SEMI ANNUAL REPORT June 30, 1994
Prudential
Intermediate
Global Income
Fund, Inc.
(LOGO)
<PAGE>
Letter to Shareholders
August 10, 1994
Dear Shareholder:
Over the last six months, higher than expected economic growth and
inflationary fears adversely impacted many worldwide fixed income
markets. As a result, domestic and foreign bond
prices declined as global yields climbed dramatically.
The returns of the Prudential Intermediate Global Income
Fund, Inc. reflected the volatility in this investment
environment.
<TABLE>
HISTORICAL PERFORMANCE
As of June 30, 1994
<CAPTION>
Total Return Net Asset Six Month Dividends
Six Months1 Value and Distributions
<S> <C> <C> <C>
Class A -5.4% $7.70 $0.28
Class B -5.7% $7.71 $0.26
</TABLE>
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of June 30, 19942
<CAPTION>
One Year Five Year Since Inception3
<S> <C> <C> <C>
Class A -4.0% +5.8% +6.0%
Class B -4.8% N/A +4.7%
</TABLE>
1These figures do not take into account applicable sales charges.
The Fund charges a maximum sales load of 3.00% for Class A shares.
Class B shares are subject to a declining contingent deferred sales
charge of 3%, 2%, 1% and 1%, respectively, over a four year period.
2Source: Prudential Mutual Fund Management. These figures take
into account applicable sales charges.
3Inception of Class A 5/26/88, Class B 1/15/92. The Fund operated
as a closed-end fund from May 26, 1988 to October 4, 1991 and
commenced operations as an open-end fund on October 7, 1991.
Note: Past performance is no guarantee of future results,
the Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less
than their original value.
Fund Overview
The Prudential Intermediate Global Income Fund, Inc. seeks to
maximize total return, the components of which are current
income and capital appreciation, by investing
primarily in a portfolio of domestic and foreign government
securities throughout the world. The Fund will maintain a
weighted average maturity of 10 years or less.
-1-
<PAGE>
Turbulent Markets
Over the period, political instability and technical market
factors greatly increased the volatility of the global fixed-income
markets. Unfortunately, market fundamentals had little influence
this time around and interest rates rose significantly higher than
anyone had previously expected.
The actions by the Fed to raise short-term interest rates in
early February set in motion a chain of events that caused global
bond markets to go on a roller coaster ride. Since the Fed's
actions were only designed to help quell U.S. inflation concerns, many
market participants were expecting foreign interest rates to
continue to decline. Some were so certain of this that they
heavily leveraged their investment portfolios, often through
the use of derivative securities. However, as foreign yields rose
and bond prices fell in sympathy with the U.S. bond market, there
was a scramble to sell fixed-income securities.
Leveraged investors were hurt more than others and they had to sell
securities sooner, often at disadvantageous times and prices.
Simultaneously, surprisingly strong U.S. economic data, along with
improving European growth further aggravated the markets and helped
interest rates spiral upwards.
The Portfolio Responds to Recent Developments
In light of recent developments, we have reduced the portfolio's
weighted average maturity from 7.4 years on December 31, 1993 to 6.6
years on June 30, 1994. We have also shortened our maturities in
countries that we believe could be hit hard by sharp rises in commodity
prices, such as Japan, which does not have large indigenous reserves of
raw materials. The accompanying pie chart shows the holdings of the
portfolio as of June 30, 1994.
We have cut back on our exposure to the U.S. bond market under the
expectation that the Federal Reserve will probably tighten monetary
policy further. Although inflation has not risen, we believe that
it could pose a threat to bonds down the road if the economy continues
to expand.
In Japan, monetary and fiscal authorities have flooded the economy with
liquidity. Low interest rates coupled with increases in fiscal spending
have set the stage for a strong recovery in Japan. Consequently, we will
continue to underweight this market until fundamentals change.
-2-
<PAGE>
Although most of Europe is currently experiencing slow economic growth
and low-to-falling inflation (an ideal climate for bonds), longer-term
yields have risen dramatically. In many countries, bond yields are now
higher than they were at the start of the 1993 global bond rally. Going
forward, we feel that Europe still has very solid fundamental prospects
for positive bond performance. However, we are remaining cautious until
we see a break in the down trend. As of June 30, 1994, we held
approximately 43% of the Fund's assets in Europe.
(CHART)
Please note that at the meeting of the Fund's shareholders in July,
shareholders approved a change in the Fund's investment objective.
The new investment objective seeks to maximize total return
via current income and capital appreciation. The Fund will invest
primarily in a portfolio of domestic and foreign government securities
throughout the world. No significant change in direction for the Fund
is expected.
This change will also permit us to invest in investment grade bonds
(bonds rated in the top four highest quality grades as determined by
Moody's or Standard & Poor's, or in unrated securities of comparable
quality), with up to 10% of total assets to be invested in
securities rated below investment grade with a minimum rating of B.
Although there are specific risks associated with securities rated
below investment grade, we believe that the Fund will be able to take
advantage of investment opportunities in emerging markets and will
also have greater flexibility in managing the portfolio in accordance
with its investment objective. There can be no assurance, however,
that this objective will be achieved.
Outlook
Prospects for many foreign bond markets are favorable given the
dramatic increases in interest rates. European bond yields should
decline as economic fundamentals still point to moderate growth,
relatively high unemployment, and low inflation. In addition, since
current rates are very attractive, we will attempt to capitalize on
these high yields and the potential for capital gains. Given market
volatility, we will initially do this on a cautious basis.
We also believe the U.S. dollar will strengthen in the future,
because its economy is currently in better shape than any other
industrialized country. Nevertheless, given the dollar's recent
downward trend, we have maintained exposure to foreign currencies
in Europe and the Japanese yen. We will reinstate
defensive currency hedges when current trends reverse.
-3-
<PAGE>
As always, we appreciate having you as a shareholder of the
Prudential Intermediate Global Income Fund, Inc. and remain
committed to managing it for your long-term benefit.
Sincerely,
Lawrence C. McQuade
President
Andrew Barnett
Portfolio Manager
Tax Update:
As a result of higher hedging costs in the European and Japanese markets
this year, it is likely that some of the dividends paid in the current
calendar year will be considered return of capital under the Internal
Revenue Code. Provisions in the Internal Revenue Code require the Fund's
currency losses, which includes the Fund's hedging costs,
to be treated as ordinary losses and offsets ordinary income
(less operating expenses).
In January 1995, you will receive a Form 1099 DIV (or substitute
Form 1099 DIV) that will reflect the total amount of distributions
that constitute a tax return of capital. Such amount is not included
as taxable income for calendar year 1994, but should be reflected as
an adjustment in the cost basis of your Fund's shares.
-4-
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--81.8%
Australia--3.9%
Australian Gov't.
Bonds,
A$ 13,800 12.50%, 9/15/97........ $ 11,180,649
------------
Canada--2.1%
Prov. of Quebec,
C$ 10,140 7.50%, 12/1/03......... 6,117,287
------------
France--4.0%
French Gov't. Bonds,
FF 73,790 5.50%, 4/25/04......... 11,663,841
------------
Germany--13.8%
Fed. Rep. of Germany,
DM 6,000 8.00%, 7/22/02......... 3,966,251
18,100 6.75%, 4/22/03......... 11,191,651
German Gov't. Bonds,
7,100 8.00%, 3/20/97......... 4,657,768
Treuhandanstalt,
31,350 7.75%, 10/1/02......... 20,279,221
------------
40,094,891
------------
Ireland--2.1%
Irish Gov't. Bonds,
IEP 4,010 9.00%, 7/15/01......... 6,171,671
------------
Italy--1.9%
Italian Gov't. Bonds,
Lira 8,370,000 12.00%, 5/19/98........ 5,515,495
------------
Japan--5.8%
Japan Development Bank,
(YEN) 750,000 5.00%, 10/1/99......... 7,918,118
260,000 6.50%, 9/20/01......... 2,951,478
Japanese Gov't. Bonds,
507,000 6.60%, 6/20/01......... 5,846,070
------------
16,715,666
------------
Netherlands--1.3%
Netherlands Gov't.
Bonds,
NLG 6,500 7.50%, 6/15/99......... 3,757,492
------------
New Zealand--5.2%
New Zealand Gov't.
Bonds,
NZ$ 15,950 10.00%, 7/15/97........ $ 10,084,458
8,500 8.00%, 7/15/98......... 5,115,089
------------
15,199,547
------------
Spain--2.5%
Spanish Gov't. Bonds,
Pts 904,000 11.45%, 8/30/98........ 7,124,496
------------
Sweden--1.9%
Swedish Gov't. Bonds,
SKr 40,000 11.00%, 1/21/99........ 5,480,842
------------
United Kingdom--13.1%
United Kingdom Treasury
Bonds,
(BR PD)9,775 10.00%, 11/15/96....... 15,895,571#
10,150 9.50%, 1/15/99......... 16,256,256#
350 8.00%, 6/10/03......... 513,735#
4,050 6.75%, 11/26/04........ 5,437,890#
------------
38,103,452
------------
United States--24.2%
United States Treasury
Bonds,
US$ 3,600 12.375%, 5/15/04....... 4,840,884
8,100 6.25%, 8/15/23......... 6,806,511
United States Treasury
Notes,
8,750 5.50%, 2/28/99......... 8,271,463
6,000 6.75%, 5/31/99......... 5,947,500
7,200 6.375%, 1/15/00........ 6,994,152
17,400 7.50%, 11/15/01........ 17,661,000
4,100 5.875%, 2/15/04........ 3,685,531
16,125 7.25%, 5/15/04......... 16,034,216
------------
70,241,257
------------
Total long-term
investments
(cost
US$240,582,160)...... 237,366,586
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
SHORT-TERM INVESTMENTS--13.5%
United States--13.4%
US$ 24,369 Joint Repurchase
Agreement Account,
4.26%, 7/1/94, (cost
US$24,369,000; Note
5)................... $ 24,369,000
14,800 United States Treasury
Bills,**
4.14%, 9/15/94....... 14,671,166
------------
39,040,166
------------
Outstanding Options
Purchased*--0.1%
Contracts
(000) Call Options
- ------------
<C> <S> <C>
(YEN)1,498,000 Japanese Gov't. Bonds,
4.10%, 12/22/03,
expiring 7/15/94
@(YEN)99.659......... 4,494
Currency Call Options
Australian Dollars,
A$ 24,650 expiring 8/19/94
@A$.7460............. 91,205
Deutschemarks,
DM 34,215 expiring 7/25/94
@DM1.71.............. 3,422
Japanese Yen,
(YEN) 16,980 expiring 8/10/94
@(YEN)105.00......... 19,527
Cross-Currency Put Options
DM 16,475 Deutschemarks,
expiring 1/12/95
@DM971.70 per Italian
Lira................. 57,662
31,590 expiring 1/24/95
@DM4.5412 per
Swedish Krona........ 78,975
------------
Total outstanding
options purchased.... 255,285
------------
Total short-term
investments
(cost $40,770,483)... 39,295,451
------------
Contracts
(000) Value
Description (Note 1)
<C> <S> <C>
Total Investments Before
Outstanding Options
Written--95.3% Value
(cost US$281,352,643;
Note 4)................ 276,662,037
------------
OUTSTANDING OPTIONS
WRITTEN*--(0.3%)
Cross-Currency Call Options
Deutschemarks,
expiring 1/12/95
@DM1025.00 per
DM 16,475 Italian Lira........... (158,160)
expiring 1/24/95 @DM4.75
31,590 per Swedish Krona...... (824,499)
------------
Total outstanding options
written (premiums
received US$713,395)... (982,659)
------------
Total Investments, Net of
Outstanding Options
Written--95.0%......... 275,679,378
Other assets in excess of
other liabilities--5.0% 14,488,093
-------------
Net Assets--100%......... $290,167,471
------------
------------
</TABLE>
- ------------------
Portfolio securities are classified according to the
securities currency denomination. Currency option
contracts are expressed in thousands of local
currency units.
# Principal amount segregated as collateral for
forward currency contracts and call options
written. Aggregate value of segregated
securities--$38,103,452.
* Non-income producing security.
** Percentage quoted represents yield-to-maturity
as of purchase date.
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME
FUND, INC.
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets June 30, 1994
-------------
<S> <C>
Investments, at value (cost $281,352,643)................................................. $ 276,662,037
Foreign currency, at value (cost $414).................................................... 429
Cash...................................................................................... 3,974
Receivable for investments sold........................................................... 11,822,220
Interest receivable....................................................................... 5,813,343
Receivable for Fund shares sold........................................................... 172,291
Forward contracts-net amount receivable from counterparties............................... 9,625,102
Deferred expenses and other assets........................................................ 58,584
-------------
Total assets............................................................................ 304,157,980
-------------
Liabilities
Forward contracts - net amount payable to counterparties.................................. 9,469,479
Payable for Fund shares reacquired........................................................ 2,425,018
Outstanding call options written, at value (premiums received $713,395)................... 982,659
Dividends payable......................................................................... 460,749
Accrued expenses.......................................................................... 370,517
Management fee payable.................................................................... 181,999
Distribution fee payable.................................................................. 52,381
Withholding taxes payable................................................................. 37,519
Payable for investments purchased......................................................... 10,188
-------------
Total liabilities....................................................................... 13,990,509
-------------
Net Assets................................................................................ $ 290,167,471
-------------
-------------
Net assets were comprised of:
Common stock, at par.................................................................... $ 37,700
Paid-in capital in excess of par........................................................ 386,542,008
-------------
386,579,708
Distributions in excess of net investment income........................................ (9,009,565)
Accumulated net realized losses on investment and foreign currency transactions......... (82,783,625)
Net unrealized depreciation of investment and foreign currency transactions............. (4,619,047)
-------------
Net assets, June 30, 1994................................................................. $ 290,167,471
-------------
-------------
Class A:
Net asset value and redemption price per share
($259,199,426 / 33,681,386 shares of common stock issued and outstanding)............. $7.70
Maximum sales charge (3.00% of offering price).......................................... .24
-------------
Maximum offering price to public........................................................ $7.94
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($30,968,045 / 4,018,148 shares of common stock issued and outstanding)............... $7.71
-------------
-------------
</TABLE>
See Notes to Financial Statements.
-7-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
Net Investment Income 1994
-------------
<S> <C>
Income
Interest and discount earned (net
of foreign withholding taxes of
$7,836).......................... $ 11,992,693
Income from securities loaned...... 45,025
-------------
12,037,718
-------------
Expenses
Management fee..................... 1,211,923
Distribution fee--Class A.......... 215,261
Distribution fee--Class B.......... 135,618
Transfer agent's fees and
expenses......................... 356,000
Custodian's fees and expenses...... 318,000
Reports to shareholders............ 91,000
Registration fees.................. 42,000
Audit fee.......................... 33,500
Directors' fees.................... 21,000
Legal fees and expenses............ 16,000
Insurance expense.................. 5,000
Miscellaneous...................... 11,111
-------------
Total expenses................... 2,456,413
-------------
Net investment income................ 9,581,305
-------------
<CAPTION>
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
<S> <C>
Net realized gain (loss) on:
Investment transactions............ (15,562,137 )
Foreign currency transactions...... (4,480,249 )
Financial futures transactions..... (196,685 )
Written option transactions........ (2,176,207 )
-------------
(22,415,278 )
-------------
Net change in unrealized
appreciation/ depreciation of:
Investments........................ (5,005,140 )
Foreign currencies................. (490,585 )
Financial futures.................. (5,188 )
Written options.................... 122,243
-------------
(5,378,670 )
-------------
Net loss on investments, foreign
currencies and written options..... (27,793,948 )
-------------
Net Decrease in Net Assets
Resulting from Operations............ $(18,212,643 )
-------------
-------------
</TABLE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
Increase (Decrease) June 30, December 31,
in Net Assets 1994 1993
------------ ------------
<S> <C> <C>
Operations
Net investment income..... $ 9,581,305 $ 28,763,222
Net realized gain (loss)
on investment and
foreign currency
transactions............ (22,415,278) 17,756,201
Net change in net
unrealized
appreciation/depreciation
of investments and
foreign currencies...... (5,378,670) 12,385,620
------------ ------------
Net increase (decrease) in
net assets resulting
from operations......... (18,212,643) 58,905,043
------------ ------------
Net equalization debits..... (102,885) (35,899)
------------ ------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A................. -- (20,557,518)
Class B................. -- (1,903,164)
------------ ------------
-- (22,460,682)
------------ ------------
Dividends in excess of net
investment income
Class A................. (9,768,582) --
Class B................. (1,123,786) --
------------ ------------
(10,892,368) --
------------ ------------
Distributions from net
realized gains
Class A................. (518,365) (3,742,148)
Class B................. (66,121) (346,439)
------------ ------------
(584,486) (4,088,587)
------------ ------------
Fund share transactions
(Note 6)
Net proceeds from shares
subscribed.............. 9,742,952 23,663,564
Net asset value of shares
issued to shareholders
in reinvestment of
dividends and
distributions........... 2,610,211 5,464,081
Cost of shares
reacquired................ (52,238,916) (113,967,037)
------------ ------------
Net decrease in net assets
from Fund share
transactions............ (39,885,753) (84,839,392)
------------ ------------
Total decrease.............. (69,678,135) (52,519,517)
Net Assets
Beginning of period......... 359,845,606 412,365,123
------------ ------------
End of period............... $290,167,471 $359,845,606
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Notes to Financial Statements
(Unaudited)
Prudential Intermediate Global Income Fund, Inc., (the ``Fund'') was
organized in Maryland on March 15, 1988, as a closed-end, non-diversified
management investment company. The Fund had no transactions until May 17, 1988,
when it sold 11,000 shares of common stock for $102,300 to Prudential Mutual
Fund Management, Inc. (``PMF''). Investment operations commenced on May 26,
1988. On October 4, 1991 the Fund concluded operations as a closed-end
investment company. Effective October 7, 1991, trading in the Fund's shares was
discontinued on the New York and Pacific Stock Exchanges and the Fund commenced
operations as an open-end, non-diversified investment company.
The Fund's investment objective is to provide high current income consistent
with the preservation of capital by investing in a portfolio consisting
primarily of U.S. and foreign government securities (see Note 7). The Fund will
also engage in certain hedging strategies to meet its investment objective. The
ability of issuers of debt securities held by the Fund to meet their obligations
may be affected by economic and political developments in a specific country or
region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Fund in the preparation of
its financial statements.
Security 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 rate. U.S. government securities for which quotations are
available are based on the valuation provided by an independent pricing service
on the day of valuation. 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 an independent pricing
service or by principal market makers. Any security for which the primary market
is on an exchange is valued at the last sale price on such exchange on the day
of valuation or, if there was no sale on such day, the last bid price quoted on
such day. Forward currency exchange contracts are valued at the current cost of
covering or offsetting the contract on the day of valuation. Options are valued
at their last sales price as of the close of options trading on the applicable
exchanges. If there is no sale on the applicable options exchange on such day,
options are valued at the average of the quoted bid and asked prices as of the
close of the applicable exchange. 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 which approximates market value.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that it's custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying collateral securities, the value of which exceeds
the principal amount of the repurchase transaction including accrued interest.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at
the 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/losses on investment
transactions.
Net realized losses on foreign currency transactions represents net foreign
exchange gains and losses from sales and maturities of short-term securities and
forward currency contracts, holding of foreign currencies, currency gains or
losses realized between the trade and settlement dates on securities
-9-
<PAGE>
<PAGE>
transactions, and the difference between the amounts of interest and foreign
taxes recorded on the Fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net currency gains and 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/depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political or economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Forward Currency Contracts: The Fund enters into forward currency contracts in
order to hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. A forward contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The gain
or loss arising from the difference between the settlement value of the original
and renegotiated forward contracts, if any, is isolated and is included in net
realized gains/losses from foreign currency transactions. Risks may arise upon
entering into these contracts from the potential inability of the counterparties
to meet the terms of their contracts.
Option Writing: When the Fund writes an option, an amount equal to the premium
received by the Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums received from writing
options which expire unexercised are treated by the Fund on the expiration date
as realized gains from written options transactions. The difference between the
premium and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction, as a
realized loss. If a call option is exercised, the premium is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Fund has realized a gain or loss. If a put option is exercised, the
premium reduces the cost basis of the securities or currencies purchased by the
Fund. The Fund as writer of an option may have no control over whether the
underlying securities or currencies may be sold (called) or purchased (put) and
as a result bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option.
Securities Lending: The Fund may lend its U.S. Government securities to
broker-dealers or government securities dealers. The loans are secured by
collateral at least equal at all times to the market value of the securities
loaned. The Fund may bear the risk of delay in recovery of, or even loss of
rights in, the securities loaned should the borrower of the securities fail
financially. The Fund receives compensation for lending its securities in the
form of fees or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive interest on the
securities loaned and any gain or loss in the market price of the securities
loaned that may occur during the term of the loan will be for the account of the
Fund. As of June 30, 1994, the Fund had no securities on loan.
Security Transactions and Investment Income: Security transactions are recorded
on the trade date. Realized gains and losses from security and currency
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis.
Net investment income (other than distribution fees), and unrealized 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.
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 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.
Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
Dividends and Distributions: The Fund declares daily and pays dividends of net
investment income monthly and makes distributions at least annually of any net
capital gains. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with Statement of Position 93-2:
Determination,
-10-
<PAGE>
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement of Position was to reclassify $10,347,607 of foreign currency
losses to undistributed net investment income from accumulated net realized loss
on investments and foreign currency transactions. 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 PMF. Pursuant to this agreement,
PMF has responsibility for all investment advisory services and supervises the
subadviser's performance of such services. PMF has entered into a subadvisory
agreement with The Prudential Investment Corporation (``PIC''); PIC furnishes
investment advisory services in connection with the management of the Fund. PMF
pays for the cost of the subadviser's services, the compensation of officers of
the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The
Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .75% of the Fund's average daily net assets.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and Prudential Securities Incorporated (``PSI''), which acts
as distributor of the Class B shares of the Fund (collectively the
``Distributors''). To reimburse the Distributors for their expenses incurred in
distributing and servicing the Fund's Class A and B shares, the Fund, pursuant
to plans of distribution, pays the Distributors a reimbursement, accrued daily
and payable monthly.
Pursuant to the Class A Plan, the Fund reimburses PMFD for its expenses with
respect to Class A shares at an annual rate of up to .30 of 1% of the average
daily net assets of the Class A shares. Such expenses under the Class A Plan
were at the annual rate of .15 of 1% of the average daily net assets of the
Class A shares for the six months ended June 30, 1994. PMFD pays various
broker-dealers, including PSI and Pruco Securities Corporation (``Prusec''),
affiliated broker-dealers, for account servicing fees and other expenses
incurred by such broker-dealers.
Pursuant to the Class B Plan, the Fund reimburses PSI for its
distribution-related expenses with respect to Class B shares at an annual rate
of up to .75 of 1% of the average daily net assets of the Class B shares. The
Class B distribution expenses include commission credits for payments of
commissions and account servicing fees to financial advisers and an allocation
for overhead and other distribution-related expenses, interest and/or carrying
charges, the cost of printing and mailing prospectuses to potential investors
and of advertising incurred in connection with the distribution of shares.
The Distributors recover the distribution expenses and account servicing fees
incurred through the receipt of reimbursement payments from the Fund under the
plans and the receipt of initial sales charges (Class A only) and contingent
deferred sales charges (Class B only) from shareholders.
PMFD has advised the Fund that it has received approximately $26,000 in
front-end sales charges resulting from sales of Class A shares during the six
months ended June 30, 1994. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons.
With respect to the Class B Plan, at any given time, the amount of expenses
incurred by PSI in distributing the Fund's shares and not recovered through the
imposition of contingent deferred sales charges in connection with certain
redemptions of shares may exceed the total payments made by the Fund pursuant to
the Class B Plan. PSI has advised the Fund that for the six months ended June
30, 1994, it received approximately $67,300 in contingent deferred sales charges
imposed upon certain redemptions by investors. PSI, as distributor, has also
advised the Fund that at June 30, 1994, the amount of distribution expenses
incurred by PSI and not yet reimbursed by the Fund or recovered through
contingent deferred sales charges approximated $202,200. This amount may be
recovered through future payments under the Class B Plan or contingent deferred
sales charges.
In the event of termination or noncontinuation of the Class B Plan, the Fund
would not be contractually obligated to pay PSI, as distributor, for any
expenses not previously reimbursed or recovered through contingent deferred
sales charges.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the six months ended June 30, 1994, the Fund incurred fees of
approximately $259,200 for the services of PMFS. As of June 30, 1994, fees of
approximately $44,500 were due to PMFS. Transfer agent
-11-
<PAGE>
<PAGE>
fees and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to non-affiliates.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments and written options, for
the six months ended June 30, 1994, aggregated $998,666,216 and $1,065,489,720,
respectively.
At June 30, 1994, the Fund had outstanding forward currency contracts, both
to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Foreign Currency Value at
Purchase Settlement Date Current Appreciation
Contracts Payable Value (Depreciaton)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring 7/8-
8/5/94......... $ 113,844,359 $113,830,860 $ (13,499)
Belgian Dollars,
expiring
7/28/94........ 10,123,139 10,208,418 85,279
British Pounds,
expiring
7/20/94........ 7,209,168 7,245,387 36,219
Canadian Dollars,
expiring 7/11-
7/20/94........ 23,364,474 23,516,228 151,754
Danish Kroner,
expiring
7/25/94........ 4,644,366 4,669,148 24,782
French Francs,
expiring 7/5-
8/5/94......... 37,042,257 37,790,861 748,604
Deutschemarks,
expiring 7/5-
8/5/94......... 189,097,414 192,916,801 3,819,387
Irish Punts,
expiring
7/15/94........ 2,528,361 2,606,977 78,616
Italian Lira,
expiring 7/20-
8/1/94......... 21,694,019 21,656,092 (37,927)
Japanese Yen,
expiring 7/11-
7/22/94........ 69,036,061 71,999,305 2,963,244
New Zealand
Dollars,
expiring 7/11-
7/22/94........ 27,670,400 28,347,717 677,317
Spanish Pesetas,
expiring
7/11/94........ $ 18,303,969 $ 18,805,974 $ 502,005
Swedish Krona,
expiring 7/11-
7/13/94........ 16,815,518 17,261,563 446,045
Swiss Francs,
expiring
7/22/94........ 7,826,413 7,862,251 35,838
--------------- ------------ --------------
$ 549,199,918 $558,717,582 $ 9,517,664
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sales Contracts Receivable Value (Depreciaton)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring 7/8-
8/5/94......... $ 118,705,708 $118,381,857 $ 323,851
British Pounds,
expiring 7/20-
9/2/94......... 28,698,249 29,130,788 (432,539)
Canadian Dollars,
expiring 7/11-
8/5/94......... 31,160,782 31,224,922 (64,140)
French Francs,
expiring 7/5-
7/11/94........ 29,489,738 30,056,770 (567,032)
Deutschemarks,
expiring 7/5-
8/9/94......... 161,607,756 164,817,154 (3,209,398)
Irish Punts,
expiring
7/15/94........ 11,075,546 11,340,541 (264,995)
Italian Lira,
expiring
7/20/94........ 13,046,000 13,169,303 (123,303)
Japanese Yen,
expiring 7/8-
7/28/94........ 26,561,385 27,773,934 (1,212,549)
New Zealand
Dollars,
expiring 7/11-
7/22/94........ 45,517,109 45,897,968 (380,859)
Netherland
Guilders,
expiring
7/8/94......... 35,093,378 36,790,889 (1,697,511)
Spanish Pesetas,
expiring
7/11/94........ 19,046,012 19,808,886 (762,874)
Swedish Krona,
expiring 7/11-
7/15/94........ 30,696,246 31,623,990 (927,744)
Swiss Francs,
expiring
7/22/94........ 9,861,472 9,904,420 (42,948)
--------------- ------------ --------------
$ 560,559,381 $569,921,422 $ (9,362,041)
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
Transactions in options written during the six months ended June 30, 1994,
were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
<S> <C> <C>
---------- -----------
Options outstanding at
December 31, 1993................. 116,811 $ 663,233
Options written..................... 380,899 2,670,971
Options terminated in closing
purchase transactions............. (89,825) (521,896)
Options expired..................... (207,250) (1,190,448)
Options exercised................... (152,570) (908,465)
---------- -----------
Options outstanding at
June 30, 1994..................... 48,065 $ 713,395
---------- -----------
---------- -----------
</TABLE>
-12-
<PAGE>
<PAGE>
The federal income tax basis of the Portfolio's investments at June 30, 1994
was $281,991,681 and, accordingly, net unrealized depreciation for federal
income tax purposes was $5,329,644 (gross unrealized appreciation--$1,925,548;
gross unrealized depreciation--$7,255,192).
For federal income tax purposes, the Fund has a capital loss carryforward as
of December 31, 1993, of approximately $69,005,500 of which $45,765,500 expires
in 1997, and $23,240,000 expires in 1998.
Note 5. Joint The Fund, along with other
Repurchase affiliated registered invest-
Agreement Account ment 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, 1994, the Fund has a 2.5% undivided interest in the
joint account. The undivided interest for the Fund represents $24,369,000 in
principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:
Goldman, Sachs & Co., 4.30%, in the principal amount of $300,000,000,
repurchase price $300,035,833, due 7/1/94. The value of the collateral including
accrued interest is $306,000,136.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 4.15%, in the principal amount
of $232,000,000, repurchase price $232,026,744, due 7/1/94. The value of the
collateral including accrued interest is $236,645,037.
Nomura Securities International, Inc., 4.25%, in the principal amount of
$275,000,000, repurchase price $275,032,465, due 7/1/94. The value of the
collateral including accrued interest is $280,500,174.
Smith Barney Shearson, Inc., 4.35%, in the principal amount of $150,000,000,
repurchase price $150,018,125, due 7/1/94. The value of the collateral including
accrued interest is $153,000,285.
Note 6. Capital The Fund offers both Class A
and Class B shares. Class A shares are sold with a
front-end sales charge of up to 3.0%. Class B shares are sold with a contingent
deferred sales charge which declines from 3% to zero depending on the period of
time the shares are held. Both classes of shares have equal rights as to
earnings, assets and voting privileges except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan.
There are 2 billion authorized shares of $.001 par value common stock divided
equally into two classes, designated Class A and Class B common stock. Of the
37,699,534 shares of common stock issued and outstanding at June 30, 1994, PMF
owned 12,284 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, 1994:
Shares sold..................... 571,031 $ 4,725,712
Shares issued in reinvestment of
dividends and distributions... 253,366 2,023,331
Shares reacquired............... (5,170,997) (41,552,576)
----------- ------------
Net decrease in shares
outstanding................... (4,346,600) $(34,803,533)
----------- ------------
----------- ------------
Year ended December 31, 1993:
Shares sold..................... 420,829 $ 3,430,997
Shares issued in reinvestment of
dividends and distributions... 537,723 4,448,300
Shares reacquired............... (11,665,755) (96,009,197)
----------- ------------
Net decrease in shares
outstanding................... (10,707,203) $(88,129,900)
----------- ------------
----------- ------------
<CAPTION>
Class B
<S> <C> <C>
Six months ended June 30, 1994:
Shares sold..................... 613,684 $ 5,017,240
Shares issued in reinvestment of
dividends and distributions... 73,241 586,880
Shares reacquired............... (1,343,561) (10,686,340)
----------- ------------
Net decrease in shares
outstanding................... (656,636) $ (5,082,220)
----------- ------------
----------- ------------
Year ended December 31, 1993:
Shares sold..................... 2,410,382 $ 20,232,567
Shares issued in reinvestment of
dividends and distributions... 122,288 1,015,781
Shares reacquired............... (2,158,964) (17,957,840)
----------- ------------
Net increase in shares
outstanding................... 373,706 $ 3,290,508
----------- ------------
----------- ------------
</TABLE>
Note 7. Subsequent On July 19, 1994, a meeting
Event of the shareholders of the
Fund was held at which time the shareholders
approved among other things: a) amendments to the Fund's Articles of
Incorporation to permit a conversion feature for Class B shares to Class A
shares after five years; b) amendments to the Class A and Class B Distribution
Plans, under which the Distribution Plans become compensation rather than
reimbursement plans, and c) a change in the Fund's investment objective to seek
to maximize total return. These changes were effective August 1, 1994.
-13-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class A(D)(D) Class B
------------------------------------------------------------------------------ -----------
Six Months Year Ten Months Six Months
Ended Ended Ended Year Ended February 28, Ended
June 30, December 31, December 31, ---------------------------------- June 30,
1994 1993 1992@ 1992 1991 1990 1994
----------- ------------ ------------ -------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period.......................... $ 8.43 $ 7.77 $ 8.39 $ 8.79 $ 8.56 $ 8.93 $ 8.44
----------- ------------ ------------ -------- ------------ -------- -----------
Income from investment operations
Net investment income............ .24 .59 .61 .71 .74 .73 .22
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions... (.69) .63 (.36) (.36) .35 (.10) (.69)
----------- ------------ ------------ -------- ------------ -------- -----------
Total from investment
operations.................... (.45) 1.22 .25 .35 1.09 .63 (.47)
----------- ------------ ------------ -------- ------------ -------- -----------
Less distributions
Dividends from net investment
income.......................... (.24) (.48) (.59) (.71) (.74) (.73) (.22)
Dividends in excess of net
investment income............... (.03) -- -- -- -- -- (.03)
Distributions from net realized
gains........................... -- (.08) (.28) -- -- -- --
Distributions in excess of net
realized gains.................. (.01) -- -- -- -- -- (.01)
Distributions from paid-in
capital
in excess of par................ -- -- -- (.04) (.12) (.27) --
----------- ------------ ------------ -------- ------------ -------- -----------
Total distributions............. (.28) (.56) (.87) (.75) (.86) (1.00) (.26)
----------- ------------ ------------ -------- ------------ -------- -----------
Net asset value, end of period... $ 7.70 $ 8.43 $ 7.77 $ 8.39 $ 8.79 $ 8.56 $ 7.71
----------- ------------ ------------ -------- ------------ -------- -----------
----------- ------------ ------------ -------- ------------ -------- -----------
TOTAL RETURN#:................... (5.47)% 16.12% 3.09% 4.24% 13.49% 7.20% (5.74)%
----------- ------------ ------------ -------- ------------ -------- -----------
----------- ------------ ------------ -------- ------------ -------- -----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)........................... $ 259,199 $320,406 $378,865 $271,714 $449,178 $437,558 $30,968
Average net assets (000)......... $ 289,393 $355,018 $331,339 $399,714 $437,752 $455,386 $36,464
Ratios to average net assets:
Expenses, including distribution
fees.......................... 1.45%* 1.41% 1.30%* 1.20% 1.04% 1.07% 2.05%*
Expenses, excluding distribution
fees.......................... 1.30%* 1.26% 1.15%* 1.15% 1.04% 1.07% 1.30%*
Net investment income........... 6.00%* 7.42% 9.08%* 8.43% 8.61% 8.16% 5.40%*
Portfolio turnover rate.......... 343% 361% 201% 170% 250% 231% 343%
Total debt outstanding at end
of period (000)................. -- -- -- -- $ 20,240 $ 27,600 --
Asset coverage@@................. -- -- -- -- $ 23,193 $ 16,854 --
<CAPTION>
Year Ten Months
Ended Ended January 15, 1992+
December 31, December 31, Through February
1993 1992@ 29, 1992
------------ ------------ -----------------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period.......................... $ 7.79 $ 8.40 $ 8.43
------ ------ -----
Income from investment operations
Net investment income............ .54 .57 .08
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions... .63 (.35) (.03)
------ ------ -----
Total from investment
operations.................... 1.17 .22 .05
------ ------ -----
Less distributions
Dividends from net investment
income.......................... (.44) (.55) (.08)
Dividends in excess of net
investment income............... -- -- --
Distributions from net realized
gains........................... (.08) (.28) --
Distributions in excess of net
realized gains.................. -- -- --
Distributions from paid-in
capital
in excess of par................ -- -- --
------ ------ -----
Total distributions............. (.52) (.83) (.08)
------ ------ -----
Net asset value, end of period... $ 8.44 $ 7.79 $ 8.40
------ ------ -----
------ ------ -----
TOTAL RETURN#:................... 15.29% 2.70% 0.58%
------ ------ -----
------ ------ -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)........................... $ 39,440 $ 33,500 $ 1,049
Average net assets (000)......... $ 36,197 $ 18,358 $ 456
Ratios to average net assets:
Expenses, including distribution
fees.......................... 2.01% 1.90%* 1.03%*
Expenses, excluding distribution
fees.......................... 1.26% 1.15%* .28%*
Net investment income........... 6.67% 8.54%* 9.43%*
Portfolio turnover rate.......... 361% 201% 170%
Total debt outstanding at end
of period (000)................. -- -- --
Asset coverage@@................. -- -- --
</TABLE>
- ---------------
* Annualized.
(D) Commencement of offering of Class B shares.
(D)(D) Prior to October 7, 1991, the Fund was organized as a closed-end fund.
@ The Fund changed its fiscal year end to December 31.
@@ Per $1,000 of debt outstanding.
# Total return does not consider the effect of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
See Notes to Financial Statements.
-14-
<PAGE>
<PAGE>
Director
John C. Davis
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Robert J. Schultz
Gerald A. Stahl
Stephen Stoneburn
Robert H. Wellington
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Deborah A. Docs, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, NY 10022
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555
The accompanying financial statements as of June 30, 1994
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.
74435G203 MF155E2
74435G302 Cat. #444583W
