ANNUAL REPORT December 31,1994
Prudential
Intermediate
Global Income
Fund, Inc.
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
February 15, 1995
Dear Shareholder:
The year 1994 was one of the worst years in history for bonds in the United
States. Disappointing performance in the domestic market spilled over into
many of the foreign bond markets as well. In sharp contrast to the very
strong year for global bond markets during the prior year, 1994's dramatic
rise in interest rates reflected investor fears that rapid US growth would
spur growth in foreign markets, causing rates to rise further and faster
than would be expected over the course of a normal business cycle.
Interest rates around the world rose dramatically. Global fixed income
funds, and the Prudential Intermediate Global Income Fund Inc. were unable
to escape the impact of negative market conditions.
Overall, your Fund continued to provide investors with a well-diversified
portfolio, which under performed the Lipper Global World Income Fund Average
for the year. Funds in the universe posted a wide range of
returns from -30.8% to 15.1%, and your Fund was well above the median.
The Fund seeks total return by investing
primarily in a portfolio of intermediate-term
government debt securities throughout the world.
<TABLE>
FUND PERFORMANCE
As of December 31, 1994
<CAPTION>
12-Month
Total Return Net Asset Value Dividends
One-Year1 12/31/94 12/31/93 & Distributions
<S> <C> <C> <C> <C>
Class A -7.0% $7.32 $8.43 $0.524
Class B -7.7 7.33 8.44 0.476
Class C N/A 7.33 N/A 0.179
Lipper Global World
Income Average2 -6.5 N/A N/A N/A
</TABLE>
1 Source: Prudential Mutual Fund Management. These figures do not take into
account applicable sales charges. The Fund charges a maximum sales load of
3% for Class A shares. Class B shares are subject to a declining contingent
deferred sales charge (CDSC) of 3%, 2%, 1% and 1% respectively. Class C
shares are subject to a 1% CDSC on shares redeemed within one year of
purchase.
2 This is the average return of 102 funds in the global world income
category for one year as determined by Lipper Analytical Services, Inc.
-1-
<PAGE>
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of December 31, 19941
<CAPTION>
One Year Five Year Since Inception2
<S> <C> <C> <C>
Class A -9.8% +4.4% +5.4%
Class B -10.7 N/A +2.9
Class C N/A N/A -3.4
</TABLE>
1 Source: Prudential Mutual Fund Management. These figures take into account
applicable sales charges.
2 Inception of Class A 5/26/88, Class B 1/15/92, Class C 8/1/94. The Fund
previously operated as a closed-end fund. Note: Past performance is no
guarantee of future results. Investment return and principal value will
fluctuate, so that investor's shares, when redeemed, may be worth more
or less than their original cost.
A Tough Environment for Global Bond Markets
This was a difficult period for bonds in many countries around the world
as demand for capital and fears of inflation pushed interest rates up.
Long term interest rates rose, irrespective of the Central Bank. Bond
market returns in every one of the countries represented in the Salomon
Brothers World Government Bond Index posted negative returns in local
currency terms (see table below). In Germany, ten-year yields rose over
200 basis points (2%), despite the Bundesbank's lowering of short term
rates by 100 basis points (1%).
The following table shows the year's performance for the worldwide bond
markets individually:
<TABLE>
<CAPTION>
Total Return
(Local currency terms)
<S> <C>
United States -3.4%
Japan -2.7%
Germany -1.8%
France -5.7%
United Kingdom -6.9%
Canada -4.5%
Italy -0.9%
Australia -6.5%
Belgium -1.2%
Denmark -3.8%
Netherlands -4.5%
Spain -3.7%
Sweden -4.7%
Austria 0.0%
</TABLE>
* Source: Salomon Brothers World Government Bond Index
-2-
<PAGE>
During the fourth quarter, strong economic activity in the United States
led to yet another rate hike of 75 basis points by the US Federal Reserve,
the largest single move this year. The action was mirrored throughout the
dollar bloc markets. In Europe, where economic activity also was stronger
than expected, yields backed up as well. One of the few bond markets which
was able to post slightly lower rates for the fourth quarter (although not
for the year) was Japan, where a still tepid recovery helped yields to
edge down slightly.
In this environment, the Fund has held to a very cautious stance, limiting
maturity exposure in its holdings virtually across the board. We also
remained well diversified, which helped the Fund to better absorb some
of the market volatility.
Exposure to the Emerging Markets
Much of the global fixed income activity at the end of the year centered
around Mexico's decision to first devalue, then float the Mexican Peso.
The Fund held a security and cash position of about 5% in Mexican Pesos,
and some dollar-denominated Mexican holdings which were somewhat, but
much less strongly affected by the Mexican Government's actions. The
Mexican denominated position was cut before the full measure of the
decline in value of the Peso to the US Dollar was realized.
While we remain concerned about Mexico, we do find other markets'
dollar-denominated debt attractive, particularly in an environment
in which rates in the developed markets are generally not expected to
fall. We are positioning the Fund conservatively in emerging markets
debt, primarily in the dollar-denominated securities of these markets.
Currency Markets Were Also Volatile
The falling US Dollar helped the Fund during the year. However, since we
adopted a conservative strategy and hedged some of our foreign currency
holdings back into the dollar, we missed out on some foreign currency
gains (the only positive aspect of global bond investing in 1994).
Outlook
Our outlook is still cautious on interest rates, particularly in the US,
where capacity constraints are being pressed, and where supply pressures
are also evident. Therefore, we are keeping the average maturity of the
Fund relatively low. We are slightly more positive on foreign bonds than
on the US market.
We expect that continued trade imbalances will weigh heavily on the US
Dollar, although we favor the Dollar relative to the Yen; we also slightly
favor the Deutschemark at current levels. We cautiously hold small amounts of
-3-
<PAGE>
dollar-denominated emerging markets exposure, and expect that these
securities will provide attractive risk-adjusted returns for the portfolio.
Please remember, foreign securities are not guaranteed and may be
influenced by currency fluctuations, political and social developments.
These risks are described in detail in the Fund's prospectus.
Looking forward to a more positive global environment for 1995, we appreciate
having you as a shareholder of the Prudential Intermediate Global Income
Fund and remain committed to managing it for your benefit.
Sincerely,
Lawrence C. McQuade
President
Andrew Barnett
Portfolio Manager
Dividend Update
Effective with the distribution to shareholders payable March 21, 1995, the
Fund will lower its distribution rate as a result of divesting itself from
certain Mexican denominated positions and other securities. The dividend
will be reduced from $.039 to $.036 per Class A shares; and from $.035 to
$.032 per Class B and C shares.
Tax Update:
As a result of higher hedging costs and currency losses in the European
and Japanese markets this year, a portion of the dividends paid in the
current calendar year were considered a return of capital (a non-taxable
distribution) under the Internal Revenue Code. Provisions in the Internal
Revenue Code require the Fund's currency losses, which include those
derived from hedging transactions, to be treated as ordinary losses and
thus offset net investment or ordinary income (less operating expenses).
In January 1995, you should have received a Form 1099 DIV (or substitute
Form 1099 DIV) that reflects the total amount of distributions that
constitutes a tax return of capital. Such amount is not included as
taxable income for calendar year 1994, but should be reflected as an
adjustment in the cost basis of your Fund's shares.
-4-
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC. Portfolio of Investments
December 31, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--79.6%
Australia--3.2%
Australian Gov't. Bonds,
A$ 10,200 9.00%, 9/15/04........... $ 7,407,399#
------------
Belgium--2.3%
Belgium Gov't. Bonds,
BF 89,000 7.00%, 4/29/99........... 2,709,524#
90,000 7.25%, 4/29/04........... 2,633,158#
------------
5,342,682
------------
Canada--2.4%
Canadian Gov't. Bonds,
C$ 8,550 7.50%, 12/1/03........... 5,493,955#
------------
Denmark--2.9%
Danish Gov't. Bonds,
DKr 42,700 8.00%, 5/15/03........... 6,565,691#
------------
France--3.0%
French Gov't. Bonds,
FF 34,200 4.50%, 5/12/96........... 6,182,610
39,000 Zero Coupon, 4/25/23..... 668,534
------------
6,851,144
------------
Germany--11.0%
Fed. Rep. of Germany,
DM 3,500 8.00%, 3/20/97........... 2,318,815
6,000 8.00%, 7/22/02........... 3,934,490
24,900 6.75%, 4/22/03........... 15,168,947
Treuhandanstalt,
6,000 7.75%, 10/1/02........... 3,903,772
------------
25,326,024
------------
Ireland--1.5%
Irish Gov't. Bonds,
IEP 2,230 9.00%, 7/15/01........... 3,481,789
------------
Italy--1.5%
Italian Gov't. Bonds,
Lira 4,000,000 12.00%, 5/19/98.......... $ 2,505,493
1,990,000 8.50%, 4/1/04............ 992,293
------------
3,497,786
------------
Japan--18.0%
Japanese Gov't. Bonds,
(YEN) 390,000 5.00%, 9/21/98........... 4,084,425
470,000 4.80%, 6/21/99........... 4,888,396
940,000 6.60%, 6/20/01........... 10,574,705
593,000 4.10%, 12/22/03.......... 5,770,542
1,660,000 4.10%, 6/21/04........... 16,067,639
------------
41,385,707
------------
Netherlands--1.6%
Netherlands Gov't. Bonds,
NLG 6,500 7.50%, 6/15/99........... 3,753,257#
------------
Spain--2.3%
Spanish Gov't. Bonds,
Pts 700,000 11.45%, 8/30/98.......... 5,306,637
------------
United Kingdom--7.2%
Exchequer,
BP 4,300 9.75%, 1/19/98........... 6,928,668
United Kingdom Treasury
Bonds,
3,350 13.25%, 1/22/97.......... 5,728,434
United Kingdom Treasury
Notes,
2,600 8.00%, 9/27/13........... 3,860,521
------------
16,517,623
------------
United States--22.7%
Sovereign Bonds--4.1%
Republic of Argentina,
US$ 800 7.90%*, 9/1/00, Series
CHR1................... 708,000
BOCON,
1,310 6.125%*, 4/1/01.......... 972,423
1,225 FRB, 6.50%*, 3/31/05..... 780,938
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
United States (cont'd.)
Republic of Brazil,
US$ 1,348 IDU, 6.0625%*, 1/1/01.... $ 1,125,163
2,150 6.6875%*, 4/15/24........ 1,333,000
Republic of Ecuador,DD
1,400 Zero Coupon, 12/30/24.... 756,000
Republic of Poland,
Discount Bond,
3,125 6.8125%*, 10/27/24....... 2,238,281
Central Bank of the
Philippines,
1,700 6.0625%*, 1/5/05......... 1,547,000
------------
9,460,805
------------
U.S. Government Bonds--18.6%
United States Treasury
Bonds,
1,300 6.25%, 8/15/23........... 1,056,861
26,350 7.50%, 11/15/24.......... 25,205,356
United States Treasury
Notes,
10,100 6.75%, 6/30/99........... 9,684,991
7,200 6.375%, 1/15/00.......... 6,770,232
------------
42,717,440
------------
Total long-term
investments
(cost
US$186,075,339)........ 183,107,939
------------
SHORT-TERM INVESTMENTS--19.7%
Argentina--2.0%
Argentina Gov't. Treasury
Bills,D
AP 4,800 9.03%, 2/24/95........... 4,681,309#
------------
Mexico--4.7%
Mexican Tesobonos,D
US$ 8,646 8.45%, 7/27/95........... 7,746,540
3,347 8.35%, 8/3/95............ 2,988,393
------------
10,734,933
------------
United States--12.7%
Repurchase Agreements
Joint Repurchase Agreement Account,
US$ 25,018 5.82%, 1/3/95, (Note
5)..................... $ 25,018,000
State Street Bank & Trust Co.,
4,277,000
4,277 4.75%, dated 12/30/94,
due 1/3/95 in the
amount of $4,279,257
(cost $4,277,000;
collateralized by
$4,435,000 U.S.
Treasury Notes, 5.125%,
due 3/31/96;
approximate value
including accrued
interest-$4,424,535)...
------------
29,295,000
------------
Outstanding Options
Purchased**--0.3%
<CAPTION>
Contracts
(000) Call Options--0.2%
- --------------
<C> <S> <C>
24,183 German Deutschemarks,
expiring 2/13/95 @
DM1.57................. 532,026
------------
Put Options--0.1%
17,185 Japanese Yen,
expiring 2/2/95 @
(YEN)100............... 109,984
------------
Cross-Currency Call Options
Italian Lira,
expiring 1/12/95 @Lira
971.7
16,475 per German
Deutschemark........... --
Swedish Krona,
expiring 1/21/95 @
Skr4.54
31,590 per German
Deutschemark........... --
------------
--
------------
Total outstanding options
purchased.............. 642,010
------------
Total short-term
investments
(cost US$46,727,040)... 45,353,252
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
<TABLE>
<CAPTION>
Contracts Value
(000) Description (Note 1)
<C> <S> <C>
Total Investments Before
Outstanding Options
Written--99.3%
(cost US$232,802,379;
Note 4) $228,461,191
------------
OUTSTANDING OPTIONS
WRITTEN**--(0.2%)
Call Options--(0.1%)
German Deutschemarks,
24,183 expiring 2/13/95 @
DM1.545................ (307,124)
------------
Cross-Currency Put Options--(0.1%)
Italian Lira, expiring
1/12/95
@ Italian Lira 1025 per
16,475 German Deutschemark.... (244,324)
------------
Total outstanding options
written (premiums
received US$466,627)... (551,448)
------------
Total Investments, Net of
Outstanding Options
Written--99.1%......... 227,909,743
Other assets in excess of
other
liabilities--0.9%...... 2,149,465
------------
Net Assets--100%......... $230,059,208
------------
------------
</TABLE>
- ------------------
Portfolio securities are classified according to the
securities
currency denomination. Option contracts are
expressed in local currency units.
# Principal amount segregated as collateral for
forward
currency contracts, when-issued securities and
options written. Aggregate value of segregated
securities--$33,244,293.
* Rate shown reflects current rate on variable
rate instrument.
** Non-income producing security.
D Percentages quoted represent yield-to-maturity
as of purchase date.
DD Represents when-issued security.
BOCON--Bonos de Consolidacion.
FRB--Floating Rate Bonds.
IDU--Interest Due and Unpaid Bonds.
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME
FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets December 31, 1994
-----------------
<S> <C>
Investments, at value (cost $232,802,379)............................................. $ 228,461,191
Receivable for investments sold....................................................... 4,681,964
Interest receivable................................................................... 4,320,712
Forward currency contracts--net amount receivable from counterparties................. 3,997,916
Receivable for Fund shares sold....................................................... 27,470
Other assets.......................................................................... 49,200
-----------------
Total assets........................................................................ 241,538,453
-----------------
Liabilities
Bank overdraft........................................................................ 85,683
Bank overdraft--foreign currency (cost $1,764)........................................ 1,795
Forward currency contracts--net amount payable to counterparties...................... 5,262,637
Payable for investments purchased..................................................... 2,968,026
Payable for Fund shares reacquired.................................................... 1,898,546
Outstanding options written, at value (premiums received $466,627).................... 551,448
Accrued expenses...................................................................... 392,269
Management fee payable................................................................ 152,444
Dividends payable..................................................................... 91,015
Distribution fee payable.............................................................. 42,874
Withholding taxes payable............................................................. 32,508
-----------------
Total liabilities................................................................... 11,479,245
-----------------
Net Assets............................................................................ $ 230,059,208
-----------------
-----------------
Net assets were comprised of:
Common stock, at par................................................................ $ 31,419
Paid-in capital in excess of par.................................................... 330,876,017
-----------------
330,907,436
Distributions in excess of net investment income.................................... (4,707,187)
Accumulated net realized loss on investments........................................ (90,428,140)
Net unrealized depreciation on investments and foreign currencies................... (5,712,901)
-----------------
Net assets, December 31, 1994......................................................... $ 230,059,208
-----------------
-----------------
Class A:
Net asset value and redemption price per share ($207,152,995 / 28,295,864 shares of
common stock issued and outstanding).............................................. $7.32
Maximum sales charge (3.00% of offering price)...................................... .23
-----------------
Maximum offering price to public.................................................... $7.55
-----------------
-----------------
Class B:
Net asset value, offering price and redemption price per share ($22,906,020 /
3,123,336 shares of common stock issued and outstanding).......................... $7.33
-----------------
-----------------
Class C:
Net asset value, offering price and redemption price per share ($193 / 26.338 shares
of common stock issued and outstanding)........................................... $7.33
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
Net Investment Income 1994
-----------------
Income
<S> <C>
Interest and discount earned (net
of foreign withholding taxes of
$2,918).......................... $22,073,945
Income from securities loaned...... 42,383
-------------
22,116,328
-------------
Expenses
Management fee..................... 2,210,372
Distribution fee--Class A.......... 394,323
Distribution fee--Class B.......... 238,759
Transfer agent's fees and
expenses........................... 668,000
Custodian's fees and expenses...... 482,000
Reports to shareholders............ 264,000
Registration fees.................. 70,000
Audit fee.......................... 67,000
Directors' fees.................... 43,125
Legal fees and expenses............ 40,000
Insurance expense.................. 8,000
Miscellaneous...................... 15,620
-------------
Total expenses................... 4,501,199
-------------
Net investment income................ 17,615,129
-------------
<CAPTION>
Net Realized and Unrealized Gain
(Loss)
on Investment and Foreign
Currency Transactions
<S> <C>
Net realized gain (loss) on:
Investment transactions............ (27,108,122)
Foreign currency transactions...... (7,359,323)
Financial futures transactions..... (196,685)
Written option transactions........ 889,826
-------------
(33,774,304)
-------------
Net change in net unrealized
appreciation/depreciation of:
Investments........................ (3,880,246)
Foreign currencies................. (2,893,776)
Financial futures.................. (5,188)
Written options.................... 306,686
-------------
(6,472,524)
-------------
Net loss on investments and foreign
currencies......................... (40,246,828)
-------------
Net Decrease in Net Assets
Resulting from Operations............ ($22,631,699)
-------------
-------------
</TABLE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
Increase (Decrease) ------------------------------
in Net Assets 1994 1993
------------- -------------
<S> <C> <C>
Operations
Net investment
income................ $ 17,615,129 $ 28,763,222
Net realized gain
(loss) on investment
and foreign currency
transactions........ (33,774,304) 17,756,201
Net change in net
unrealized
appreciation/depreciation
on investments and
foreign
currencies.......... (6,472,524) 12,385,620
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... (22,631,699) 58,905,043
------------- -------------
Net equalization
debits................ (298,272) (35,899)
------------- -------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A............. (9,720,977) (20,557,518)
Class B............. (1,068,617) (1,903,164)
------------- -------------
(10,789,594) (22,460,682)
------------- -------------
Distributions from net
realized gains
Class A............. (451,238) (3,742,148)
Class B............. (57,559) (346,439)
------------- -------------
(508,797) (4,088,587)
------------- -------------
Tax return of capital
distributions
Class A............. (7,599,757) --
Class B............. (836,616) --
------------- -------------
(8,436,373) --
------------- -------------
Fund share transactions
(Note 6)
Net proceeds from
shares subscribed... 12,598,805 23,663,564
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions....... 4,734,600 5,464,081
Cost of shares
reacquired............ (104,455,068) (113,967,037)
------------- -------------
Net decrease in net
assets from Fund
share
transactions........ (87,121,663) (84,839,392)
------------- -------------
Total decrease.......... (129,786,398) (52,519,517)
Net Assets
Beginning of year....... 359,845,606 412,365,123
------------- -------------
End of year............. $ 230,059,208 $ 359,845,606
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Notes to Financial Statements
Prudential Intermediate Global Income Fund, Inc., (the ``Fund'') was
organized in Maryland as a closed-end, non-diversified management investment
company and commenced investment operations on May 26, 1988. On October 4, 1991
the Fund concluded operations as a closed-end investment company and effective
October 7, 1991, commenced operations as an open-end, non-diversified investment
company.
The Fund's investment objective is to maximize total return, the components
of which are current income and capital appreciation, 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 of
Policies significant accounting policies
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. Portfolio securities (including options) are valued
at their current market value as determined by an independent pricing service,
principal market maker or by reference to the applicable exchange price. Forward
currency exchange contracts are valued at the current cost of covering or
offsetting the contract on the day of valuation. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Directors of
the Fund.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost which approximates market value.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, 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 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
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: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at
-10-
<PAGE>
<PAGE>
current exchange rates and any unrealized gain or loss is included in net
unrealized appreciation or depreciation on investments. Gain or loss is realized
on the settlement date of the contract equal to the difference between the
settlement value of the original and renegotiated forward contracts. This gain
or loss, if any, is included in net realized gain (loss) on foreign currency
transactions. Risks may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of 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. This 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. When the contract expires or is closed, the gain or loss is realized and
is presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Fund invests in financial futures contracts in order to hedge its
existing portfolio securities, or securities the Fund intends to purchase,
against fluctuations in value caused by changes in prevailing interest rates.
Should interest 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.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
When the Fund purchases an option, it pays a premium and an amount equal to that
premium is recorded as an investment. When the Fund writes an option, it
receives a premium and an amount equal to that premium is recorded as a
liability. The investment or liability is adjusted daily to reflect the current
market value of the option. If an option expires unexercised, the Fund realizes
a gain or loss to the extent of the premium received or paid. If an option is
exercised, the premium received or paid is an adjustment to the proceeds from
the sale or the cost basis of the purchase in determining whether the Fund has
realized a gain or loss. The difference between the premium and the amount
received or paid on effecting a closing purchase or sale transaction is also
treated as a realized gain or loss. Gain or loss on purchased options is
included in net realized gain (loss) on investment transactions. Gain or loss on
written options is presented separately as net realized gain (loss) on written
option transactions.
The Fund, as writer of an option, has no control over whether the underlying
securities or currencies may be sold (called) or purchased (put). As a result,
the Fund bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. The Fund, as purchaser of an
option, bears the risk of the potential inability of the counterparties to meet
the terms of their contracts.
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 December 31, 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
-11-
<PAGE>
<PAGE>
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 AICPA Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this Statement of Position was to reclassify $13,986,440 of
foreign currency losses to distributions in excess of net investment income from
accumulated net realized loss on investments. Tax return of capital
distributions are charged to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement, PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with The Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PMF is computed 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 with Prudential Securities Incorporated (``PSI''), which
acts as distributor of the Class B and Class C shares of the Fund (collectively
the ``Distributors''). The Fund compensates the Distributors for distributing
and servicing the Fund's Class A, Class B and Class C shares, pursuant to plans
of distribution (the ``Class A, B and C Plans''), regardless of expenses
actually incurred by them. The distribution fees are accrued daily and payable
monthly.
On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B distribution plans under which the distribution plans became
compensation plans, effective August 1, 1994. Prior thereto, the distribution
plans were reimbursement plans, under which PMFD and PSI were reimbursed for
expenses actually incurred by them up to the amount permitted under the Class A
and Class B Plans, respectively. The Fund is not obligated to pay any prior or
future excess distribution costs (costs incurred by the Distributors in excess
of distribution fees paid by the Fund or contingent deferred sales charges
received by the Distributors). The rate of the distribution fees charged to
Class A and Class B shares of the Fund did not change under the amended plans of
distribution. The Fund began offering Class C shares on August 1, 1994.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, .75 of
1% and 1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .15% of 1%, .75% of 1% and .75
of 1% of the average daily net assets of the Class A, B and C shares,
respectively, for the fiscal year ended December 31, 1994.
PMFD has advised the Fund that it has received approximately $32,800 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended December 31, 1994. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons.
PSI has advised the Fund that for the fiscal year ended December 31, 1994, it
received approximately $133,200 in contingent deferred sales charges imposed
upon certain redemptions by Class B shareholders.
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, 1994, the Fund incurred fees of
approximately $484,200 for the services of PMFS. As of December 31, 1994, fees
of approximately $36,000 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
-12-
<PAGE>
written options, for the fiscal year ended December 31, 1994, aggregated
$1,449,290,570 and $1,564,259,022, respectively.
At December 31, 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 (Depreciation)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring
3/15/95........ $ 9,033,969 $ 9,048,030 $ 14,061
Belgian Francs,
expiring
1/30/95........ 3,614,997 3,631,949 16,952
British Pounds,
expiring
1/23/95........ 27,995,988 27,299,769 (696,219)
Canadian Dollars,
expiring
2/9/95......... 29,230,592 28,334,506 (896,086)
Danish Kroner,
expiring
3/6/95......... 1,701,182 1,718,292 17,110
Deutschemarks,
expiring 1/6-
3/28/95........ 118,832,187 118,943,338 111,151
French Francs,
expiring
2/7/95......... 9,173,218 8,932,039 (241,179)
Italian Lira,
expiring
2/21/95........ 9,633,135 9,732,170 99,035
Japanese Yen,
expiring 2/14-
3/13/95........ 48,897,207 48,383,369 (513,838)
Netherlands
Guilders,
expiring
3/6/95......... 3,591,662 3,652,347 60,685
New Zealand
Dollars,
expiring 2/14-
4/26/95........ 18,897,841 19,348,850 451,009
Spanish Pesetas,
expiring
2/22/95........ 1,596,391 1,608,469 12,078
Swedish Krona,
expiring
2/7/95......... 2,918,033 2,877,872 (40,161)
Swiss Francs,
expiring
1/23/95........ 13,002,045 12,877,341 (124,704)
--------------- ------------ --------------
$ 298,118,447 $296,388,341 $ (1,730,106)
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
- ----------------- --------------- ------------ --------------
<S> <C> <C> <C>
Australian
Dollars,
expiring 2/17-
3/6/95......... $ 11,417,188 $ 11,680,595 $ (263,407)
Belgian Francs,
expiring
1/30/95........ 2,744,200 2,748,441 (4,241)
British Pounds,
expiring
1/23/95........ 32,901,182 32,791,369 109,813
Canadian Dollars,
expiring
2/9/95......... 28,078,686 27,247,763 830,923
Danish Kroner,
expiring 2/6-
3/6/95......... 5,484,985 5,358,026 126,959
Deutschemarks,
expiring 1/23-
3/28/95........ 110,911,633 111,200,317 (288,684)
Irish Punts,
expiring
3/10/95........ 3,526,159 3,551,890 (25,731)
Italian Lira,
expiring
2/21/95........ 11,734,946 11,794,472 (59,526)
Japanese Yen,
expiring 2/14-
3/13/95........ 32,519,019 32,158,719 360,300
New Zealand
Dollars,
expiring 2/14-
4/26/95........ 10,197,180 10,503,442 (306,262)
Spanish Pesetas,
expiring
2/22/95........ 3,064,395 3,082,599 (18,204)
Swiss Francs,
expiring
1/23/95........ 12,880,786 12,877,341 3,445
--------------- ------------ --------------
$ 265,460,359 $264,994,974 $ 465,385
--------------- ------------ --------------
--------------- ------------ --------------
</TABLE>
Transactions in options written during the fiscal year ended December 31,
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..................... 441,702 3,003,985
Options terminated in closing
purchase transactions............. (121,415) (979,056)
Options expired..................... (230,110) (1,284,174)
Options exercised................... (166,330) (937,361)
---------- -----------
Options outstanding at
December 31, 1994................. 40,658 $ 466,627
---------- -----------
---------- -----------
</TABLE>
-13-
<PAGE>
<PAGE>
The federal income tax basis of the Portfolio's investments at December 31,
1994 was $233,634,022 and, accordingly, net unrealized depreciation for federal
income tax purposes was $5,172,831 (gross unrealized appreciation--$981,541
gross unrealized depreciation--$6,154,372).
For federal income tax purposes, the Fund has a capital loss carryforward as
of December 31, 1994, of approximately $87,639,600 of which $45,765,500 expires
in 1997, $23,240,000 expires in 1998 and $18,634,100 expires in 2002.
The Fund will elect to treat approximately $2,165,600 of net capital losses
and $5,287,500 of net foreign currency losses incurred in the two month period
ended December 31, 1994 as having been incurred in the following fiscal year.
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, 1994, the Fund has a 3.2% undivided interest in
the joint account. The undivided interest for the Fund represents $25,018,000 in
the principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:
Goldman, Sachs & Co., 5.75%, in the principal amount of $250,000,000,
repurchase price $250,159,722, due 1/3/95. The value of the collateral including
accrued interest is $255,000,108.
Lehman Government Securities Inc., 5.90%, in the principal amount of
$70,000,000, repurchase price $70,045,889, due 1/3/95. The value of the
collateral including accrued interest is $71,379,084.
Morgan Stanley & Co., 5.75%, in the principal amount of $250,000,000,
repurchase price $250,159,722, due 1/3/95. The value of the collateral including
accrued interest is $255,146,220.
Smith Barney Inc., 5.95%, in the principal amount of $200,000,000, repurchase
price $200,132,222, due 1/3/95. The value of the collateral including accrued
interest is $204,036,161.
Note 6. Capital The Fund offers Class A, Class
B and Class C 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. Class C shares are sold with a contingent
deferred sales charge of 1% during the first year. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately five
years after purchase commencing in or about February 1995.
There are 2 billion authorized shares of $.001 par value common stock divided
equally into Class A, B and C shares. Of the 31,419,226 shares of common stock
issued and outstanding at December 31, 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>
Year ended December 31, 1994:
Shares sold..................... 818,956 $ 6,611,489
Shares issued in reinvestment of
dividends and distributions... 477,735 3,708,750
Shares reacquired............... (11,028,813) (85,609,639)
----------- ------------
Net decrease in shares
outstanding................... (9,732,122) $(75,289,400)
----------- ------------
----------- ------------
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>
Year ended December 31, 1994:
Shares sold..................... 741,502 $ 5,987,116
Shares issued in reinvestment of
dividends and distributions... 131,446 1,025,848
Shares reacquired............... (2,424,396) (18,845,429)
----------- ------------
Net decrease in shares
outstanding................... (1,551,448) $(11,832,465)
----------- ------------
----------- ------------
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
----------- ------------
----------- ------------
<CAPTION>
Class C
<S> <C> <C>
August 1, 1994* through
December 31, 1994:
Shares sold..................... 26 $ 200
Shares issued in reinvestment of
dividends..................... -- 2
----------- ------------
Net increase in shares
outstanding................... 26 $ 202
----------- ------------
----------- ------------
</TABLE>
- ---------------
* Commencement of offering of Class C shares.
-14-
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class ADD
Class B
-------------------------------------------------------------------
-----------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Year Ended Ten Months
Year Ended
December 31, Ended Year Ended February 28,
December 31,
------------------- December 31, ------------------------------
-----------------
1994 1993 1992@ 1992 1991 1990
1994 1993
-------- -------- ------------ -------- -------- --------
------- -------
<CAPTION>
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of
period............................ $ 8.43 $ 7.77 $ 8.39 $ 8.79 $ 8.56 $ 8.93
$ 8.44 $ 7.79
-------- -------- ------------ -------- -------- --------
------- -------
Income from investment operations
Net investment income.............. .50 .59 .61 .71 .74 .73
.45 .54
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (1.09) .63 (.36) (.36) .35 (.10)
(1.09) .63
-------- -------- ------------ -------- -------- --------
------- -------
Total from investment
operations...................... (.59) 1.22 .25 .35 1.09 .63
(.64) 1.17
-------- -------- ------------ -------- -------- --------
------- -------
Less distributions
Dividends from net investment
income............................ (.29) (.48) (.59) (.71) (.74) (.73)
(.26) (.44)
Distributions from capital gains... (.01) (.08) (.28) -- -- --
(.01) (.08)
Tax return of capital
distributions..................... (.22) -- -- (.04) (.12) (.27)
(.20) --
-------- -------- ------------ -------- -------- --------
------- -------
Total distributions............... (.52) (.56) (.87) (.75) (.86) (1.00)
(.47) (.52)
-------- -------- ------------ -------- -------- --------
------- -------
Net asset value, end of period..... $ 7.32 $ 8.43 $ 7.77 $ 8.39 $ 8.79 $ 8.56
$ 7.33 $ 8.44
-------- -------- ------------ -------- -------- --------
------- -------
-------- -------- ------------ -------- -------- --------
------- -------
TOTAL RETURN#:..................... (7.02)% 16.12% 3.09% 4.24% 13.49% 7.20%
(7.69)% 15.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).... $207,153 $320,406 $378,865 $271,714 $449,178 $437,558
$22,906 $39,440
Average net assets (000)........... $262,882 $355,018 $331,339 $399,714 $437,752 $455,386
$31,835 $36,197
Ratios to average net assets:##
Expenses, including distribution
fees............................ 1.46% 1.41% 1.30%* 1.20% 1.04% 1.07%
2.07% 2.01%
Expenses, excluding distribution
fees............................ 1.31% 1.26% 1.15%* 1.15% 1.04% 1.07%
1.31% 1.26%
Net investment income............. 6.04% 7.42% 9.08%* 8.43% 8.61% 8.16%
5.44% 6.67%
Portfolio turnover rate 554% 361% 201% 170% 250% 231%
554% 361%
Total debt outstanding at end of
period (000)...................... -- -- -- -- $ 20,240 $ 27,600
-- --
Asset coverage@@................... -- -- -- -- $ 23,193 $ 16,854
-- --
<CAPTION>
Class C
------------
<S> <C> <C> <C>
January 15, August 1,
Ten Months 1992+ 1994DDD
Ended Through Through
December 31, February 29, December 31,
1992@ 1992 1994
------------ ------------ ------------
PER SHARE OPERATING
PERFORMANCE:
<S> <C> <C> <C>
Net asset value, beginning of
period............................ $ 8.40 $ 8.43 $ 7.69
------ ----- -----
Income from investment operations
Net investment income.............. .57 .08 .14
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (.35) (.03) (.32)
------ ----- -----
Total from investment
operations...................... .22 .05 (.18)
------ ----- -----
Less distributions
Dividends from net investment
income............................ (.55) (.08) (.10)
Distributions from capital gains... (.28) -- --
Tax return of capital
distributions..................... -- -- (.08)
------ ----- -----
Total distributions............... (.83) (.08) (.18)
------ ----- -----
Net asset value, end of period..... $ 7.79 $ 8.40 $ 7.33
------ ----- -----
------ ----- -----
TOTAL RETURN#:..................... 2.70% 0.58% (2.44)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).... $ 33,500 $1,049 $ 193**
Average net assets (000)........... $ 18,358 $ 456 $ 197**
Ratios to average net assets:##
Expenses, including distribution
fees............................ 1.90%* 1.03%* 1.05%*
Expenses, excluding distribution
fees............................ 1.15%* .28%* .30%*
Net investment income............. 8.54%* 9.43%* 3.30%*
Portfolio turnover rate 201% 170% 554%
Total debt outstanding at end of
period (000)...................... -- -- --
Asset coverage@@................... -- -- --
</TABLE>
----------------
* Annualized.
** Figures are actual and not rounded to the nearest thousand.
D Commencement of offering of Class B shares.
DD Prior to October 7, 1991, the Fund was organized as a closed-end fund.
DDD Commencement of offering of Class C shares.
@ 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.
## Because of the event referred to in DDD and the timing of such, the
ratios for the Class C shares are not necessarily comparable to that of
Class A or B shares and are not necessarily indicative of future ratios.
See Notes to Financial Statements.
-15-
<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, 1994, the results of its
operations for the year then ended, the changes in its net assets for the two
years then ended and the financial highlights for the two years ended December
31, 1994, for the ten month period ended December 31, 1992 and for each of the
three years in the period ended February 29, 1992 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, 1994 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1995
-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, 1994) as to certain tax benefits
inherent in the distributions paid by the Fund during such fiscal year.
Accordingly, during its fiscal year ended December 31, 1994, the Fund paid
distributions from realized long-term capital gains of $0.014 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>
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,
Inc. (Class A, Class B and Class C) with a similar investment in the J. P.
Morgan Global Traded Government Bond Index (the Global Index) by portraying the
initial account values at the commencement of operations of each class 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, in 1992
for Class B shares and 1994 for Class C shares. For purposes of the graphs and,
unless otherwise indicated, the accompanying tables, it has been assumed that
(a) the current 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
and Class C shares, assuming full redemption on December 31, 1994; (c) all
recurring fees (including management fees) were deducted; and (d) all dividends
and distributions were reinvested. Class B shares will automatically convert to
Class A shares on a quarterly basis approximately five years after purchase.
This conversion feature is expected to be implemented on or about February 1995
and is not reflected in the graph.
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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Directors
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
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 Americas
New York, NY 10036
Legal Counsel
Shereff, Friedman, Hoffman & Goodman LLP
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
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
74435G203
74435G302
74435G401 (LOGO) MF155E
