<PAGE>
(ICON)
Prudential
Intermediate
Global
Income
Fund, Inc.
SEMI
ANNUAL
REPORT
June 30, 1999
(LOGO)
<PAGE>
A Message from the Fund's President August 20, 1999
(PHOTO)
Dear Shareholder,
Prudential Intermediate Global Income Fund posted a negative return for the
six-month period that ended on June 30, 1999, as did its benchmark, the Lipper
Global Income Fund Average. The Fund was hurt primarily by its still-
considerable exposure to U.S. Treasuries. These government securities and bonds
of certain other major debt markets sold off in the first half of the year amid
concern about the potential for higher inflation. Since rising inflation erodes
the value of bonds' fixed interest payments, investors demanded higher yields
on most longer-term debt securities. As a result, prices of these debt
securities--which move in the opposite direction of their yields--fell
significantly. By contrast, emerging market bonds rallied after Brazil
apparently weathered its financial crisis far better than expected.
In the following report, Portfolio Managers Gabriel Irwin and Simon Wells take
a closer look at bond market events that took place during the six-month
reporting period and explain how they have positioned Prudential Intermediate
Global Income Fund accordingly.
Diversification is key
While the bond market was experiencing some turbulence, the stock market was
reaching new highs as a broader group of stocks started to benefit from
encouraging global economic news. This disparity not only highlights the
value of professional portfolio management, it illustrates why investors
should have a well-diversified asset allocation strategy. It is also a good
practice to rebalance your holdings, when necessary, to keep your asset
allocation consistent with your long-term objectives and risk tolerance. A
properly diversified portfolio of value- and growth-oriented equity funds,
international and domestic bond funds, and money market funds could help you
weather inevitable market turbulence and achieve more consistent returns over
time. Your Prudential professional can help you conduct this review and make
sure your investment strategies are on course.
Thank you for your continued confidence in Prudential mutual funds.
Sincerely,
John R. Strangfeld
President and Chief Investment Officer
Prudential Intermediate Global Income Fund, Inc.
<PAGE>
Portfolio Managers' Report
(PHOTOS)
Gabriel Irwin and Simon Wells
Fund Managers
Investment Goals and Style
Your Fund seeks to maximize total return made up of current income and capital
appreciation. The Fund invests primarily in intermediate-term, investment-grade
debt securities issued throughout the world. The Fund may also invest up to 10%
of total net assets in bonds rated below investment grade with a minimum rating
of "B" by Standard & Poor's or Moody's, or of comparable quality in our view.
Lower-rated securities carry a greater risk of loss of principal and interest
than higher-rated securities. There are special risks associated with foreign
investing, including social, political and currency risks, as well as
potential illiquidity. There can be no assurance the Fund's investment
objective will be achieved.
Market Review
We increased exposure to emerging market bonds
The first half of 1999 began on a somber note for emerging market bonds. In
January, the Brazilian government devalued the nation's currency--the real--
amid doubts about its ability to solve Brazil's longstanding fiscal
difficulties. But the Brazilian government acted quickly to regain investor
confidence by cutting spending, raising taxes and taking other measures.
Encouraged by these moves, investor demand increased for Brazilian debt
securities and other emerging market bonds. In addition, investor sentiment
toward emerging market bonds of Southeast Asian countries improved as economic
stability returned to that region. As a whole, emerging market bonds performed
better than debt securities in other fixed-income markets during the six
months, based on Lehman Brothers indexes.
The Fund's exposure to below-investment-grade emerging market bonds rose from
4.6% of its total investments as of December 31, 1998 to 9.67% as of June 30,
1999. We selectively purchased a mixture of shorter- and longer-term
government bonds of Jordan, Venezuela, Bulgaria, and Malaysia--all of which
were denominated in U.S. dollars. Emerging market bonds offer high yields
because they are often rated below investment grade and carry greater credit
risk than the government bonds of developed western economies. For these
reasons, we limit the Fund's exposure to these lower-quality bonds.
We trimmed U.S. Treasuries and Australian bonds
The money used to purchase emerging market bonds came from selling some of the
Fund's longer-term, dollar-bloc bonds, which is a group that includes U.S.
Treasuries and the government bonds of Australia, Canada, and New Zealand. In
this case, we primarily sold Treasuries and Australian government bonds,
Proposed Reorganization
The Board of Directors of Prudential Intermediate Global Income Fund, Inc. has
approved a proposal to merge the Fund into Prudential Global Total Return
Fund, Inc., which is also managed by Gabriel Irwin and Simon Wells. The
proposal must be approved by shareholders. If approved, a tax-free
reorganization is expected to occur in October 1999.
<PAGE>
which caused dollar-bloc bonds to fall from 50.4% of the Fund's total
investments as of December 31, 1998 to 47.5% by the end of June 1999. Selling
these bonds helped to lower the Fund's duration (a measure of its sensitivity
to changes in the level of interest rates) from 5.8 years to 4.2 years. A
shorter duration made the Fund less sensitive to the rise in the yields of
dollar-bloc bonds and the decline in their prices. However, our still-
considerable exposure to these bonds--especially Treasuries--was a key reason
the Fund posted negative returns for the first half of the year.
In fact, dollar-bloc bonds and most major European government bond markets
provided negative returns for the six months, according to Lehman Brothers
indexes. They sold off amid concern that the powerful U.S. economic expansion,
a pickup in world economic growth, and rising commodity prices would spark
higher inflation. Investors dislike mounting inflationary pressures because
it erodes the value of their bonds' fixed interest payments. Because bond
yields typically reflect the anticipated rate of inflation, investors began
to push yields higher in many bond markets (and their prices lower),
particularly in the Treasury market.
Performance at a Glance
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 6/30/99
Six One Five Ten Since
Months Year Years Years Inception2
<S> <C> <C> <C> <C> <C>
Class A -3.35% 1.09% 48.80% 103.33% 120.81%
Class B -3.67 0.57 44.35 N/A 62.04
Class C -3.67 0.57 N/A N/A 43.81
Class Z -3.23 1.30 N/A N/A 16.12
Lipper Global Inc. Fund
Avg.3 -3.35 -0.05 36.02 102.23 ***
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 6/30/99
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -1.94% 7.62% 7.03% 7.11%
Class B -2.43 7.62 N/A 6.69
Class C -1.44 N/A N/A 7.46
Class Z 1.30 N/A N/A 5.51
</TABLE>
<TABLE>
<CAPTION>
Distributions and Yields As of 6/30/99
Total Distributions 30-Day
Paid for Six Mos. SEC Yield
<S> <C> <C>
Class A $0.24 4.90%
Class B $0.22 5.05%
Class C $0.22 5.00%
Class Z $0.24 5.31%
</TABLE>
Past performance is not indicative of future results. Principal and investment
return will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
1 Source: Prudential Investments Fund Management LLC and Lipper, Inc. The
cumulative total returns do not take into account sales charges. The average
annual total returns do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 3% for Class A shares. Class B
shares are subject to a declining contingent deferred sales charge (CDSC) of
3%, 2%, 1%, and 1% for four years. Class B shares will automatically convert
to Class A shares, on a quarterly basis, approximately five years after
purchase. Class C shares are subject to a front-end sales charge of 1% and a
CDSC of 1% for 18 months. Class C shares bought before November 2, 1998, have a
1% CDSC if sold within one year. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fees.
2 Inception dates: Class A, 5/26/88; Class B, 1/15/92; Class C, 8/1/94; and
Class Z, 9/16/96.
3 Lipper average returns are for all funds in each share class for the six-
month, one-, five-, and ten-year periods in the Global Income Fund category.
*** Lipper Since Inception returns are 109.78% for Class A, 51.39% for Class
B, 35.25% for Class C, and 11.89% for Class Z, based on all funds in each
share class.
- -------------------------------------------------------------------------------
1
<PAGE>
Review Cont'd.
Fed stepped in to slow U.S. economic growth
This trend continued amid growing expectations that the Federal Reserve would
increase the Federal funds rate--or the rate U.S. banks charge each other for
overnight loans--to keep the U.S. economy from overheating. In mid-May,
Federal Reserve policy makers announced they were considering raising the key
rate because of the potential for higher inflation. Finally on June 30, 1999,
the Federal Reserve increased the Federal funds rate by a quarter of a
percentage point to 5.00%.
Besides dollar-bloc bonds, we also sold long-term German government bonds to
shorten the Fund's duration. As for currencies, we substantially reduced the
Fund's euro exposure. When the euro debuted on January 1, 1999, the new single-
European currency was widely expected to gain in value. As it turned out, the
euro weakened by approximately 12% against the U.S. dollar in its first six
months, largely reflecting the superior strength of the U.S. economy compared
with that of continental Europe. Even though we cut the Fund's euro exposure
over the six-month period, its remaining exposure to the currency still
detracted from the Fund's performance.
Five Largest Issuers
Expressed as a percentage of net assets as of 6/30/99
German Government Bonds 18.8%
U.S. Treasury Obligations 18.1
Danish Government Bonds 3.8
Swedish Government Bonds 3.5
Polish Treasury Bills 2.8
Geographic/Currency Concentration
Expressed as a percentage of total investments as of 6/30/99
United States 37%
Euro 23
Germany 5
United Kingdom 4
Australia 4
Other 21
Cash Equivalents 6
Looking Ahead
Our emerging market bond outlook remains positive--
in the medium term
Emerging market bonds offer yields that, on average, are notably higher
than in recent years. Although these bonds carry considerable risks, we
believe investors with prudent exposure to eastern European and Asian
emerging bond markets will continue to be rewarded. As for the euro,
its substantial decline will likely have a stimulating effect on the
European economy because the weaker currency has made prices of European
exports very competitive. Should signs of economic recovery continue to
emerge in Europe, the euro's outlook will probably improve.
- -------------------------------------------------------------------------------
2
<PAGE>
Portfolio of Investments PRUDENTIAL INTERMEDIATE GLOBAL
as of June 30, 1999 (Unaudited) INCOME FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--87.7%
- ------------------------------------------------------------
Australia--3.8%
A$ 2,370 Commonwealth of Australia,
10.00%, 10/15/02 $ 1,771,682
4,370 New South Wales Treasury
Corporation,
6.50%, 5/1/06 2,901,382
------------
4,673,064
- ------------------------------------------------------------
Canada--3.4%
C$ 1,750 British Columbia Provincial
Bond,
6.00%, 6/9/08 1,192,839
500 Canadian Government Bond,
9.00%, 12/1/04 392,526
3,800 Province of Quebec,
6.50%, 10/1/07 2,655,030
------------
4,240,395
- ------------------------------------------------------------
Denmark--3.8%
Danish Government Bonds,
DKr 17,000 7.00%, 12/15/04 2,659,666
12,060 8.00%, 3/15/06 1,998,861
------------
4,658,527
- ------------------------------------------------------------
Euro--22.8%
EURO 3,560 French Government Bonds,
4.00%, 4/25/09 3,499,606
German Government Bonds,
850 4.50%, 5/17/02 901,847
7,250 3.75%, 8/26/03 7,478,865
2,360 7.375%, 1/3/05 2,825,628
4,675 3.75%, 1/4/09 4,550,313
6,391 6.25%, 1/4/24 7,384,842
1,210 Italian Government Bonds,
6.50%, 11/1/27 1,403,753
------------
28,044,854
Germany--4.6%
DM 4,000 Republic of Colombia,
7.25%, 12/21/00 $ 2,161,469
4,000 Tokyo Gas Co. Ltd.,
7.00%, 7/27/05 2,418,057
2,000 United Mexican States,
8.125%, 9/10/04 1,146,729
------------
5,726,255
- ------------------------------------------------------------
Greece--2.4%
Hellenic Republic,
GRD 545,000 11.90%, 12/31/03 1,798,474
306,500 8.60%, 3/26/08 1,120,082
------------
2,918,556
- ------------------------------------------------------------
Hungary--0.9%
Hungarian Government Bonds,
HUF 250,000 15.00%, 7/24/01 1,048,757
- ------------------------------------------------------------
New Zealand--3.6%
NZ$ 5,400 Federal National Mortgage
Association,
7.25%, 6/20/02 2,931,474
2,700 International Bank of
Reconstruction Development,
7.25%, 5/27/03 1,470,403
------------
4,401,877
- ------------------------------------------------------------
Russia--0.1%
European Bank of Reconstruction
Development,
RUB 6,800 Zero Coupon, 5/28/02 70,089
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments PRUDENTIAL INTERMEDIATE GLOBAL
as of June 30, 1999 (Unaudited) INCOME FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Sweden--3.4%
Swedish Government Bond,
SEK 10,300 5.00%, 1/15/04 $ 1,237,410
24,000 6.00%, 2/9/05 3,011,254
------------
4,248,664
- ------------------------------------------------------------
United Kingdom--4.0%
BP 2,255 United Kingdom Treasury Strip,
9.50%, 10/25/04 4,208,275
400 Powergen PLC,
8.875%, 3/26/03 675,926
------------
4,884,201
- ------------------------------------------------------------
United States--34.9%
Corporate Bonds--2.3%
US$ 1,000 General Motors Acceptance
Corp.,
5.75%, 11/10/03 967,540
1,300 Household Finance Corp.,
6.40%, 6/17/08 1,235,299
750 Petroliam Nasional Berhad
(Malaysia),
7.125%, 10/18/06 684,000
------------
2,886,839
------------
- ------------------------------------------------------------
Sovereign Bonds--13.4%
600 Kingdom Of Jordan,
5.50%, 12/23/23 360,000
1,500 Ministry of Finance, (Russia),
10.00%, 6/26/07 739,687
1,400 Province of Ontario, (Canada),
6.00%, 2/21/06 1,350,300
Republic of Argentina,
698 5.9375%, 3/31/05, FRB 593,782
2,500 11.00%, 10/9/06 2,311,250
US$ 492 Republic of Brazil,
6.0625%, 1/1/01, FRN $ 470,500
1,000 Republic of Bulgaria,
2.50%, 7/28/12, FRB 595,000
2,300 Republic of Colombia,
7.25%, 2/23/04 1,911,300
1,328 Republic of Croatia,
5.8125%, 7/31/06, FRN 1,115,240
500 Republic of Lithuania,
7.125%, 7/22/02 471,250
500 Republic of Malaysia,
8.75%, 6/1/09 504,700
1,000 Republic of Panama,
7.875%, 2/13/02 972,500
1,100 Republic of Peru,
4.50%, 3/7/17 675,180
Republic of Venezuela,
1,012 6.3125%, 12/18/07, FRN 772,889
800 13.625%, 8/15/18 716,000
1,345 Russian Federation,
11.00%, 7/24/18 665,775
750 Sultan of Oman,
7.125%, 3/20/02 738,750
500 Trinidad & Tobago Republic,
9.75%, 11/3/00 502,749
1,000 United Mexican States,
9.75%, 2/6/01 1,041,500
------------
16,508,352
- ------------------------------------------------------------
Supranational Bonds--1.1%
1,350 Corporacion Andina de Fomento,
7.375%, 7/21/00 1,340,604
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments PRUDENTIAL INTERMEDIATE GLOBAL
as of June 30, 1999 (Unaudited) INCOME FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal US$
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
U.S. Government Securities--18.1%
United States Treasury Bonds,
US$ 3,500 6.125%, 9/30/00 $ 3,530,065
6,000 5.75%, 8/15/03 6,003,720
3,100 7.875%, 11/15/04 3,390,625
1,700 6.25%, 2/15/07 1,732,147
1,450 6.625%, 2/15/27 1,531,330
United States Treasury Notes,
5,110 5.00%, 4/30/01 5,066,872
1,000 5.875%, 11/15/05 1,000,000
------------
22,254,759
------------
42,990,554
------------
Total long-term investments
(cost US$113,693,242) 107,905,793
------------
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--11.1%
Hungary--1.1%
Hungarian Government Bonds,
HUF 200,000 16.50%, 7/24/99 827,715
130,000 16.00%, 4/12/00 542,854
------------
1,370,569
- ------------------------------------------------------------
Poland--2.8%
Polish Treasury Bills,(a)
PLZ 2,500 12.78%, 9/15/99 620,367
2,210 12.92%, 10/20/99 541,822
1,750 13.04%, 10/27/99 427,887
3,970 12.99%, 11/10/99 966,223
3,700 13.15%, 12/24/99 886,542
------------
3,442,841
- ------------------------------------------------------------
Russia--0.1%
European Bank of Reconstruction
Development,
RUB 4,100 31.00%, 5/5/00 135,230
United States--7.1%
Sovereign Bonds--1.2%
US$ 350 Banco Ganadero S.A.,
(Colombia),
9.75%, 8/26/99 $ 352,082
1,100 Financiera Energetica Nacional,
(Colombia),
9.00%, 8/11/99 1,086,250
------------
1,438,332
- ------------------------------------------------------------
Repurchase Agreement--5.9%
7,261 Joint Repurchase Agreement
Account,
4.78%, 7/1/99, (Note 5) 7,261,000
------------
8,699,332
------------
Total short-term Investments
(cost US$14,331,458) 13,647,972
------------
- ------------------------------------------------------------
Total Investments--98.8%
(cost $128,024,700; Note 4) 121,553,765
Other assets in excess of
liabilities--1.2% 1,511,001
------------
Net Assets--100% $123,064,766
------------
------------
</TABLE>
- ---------------
Portfolio securities are classified according to the securities
currency denomination.
(a) Percentages quoted represent yield-to-maturity as of purchase date.
FRN--Floating Rate Note.
FRB--Floating Rate Bond.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Statement of Assets and Liabilities (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
Assets June 30, 1999
<S> <C>
Investments, at value (cost $128,024,700)................................................................... $121,553,765
Foreign currency, at value (cost $1,630).................................................................... 1,624
Cash........................................................................................................ 19,500
Receivable for investments sold............................................................................. 4,165,643
Interest receivable......................................................................................... 2,551,893
Forward currency contracts - net amount receivable from counterparties...................................... 354,390
Receivable for Fund shares sold............................................................................. 23,422
Other assets................................................................................................ 1,944
-------------
Total assets............................................................................................. 128,672,181
-------------
Liabilities
Payable for investments purchased........................................................................... 4,641,571
Accrued expenses............................................................................................ 378,200
Payable for Fund shares reacquired.......................................................................... 251,986
Dividends payable........................................................................................... 197,305
Management fee payable...................................................................................... 76,591
Forward currency contracts - net amount payable to counterparties........................................... 52,359
Withholding tax payable..................................................................................... 6,094
Distribution fee payable.................................................................................... 3,309
-------------
Total liabilities........................................................................................ 5,607,415
-------------
Net Assets.................................................................................................. $123,064,766
-------------
-------------
Net assets were comprised of:
Common stock, at par..................................................................................... $ 16,222
Paid-in capital in excess of par......................................................................... 176,497,921
-------------
176,514,143
Distributions in excess of net investment income......................................................... (718,365)
Accumulated net realized loss on investments............................................................. (46,559,983)
Net unrealized depreciation on investments and foreign currencies........................................ (6,171,029)
-------------
Net assets, June 30, 1999................................................................................... $123,064,766
-------------
-------------
Class A:
Net asset value and redemption price per share
($106,580,079 / 14,049,080 shares of common stock issued and outstanding)............................. $7.59
-------------
-------------
Class B:
Net asset value and redemption price per share
($4,520,699 / 595,560 shares of common stock issued and outstanding).................................. $7.59
-------------
-------------
Class C:
Net asset value and redemption price per share
($394,271 / 51,939 shares of common stock issued and outstanding)..................................... $7.59
-------------
-------------
Class Z:
Net asset value and redemption price per share
($11,569,717 / 1,525,131 shares of common stock issued and outstanding)............................... $7.59
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
INCOME FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income June 30, 1999
<S> <C>
Income
Interest and discount earned (net of
foreign withholding taxes of $10,168)... $ 4,844,882
-------------
Expenses
Management fee............................. 483,920
Distribution fee--Class A.................. 147,321
Distribution fee--Class B.................. 17,720
Distribution fee--Class C.................. 1,140
Transfer agent's fees and expenses......... 167,000
Custodian's fees and expenses.............. 104,000
Reports to shareholders.................... 40,000
Registration fees.......................... 30,000
Legal fees and expenses.................... 27,000
Audit fee.................................. 21,000
Directors' fees and expenses............... 11,000
Insurance.................................. 1,000
Miscellaneous.............................. 3,374
-------------
Total expenses.......................... 1,054,475
-------------
Net investment income......................... 3,790,407
-------------
Net Realized and Unrealized Gain
(Loss) on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions.................... 1,430,875
Foreign currency transactions.............. (1,335,464)
-------------
95,411
-------------
Net change in unrealized appreciation (depreciation) of:
Investments................................ (8,295,306)
Foreign currencies......................... 89,507
-------------
(8,205,799)
-------------
Net loss on investments and foreign
currencies................................. (8,110,388)
-------------
Net Decrease in Net Assets
Resulting from Operations..................... $ (4,319,981)
-------------
-------------
</TABLE>
PRUDENTIAL INTERMEDIATE GLOBAL
INCOME FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) June 30, December 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income........ $ 3,790,407 $ 8,644,314
Net realized gain (loss) on
investment and foreign
currency transactions..... 95,411 (399,177)
Net change in unrealized
appreciation/depreciation
of investments and foreign
currencies................ (8,205,799) 3,866,718
------------ --------------
Net increase (decrease) in
net assets resulting from
operations ............... (4,319,981) 12,111,855
------------ --------------
Dividends and distributions
(Note 1):
Dividends from net investment
income
Class A................... (3,462,084) (8,245,704)
Class B................... (146,301) (449,178)
Class C................... (9,750) (14,329)
Class Z................... (172,272) (219,705)
------------ --------------
(3,790,407) (8,928,916)
------------ --------------
Distributions in excess of
net investment income
Class A................... (226,832) --
Class B................... (9,806) --
Class C................... (653) --
Class Z................... (8,311) --
------------ --------------
(245,602) --
------------ --------------
Fund share transactions (net of
share conversions) (Note 6)
Net proceeds from shares
sold...................... 13,283,905 8,175,064
Net asset value of shares
issued in reinvestment of
dividends and
distributions............. 1,756,115 3,801,592
Cost of shares reacquired.... (20,327,968) (27,862,529)
------------ --------------
Net decrease in net assets
from Fund share
transactions.............. (5,287,948) (15,885,873)
------------ --------------
Total decrease.................. (13,643,938) (12,702,934)
Net Assets
Beginning of period............. 136,708,704 149,411,638
------------ --------------
End of period................... $123,064,766 $ 136,708,704
------------ --------------
------------ --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Notes to Financial Statements (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
Prudential Intermediate Global Income Fund, Inc., (the 'Fund') was organized in
Maryland as a closed-end, nondiversified 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, nondiversified 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 Policies
The following is a summary of 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 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. 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 under triparty repurchase agreements, as the case may be take
possession of the underlying collateral securities, the value of which exceeds
the principal amount of the repurchase transaction including accrued interest.
To the extent that any repurchase transaction exceeds one business day, the
value of the collateral is marked-to-market on a daily basis to ensure the
adequacy of the collateral. If the seller defaults and the value of the
collateral declines or if bankruptcy proceedings are commenced with respect to
the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at the
current rates of exchange;
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period-end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term debt securities sold
during the period. Accordingly, such realized foreign currency gains and losses
are included in the reported net realized gains/losses on investment
transactions.
Net realized losses on foreign currency transactions represent 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
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
- --------------------------------------------------------------------------------
8
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Notes to Financial Statements (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
foreign portfolio holdings or on specific receivables and payables denominated
in a foreign currency. The contracts are valued daily at current exchange rates
and any unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
Security Transactions and Net Investment Income: Security transactions are
recorded on the trade date. Realized gains and losses from security and currency
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis. The Fund amortizes discounts on purchases of debt
securities as adjustments to income. Expenses are recorded on the accrual basis
which may require the use of certain estimates by management.
Net investment income (other than distribution fees), and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
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.
Dividends and Distributions: The Fund declares dividends of net investment
income daily and pays such dividends 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 decrease both undistributed
net investment income and accumulated net realized losses by $1,335,464. This
was primarily the result of net foreign currency losses for the six months ended
June 30, 1999. Net investment income, net realized gains and net assets were not
affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'): PIC, through an agreement with PRICOA Asset
Management Ltd. ('PRICOA'), furnishes investment advisory services in connection
with the management of the Fund. PIFM pays for the services of PIC (which in
turn pays PRICOA), the cost of compensation of officers of the Fund, occupancy
and certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PIFM is computed daily and payable monthly at an annual
rate of .75 of 1% of the Fund's average daily net assets.
The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Class A, B, C and Z
shares of the Fund. The Fund compensates PIMS for distributing and servicing the
Fund's Class A, Class B and Class C shares, pursuant to a plan of distribution,
(the 'Class A, B and C Plans'), regardless of expenses actually incurred by
them. The distribution fees were accrued daily and payable monthly. No
distribution or service fees were paid to PIMS as distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, .75 of 1%
and 1% of the average daily net assets of the Class A, B and C shares,
respectively. Effective May 26, 1999, such expenses for the Fund were .25 of 1%,
.25 of 1% and .25 of 1% of the average daily net assets of the Class A, B and C
shares, respectively. Prior to May 26, 1999, such expenses under the Plans were
.25 of 1%, .75 of 1% and .75 of 1% of the average daily net assets of the Class
A, B and C shares, respectively.
PIMS has advised the Fund that they have received approximately $10,400 and $200
in front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the six months ended June 30, 1999. From these fees, PIMS
paid such sales charges to Pruco Securities Corporation, an affiliated
broker-dealer, which in turn paid commissions to salespersons and incurred other
distribution costs.
- --------------------------------------------------------------------------------
9
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Notes to Financial Statements (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
PIMS has advised the Fund that for the six months ended June 30, 1999, they
received approximately $9,400 in contingent deferred sales charges imposed upon
certain redemptions by Class B shareholders.
PIFM, PIC, PIMS and PRICOA are indirect, wholly owned subsidiaries of The
Prudential Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to either
agreement during the six months ended June 30, 1999. The purpose of the
agreements are to serve as an alternative source of funding for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the six months ended June 30,
1999, the Fund incurred fees of approximately $152,000 for the services of PMFS.
As of June 30, 1999, fees of approximately $29,900 were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments
for the six months ended June 30, 1999, aggregated $60,452,721 and $70,074,660,
respectively.
At June 30, 1999, the Fund had outstanding forward currency contracts to buy and
sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Purchase Contracts Receivable Value (Depreciation)
- ------------------------------ --------------- ----------- ---------------
<S> <C> <C> <C>
Australian Dollar,
expiring 7/15/99............. $ 1,284,657 $ 1,289,797 $ 5,140
Canadian Dollar,
expiring 7/8/99.............. 3,399,008 3,388,573 (10,435)
Euro,
expiring 7/13/99............. 1,560,500 1,547,836 (12,664)
Pound Sterling,
expiring 8/4/99.............. 1,154,475 1,146,621 (7,854)
Swedish Krona,
expiring 7/9/99.............. 3,775,304 3,823,624 48,320
--------------- ----------- -------
$11,173,944 $11,196,451 $ 22,507
--------------- ----------- -------
--------------- ----------- -------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current Appreciation
Sale Contracts Payable Value (Depreciation)
- ------------------------------ --------------- ----------- ---------------
<S> <C> <C> <C>
Australian Dollar,
expiring 7/15/99............. $ 1,800,751 $ 1,799,734 $ 1,017
Canadian Dollar,
expiring 7/8/99.............. 4,718,427 4,688,966 29,461
Swiss Franc,
expiring 7/9/99.............. 8,703,334 8,578,265 125,069
Euro,
expiring 7/13/99 - 7/23/99... 14,237,655 14,153,309 84,346
Japanese Yen,
expiring 7/26/99............. 1,557,415 1,550,008 7,407
New Zealand Dollar,
expiring 7/19/99............. 4,576,582 4,544,230 32,352
Pound Sterling,
expiring 8/4/99.............. 984,706 963,428 21,278
Swedish Krona,
expiring 7/9/99.............. 1,260,827 1,282,233 (21,406)
--------------- ----------- -------
$37,839,697 $37,560,173 $ 279,524
--------------- ----------- -------
--------------- ----------- -------
</TABLE>
The cost basis of investments for federal income tax purposes, including
short-term investments, at June 30, 1999 was $128,101,328 and, accordingly, as
of June 30, 1999 net unrealized depreciation for federal income tax purposes was
$6,547,563 (gross unrealized appreciation--$599,447 gross unrealized
depreciation--$7,147,010).
For federal income tax purposes, the Fund has a capital loss carryforward as of
December 31, 1998, of approximately $46,655,300 of which $14,010,600 expires in
1999, $14,010,600 expires in 2000 and $18,634,100 expires in 2002. The Fund is
electing to treat net currency losses of approximately $207,000 incurred in the
two-month period ended
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Notes to Financial Statements (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
December 31, 1998 as having been incurred in the next year. Accordingly, no
capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of the aggregate of such amounts.
- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment companies, transfers
uninvested cash balances into a single joint account, the daily aggregate
balance of which is invested in one or more repurchase agreements collateralized
by U.S. Treasury or federal agency obligations. As of June 30, 1999, the Fund
has a 0.9% undivided interest in the joint account. The undivided interest for
the Fund represents $7,261,000 in the principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor were as
follows:
Deutsche Bank Securities Inc., 4.75%, in the principal amount of $150,000,000,
repurchase price $150,019,792, due 7/1/99. The value of the collateral including
accrued interest was $153,000,548.
Goldman Sachs & Co., 4.85%, in the principal amount of $200,000,000, repurchase
price $200,026,944, due 7/1/99. The value of the collateral including accrued
interest was $204,001,378.
Morgan Stanley Dean Witter, 4.70%, in the principal amount of $178,944,000,
repurchase price $178,967,362, due 7/1/99. The value of the collateral including
accrued interest was $182,666,733.
Morgan Stanley Dean Witter, 4.72%, in the principal amount of $50,000,000,
repurchase price $50,006,556, due 7/1/99. The value of the collateral including
accrued interest was $51,021,154.
Warburg Dillon Read LLC, 4.81%, in the principal amount of $200,000,000,
repurchase price $200,026,722, due 7/1/99. The value of the collateral including
accrued interest was $204,001,326.
- ------------------------------------------------------------
Note 6. Capital
Prior to May 27, 1999, the Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are sold with a front-end sales charge of up to 3%. 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 front-end sales charge of 1% and a contingent deferred sales charge
of 1% during the first 18 months. Class B shares will automatically convert to
Class A shares on a quarterly basis approximately five years after purchase.
Class Z shares are not subject to any sales or redemption charge and are offered
exclusively for sale to a limited group of investors. There are 2 billion
authorized shares of $.001 par value common stock divided equally into Class A,
B, C and Z shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ---------- ------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold....................... 396,342 $ 3,111,328
Shares issued in reinvestment of
dividends and distributions..... 189,687 1,484,440
Shares reacquired................. (2,269,529) (17,572,418)
---------- ------------
Net decrease in shares outstanding
before conversion............... (1,683,500) (12,976,650)
Shares issued upon conversion from
Class B......................... 135,655 1,050,960
---------- ------------
Net decrease in shares
outstanding..................... (1,547,845) $(11,925,690)
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold....................... 449,484 $ 3,607,243
Shares issued in reinvestment of
dividends and distributions..... 409,532 3,282,668
Shares reacquired................. (2,955,367) (23,662,310)
---------- ------------
Net decrease in shares outstanding
before conversion............... (2,096,351) (16,772,399)
Shares issued upon conversion from
Class B......................... 277,954 2,245,059
---------- ------------
Net decrease in shares
outstanding..................... (1,818,397) $(14,527,340)
---------- ------------
---------- ------------
<CAPTION>
Class B
- ----------------------------------
Six months ended June 30, 1999:
Shares sold....................... 156,891 $ 1,232,560
Shares issued in reinvestment of
dividends and distributions..... 13,548 106,076
Shares reacquired................. (174,365) (1,360,936)
---------- ------------
Net decrease in shares outstanding
before conversion............... (3,926) (22,300)
Shares reacquired upon conversion
into
Class A......................... (135,480) (1,050,960)
---------- ------------
Net decrease in shares
outstanding..................... (139,406) $(1,073,260)
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold....................... 193,771 $ 1,556,311
Shares issued in reinvestment of
dividends and distributions..... 36,859 295,629
Shares reacquired................. (341,422) (2,738,243)
---------- ------------
Net decrease in shares outstanding
before conversion............... (110,792) (886,303)
Shares reacquired upon conversion
into
Class A......................... (277,683) (2,245,059)
---------- ------------
Net decrease in shares
outstanding..................... (388,475) $(3,131,362)
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Notes to Financial Statements (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Shares Amount
- ---------------------------------- ---------- ------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold....................... 14,560 $ 114,447
Shares issued in reinvestment of
dividends and distributions..... 1,088 8,513
Shares reacquired................. (2,785) (22,058)
---------- ------------
Net increase in shares
outstanding..................... 12,863 $ 100,902
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold....................... 25,390 $ 203,275
Shares issued in reinvestment of
dividends and distributions..... 1,548 12,421
Shares reacquired................. (12,925) (103,859)
---------- ------------
Net increase in shares
outstanding..................... 14,013 $ 111,837
---------- ------------
---------- ------------
Class Z
- ----------------------------------
Six months ended June 30, 1999:
Shares sold....................... 1,154,406 $ 8,825,570
Shares issued in reinvestment of
dividends and distributions..... 20,133 157,086
Shares reacquired................. (174,882) (1,372,556)
---------- ------------
Net increase in shares
outstanding..................... 999,657 $ 7,610,100
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold....................... 350,457 $ 2,808,235
Shares issued in reinvestment of
dividends and distributions..... 26,304 210,874
Shares reacquired................. (169,535) (1,358,117)
---------- ------------
Net increase in shares
outstanding..................... 207,226 $ 1,660,992
---------- ------------
---------- ------------
</TABLE>
- ------------------------------------------------------------
Note 7. Proposed Merger
On May 26, 1999, the Board of Directors approved an Agreement and Plan of
Reorganization and Liquidation of the Intermediate Fund which provides for the
transfer of substantially all of the assets and liabilities of the Fund to
Prudential Global Total Return Fund, Inc. Class A, B, C and Z shares of the Fund
will be exchanged at net asset value for Class A, B, C and Z shares of
equivalent value of Prudential Global Total Return Fund, Inc. The Fund will then
cease operations.
- --------------------------------------------------------------------------------
12
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Financial Highlights (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -----------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995(b)
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.09 $ 7.91 $ 8.34 $ 8.30 $ 7.32
---------- -------- -------- -------- --------
Income from investment operations
Net investment income.......................................... .23 .49 .54 .56 .52
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (.49) .19 (.18) .33 1.20
---------- -------- -------- -------- --------
Total from investment operations............................ (.26) .68 .36 .89 1.72
---------- -------- -------- -------- --------
Less distributions
Dividends from net investment income........................... (.23) (.50) (.54) (.56) (.52)
Distributions in excess of net investment income............... (.01) -- (.25) (.29) (.22)
Distributions from capital gains............................... -- -- -- -- --
Tax return of capital distributions............................ -- -- -- -- --
---------- -------- -------- -------- --------
Total distributions......................................... (.24) (.50) (.79) (.85) (.74)
---------- -------- -------- -------- --------
Net asset value, end of period................................. $ 7.59 $ 8.09 $ 7.91 $ 8.34 $ 8.30
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
TOTAL RETURN(a):............................................... (3.35)% 8.91% 4.42% 11.13% 24.01%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $106,580 $126,191 $137,799 $165,829 $181,985
Average net assets (000)....................................... $118,834 $130,686 $153,168 $169,219 $200,759
Ratios to average net assets:
Expenses, including distribution fees....................... 1.63%(c) 1.51% 1.41% 1.40% 1.40%
Expenses, excluding distribution fees....................... 1.38%(c) 1.36% 1.26% 1.25% 1.25%
Net investment income....................................... 5.88%(c) 6.11% 6.62% 6.55% 6.09%
For Class A, B, C and Z shares:
Portfolio turnover rate..................................... 50% 35% 40% 45% 220%
<CAPTION>
1994
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.43
--------
Income from investment operations
Net investment income.......................................... .50
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (1.09)
--------
Total from investment operations............................ (.59)
--------
Less distributions
Dividends from net investment income........................... (.29)
Distributions in excess of net investment income............... --
Distributions from capital gains............................... (.01)
Tax return of capital distributions............................ (.22)
--------
Total distributions......................................... (.52)
--------
Net asset value, end of period................................. $ 7.32
--------
--------
TOTAL RETURN(a):............................................... (7.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $207,153
Average net assets (000)....................................... $262,882
Ratios to average net assets:
Expenses, including distribution fees....................... 1.46%
Expenses, excluding distribution fees....................... 1.31%
Net investment income....................................... 6.04%
For Class A, B, C and Z shares:
Portfolio turnover rate..................................... 554%
</TABLE>
- ---------------
(a) 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.
(b) Calculated based upon average shares outstanding during the period.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Financial Highlights (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ---------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995(b)
---------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.10 $ 7.92 $ 8.34 $ 8.31 $ 7.33
----- --------- ------- ------- -------
Income from investment operations
Net investment income.......................................... .21 .44 .50 .53 .47
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (.50) .19 (.18) .30 1.20
----- --------- ------- ------- -------
Total from investment operations............................ (.29) .63 .32 .83 1.67
----- --------- ------- ------- -------
Less distributions
Dividends from net investment income........................... (.21) (.45) (.50) (.53) (.47)
Distributions in excess of net investment income............... (.01) -- (.24) (.27) (.22)
Distributions from capital gains............................... -- -- -- -- --
Tax return of capital distributions............................ -- -- -- -- --
----- --------- ------- ------- -------
Total distributions......................................... (.22) (.45) (.74) (.80) (.69)
----- --------- ------- ------- -------
Net asset value, end of period................................. $ 7.59 $ 8.10 $ 7.92 $ 8.34 $ 8.31
----- --------- ------- ------- -------
----- --------- ------- ------- -------
TOTAL RETURN(a):............................................... (3.67)% 8.39% 3.80% 10.36% 23.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $4,521 $ 5,950 $ 8,896 $12,987 $17,317
Average net assets (000)....................................... $5,398 $ 7,872 $11,377 $15,491 $19,336
Ratios to average net assets:
Expenses, including distribution fees....................... 2.03%(c) 2.11% 2.01% 2.00% 2.00%
Expenses, excluding distribution fees....................... 1.38%(c) 1.36% 1.26% 1.25% 1.25%
Net investment income....................................... 5.47%(c) 5.51% 6.04% 5.94% 5.49%
<CAPTION>
1994
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.44
-------
Income from investment operations
Net investment income.......................................... .45
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (1.09)
-------
Total from investment operations............................ (.64)
-------
Less distributions
Dividends from net investment income........................... (.26)
Distributions in excess of net investment income............... --
Distributions from capital gains............................... (.01)
Tax return of capital distributions............................ (.20)
-------
Total distributions......................................... (.47)
-------
Net asset value, end of period................................. $ 7.33
-------
-------
TOTAL RETURN(a):............................................... (7.69)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $22,906
Average net assets (000)....................................... $31,835
Ratios to average net assets:
Expenses, including distribution fees....................... 2.07%
Expenses, excluding distribution fees....................... 1.31%
Net investment income....................................... 5.44%
</TABLE>
- ---------------
(a) 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.
(b) Calculated based upon average shares outstanding during the period.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Financial Highlights (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995(b)
---------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.10 $ 7.92 $ 8.34 $ 8.31 $ 7.33
----- ------- ------- ------ -------
Income from investment operations
Net investment income.......................................... .21 .44 .50 .53 .47
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (.50) .19 (.18) .30 1.20
----- ------- ------- ------ -------
Total from investment operations............................ (.29) .63 .32 .83 1.67
----- ------- ------- ------ -------
Less distributions
Dividends from net investment income........................... (.21) (.45) (.50) (.53) (.47)
Distributions in excess of net investment income............... (.01) -- (.24) (.27) (.22)
Tax return of capital distributions............................ -- -- -- -- --
----- ------- ------- ------ -------
Total distributions......................................... (.22) (.45) (.74) (.80) (.69)
----- ------- ------- ------ -------
Net asset value, end of period................................. $ 7.59 $ 8.10 $ 7.92 $ 8.34 $ 8.31
----- ------- ------- ------ -------
----- ------- ------- ------ -------
TOTAL RETURN(a):............................................... (3.67)% 8.39% 3.80% 10.36% 23.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 394 $ 316 $ 198 $ 190 $ 13
Average net assets (000)....................................... $ 356 $ 251 $ 213 $ 110 $ 11
Ratios to average net assets:
Expenses, including distribution fees....................... 2.03%(c) 2.11% 2.01% 2.00% 2.00%
Expenses, excluding distribution fees....................... 1.38%(c) 1.36% 1.26% 1.25% 1.25%
Net investment income....................................... 5.52%(c) 5.51% 6.25% 6.02% 5.49%
<CAPTION>
August 1,
1994(e)
Through
December 31,
1994
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 7.69
-----
Income from investment operations
Net investment income.......................................... .14
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (.32)
-----
Total from investment operations............................ (.18)
-----
Less distributions
Dividends from net investment income........................... (.10)
Distributions in excess of net investment income............... --
Tax return of capital distributions............................ (.08)
-----
Total distributions......................................... (.18)
-----
Net asset value, end of period................................. $ 7.33
-----
-----
TOTAL RETURN(a):............................................... (2.44)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 193(d)
Average net assets (000)....................................... $ 197(d)
Ratios to average net assets:
Expenses, including distribution fees....................... 1.05%(c)
Expenses, excluding distribution fees....................... .30%(c)
Net investment income....................................... 3.30%(c)
</TABLE>
- ---------------
(a) 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.
(b) Calculated based upon average shares outstanding during the period.
(c) Annualized.
(d) Figures are actual and not rounded to the nearest thousand.
(e) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15
<PAGE>
PRUDENTIAL INTERMEDIATE GLOBAL
Financial Highlights (Unaudited) INCOME FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
----------------------------------------------------
September 16,
Six Months Year Ended December 1996(d)
Ended 31, Through
June 30, ------------------- December 31,
1999(b) 1998(b) 1997(b) 1996
---------- ------- ------- -------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $ 8.09 $ 7.91 $ 8.34 $ 8.39
---------- ------- ------- -----
Income from investment operations
Net investment income.......................................... .23 .50 .55 .32
Net realized and unrealized gain (loss) on investment and
foreign currency transactions............................... (.49) .19 (.18) .12
---------- ------- ------- -----
Total from investment operations............................ (.26) .69 .37 .44
---------- ------- ------- -----
Less distributions
Dividends from net investment income........................... (.23) (.51) (.55) (.32)
Distributions in excess of net investment income............... (.01) -- (.25) (.17)
---------- ------- ------- -----
Total distributions......................................... (.24) (.51) (.80) (.49)
---------- ------- ------- -----
Net asset value, end of period................................. $ 7.59 $ 8.09 $ 7.91 $ 8.34
---------- ------- ------- -----
---------- ------- ------- -----
TOTAL RETURN(a):............................................... (3.23)% 9.07% 4.57% 5.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 11,570 $4,251 $2,518 $ 341
Average net assets (000)....................................... $ 5,526 $3,403 $1,668 $ 142
Ratios to average net assets:
Expenses, including distribution fees....................... 1.38%(c) 1.36% 1.26% 1.11%(c)
Expenses, excluding distribution fees....................... 1.38%(c) 1.36% 1.26% 1.11%(c)
Net investment income....................................... 6.29%(c) 6.26% 6.76% 6.94%(c)
</TABLE>
- ---------------
(a) 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.
(b) Calculated based upon average shares outstanding during the period.
(c) Annualized.
(d) Commencement of offering of Class Z shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 16
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
PRICOA Asset Management, Ltd.
115 Houndsditch
London EC3A 7BU
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
The accompanying financial statements as of June 30, 1999, were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
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74435G302
74435G401
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