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Prudential Short-Term Global Income Fund, Inc.
(Short-Term Global Income Portfolio)
(Global Assets Portfolio)
Supplement dated October 4, 1995
to Prospectus dated January 3, 1995
Proposed Reorganization
The Board of Directors of Prudential Short-Term Global Income Fund, Inc.
(the Fund) has recently approved a proposal to sell the assets and liabilities
of the Fund's Global Assets Portfolio for shares of the Fund's
Short-Intermediate Term Global Income Portfolio. Class A shares of the Global
Assets Portfolio would be exchanged at net asset value for Class A shares of
equivalent value of Short-Intermediate Term Global Income Portfolio.
The transaction has been approved by the Fund's Board of Directors and is
subject to approval by the shareholders of the Global Assets Portfolio. It is
anticipated that the proxy statement/prospectus relating to the proposed
transaction will be mailed to Global Assets Portfolio shareholders in
November 1995.
Under the terms of the proposal, shareholders of Global Assets Portfolio
would become shareholders of the Short-Intermediate Term Global Income
Portfolio. No sales charges would be imposed on the proposed transfer. The Fund
anticipates obtaining an opinion of counsel that no gain or loss for federal
income tax purposes would be recognized by shareholders of either portfolio as a
result of the proposed transaction.
Effective immediately, Global Assets Portfolio will no longer accept
purchase orders of its Class A shares, except for purchases by certain
Retirement and Employee Plans (excluding IRA accounts). Existing shareholders
may continue to acquire shares through dividend reinvestment. The current
exchange privilege of obtaining shares of other Prudential Mutual Funds and the
current redemption privilege for Global Assets Portfolio shareholders will
remain in effect. Notwithstanding the above exceptions, no shares may be
acquired by any means beginning four days prior to the date of closing of the
proposed reorganization.
Short-Term Global Income Portfolio
The Board of Directors has approved changes in certain investment policies
which are effective immediately. In connection with such changes the Portfolio
has changed its name from the Short-Term Global Income Portfolio to the
Short-Intermediate Term Global Income Portfolio. This name change reflects
the lengthening of the Portfolio's weighted average maturity from not more than
3 years, to more than 2, but less than 5 years. Other changes approved by the
Fund's Board of Directors are reflected below.
The following replaces the first paragraph under and supplements the
information in ``How the Fund Invests--Investment Objectives and Policies.''
The Short-Intermediate Term Global Income Portfolio's investment objective
is to maximize total return, the components of which are current income and
capital appreciation. The Portfolio seeks to achieve its objective by investing
primarily in a portfolio of investment grade debt securities having weighted
average maturities of more than 2, but less than 5 years, and a maximum maturity
for any individual security of 10 years. The Portfolio may also invest up to 15%
of its total assets in non-investment grade securities with a minimum rating of
B (as determined by the Standard & Poor's Ratings Group, Moody's Investors
Services, Inc. or by another nationally recognized statistical ratings
organization, or if unrated, deemed to be of equivalent quality by the
portfolio's investment adviser). Investment in non-investment grade securities
may entail additional risks to the Portfolio. <PAGE>
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See ``How the Fund Invests--Risk Factors--Medium and Lower-Rated Securities.''
There is no assurance that the Portfolio will achieve its investment objective.
The Short-Intermediate Term Global Income Portfolio will under normal
circumstances invest in a minimum of five different countries, and will invest
at least 30% of its total assets in securities denominated in U.S. Dollars and
in cash, and at least 50% of its total assets in securities denominated in the
U.S., Canadian, Australian or New Zealand Dollar. The Portfolio may invest 100%
of its assets in securities denominated in U.S. Dollars or in cash for
temporary, extraordinary or emergency purposes.
The following supplements ``How the Fund Invests--Other Investments and
Investment Techniques.''
Zero Coupon Securities
The Portfolio may invest up to 10% of its total assets in zero coupon
securities. Zero coupon securities are securities that are sold at a discount to
par value and on which interest payments are not made during the life of the
security. Upon maturity, the holder is entitled to receive the par value of the
security. While interest payments are not made on such securities, holders of
such securities are deemed to have received annually `phantom income.' The
Portfolio accrues income with respect to these securities prior to the receipt
of cash payments. Zero coupon securities may be subject to greater fluctuation
in value and lesser liquidity in the event of adverse market conditions than
comparable rated securities paying cash interest at regular intervals.
Convertible Securities
The Portfolio may invest up to 5% of its total assets in convertible
securities. A convertible security is generally a corporate bond (or preferred
stock) which may be converted at a stated price within a specified period of
time into a certain quantity of the common stock of the same or a different
issuer. Convertible securities are senior to common stocks in a corporation's
capital structure, but are usually subordinated to similar nonconvertible
securities. While providing a fixed income stream (generally higher in yield
than the income derivable from a common stock but lower than that afforded by a
similar nonconvertible security), a convertible security also affords an
investor the opportunity, through its conversion feature, to participate in the
capital appreciation dependent upon a market price advance in the convertible
security's underlying common stock. The Portfolio may from time to time hold
common stock received upon the conversion of a convertible security. The
Portfolio does not intend to retain the common stock in its portfolio and will
sell it as soon as reasonably practicable. Convertible securities also include
preferred stock which technically is an equity security.
In general, the market value of a convertible security is at least the
higher of its `investment value` (i.e., its value as a fixed-income security) or
its `conversion value` (i.e., its value upon conversion into its underlying
common stock). As a fixed-income security, a convertible security tends to
increase in market value when interest rates decline and tends to decrease in
value when interest rates rise. However, the price of a convertible security is
also influenced by the market value of the security's underlying stock. The
price of a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market value of the
underlying stock declines.
Securities of Other Investment Companies
The Portfolio may invest up to 5% of its total assets in shares of
closed-end investment companies or investment trusts. If the Portfolio does
invest in securities of other investment companies, shareholders of the
Portfolio may be subject to duplicate management and advisory fees.
MF144C-1
