<PAGE>
LETTER TO SHAREHOLDERS
-------------------------------
February 4, 1994
Dear Shareholder:
The fundamental breakdown of the European exchange rate mechanism in August,
political and economic reform in Japan and the divergence of global economic
growth patterns during the last 12 months contributed to a volatile global
bond environment. Despite this market volatility, the Prudential Intermediate
Global Income Fund, Inc. provided competitive returns.
<TABLE>
<CAPTION>
FUND PERFORMANCE
As of December 31, 1993
Total Return Net Asset Value 12-month
One Year1 12/31/93 12/31/92 Dividends
<S> <C> <C> <C> <C>
Class A 16.12% $8.43 $7.77 $0.56
Class B 15.29% $8.44 $7.79 $0.52
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
As of December 31, 1993(2)
One Year Five Year Since Inception3
<S> <C> <C> <C>
Class A 12.64% 7.99% 7.79%
Class B 12.29% N/A 8.84%
<FN>
(1)Source: Lipper Analytical Services, Inc. These 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.
(2)Source: Prudential Mutual Fund Management. These figures take into
account applicable sales charges.
(3)Inception of Class A 5/26/88, Class B 1/15/92. The Fund previously
operated as a closed-end fund. Note: Past performance is no guarantee
of future results, and an investor's shares, when redeemed, may be worth
more or less than their original value.
</TABLE>
Global Bond Yields and Your Fund
During 1993, recession in Europe, slow and uneven growth in the dollar bloc
nations of Australia, Canada, New Zealand and the U.S., and lower global
inflationary pressures encouraged bond yields to fall worldwide. Despite this,
many European countries, concerned about inflation and stable exchange rates,
continued their unsustainable tight monetary policies. Thus, we
favored a diversified portfolio of longer dated bonds.
When yields fell, the Fund was in a better position to capture
significant capital gains in many
1
<PAGE>
bond markets. As of December 31, 1993, the weighted average maturity of
the Fund was 7.4 years.
Decreases in overseas bond yields continued to outpace the decline in
North American markets. In particular, the Fund's European bond holdings
offered significantly higher total returns than comparable U.S. Treasurys.
Rising European unemployment and slow industrial demand caused interest rates
to decline sharply throughout Europe since the end of June. The Fund was
well positioned to take advantage of this situation since approximately 55%
of total net assets were held in European countries as of December 31, 1993.
As the Japanese economy continued to weaken and inflation remained extremely
low, we maintained our holdings in Japan, with particular emphasis on longer
dated government bonds. Prior government intervention intended to help
the economy has only been modestly successful. The bond market should benefit
as long as these conditions persist.
We reduced the Fund's U.S. bond holdings. Strong U.S. economic data during
the fourth quarter of last year pointed to accelerated domestic growth.
Although inflation is currently low, U.S. government bond yields rose when
the Federal Reserve recently stated that it may move to increase short-term
rates further by Spring if signs of inflation emerge.
Currency Markets and Your Fund
During the first six months of last year, the U.S. dollar was mixed. The
dollar, however, strengthened during the second half of 1993 on data that
indicated there was an increasing divergence of growth patterns between the
U.S. and most other major industrialized nations. The Japanese yen, after
strengthening dramatically during the first six months of the year, has come
under downward pressure against the dollar as growth prospects in Japan
remain bleak.
In Europe, relatively tight monetary policy continues to drag down economic
growth. As a result, we have been anticipating further declines in official
interest rates in the coming months. Since this would help to depreciate many
European currencies against a rising U.S. dollar, a significant portion of the
Fund's foreign currency exposure remains hedged back to the U.S. dollar.
Dollar bloc currencies such as the Canadian dollar and the Australian dollar
remained stable over the period and we generally maintained an unhedged
currency position with these countries' holdings.
Outlook
The prospects for the global bond market are positive. Given the low level
of U.S. interest rates, economic weakness abroad, and generally stable
worldwide inflation, global bonds should remain attractive in 1994. We will
attempt to maintain diversified holdings in various world bond markets in
order to capture both high current yields and potential capital gains
resulting from
2
<PAGE>
falling interest rates. In coming months, we will continue to focus on
investments outside of the United States. In addition, if the U.S.
dollar appreciates further against other foreign currencies, hedging will
become an important portfolio strategy.
As always, it is a pleasure to have you as a shareholder of the
Prudential Intermediate Global Income Fund and to take the opportunity to
report our activities to you.
Sincerely,
Lawrence C. McQuade
President
Andrew Barnett
Portfolio Manager
3
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--89.6%
Australia--2.0%
Australian Gov't.
Bonds,
A$ 9,000 9.00%, 9/15/04......... $ 7,152,896#
------------
Canada--5.9%
Canadian Gov't. Bonds,
Can$ 8,000 6.25%, 2/1/98.......... 6,191,528#
7,300 5.75%, 3/1/99.......... 5,513,024#
Prov. of Quebec,
12,440## 7.50%, 12/1/03......... 9,524,307#
------------
21,228,859
------------
Denmark--5.9%
Danish Gov't. Bonds,
DKr 32,900 9.00%, 11/15/98........ 5,507,951#
93,250 8.00%, 5/15/03......... 15,566,757#
------------
21,074,708
------------
France--6.9%
French Gov't. Bonds,
FF 57,620 8.50%, 11/12/97........ 10,910,665#
ECU 2,000 10.00%, 2/26/01........ 2,761,560#
FF 51,700 8.50%, 4/25/23......... 11,319,317#
------------
24,991,542
------------
Germany--4.0%
Fed. Rep. of Germany,
DM 18,575 8.00%, 7/22/02......... 12,339,871#
Treuhandanstalt,
2,250 6.125%, 6/25/98........ 1,350,259#
1,200 6.875%, 6/11/03........ 742,302#
------------
14,432,432
------------
Ireland--5.5%
Irish Gov't. Bonds,
IEP 7,625 9.00%, 7/15/01......... 12,490,760#
Irish Gov't. Bonds,
IEP 5,200 6.25%, 10/18/04........ $ 7,256,762#
------------
19,747,522
------------
Italy--6.7%
Italian Gov't. Bonds,
L 17,270,000 12.00%, 1/20/98........ 11,178,698#
19,720,000 12.00%, 5/19/98........ 12,872,822#
------------
24,051,520
------------
Japan--8.8%
Japan Development Bank,
(Yen)770,000 6.50%, 9/20/01......... 8,356,356#
Japanese Gov't. Bonds,
1,861,000 3.90%, 12/22/03........ 17,441,701#
540,000 5.50%, 9/20/13......... 5,807,900#
------------
31,605,957
------------
Mexico--1.1%
Mexican Treasury
Bills,**
MP 15,000 11.75%, 9/7/95......... 4,032,435#
------------
Netherlands--4.6%
Netherlands Gov't.
Bonds,
NLG 29,200 7.50%, 6/15/99......... 16,671,165#
------------
Spain--3.9%
Spanish Gov't. Bonds,
Pts 1,779,000 11.45%, 8/30/98........ 14,187,418#
------------
Sweden--7.3%
Statens Bostads
Finansier,
SKr 35,000 13.00%, 9/20/95........ 4,619,119
61,000 12.50%, 1/23/97........ 8,452,168
Swedish Gov't. Bonds,
91,500 11.00%, 1/21/99........ 13,126,984
------------
26,198,271
------------
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
United Kingdom--9.0%
United Kingdom Treasury
Notes,
(Br. Pd)13,524 10.50%, 5/19/99........ $ 24,239,963#
4,600 8.00%, 9/27/13......... 7,991,997#
------------
32,231,960
------------
United States--18.0%
United States Treasury
Bonds,
US$ 7,000 12.375%, 5/15/04....... 10,487,960#
United States Treasury
Notes,
19,500 5.125%, 11/30/98....... 19,432,920#
10,000 6.375%, 1/15/00........ 10,503,100#
8,120++ 5.50%, 4/15/00......... 8,185,934#
5,400+ 7.50%, 11/15/01........ 6,024,348#
5,700 6.25%, 2/15/03......... 5,890,608#
4,450 5.75%, 8/15/03......... 4,434,692#
------------
64,959,562
------------
Total long-term
investments
(cost
US$322,716,198)...... 322,566,247
------------
SHORT-TERM INVESTMENTS--9.0%
Mexico--5.5%
Mexican Treasury
Bills,**
MP 15,000 12.00%, 8/4/94......... 4,547,130#
50,000 11.72%, 9/8/94......... 15,013,526#
------------
19,560,656
------------
United States--2.9%
Joint Repurchase
Agreement
Account,
US$ 5,427 3.15%, 1/3/94, (cost
US$5,427,000; Note
5)................... $ 5,427,000
United States Treasury
Bills,**
5,060 2.98%, 3/31/94......... 5,023,214
------------
10,450,214
------------
Outstanding Options
Purchased*--0.6%
Contracts Call Options
(000)
- ------------
German Gov't. Bonds,
84,900 6.75%, 4/22/03,
expiring 3/22/94
@ DM107.80........... 271,680
Japanese Gov't. Bonds,
2,457,000 5.50%, 3/20/02,
expiring 3/14/94
@ (Yen)110.748....... 144,963
1,500,000 4.50%, 6/20/03,
expiring 1/31/94
@ (Yen)107.631....... 1,153,950
Currency Call Options
German Deutschemarks,
18,670 expiring 1/19/94
@ DM1.71............. 369,666
Cross-Currency Call Options
Swiss Francs,
expiring 1/6/94
33,957 @CHF .8635 per German
Deutschemark........... 4,075
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Contracts Value
(000) Description (Note 1)
<C> <S> <C>
Currency Put Options
Australian Dollars,
29,904 expiring 1/20/94
@ A$ .6815........... $ 222,785
German Deutschemarks,
18,350 expiring 1/6/94 @
DM1.70............... 734
38,404 expiring 1/6/94 @
DM1.60............... 3,840
------------
Total outstanding
options
purchased............ 2,171,693
------------
Total short-term
investments
(cost
US$31,547,522)....... 32,182,563
------------
Total Investments
Before Outstanding
Options
Written--98.6%
(cost US$354,263,720;
Note 4).............. 354,748,810
------------
OUTSTANDING OPTIONS
WRITTEN*--(0.3%)
Currency Call Options
Australian Dollars,
29,708 expiring 1/20/94
@ A$ .686............ (75,755)
German Deutschemarks,
38,404 expiring1/6/94
@DM1.70.............. (890,973)
Currency Put Options
Australian Dollars,
30,349 expiring 1/20/94
@ A$ .6715........... $ (88,012)
German Deutschemarks,
18,350 expiring1/4/94 @
DM1.675.............. --
------------
Total outstanding
options
written
(premiums received
US$663,233).......... (1,054,740)
------------
Total Investments, Net
of
Outstanding Options
Written--98.3%......... 353,694,070
Other assets in excess
of
other
liabilities--1.7%.... 6,151,536
------------
Net Assets--100%....... $359,845,606
------------
------------
<FN>
- ------------------
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,
delayed delivery securities and call options written. Aggregate value of
segregated securities-- $315,928,632.
## Indicates a delayed delivery security.
* Non-income producing security.
** Percentages quoted represent yields to maturity as of purchase date.
+ Partially pledged as initial margin on financial futures contracts.
++ Represents security; a portion ($6,620,000) of which is on loan.
ECU--European Currency Units.
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME
FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
December 31, 1993
-----------------
<S> <C>
Assets
Investments, at value (cost $354,263,720).................. $ 354,748,810
Receivable for investments sold............................ 16,574,565
Interest receivable........................................ 8,419,607
Collateral for securities loaned, at value................. 7,228,034
Forward contracts-net amount receivable from counterparties 809,394
Receivable for Fund shares sold............................ 240,545
Deferred expenses and other assets......................... 72,553
--------------
Total assets............................................. 388,093,508
--------------
Liabilities
Bank overdraft............................................. 514,507
Payable for investments purchased.......................... 16,841,751
Payable upon return of securities loaned................... 7,228,034
Payable for Fund shares reacquired......................... 1,550,736
Outstanding options written, at value (premiums
received $663,233)....................................... 1,054,740
Accrued expenses........................................... 361,699
Due to broker-variation margin payable..................... 287,970
Management fee payable..................................... 231,920
Dividend Payable........................................... 80,337
Distribution fee payable................................... 66,758
Withholding taxes payable.................................. 29,450
-------------
Total liabilities........................................ 28,247,902
-------------
Net Assets................................................. $ 359,845,606
-------------
-------------
Net assets were comprised of:
Common stock, at par..................................... $ 42,703
Paid-in capital in excess of par......................... 426,422,758
-------------
426,465,461
Undistributed net investment income...................... 2,751,990
Accumulated net realized loss on investments and foreign
currency transactions.................................. (70,131,468)
Net unrealized appreciation.............................. 759,623
-------------
Net assets, December 31, 1993.............................. $ 359,845,606
-------------
-------------
Class A:
Net asset value and redemption price per share
($320,405,814 (divided by) 38,027,986 shares of
common stock issued and outstanding)................... $8.43
Maximum sales charge (3.00% of offering price)........... .26
Maximum offering price to public......................... $8.69
Class B:
Net asset value, offering price and redemption price per
share ($39,439,792 (divided by) 4,674,784 shares of
common stock issued and outstanding)................... $8.44
</TABLE>
See Notes to Financial Statements.
-7-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
Net Investment Income 1993
----------------
Income
<S> <C>
Interest and discount earned....... $34,401,251
Income from securities loaned...... 91,129
-------------
34,492,380
-------------
Expenses
Management fee..................... 2,934,112
Distribution fee--Class A.......... 532,527
Distribution fee --Class B......... 271,479
Transfer agent's fees and
expenses........................... 775,000
Custodian's fees and expenses...... 759,000
Reports to shareholders............ 180,000
Registration fees.................. 68,000
Audit fee.......................... 67,000
Directors' fees.................... 50,000
Insurance expense.................. 46,000
Legal fees and expenses............ 35,000
Amortization of organization
expense............................ 2,578
Miscellaneous...................... 8,462
-------------
Total expenses................... 5,729,158
-------------
Net investment income................ 28,763,222
-------------
Net Realized and Unrealized Gain
(Loss) on Investment and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............ 8,207,303
Foreign currency transactions...... 1,914,101
Financial futures transactions..... 2,297,507
Written option transactions........ 5,337,290
-------------
17,756,201
-------------
Net change in net unrealized
appreciation/depreciation on:
Investments........................ 16,250,917
Foreign currencies................. (3,478,978)
Financial futures.................. 5,188
Written options.................... (391,507)
-------------
12,385,620
-------------
Net gain on investments and foreign
currencies......................... 30,141,821
-------------
Net Increase in Net Assets
Resulting from Operations............ $58,905,043
-------------
-------------
</TABLE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Ten months
Year Ended Ended
Increase (Decrease) December 31, December 31,
in Net Assets 1993 1992
------------ ------------
<S> <C> <C>
Operations
Net investment
income................. $ 28,763,222 $ 26,470,840
Net realized gain on
investment and
foreign currency
transactions......... 17,756,201 5,090,415
Net change in net
unrealized
appreciation/depreciation
on investments and
foreign currencies... 12,385,620 (23,926,935)
------------ ------------
Net increase in net
assets resulting from
operations........... 58,905,043 7,634,320
------------ ------------
Net equalization
debits................. (35,899) --
------------ ------------
Dividends and distributions (Note 1)
Dividends to
shareholders from net
investment income
Class A.............. (20,557,518) (24,091,902)
Class B.............. (1,903,164) (1,222,290)
------------ ------------
(22,460,682) (25,314,192)
------------ ------------
Distributions to
shareholders from net
realized gains on
investment
transactions
Class A.............. (3,742,148) (7,977,489)
Class B.............. (346,439) (521,712)
------------ ------------
(4,088,587) (8,499,201)
------------ ------------
Fund share transactions
(Note 6)
Net proceeds from
shares subscribed.... 23,663,564 257,728,106
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 5,464,081 5,534,034
Cost of shares
reacquired............. (113,967,037) (97,480,338)
------------ ------------
Net increase (decrease)
in net assets from
Fund share
transactions......... (84,839,392) 165,781,802
------------ ------------
Total increase
(decrease)............. (52,519,517) 139,602,729
Net Assets
Beginning of year........ 412,365,123 272,762,394
------------ ------------
End of year.............. $359,845,606 $412,365,123
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Notes to Financial Statements
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. Subsequent to
February 29, 1992 (the Fund's former fiscal year-end) the Fund changed its
fiscal year-end to December 31.
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. 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 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 year, 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 year 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
year. 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
transactions, and the difference between the amounts of
-9-
<PAGE>
<PAGE>
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 year 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.
Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of debt securities at a set
price for delivery on a future date. Upon entering into a financial futures
contract, the Fund is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount. The amount is
known as the ``initial margin''. Subsequent payments, known as ``variation
margin'', are made or received by the Fund each day, depending on the daily
fluctuations in the value of the underlying security. Such variation margin is
recorded for financial statement purposes on a daily basis as unrealized gain or
loss until the contracts expire or are closed, at which time the gain or loss is
reclassified to realized gain or loss.
The Fund invests in financial futures contracts solely for the purpose of
hedging its existing portfolio securities or securities the Fund intends to
purchase against fluctuations in value caused by changes in prevailing market
conditions. Should market rates move unexpectedly the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets.
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.
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.
-10-
<PAGE>
<PAGE>
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.
Deferred Organization Expenses: Approximately $50,000 was incurred in connection
with the organization of the Fund. These costs were deferred and amortized over
the sixty month period ended May 1993.
Reclassification of Capital Accounts: Effective January 1, 1993, the Fund began
accounting and reporting for distributions to shareholders in accordance with
Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result of this statement, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. The effect caused by adopting this
statement was to increase paid-in capital by $66,030,945, increase undistributed
net investment income by $4,125,398 and increase accumulated net realized losses
on investments and foreign currency transactions by $70,156,343 compared to
amounts previously reported through December 31, 1992. During the year ended
December 31, 1993, the Fund reclassified $8,843,795 of foreign currency losses
to undistributed net investment income from accumulated net realized loss on
investments and foreign currency transactions. In addition, the Fund increased
paid-in capital by $194,670, increased undistributed net investment income by
$47,098 and decreased accumulated net realized loss on investments and foreign
currency transactions by $241,768 due to a reclassification of market discount
during the year ended December 31, 1993. 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 fiscal year ended December 31, 1993. 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
-11-
<PAGE>
<PAGE>
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 $62,300 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended December 31, 1993. 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 fiscal year ended
December 31, 1993, it received approximately $101,000 in contingent deferred
sales charges imposed upon certain redemptions by investors. PSI, as
distributor, has also advised the Fund that at December 31, 1993, the amount of
distribution expenses incurred by PSI and not yet reimbursed by the Fund or
recovered through contingent deferred sales charges approximated $276,800. 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 fiscal year ended December 31, 1993, the Fund incurred fees of
approximately $616,000 for the services of PMFS. As of December 31, 1993, fees
of approximately $44,900 were due to PMFS. Transfer agent fees and expenses in
the Statement of Operations include certain out-of-pocket expenses paid to
non-affiliates.
Note 4. Portfolio Purchases and sales of invest
Securities ment securities, other than
short-term investments and written options, for
the fiscal year ended December 31, 1993, aggregated $1,255,321,182 and
$1,281,511,234, respectively.
At December 31, 1993, 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 1/24-
2/7/94......... $ 135,659,159 $137,317,669 $ 1,658,510
Belgian Francs,
expiring
1/31/94........ 9,600,000 9,439,274 (160,726)
British Pounds,
expiring 1/20-
2/7/94......... 36,388,114 35,983,002 (405,112)
Canadian Dollars,
expiring
2/15/94........ 14,323,069 14,549,694 226,625
French Francs,
expiring 1/5-
2/15/94........ 12,403,202 12,271,254 (131,948)
German
Deutschemarks,
expiring 1/18-
2/15/94........ 277,812,090 273,014,484 (4,797,606)
Italian Lira,
expiring
1/18/94........ 28,645,000 27,257,561 (1,387,439)
Japanese Yen,
expiring 1/26-
2/8/94......... 111,607,197 108,186,343 (3,420,854)
New Zealand
Dollars,
expiring
2/8/94......... 19,699,782 19,825,987 126,205
Swiss Francs,
expiring
1/18/94........ 39,588,845 39,763,433 174,588
--------------- ------------ --------------
$ 685,726,458 $677,608,701 $ (8,117,757)
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciaton)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring 1/4-
1/31/94........ $ 121,661,812 $123,481,281 $ (1,819,469)
British Pounds,
expiring 1/20-
2/8/94......... 18,170,105 18,019,243 150,862
Canadian Dollars,
expiring 1/6-
2/15/94........ 30,341,561 30,531,401 (189,840)
Danish Kroner,
expiring
1/24/94........ 10,531,939 10,400,944 130,995
</TABLE>
-12-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciaton)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
French Francs,
expiring
2/15/94........ $ 9,226,099 $ 9,127,517 $ 98,582
German
Deutschemarks,
expiring 1/4-
2/15/94........ 398,821,442 391,880,693 6,940,749
Irish Punts,
expiring
2/15/94........ 19,723,640 19,595,375 128,265
Italian Lira,
expiring 1/18-
2/15/94........ 22,403,387 22,168,247 235,140
Japanese Yen,
expiring 1/26-
2/8/94......... 109,335,617 106,975,709 2,359,908
New Zealand
Dollars,
expiring
2/8/94......... 19,551,522 19,591,016 (39,494)
Netherland
Guilders,
expiring 1/5-
2/15/94........ 53,504,576 52,497,896 1,006,680
Spanish Pesetas,
expiring
2/15/94........ 14,590,455 14,270,361 320,094
Swedish Krona,
expiring
1/10/94........ 23,023,602 23,016,675 6,927
Swiss Francs,
expiring
1/18/94........ 37,870,035 38,272,283 (402,248)
--------------- ------------ --------------
$ 888,755,792 $879,828,641 $ 8,927,151
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
Transactions in options written during the fiscal year ended December 31,
1993, were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
---------- -----------
<S> <C> <C>
Options outstanding at
December 31, 1992................. -- --
Options written..................... 700,397 $ 3,830,711
Options terminated in closing
purchase transactions............. (143,118) (730,824)
Options expired..................... (302,885) (1,655,558)
Options exercised................... (137,583) (781,096)
---------- -----------
Options outstanding at
December 31, 1993................. 116,811 $ 663,233
---------- -----------
---------- -----------
</TABLE>
The federal income tax basis of the Portfolio's investments at December 31,
1993 was $354,452,876 and, accordingly, net unrealized appreciation for federal
income tax purposes was $295,934 (gross unrealized appreciation--$5,108,512
gross unrealized depreciation-- $4,812,578).
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. Such carryforward is after utilization
of approximately $18,455,500 of net taxable gains realized and recognized during
the year ended December 31, 1993.
As of December 31, 1993 the Fund had securities on loan with an aggregate
market value of $6,673,754. As of such date, the Fund held U.S. Treasury Notes
in the principal amount of $6,565,000, 7.875%, due 2/15/96 with an aggregate
value, including accrued interest, of $7,228,034 as collateral for the
securities loaned.
At December 31, 1993, the Fund sold 182 financial futures contracts on U.S.
Treasury Bonds expiring March 1994. The value at disposition of such contracts
is $20,671,188. The value of such contracts on December 31, 1993 was
$20,666,000, thereby resulting in an unrealized gain of $5,188.
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 December 31, 1993, the Fund has a .45% undivided interest in
the joint account. The undivided interest for the Fund represents $5,427,000 in
the principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:
Bear, Stearns & Co., 3.18%, in the principal amount of $323,000,000,
repurchase price $323,085,595, due 1/3/94; collateralized by $200,000,000 U.S.
Treasury Notes, 3.875%, due 3/31/95, $5,745,000 U.S. Treasury Notes, 4.25%, due
7/31/95, $85,000 U.S. Treasury Notes, 7.375%, due 5/15/96, $30,000,000 U.S.
Treasury Notes, 5.625%, due 1/31/98 and $80,030,000 U.S. Treasury Notes, 7.50%,
due 11/15/01; approximate aggregate value including accrued
interest--$329,564,341.
Kidder, Peabody & Co. Inc., 3.20%, in the principal amount of $375,000,000,
repurchase price $375,100,000, due 1/3/94; collateralized by $200,000,000 U.S.
Treasury Bonds, 11.625%, due 11/15/04, $38,000,000 U.S. Treasury Bonds, 12.75%,
due 11/15/10, $11,730,000 U.S. Treasury Notes, 7.25%, due 11/15/96, $90,000 U.S.
Treasury Bonds, 9.00%, due 2/15/94 and $15,000,000 U.S. Treasury Notes, 7.375%,
-13-
<PAGE>
<PAGE>
due 5/15/96; approximate aggregate value including accrued
interest--$382,608,562.
Goldman, Sachs & Co., 3.10%, in the principal amount of $399,000,000,
repurchase price $399,103,075, due 1/3/94; collateralized by $363,720,000 U.S.
Treasury Bonds, 7.50%, due 11/15/16; approximate value including accrued
interest--$408,104,889.
Barclays de Zoete Wedd, Inc., 3.10%, in the principal amount of $100,000,000,
repurchase price $100,025,833, due 1/3/94; collateralized by $32,000,000 U.S.
Treasury Notes, 7.50%, due 11/15/01, $7,305,000 U.S. Treasury Notes, 8.50%, due
2/15/00 and $49,000,000 U.S. Treasury Notes, 8.875%, due 11/15/98; approximate
aggregate value including accrued interest--$102,043,014.
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
42,702,770 shares of common stock issued and outstanding at December 31, 1993,
PMF owned 12,263 Class A shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
----------- ------------
<S> <C> <C>
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)
----------- ------------
----------- ------------
Period ended December 31, 1992:
Shares sold..................... 707,260 $ 5,689,697
Shares issued*.................. 26,390,197 212,441,089
Shares issued in reinvestment of
dividends and distributions... 603,583 4,842,287
Shares reacquired............... (11,354,743) (91,201,784)
----------- ------------
Net increase in shares
outstanding................... 16,346,297 $131,771,289
----------- ------------
----------- ------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Amount
----------- ------------
<S> <C> <C>
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
----------- ------------
----------- ------------
Period ended December 31, 1992:
Shares sold..................... 4,253,427 $ 34,481,862
Shares issued*.................. 633,886 5,115,458
Shares issued in reinvestment of
dividends and distributions... 86,820 691,747
Shares reacquired............... (797,981) (6,278,554)
----------- ------------
Net increase in shares
outstanding................... 4,176,152 $ 34,010,513
----------- ------------
----------- ------------
<FN>
- ---------------
* Represents amounts issued in connection with the
acquisition of Prudential Strategic Income Fund.
</TABLE>
Note 7. Capital On February 2, 1994 the
Gain Distribution Board of Directors of the
Fund declared a distribution of long-term capital
gains of $0.014 per share payable February 18, 1994 to shareholders of record on
February 10, 1994.
-14-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class A++ Class B
-------------------------------------------------------------------------------- ------------
Year Ten Months May 26, Year
Ended Ended Year Ended February 28, 1988** Ended
December 31, December 31, ---------------------------------- to February December 31,
1993 1992@ 1992 1991 1990 28, 1989 1993
------------ ------------ -------- ------------ -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period............... $ 7.77 $ 8.39 $ 8.79 $ 8.56 $ 8.93 $ 9.30 $ 7.79
------------ ------------ -------- ------------ -------- ------------- ------------
Income from investment
operations
Net investment income..... .59 .61 .71 .74 .73 .59 .54
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions............ .63 (.36) (.36) .35 (.10) (.26) .63
------------ ------------ -------- ------------ -------- ------------- ------------
Total from investment
operations............ 1.22 .25 .35 1.09 .63 .33 1.17
------------ ------------ -------- ------------ -------- ------------- ------------
Less distributions
Dividends from net
investment income....... (.48) (.59) (.71) (.74) (.73) (.59) (.44)
Distributions from capital
gains................... (.08) (.28) -- -- -- -- (.08)
Distributions from paid-in
capital in excess of
par..................... -- -- (.04) (.12) (.27) (.09) --
------------ ------------ -------- ------------ -------- ------------- ------------
Total distributions..... (.56) (.87) (.75) (.86) (1.00) (.68) (.52)
------------ ------------ -------- ------------ -------- ------------- ------------
Capital charge resulting
from the issuance of
Fund shares............. -- -- -- -- -- (.02) --
------------ ------------ -------- ------------ -------- ------------- ------------
Net asset value, end of
period.................. $ 8.43 $ 7.77 $ 8.39 $ 8.79 $ 8.56 $ 8.93 $ 8.44
------------ ------------ -------- ------------ -------- ------------- ------------
------------ ------------ -------- ------------ -------- ------------- ------------
TOTAL RETURN#: 16.12% 3.09% 4.24% 13.49% 7.20% 3.41% 15.29%
------------ ------------ -------- ------------ -------- ------------- ------------
------------ ------------ -------- ------------ -------- ------------- ------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)................... $320,406 $378,865 $271,714 $ 449,178 $437,558 $ 456,224 $ 39,440
Average net assets
(000)................... $355,018 $331,339 $399,714 $ 437,752 $455,386 $ 463,039 $ 36,197
Ratios to average net
assets:
Expenses, including
distribution fees..... 1.41% 1.30%* 1.20% 1.04% 1.07% .97%* 2.01%
Expenses, excluding
distribution fees..... 1.26% 1.15%* 1.15% 1.04% 1.07% .97%* 1.26%
Net investment income... 7.42% 9.08%* 8.43% 8.61% 8.16% 8.54%* 6.67%
Portfolio turnover rate 361% 201% 170% 250% 231% 358% 361%
Total debt outstanding at
end
of period (000)......... -- -- -- $ 20,240 $ 27,600 $ 34,960 --
Asset coverage@@.......... -- -- -- $ 23,193 $ 16,854 $ 14,050 --
<CAPTION>
Ten Months
Ended January 15, 1992+
December 31, Through February
1992@ 29, 1992
------------ -----------------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period............... $ 8.40 $ 8.43
------------ ------
Income from investment
operations
Net investment income..... .57 .08
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions............ (.35) (.03)
------------ ------
Total from investment
operations............ .22 .05
------------ ------
Less distributions
Dividends from net
investment income....... (.55) (.08)
Distributions from capital
gains................... (.28) --
Distributions from paid-in
capital in excess of
par..................... -- --
------------ ------
Total distributions..... (.83) (.08)
------------ ------
Capital charge resulting
from the issuance of
Fund shares............. -- --
------------ ------
Net asset value, end of
period.................. $ 7.79 $ 8.40
------------ ------
------------ ------
TOTAL RETURN#: 2.70% 0.58%
------------ ------
------------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)................... $ 33,500 $ 1,049
Average net assets
(000)................... $ 18,358 $ 456
Ratios to average net
assets:
Expenses, including
distribution fees..... 1.90%* 1.03%*
Expenses, excluding
distribution fees..... 1.15%* .28%*
Net investment income... 8.54%* 9.43%*
Portfolio turnover rate 201% 170%
Total debt outstanding at
end
of period (000)......... -- --
Asset coverage@@.......... -- --
<FN>
- ---------------
* Annualized.
** Commencement of investment operations.
+ Commencement of offering of Class B shares.
++ 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.
</TABLE>
See Notes to Financial Statements.
-15-
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Prudential Intermediate Global Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Intermediate Global
Income Fund, Inc. (the ``Fund'') at December 31, 1993, the results of its
operations for the year then ended, the changes in its net assets for the year
then ended and for the ten month period ended December 31, 1992 and the
financial highlights for the year ended December 31, 1993, for the ten month
period ended December 31, 1992, for each of the three years in the period ended
February 29, 1992 and for the period from May 26, 1988 (commencement of
operations) through February 28, 1989, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as ``financial statements'') are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1993 by correspondence with the
custodian and brokers, and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
February 11, 1994
-16-
<PAGE>
<PAGE>
TAX INFORMATION (UNAUDITED)
We are required by the Internal Revenue Code to advise you within 60 days of
the Fund's fiscal year end (December 31, 1993) as to the federal tax status of
distributions paid by the Fund during such fiscal year. Accordingly, during its
fiscal year ended December 31, 1993, the Fund paid distributions from realized
long-term capital gains of $0.08 which are taxable as such.
We wish to advise you that the corporate dividends received deduction for the
Fund is zero. Only funds that invest in U.S. equity securities are entitled to
pass-through a corporate dividends received deduction.
For the purpose of preparing your annual federal income tax return, however,
you should report the amounts as reflected on the appropriate Form 1099-DIV or
substitute 1099-DIV.
-17-
<PAGE>
<PAGE>
The following two charts compare a $10,000 investment in
Class A shares and Class B shares, with a similar investment in
the JP Morgan Global Traded Government Bond Index. Included in
the charts are the average annual total returns for each Class
for the one-year, five-year and since inception periods with and
without sales charges.
Past performance is no guarantee of future performance, and an investor's shares
when redeemed, may be worth more or less than their original value.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in Prudential Intermediate Global Income Fund
(Class A and Class B) with a similar investment in the JP Morgan Global Traded
Government Bond Index (the Global Index) by portraying the initial account
values on May 26, 1988 for Class A shares and January 15, 1992 for Class B
shares and subsequent account values at the end of each fiscal year (December
31), as measured on a quarterly basis, beginning in 1988 for Class A shares and
in 1992 for Class B shares. For purposes of the graphs and, unless otherwise
indicated, the accompanying tables, it has been assumed that (a) the maximum
sales charge was deducted from the initial $10,000 investment in Class A shares;
(b) the maximum applicable contingent deferred sales charge was deducted from
the value of the investment in Class B shares assuming full redemption on
December 31, 1993; (c) all recurring fees (including management fees) were
deducted; and (d) all dividends and distributions were reinvested.
The Global Bond Index is a weighted index of the total return of government
bonds from 13 countries, including Australia, Belgium, Canada, Denmark, France,
Germany, Italy, Japan, Netherlands, Spain, Sweden, United Kingdom and the United
States and provides a broad measure of market performance. The Global Bond Index
is an unmanaged index and includes the reinvestment of all dividends, but does
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund. The securities that comprise the Global Bond Index
may differ substantially from the securities in the Fund's portfolio. The Global
Bond Index is not the only index that may be used to characterize performance of
global bond funds and other indexes may portray different comparative
performance.
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<PAGE>
<PAGE>
Directors
John C. Davis
Lawrence C. McQuade
William C. Norby
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
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, NY 10022
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
Collect (908) 417-7555
This report is not authorized for distribution
to prospective investors unless preceded or
accompanied by a current prospectus.
74435G203 MF155E
74435G302 Cat. #444582Y
