The Global
Government Plus
Fund, Inc.
- -------------------------------------------------------------------
Semi-Annual Report
June 30, 1995
(R)The mark is a Registered trademark of The Prudential Insurance
Company of America.
<PAGE>
Letter to Shareholders
August 15, 1995
Dear Shareholder:
Global bonds produced generous returns in the first six months of 1995. The
global bond rally was led largely by the U.S. bond market where yields
declined sharply amid slower economic growth and diminished inflation fears.
For the six months ended June 30, 1995, we're pleased to report that The
Global Government Plus Fund, Inc. performed better than the average fund
in Lipper's Closed-End World Income Fund - Developed Nations category.
Your Fund has also performed better than its peer group over the one year
period ended June 30, 1995.
<TABLE>
TOTAL RETURNS BASED ON NET ASSET VALUE
As of June 30, 1995
<CAPTION>
6 Months One Year Since Inception
(7/31/87)
<S> <C> <C> <C>
The Global Government 15.6% 13.7% 78.9%
Plus Fund, Inc.1
Lipper Rank2 4/14 5/14 N/A
Lipper Closed-End
World Income Fund --
Developed Nations
Average3 9.3 10.4 N/A
</TABLE>
1. Source: Lipper Analytical Services, Inc. Total return of the Fund
represents the change in net asset value from the beginning of the respective
period through 6/30/95 and assumes the reinvestment of dividends and
distributions. Shares of the Fund are traded on the New York Stock Exchange.
Past performance is no guarantee of future results.
2. As determined by Lipper. It measures the Fund's net asset value
performance and ranking in the Closed-End World Income Fund - Developed
Nations category.
3. Source: Lipper. This is the average return of 14 funds in the Closed-End
World Income - Developed Nations category for the six months and one-year
ended June 30, 1995.
Stock Listing
The Global Government Plus Fund,
Inc.'s common stock is traded on
the New York Stock Exchange under
the symbol "GOV" and is frequently
listed as "GloblGvtFd" in the
financial sections of newspapers.
It is also listed in a closed-end
fund table every Monday in The Wall
Street Journal and every Saturday
in Barron's.
-1-
<PAGE>
<TABLE>
TOTAL RETURNS BASED ON MARKET PRICE
As of June 30, 1995
<CAPTION>
6 Months One Year
<S> <C> <C>
The Global Government
Plus Fund4 17.2% 14.0%
</TABLE>
4. Total investment return is calculated assuming a purchase of common
stock at the current market value on the first day and a sale at the
current market value on the last day of each period reported. Dividends
and distributions are assumed for purposes of this calculation to be
reinvested at prices obtained under the Fund's dividend reinvestment
plan. This calculation does not reflect brokerage commissions. Total
return for a period less than one full year is not annualized.
The Fund's Objective
The Global Government Plus Fund, Inc. seeks to maximize total return by
investing in a portfolio of longer-term government debt securities throughout
the world.
Our overall strategy is to emphasize country and currency allocations with
the most attractive combination of yield and total return potential, rather
than particular types of bonds. This "top-down" approach begins with a
fundamental review of the world's 18 to 20 largest bond markets. We review
factors such as economic trends, business and political changes and supply
and demand, then evaluate which countries' bonds offer the best value under
those conditions.
During the first half of 1995, the world bond markets turned in solid results
as global expectations shifted from strong growth to steady, non-inflationary
growth, sending interest rates lower. This shift was most pronounced in the
United States, which has led the world's recent bond recovery. In response,
we have shifted assets toward dollar bloc bonds after the recent historical
lows reached by the U.S. dollar, and moved away from low-yielding bonds in
Japan.
What Went Well
U.S. Bonds Rallied. Our large position in United States securities (37% as
of June 30, 1995) contributed to the Fund's positive performance. As U.S.
economic growth began to slow in 1995, 10-year U.S. Treasury yields fell to
6.2% from 7.2%, sending bond prices up 9.0% for the six months ended June
30 and 4.7% in the second quarter, as measured by the Lehman Brothers
Intermediate Government Bond Index.
Weak U.S. Dollar Improved Returns from Foreign-Currency Denominated Holdings
in First Quarter. In the first quarter, the weakness of the dollar relative
to the German mark and Japanese yen had a significant impact on your Fund's
returns from Europe and Japan. Returns from core European country bonds rose
an extra 10% to 12% when translated into U.S. dollars. Japanese bond
performance was even stronger. The yen's rise against the dollar from
December 30, 1994 to June 30, 1995 resulted in a total return of just
below 33%.
-2-
<PAGE>
Increased U.S. Dollar Exposure in Second Quarter. We sharply curtailed
the Fund's foreign currency exposure in the second quarter, from just over
60% to less than 20%, and raised U.S. dollar exposure. After reaching
historic lows early in the year, the dollar stabilized during the second
quarter, leading us to believe there was a greater risk of the dollar rising
than falling. Our shift to dollar-based securities would reduce currency
risk if the dollar did rise. In fact, the dollar has gained over 10%
vis-a-vis the Japanese yen over the past several months.
Reduced Japanese Exposure. We reduced our position in the Japanese market
from 20% as of March 31, 1995 to 7% of assets, locking in gains earned
earlier this year. The powerful rally in the Japanese market has left
little room for additional price gains and resulted in historically low
yields on those bonds. There are economic concerns, as well, and we
remain guarded about Japan's overall economic health and other unsettling
events, such as its banking crisis.
And Not So Well
Lack of Leveraging. Many of our peers in the Lipper category use leverage,
or borrow at short-term rates in an attempt to invest the proceeds in
longer-term, higher-yielding securities. This aggressive strategy worked
well in the second quarter as interest rates and short-term borrowing costs
declined. Your Fund does not leverage to generate extra returns, and thus
underperformed some of these funds in the second quarter. However, for
the six months, we outperformed many of our peers.
Looking Ahead
For the remainder of the year, the outlook for global bonds is positive,
yet cautious.
We expect world inflation to remain low, which should continue to support
bond prices and current yield levels. The prospect for additional price
gains will be more limited than the first half of the year. Clouding this
picture slightly is the uncertainty over the direction of the U.S. dollar.
By most measures, the dollar is significantly undervalued against other
leading currencies. Until the dollar rebounds fully, we will remain somewhat
neutral on currency exposure.
-3-
<PAGE>
Additionally, the Fund's Board of Directors has recently approved the
conversion of your Fund from a closed-end fund to an open-end fund. This
conversion is subject to shareholder approval. It is expected that a
shareholder meeting will be scheduled for the fourth quarter of 1995.
The proposal to open-end the Fund must be approved by a favorable vote
of at least 66 2/3 of the outstanding shares of the Fund's common stock.
As always, it is a pleasure to have you as a shareholder of The Global
Government Plus Fund, Inc. and to take the opportunity to report our
activities to you.
Sincerely,
J. Gabriel Irwin
Portfolio Manager
Simon Wells
Portfolio Manager
Richard A. Redeker
President
<PAGE>
- ----------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Portfolio of Investments
June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------
Principal US$
Amount Value
(000) Description (Note 1)
- --------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS(a)--89.7%
Australia--4.5%
Australian Government
Bond,
A$ 18,360 9.00%, 9/15/04........... $ 12,875,063
New South Wales Treasury
Corporation,
4,700 6.50%, 5/1/06............ 2,658,122
------------
15,533,185
------------
Canada--5.0%
British Columbia
Provincial Bond,
C$ 5,000 7.75%, 6/16/03........... 3,563,753
Canadian Government Bond,
17,900 9.00%, 12/1/04........... 13,889,838
------------
17,453,591
------------
Denmark--7.0%
Danish Government Bonds,
DKr 37,790 8.00%, 11/15/01.......... 6,890,407
42,600 8.00%, 5/15/03........... 7,653,880
57,790 7.00%, 12/15/04.......... 9,623,518
------------
24,167,805
------------
Germany--11.0%
German Government Bonds,
DM 9,470 6.125%, 3/26/98.......... 6,924,595
10,190 5.375%, 2/22/99.......... 7,270,683
21,410 6.75%, 4/22/03........... 15,253,078
4,500 7.375%, 1/3/05........... 3,321,351
8,950 6.25%, 1/4/24............ 5,461,181
------------
38,230,888
------------
Ireland--3.7%
Irish Government Bonds,
IEP 4,000 8.75%, 7/27/97........... 6,639,045
4,000 6.25%, 4/1/99............ 6,059,316
------------
12,698,361
------------
Italy--3.1%
Italian Government Bond,
Lira 19,940,000 8.50%, 8/1/99............ 10,767,420
------------
- --------------------------------------------------------
Principal US$
Amount Value
(000) Description (Note 1)
- --------------------------------------------------------
Japan--7.1%
Japanese Government
Bonds,
Y 780,000 6.60%, 6/20/01........... $ 11,311,103
1,000,000 4.60%, 9/20/04........... 13,450,024
------------
24,761,127
------------
Netherlands--3.0%
Dutch Government Bonds,
DG 2,200 7.50%, 6/15/99........... 1,490,821
10,000 7.00%, 6/15/05........... 6,454,568
3,600 7.50%, 1/15/23........... 2,304,834
------------
10,250,223
------------
New Zealand--0.8%
New Zealand Government
Bond,
NZ$ 4,000 10.00%, 7/15/97.......... 2,765,433
------------
Sweden--4.2%
Swedish Government Bonds,
SKr 31,900 11.00%, 1/21/99.......... 4,423,155
75,000 10.25%, 5/5/00........... 10,127,283
------------
14,550,438
------------
United Kingdom--7.3%
Guaranteed Export Finance
Corp.,
BP 2,000 7.25%, 12/15/98.......... 3,087,723
United Kingdom Treasury
Bond,
5,840 7.75%, 9/8/06............ 8,802,157
United Kingdom Treasury
Notes,
2,940 7.00%, 11/6/01........... 4,369,777
6,060 8.00%, 9/27/13........... 9,206,092
------------
25,465,749
------------
United States--33.0%
U.S. Government Bonds--30.3%
United States Treasury
Bond,
US$ 15,075 7.50%, 11/15/24.......... 16,679,131
United States Treasury
Notes,
7,750 6.00%, 11/30/97.......... 7,765,732
11,900 5.00%, 1/31/99........... 11,539,311
6,575 6.75%, 5/31/99........... 6,747,594
27,090 6.75%, 6/30/99........... 27,788,380
3,160 7.75%, 11/30/99.......... 3,370,330
10,550 7.75%, 1/31/00........... 11,272,042
7,750 5.50%, 4/15/00........... 7,599,805
10,800 7.875%, 11/15/04......... 12,028,500
------------
104,790,825
------------
</TABLE>
See Notes to Financial Statements.
--5--
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
<C> <S> <C>
Principal US$
Amount Value
(000) Description (Note 1)
- --------------------------------------------------------
Sovereign Bonds--2.7%
National Bank of Hungary,
US$ 2,000 7.95%, 11/1/03........... $ 1,722,000
Republic of Colombia,
2,000 8.75%, 10/6/99........... 2,086,252
Republic of Ecuador,
4,200 7.25%, 2/28/25........... 2,086,875
Republic of Poland,
Discount Bond,
4,650 7.125%, 10/27/24......... 3,563,062
------------
9,458,189
------------
Total long-term
investments
(cost
US$300,012,097)........ 310,893,234
------------
SHORT-TERM INVESTMENTS--9.4%
Mexico--0.1%
Mexican Tesobonos(b),
135 8.45%, 7/27/95........... 135,000
94 8.35%, 8/3/95............ 94,000
------------
229,000
------------
New Zealand--3.3%
New Zealand Government
Bond,
NZ$ 8,000 8.00%, 11/15/95.......... 5,326,060
New Zealand Time Deposit,
9,300 8.50%, 7/3/95............ 6,215,206
------------
11,541,266
------------
- --------------------------------------------------------
Principal US$
Amount Value
(000) Description (Note 1)
- --------------------------------------------------------
United States--6.0%
Joint Repurchase
Agreement Account,
US$ 20,876 6.12%, 7/3/95 (Note 5)... $ 20,876,000
------------
Total short-term
investments
(cost US$32,702,385)... 32,646,266
------------
Total Investments--99.1%
(cost $332,714,482; Note
3)..................... 343,539,500
Other assets in excess of
liabilities--0.9%...... 3,023,006
------------
Net Assets--100%......... $346,562,506
------------
------------
</TABLE>
- ---------------
Portfolio securities are classified according to the
security's currency denomination.
(a) Principal amount segregated as collateral for
forward currency contracts.
(b) Percentages quoted represent yields to maturity as
of purchase date.
See Notes to Financial Statements.
--6--
<PAGE>
- ----------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Statement of Assets and Liabilities
June 30, 1995
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost
$332,714,482)........................ $343,539,500
Foreign currency, at value (cost
$535,819)............................ 545,353
Cash................................... 474
Receivable for investments sold........ 6,961,721
Interest receivable.................... 5,582,768
Forward currency contracts--amount
receivable from counterparties....... 4,780,771
Deferred expenses and other assets..... 81,820
------------
Total assets....................... 361,492,407
------------
Liabilities
Payable for investments purchased...... 4,915,789
Dividend payable....................... 4,792,463
Forward currency contracts--amount
payable to counterparties............ 4,615,337
Management fee payable................. 233,002
Accrued expenses and other
liabilities.......................... 256,170
Withholding taxes payable.............. 117,140
------------
Total liabilities.................. 14,929,901
------------
Net Assets............................. $346,562,506
------------
------------
Net assets were comprised of:
Common stock, at par................. $ 526,425
Paid-in capital in excess of par..... 394,006,793
Cost of 7,000,000 shares held in
treasury........................... (50,685,700)
------------
343,847,518
Undistributed net investment
income............................. 11,190,841
Accumulated net realized losses on
investments........................ (19,487,178)
Net unrealized appreciation on
investments
and foreign currencies............. 11,011,325
------------
Net assets, June 30, 1995............ $346,562,506
------------
------------
Net asset value per share:
($346,562,506 / 45,642,508 shares of
common stock issued and
outstanding)....................... $7.59
------------
------------
</TABLE>
- ----------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Statement of Operations
Six Months Ended June 30, 1995
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Net Investment Income
Income
Interest and discount earned (net of
foreign
withholding tax of $49,856)......... $ 11,806,037
------------
Expenses
Management fee........................ 1,236,753
Custodian's fees and expenses......... 159,000
Reports to shareholders............... 109,000
Transfer agent's fees and expenses.... 62,000
Directors' fees....................... 40,000
Insurance............................. 35,000
Audit fees and expenses............... 30,000
Legal fees and expenses............... 7,000
Miscellaneous......................... 29,755
------------
Total expenses...................... 1,708,508
------------
Net investment income................. 10,097,529
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............... 20,491,317
Foreign currency transactions......... 1,934,686
Written option transactions........... (2,543,236)
------------
19,882,767
------------
Net change in unrealized
appreciation/depreciation on:
Investments........................... 15,816,714
Foreign currencies.................... 1,531,614
Written options....................... 115,131
------------
17,463,459
------------
Net gain on investments and foreign
currency transactions................. 37,346,226
------------
Net Increase In Net Assets
Resulting from Operations............... $ 47,443,755
------------
------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
--7--
<PAGE>
<PAGE>
- ----------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease)
in Net Assets
<S> <C> <C>
Six Months Year
Ended Ended
June 30, December 31,
1995 1994
------------ ------------
Operations:
Net investment income... $ 10,097,529 $ 20,595,065
Net realized gain (loss)
on investments and
foreign currency
transactions.......... 19,882,767 (36,867,119)
Net change in unrealized
appreciation/depreciation
on investments and
foreign currencies.... 17,463,459 (7,476,303)
------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 47,443,755 (23,748,357)
------------ ------------
Dividends and
distributions:
Dividends from net
investment income..... (9,584,546) (10,301,920)
Distributions from net
realized gains........ -- (4,634,400)
Tax return of capital
distribution.......... -- (10,394,847)
------------ ------------
Total dividends and
distributions........... (9,584,546) (25,331,167)
------------ ------------
Total increase
(decrease).............. 37,859,209 (49,079,524)
Net Assets
Beginning of period....... 308,703,297 357,782,821
------------ ------------
End of period............. $346,562,506 $308,703,297
------------ ------------
------------ ------------
</TABLE>
- ----------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Notes to Financial Statements
(Unaudited)
- ----------------------------------------------------------
The Global Government Plus Fund, Inc. (the ``Fund'') was organized in
Maryland on April 20, 1987, as a closed-end, non-diversified management
investment company. Investment operations commenced on July 31, 1987.
The Fund's investment objective is to maximize total return, the components
of which are current income and capital appreciation. The ability of issuers of
debt securities held by the Fund to meet their obligations may be affected by
economic and political developments in a specific country or region.
Note 1. Accounting The following is a summary of
Policies significant accounting policies
followed by the Fund in the preparation of its
financial statements.
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. 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, are valued at the mean between the
most recently quoted bid and asked prices provided 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. Forward currency
contracts are valued at the current cost of covering or offsetting the contract
on the day of valuation. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by
or
under the direction of the Board of Directors of the Fund.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
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.
To the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to ensure the
adequecy of
See Notes to Financial Statements.
--8--
<PAGE>
<PAGE>
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in United States dollars. Foreign currency amounts are translated into United
States dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at
the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at
the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term debt securities sold
during the period. Accordingly, realized foreign currency gains (losses) are
included in the reported net realized gains on security transactions.
Net realized gains on foreign currency transactions represent net foreign
exchange gains from sales and maturities of short-term securities and forward
currency contracts, disposition of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions, and
the difference between the amounts of interest, U.S. and foreign taxes recorded
on the Fund's books and the US dollar equivalent amounts actually received or
paid. Net currency gains (losses) from valuing foreign currency denominated
assets (excluding investments) and liabilities at period end exchange rates are
reflected as a component of net unrealized appreciation on investments and
foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political or economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
When the Fund purchases an option, it pays a premium and an amount equal to that
premium is recorded as an investment. When the Fund writes an option, it
receives a premium and an amount equal to that premium is recorded as a
liability. The investment or liability is adjusted daily to reflect the current
market value of the option. If an option expires unexercised, the Fund realizes
a gain or loss to the extent of the premium received or paid. If an option is
exercised, the premium received or paid is an adjustment to the proceeds from
the sale or the cost basis of the purchase in determining whether the Fund has
realized a gain or loss. The difference between the premium and the amount
received or paid on effecting a closing purchase or sale transaction is also
treated as a realized gain or loss. Gain or loss on purchased options is
included in net realized gain (loss) on investment transactions. Gain or loss
on
written options is presented separately as net realized gain (loss) on written
option transactions.
The Fund, as writer of an option, has no control over whether the underlying
securities or currencies may be sold (called) or purchased (put). As a result,
the Fund bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. The Fund, as purchaser of
an
option, bears the risk of the potential inability of the counterparties to meet
the terms of their contracts.
Security Transactions and Investment Income: Security transactions are recorded
on the trade date. Realized and unrealized gains and losses from security and
currency transactions are calculated on the identified cost basis. Interest
income which is comprised of three elements: stated coupon, original issue
discount and market discount, is recorded on the accrual basis.
--9--
<PAGE>
<PAGE>
Dividends and Distributions: Dividends are declared quarterly. Distributions of
long-term capital gains, if any, will be declared annually. Dividends and
distributions are recorded on the ex-dividend dates.
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 currencies and loss deferrals.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' 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 undistributed net investment income by
$10,677,858 and increase accumulated net realized losses on investments by
$10,677,858 for realized foreign currency gains during the six months ended June
30, 1995. Net investment income, net realized gains and net assets were not
affected by this change.
Taxes: It is the Fund's policy to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise 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 rates.
Note 2. Agreements The Fund has a management
Mutual Fund Management, agreement with Prudential
Inc. (``PMF''). Pursuant to this agreement PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with The Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PMF is computed weekly and payable monthly at the
annual rate of 0.75% of the Fund's average weekly net assets up to US $1 billion
and 0.70% of average weekly net assets in excess of US $1 billion.
PMF and PIC are indirect wholly-owned subsidiaries of The Prudential
Insurance Company of America (``Prudential'').
Note 3. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments and options written, for
the six months ended June 30, 1995 aggregated $451,466,216 and $433,042,354,
respectively.
At June 30, 1995, the Fund 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>
French Francs,
expiring
10/10/95........ $ 21,514,381 $ 21,428,463 $ (85,918)
German
Deutschemarks,
expiring
11/1/95......... 7,830,328 8,447,964 617,636
Ireland Punt,
expiring
9/11/95......... 3,559,767 3,499,657 (60,110)
Spanish Pesetas,
expiring
9/11/95-11/2/95... 53,448,340 57,199,787 3,751,447
--------------- ------------ --------------
$ 86,352,816 $ 90,575,871 $ 4,223,055
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------ --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring
7/27/95......... $ 5,786,547 $ 5,719,590 $ 66,957
British Pounds,
expiring
7/27/95......... 15,784,943 15,875,186 (90,243)
French Francs,
expiring
10/10/95-11/9/95... 20,970,991 21,254,408 (283,417)
German
Deutschemarks,
expiring
7/27/95-11/1/95... 60,006,838 59,929,962 76,876
Ireland Punt,
expiring
7/27/95-9/11/95... 9,810,955 9,761,277 49,678
Japanese Yen,
expiring
7/27/95......... 12,668,879 12,548,499 120,380
Spanish Pesetas,
expiring
9/11/95-11/2/95... 53,517,762 57,595,576 (4,077,814)
Swedish Krona,
expiring
7/27/95......... 4,770,312 4,740,484 29,828
Swiss Francs,
expiring
7/27/95......... 10,494,727 10,444,593 50,134
--------------- ------------ --------------
$ 193,811,954 $197,869,575 $ (4,057,621)
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
--10--
<PAGE>
Transactions in options written for the six months ended June 30, 1995 were
as follows:
<TABLE>
<CAPTION>
Number
of
Contracts Premiums
(000) Received
-------- ------------
<S> <C> <C>
Options outstanding at December
31, 1994...................... 48,147 $ 531,268
Options written................. 100,002 607,300
Options terminated in closing
purchase transactions......... (131,749) (883,499 )
Options exercised............... (16,400 ) (255,069 )
-------- ------------
Options outstanding at June 30,
1995.......................... 0 0
-------- ------------
-------- ------------
</TABLE>
The federal income tax basis of the Fund's investments at June 30, 1995 was
$334,224,500 and, accordingly, net unrealized appreciation for United States
federal income tax purposes was $9,315,000 (gross unrealized appreciation--
$10,977,561; gross unrealized depreciation--$1,662,561).
For federal income tax purposes, the Fund had a capital loss carryforward as
of December 31, 1994 of approximately $19,895,830 which will expire in 2002.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
The Fund has elected to treat approximately $2,362,300 of net capital losses
and approximately $6,843,600 of net currency losses incurred in the two month
period ended December 31, 1994 as having incurred in the current fiscal year.
Note 4. Joint The Fund, along with other
Repurchase affiliated registered invest-
Agreement ment companies, transfers
Account 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 June 30, 1995, the Fund has a 3.1% undivided interest in the joint
account. The undivided interest for the Fund represented $20,876,000 in the
principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefor was as follows:
Bear, Stearns & Co. Inc., 6.125% in the principal amount of $200,000,000,
repurchase price $200,102,083, due 7/3/95. The value of the collateral including
accrued interest was $204,321,562.
CS First Boston Corp., 6.13% in the principal amount of $160,000,000,
repurchase price $160,081,733, due 7/3/95. The value of the collateral including
accrued interest was $163,246,196.
Goldman, Sachs & Co., 6.10%, in the principal amount of $116,557,000,
repurchase price $116,616,250, due 7/3/95. The value of the collateral including
accrued interest was $118,889,059.
Smith Barney, Inc., 6.13%, in the principal amount of $200,000,000,
repurchase price $200,102,167, due 7/3/95. The value of the collateral including
accrued interest was $204,000,775.
Note 5. Capital There are 200 million shares
of $.01 par value common stock authorized. Of the
45,642,508 shares outstanding at June 30, 1995, Prudential owned 11,000 shares.
Note 6. Subsequent At a special meeting held on
Event August 15, 1995, The Board
of Directors of the Fund approved the conversion
of the Fund from a closed-end fund to an open-end fund subject to shareholder
approval. At a special meeting of the Board of Directors to be held in or about
September, Directors will be asked, among other things, to approve specific
changes to the Fund's Articles of incorporation and investment restrictions to
facilitate the conversion and to submit these changes and a proposal to convert
the Fund to an open-end fund for shareholder approval. These matters will be
considered at a special meeting of shareholders to be scheduled for the fourth
quarter of 1995. If shareholders approve the proposed conversion of the Fund to
an open-end fund, it is expected that a 2% redemption fee payable to the Fund
will be imposed on all redemptions of Fund shares during the first six months
following the conversion.
--11--
<PAGE>
<PAGE>
Note 7. Quarterly Data
<TABLE>
<CAPTION>
Net realized
and
unrealized
gains
(losses) on Net increase (decrease)
investments in net assets
Quarterly Net Investment and
foreign resulting from
period Total income
currencies operations
ended income Amount Per share Amount
Per share Amount Per share
<S> <C> <C> <C> <C>
<C> <C> <C>
- --------------- ---------- ------------------------
- -------------------------- --------------------------
March 31, 1993 $7,647,932 $6,639,056 $0.15 $14,834,350
$0.33 $21,473,406 $0.48
June 30, 1993 7,413,933 6,508,833 0.14 11,850,346
0.26 18,359,179 0.40
Sept. 30, 1993 7,289,441 6,284,989 0.14 1,423,613
0.03 7,708,602 0.17
Dec. 31, 1993 6,588,904 5,623,953 0.12 5,493,009
0.12 11,116,962 0.24
March 31, 1994 6,244,690 5,303,162 0.12 (18,489,710)
(0.41) (13,186,548) (0.29)
June 30, 1994 6,041,022 5,135,895 0.11 (10,804,079)
(0.23) (5,668,184) (0.12)
Sept. 30, 1994 5,910,445 4,885,074 0.11 (6,032,968)
(0.13) (1,147,894) (0.02)
Dec. 31, 1994 6,073,987 5,270,934 0.11 (9,016,665)
(0.20) (3,745,731) (0.09)
March 31, 1995 5,540,900 4,672,947 0.10 (4,296,139)
(.09) 376,808 .01
June 30, 1995 6,265,137 5,424,582 0.12 41,642,365
.91 47,066,947 1.03
<CAPTION>
Dividends
Quarterly and Share
period distributions price
ended Amount Per share High Low
<S> <C> <C> <C> <C>
- --------------- ------------------------- ------------
March 31, 1993 $7,302,526 $ 0.16 $7 3/4 $7
June 30, 1993 7,302,526 0.16 7 3/4 7 1/8
Sept. 30, 1993 7,302,526 0.16 7 7/8 7 3/8
Dec. 31, 1993 15,747,378 0.345 7 3/4 7
March 31, 1994 10,040,927 0.22 7 1/4 6 1/4
June 30, 1994 5,477,101 0.12 6 1/2 5 5/8
Sept. 30, 1994 5,020,675 0.11 6 1/4 5 3/4
Dec. 31, 1994 4,792,464 0.105 6 5 1/2
March 31, 1995 4,792,273 0.105 6 1/8 5 1/2
June 30, 1995 4,792,273 0.105 6 5/8 5 7/8
</TABLE>
--12--
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
THE GLOBAL GOVERNMENT PLUS FUND, INC.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended December 31,
June 30,
- ------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1995 1994
1993 1992 1991 1990
<S> <C> <C>
<C> <C> <C> <C>
----------- --------
-------- -------- -------- --------
Net asset value, beginning of period........... $ 6.76 $ 7.84
$ 7.38 $ 8.28 $ 8.25 $ 8.25
----------- --------
-------- -------- -------- --------
Net investment income.......................... .22 .45
.55 .67 .66 .59
Net realized and unrealized gain (loss) on
investments and foreign currencies........... .82 (.97)
.74 (.70) .09 .06
----------- --------
-------- -------- -------- --------
Total from investment operations............. 1.04 (.52)
1.29 (.03) .75 .65
----------- --------
-------- -------- -------- --------
Dividends from net investment income........... (.21) (.23)
(.23) (.67) (.66) (.59)
Distributions from net capital gains........... -- (.10)
(.54) (.20) -- --
Distributions in excess of net capital gains... -- --
(.06) -- -- --
Tax return of capital distributions............ -- (.23)
-- -- (.06) (.21)
----------- --------
-------- -------- -------- --------
Total dividends and distributions............ (.21) (.56)
(.83) (.87) (.72) (.80)
----------- --------
-------- -------- -------- --------
Increase resulting from Fund share
transactions................................. -- --
-- -- -- .15
----------- --------
-------- -------- -------- --------
Net asset value, end of period................. $ 7.59 $ 6.76
$ 7.84 $ 7.38 $ 8.28 $ 8.25
----------- --------
-------- -------- -------- --------
----------- --------
-------- -------- -------- --------
Per share market price, end of period.......... $ 6.375 $ 5.625
$ 7.00 $ 7.00 $ 7.75 $ 7.25
----------- --------
-------- -------- -------- --------
----------- --------
-------- -------- -------- --------
TOTAL INVESTMENT RETURN(a)..................... 17.21% (12.04)%
11.57% 1.25% 17.44% 8.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................ $ 346,563 $308,703
$357,783 $336,780 $377,911 $376,722
Average net assets (000)....................... $ 331,108 $331,421
$361,374 $364,037 $364,072 $382,943
Ratio of expenses to average net assets........ 1.04%(b) 1.11%
1.07% 1.15% 1.29% 1.47%
Ratio of net investment income to average net
assets....................................... 6.15%(b) 6.21%
6.93% 8.36% 8.30% 7.40%
Portfolio turnover rate........................ 145% 526%
441% 346% 267% 503%
</TABLE>
- ---------------
(a) Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market value on the last day of each period reported. Dividends and
distributions are assumed for purposes of this calculation to be
reinvested at prices obtained under the dividend reinvestment plan. This
calculation does not reflect brokerage commissions. Total investment
return for periods of less than one full year are not annualized.
(b) Annualized.
Contained above is selected data for a share of common stock outstanding,
total investment return, ratios to average net assets and other
supplemental data for the years indicated. This information has been
determined based upon information provided in the financial statements
and market price data for the Fund's shares.
See Notes to Financial Statements.
--13--
<PAGE>
OTHER INFORMATION
Dividend Reinvestment Plan. Shareholders may elect to have all distributions
of dividends and capital gains automatically reinvested in Fund shares (Shares)
pursuant to the Fund's Dividend Reinvestment Plan (the Plan). Shareholders who
do not participate in the Plan will receive all distributions in cash paid by
check in United States dollars mailed directly to the shareholders of record (or
if the shares are held in street or other nominee name, then to the nominee) by
the transfer agent, as dividend disbursing agent. Shareholders who wish to
participate in the Plan should contact the Fund at (800) 451-6788.
State Street Bank & Trust Co. (the Plan Agent) serves as agent for the
shareholders in administering the Plan. After the Fund declares a dividend or
determines to make a capital gains distribution, if (1) the market price is
lower than net asset value, the participants in the Plan will receive the
equivalent in Shares valued at the market price determined as of the time of
purchase (generally, following the payment date of the dividend or
distribution); or if (2) the market price of Shares on the payment date of the
dividend or distribution is equal to or exceeds their net asset value,
participants will be issued Shares at the higher of net asset value or 95% of
the market price. If net asset value exceeds the market price of Shares on the
payment date or the Fund declares a dividend or other distribution payable only
in cash, the Plan Agent will, as agent for the participants, receive the cash
payment and use it to buy Shares in the open market. If, before the Plan Agent
has completed its purchases, the market price exceeds the net asset value per
Share, the average per share purchase price paid by the Plan Agent may exceed
the net asset value per share, resulting in the acquisition of fewer shares than
if the dividend or distribution had been paid in shares issued by the Fund. The
Fund will not issue Shares under the Plan below net asset value.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage commissions
charged with respect to shares issued directly by the Fund. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and distributions. The automatic reinvestment of
dividends and distributions will not relieve participants of any federal income
tax that may be payable on such dividends or distributions.
The Fund reserves the right to amend or terminate the Plan upon 90 days'
written notice to shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Shares and cash for
fractional Shares.
All correspondence concerning the Plan should be directed to the Plan Agent,
State Street Bank & Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
--14--
<PAGE>
<PAGE>
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Shareholders of The Global Government Plus Fund, Inc.
(The ``Fund'') was held on Thursday, June 22, 1995 at the offices of Prudential
Securities Incorporated, One Seaport Plaza, New York, New York. The meeting was
held for the following purposes:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(1) To elect the following three directors to serve as follows:
Director Class Term Expiring
------------------ ------ -------- ---------
Edward D. Beach I 3 years 1998
Richard A. Redeker I 3 years 1998
Donald D. Lennox III 2 years 1997
Directors whose term of office continued beyond this meeting are Harry
A. Jacobs, Douglas H.
McCorkindale, Thomas T. Mooney and Louis A. Weill, III.
To ratify the selection of Price Waterhouse LLP as independent public
accountants for the
(2) year ending December 31, 1995.
(3) To transact such other business as may properly come before the meeting
or any adjournment
thereof.
</TABLE>
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Director/Auditor Votes for Votes against Votes withheld
Abstentions
------------------ ----------- -------------- ---------------
------------
<S> <C> <C> <C> <C>
<C> <C>
(1) Edward D. Beach 28,000,283 -- 6,858,107
--
Richard A. Redeker 28,000,383 -- 6,858,007
--
Donald D. Lennox 28,010,533 -- 6,847,857
--
(2) Price Waterhouse
LLP 32,286,670 1,252,231 --
1,319,489
(3) There was no other business voted upon at the Annual Meeting of
Shareholders.
</TABLE>
--15--
<PAGE>
Directors
Edward D. Beach
Harry A. Jacobs, Jr.
Donald D. Lennox
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Louis A. Weil, III
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant 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
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Dechert Price & Rhoads
1500 K Street., NW
Washington, D.C. 20005
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that the Fund may purchase, from
time to time, shares of its common stock in the open market.
The accompanying financial statements as of June 30, 1995 were
not audited and, accordingly, no opinion is expressed on them.
This report is for stockholder information. This is not a
prospectus intended for use in the purchase or sale of Fund
shares.
The Global Government Plus Fund, Inc.
One Seaport Plaza
New York, NY 10292
for information call toll free
(800) 451-6788
or collect (212) 214-5572
or for information
regarding net asset value
(212) 214-3332
378907109
