LETTER TO SHAREHOLDERS
Dear Shareholder:
The Dreyfus Global Bond Fund was launched on March 18, 1994, which
happened to coincide with a period of increased volatility in the
international capital markets. November 30, 1994 has been selected as the end
of the Fund's fiscal year. Accordingly, this semi-annual report, with results
as of May 31, covers the first two and one-half months of the Fund's
operations.
During that brief time, Dreyfus Global Bond Fund maintained an annualized
distribution rate per share of 6.75%.* However, net asset value per share
registered a decline of 2.00%, resulting in a total return of -1.28% for the
reporting period.**
The initial structure of the Fund was based on two main assumptions: that
U.S. interest rates had troughed and were likely to rise in a slow, orderly
manner, and that rates in Europe (which we believe to be at least two years
behind the U.S. in the economic cycle) would continue their decline. The
portfolio was heavily biased towards European bonds with a slightly
underweighted position in Japan and the U.S. From a currency point of view,
the Fund was skewed towards the U.S. dollar at the expense of the Yen, the
Guilder and the Deutsche Mark.
Although, on the whole, economic fundamentals continue to be favorable to
all fixed-income markets (except perhaps the U.S.), the prices of global
bonds have declined sharply since February 4, when the Federal Reserve Board
began to increase short-term interest rates. During the quarter ended May 31,
the Salomon Brothers World Government Bond Index fell by 2.17% in local
currency terms,*** the worst-performing markets being the U.K.
(-7.89%), Canada (-6.82%) and Australia (-4.62%). Only Japan and Italy put in
positive total returns, achieving a miserly +2.15% and +0.29% respectively.
The reasons for this dramatic sell-off are far from clear. Initially, the
collapse seemed to have been provoked by the liquidation of derivatives
positions by U.S. hedge funds. A degree of credence may be accorded to this
interpretation: certainly, volumes in the futures markets have been higher
than those in their cash counterparts.
Sentiment in all fixed-income markets deteriorated in recent months. What
began as a technical correction turned into a meaningful decline during the
fiscal period as market participants have seized increasingly on unfavorable
news. Increases in U.S. short-term interest rates and rapid growth in the
U.S. economy have convinced many that European inflation and interest rates
are set to rise inexorably; that the Bundesbank has no further need to ease,
and that it is boom time again on the Continent -- facts not borne out by
equity markets. The European and British bond markets seem to us to have lost
touch with economic fundamentals.
What has been seen, in retrospect, has been a cash crunch - the
repatriation of funds to the U.S. and heavy cash calls for privatizing,
rights issues and government funding have driven up the cost of money.
Markets - particularly the U.K., France and Holland - are, in our opinion,
technically oversold.
We admit that we have been surprised by the extent of the reversal of
fortunes in the global bond markets. But, based on our fundamental analysis,
European debt looks cheap. We believe that lower interest rates are still the
order of the day and that a sharp rebound is in the cards.
Sincerely,
(Paul D.A. Nix signature logo)
Paul D.A. Nix
Senior Vice President and Investment Officer
Dreyfus Global Bond Fund
Director, M & G Investment Management, Ltd.
May 31, 1994
London, U.K.
* Annualized distribution rate per share is based upon dividends per
share declared from net investment income during the period, divided by
the net asset value per share at the end of the period.
** Total return represents the change during the period in a
hypothetical account with dividends reinvested.
***The Salomon Brothers World Government Bond Index is a
market-capitalization weighted benchmark covering debt issues of 14
Government bond markets.
<TABLE>
<CAPTION>
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES-96.1% AMOUNT VALUE
----------- ------------
<S> <C> <C>
BANKING-13.7% Bayerische Landesbank Girozentrale,
Bonds, 6%, 2004...................... $ 528,554 (a) $ 486,270
Societe Generale,
Floating Rate Notes, 4 3/8%, 2008..... 500,00 (b) 500,025
Sudwestdeutsche Landesbank Capital Markets,
Bonds (Gtd. by Sudwestdeutsche
Landesbank Girozentrale), 6 1/4%,2003. 516,403 (a) 487,743
-------------
1,474,038
-------------
CHEMICALS-12.4% Eastman Kodak,
Notes, 7 7/8%, 1997................... 450,000 457,313
Hoechst,
Bearer Bonds, 6%, 2000................ 500,000 463,125
Imperial Chemical Industries,
Bonds, 9 3/4%, 2005................... 415,525 (c) 420,719
-------------
1,341,157
-------------
FINANCIAL SERVICES-9.6% Credit Local De France,
Bonds, 6%, 2001....................... 477,099 (d) 533,516
Ford Motor Credit,
Floating Rate Notes, 4 7/8%, 1998. 500,000 (b) 498,400
-------------
1,031,916
-------------
MACHINERY AND ENGINEERING-4.4% Fuji Heavy Industries,
Bonds (Gtd. by The Industrial Bank of Japan),
8 3/4%, 1999.......................... 450,000 470,250
-------------
MISCELLANEOUS-12.6% Petroleos Mexicanos,
Gtd. Notes, 9%, 2003.................. 491,075 (c) 438,898
Treasury Corp. of Victoria,
Bonds (Gtd. by The Government of Victoria),
7 1/4%, 2003.......................... 523,980 (e) 453,898
Ville de Montreal,
Notes, 6 3/8%, 2001................... 542,299 (f) 468,438
-------------
1,361,234
-------------
TELECOMMUNICATIONS-1.2% Cable and Wireless,
Bonds, 6 1/2%, 2003................... 150,000 133,912
-------------
UTILITIES-ELECTRIC-4.9% Chubu Electric Power,
Bonds, 6 1/8%, 2001................... 477,099 (d) 533,182
-------------
FOREIGN/GOVERNMENTAL-37.3%..Asfinag,
Bonds (Gtd. by the Republic of Austria),
6%, 2000.............................. 477,099 (d) 530,773
France O.A.T. Coupon Strip,
Zero Coupon, 2018..................... 1,776,514 (g) 251,022
Zero Coupon, 2022..................... 1,753,200 (h) 199,164
Ireland Treasury Securities,
6 1/4%, 2004.......................... 199,058 (i) 166,910
Italy Treasury Bonds,
8 1/2%, 1999.......................... 546,139 (j) 526,396
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF INVESTMENTS MAY 31, 1994 (UNAUDITED)
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
-------------- ------------
FOREIGN/GOVERNMENTAL (CONTINUED) Kingdom of Denmark Bullet,
7%, 2004.............................. $ 518,255 (k) $ 480,811
Netherlands Government Bonds,
5 3/4%, 2004................................ 704,035 (l) 641,023
Spain Government Bonds,
8%, 2004.................................... 552,283 (m) 489,323
United Kingdom Treasury Securities,
8%, 2003.................................... 256,870 (c) 248,445
United Mexican States (Aztec),
Collateralized Floating Rate Bonds,
5 13/16% 2008 .............................. 500,000 (b) 489,375
-------------
4,023,242
-------------
TOTAL BONDS AND NOTES
(cost $10,599,269).......................... $10,368,931
-------------
-------------
SHORT-TERM INVESTMENTS-1.2%
U.S. TREASURY BILLS;. 3.72%, 6/30/94
(cost $123,628)............................. $ 124,000 $ 123,609
-------------
-------------
TOTAL INVESTMENTS (cost $10,722,897)..................................................... 97.3% $10,492,540
---------- -----------
---------- -----------
CASH AND RECEIVABLES (NET) ............................................................. 2.7%$ 294,319
---------- -----------
---------- -----------
NET ASSETS............................................................................... 100.0% $10,786,859
---------- -----------
---------- -----------
</TABLE>
NOTES TO STATEMENT OF INVESTMENTS:
(a) Denominated in German Deutsche Marks.
(b) Variable rate security-interest rate subject to periodic change.
(c) Denominated in British Pounds.
(d) Denominated in Japanese Yen.
(e) Denominated in Australian Dollars.
(f) Denominated in Canadian Dollars.
(g) Denominated in French Francs.
(h) Denominated in European Currency Units.
(i) Denominated in Irish Pounds.
(j) Denominated in Italian Lire.
(k) Denominated in Danish Krone.
(l) Denominated in Dutch Guilders.
(m) Denominated in Spanish Pesetas.
See notes to financial statements.
<TABLE>
<CAPTION>
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1994 (UNAUDITED)
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $10,722,897)-see statement...................................... $10,492,540
Cash.................................................................... 86,965
Interest receivable..................................................... 260,456
Prepaid expenses-Note 1(e).............................................. 59,360
Due from The Dreyfus Corporation........................................ 33,198
-------------
10,932,519
LIABILITIES:
Net unrealized (depreciation) on forward currency exchange
contracts-Note 3(a)................................................... $53,237
Accrued expenses and other liabilities.................................. 92,423 145,660
------------ -------------
NET ASSETS ................................................................ $10,786,859
-------------
-------------
REPRESENTED BY:
Paid-in capital......................................................... $10,997,615
Accumulated undistributed investment income-net......................... 72,980
Accumulated net realized (loss) on investments.......................... (142)
Accumulated net unrealized (depreciation) on investments
and forward currency exchange contracts-Note 3(b)..................... (283,594)
-------------
NET ASSETS at value applicable to 880,261 shares outstanding
(300 million shares of $.001 par value Common Stock authorized)......... $10,786,859
-------------
-------------
NET ASSET VALUE, offering and redemption price per share
($10,786,859 / 880,261 shares).......................................... $12.25
-------------
-------------
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF OPERATIONS
FROM MARCH 18, 1994 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1994 (UNAUDITED)
INVESTMENT INCOME:
INTEREST INCOME (net of $999 foreign taxes withheld at source).......... $ 150,379
EXPENSES:
Management fee--Note 2(a)............................................. $ 15,025
Shareholder servicing costs-Note 2(b,c)............................... 13,969
Organization expenses-Note 1(e)....................................... 7,125
Auditing fees......................................................... 6,475
Legal fees............................................................ 4,500
Directors' fees and expenses-Note 2(d)................................ 4,000
Registration fees..................................................... 3,767
Custodian fees........................................................ 2,187
Prospectus and shareholders' reports--Note 2(b)....................... 1,450
Miscellaneous......................................................... 458
----------
58,956
Less--expense reimbursement from Manager due to
undertaking-Note 2(a)............................................. 58,956
----------
TOTAL EXPENSES.................................................. ---
-----------
INVESTMENT INCOME--NET.......................................... 150,379
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS:
Net realized (loss) on investments-Note 3(a)............................ $ (142)
Net unrealized (depreciation) on investments and forward currency
exchange contracts.................................................... (283,594)
----------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS............... (283,736)
-----------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (133,357)
-----------
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FROM MARCH 18, 1994 (COMMENCEMENT OF OPERATIONS) TO MAY 31, 1994 (UNAUDITED)
OPERATIONS:
Investment income--net.................................................................... $ 150,379
Net realized (loss) on investments........................................................ (142)
Net unrealized (depreciation) on investments for the period............................... (283,594)
-------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................. (133,357)
-------------
DIVIDENDS TO SHAREHOLDERS FROM;
Investment income-net..................................................................... (77,399)
-------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold............................................................. 10,956,916
Dividends reinvested...................................................................... 71,915
Cost of shares redeemed................................................................... (131,216)
-------------
INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS.................................. 10,897,615
-------------
TOTAL INCREASE IN NET ASSETS........................................................ 10,686,859
NET ASSETS:
Beginning of period-Note 1................................................................ 100,000
-------------
End of period (including undistributed investment income--net of $72,980)................. $10,786,859
-------------
-------------
SHARES
-------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................... 877,076
Shares issued for dividends reinvested.................................................... 5,782
Shares redeemed........................................................................... (10,597)
-------------
NET INCREASE IN SHARES OUTSTANDING...................................................... 872,261
-------------
See notes to financial statements.
DREYFUS GLOBAL BOND FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
Contained below is per share operating performance data for a share of
Common Stock outstanding, total investment return, ratios to average net
assets and other supplemental data for the period March 18, 1994
(commencement of operations) to May 31, 1994. This information has been
derived from the Fund's financial statements.
PER SHARE DATA:
Net asset value, beginning of period............................................................ $12.50
-------
INVESTMENT OPERATIONS:
Investment income--net.......................................................................... .17
Net realized and unrealized (loss) on investments............................................... (.33)
-------
TOTAL FROM INVESTMENT OPERATIONS.............................................................. (.16)
-------
DISTRIBUTIONS;
Dividends from investment income-net............................................................ (.09)
-------
Net asset value, end of period.................................................................. $12.25
-------
-------
TOTAL INVESTMENT RETURN............................................................................. (6.23%)*
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................................................... -
Ratio of net investment income to average net assets............................................ 7.01%*
Decrease reflected in above expense ratio due to undertaking by Dreyfus......................... 2.75%*
Portfolio Turnover Rate......................................................................... -
Net Assets, end of period (000's Omitted)....................................................... $10,787
* Annualized.
See notes to financial statements.
</TABLE>
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
Dreyfus Global Bond Fund, Inc. (the "Fund") was incorporated on September
8, 1993 and had no operations until March 18, 1994 (commencement of
operations) other than matters relating to its organization and registration
as a non-diversified open-end management investment company under the
Investment Company Act of 1940 ("Act") and the Securities Act of 1933 and the
sale and issuance of 8,000 shares of Common Stock ("Initial Shares") to The
Dreyfus Corporation ("Dreyfus"), the Fund's investment adviser. M&G
Investment Management Limited ("M&G") serves as the Fund's sub-investment
adviser. Dreyfus Service Corporation ("Distributor"), a wholly-owned
subsidiary of Dreyfus, acts as the distributor of the Fund's shares, which
are sold to the public without a sales load. As of May 31, 1994, the Manager
held 410,914 shares. The Fund's fiscal year ends on November 30.
(A) PORTFOLIO VALUATION: Investments in securities are valued each
business day at the last sales price on the securities exchange on which such
securities are primarily traded or at the last sales price on the national
securities market. Securities not listed on an exchange or the national
securities market, or securities for which there were no transactions, are
valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available. Investments denominated in foreign
currencies are translated to U.S. dollars at the prevailing rates of
exchange.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income, including, where applicable, amortization of discount on investments,
is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-dividend
date. Dividends from investment income-net are declared and paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
On May 31, 1994, the Board of Directors declared a cash dividend of $.079
per share from undistributed investment income-net, payable on June 1, 1994
(ex-dividend date), to shareholders of record as of the close of business on
May 31, 1994.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company, if such qualification is in the best interests
of its shareholders, by complying with the applicable provisions of the
Internal Revenue Code, and to make distributions of taxable income sufficient
to relieve it from substantially all Federal income taxes.
(E) OTHER: Organization expenses paid by the Fund are included in prepaid
expenses and are being amortized to operations from March 18, 1994, the date
operations commenced, over the period during which it is expected that a
benefit will be realized, not to exceed five years. At May 31, 1994, the
unamortized balance of such expenses amounted to $59,375. In the event that
any of the Initial Shares are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization expenses
in the same proportion as the number of such shares being redeemed bears to
the number of such shares outstanding at the time of such redemption.
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2-INVESTMENT ADVISORY FEE, SUB-INVESTMENT ADVISORY FEE AND OTHER TRANSACT
IONS WITH AFFILIATES:
(A) Pursuant to a Management Agreement with Dreyfus, the management fee
is computed at the annual rate of .70 of 1% of the average daily value of the
Fund's net assets and is payable monthly. Dreyfus and M&G have agreed that
if in any full fiscal year the Fund's aggregate expenses, exclusive of
interest, taxes, brokerage and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund, Dreyfus and M&G
will bear the excess expense in proportion to their management fee and
sub-advisory fee to the extent required by state law. The most stringent
state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full fiscal year that such expenses
(exclusive of distribution expenses and certain expenses as described above)
exceed 21/2% of the first $30 million, 2% of the next $70 million and 11/2%
of the excess over $100 million of the average value of the Fund's net assets
in accordance with California "blue sky" regulations.
However, Dreyfus had undertaken from March 18, 1994 through December 31,
1994, or until such time as the net assets of the Fund exceed $50 million,
regardless of whether they remain at that level, to assume all expenses of
the Fund. The expense reimbursement, pursuant to the undertaking amounted to
$58,956 for the period ended May 31, 1994.
Pursuant to a Sub-Investment Advisory Agreement between Dreyfus and M&G,
the sub-advisory fee is computed at the annual rate of .28 of 1% of the
average daily value of the Fund's net assets and is payable monthly by
Dreyfus.
(B) Under the Distribution Plan (the "Plan") adopted pursuant to Rule
12b-1 under the Act, the Fund pays the Distributor, at an annual rate of .25
of 1% of the value of the Fund's average daily net assets, for costs and
expenses in connection with advertising, marketing and distributing the
Fund's shares and for servicing shareholder accounts. The Distributor may
make payments to one or more Service Agents (a securities dealer, financial
institution, or other industry professional) based on the value of the Fund's
shares owned by clients of the Service Agent. The Plan also separately
provides for the Fund to bear the costs of preparing, printing and
distributing certain of the Fund's prospectuses and statements of additional
information and costs associated with implementing and operating the Plan,
not to exceed the greater of $100,000 or .005 of 1% of the Fund's average
daily net assets for any full fiscal year. During the period ended May 31,
1994, the Fund was charged $5,666 pursuant to the Plan.
(C) Pursuant to the Fund's Shareholder Services Plan, the Fund pays the
Distributor an annual rate of .25 of 1% of the value of the Fund's average
daily net assets for servicing shareholder accounts. The services provided
may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. During the period ended May 31, 1994, the Fund was charged an
aggregate of $5,366 pursuant to the Shareholder Services Plan.
(D) Certain officers and directors of the Fund are "affiliated persons,"
as defined in the Act, of Dreyfus and/or the Distributor. Each director who
is not an "affiliated person" receives an annual fee of $1,000 and an
attendance fee of $250 per meeting.
(E) On December 5, 1993, Dreyfus entered into an Agreement and Plan of
Merger (the "Merger Agreement") providing for the merger of Dreyfus with a
subsidiary of Mellon Bank Corporation ("Mellon").
DREYFUS GLOBAL BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a number
of contingencies, including receipt of certain regulatory approvals and
approvals of the stockholders of Dreyfus and of Mellon. The merger is
expected to occur in August 1994, but could occur later.
As a result of regulatory requirements and the terms of the Merger
Agreement, Dreyfus will seek various approvals from the Fund's shareholders
before completion of the merger. Proxy materials, approved by the Fund's
Board, recently have been mailed to Fund shareholders.
NOTE 3-SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases of investment securities, excluding
short-term securities and forward currency exchange contracts, during the
period ended May 31, 1994 amounted to $10,569,057.
In addition, the following summarizes open forward currency exchange
contracts at May 31, 1994:
<TABLE>
<CAPTION>
U.S. DOLLAR UNREALIZED
FORWARD CURRENCY SALE CONTRACTS PROCEEDS VALUE (DEPRECIATION)
- ----------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Dutch Guilders, expiring 10/31/94.......... $ 522,821 $ 541,301 $(18,480)
German Deutsche Marks, expiring 10/31/94... 493,885 510,668 (16,783)
Japanese Yen, expiring 10/31/94............ 1,267,112 1,285,086 (17,974)
----------
$(53,237)
----------
----------
</TABLE>
When executing forward currency exchange contracts, the Fund is obligated
to buy or sell a foreign currency at a specified rate on a certain date in
the future. With respect to sales of forward currency exchange contracts, the
Fund would incur a loss if the value of the contract increases between the
date the forward contract is opened and the date the forward contract is
closed. The Fund realizes a gain if the value of the contract decreases
between those dates. With respect to purchases of forward currency exchange
contracts, the Fund would incur a loss if the value of the contract decreases
between the date the forward contract is opened and the date the forward
contract is closed. The Fund realizes a gain if the value of the contract
increases between those dates.
(B) At May 31, 1994, accumulated net unrealized depreciation on
investments was $283,594, consisting of $81,325 gross unrealized appreciation
and $364,919 gross unrealized depreciation.
At May 31, 1994, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes (see
the Statement of Investments).
(Dreyfus Logo)
Global
Bond Fund, Inc.
Semi-Annual
Report
May 31, 1994
DREYFUS GLOBAL BOND FUND, INC.
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
INVESTMENT ADVISOR
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
SUB-INVESTMENT ADVISOR
M&G Investment Management Limited
Three Quays, Tower Hill
London, EC3R 6BQ, England
DISTRIBUTOR
Dreyfus Service Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
110 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
P.O. Box 9671
Providence, RI 02940
Further information is contained in the Prospectus,
which must precede or accompany this report.
Printed in U.S.A. 098SA945
Registration Mark
