(ICON)
The Global
Government
Plus Fund,
Inc.
- ---------------------
(formerly The Global
Government Plus Fund,
Inc.)
SEMI
ANNUAL
REPORT
June 30, 1997
(LOGO)
<PAGE>
Prudential International Bond Fund, Inc.
Performance At A Glance.
Welcome to the first shareholder report for the
Prudential International Bond
Fund, formerly The Global Government Plus Fund.
Our new name more closely
identifies our investment strategy. For details,
please turn the page.
A strengthening U.S. dollar and rising U.S.
interest rates crimped returns of
investors in foreign bond markets during the six
months ended June 30. Still,
despite unfavorable market conditions, your
Prudential International Bond Fund
performed better than competing funds as measured
by Lipper Analytical
Services. That's because of our holdings in
emerging market debt and our
decision to limit our exposure to foreign
currencies.
Cumulative Total Returns1 As
of 6/30/97
<TABLE>
<CAPTION>
Six One
Five Since
Months Year
Years Inception2
<S> <C> <C>
<C> <C>
Class A 1.5% 10.3%
58.1% 140.8%
Class B 1.4 9.7
N/A 14.4
Class C 1.4 9.7
N/A 14.4
Class Z N/A N/A
N/A 2.7
Lipper Gen.
World Inc. Avg3 0.9 9.3
37.1 ***
</TABLE>
Average Annual Total Returns1
As of 6/30/97
<TABLE>
One Five
Since
Year Years
Inception2
<S> <C> <C>
<C>
Class A 5.8% 8.1%
8.8%
Class B 4.7 N/A
7.0
Class C 8.7 N/A
9.7
</TABLE>
Dividends & Yields As of
6/30/97
<TABLE>
<CAPTION>
<S> <C>
<C>
Total Dividends
30-Day
Paid for Six Mos.
SEC Yield
Class A $0.34
4.82%
Class B $0.32
4.43
Class C $0.32
4.41
Class Z $0.34
5.18
</TABLE>
Past performance is not indicative 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 the original cost.
Past performance numbers,
with the exception of one-year returns, do not
fully reflect the higher
operating expenses incurred since the Fund
commenced operations as an open-end
mutual fund on January 15, 1996. If these expenses
had been applied since the
Fund's inception, past performance returns would
have been lower. Prior to
January 15, 1996 the Fund operated as a closed-end
fund with shares being
traded on the New York Stock Exchange.
1Source: Prudential Investments Fund Management
and Lipper Analytical Services.
The cumulative total returns do not take into
account applicable sales charges.
The average annual total returns do take into
account applicable sales charges.
The Fund charges a maximum front end sales load of
4% for Class A shares. Class
B shares are subject to a declining contingent
deferred sales charge (CDSC) of
5%, 4%, 3%, 2%, 1% and 1% for six years. Class C
shares have a 1% CDSC for one
year. Class B shares will automatically convert to
Class A shares on a
quarterly basis, after approximately seven years.
Class Z shares are not
subject to sales charges or distribution fees.
Since Class Z shares have been
in existence less than a year no average annual
total returns are presented.
2Inception dates: 7/31/87 Class A; 1/15/96 Class B
and Class C; 3/17/97
Class Z.
3These are the cumulative total returns of 145
funds in the Lipper General
World Income Fund category for six months; 138
funds for one year, and 44
funds for five years.
*** Lipper Since Inception returns are: Class A,
112.9%; Class B and Class C,
12.1%; and Class Z, 3.2% for all funds in each
Lipper share class.
How Investments Compared.
(As of 6/30/97)
(CHART)
Source: Lipper Analytical Services. Financial
markets change, so a mutual
fund's past performance should never be used to
predict future results. The
risks to each of the investments listed above are
different -- we provide
12-month total returns for several Lipper mutual
fund categories to show you
that reaching for higher returns means tolerating
more risk. The greater the
risk, the larger the potential reward or loss. In
addition, we've included
historical 20-year average annual returns. These
returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal.
Investors have received higher
historical total returns from stocks than from
most other investments. Smaller
capitalization stocks offer greater potential for
long-term growth but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock
funds, which can help smooth
out their total returns year by year. But their
prices still fluctuate
(sometimes significantly) and their returns have
been historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds
issued by state governments,
state agencies and/or municipalities. This
investment provides income that
is usually exempt from federal and state income
taxes.
Money Market Funds attempt to preserve a constant
share value; they don't
fluctuate much in price but, historically, their
returns have been generally
among the lowest of the major investment
categories.
<PAGE>
Gabriel Irwin and Simon Wells, Fund Managers
(PHOTOS)
Portfolio
Managers' Report
Your Fund seeks to maximize total return, which is
current income plus any
capital appreciation of its underlying bonds. The
Fund invests primarily in
intermediate-term, investment grade debt
securities issued outside the U.S.
(Although up to 35% of total investments can be
invested in U.S. securities).
The Fund may also invest up to 15% of total
investments in bonds rated below
investment grade with a minimum rating of "B" by
Standard & Poor's or Moody's
or of comparable quality in our view. Lower-rated
securities carry a greater
risk of loss of principal and interest than higher
rated securities. There are
special risks associated with foreign investing,
including social, political
and currency risks and potential illiquidity.
There can be no assurance that
the Fund's investment objective will be achieved.
Our New Name.
We changed your Fund's name to Prudential
International Bond Fund, Inc. from
The Global Government Plus Fund, Inc., to better
identify our investment
strategy of investing primarily outside the U.S.
In addition, we've sped up
our dividend payments -- we now declare dividends
daily and pay these
dividends monthly. Finally, our investment
policies have been slightly altered
to permit us to hold up to 15% in below investment
grade bonds, an increase
from 10%.
Strategy Session.
- --------------------------------------------------
- -----------------------------
U. S. Rates Rise.
After posting double-digit returns in 1996, global
bonds faced more difficult
times in the first quarter of 1997 as the U.S.
economy expanded rapidly,
driving interest rates higher. When economic
growth is too strong, it can lead
to inflationary pressures that erode the value of
a bond's fixed interest and
principal payments. Fearing this, investors drove
world bond prices lower and
yields higher. Then, in March, the U.S. Federal
Reserve increased short-term
interest rates by a quarter percentage point to
5.5%.
After the Federal Reserve acted, U.S. economic
growth slowed, so investors bid
bond prices higher and the 30-year U.S. Treasury
bond yield tumbled back below
7%.
Through this period, we modestly adjusted
duration, a measure of your Fund's
sensitivity to interest rate changes. We shortened
duration when we expected
interest rates to rise, and lengthened as they
fell. We were careful not to
extend duration too much as summer began because
we expect interest rates to
edge higher later in the year.
Fewer Dollars.
We slightly trimmed the Fund's substantial holding
in dollar-bloc currencies
(United States, Australia, Canada and New Zealand)
to 54% of total net assets
as of June 30, 1997. Our outlook on the U.S.
dollar remains favorable, but we
believe the currency, which has soared in value,
will eventually come back to
a more realistic level.
Arrivederci Roma.
The expectation of currency union in Europe made
Italian bonds very attractive
last year, providing investors with a 27% return
in 1996 in local currency
terms, according to Salomon Brothers. Your Fund
held 5% of total investments
in Italian bonds at the beginning of 1997, but we
sold them because the risk
of losses outweighed the possibility for further
gains.
<PAGE>
What Went Well.
- --------------------------------------------------
- ---------
Hello, Sweden.
We used proceeds from the sale of Italian and
German bonds to buy Swedish
bonds, which appreciated amid lower-than-expected
inflation and falling
interest rates.
Currency Jitters.
Currency risk is an integral part of investing in
global bonds. Fortunately,
we avoided trouble in Europe and Asia by selling
Czech bonds and entering into
contracts to sell Indonesian rupiahs on a future
date in exchange for U.S.
dollars. Here's what happened:
- - Investors sold the Czech koruna in May, betting
that the government would be
forced to devalue the currency in an effort to
narrow the country's trade
deficit. As expected, the Czech National Bank
freed the koruna from certain
trading restrictions, thereby allowing the value
of currency to tumble.
Earlier in the year, we could see the koruna might
weaken so we sold our Czech
bonds.
- - As the reporting period was ending, sign of
instability in Southeast Asia
caused us to become wary of currencies there.
Shortly after, we entered into
forward contracts to sell Indonesian rupiahs.
Doing this removed the risk of
owning rupiahs from the Fund's Indonesian bonds.
Shifting the currency risk to
U.S. dollars proved to be a wise choice because a
sharp decline in the value of
the Thai baht in July triggered a region-wide
currency scare that spilled over
to many Southeast Asian currencies, including the
rupiah.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 6/30/97.
(CHART)
Five Largest
Holdings.
5.0% U.S. Treasury Note
9/30/00
4.3% Swedish Gov't Bond
2/09/05
3.6% U.S. Treasury Note
11/15/04
3.6% Canadian Gov't Bond
12/01/04
3.5% Spanish Gov't Bond
2/28/09
Expressed as a percentage of total investments as
of 6/30/97.
And Not So Well.
- --------------------------------------------------
- ---------
A Yen For Yen.
Over the past six months, your Fund did not hold
any Japanese government
bonds or currency. Official Japanese interest
rates have remained at
historically low levels, making the nation's
currency and bonds less
attractive to yield-hungry investors. Yet some
investors clung to the notion
during the second quarter that Japanese interest
rates would soon rise because
the economy had strengthened sufficiently to
withstand higher rates. As a
result, the Japanese yen gained against the U.S.
dollar in the spring. Our
performance would have been better had we held yen
at that time.
Looking Ahead.
- --------------------------------------------------
- ---------
After the reporting period, we adjusted our
holdings in Australia and New
Zealand because we were concerned about slower
economic growth in both
countries. Moderating growth typically leads to
lower interest rates that tend
to hurt a currency's value by decreasing returns
when that weaker currency is
sold for U.S. dollars. (In Australia, short-term
interest rates have already
slid beneath the level of comparable rates in the
United States.) So we entered
into contracts to sell Australian and New Zealand
dollars at a future date in
exchange for U.S. dollars. These transactions have
shifted into U.S. dollars
most of the currency risk on our Australian bonds
and all of the currency risk
on our New Zealand bonds. We are generally
cautious about bonds because we
expect global interest rates to edge higher later
in the year. However, the
vast world bond market still offers a variety of
attractive investment
opportunities.
1
<PAGE>
President's Letter
August 4, 1997
- --------------------------------------------------
- -----------------------------
(PHOTO)
Dear Shareholder:
With the midpoint of 1997 behind us, I'm pleased
to report that the recent
news from the financial markets has been decidedly
upbeat. The Dow Jones
Industrial Average has gained more than 20%
through the end of June, while
lower long-term interest rates have made bonds an
attractive investment.
This stands in contrast to April when the Dow fell
10% from a record high on
fears of higher interest rates and surging
inflation. Interest rates have since
fallen as the economy slowed and the Dow has
reached several new highs.
The market swings we've seen this year illustrate
the importance of "staying
the course" to your financial goal. We realize
that maintaining investment
discipline when faced with market uncertainty
isn't easy. Here are some
thoughts that may help:
- - Keep Your Expectations Realistic. The best
investors know that financial
markets rise and fall -- and so too, will the
value of their investments.
Over time, however, stocks have been shown to
produce very attractive returns
that were well ahead of inflation. And where
income is the primary goal,
bonds have also provided attractive returns.
- - Remember Your Time Horizon. If your investment
goals are long term (several
years or more), so should your time horizon.
During this period, it's not
unusual for stocks and bonds to experience
several periods of market
uncertainty.
- - We're On Your Side. Your Prudential Securities
Financial Advisor or Pruco
Securities Registered Representative can help
you understand what's happening
in the financial markets. They can assist you in
making informed decisions
based upon a thorough knowledge of your
financial needs and long-term goals.
Call him or her today.
Thank you for your continued confidence in
Prudential mutual funds. We'll do
everything we can to keep you informed and to earn
your trust.
Sincerely,
Brian M. Storms
President, Prudential Mutual Funds & Annuities
2
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ----------
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description US$ Value
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
LONG-TERM INVESTMENTS--86.1%
- --------------------------------------------------
- ----------
Australia--5.6%
AUD 3,700 New South Wales Treasury
Corporation,
6.50%, 5/1/06
$ 2,641,405
4,500 Queensland Treasury Corporation,
8.00%, 8/14/01
3,570,399
- ------------
6,211,804
- --------------------------------------------------
- ----------
Canada--8.1%
CAD 4,000 British Columbia Provincial
Bond,
7.75%, 6/16/03
3,147,845
2,300 Province of Quebec,
9.25%, 4/1/02
1,893,499
4,600(a) Canadian Government Bond,
9.00%, 12/1/04
3,901,209
- ------------
8,942,553
- --------------------------------------------------
- ----------
Denmark--6.3%
Danish Government Bonds,
DKK 12,000(a) 8.00%, 5/15/03
2,045,107
16,000 7.00%, 12/15/04
2,582,226
14,250(a) 8.00%, 3/15/06
2,415,451
- ------------
7,042,784
- --------------------------------------------------
- ----------
France--1.7%
FRF 10,000 National Bank of Hungary,
8.00%, 11/12/99
1,845,938
- --------------------------------------------------
- ----------
Germany--9.1%
German Government Bonds,
DEM 5,500 6.75%, 4/22/03
3,435,328
5,300(a) 7.375%, 1/3/05
3,406,295
2,500(a) 6.25%, 1/4/24
1,386,337
3,000 Republic of Colombia,
7.25%, 12/21/00
1,830,739
- ------------
10,058,699
Greece--2.4%
Hellenic Republic,
GRD 350,000 10.70%, 12/31/99
$ 1,305,228
370,000 12.60%, 12/31/03
1,391,951
- ------------
2,697,179
- --------------------------------------------------
- ----------
Netherlands--3.9%
Dutch Government Bonds,
NLG 5,700(a) 7.00%, 6/15/05
3,205,432
2,000(a) 7.50%, 1/15/23
1,165,519
- ------------
4,370,951
- --------------------------------------------------
- ----------
New Zealand--3.4%
NZD 1,750 Fannie Mae,
7.25%, 6/20/02
1,191,404
3,700 New Zealand Government Bond,
8.00%, 2/15/01
2,607,212
- ------------
3,798,616
- --------------------------------------------------
- ----------
Poland--0.3%
PLN 1,000 Government of Poland,
16.00%, 10/12/98
286,040
- --------------------------------------------------
- ----------
Spain--3.5%
ESP 500,000(a) Spanish Government Bond,
8.20%, 2/28/09
3,847,826
- --------------------------------------------------
- ----------
Sweden--4.2%
SEK 37,000 Swedish Government Bond,
6.00%, 2/9/05
4,679,380
- --------------------------------------------------
- ----------
United Kingdom--7.2%
650 Powergen PLC,
8.875%, 3/26/03
1,132,500
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ----------
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description US$ Value
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
United Kingdom (cont'd.)
GBP 200 Republic of Argentina,
11.50%, 8/14/01
$ 355,614
United Kingdom Treasury Bonds,
1,850 7.75%, 9/8/06
3,203,076
1,700(a) 8.75%, 8/25/17
3,297,703
- ------------
7,988,893
- --------------------------------------------------
- ----------
United States--30.4%
Corporate Bonds--5.9%
US$ 650 Banco Ganadero Colombian Bond
(Colombia),
9.75%, 8/26/99
683,150
2,000 Empresas La Moderna, SA
(Mexico),
11.375%, 1/25/99
2,110,000
1,900 Financiera Energetica Nacional
(Colombia),
9.00%, 11/8/99
1,969,350
500 Petroleas Mexicano (Mexico),
6.8125%, 3/8/99
500,000
750 Rio De Janeiro Municipality
(Brazil),
10.375%, 7/12/99
780,938
500 Romanian Commercial Bank
(Romania),
9.125%, 3/10/00
497,500
- ------------
6,540,938
- --------------------------------------------------
- ----------
Sovereign Bonds--10.2%
1,000 Ministry Of Russia,
10.00%, 6/26/07
997,500
500 Oman Sultanate (India),
7.125%, 3/20/02
501,250
1,000 Republic of Argentina,
6.75%, 3/31/05, Ser. L, FRN
911,800
1,740 Republic of Brazil,
6.50%, 1/1/01, IDU, FRN
1,716,075
1,000 Republic of Croatia,
6.50%, 7/31/06, FRN
948,124
Republic of Poland,
US$ 1,000 4.00%, 10/27/14
$ 856,250
3,500 6.9375%, 10/27/24, FRN
3,421,250
2,000 United Mexican States,
Zero Coupon (until 8/6/97),
7.875%, 8/6/01, FRN
2,003,800
- ------------
11,356,049
- ------------
- --------------------------------------------------
- ----------
Supranational Bonds--3.8%
4,100 Corporacion Andina de Formento,
7.375%, 7/21/00
4,157,400
- ------------
- --------------------------------------------------
- ----------
U.S. Government Obligations--10.5%
United States Treasury Notes,
2,250(a) 6.75%, 6/30/99
2,277,427
5,500(a) 6.125%, 9/30/00
5,475,910
3,600(a) 7.875%, 11/15/04
3,885,192
- ------------
11,638,529
- ------------
33,692,916
- ------------
Total long-term investments
(cost US$94,429,097)
95,463,579
- ------------
SHORT-TERM INVESTMENTS--12.2%
- --------------------------------------------------
- ----------
Hungary--0.7%
HUF 130,000 Hungarian Government Bond,
23.50%, 5/17/98
714,797
- --------------------------------------------------
- ----------
Indonesia--1.7%
IDR 1,000,000 Asia Pulp And Paper,
Zero Coupon, 1/27/98
378,159
1,000,000 Bakrie Brothers,
Zero Coupon, 2/19/98
369,480
2,000,000 Bank Negara Indonesia,
Zero Coupon, 12/7/97
775,375
1,000,000 Bank Tabungan Negara,
Zero Coupon, 11/7/97
393,513
- ------------
1,916,527
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ----------
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description US$ Value
(Note 1)
<C> <S>
<C>
- --------------------------------------------------
- ----------
Poland--1.5%
PLN 1,250 General Electric Capital
Corporation,
18.25%, 2/27/98
$ 372,233
750 ING Bank, Euro Commercial Paper,
21.50%, 8/4/97
227,603
Polish Treasury Bills,
1,000 Zero Coupon, 8/20/97
295,461
1,000 Zero Coupon, 10/8/97
287,187
2,000 Zero Coupon, 4/15/98
519,254
- ------------
1,701,738
- --------------------------------------------------
- ----------
Spain--1.5%
ESP 230,000 Republic of Argentina,
12.80%, 12/9/97
1,599,609
- --------------------------------------------------
- ----------
Repurchase Agreement--6.8%
US$ 7,521 Joint Repurchase Agreement
Account,
5.96%, 7/1/97 (Note 5)
7,521,000
- ------------
Total short-term investments
(cost US$14,015,541)
13,453,671
- ------------
- --------------------------------------------------
- ----------
Total Investments--98.3%
(cost $108,444,638; Note 4)
108,917,250
Other assets in excess of
liabilities--1.7%
1,932,962
- ------------
Net Assets--100%
$110,850,212
- ------------
- ------------
</TABLE>
- ---------------
Portfolio securities are classified according to
the security's currency
denomination.
(a) Principal amount segregated as collateral for
forward currency contracts.
FRN--Floating Rate Note.
IDU--Interest Due and Unpaid.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 5
<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- -----------------------------
<TABLE>
Assets
June 30, 1997
<S>
<C>
Investments, at value (cost
$108,444,638).....................................
.............................. $108,917,250
Foreign currency, at value (cost
$114).............................................
......................... 113
Interest
receivable........................................
.................................................
2,267,252
Forward curreny contracts - amount receivable from
counterparties....................................
....... 309,802
Receivable for Fund shares
sold..............................................
............................... 61,088
Other
assets............................................
..................................................
.. 4,571
- -------------
Total
assets............................................
.................................................
111,560,076
- -------------
Liabilities
Payable for Fund shares
reacquired........................................
..................................
339,833
Accrued expenses and other
liabilities.......................................
............................... 286,788
Management fee
payable...........................................
...........................................
69,224
Distribution fee
payable...........................................
.........................................
14,019
- -------------
Total
liabilities.......................................
.................................................
709,864
- -------------
Net
Assets............................................
..................................................
.... $110,850,212
- -------------
- -------------
Net assets were comprised of:
Common stock, at
par...............................................
...................................... $
149,548
Paid-in capital in excess of
par...............................................
.......................... 108,577,389
- -------------
108,726,937
Undistributed net investment
income............................................
.......................... 2,962,619
Accumulated net realized loss on
investments.......................................
...................... (1,586,512)
Net unrealized appreciation on investments and
foreign
currencies........................................
747,168
- -------------
Net assets, June 30,
1997..............................................
.....................................
$110,850,212
- -------------
- -------------
Class A:
Net asset value and redemption price per share
($110,368,742 / 14,889,865 shares of common
stock issued and
outstanding).............................
$7.41
Maximum sales charge (4% of offering
price)............................................
.................. .31
- -------------
Maximum offering price to
public............................................
............................. $7.72
- -------------
- -------------
Class B:
Net asset value, offering price and redemption
price per share
($412,562 / 55,600 shares of common stock
issued and
outstanding).....................................
$7.42
- -------------
- -------------
Class C:
Net asset value, offering price and redemption
price per share
($30,218 / 4,073 shares of common stock
issued and
outstanding)......................................
. $7.42
- -------------
- -------------
Class Z:
Net asset value, offering price and redemption
price per share
($38,690 / 5,216 shares of common stock
issued and
outstanding)......................................
. $7.42
- -------------
- -------------
</TABLE>
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 6
<PAGE>
PRUDENTIAL INTERNATIONAL BOND FUND, INC.
Statement of Operations (Unaudited)
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income
June 30, 1997
<S>
<C>
Income
Interest and discount earned (net of
foreign withholding taxes of $53,523)...
$ 4,774,746
-
- ------------
Expenses
Management fee.............................
437,612
Distribution fee--Class A..................
87,349
Distribution fee--Class B..................
772
Distribution fee--Class C..................
74
Transfer agent's fees and expenses.........
135,000
Custodian's fees and expenses..............
111,000
Reports to shareholders....................
97,000
Registration fees..........................
37,000
Audit fees and expenses....................
18,000
Directors' fees............................
13,500
Legal fees and expenses....................
12,000
Miscellaneous..............................
24,452
-
- ------------
Total expenses..........................
973,759
-
- ------------
Net investment income.........................
3,800,987
-
- ------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions....................
1,648,267
Foreign currency transactions..............
3,174,444
-
- ------------
4,822,711
-
- ------------
Net change in unrealized appreciation on:
Investments................................
(6,881,082)
Foreign currencies.........................
136,828
-
- ------------
(6,744,254)
-
- ------------
Net loss on investments and foreign
currencies.................................
(1,921,543)
-
- ------------
Net Increase in Net Assets
Resulting from Operations.....................
$ 1,879,444
-
- ------------
-
- ------------
</TABLE>
PRUDENTIAL INTERNATIONAL BOND FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- --------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended
Increase (Decrease) June 30,
December 31,
in Net Assets 1997
1996
<S> <C>
<C>
Operations
Net investment income....... $ 3,800,987
$ 11,655,072
Net realized gain on
investment and foreign
currency transactions.... 4,822,711
17,611,229
Net change in unrealized
appreciation on
investments and foreign
currencies............... (6,744,254)
(9,292,986)
-------------
- -----------------
Net increase in net assets
resulting from
operations............... 1,879,444
19,973,315
-------------
- -----------------
Dividends and distributions
(Note 1)
Dividends from net
investment income
Class A.................. (3,782,746)
(14,407,707)
Class B.................. (8,306)
(1,274)
Class C.................. (607)
(459)
Class Z.................. (582)
- --
-------------
- -----------------
(3,792,241)
(14,409,440)
-------------
- -----------------
Distributions in excess of
net investment income
Class A.................. (1,460,235)
(6,550,634)
Class B.................. (2,713)
(4,741)
Class C.................. (121)
(747)
Class Z.................. (3)
- --
-------------
- -----------------
(1,463,072)
(6,556,122)
-------------
- -----------------
Fund share transactions (Note
6)
Net proceeds from shares
sold..................... 804,367
25,036,772
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 1,114,665
3,183,726
Cost of shares reacquired... (13,416,956)
(251,843,155)(a)
-------------
- -----------------
Net decrease in net assets
from Fund share
transactions............. (11,497,924)
(223,622,657)
-------------
- -----------------
Total decrease................. (14,873,793)
(224,614,904)
Net Assets
Beginning of period............ 125,724,005
350,338,909
-------------
- -----------------
End of period.................. $ 110,850,212
$ 125,724,005
-------------
- -----------------
-------------
- -----------------
</TABLE>
- ---------------
(a) Net of $4,291,995 redemption fee retained by
the the Fund.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 7
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
Prudential International Bond Fund, Inc., formerly
known as The Global
Government Plus Fund, Inc. (the Fund), is an open-
end, non-diversified,
management investment company whose investment
objective is to seek total
return, the components of which are current income
and capital appreciation. The
Fund invests primarily in debt securities of
issuers located in at least three
countries, excluding the United States (except in
periods of weakness). The Fund
invests in foreign debt securities issued by
foreign corporate issuers as well
as securities issued or guaranteed by foreign
governments, semi-governmental
entities, governmental agencies, supernational
entities and other governmental
entities. The bonds are primarily of investment
grade, i.e., bonds rated within
the four highest quality grades as determined by
Moody's Investor's Service or
Standard & Poor's Rating's Group, or in unrated
securities of equivalent
quality. In addition, the Fund is permitted to
invest up to 15% of the Fund's
total assets in bonds rated below investment grade
with a minimum rating of B,
or in unrated securities of equivalent quality.
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 Policies
The following is a summary of 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
adequacy of 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 fiscal
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 fiscal period. Accordingly, realized
foreign currency gains (losses)
are included in the reported net realized gains on
investment 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
fiscal period end exchange
rates are reflected as a component of net
unrealized appreciation on investments
and foreign currencies.
- --------------------------------------------------
- ------------------------------
8
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
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.
Security Transactions and Net 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. Expenses
are recorded on the accrual basis which may
require the use of certain estimates
by management.
Dividends and Distributions: Dividends are
declared quarterly. Distributions of
long-term capital gains, if any, will be declared
at least annually. 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 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 and increase
accumulated net realized loss on investments by
$2,945,418 for foreign currency
gains realized and recognized during the six
months ended June 30, 1997. 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 rules and rates.
- --------------------------------------------------
- ----------
Note 2. Agreements
The Fund has a management agreement with
Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement PIFM has
responsibility for all
investment advisory services and supervises the
subadviser's performance of such
services. PIFM 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. PIFM
pays for the cost of the
subadviser's services, 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 PIFM is computed daily and
payable monthly at an annual
rate of .75 of 1% of the Fund's average daily net
assets.
The Fund has a distribution agreement with
Prudential Securities Incorporated
('PSI'), which acts as distributor of the Class A,
Class B, Class C and Class Z
shares of the Fund. The Fund compensates PSI for
distributing and servicing the
Fund's Class A, Class B, and Class C shares,
pursuant to a plan of distribution,
(the 'Class A, B and C Plan') regardless of
expenses actually incurred by them.
The distribution fees are accrued daily and
payable monthly. No distribution or
service fees are paid to PSI as distributor of the
Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund
compensates PSI for
distribution-related activities at an annual rate
of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B,
and C shares respectively.
Such expenses under the Plans were .15 of 1%, .75
of 1% and .75 of 1% of the
average daily net assets of the Class A, B and C
shares, respectively, for the
six months ended June 30, 1997.
PSI has advised the Fund that it has received
approximately $5,400 in front-end
sales charges resulting from sales of Class A
shares during the six months ended
June 30, 1997. From these fees, PSI paid such
sales
- --------------------------------------------------
- ------------------------------
9
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
charges to Pruco Securities Corporation, an
affiliated broker-dealer, which in
turn paid commissions to sales-persons and
incurred other distribution costs.
PSI, PIFM, and PIC are indirect, wholly-owned
subsidiaries of The Prudential
Insurance Company of America.
The Fund, along with other affiliated registered
investment companies (the
'Funds'), entered into a credit agreement (the
'Agreement') on December 31, 1996
with an unaffiliated lender. The maximum
commitment under the Agreement is
$200,000,000. The Agreement expires on December
30, 1997. Interest on any such
borrowings outstanding will be at market rates.
The purpose of the Agreement is
to serve as an alternative source of funding for
capital share redemptions. The
Fund has not borrowed any amounts pursuant to the
Agreement as of June 30, 1997.
The Funds pay a commitment fee at an annual rate
of .055 of 1% on the unused
portion of the credit facility. The commitment fee
is accrued and paid quarterly
on a pro-rata basis by the Funds.
- --------------------------------------------------
- ----------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a
wholly-owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the
six months ended June 30, 1997
the Fund incurred fees of approximately $107,000
for the services of PMFS. As of
June 30, 1997 approximately $18,000 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 Securities
Purchases and sales of investment securities,
other than short-term investments,
for the six months ended June 30, 1997 aggregated
$31,356,846 and $42,593,362,
respectively.
At June 30, 1997, the Fund had outstanding forward
currency contracts to sell
foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value
Appreciation
- ------------------- --------------- -----------
- ---------------
<S> <C> <C>
<C>
Australian Dollars,
expiring
7/30/97.......... $ 2,392,575 $ 2,379,166
$ 13,409
French Francs,
expiring
7/30/97.......... 5,171,515 5,120,845
50,670
Netherlands
Guilders,
expiring
7/30/97.......... 13,817,518 13,690,013
127,505
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value
Appreciation
- ------------------- --------------- -----------
- ---------------
<S> <C> <C>
<C>
New Zealand Dollar,
expiring
7/30/97.......... $ 2,784,254 $ 2,746,082
$ 38,172
Spanish Pesatas,
expiring
7/30/97.......... 585,808 578,390
7,418
Swiss Francs,
expiring
7/30/97.......... 6,106,071 6,033,443
72,628
--------------- -----------
- ---------------
$30,857,741 $30,547,939
$ 309,802
--------------- -----------
- ---------------
--------------- -----------
- ---------------
</TABLE>
The United States federal income tax basis of the
Fund's investments at June 30,
1997 was $108,457,240 and, accordingly, net
unrealized appreciation for United
States federal income tax purposes was $460,010
(gross unrealized
appreciation--$3,361,049; gross unrealized
depreciation--$2,901,039).
For federal income tax purposes, the Fund had a
capital loss carryforward as of
December 31, 1996 of approximately $3,166,900
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.
- --------------------------------------------------
- ----------
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered
investment companies, transfers
uninvested cash balances into a single joint
account, the daily aggregate
balance of which is invested in one or more
repurchase agreements collateralized
by U.S. Treasury or federal agency obligations. As
of June 30, 1997, the Fund
had a 1.10% undivided interest in the joint
account. The undivided interest for
the Fund represented $7,521,000 in the principal
amount. As of such date, each
repurchase agreement in the joint account and the
collateral therefor were as
follows:
Dean Witter Reynolds, Inc., 5.90%, in the
principal amount of $100,000,000,
repurchase price $100,016,389, due 7/1/97. The
value of the collateral including
accrued interest was $102,000,893.
Deutsche Bank Securities Corp., 5.95%, in the
principal amount of $184,000,000,
repurchase price $184,030,411, due 7/1/97. The
value of the collateral including
accrued interest was $187,680,112.
J.P. Morgan Securities, Inc., 6.00%, in the
principal amount of $170,000,000,
repurchase price $170,028,333, due 7/1/97. The
value of the collateral including
accrued interest was $173,400,988.
- --------------------------------------------------
- ------------------------------
10
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
SBC Warburg, Ltd., 5.95%, in the principal amount
of $227,000,000, repurchase
price $227,037,518, due 7/1/97. The value of the
collateral including accrued
interest was $232,448,194.
- --------------------------------------------------
- ----------
Note 6. Capital
The Fund offers Class A, Class B, Class C and
Class Z shares. Class A shares are
sold with a front-end sales charge of up to 4%.
Class B shares are sold with a
contingent deferred sales charge which declines
from 5% 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 automatically
convert to Class A shares on a quarterly basis
approximately seven years after
purchase. A special exchange privilege is also
available for shareholders who
qualified to purchase Class A shares at net asset
value. Effective March 17,
1997, the Fund commenced offering Class Z shares.
Class Z shares are not subject
to any sales or redemption charge and are offered
exclusively for sale to a
limited group of investors.
There are 2 billion shares of common stock, $.01
par value per share, authorized
divided into four classes, designated Class A,
Class B, Class C and Class Z
common stock, consisting of 500 million shares of
each class. As of June 30,
1997 Prudential owned 11,000 Class A shares.
Transactions in shares of common stock were as
follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- --------------------------------- -----------
- -------------
<S> <C>
<C>
Six months ended June 30, 1997:
Shares sold...................... 54,175
$ 408,197
Shares issued in reinvestment of
dividends and distributions.... 149,919
1,105,156
Shares reacquired................ (1,782,231)
(13,412,036)
-----------
- -------------
Net decrease in shares
outstanding.................... (1,578,137)
$ (11,898,683)
-----------
- -------------
-----------
- -------------
January 15, 1996(b) through
December 31, 1996:
Shares sold...................... 3,220,486
$ 24,951,678
Shares issued in reinvestment of
dividends and distributions.... 414,016
3,178,814
Shares reacquired................ (32,809,008)
(251,843,149)(a)
-----------
- -------------
Net decrease in shares
outstanding.................... (29,174,506)
$(223,712,657)
-----------
- -------------
-----------
- -------------
<CAPTION>
Class B Shares
Amount
- --------------------------------- -----------
- -------------
<S> <C>
<C>
Six months ended June 30, 1997:
Shares sold...................... 44,963
$ 337,794
Shares issued in reinvestment of
dividends and distributions.... 1,153
8,516
Shares reacquired................ (298)
(2,191)
-----------
- -------------
Net increase in shares
outstanding.................... 45,818
$ 344,119
-----------
- -------------
-----------
- -------------
January 15, 1996(b) through
December 31, 1996:
Shares sold...................... 9,299
$ 73,644
Shares issued in reinvestment of
dividends and distributions.... 484
3,719
Shares reacquired................ (1)
(6)
-----------
- -------------
Net increase in shares
outstanding.................... 9,782
$ 77,357
-----------
- -------------
-----------
- -------------
<CAPTION>
Class C
- ---------------------------------
<S> <C>
<C>
Six months ended June 30, 1997:
Shares sold...................... 2,725
$ 20,002
Shares issued in reinvestment of
dividends and distributions.... 56
413
Shares reacquired................ (360)
(2,729)
-----------
- -------------
Net increase in shares
outstanding.................... 2,421
$ 17,686
-----------
- -------------
-----------
- -------------
January 15, 1996 through
December 31, 1996:
Shares sold...................... 1,497
$ 11,450
Shares issued in reinvestment of
dividends and distributions.... 155
1,193
-----------
- -------------
Net increase in shares
outstanding.................... 1,652
$ 12,643
-----------
- -------------
-----------
- -------------
<CAPTION>
Class Z
- ---------------------------------
<S> <C>
<C>
March 17, 1997(c) through June
30, 1997:
Shares sold...................... 5,138
$ 38,374
Shares issued in reinvestment of
dividends and distributions.... 78
580
-----------
- -------------
Net increase in shares
outstanding.................... 5,216
$ 38,954
-----------
- -------------
-----------
- -------------
</TABLE>
- ---------------
(a) Net of $4,291,995 redemption fee retained by
the Fund.
(b) Commencement of offering of Class A and B
shares.
(c) Commencement of offering of Class Z shares.
- --------------------------------------------------
- ----------
Note 7. Subsequent Event
Effective August 8, 1997 the Fund changed its
dividend policy from declaring
dividends of net investment income at least
quarterly to declaring such
dividends daily and paying those dividends
monthly.
- --------------------------------------------------
- ------------------------------
11
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class A(b)
- -------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ----------------------------------
1997(d) 1996 1995 1994
<S>
<C> <C> <C> <C>
- ---------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.........................................
$ 7.63 $ 7.68 $ 6.76 $ 7.84
- ---------- -------- -------- --------
Income from investment operations:
Net investment
income............................................
............ .24 .56
.48 .45
Net realized and unrealized gain (loss) on
investments and foreign
currencies........................................
........................ (.12)
.28 1.13 (.97)
- ---------- -------- -------- --------
Total from investment
operations........................................
.. .12 .84 1.61
(.52)
- ---------- -------- -------- --------
Less distributions:
Dividends from net investment
income.........................................
(.25) (.67) (.48) (.23)
Distributions from net realized capital
gains................................ --
- -- -- (.10)
Distributions in excess of net investment
income............................. (.09)
(.40) (.21) --
Distributions in excess of net capital
gains................................. --
- -- -- --
Tax return of capital
distributions.....................................
..... -- -- --
(.23)
- ---------- -------- -------- --------
Total dividends and
distributions.....................................
.... (.34) (1.07) (.69)
(.56)
- ---------- -------- -------- --------
Redemption fee retained by
Fund(d)...........................................
- -- .18 -- --
- ---------- -------- -------- --------
Net asset value, end of
period............................................
... $ 7.41 $ 7.63 $ 7.68 $
6.76
- ---------- -------- -------- --------
- ---------- -------- -------- --------
Per share market price, end of
period........................................
N/A N/A $ 7.375 $ 5.625
- -------- --------
- -------- --------
TOTAL INVESTMENT RETURN BASED ON(a):
Market
price.............................................
................. N/A N/A
44.39% (12.04)%
Net asset
value.............................................
.............. 1.54% 14.02%
25.14% (5.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................................
. $110,369 $125,637 $350,339
$308,703
Average net assets
(000).............................................
........ $117,430 $180,588 $342,741
$331,421
Ratios to average net assets:
Expenses, including distribution
fees.....................................
1.67%(e) 1.48%(c) 1.05% 1.11%
Expenses, excluding distribution
fees.....................................
1.52%(e) 1.34%(c) 1.05% 1.11%
Net investment
income............................................
......... 6.52%(e) 6.45%(c) 6.37%
6.21%
Portfolio turnover
rate..............................................
........ 30% 38% 203%
526%
<CAPTION>
1993 1992
<S>
<C> <C>
- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................................... $
7.38 $ 8.28
- -------- --------
Income from investment operations:
Net investment
income............................................
............ .55 .67
Net realized and unrealized gain (loss) on
investments and foreign
currencies........................................
........................ .74 (.70)
- -------- --------
Total from investment
operations........................................
.. 1.29 (.03)
- -------- --------
Less distributions:
Dividends from net investment
income.........................................
(.23) (.67)
Distributions from net realized capital
gains................................ (.54)
(.20)
Distributions in excess of net investment
income............................. --
- --
Distributions in excess of net capital
gains................................. (.06)
- --
Tax return of capital
distributions.....................................
..... -- --
- -------- --------
Total dividends and
distributions.....................................
.... (.83) (.87)
- -------- --------
Redemption fee retained by
Fund(d)...........................................
- -- --
- -------- --------
Net asset value, end of
period............................................
... $ 7.84 $ 7.38
- -------- --------
- -------- --------
Per share market price, end of
period........................................ $
7.00 $ 7.00
- -------- --------
- -------- --------
TOTAL INVESTMENT RETURN BASED ON(a):
Market
price.............................................
................. 11.57% 1.25%
Net asset
value.............................................
.............. 18.38% (0.08)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................................
. $357,783 $336,780
Average net assets
(000).............................................
........ $361,374 $364,037
Ratios to average net assets:
Expenses, including distribution
fees.....................................
1.07% 1.15%
Expenses, excluding distribution
fees.....................................
1.07% 1.15%
Net investment
income............................................
......... 6.93% 8.36%
Portfolio turnover
rate..............................................
........ 441% 346%
</TABLE>
- ---------------
(a) Total investment return based on net asset
value is calculated assuming a
purchase of common stock at the current net
asset value on the first day and
a sale at the current net asset value on the
last day of each period
reported. Total investment return does not
consider the effect of sales
load. Prior to January 15, 1996 the Fund
operated as a closed-end investment
company and total investment return was
calculated based on market value
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 returns for periods of less
than one full year are not
annualized.
(b) Prior to January 15, 1996 the Fund operated as
a closed-end, non-diversified
management investment company.
(c) Because of the event referred to in (b) and
the timing of such, the ratios
for the Class A shares are not necessarily
comparable to those of prior
periods.
(d) Calculated based upon weighted average shares
outstanding during the period.
(e) Annualized
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 12
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL
INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------
- ------------------------------
<TABLE>
<CAPTION>
Class B Class C
- --------------------------- ----------
January 15,
Six Months 1996(c) Six Months
Ended Through Ended
June 30, December 31, June 30,
1997(d) 1996 1997(d)
<S>
<C> <C> <C>
- ---------- ------------ ----------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.........................................
$ 7.64 $ 7.72 $ 7.64
- ---------- ------------ ----------
Income from investment operations:
Net investment
income............................................
............ .21 .52
.21
Net realized and unrealized gain (loss) on
investments and foreign
currencies........................................
........................ (.11)
.25 (.11)
- ---------- ------------ ----------
Total from investment
operations........................................
.. .10 .77 .10
- ---------- ------------ ----------
Less distributions:
Dividends from net investment
income.........................................
(.23) (.63) (.23)
Distributions in excess of net investment
income............................. (.09)
(.40) (.09)
- ---------- ------------ ----------
Total dividends and
distributions.....................................
.... (.32) (1.03) (.32)
- ---------- ------------ ----------
Redemption fee retained by
Fund(d)...........................................
- -- .18 --
- ---------- ------------ ----------
Net asset value, end of
period............................................
... $ 7.42 $ 7.64 $ 7.42
- ---------- ------------ ----------
- ---------- ------------ ----------
TOTAL INVESTMENT
RETURN(a).........................................
.......... 1.38% 12.86%
1.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................................
. $ 413 $75 $ 30
Average net assets
(000).............................................
........ $ 208 $23 $
20
Ratios to average net assets:(b)
Expenses, including distribution
fees.....................................
2.27% 2.09% 2.27%
Expenses, excluding distribution
fees.....................................
1.52% 1.34% 1.52%
Net investment
income............................................
......... 5.92% 5.85%
5.92%
Portfolio turnover
rate..............................................
........ 30% 38%
30%
<CAPTION>
Class Z
- ------------
January 15, March 17,
1996(c) 1997(c)
Through Through
December 31, June 30,
1996 1997(d)
<S>
<C> <C>
- ------------ ------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.........................................
$ 7.72 $ 7.57
- ------------ ------------
Income from investment operations:
Net investment
income............................................
............ .52 .12
Net realized and unrealized gain (loss) on
investments and foreign
currencies........................................
........................ .25
.07
- ------------ ------------
Total from investment
operations........................................
.. .77 .19
- ------------ ------------
Less distributions:
Dividends from net investment
income.........................................
(.63) (.25)
Distributions in excess of net investment
income............................. (.40)
(.09)
- ------------ ------------
Total dividends and
distributions.....................................
.... (1.03) (.34)
- ------------ ------------
Redemption fee retained by
Fund(d)...........................................
.18 --
- ------------ ------------
Net asset value, end of
period............................................
... $ 7.64 $ 7.42
- ------------ ------------
- ------------ ------------
TOTAL INVESTMENT
RETURN(a).........................................
.......... 12.86% 2.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................................
. $13 $ 39
Average net assets
(000).............................................
........ $8 $ 10
Ratios to average net assets:(b)
Expenses, including distribution
fees.....................................
2.09% 1.52%
Expenses, excluding distribution
fees.....................................
1.34% 1.52%
Net investment
income............................................
......... 5.85% 6.67%
Portfolio turnover
rate..............................................
........ 38% 30%
</TABLE>
- ---------------
(a) Total investment return is based on a purchase
of common stock at the
current net asset value on the first day and a
sale at the current net asset
value on the last day of each period reported.
Total investment return does
not consider the effect of sales load. Total
investment returns for periods
of less than one full year, are not
annualized.
(b) Annualized.
(c) Commencement of offering of Class B, Class C
and Class Z shares.
(d) Calculated based upon weighted average shares
outstanding during the period.
- --------------------------------------------------
- ------------------------------
See Notes to Financial Statements. 13
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Donald D. Lennox
Douglas H. McCorkindale
Mendel A. Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Richard A. Redeker, President
Thomas A. Early, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
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 LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information
about the Fund's portfolio
holdings are for the period covered by this report
and are subject to change
thereafter.
The accompanying financial statements as of June
30, 1997 were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
74436Q101 MF170E2
74436Q200 Cat#42M182S
74436Q309
74436Q408
