PRUDENTIAL SHORT TERM GLOBAL INCOME FUND INC, N-30D, 1995-01-11

PRUDENTIAL SHORT TERM GLOBAL INCOME FUND INC
N-30D, 1995-01-11

Previous: PRUDENTIAL MULTI SECTOR FUND INC, N-30D, 1995-01-11

Next: FIRST TRUST COMBINED SERIES 126, 24F-2NT, 1995-01-11

ANNUAL REPORT October 31,1994

Prudential
Short-Term
Global Income
Fund, Inc.

(ICON)

Global Assets
Portfolio

(LOGO)

<PAGE>

Letter to Shareholders

December 19, 1994

Dear Shareholder:

The market environment facing global fixed income funds over the past 12
months was extremely difficult. The volatile interest rate and currency
market conditions in 1994 were to global fixed income instruments what
1987 was to equities -- extraordinarily unfavorable. Nevertheless, we
are pleased to have this opportunity to update you on your Fund's
activities. Because of the limited maturity profile of the Global
Assets Portfolio, this Fund was able to avoid some of the problems
of a rising interest rate climate, and the Fund's performance over
the year, was less volatile than most of the global short-term income
funds. For the year, your Fund performed in line with the Lipper
Short-Term Multi-Market Average.

<TABLE>
HISTORICAL TOTAL RETURNS1
As of October 31, 1994
<CAPTION>
One Year Since Inception2
<S> <C> <C>
Class A +0.5% +12.7%
Lipper ST World
Multi-Mkt Avg.3 +0.7 N/A
</TABLE>

<TABLE>
AVERAGE ANNUAL TOTAL RETURNS4
As of September 30, 1994
<CAPTION>
One Year Since Inception2
<S> <C> <C>
Class A -0.5% +2.9%
</TABLE>

2 Inception dates: 2/15/91 Class A.

3 This is the average of 63 funds in the Short-Term World Multi-Market
Average, according to Lipper Analytical Services, Inc.

4 Source: Prudential Mutual Fund Management. These figures take into
account applicable sales charges. The Fund charges a maximum sales load
of .99% for Class A shares.

-1-
<PAGE>

Fund Overview

The Global Assets Portfolio invests in short-term, worldwide debt
securities with remaining maturities of not more than one year.
The Fund's net asset value as of October 31, 1994 was $1.80 for Class
A. The Fund also paid dividends of $0.09 per Class A share for the
12-month period ended October 31, 1994.

Bond Markets

The market climate of falling interest rates that were so favorable
for global fixed income funds essentially disappeared during 1994.
The dollar bloc countries led a backup in interest rates (US, Canada,
Australia, and New Zealand). With surging economic growth, inflation
fears and upward interest rate pressures, this weighed heavily on
bond prices. The result, even at the short end of nearly every bond
market around the world, was negative return. Interest rate hikes by
the US Federal Reserve were followed by, and in some cases (like Australia)
exceeded, hikes in other dollar bloc bond markets.

The dramatic rise in market interest rates in many countries far exceeded
official interest rate hikes. At the beginning of the year, the Fund held
securities in the US, Mexico, Canada, Australia, and New Zealand. Bond
prices in the portfolio fell as interest rates rose, although the relatively
short maturity structure offered some shelter. However, we sold securities
at lower prices to meet redemption requests. Subsequently, the depth and
speed with which the same economies rebounded resulted in sharp reversals
of monetary policy, and short-term rates shot up. Additionally, the cross
hedges we had put in place for the currency exposure in the Italian,
Swedish, and Spanish markets lost ground.

Over the last few months, we positioned the Fund in Mexico in both
peso-denominated Cetes and dollar-denominated Tesobonos. Now, we
continue to favor New Zealand among the dollar-block markets, and are
holding positions there, as well as in Canada, Australia and the U.S.
As rates have risen, we have been able to lock in quite attractive yields.

Currency Markets

Further confounding the environment over the period was a volatile trading
pattern exhibited by the U.S. dollar. While rising interest rates in the
US (accompanied by a cumulative hike of 225 basis points engineered by the
Federal Reserve) would in most periods have pushed the US dollar higher,
concerns about trade policy with Japan, our chronic (and rising) current
account deficit, and general lack of confidence about US policy in general
instead weighed the dollar down -- certainly relative to the Japanese yen,
and even compared to some of the slower-growing countries of Europe.

-2-
<PAGE>

We had anticipated that rising US interest rates in combination with
flat European rates would strengthen the dollar, and during the first
and second quarters of 1994, hedged a significant portion of the Fund's
assets back into US dollars. We hedged non-core European bond exposure
by cross hedging with Deutschemarks and Yen. When the anticipated US
dollar recovery failed to materialize, these positions lost ground.
During the third quarter, we recaptured some positive currency movement
by lifting some of the hedges, and then repositioning. We are now holding
primarily dollar bloc currencies, and hedging our UK exposure through
Deutschemarks.

Outlook

This year has unquestionably been a tough one for global fixed income.
However, there has been a positive aspect for funds such as yours. As
rates have risen, we have been able to capture some higher yielding
coupons that will increase the income stream to the Fund. We believe,
looking forward, that there will be relief from the volatility experienced
in the global bond environment over the past year, and that the current
level of interest rates worldwide will provide some opportunity for more
positive performance in the coming year.

As always, it is a pleasure to have you as a shareholder of the Prudential
Short-Term Global Income Fund / Global Assets Portfolio and to take this
opportunity to report our activities to you.

Sincerely,

Lawrence C. McQuade
President

Jeffrey Brummette
Portfolio Manager

-3-
<PAGE>

<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC. Portfolio of Investments
GLOBAL ASSETS PORTFOLIO October 31, 1994
<TABLE>
<CAPTION>
Principal US$ Principal
US$
Amount Value Amount
Value
(000) Description (Note 1) (000) Description
(Note 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--101.6%
Australia--5.3%
South Australia Finance
Auth.,
A$ 3,500 13.00%, 7/15/95.......... $ 2,691,902
-----------
Canada--4.2%
Canadian Treasury
Bills,**
C$ 1,000 7.83%, 6/29/95........... 709,735
2,000 6.90%, 8/10/95........... 1,407,119
-----------
2,116,854
-----------
Italy--3.9%
General Electric Capital
Corp.,
Lira 3,000,000 11.50%, 2/7/95........... 1,956,318
-----------
Mexico--9.8%
Mexican Cetes,**
MP 3,500 14.50%, 12/8/94.......... 1,003,983
10,773 13.20%, 8/17/95.......... 2,818,954
510 13.20%, 9/7/95........... 132,480
3,822 13.10%, 9/21/95.......... 988,057
-----------
4,943,474
-----------
New Zealand--17.1%
New Zealand Treasury
Bills,**
NZ$ 10,500 7.45%, 12/19/94.......... 6,399,163
3,668 7.56%, 1/11/95........... 2,223,291
-----------
8,622,454
-----------
Spain--4.2%
Kingdom of Spain,**
Pts 265,000 11.40%, 7/15/95.......... 2,144,717
-----------
United States--57.1%
Fuji Bank, Ltd., C.P.,
US$ 4,000 4.84%, 11/1/94........... 4,000,000
Joint Repurchase
Agreement Account,
4.77%, 11/1/94 (Note
US$ 9,966 5)..................... $ 9,966,000
Mexican Tesobonos,**
2,078 7.10%, 11/10/94.......... 2,075,507
3,156 8.45%, 7/27/95........... 2,970,819
2,000 8.41%, 8/17/95........... 1,873,443
Mitsubishi Bank, Ltd.,
C.P.,
4,000 4.88%, 11/1/94........... 4,000,000
Wal-Mart Stores Inc.,
C.P.,
4,000 4.75%, 11/2/94........... 3,999,472
-----------
28,885,241
-----------
Total short-term
investments
(cost US$51,095,673)... 51,360,960
-----------

<CAPTION>
OUTSTANDING OPTIONS
Contracts(D) PURCHASED*--0.2%
- ------------
<C> <S> <C>
Currency Call Options
Australian Dollars,
A$ 7,700 expiring 11/23/94
@ A$0.7413............. 37,722
Japanese Yen,
(YEN) 3,600 expiring 5/5/95
@ (YEN)105.50.......... 9,720
Currency Put Options
Japanese Yen,
(YEN) 2,900 expiring 1/26/95
@ (YEN)93.70........... 23,490
Cross-Currency Put
Options
Deutschemarks,
expiring 1/12/95
@ DM 972.30 per Italian
DM 2,700 Lira................... 1,620
@ DM 974.16 per Italian
3,700 Lira................... 737
</TABLE>

-4- See Notes to Financial Statements.

<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
<TABLE>
<CAPTION>
US$
Value
Contracts(D) Description (Note 1)
<C> <S> <C>
Cross-Currency Put
Options--cont'd.
Deutschemarks,
expiring 1/20/95
DM 7,600 @ DM 4.6015
per Swedish Krona...... $ 19,152
-----------
Total outstanding options
purchased (cost
US$377,947)............ 92,441
-----------
Total Investments--101.8%
(cost $51,473,620; Note
4)..................... 51,453,401
Liabilities in excess of
other assets--(1.8%)... (916,021)
-----------
Net Assets--100%......... $50,537,380
-----------
-----------
</TABLE>
- ------------------
Portfolio securities are classified by country according to the
security's currency denomination.
C.P.--Commercial Paper
* Non-income producing security.
** Percentage quoted represents yield to maturity as of purchase date.
(D) Expressed in thousands of local currency units.
-5- See Notes to Financial Statements.

<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets October 31, 1994
----------------
<S> <C>
Investments, at value (cost $51,473,620)................................................ $ 51,453,401
Cash.................................................................................... 29,306
Foreign currency, at value (cost $3,769)................................................ 3,790
Forward currency contracts--net amount receivable from counterparties................... 647,171
Interest receivable..................................................................... 338,383
Deferred expenses and other assets...................................................... 13,341
----------------
Total assets.......................................................................... 52,485,392
----------------
Liabilities
Payable for Fund shares reacquired...................................................... 964,012
Forward currency contracts--net amount payable to counterparties........................ 710,661
Accrued expenses........................................................................ 147,027
Dividends payable....................................................................... 69,065
Due to Manager.......................................................................... 24,747
Due to Distributor...................................................................... 22,497
Withholding taxes payable............................................................... 10,003
----------------
Total liabilities..................................................................... 1,948,012
----------------
Net Assets.............................................................................. $ 50,537,380
----------------
----------------
Net assets were comprised of:
Common stock, at par.................................................................. $ 28,039
Paid-in capital in excess of par...................................................... 66,031,930
----------------
66,059,969
Accumulated distributions in excess of net investment income.......................... (4,612,582)
Accumulated net realized loss on investments.......................................... (10,836,547)
Net unrealized depreciation on investments and foreign currencies..................... (73,460)
----------------
Net assets, October 31, 1994............................................................ $ 50,537,380
----------------
----------------
Class A:
Net asset value and redemption price per share ($50,537,380 / 28,039,288 shares of
common stock
issued and outstanding)............................................................. $1.80
Maximum sales charge (.99% of offering price)......................................... .02
----------------
Maximum offering price to public...................................................... $1.82
----------------
----------------
</TABLE>

See Notes to Financial Statements.
-6-
<PAGE>
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
October 31,
Net Investment Income 1994
--------------
<S> <C>
Income
Interest........................... $ 4,813,682
--------------
Expenses
Management fee..................... 453,970
Distribution fee--Class A.......... 411,334
Custodian's fees and expenses...... 303,000
Transfer agent's fees and
expenses........................... 97,000
Reports to shareholders............ 36,000
Directors' fees.................... 35,000
Legal fees......................... 27,000
Audit fee.......................... 25,000
Registration fees.................. 22,000
Amortization of organization
expenses........................... 12,000
Miscellaneous...................... 13,517
--------------
Total expenses................... 1,435,821
--------------
Net investment income................ 3,377,861
--------------
Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions............ (1,211,080)
Foreign currency transactions...... (2,748,152)
Written option transactions........ 420,651
--------------
(3,538,581)
--------------
Net change in unrealized
appreciation/ depreciation of:
Investments........................ (132,005)
Foreign currencies................. 658,538
Written options.................... 13,775
--------------
540,308
--------------
Net loss on investments, foreign
currencies and written options..... (2,998,273)
--------------
Net Increase in Net Assets
Resulting from Operations............ $ 379,588
--------------
--------------
</TABLE>

PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
Net Increase (Decrease) -------------------------------
in Net Assets 1994 1993
-------------- -------------
<S> <C> <C>
Operations
Net investment
income................. $ 3,377,861 $ 14,327,588
Net realized loss on
investments and
foreign currency
transactions......... (3,538,581) (21,161,713)
Net change in
unrealized
appreciation/depreciation
of investments and
foreign currencies... 540,308 17,158,011
-------------- -------------
Net increase in net
assets resulting from
operations........... 379,588 10,323,886
-------------- -------------
Contingent deferred sales
charges collected (Note
2)..................... 8,161 25,932
-------------- -------------
Net equalization
debits................. -- (3,675,103)
-------------- -------------
Dividends and
distributions (Note 1)
Dividends from net
investment income
Class A.............. -- (3,217,487)
Class B.............. -- (1,053,946)
-------------- -------------
-- (4,271,433)
-------------- -------------
Dividends in excess of
net investment income
Class A.............. (117,091) --
Class B.............. (411) --
-------------- -------------
(117,502) --
-------------- -------------
Tax return of capital
distributions
Class A.............. (3,826,815) (4,026,397)
Class B.............. (13,439) (1,318,920)
-------------- -------------
(3,840,254) (5,345,317)
-------------- -------------
Fund share transactions
(Note 6)
Net proceeds from
shares subscribed.... 4,822,020 169,695,598
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 2,685,643 5,821,978
Cost of shares
reacquired............. (82,912,800) (356,365,191)
-------------- -------------
Net decrease in net
assets from Fund
share transactions... (75,405,137) (180,847,615)
-------------- -------------
Total decrease........... (78,975,144) (183,789,650)
Net Assets
Beginning of year........ 129,512,524 313,302,174
-------------- -------------
End of year.............. $ 50,537,380 $ 129,512,524
-------------- -------------
-------------- -------------
</TABLE>

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

<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
Notes to Financial Statements
Prudential Short-Term Global Income Fund, Inc. (the ``Fund''), registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company, was incorporated in Maryland on February 21,
1990. The Fund consists of two series, namely: Short-Term Global Income
Portfolio and Global Assets Portfolio. The Global Assets Portfolio (the
``Portfolio'') commenced investment operations on February 15, 1991. 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 the U.S. and abroad having remaining maturities of not more than
one year. 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 exchange rate. 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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, 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 debt securities sold
during the fiscal year.
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 unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at fiscal year end exchange rates are reflected as a component of
net unrealized appreciation/depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
-8-
<PAGE>
<PAGE>
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 were allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
As of October 31, 1994, there are no Class B shares outstanding (see Note 6).
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 from
book basis net investment income monthly and makes distributions at least
annually of any net capital gains. Dividends and distributions are recorded on
the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions.
Reclassification of Capital Accounts: The Portfolio accounts and reports 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 of applying this statement was to increase accumulated distributions in
excess of net investment income by $3,316,665, decrease accumulated net realized
loss on investments by $3,656,083 and decrease paid-in capital by $339,418. This
was primarily the result of net foreign currency losses incurred for the fiscal
year ended October 31, 1994. Net investment income, net realized gains and net
assets were not affected by this change. Included in accumulated distributions
in excess of net investment income as of October 31, 1994 is $4,505,980 of
equalization debits.
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 $60,000 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.

Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this
-9-
<PAGE>
<PAGE>
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 Portfolio has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Portfolio. The Portfolio compensates PMFD for distributing and
servicing the Portfolio's Class A shares, pursuant to a plan of distribution,
regardless of expenses actually incurred by PMFD. The distribution fees are
accrued daily and payable monthly.
On July 19, 1994, shareholders of the Portfolio approved amendments to the
Class A distribution plan under which the Class A distribution plan became a
compensation plan, effective August 1, 1994. Prior thereto, the Class A
distribution plan was a reimbursement plan, under which PMFD was reimbursed for
expenses actually incurred by it up to the amount permitted under the Class A
Plan. The Portfolio is not obligated to pay any prior or future excess
distribution costs (costs incurred by PMFD in excess of distribution fees paid
by the Portfolio or contingent deferred sales charges received by PMFD). The
rate of the distribution fees charged to Class A shares of the Portfolio did not
change under the amended plan of distribution.
Pursuant to the Class A Plan, the Portfolio compensates PMFD for
distribution-related activities at an annual rate of up to .50 of 1% of the
average daily net assets of the Class A shares.
PMFD has advised the Portfolio that it has received approximately $24,100 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended October 31, 1994. From these fees, PMFD paid such sales charges to
PSI and Pruco Securities Corporation, affiliated broker-dealers, which in turn
paid commissions to salespersons and incurred other distribution costs.
As of May 10, 1994, there are no Class B shares outstanding. Prior thereto,
the Portfolio reimbursed Prudential Securities Incoporated (``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.
There were no distribution costs incurred nor reimbursable under the Class B
Plan for the fiscal year ended October 31, 1994. All contingent deferred sales
charges collected on the redemption of Class B shares were retained and credited
to the Fund's Class B shares paid-in capital account.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.

Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
With Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the fiscal year ended October 31, 1994, the Portfolio incurred fees of
approximately $88,200 for the services of PMFS. As of October 31, 1994,
approximately $4,200 of such fees were due to PMFS for its services. Transfer
sgent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to non-affiliates.

Note 4. Portfolio The federal income tax basis
of the Portfolio's investments Securities
at October 31, 1994 was substantially the same as
the basis for financial reporting purposes and, accordingly, net unrealized
depreciation for federal income tax purposes was $20,219 (gross unrealized
appreciation--$390,534; gross unrealized depreciation--$410,753).
For federal income tax purposes, the Portfolio has a capital loss
carryforward as of October 31, 1994 of approximately $10,837,000 of which
$4,584,000 expires in 2000 and $6,253,000 expires in 2001. Such carryforward is
after utilization of approximately $118,000 to offset net taxable gains realized
during the fiscal year ended October 31, 1994. 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, 1994
were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
--------- ----------
<S> <C> <C>
Options outstanding at
October 31, 1993................ 9,500 $ 71,725
Options written................... 194,486 1,232,665
Options terminated in closing
purchase transactions........... (147,586) (989,488)
Options expired................... (39,000) (146,797)
Options exercised................. (17,400) (168,105)
--------- ----------
Options outstanding at
October 31, 1994................ -- $ --
--------- ----------
--------- ----------
</TABLE>

-10-

<PAGE>
At October 31, 1994, 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 11/28/94.... $ 1,500,000 $ 1,502,182 $ 2,182
British Pounds,
expiring 11/8/94..... 3,787,934 3,803,715 15,781
Canadian Dollars,
expiring 11/14/94.... 3,839,874 3,824,278 (15,596)
Deutschemarks,
expiring
11/7-11/30/94........ 43,549,474 43,744,309 194,835
Italian Lira,
expiring 12/13/94.... 5,582,088 5,604,324 22,236
Japanese Yen, expiring
11/7-11/18/94........ 8,071,856 8,098,057 26,201
--------------- ----------- --------------
$ 66,331,226 $66,576,865 $ 245,639
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>

<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- --------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Australian Dollars,
expiring
11/28/94-1/6/95.... $ 4,292,121 $ 4,305,984 $ (13,863)
Canadian Dollars,
expiring 11/14/94.. 3,340,000 3,333,068 6,932
Deutschemarks,
expiring
11/7-11/30/94...... 36,905,323 36,987,699 (82,376)
Italian Lira,
expiring 12/13/94.. 4,893,603 5,004,106 (110,503)
Japanese Yen,
expiring
11/7/94-11/14/94... 3,027,086 3,083,844 (56,758)
Spanish Pesetas
expiring 12/22/94.. 1,795,479 1,790,831 4,648
Swedish Krona,
expiring 11/7/94... 267,059 266,205 854
Swiss Francs,
expiring 11/14/94.. 3,000,000 3,058,063 (58,063)
--------------- ----------- --------------
$ 57,520,671 $57,829,800 $ (309,129)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>

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. At October 31, 1994, the Fund
had a 1.11% undivided interest in the repurchase agreements in the joint
account. The undivided interest for the Fund represented $9,966,000 in principal
amount. As of such date, each repurchase agreement in the joint account and the
value of the collateral therefor were as follows:
Smith Barney, Inc., 4.80%, in the principal amount of $260,000,000,
repurchase price $260,034,667, due 11/1/94. The value of the collateral
including accrued interest is $265,200,122.
Nomura Securities International, Inc., 4.77%, in the principal amount of
$100,000,000, repurchase price $100,013,250, due 11/1/94. The value of the
collateral including accrued interest is $102,000,391.
Goldman, Sachs & Co., 4.75%, in the principal amount of $275,000,000,
repurchase price $275,036,285, due 11/1/94. The value of the collateral
including accrued interest is $280,500,611.
CS First Boston Corp., 4.75%, in the principal amount of $265,000,000,
repurchase price $265,034,965, due 11/1/94. The value of the collateral
including accrued interest is $271,053,272.

Note 6. Capital The Portfolio currently offers
only Class A shares which are sold with a
front-end sales charge of up to .99%. The Portfolio discontinued offering Class
B shares on April 14, 1993. Class B shares automatically converted to Class A
shares upon being held longer than one year from the date of purchase. Effective
May 10, 1994, the remaining Class B shares converted to Class A shares. There
are 500 million 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 250 million authorized shares.
-11-
<PAGE>
<PAGE>
Transactions in shares of common stock for the fiscal years ended October 31,
1994 and 1993 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------- ------------ -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares sold................. 1,787,071 $ 3,241,520
Shares sold--conversion from
Class B................... 844,439 1,580,500
Shares issued in
reinvestment of
dividends................. 1,447,695 2,676,200
Shares reacquired........... (43,793,517) (80,885,842)
------------ -------------
Net decrease in shares
outstanding............... (39,714,312) $ (73,387,622)
------------ -------------
------------ -------------
Year ended October 31, 1993:
Shares sold................. 6,064,340 $ 11,274,743
Shares sold--conversion from
Class B................... 83,379,084 154,875,114
Shares issued in
reinvestment of dividends
and distributions......... 2,229,981 4,138,266
Shares reacquired........... (83,960,705) (155,987,024)
------------ -------------
Net increase in shares
outstanding............... 7,712,700 $ 14,301,099
------------ -------------
------------ -------------
<CAPTION>
Class B Shares Amount
- ---------------------------- ------------ -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares issued in
reinvestment of
dividends................. 4,960 $ 9,443
Shares reacquired........... (236,484) (446,458)
Shares
reacquired--conversion
into Class A.............. (831,163) (1,580,500)
------------ -------------
Net decrease in shares
outstanding............... (1,062,687) $ (2,017,515)
------------ -------------
------------ -------------
Year ended October 31, 1993:
Shares sold................. 1,902,610 $ 3,545,741
Shares issued in
reinvestment of dividends
and distributions......... 903,347 1,683,712
Shares reacquired........... (24,366,585) (45,503,053)
Shares
reacquired--conversion
into Class A.............. (83,275,750) (154,875,114)
------------ -------------
Net decrease in shares
outstanding............... (104,836,378) $(195,148,714)
------------ -------------
------------ -------------
</TABLE>

-12-

<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
GLOBAL ASSETS PORTFOLIO
Financial Highlights
<TABLE>
<CAPTION>
Class A Class
B
-----------------------------------------------
- ---------------------------------------------------
February 15, November 1,
February 15,
Year Ended 1991* 1993 Year
Ended 1991*
October 31, through through October
31, through
------------------------------- October 31, May 9,
- ------------------- October 31,
1994 1993 1992 1991 1994@ 1993
1992 1991
------- -------- -------- ------------ ----------- -------
- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period... $ 1.88 $ 1.89 $ 2.00 $ 2.00 $1.90 $ 1.89
$ 2.00 $ 2.00
------- -------- -------- ------------ ----------- -------
- -------- ------------
Income from investment operations
Net investment income... .08 .12 .16 .12(D) .04 .12
.15 .11(D)
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions.......... (.07) (.04) (.13) -- (.03) (.04)
(.13) --
------- -------- -------- ------------ ----------- -------
- -------- ------------
Total from investment
operations.......... .01 .08 .03 .12 .01 .08
.02 .11
------- -------- -------- ------------ ----------- -------
- -------- ------------
Less distributions
Dividends from net
investment
income................ -- (.04) (.14) (.12) -- (.04)
(.13) (.11)
Tax return of capital
distributions......... (.09) (.05) -- -- (.05) (.05)
-- --
------- -------- -------- ------------ ----------- -------
- -------- ------------
Total distributions... (.09) (.09) (.14) (.12) (.05) (.09)
(.13) (.11)
------- -------- -------- ------------ ----------- -------
- -------- ------------
Contingent deferred
sales charges
collected............. -- -- -- -- .03 .02
-- --
------- -------- -------- ------------ ----------- -------
- -------- ------------
Net asset value, end of
period................ $ 1.80 $ 1.88 $ 1.89 $ 2.00 $1.89 $ 1.90
$ 1.89 $ 2.00
------- -------- -------- ------------ ----------- -------
- -------- ------------
------- -------- -------- ------------ ----------- -------
- -------- ------------
TOTAL RETURN#:.......... 0.47% 4.36% 1.46% 5.91% 2.33% 5.47%
0.94% 5.53%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000).......... $50,537 $127,490 $113,412 $ 86,443 $0 $ 2,023
$199,890 $ 134,015
Average net assets
(000)................. $82,267 $153,339 $138,331 $ 23,224 $ 525 $52,653
$248,941 $ 42,449
Ratios to average net
assets:@@
Expenses, including
distribution fees... 1.73% 1.48% 1.33% 1.25%(D)** 1.21%** 1.61%
1.83% 1.75%(D)**
Expenses, excluding
distribution fees... 1.23% .98% .83% .75%(D)** 1.21%** .98%
.83% .75%(D)**
Net investment
income.............. 4.09% 6.44% 8.16% 8.64%(D)** 4.48%** 6.31%
7.66% 8.21%(D)**
</TABLE>
- ---------------
* Commencement of investment operations.
** Annualized.
# 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.
Total returns for periods of less than a full year are not annualized.
(D) Net of expense subsidy.
@ Last day of investment operations of Class B shares. On May 10, 1994, all
existing Class B shares were converted to Class A shares.
@@ Because of the events referred to in @ and the timing of such, the Class B
shares ratios for the most recent period are not necessarily comparable to
that of Class A shares.

See Notes to Financial Statements.
-13-

<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Prudential Short-Term Global Income Fund, Inc.
Global Assets Portfolio
We have audited the accompanying statement of assets and liabilities of
Prudential Short-Term Global Income Fund, Inc., Global Assets Portfolio,
including the portfolio of investments, as of October 31, 1994, 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 and for the period February
15, 1991 (commencement of investment operations) to October 31, 1991. 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, 1994 by correspondence with the custodian. 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., Global Assets Portfolio, as of October 31,
1994, 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 LLP
New York, New York
December 16, 1994
-14-
<PAGE>
<PAGE>
Past performance is not predictive of future performance and an investor's
shares may be worth more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in Prudential Short-Term Global Income Fund: Global
Assets Portfolio (Class A) with a similar investment in the J.P. Morgan Global
Short-Term Index (GSTI) by portraying the initial account values at the
commencement of operations and subsequent account values at the end of each
fiscal year (October 31), as measured on a quarterly basis, beginning in 1991
for Class A shares. For purposes of the graph and, unless otherwise indicated,
the accompanying table, it has been assumed that (a) the maximum sales charge
was deducted from the initial $10,000 investment in Class A shares; (b) all
recurring fees (including management fees) were deducted; and (c) all dividends
and distributions were reinvested.
The GSTI is a weighted index of liquid, short-term government bonds of the
following countries: Belgium, Sweden, Germany, Australia, Canada, Denmark,
France, Italy, Japan, Netherlands, Spain, U.S. and U.K. The GSTI is an unmanaged
index and changes in market capitalization in the GSTI are revised monthly. The
GSTI does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund. The securities which comprise the
GSTI may differ substantially from the securities in the Fund's portfolio. The
GSTI is not the only index that may be used to characterize performance of
global income funds and other indices may portray different comparative
performance.
-15-
<PAGE>
<PAGE>

Directors
Stephen C. Eyre
Delayne Dedrick Gold
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. La Blanc
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead

Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary

Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101

Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906

Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281

Legal Counsel
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, NY 10022

Prudential Mutual FundsOne Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555

This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.

MF 149E
74436H309 (LOGO) Cat #4443616
ANNUAL REPORT October 31, 1994

Prudential
Short-Term Global Income Fund, Inc.

(ICON)

Short-Term
Global Income
Portfolio

(LOGO)

<PAGE>

Letter to Shareholders

December 19, 1994

Dear Shareholder:

Difficult is a kind word for the market environment that faced global fixed
income funds over the past 12 months, affecting the Prudential Short-Term
Global Income Fund / Short-Term Global Income Portfolio and the entire asset
group. The volatile interest rate and currency market conditions in 1994 were
to global fixed income instruments what 1987 was to equities -- extremely
unfavorable. Nevertheless, we are pleased to have this opportunity to update
you on your Fund's activities. Performance, although negative, and weaker
against the universe over the latter part of the year, was slightly below other
similar funds of this type for the 12-month period covered by this report, as
reflected in the Lipper Short-Term Multi-Market Average shown below.

<TABLE>
HISTORICAL TOTAL RETURNS1
As of October 31, 1994
<CAPTION>
One Year Since Inception2
<S> <C> <C>
Class A -1.9% +17.0%
Class B -2.6 +13.1
Class C N/A +0.8
Lipper ST World
Multi-Mkt Avg.3 0.7 N/A
</TABLE>

<TABLE>
HISTORICAL TOTAL RETURNS4
As of September 30, 1994
<CAPTION>
One Year Since Inception2
<S> <C> <C>
Class A -4.4% +3.1%
Class B -5.3 +2.7
Class C N/A N/A
</TABLE>

1 Source: Prudential Mutual Fund Management. Past performance is not a
guarantee of future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. These figures do not take into account sales
charges.
2 Inception dates: 11/01/90 Class A and Class B; 8/1/94 Class C.
3 This is the average of 63 funds for one year in the Short-Term World
Multi-Market Average, according to Lipper Analytical Services, Inc.
4 Source: Prudential Mutual Fund Management. These figures take into account
applicable sales charges. The Fund charges a maximum sales load of 3% for Class
A shares. Class B shares are subject to a declining contingent deferred sales
charge of 3%, 2%, 1% and 1% during the first four years. Class C shares are
subject to a 1% contingent deferred sales charge on shares redeemed during the
first year. Class C performance is not yet applicable since the share class has
only been in existence since August.

-1-

<PAGE>

Fund Overview

The Fund invests primarily in short-term, worldwide debt securities with
remaining maturities of not more than three years. The Fund's net asset value
as of October 31, 1994 was $8.56 for Class A, Class B and Class C shares. The
Fund also paid dividends of $0.57 per Class A share, $0.49 per Class B shares
and $0.13 per Class C shares for the 12-month period ended October 31, 1994.

Bond Markets

In sharp contrast to the positive market environment of 1993 that offered
strong opportunities in bond and currency markets, 1994 was hard on both
fronts. Led by dollar bloc countries (US, Canada, Australia and New Zealand),
world growth surged in 1994. Unfortunately, strong growth, while hailed
positively on most fronts, is NOT a scenario that generally behooves bond
investors. Inflation concerns, accompanied by upward interest rate pressures,
weighed very heavily on bond prices this year. The result was negative return
in almost every bond market around the world, including the United States. This
environment impacted global fixed income funds and your Fund.

The US Federal Reserve's tightening moves were followed by hikes in other
dollar bloc bond markets. European bond holdings, which dramatically helped the
Fund in 1993, produced much more mixed results in 1994. During the first half
of the year, as European economies began to recover and Central Banks
stimulated with short-term rate cuts, short-term bonds outperformed the long
end of most markets. Subsequently, the depth and speed with which the same
economies rebounded resulted in sharp reversals of monetary policy, and their
bond markets gave back significant ground.

The dramatic rise in market interest rates in many countries far exceeded
official interest rate hikes, affecting the performance of the portfolio. We
have moved to shorter-dated maturities to reduce price volatility and, in the
process, have locked in quite attractive yields. We are poised to take
advantage of some limited emerging market opportunities which should add value
in a static or rising interest rate environment. These include attractively
priced securities in Argentina and Brazil (most dollar-denominated, including
some floating rate notes).

Currency Markets

Further confounding the environment for global funds was the volatile trading
pattern exhibited by the U.S. dollar. While rising interest rates in the US
(accompanied by a cumulative hike of 225 basis points engineered by the Federal
Reserve) would in most periods have pushed the US dollar higher, concerns about
trade policy with Japan, our chronic (and rising) current account deficit, and
general lack of confidence about US policy in general instead weighed the
dollar down -- certainly relative to the Japanese yen, and even compared to
some of the slower-growing countries of Europe.

-2-

<PAGE>

US interest rates in combination with flat European rates did not strengthen
the dollar as we had anticipated. During the first and second quarters of 1994,
we hedged a significant portion of the Fund's assets back into US dollars and
missed some opportunities in the Yen and Deutschemark when the US dollar
recovery failed to materialize. During the third quarter, we captured some
positive currency movement when we repositioned the Fund by removing some
hedges, but were unable to offset the losses completely.

Outlook

While this year has been a tough one, there has been a positive aspect for
funds such as this Fund. In the process of seeking to protect the portfolio,
we have been able to capture some higher yielding coupons that will increase
the income stream to the Fund. Looking forward, we believe there will be relief
from the volatility experienced in the global bond environment over the past
year, and that the current level of interest rates worldwide will provide some
opportunity for a more positive performance in the coming year.

As always, it is a pleasure to have you as a shareholder of the Prudential
Short-Term Global Income Fund / Short-Term Global Income Portfolio and to take
this opportunity to report our activities to you.

Sincerely,

Lawrence C. McQuadex
President

Jeffrey E. Brummette
Portfolio Manager
-3-
<PAGE>

PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC. Portfolio of Investments
SHORT-TERM GLOBAL INCOME PORTFOLIO October 31, 1994
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--61.7%
Australia--13.5%
Australian Gov't. Bonds,
A$ 10,500# 13.00%, 7/15/96......... $ 8,289,330
New South Wales Treasury
Corp.,
8,000# 8.50%, 3/1/96........... 5,921,098
Victorian Treasury
Corp.,
12,765# 12.50%, 7/15/96......... 9,987,162
Western Australia
Treasury
Corp.,
7,000# 10.00%, 1/15/97......... 5,259,261
------------
29,456,851
------------
Brazil--1.3%
Republic of Brazil,
BRL 3,528 6.06%, 1/1/01........... 2,888,550
------------
Canada--3.1%
Canadian Gov't. Bonds,
C$ 9,000 7.75%, 9/15/96.......... 6,664,904
------------
Denmark--4.2%
Danish Gov't. Bullet,
DKr 53,050 9.00%, 11/15/96......... 9,155,884
------------
France--3.0%
Gov't. of France,
FF 34,000 6.50%, 10/12/96......... 6,521,884
------------
Ireland--2.6%
Irish Gov't. Bonds,
IEP 3,500 9.00%, 7/30/96.......... 5,692,959
------------
Italy--3.0%
Export Finance of
Norway,
Lira 8,000,000 12.25%, 8/5/96.......... 5,291,360
Italian Gov't. BTP,
2,000,000 10.00%, 8/1/96.......... 1,281,500
------------
6,572,860
------------
Mexico--1.5%
Mexican Treasury
Bills,**
MP 13,947# 14.13%, 10/10/96........ $ 3,170,600
------------
Spain--4.3%
Kingdom of Spain,
Pts 1,000,000 11.90%, 7/15/96......... 8,177,941
Nordic Investment Bank,
150,000 13.80%, 11/30/95........ 1,247,907
------------
9,425,848
------------
Sweden--3.0%
Statens Bostad Housing
Fund,
SKr 45,000 12.50%, 1/23/97......... 6,463,944
------------
United Kingdom--16.2%
Bayerische Hypothelsen
Bank,
(BR PD)5,000 11.13%, 6/24/96......... 8,487,924
United Kingdom Treasury
Bonds,
10,350 13.25%, 1/22/97......... 18,569,794
5,000 8.75%, 9/1/97........... 8,223,550
------------
35,281,268
------------
United States--6.0%
Cedulas Hipotecarias
Rurales,
US$ 4,400 7.90%, 9/1/00........... 3,971,000
Republic of Argentina
Bote,
23,000 4.94%, 5/31/96.......... 9,108,000
------------
13,079,000
------------
Total long-term
investments
(cost
US$133,117,733)....... 134,374,552
------------
SHORT-TERM INVESTMENTS--38.6%
Canada--4.1%
Canadian Treasury
Bills,**
C$ 9,640 7.90%, 6/29/95.......... 6,841,845
</TABLE>

-4- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
SHORT-TERM GLOBAL INCOME PORTFOLIO
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Canada--cont'd.
Ontario Province
Canada,**
C$ 3,000 6.00%, 3/21/95.......... $ 2,166,712
------------
9,008,557
------------
Mexico--8.3%
Mexican Treasury
Bills,**
MP 6,900# 14.30%, 12/8/94......... 1,980,402
24,500# 14.50%, 12/8/94......... 7,031,863
19,490# 13.20%, 9/7/95.......... 5,062,817
15,288# 13.10%, 9/21/95......... 3,952,223
------------
18,027,305
------------
New Zealand--15.0%
New Zealand Gov't.
Bonds,
NZ$ 26,000 10.00%, 2/15/95......... 16,080,847
New Zealand Treasury
Bills,**
9,000 6.82%, 11/9/94.......... 5,491,066
1,400 7.02%, 11/9/94.......... 854,166
1,500 7.10%, 12/7/94.......... 916,586
15,489 7.56%, 1/11/95.......... 9,388,376
------------
32,731,041
------------
United States--11.2%
Joint Repurchase
Agreement Account,
US$ 8,847 4.77%, 11/1/94 (Note
5).................... 8,847,000
Mexican Tesobonos,**
5,695 8.69%, 7/27/95.......... 5,360,841
2,632 8.35%, 8/3/95........... 2,473,829
8,200 8.41%, 8/17/95.......... 7,681,119
------------
24,362,789
------------
Total short-term
investments
(cost
US$82,568,380)........ 84,129,692
------------
OUTSTANDING OPTIONS
PURCHASED*--0.2%
Currency Call Options
A$ 32,000 Australian Dollars,
expiring 11/23/94
@A$.7413.............. $ 156,768
(YEN) 15,000 Japanese Yen,
expiring 5/5/95
@(YEN)105.50.......... 40,500
------------
197,268
------------
Currency Put Options
(YEN) 12,300 Japanese Yen,
expiring 1/26/95
@(YEN)93.70........... 99,630
------------
Cross-Currency Put Options
5,820
Deutschemarks,
expiring 1/12/95
@DM972.30 per Italian
DM 9,700 Lira..................
15,000 @DM974.16 per Italian
Lira.................. 2,985
27,400 expiring 1/20/95
@DM4.6015 per Swedish
Krona................. 69,048
------------
77,853
------------
Total outstanding
options
purchased
(cost US$1,481,065)... 374,751
------------
Total Investments--100.5%
(cost $217,167,178; Note
4).................... 218,878,995
Liabilities in excess of
other
assets--(0.5)%........ (1,071,128)
------------
Net Assets--100%........ $217,807,867
------------
------------
</TABLE>
- ---------------
Portfolio securities are classified according to the security's
currency denomination.

# Principal amount segregated as collateral for
forward currency contracts. Aggregate value of
segregated securities--$50,654,756.
* Non-income producing security.
** Percentage quoted represents yield to maturity
as of purchase date.
(D) Expressed in thousands of local currency units.

-5- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL SHORT-TERM GLOBAL
INCOME FUND, INC.
SHORT-TERM GLOBAL INCOME PORTFOLIO
<TABLE>
<CAPTION>
October 31, 1994
----------------
<S> <C>
Statement of Assets and Liabilities

Assets
Investments, at value (cost $217,167,178)............................................... $218,878,995
Foreign currency, at value (cost $47,559)............................................... 48,834
Interest receivable..................................................................... 4,029,767
Forward currency contracts--net amount receivable from counterparties................... 2,755,484
Receivable for Fund shares sold......................................................... 28,298
Deferred expenses and other assets...................................................... 49,197
----------------
Total assets........................................................................ 225,790,575
----------------
Liabilities
Forward currency contracts--net amount payable to counterparties........................ 3,754,380
Payable for Fund shares reacquired...................................................... 3,244,590
Dividends payable....................................................................... 385,050
Accrued expenses........................................................................ 271,445
Due to Distributors..................................................................... 128,803
Due to Manager.......................................................................... 105,402
Withholding taxes payable............................................................... 93,038
----------------
Total liabilities................................................................... 7,982,708
----------------
Net Assets.............................................................................. $217,807,867
----------------
----------------
Net assets were comprised of:
Common stock, at par.................................................................. $ 25,452
Paid-in capital in excess of par...................................................... 266,606,388
----------------
266,631,840
Accumulated distributions in excess of net investment income.......................... (10,975,642)
Accumulated net realized loss on investments.......................................... (38,707,984)
Net unrealized appreciation on investments and foreign currencies..................... 859,653
----------------
Net assets, October 31, 1994............................................................ $217,807,867
----------------
----------------
Class A:
Net asset value and redemption price per share
($28,841,436 / 3,369,859 shares of common stock issued and outstanding)............. $8.56
Maximum sales charge (3.00% of offering price)........................................ .26
----------------
Maximum offering price to public...................................................... $8.82
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($188,966,231 / 22,082,197 shares of common stock issued and outstanding)........... $8.56
----------------
----------------
Class C:
Net asset value, offering price and redemption price per share
($200.23 / 23.401 shares of common stock issued and outstanding).................... $8.56
----------------
----------------
</TABLE>

See Notes to Financial Statements.
-6-
<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 1994
------------
<S> <C>
Income
Interest (net of foreign
withholding
taxes of $106,062)............... $ 28,076,745
------------
Expenses
Distribution fee--Class A.......... 57,000
Distribution fee--Class B.......... 2,679,726
Management fee..................... 1,755,285
Custodian's fees and expenses...... 671,000
Transfer agent's fees and
expenses......................... 425,000
Reports to shareholders............ 180,000
Registration fees.................. 58,000
Amortization of organization
expenses......................... 40,000
Audit fee.......................... 35,000
Directors' fees.................... 35,000
Legal.............................. 26,000
Miscellaneous...................... 18,079
------------
Total expenses................... 5,980,090
------------
Net investment income................ 22,096,655
------------
Realized and Unrealized
Gain (Loss) on Investments and
Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions............ (23,776,265)
Foreign currency transactions...... (13,261,084)
Written option transactions........ 1,595,280
Future transactions................ (8,570)
------------
(35,450,639)
------------
Net change in unrealized
appreciation/
depreciation of:
Investments........................ 7,302,972
Foreign currencies................. (1,578,939)
Written options.................... 44,225
------------
5,768,258
------------
Net loss on investments, foreign
currencies and written options..... (29,682,381)
------------
Net Decrease in Net Assets
Resulting from Operations............ $ (7,585,726)
------------
------------
</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 1994 1993
------------ ------------
<S> <C> <C>
Operations
Net investment
income................. $ 22,096,655 $ 52,264,411
Net realized loss on
investments and
foreign currency
transactions......... (35,450,639) (52,043,418)
Net change in
unrealized
appreciation/depreciation
of investments and
foreign currencies... 5,768,258 37,156,133
------------ ------------
Net increase (decrease)
in net assets resulting
from operations........ (7,585,726) 37,377,126
------------ ------------
Net equalization
debits................. -- (7,869,071)
------------ ------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A.............. -- (4,363,707)
Class B.............. -- (25,199,590)
------------ ------------
-- (29,563,297)
------------ ------------
Tax return of capital
distributions
Class A.............. (2,411,703) --
Class B.............. (15,406,444) --
------------ ------------
(17,818,147) --
------------ ------------
Fund share transactions
(Note 6)
Proceeds from shares
subscribed........... 11,205,281 39,187,479
Net asset value of
shares issued in
reinvestment of
dividends and
distributions........ 10,703,295 17,172,475
Cost of shares
reacquired........... (213,168,513) (330,090,306)
------------ ------------
Net decrease in net
assets from Fund share
transactions........... (191,259,937) (273,730,352)
------------ ------------
Total decrease........... (216,663,810) (273,785,594)
Net Assets
Beginning of year........ 434,471,677 708,257,271
------------ ------------
End of year.............. $217,807,867 $434,471,677
------------ ------------
------------ ------------
</TABLE>

See Notes to Financial Statements. See Notes to Financial Statements.
-7-
<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 maximum total return, the
components of which are current income and capital appreciation, by investing
primarily in a portfolio of investment grade debt securities denominated in U.S.
dollar and a range of foreign currencies 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 of
Policies significant accounting policies
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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, 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.
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 unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at fiscal year end exchange rates are reflected as a component of
net unrealized appreciation/depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with
-8-
<PAGE>
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 from
book basis net investment income monthly and makes distributions at least
annually of any net capital gains. Dividends and distributions are recorded on
the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions.
Reclassification of Capital Accounts: The Portfolio accounts and reports 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 of applying this statement was to increase accumulated distributions in
excess of net investment income by $27,093,822, decrease accumulated net
realized loss on investments by $23,439,669 and increase paid-in capital by
$3,654,153. This was primarily the result of net foreign currency losses
incurred for the fiscal year ended October 31, 1994. Net investment income, net
realized gains and net assets were not affected by this change. Included in
accumulated distributions in excess of net investment income as of October 31,
1994 is $11,125,103 of equalization debits.
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 shares purchased until all organization expenses have been amortized.
-9-
<PAGE>

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 Portfolio has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and with Prudential Securities Incorporated (``PSI''), which
acts as distributor of the Class B and Class C shares of the Fund. The Portfolio
reimburses PMFD and compensates PSI for distributing and servicing the Fund's
Class A, Class B and Class C shares, pursuant to plans of distribution (the
``Class A, B and C Plans''). The distribution fees are 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, 1994. 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.
On July 19, 1994, shareholders of the Portfolio approved amendments to the
Class B distribution plan under which the Class B distribution plan became a
compensation plan, effective August 1, 1994. Prior thereto, the Class B
distribution plan was a reimbursement plan, under which PSI was reimbursed for
expenses actually incurred by it up to the amount permitted under the Class B
Plan. The Portfolio is not obligated to pay any prior or future excess
distribution costs (costs incurred by PSI in excess of distribution fees paid by
the Fund or contingent deferred sales charges received by PSI). The Portfolio
began offering Class C shares on August 1, 1994.
Pursuant to the Class B and C Plans, the Portfolio compensates PSI for
distribution-related activities at an annual rate of up to 1% of the average
daily net assets of both the Class B and C shares. Such expenses under the Class
B Plan were charged at an effective rate of .95 of 1% of the average daily net
assets of the Class B shares for the fiscal year ended October 31, 1994 and are
currently charged at a rate of .75 of 1% of the average daily net assets of the
Class B shares. Such expenses under the Class C Plan were charged at .75 of 1%
of the average daily net assets of the Class C shares for the fiscal year ended
October 31, 1994.
PMFD has advised the Portfolio that it has received approximately $15,000 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended October 31, 1994. From these fees, PMFD paid such sales charges to
dealers which in turn paid commissions to salespersons.
PSI has advised the Portfolio that for the fiscal year ended October 31,
1994, it received approximately $1,291,500 in contingent deferred sales charges
imposed upon certain redemptions by Class B shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.

Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS'') a
With Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the fiscal year ended October 31, 1994, the Portfolio incurred fees of
approximately $368,900 for the services of PMFS. As of October 31, 1994,
approximately $24,100 of such fees were due to PMFS. Transfer agent fees and
expenses in the Statement of Operations include certain out-of-pocket expenses
paid to non-affiliates.

Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments and options, for the fiscal
year ended October 31, 1994 aggregated $595,732,470 and $826,634,833,
respectively.
The United States federal income tax basis of the Fund's investments at
October 31, 1994 was substantially the same as for financial reporting purposes
and, accordingly, net unrealized appreciation of investments, for United States
federal income tax purposes was $1,711,817 (gross unrealized
appreciation--$3,837,980; gross unrealized depreciation--$2,126,163).
For federal income tax purposes, the Portfolio had a capital loss
carryforward as of October 31, 1994, of approximately $38,708,000 of which
$26,697,000 expires in 2001 and $12,011,000 expires in 2002. Accordingly, no
capital gains distributions are expected to be paid to shareholders until future
net gains have been realized in excess of such carryforward.
-10-
<PAGE>

Transactions in options written during the year ended October 31, 1994 were
as follows:

<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
--------- -----------
<S> <C> <C>
Options outstanding at
October 31, 1993................. 30,500 $ 230,275
Options written.................... 808,475 4,633,666
Options terminated in closing
purchase transactions............ (625,575) (3,723,804)
Options expired.................... (157,600) (593,882)
Options exercised.................. (55,800) (546,255)
--------- -----------
Options outstanding at
October 31, 1994................. -- --
--------- -----------
--------- -----------
</TABLE>

At October 31, 1994, 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
11/28/94........ $ 10,000,000 $ 10,014,548 $ 14,548
Canadian Dollars,
expiring
11/14/94........ 21,585,502 21,497,829 (87,673)
Deutschemarks,
expiring
11/7-11/30/94... 174,593,203 175,115,626 522,423
Italian Lira,
expiring
12/13/94........ 15,625,681 15,880,098 254,417
Japanese Yen,
expiring
11/7-11/18/94... 34,058,007 34,168,798 110,791
Spanish Pesetas,
expiring
12/22/94........ 13,495,279 13,617,258 121,979
Swedish Krona,
expiring
11/7/94......... 3,997,331 3,911,744 (85,587)
--------------- ------------ -----------
$ 273,355,003 $274,205,901 $ 850,898
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------ --------------- ------------ -----------
<S> <C> <C> <C>
Australian
Dollars,
expiring
11/28/94-
1/6/95.......... $ 40,376,270 $ 40,538,994 $ (162,724)
Canadian Dollars,
expiring
11/14/94........ 26,000,000 25,941,819 58,181

<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------ --------------- ------------ -----------
<S> <C> <C> <C>
Deutschemarks,
expiring
11/7-11/30/94... $ 176,275,718 $177,005,919 $ (730,201)
French Francs,
expiring
11/18/94........ 6,574,879 6,548,585 26,294
Italian Lira,
expiring
12/13/94........ 15,544,328 15,880,098 (335,770)
Japanese Yen,
expiring
11/7-11/14/94... 12,814,751 13,054,249 (239,498)
Spanish Pesetas,
expiring
12/22/94........ 17,889,590 18,160,408 (270,818)
Swedish Krona,
expiring
11/7/94......... 11,600,110 11,563,002 37,108
Swiss Francs,
expiring
11/14/94........ 15,173,823 15,406,189 (232,366)
--------------- ------------ -----------
$ 322,249,469 $324,099,263 $(1,849,794)
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>

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, 1994, the
Portfolio has a 0.98% undivided interest in the repurchase agreements in the
joint account. The undivided interest for the Portfolio represents $8,847,000 in
principal amount. As of such date, each repurchase agreement in the joint
account and the value of the collateral therefor were as follows:
Smith Barney, Inc., 4.80%, in the principal amount of $260,000,000,
repurchase price $260,034,667, due 11/1/94. The value of the collateral
including accrued interest is $265,200,122.
Nomura Securities International, Inc., 4.77%, in the principal amount of
$100,000,000, repurchase price $100,013,250, due 11/1/94. The value of the
collateral including accrued interest is $102,000,391.
Goldman, Sachs & Co., 4.75%, in the principal amount of $275,000,000,
repurchase price $275,036,285, due 11/1/94. The value of the collateral
including accrued interest is $280,500,611.
-11-
<PAGE>
CS First Boston Corp., 4.75%, in the principal amount of $265,000,000,
repurchase price $265,034,965, due 11/1/94. The value of the collateral
including accrued interest is $271,053,272.

Note 6. Capital The Portfolio currently offers
Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 3.0%. Class B shares are
sold with a contingent deferred sales charge which declines from 3% to zero
depending on the period of time the shares are held. Class C shares are sold
with a contingent deferred sales charge of 1% during the first year. Class B
shares will automatically convert to Class A shares on a quarterly basis
approximately five years after purchase commencing in or about February 1995.
The Fund has authorized 1.5 billion shares of common stock at $.001 par value
per share equally divided into Class A, B and C shares. Of the 25,452,079 shares
of common stock issued and outstanding at October 31, 1994, PMF owned 10,000
shares.
Transactions in shares of common stock for the fiscal years ended October 31,
1994 and 1993 were as follows:

<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ----------- -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares sold................... 551,897 $ 4,763,324
Shares issued in reinvestment
of
dividends and
distributions............... 194,713 1,743,925
Shares reacquired............. (3,776,033) (34,191,806)
----------- -------------
Net decrease in shares
outstanding................. (3,029,423 $ (27,684,557)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
<CAPTION>
Class B Shares Amount
- ------------------------------ ----------- -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares sold................... 710,218 $ 6,441,757
Shares issued in reinvestment
of
dividends and
distributions............... 1,001,413 8,959,370
Shares reacquired............. (20,015,210) (178,976,707)
----------- -------------
Net decrease in shares
outstanding................. (18,303,579) $(163,575,580)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
<CAPTION>
Class C
- ------------------------------
<S> <C> <C>
August 1, 1994* through
October 31, 1994:
Shares sold................... 23 $ 200
----------- -------------
Increase in shares
outstanding................. 23 $ 200
----------- -------------
----------- -------------
</TABLE>
- ---------------
* Commencement of offering of Class C shares.
-12-
<PAGE>

PRUDENTIAL SHORT-TERM GLOBAL INCOME FUND, INC.
SHORT-TERM GLOBAL INCOME PORTFOLIO
Financial Highlights

Class A Class B
Class C
----------------------------------------------
- ---------------------------------------------- ----------

August 1,

1994(D)

through
Year Ended October 31, Year Ended October 31,
October
----------------------------------------------
- ---------------------------------------------- 31,
1994 1993 1992 1991 1994 1993 1992
1991 1994
---------- -------- -------- -------- ---------- -------- --------
-------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE
OPERATING
PERFORMANCE:
Net asset value,
beginning of
period........ $ 9.29 $ 9.16 $ 9.97 $ 10.00 $ 9.29 $ 9.16 $ 9.97
$ 10.00 $ 8.61
---------- -------- -------- -------- ---------- -------- --------
-------- ------

Income from
investment
operations
Net investment
income........ .70 .97 .96 1.03 .62 .88 .88
.95 .14
Net realized and
unrealized
gain (loss) on
investment and
foreign
currency
transactions... (.86) (.26) (.95) (.02) (.86) (.26) (.95)
(.02) (.06)
---------- -------- -------- -------- ---------- -------- --------
-------- -----
Total from
investment
operations... (.16) .71 .01 1.01 (.24) .62 (.07)
.93 .08
---------- -------- -------- -------- ---------- -------- --------
-------- -----
Less
distributions
Dividends from
net investment
income........ -- (.58) (.82) (1.03) -- (.49) (.74)
(.95) --
Tax return of
capital
distributions... (.57) -- -- -- (.49) -- --
-- (.13)
Distributions
from net
capital
gains......... -- -- -- (.01) -- -- --
(.01) --
---------- -------- -------- -------- ---------- -------- --------
-------- -----
Total
distributions... (.57) (.58) (.82) (1.04) (.49) (.49) (.74)
(.96) (.13)
---------- -------- -------- -------- ---------- -------- --------
-------- -----
Net asset value,
end of
period........ $ 8.56 $ 9.29 $ 9.16 $ 9.97 $ 8.56 $ 9.29 $ 9.16
$ 9.97 $ 8.56
---------- -------- -------- -------- ---------- -------- --------
-------- -----
---------- -------- -------- -------- ---------- -------- --------
-------- -----

TOTAL
RETURN#:...... (1.89)% 7.96% (0.07)% 10.41% (2.62)% 7.00% (0.86)%
9.51% 0.75%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period
(000)......... $28,841 $59,458 $101,358 $105,148 $188,966 $375,013 $606,899
$669,086 $200@
Average net
assets
(000)......... $38,000 $70,347 $119,171 $51,830 $281,143 $474,175 $814,734
$349,607 $199@
Ratios to average net
assets:(D)(D)
Expenses,
including
distribution
fees........ 1.17% 1.02% 1.08% 1.01% 1.97% 1.87% 1.93%
1.87% .93%*
Expenses,
excluding
distribution
fees........ 1.02% .87% .93% .86% 1.02% .87% .93%
.87% .18%*
Net investment
income...... 7.67% 10.81% 9.93% 10.23% 6.82% 9.42% 9.05%
9.46% 7.02%*
Portfolio
turnover
rate.......... 232% 307% 180% 66% 232% 307% 180%
66% 232%
</TABLE>
- ---------------
* Annualized.
(D) Commencement of offering of Class C shares.
(D)(D) Because of the event referred to in (D) and the timing of such, the
ratios for the Class C shares are not necessarily comparable to that of
Class A or B shares and are not necessarily indicative of future ratios.
@ Figures are actual and not rounded to the nearest thousand.
# Total return does not consider the effects of sales loads. Total return
is calculated assuming a purchase of shares on the first day and a sale
on the last day of each period reported and includes reinvestment of
dividends and distributions. Total returns for periods of less than a
full year are not annualized.

See Notes to Financial Statements.
-13-

<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, 1994, 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 four 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, 1994 by correspondence with the custodian. 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, 1994, 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 LLP
New York, New York
December 16, 1994
-14-
<PAGE>
<PAGE>
Past performance is not predictive of future performance and an investor's
shares may be worth more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in Prudential Short-Term Global Income Fund, Inc.
Short-Term Global Income Portfolio (Class A, Class B and Class C) with a similar
investment in the J.P. Morgan Global Short-Term Index (GSTI) by portraying the
initial account values at the commencement of operations of each class and
subsequent account values at the end of each fiscal year (October 31) beginning
in 1990 for Class A and Class B shares and 1994 for Class C shares. For purposes
of the graphs and, unless otherwise indicated, the accompanying tables, it has
been assumed that (a) the current maximum sales charge was deducted from the
initial $10,000 investment in Class A shares; (b) the maximum applicable
contingent deferred sales charge was deducted from the value of the investment
in Class B shares and Class C shares, assuming full redemption on October 31,
1994; (c) all recurring fees (including management fees) were deducted; and (d)
all dividends and distributions were reinvested. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately five
years after purchase. This conversion feature is expected to be implemented on
or about February 1995 and is not reflected in the graph.
The GSTI is a weighted index of liquid, short-term government bonds of the
following countries: Belgium, Sweden, Germany, Australia, Canada, Denmark,
France, Italy, Japan, Netherlands, Spain, U.S. and U.K. The GSTI is an unmanaged
index and changes in market capitalization in the GSTI are revised monthly. The
GSTI does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund. The securities which comprise the
GSTI may differ substantially from the securities in the Fund's portfolio. The
GSTI is not the only index that may be used to characterize performance of
global income funds and other indices may portray different comparative
performance.
-15-
<PAGE>
Directors
Stephen C. Eyre
Delayne Dedrick Goldx
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. La Blanc
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead