PRUDENTIAL INTERNATIONAL BOND FUND INC, N-30D, 1999-09-08

PRUDENTIAL INTERNATIONAL BOND FUND INC
N-30D, 1999-09-08

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<PAGE>

(ICON)

Prudential
International
Bond Fund,
Inc.

SEMI
ANNUAL
REPORT
June 30, 1999

(LOGO)

<PAGE>

A Message from the Fund's President August 20, 1999
(PHOTO)

Dear Shareholder,

Prudential International Bond Fund posted negative returns for the
six-month period that ended on June 30, 1999, as did its benchmark,
the Lipper Global Income Fund Average. The Fund was hurt primarily
by its still-considerable exposure to U.S. Treasuries. These
government securities and bonds of certain other major debt
markets sold off in the first half of the year amid concern
about the potential for higher inflation. The following report
takes a closer look at bond market events that took place during
the six-month reporting period, and explains how Prudential
International Bond Fund was positioned accordingly.

Our integrated and expanded team
I would like to take this opportunity to tell you about some
changes we've made to our Fixed Income Group. Earlier in the
year, we combined our fixed-income areas into one integrated
group that will manage money for Prudential's retail and
institutional investors, as well as its policyholders. This
integrated group now manages approximately $145 billion in
assets, making it one of the three largest fixed-income money
managers in the country. The expanded depth, breadth, and scale
of our investment team also allow us to tap the best talent and
share investment ideas, proprietary research, and analytical
tools. The group is co-headed by Senior Managing Directors Jim
Sullivan, who is responsible for portfolio management and credit
research, and Jack Gaston, who is in charge of risk management
and quantitative research.

To utilize these integrated resources more effectively, Mr.
Sullivan recently organized the group into teams, each
specializing in a different sector of the fixed-income
market. The Global Bond Sector team will now be responsible
for the day-to-day management of your Prudential International
Bond Fund. Many of the investment professionals who supported
the management of the Fund in the past are part of this new
team that will work together to share their knowledge and
strive to enhance performance.

Thank you for your continued confidence in Prudential mutual
funds. I firmly believe that the group's combined resources
and our new team approach will make us a powerhouse in the
world of fixed-income investing across all sectors.

Sincerely,

John R. Strangfeld
President and Chief Investment Officer
Prudential International Bond Fund, Inc.

<PAGE>

Performance Review

<TABLE>
Cumulative Total Returns1 As of 6/30/99
<CAPTION>
Six One Five Ten Since
Months Year Years Years Inception2
<S> <C> <C> <C> <C> <C>
Class A -3.87% -0.07% 52.06% 130.70% 155.76%
Class B -4.09 -0.47 N/A N/A 19.94
Class C -4.09 -0.47 N/A N/A 19.94
Class Z -3.74 0.29 N/A N/A 9.29
Lipper Global Inc.
Fund Avg.3 -3.35 -0.05 36.02 102.23 ***
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 6/30/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -4.06% 7.86% 8.28% 7.83%
Class B -5.47 N/A N/A 4.89
Class C -2.47 N/A N/A 5.10
Class Z 0.29 N/A N/A 3.96
</TABLE>

<TABLE>
Distributions and Yields As of 6/30/99
<CAPTION>
Total Distributions 30-Day
Paid for Six Mos. SEC Yield
<S> <C> <C>
Class A $0.30 4.71%
Class B $0.28 4.40%
Class C $0.28 4.36%
Class Z $0.31 5.16%
</TABLE>

Past performance is not indicative of future results. Principal
and investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their 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.

1 Source: Prudential Investments Fund Management LLC and Lipper,
Inc. The cumulative total returns do not take into account sales
charges. The average annual total returns do take into account
applicable sales charges. The Fund charges a maximum front-end
sales charge 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 B shares
will automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. Class C shares
are subject to a front-end sales charge of 1% and a CDSC of 1%
for 18 months. Class C shares bought before November 2, 1998,
have a 1% CDSC if sold within one year. Class Z shares are not
subject to a sales charge or distribution and service (12b-1) fees.

2 Inception dates: Class A, 7/31/87; Class B and Class C, 1/15/96;
and Class Z, 3/17/97.

3 Lipper average returns are for all funds in each share class
for the six-month, one-, five-, and ten-year periods in the
Global Income Fund category.

***Lipper Since Inception returns are 135.15% for Class A, 14.59%
for Class B and Class C, and 8.13% for Class Z, based on all funds
in each share class.

We increased exposure to emerging market bonds
The first half of 1999 began on a somber note for emerging
market bonds. In January, the Brazilian government devalued
the nation's currency--the real--amid doubts about its ability
to solve Brazil's longstanding fiscal difficulties. But the
Brazilian government acted quickly to regain investor confidence
by cutting spending, raising taxes, and taking other measures.
Encouraged by these moves, investor demand increased for Brazilian
debt securities and other emerging market bonds. In addition,
investor sentiment toward emerging market bonds of Southeast
Asian countries improved as economic stability returned to
that region. As a whole, emerging market bonds performed
better than debt securities in other fixed-income markets
during the six months, based on Lehman Brothers indexes.

The Fund's exposure to below-investment-grade emerging market bonds
rose from 5.17% of its total investments as of December 31, 1998 to
9.12% as of June 30, 1999. We selectively purchased a mixture of
shorter- and longer-term government bonds of Jordan, Venezuela,
Bulgaria, and Malaysia--all of which were denominated in U.S.
dollars. Emerging market bonds provide high yields because
they are often rated below investment grade and carry greater
credit risk than the government bonds of developed Western
economies. For these reasons, we limit the Fund's exposure
to these bonds.

We trimmed U.S. Treasuries
The money we used to purchase emerging market bonds came
primarily from selling some of our U.S. Treasuries. Among
the Treasuries we sold were long-term bonds maturing in 2027.
As a result, Treasuries fell from 15.23% of the Fund's total
investments as of December 31, 1998 to 11.19% as of June 30,
1999. Selling these bonds helped to lower the Fund's duration
(a measure of its sensitivity to changes in the level of
interest rates)

<PAGE>

from 5.8 years to 4.3 years. A shorter duration made the Fund
less sensitive to the rise in bond yields and the decline in
their prices. However, our still-considerable exposure to
Treasuries was a key factor that caused the Fund to post
negative returns for the first half of the year.

In fact, Treasuries and many major European government bond
markets provided negative returns for the six months, according
to Lehman Brothers indexes. They sold off amid concern that the
strong U.S. economic expansion, a pickup in global economic growth,
and rising commodity prices would spark higher inflation. Investors
dislike mounting inflationary pressures because it erodes the value
of their bonds' fixed interest payments. Because bond yields
typically reflect the anticipated rate of inflation, investors
began to push yields higher in many bond markets (and their
prices lower), particularly in the Treasury market.

Fed stepped in to slow U.S. economic growth
This trend continued amid growing expectations that the Federal
Reserve would increase the Federal funds rate--the rate U.S.
banks charge each other for overnight loans--to keep the U.S.
economy from overheating. In mid-May, Federal Reserve policy
makers announced they were considering raising the key rate
because of the potential for higher inflation. Finally on
June 30, 1999, the Federal Reserve boosted the Federal funds
rate by a quarter of a percentage point to 5.00%.

Besides the sell-off in Treasuries, the Fund was also hurt
by its remaining exposure to the euro, even though we had
substantially reduced the Fund's weighting in the single
European currency during the six-month period. From the euro's
debut on January 1, 1999 until June 30, 1999, the currency
weakened by approximately 12% against the U.S. dollar. This
trend largely reflected the U.S. economy's greater strength
versus that of continental Europe.

Five Largest Issuers
Expressed as a percentage of net assets as of 6/30/99

German Government Bonds 20.2%
U.S. Treasury Obligations 11.1
Corporacion Andina de Fomento 5.4
Danish Government Bonds 4.4
Swedish Government Bonds 3.5

Geographic/Currency Concentration
Expressed as a percentage of total investments as of 6/30/99

United States 33%
Euro 25
Denmark 4
Canada 4
United Kingdom 4
Cash Equivalents 5
Other 25

Investment Goals and Style
Your Fund seeks total return made up of current income and
capital appreciation. The Fund invests primarily in intermediate-
and long-term, investment-grade debt securities of issuers outside
the United States. However, up to 35% of total investments can be
held in U.S. securities. The Fund may also invest up to 15% of
total assets 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, as well as
potential illiquidity. There can be no assurance that the
Fund's investment objective will be achieved.

<PAGE>

Review Cont'd.

Looking Ahead
Our emerging market bond outlook remains positive--in the medium term
We expect to maintain a significant exposure to emerging market bonds,
which offer yield spreads that, on average, are higher than they have
been in recent years. Although these bonds carry considerable risks,
we believe investors with prudent exposure to eastern European and
Asian emerging market debt securities will continue to be rewarded.
As for the euro, its substantial decline will likely have a
stimulative effect on the European economy because the weaker
currency has made prices of European exports very competitive.
Should signs of economic recovery continue to emerge in Europe,
the euro's outlook will probably improve.

2
<PAGE>
Portfolio of Investments as of
June 30, 1999 (Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--86.6%
- ------------------------------------------------------------
Australia--4.1%
A$ 1,520 Commonwealth of Australia,
10.00%, 10/15/02 $ 1,136,269
2,960 New South Wales Treasury
Corporation,
6.50%, 5/1/06 1,965,238
-----------
3,101,507
- ------------------------------------------------------------
Canada--4.2%
C$ 2,000 British Columbia Provincial Bond,
6.00%, 6/9/08 1,363,244
2,600 Province of Quebec,
6.50%, 10/1/07 1,816,600
-----------
3,179,844
- ------------------------------------------------------------
Denmark--4.4%
Danish Government Bonds,
DKr 10,500 7.00%, 12/15/04 1,642,735
10,215 8.00%, 3/15/06 1,693,065
-----------
3,335,800
- ------------------------------------------------------------
Euro--24.5%
EURO 2,215 French Government Bonds,
4.00%, 4/25/09 2,177,423
German Government Bonds,
505 4.50%, 5/17/02 535,803
4,020 3.75%, 8/26/03 4,146,902
2,710 7.375%, 1/3/05 3,244,498
2,830 3.75%, 1/4/09 2,754,521
4,000 6.25%, 1/4/24 4,621,919
930 Republic of Italy,
6.50%, 11/1/27 1,078,918
-----------
18,559,984
- ------------------------------------------------------------
Germany--2.1%
DM 3,000 Republic of Colombia,
7.25%, 12/21/00 1,621,102
Greece--2.5%
Hellenic Republic,
GRD 370,000 11.90%, 12/31/03, FRN $ 1,220,982
182,300 8.60%, 3/26/08 666,202
-----------
1,887,184
- ------------------------------------------------------------
Hungary--0.4%
HUF 80,000 Hungarian Government Bonds,
15.00%, 7/24/01 335,603
- ------------------------------------------------------------
New Zealand--3.8%
NZ$ 3,500 Federal National Mortgage
Association,
7.25%, 6/20/02 1,900,030
1,800 International Bank of
Reconstruction Development,
7.25%, 5/27/03 980,268
-----------
2,880,298
- ------------------------------------------------------------
Russia--0.1%
RUB 4,500 European Bank of Reconstruction
Development,
Zero Coupon, 5/28/02 46,382
- ------------------------------------------------------------
Sweden--3.5%
Swedish Government Bonds,
SEK 6,400 5.00%, 1/15/04 768,876
15,000 6.00%, 2/9/05 1,882,034
-----------
2,650,910
- ------------------------------------------------------------
United Kingdom--4.1%
BP 1,660 United Kingdom Treasury Strip,
9.50%, 10/25/04 3,097,888
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
Portfolio of Investments as of
June 30, 1999 (Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States--32.9%
Corporate Bonds--2.5%
US$ 650 General Motors Acceptance Corp.,
5.75%, 11/10/03 $ 628,901
850 Household Finance Corporation,
6.40%, 6/17/08 807,695
500 Petroliam Nasional Berhad
(Malaysia),
7.125%, 10/18/06 456,000
-----------
1,892,596
- ------------------------------------------------------------
Sovereign Bonds--12.7%
400 Kingdom of Jordan
5.50%, 12/23/23 240,000
900 Ministry of Finance (Russia),
10.00%, 6/26/07 443,812
500 Oman Sultante (India),
7.125%, 3/20/02 492,500
Republic of Argentina, FRN,
465 5.9375%, 3/31/05 395,855
1,000 11.00%, 10/9/06 924,500
369 Republic of Brazil, FRN,
6.0625%, 1/1/01 352,875
750 Republic of Bulgaria,
2.50%, 7/28/12 446,250
500 Republic of Colombia,
7.25%, 2/23/04 415,500
885 Republic of Croatia, FRN,
5.8125%, 7/31/06 743,492
400 Republic of Lithuania,
7.125%, 7/22/02 377,000
300 Republic of Malaysia,
8.75%, 6/1/09 302,820
600 Republic of Panama,
7.875%, 2/13/02 583,500
700 Republic of Peru,
4.50%, 3/7/17 429,660
Republic of Venezuela,
810 6.3125%, 12/18/07 358,000
400 13.625%, 8/15/18 618,311
880 Russian Federation,
11.00%, 7/24/18 435,600
$2,000 United Mexican States, FRN,
9.75%, 2/6/01 $ 2,083,000
-----------
9,642,675
- ------------------------------------------------------------
Foreign Government Bonds--1.2%
900 Province of Ontario,
6.00%, 2/21/06 868,050
- ------------------------------------------------------------
Supranational Bonds--5.4%
4,100 Corporacion Andina de Fomento,
7.375%, 7/21/00 4,071,464
- ------------------------------------------------------------
U.S. Government Obligations--11.1%
United States Treasury Bonds,
4,000 6.25%, 2/15/07 4,075,640
570 6.625%, 2/15/27 601,972
United States Treasury Notes,
3,145 5.00%, 4/30/01 3,118,456
600 5.875%, 11/15/05 600,000
-----------
8,396,068
-----------
24,870,853
-----------
Total long-term investments
(cost US$69,842,106) 65,567,355
-----------
SHORT-TERM INVESTMENTS--12.4%
- ------------------------------------------------------------
Hungary--1.6%
Hungarian Government Bonds,
HUF 140,000 16.50%, 7/24/99 579,400
150,000 16.00%, 4/12/00 626,370
-----------
1,205,770
- ------------------------------------------------------------
Poland--2.8%
Polish Treasury Bills,
PLZ 1,500 12.78%(a), 9/15/99 372,220
1,370 12.92%(a), 10/20/99 335,881
1,080 13.04%(a), 10/27/99 264,067
2,410 12.99%(a), 11/10/99 586,548
2,300 13.15%(a), 12/24/99 551,094
-----------
2,109,810
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL INTERNATIONAL BOND FUND, INC.
Portfolio of Investments as of June 30, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Russia--0.1%
RUB 2,700 European Bank of Reconstruction
Development,
31.00%, 5/5/00 $ 89,054
- ------------------------------------------------------------
United States--7.9%
Corporate Bonds--3.3%
US$ 650 Banco Ganadero Colombian Bond
(Colombia),
9.75%, 8/26/99 653,868
1,900 Financiera Energetica Nacional
(Colombia),
9.00%, 11/8/99 1,876,250
-----------
2,530,118
- ------------------------------------------------------------
Repurchase Agreement--4.6%
3,467 Joint Repurchase Agreement
Account
4.78%, 7/1/99 (Note 5) 3,467,000
-----------
5,997,118
-----------
Total short-term Investments
(cost US$9,962,664) 9,401,752
-----------
- ------------------------------------------------------------
Total Investments--99.0%
(cost $79,804,770; Note 4) 74,969,107
Other assets in excess of
liabilities--1.0% 756,820
-----------
Net Assets--100% $75,725,927
-----------
-----------
</TABLE>
- ---------------
Portfolio securities are classified according to the security's currency
denomination.
(a) Percentages quoted represent yield-to-maturity as of purchase date.
FRN--Floating Rate Note.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets June 30, 1999
<S> <C>
Investments, at value (cost $79,804,770).................................................................... $74,969,107
Cash........................................................................................................ 54,190
Receivable for investments sold............................................................................. 2,489,600
Interest receivable......................................................................................... 1,597,766
Forward currency contracts-amount receivable from counterparties............................................ 214,675
Receivable for Fund shares sold............................................................................. 51,957
Other assets................................................................................................ 2,400
-------------
Total assets............................................................................................. 79,379,695
-------------
Liabilities
Foreign currency, Bank overdraft............................................................................ 23,181
Payable for investments purchased........................................................................... 2,809,764
Payable for Fund shares reacquired.......................................................................... 275,319
Accrued expenses and other liabilities...................................................................... 249,594
Dividends payable........................................................................................... 122,742
Forward currency contracts-amount payable to counterparties................................................. 110,051
Management fee payable...................................................................................... 47,176
Distribution fee payable.................................................................................... 15,941
-------------
Total liabilities........................................................................................ 3,653,768
-------------
Net Assets.................................................................................................. $75,725,927
-------------
-------------
Net assets were comprised of:
Common stock, at par..................................................................................... $ 114,495
Paid-in capital in excess of par......................................................................... 81,563,126
-------------
81,677,621
Distributions in excess of net investment income......................................................... (1,247,767)
Accumulated net realized gains on investments............................................................ 27,580
Net unrealized depreciation on investments and foreign currencies........................................ (4,731,507)
-------------
Net assets, June 30, 1999................................................................................... $75,725,927
-------------
-------------
Class A:
Net asset value and redemption price per share
($71,111,557 / 10,753,509 shares of common stock issued and outstanding).............................. $6.61
Maximum sales charge (4% of offering price).............................................................. .28
-------------
Maximum offering price to public......................................................................... $6.89
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($1,644,363 / 248,067 shares of common stock issued and outstanding).................................. $6.63
-------------
-------------
Class C:
Net asset value and redemption price per share
($245,982 / 37,110 shares of common stock issued and outstanding)..................................... $6.63
Sales charge (1% of offering price)...................................................................... .07
-------------
Offering price to public................................................................................. $6.70
-------------
-------------
Class Z:
Net asset value, offering price and redemption price per share
($2,724,025 / 410,832 shares of common stock issued and outstanding).................................. $6.63
-------------
-------------
</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, 1999
<S> <C>
Income
Interest and discount earned (net of foreign
withholding taxes of $6,204).............. $ 3,059,619
-------------
Expenses
Management fee............................... 303,484
Distribution fee--Class A.................... 95,981
Distribution fee--Class B.................... 5,257
Distribution fee--Class C.................... 906
Transfer agent's fees and expenses........... 100,000
Custodian's fees and expenses................ 95,000
Reports to shareholders...................... 53,000
Legal fees and expenses...................... 32,000
Audit fees and expenses...................... 18,000
Registration fees............................ 16,000
Directors' fees.............................. 9,000
Insurance.................................... 600
Miscellaneous................................ 1,845
-------------
Total expenses............................ 731,073
-------------
Net investment income........................... 2,328,546
-------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions...................... (584,535)
Foreign currency transactions................ (206,146)
-------------
(790,681)
-------------
Net change in unrealized appreciation (depreciation) on:
Investments.................................. (4,684,594)
Foreign currencies........................... 21,124
-------------
(4,663,470)
-------------
Net loss on investments and foreign
currencies................................... (5,454,151)
-------------
Net Decrease in Net Assets
Resulting from Operations....................... $ (3,125,605)
-------------
-------------
</TABLE>

PRUDENTIAL INTERNATIONAL BOND FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase June 30, December 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 2,328,546 $ 5,610,162
Net realized gain (loss) on
investment and foreign
currency transactions....... (790,681) 471,049
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currencies.................. (4,663,470) 1,033,608
------------- -------------
Net increase (decrease) in net
assets resulting from
operations.................. (3,125,605) 7,114,819
------------- -------------
Dividends and distributions (Note
1)
Dividends from net investment
income
Class A..................... (1,189,876) (3,147,035)
Class B..................... (20,011) (24,528)
Class C..................... (3,436) (3,873)
Class Z..................... (40,531) (51,961)
------------- -------------
(1,253,854) (3,227,397)
------------- -------------
Distributions in excess of net
investment income
Class A..................... (1,184,100) (2,100,081)
Class B..................... (19,913) (16,368)
Class C..................... (3,420) (2,584)
Class Z..................... (40,334) (34,675)
------------- -------------
(1,247,767) (2,153,708)
------------- -------------
Distributions from net realized
gains
Class A..................... (946,664) (575,748)
Class B..................... (18,507) (4,487)
Class C..................... (3,104) (709)
Class Z..................... (31,881) (9,506)
------------- -------------
(1,000,156) (590,450)
------------- -------------
Fund share transactions (net of
share conversions) (Note 6)
Net proceeds from shares
sold........................ 2,980,211 6,408,174
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 1,124,529 1,664,187
Cost of shares reacquired...... (9,487,758) (19,079,029)
------------- -------------
Net decrease in net assets from
Fund share transactions..... (5,383,018) (11,006,668)
------------- -------------
Total decrease.................... (12,010,400) (9,863,404)
Net Assets
Beginning of period............... 87,736,327 97,599,731
------------- -------------
End of period..................... $ 75,725,927 $ 87,736,327
------------- -------------
------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
Prudential International Bond Fund, Inc., (the 'Fund'), is an open-end,
nondiversified, 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 it'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 on the basis of valuations
provided by an independent pricing agent or principal market maker. Any security
for which the primary market is on an exchange or NASDAQ National Market System
securities are valued at the last sale price on such exchange on the day of
valuation or, if there was no sale on such day, at the mean between the last bid
and asked prices on such day or at the bid price on such day in the absence of
an asked price. 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 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, such realized foreign currency gains and losses
are included in the reported net realized gains on investment transactions.

Net realized gains or losses 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, discount, and
foreign taxes recorded on the Fund's books and the U.S. 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 or depreciation 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 and foreign currencies. 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.

Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares based upon the
relative proportion of net assets of each class at the beginning of the day.

Dividends and Distributions: The Fund declares daily and pays dividends from
book basis net investment income monthly and makes distributions at least
annually of any net capital gains. Dividends and distributions are recorded on
the ex-dividend date.

Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions.

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.

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 distributions in excess of net investment income
and decrease accumulated net realized loss on investments by $1,074,692. This
was primarily the result of net foreign currency losses for the six months ended
June 30, 1999. Net investment income, net realized gains and net assets were not
affected by this change.

- ------------------------------------------------------------
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, through an agreement with PRICOA Asset
Management Ltd. ('PRICOA'), 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 up to $1 billion and
.70 of 1% of such assets in excess of $1 billion.

The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'). The Fund compensates PIMS 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 Plans'), regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
No distribution or service fees are paid to PIMS as distributor of the Class Z
shares of the Fund.

Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and
- --------------------------------------------------------------------------------
9

<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
1% of the average daily net assets of the Class A, B and C shares respectively.
Such expenses under the Plans were .25 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, 1999.

PIMS has advised the Fund that it has received approximately $3,600 in front-end
sales charges resulting from sales of Class A and $1,100 in Class C shares
during the six months ended June 30, 1999. From these fees, PIMS paid such sales
charges to Pruco Securities Corporation, an affiliated broker-dealer, which in
turn paid commissions to sales-persons and incurred other distribution costs.

PIMS has advised the Series that for the six months ended June 30, 1999, it has
received approximately $2,300 in contingent deferred sales charges imposed upon
certain redemptions by Class B shareholders.

PIFM, PIC, PIMS and PRICOA are indirect, wholly owned subsidiaries of The
Prudential Insurance Company of America.

As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. Interest on any such borrowings outstanding will be
at market rates. The SCA expires on March 9, 2000. Prior to March 11, 1999, the
Funds had a credit agreement with a maximum commitment of $200,000,000. The
commitment fee was .055 of 1% on the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to either agreement during the period
ended June 30, 1999. The purpose of the agreements is to serve as an alternative
source of funding for capital share redemptions.

- ------------------------------------------------------------
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, 1999
the Fund incurred fees of approximately $89,000 for the services of PMFS. As of
June 30, 1999 approximately $15,000 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 nonaffiliates.

Note 4. Portfolio Securities

Purchases and sales of investment securities, other than short-term investments,
for the six months ended June 30, 1999 aggregated $37,258,735 and $43,183,163,
respectively.

At June 30, 1999, the Fund had outstanding forward currency contracts to
purchase and sell foreign currencies, as follows:

<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Purchase Contracts Payable Value (Depreciation)
- ------------------- --------------- ----------- ---------------
<S> <C> <C> <C>
Australian Dollar,
expiring
7/15/99.......... $ 784,030 $ 787,167 $ 3,137
Canadian Dollar,
expiring
7/8/99........... 2,102,198 2,095,744 (6,454)
Euro,
expiring
7/13/99.......... 5,640,397 5,554,990 (85,407)
Pound Sterling,
expiring
8/4/99........... 718,637 713,748 (4,889)
Swedish Krona,
expiring
7/9/99........... 2,344,477 2,374,485 30,008
--------------- ----------- ---------------
$11,589,739 $11,526,134 $ (63,605)
--------------- ----------- ---------------
--------------- ----------- ---------------
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------- --------------- ----------- ---------------
<S> <C> <C> <C>
Australian Dollar,
expiring
7/15/99.......... $ 1,155,677 $ 1,155,025 $ 652
Canadian Dollar,
expiring
7/8/99........... 3,507,857 3,485,354 22,503
Euro,
expiring 7/13/99
- 8/4/99......... 10,800,592 10,726,539 74,053
Japanese Yen,
expiring
7/26/99.......... 1,018,204 1,013,362 4,842
New Zealand Dollar,
expiring
7/19/99.......... 2,995,715 2,974,537 21,178
Swedish Krona,
expiring
7/9/99........... 783,426 796,727 (13,301)
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ------------------- ---------------- ------------ ----------------
<S> <C> <C> <C>
Swiss Franc,
expiring
7/9/99........... $ 4,057,193 $ 3,998,891 $ 58,302
--------------- ----------- ---------------
$24,318,664 $24,150,435 $ 168,229
--------------- ----------- ---------------
--------------- ----------- ---------------
</TABLE>

The United States federal income tax basis of the Fund's investments at June 30,
1999 was $79,852,699 and, accordingly, net unrealized depreciation for United
States federal income tax purposes was $4,883,592 (gross unrealized
appreciation--$179,792; gross unrealized depreciation--$5,063,384).

- ------------------------------------------------------------
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, 1999, the Fund
had a .45% undivided interest in the joint account. The undivided interest for
the Fund represented $3,467,000 in the principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor were as
follows:

Deutche Bank Securities Inc., 4.75%, in the principal amount of $150,000,000,
repurchase price $150,019,792, due 7/1/99. The value of the collateral including
accrued interest was $153,000,548.

Goldman Sachs & Co., 4.85%, in the principal amount of $200,000,000, repurchase
price $200,026,944, due 7/1/99. The value of the collateral including accrued
interest was $204,001,378.

Morgan Stanley Dean Witter, 4.70%, in the principal amount of $178,944,000,
repurchase price $178,967,362, due 7/1/99. The value of the collateral including
accrued interest was $182,666,733.

Morgan Stanley Dean Witter, 4.72%, in the principal amount of $50,000,000,
repurchase price $50,006,556, due 7/1/99. The value of the collateral including
accrued interest was $51,021,154.

Warburg Dillon Read LLC, 4.81%, in the principal amount of $200,000,000,
repurchase price $200,026,722, due 7/1/99. The value of the collateral including
accrued interest was $204,001,326.

- ------------------------------------------------------------
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 front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. 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. 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,
1999 Prudential owned 145 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, 1999:
Shares sold...................... 84,484 $ 580,359
Shares issued in reinvestment of
dividends and distributions.... 140,789 966,507
Shares reacquired................ (1,180,329) (8,169,076)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (955,056) (6,622,210)
Shares issued upon conversion
from Class B................... 140 930
----------- -------------
Net decrease in shares
outstanding.................... (954,916) $ (6,621,280)
----------- -------------
----------- -------------
</TABLE>
- --------------------------------------------------------------------------------
11

<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Amount
- --------------------------------- ----------- -------------
Year ended December 31, 1998:
<S> <C> <C>
Shares sold...................... 372,024 $ 2,657,375
Shares issued in reinvestment of
dividends and distributions.... 214,448 1,531,157
Shares reacquired................ (2,481,487) (17,676,855)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (1,895,015) (13,488,323)
Shares issued upon conversion
from Class B................... 1,973 14,203
----------- -------------
Net decrease in shares
outstanding.................... (1,893,042) $ (13,474,120)
----------- -------------
----------- -------------
<CAPTION>
Class B
- ---------------------------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold...................... 140,519 $ 966,947
Shares issued in reinvestment of
dividends and distributions.... 6,865 47,086
Shares reacquired................ (68,625) (466,278)
----------- -------------
Net increase in shares
outstanding before
conversion..................... 78,759 547,755
Shares reacquired upon conversion
into Class A................... (140) (930)
----------- -------------
Net increase in shares
outstanding.................... 78,619 $ 546,825
----------- -------------
----------- -------------
Year ended December 31, 1998:
Shares sold...................... 138,265 $ 988,889
Shares issued in reinvestment of
dividends and distributions.... 5,180 37,028
Shares reacquired................ (46,855) (334,557)
----------- -------------
Net increase in shares
outstanding before
conversion..................... 96,590 691,360
Shares reacquired upon conversion
into Class A................... (1,975) (14,203)
----------- -------------
Net increase in shares
outstanding.................... 94,615 $ 677,157
----------- -------------
----------- -------------
<CAPTION>
Class C Shares Amount
- --------------------------------- ----------- -------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold...................... 4,234 $ 28,901
Shares issued in reinvestment of
dividends and distributions.... 1,209 8,306
Shares reacquired................ (4,162) (28,846)
----------- -------------
Net increase in shares
outstanding.................... 1,281 $ 8,361
----------- -------------
----------- -------------
Year ended December 31, 1998:
Shares sold...................... 33,210 $ 237,920
Shares issued in reinvestment of
dividends and distributions.... 671 4,790
Shares reacquired................ (8,776) (62,577)
----------- -------------
Net increase in shares
outstanding.................... 25,105 $ 180,133
----------- -------------
----------- -------------
<CAPTION>
Class Z
- ---------------------------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold...................... 202,541 $ 1,404,004
Shares issued in reinvestment of
dividends and distributions.... 14,941 102,630
Shares reacquired................ (119,888) (823,558)
----------- -------------
Net increase in shares
outstanding.................... 97,594 $ 683,076
----------- -------------
----------- -------------
Year ended December 31, 1998:
Shares sold...................... 352,766 $ 2,523,990
Shares issued in reinvestment of
dividends and distributions.... 12,769 91,212
Shares reacquired................ (140,684) (1,005,040)
----------- -------------
Net increase in shares
outstanding.................... 224,851 $ 1,610,162
----------- -------------
----------- -------------
</TABLE>
- --------------------------------------------------------------------------------
12

<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A(b)
--------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -----------------------------------------------------------
1999(c) 1998(c) 1997(c) 1996 1995 1994
---------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 7.17 $ 7.08 $ 7.63 $ 7.68 $ 6.76 $ 7.84
---------- ------- -------- -------- -------- --------
Income from investment operations:
Net investment income......................... .20 .43 .49 .56 .48 .45
Net realized and unrealized gain (loss) on
investments and foreign currencies......... (.46) .12 (.22) .28 1.13 (.97)
---------- ------- -------- -------- -------- --------
Total from investment operations........... (.26) .55 .27 .84 1.61 (.52)
---------- ------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income.......... (.11) (.25) (.58) (.67) (.48) (.23)
Distributions in excess of net investment
income..................................... (.10) (.17) (.24) (.40) (.21) --
Distributions from net realized capital
gains...................................... (.09) (.04) -- -- -- (.10)
Distributions in excess of net capital
gains...................................... -- -- -- -- -- --
Tax return of capital distributions........... -- -- -- -- -- (.23)
---------- ------- -------- -------- -------- --------
Total dividends and distributions.......... (.30) (.46) (.82) (1.07) (.69) (.56)
---------- ------- -------- -------- -------- --------
Redemption fee retained by Fund............... -- -- -- .18 -- --
---------- ------- -------- -------- -------- --------
Net asset value, end of period................ $ 6.61 $ 7.17 $ 7.08 $ 7.63 $ 7.68 $ 6.76
---------- ------- -------- -------- -------- --------
---------- ------- -------- -------- -------- --------
Per share market price, end of period......... N/A N/A N/A N/A $ 7.375 $ 5.625
---------- ------- -------- -------- -------- --------
---------- ------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN BASED ON(a):
Market price............................... N/A N/A N/A N/A 44.39% (12.04)%
Net asset value............................ (3.87)% 8.00% 3.62% 14.02% 25.14% (5.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 71,112 $84,008 $ 96,365 $125,637 $350,339 $308,703
Average net assets (000)...................... $ 77,421 $89,970 $110,910 $180,588 $342,741 $331,421
Ratios to average net assets:
Expenses, including distribution fees...... 1.80%(d) 1.63% 1.64% 1.48% 1.05% 1.11%
Expenses, excluding distribution fees...... 1.55%(d) 1.48% 1.49% 1.34% 1.05% 1.11%
Net investment income...................... 5.75%(d) 6.08% 6.54% 6.45% 6.37% 6.21%
For Class A, B, C and Z shares:
Portfolio turnover rate....................... 51% 46% 53% 38% 203% 526%
</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 return 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) Calculated based upon weighted average shares outstanding during the period.
(d)Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13

<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
--------------------------------------------------- ------------------------
January 15, Year
Six Months 1996(c) Six Months Ended
Ended Year Ended Through Ended December
June 30, December 31, December 31, June 30, 31,
1999(d) 1998(d) 1997(d) 1996 1999(d) 1998(d)
----- ------- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 7.19 $ 7.10 $ 7.64 $ 7.72 $ 7.19 $ 7.10
----- ------- ------- ----- ----- -------
Income from investment operations:
Net investment income......................... .18 .37 .44 .52 .18 .37
Net realized and unrealized gain (loss) on
investments and foreign currencies......... (.46) .11 (.20 ) .25 (.46) .11
----- ------- ------- ----- ----- -------
Total from investment operations........... (.28) .48 .24 .77 (.28) .48
----- ------- ------- ----- ----- -------
Less distributions:
Dividends from net investment income.......... (.09) (.21 ) (.54 ) (.63) (.09) (.21)
Distributions in excess of net investment
income..................................... (.10) (.14 ) (.24 ) (.40) (.10) (.14)
Distributions from net realized gains......... (.09) (.04 ) -- -- (.09) (.04)
----- ------- ------- ----- ----- -------
Total dividends and distributions.......... (.28) (.39 ) (.78 ) (1.03) (.28) (.39)
----- ------- ------- ----- ----- -------
Redemption fee retained by Fund............... -- -- -- .18 -- --
----- ------- ------- ----- ----- -------
Net asset value, end of period................ $ 6.63 $ 7.19 $ 7.10 $ 7.64 $ 6.63 $ 7.19
----- ------- ------- ----- ----- -------
----- ------- ------- ----- ----- -------
TOTAL INVESTMENT RETURN(a).................... (4.09)% 7.32 % 3.25 % 12.86% (4.09)% 7.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $1,644 $1,218 $531 $75 $246 $257
Average net assets (000)...................... $1,414 $785 $335 $23 $244 $126
Ratios to average net assets:
Expenses, including distribution fees...... 2.30%(b) 2.23% 2.24% 2.09%(b) 2.30%(b) 2.23%
Expenses, excluding distribution fees...... 1.55%(b) 1.48% 1.49% 1.34%(b) 1.55%(b) 1.48%
Net investment income...................... 5.30%(b) 5.51% 6.00% 5.85%(b) 5.28%(b) 5.53%
<CAPTION>
January 15,
1996(c)
Through
December 31,
1997(d) 1996
------- -----
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 7.64 $ 7.72
------- -----
Income from investment operations:
Net investment income......................... .40 .52
Net realized and unrealized gain (loss) on
investments and foreign currencies......... (.16 ) .25
------- -----
Total from investment operations........... .24 .77
------- -----
Less distributions:
Dividends from net investment income.......... (.54 ) (.63)
Distributions in excess of net investment
income..................................... (.24 ) (.40)
Distributions from net realized gains......... -- --
------- -----
Total dividends and distributions.......... (.78 ) (1.03)
------- -----
Redemption fee retained by Fund............... -- .18
------- -----
Net asset value, end of period................ $ 7.10 $ 7.64
------- -----
------- -----
TOTAL INVESTMENT RETURN(a).................... 3.25% 12.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $76 $13
Average net assets (000)...................... $26 $8
Ratios to average net assets:
Expenses, including distribution fees...... 2.24% 2.09%(b)
Expenses, excluding distribution fees...... 1.49% 1.34%(b)
Net investment income...................... 5.96% 5.85%(b)
</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.

(d) Calculated based upon weighted average shares outstanding during the period.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14

<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL INTERNATIONAL BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
----------------------------------------------
March 17,
Six Months 1997(c)
Ended Year Ended Through
June 30, December 31, December 31,
1999(d) 1998(d) 1997(d)
----- ----- -----
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 7.19 $ 7.10 $ 7.57
----- ----- -----
Income from investment operations:
Net investment income......................... .21 .44 .38
Net realized and unrealized gain (loss) on
investments and foreign currencies......... (.46) .10 (.02)
----- ----- -----
Total from investment operations........... (.25) .54 .36
----- ----- -----
Less distributions:
Dividends from net investment income.......... (.12) (.25) (.59)
Distributions in excess of net investment
income..................................... (.10) (.16) (.24)
Distributions from net realized gains......... (.09) (.04) --
----- ----- -----
Total dividends and distributions.......... (.31) (.45) (.83)
----- ----- -----
Net asset value, end of period................ $ 6.63 $ 7.19 $ 7.10
----- ----- -----
----- ----- -----
TOTAL INVESTMENT RETURN(a).................... (3.74)% 8.16% 4.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $2,724 $2,253 $628
Average net assets (000)...................... $2,527 $1,487 $121
Ratios to average net assets:
Expenses, including distribution fees...... 1.55%(b) 1.48% 1.49%(b)
Expenses, excluding distribution fees...... 1.55%(b) 1.48% 1.49%(b)
Net investment income...................... 6.04%(b) 6.29% 6.82%(b)
</TABLE>

(b) Annualized.

<PAGE>

Getting the Most from Your Prudential Mutual Fund

How many times have you read these reports--or other financial materials--
and stumbled across a word that you don't understand?

Many shareholders have run into the same problem. We'd like to
help. So we'll use this space from time to time to explain some
of the words you might have read, but not understood. And if you
have a favorite word that no one can explain to your satisfaction,
please write to us.

Basis Point: 1/100th of 1%. For example, one-half of one percent
is 50 basis points.

Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds
that separate mortgage pools into different maturity classes,
called tranches. These instruments are sensitive to changes in
interest rates and homeowner refinancing activity. They are
subject to prepayment and maturity extension risk.

Derivatives: Securities that derive their value from other
securities. The rate of return of these financial instruments
rises and falls--sometimes very suddenly --in response to changes
in some specific interest rate, currency, stock, or other variable.

Discount Rate: The interest rate charged by the Federal Reserve on
loans to member banks.

Federal Funds Rate: The interest rate charged by one bank to another
on overnight loans.

Futures Contract: An agreement to purchase or sell a specific amount
of a commodity or financial instrument at a set price at a specified
date in the future.

Leverage: The use of borrowed assets to enhance return. The expectation
is that the interest rate charged on borrowed funds will be lower than
the return on the investment. While leverage can increase profits, it
can also magnify losses.

Liquidity: The ease with which a financial instrument (or product) can
be bought or sold (converted into cash) in the financial markets.

Price/Earnings Ratio: The price of a share of stock divided by the
earnings per share for a 12-month period.

Option: An agreement to purchase or sell something, such as shares
of stock, by a certain time for a specified price. An option need
not be exercised.

Spread: The difference between two values; often used to describe
the difference between "bid" and "asked" prices of a security, or
between the yields of two similar maturity bonds.

Yankee Bond: A bond sold by a foreign company or government in the
U.S. market and denominated in U.S. dollars.

<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
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
Stephen M. Ungerman, Assistant Treasurer

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

PRICOA Asset Management, Ltd.
115 Houndsditch
London EC3A 7BU

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

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
PricewaterhouseCoopers 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, 1999, 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 BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
New York, NY
(800) 225-1852

74436Q101 MF170E2
74436Q200
74436Q309
74436Q408