DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
Dear Shareholder:
We are pleased to report the performance for Dreyfus Global Bond Fund, Inc.
for the six-month period ended May 31, 1998. During that period, your Fund was
able to deliver a positive U.S. dollar return and achieved a total return of 3.
18% .* This compared favorably with the Salomon Smith Barney World Government
Bond Index (unhedged) return of 2.33%.** At the same time, due to strong U.S.
dollar performance, the Fund underperformed the return of the same index by
2.37% when full hedging against currency fluctuation is taken into account.
ECONOMIC REVIEW
As the International Monetary Fund led attempts to rescue the shattered Asian
economies at the end of last year, relative calm returned to financial markets.
The Organization for Economic Cooperation and Development (OECD) predicted that
the impact of the crisis would be to reduce real Gross Domestic Product (GDP)
growth of member countries in 1998 by 0.6% to 2.9%. This helped bond markets, as
investors remained confident that inflation would stay low as long as moderate
growth in the U.S. and Europe was offset by weaker growth in Asia, particularly
Japan.
Contrasting economic developments were seen across the globe. In the U.S.,
strong economic growth continued into the first quarter of 1998, yet the
inflation trend remained favorable. This helped ensure that the Federal Reserve
Board kept short-term interest rates unchanged. However, in Japan, the arrival
of Tokyo's "big bang" added competitive pressures to the severe problems already
facing the financial sector. At a time when that country's GDP growth became
negative, the Japanese government' s latest economic package fell short of
expectations.
At the beginning of May, European finance ministers decided which countries
would become part of the European Monetary Union on January 1, 1999. Eleven
countries elected to join the process of replacing their national currencies
with the Euro. In a meeting that provided no great surprises, bilateral exchange
rates between member countries were fixed, and Wim Duisenburg was named
President of the European Central Bank.
MARKET ENVIRONMENT
Global bonds were consistently strong over the last six months. The Australian
bond market performed very well,
rising 6.6%. In Europe, the UK and Sweden led the way, both climbing about 8.0%
despite their decisions not to become founding members of the European Monetary
Union. The U.S. market generated a healthy return of 4.1%. Even the worst
performer, Japan, saw prices rise by 3.5% . However, the impact of foreign
exchange rate movements was extremely significant. Despite strong local bond
market performance, the Australian dollar weakened by nearly 8.5% against the
U.S. dollar. The yen plunged 7.9% as further gloomy economic news emanated from
Japan and no support program came out of the G8 meeting.
PORTFOLIO FOCUS
We worked hard to position the portfolio in what we believed were the best
performing bond markets. The attractiveness of markets was assessed on the basis
of adjusted real yields using our value-based model. The Fund benefited from a
substantial holding of Australian bonds held throughout the period. More
recently, the profitable exposure to European bonds was reduced in order to
increase holdings of U.S. Iong bonds. This resulted in an increase in the
duration of the portfolio, which had been slightly reduced in March following
the rally in the early part of the year. The latest increase in duration was
consistent with our improved outlook for interest rates globally.
The currency exposure of the Fund was carefully controlled over a difficult
period. We hedged out all exposure to the Australian dollar resulting from the
bond holding, due to our negative view on the currency. Instead, the pound
sterling and more recently, the deutschmark were favored. Further
diversification was obtained through small holdings of Swedish krone and New
Zealand dollars. The overall level of foreign currency exposure of the Fund was
hedged back aggressively to the extent of 84% on average throughout the period,
and by as much as 98% in January 1998. This successfully provided the Fund with
protection against the full impact of foreign currency weakness.
We appreciate your interest in the Dreyfus Global Bond Fund, and will continue
our efforts to serve your investment needs.
Sincerely,
[Christine Downton signature logo]
Christine Downton
Portfolio Manager
June 18, 1998
New York, N.Y.
* Total return includes reinvestment of dividends and any capital gains paid.
**SOURCE: LIPPER ANALYTICAL SERVICES, INC.--Unlike the Fund, which can invest
in both corporate and government bonds, the Salomon Smith Barney World
Government Bond Index is a market-capitalization weighted benchmark that tracks
the performance and covers debt issues of 14 government bond markets.
<TABLE>
DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF INVESTMENTS MAY 31, 1998 (UNAUDITED)
Principal
Bonds and Notes--58.2% Amount Value
- ------------------------- ____________ ____________
<S> <C> <C>
Banking--16.8% Bayerische Landesbank Girozentrale,
Notes, 6.625%, 2007 $.....620,000 $ 645,575
International Bank for Reconstruction and Development,
Notes, 6.375%, 2005 610,000 631,731
Landeskreditbank
Baden-Wuerttemberg,
Gtd. Notes, 6.50%, 2008 431,252 (a) 478,420
Sudwestdeutsche Landesbank Capital Markets,
Gtd. Bonds, 6%, 2008 650,000 645,938
____________
2,401,664
____________
Foreign/
Governmental--28.7% Australia Government,
Bonds, 8.75%, 2008 523,320 (b) 660,466
Bundesrepublik Deutschland,
Bonds, 4.75%, 2001 450,854 (a) 457,078
Kingdom of Sweden,
Notes, 7.875%, 2007 245,462 (b) 279,827
Netherlands Government Bonds,
7.50%, 2010 596,273 (c) 728,050
New South Wales Treasury Corp.,
Notes, 6.50%, 2006 591,850 (b) 626,251
Queensland Treasury,
Global Notes, 6.50%, 2005 498,400 (b) 529,862
South Australian Finance,
Notes, 7.50%, 2007 467,250 (b) 529,478
Treasury Corp. of Victoria,
Bonds, 7.125%, 2005 258,545 (b) 282,137
____________
4,093,149
____________
U.S. Government
Agency--3.6% Federal National Mortgage Association,
Global Notes, 6.375%, 2007 493,416 (b) 517,161
____________
U.S. Government--9.1% U.S. Treasury Bonds,
7.25%, 5/15/2016 1,124,000 1,296,039
____________
TOTAL BONDS AND NOTES
(cost $8,487,816) $ 8,308,013
____________
DREYFUS GLOBAL BOND FUND, INC.
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STATEMENT OF INVESTMENTS (CONTINUED) MAY 31, 1998 (UNAUDITED)
Principal
Short-Term Investments--39.6% Amount Value
- -------------------------------------------------------
____________ ____________
U.S. Treasury Bills: 4.93%, 7/2/1998 $.....257,000 $ 255,993
4.93%, 7/23/1998 4,860,000 4,826,563
4.88%, 7/30/1998 54,000 53,578
4.88%, 8/6/1998 245,000 242,834
4.92%, 8/27/1998 274,000 270,762
____________
TOTAL SHORT-TERM INVESTMENTS
(cost $5,648,418) $ 5,649,730
____________
____________
TOTAL INVESTMENTS (cost $14,136,234) 97.8% $13,957,743
_______ ____________
CASH AND RECEIVABLES (NET) 2.2% $ 312,545
_______ ____________
NET ASSETS . 100.0% $14,270,288
_______ ____________
Notes to Statement of Investments:
- -----------------------------------------------------------------------------
(a) Converted to U.S. Dollars from German Deutsche Marks.
(b) Converted to U.S. Dollars from Australian Dollars.
(c) Converted to U.S. Dollars from Dutch Guilders.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS GLOBAL BOND FUND, INC.
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STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1998 (UNAUDITED)
Cost Value
____________ ___________
<S> <C> <C>
ASSETS: Investments in securities--See Statement of Investments $14,136,234 $13,957,743
Receivable for investment securities sold 326,430
Net unrealized appreciation on forward
currency exchange contracts--Note 4(a) 223,261
Interest receivable 212,333
Receivable for forward currency exchange contracts 44,591
Receivable for shares of Common Stock subscribed 20,600
Prepaid expenses and other assets 20,325
Due from The Dreyfus Corporation 9,019
____________
14,814,302
____________
LIABILITIES: Due to Distributor 2,978
Cash overdraft due to Custodian 274,506
Payable for forward currency exchange contracts 174,306
Payable for investment securities purchased 66,835
Payable for shares of Common Stock redeemed 1,500
Accrued expenses 23,889
____________
544,014
____________
NET ASSETS $14,270,288
____________
REPRESENTED BY: Paid-in capital $13,922,888
Accumulated distributions in excess of
investment income--net (146,383)
Accumulated net realized gain (loss) on investments and
foreign currency transactions 447,296
Accumulated net unrealized appreciation (depreciation)
on investments and foreign currency transactions 46,487
____________
NET ASSETS $14,270,288
____________
SHARES OUTSTANDING
(300 million shares of $.001 par value Common Stock authorized) 1,121,986
NET ASSET VALUE, offering and redemption price per share $12.72
_______
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS GLOBAL BOND FUND, INC.
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STATEMENT OF OPERATIONS SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
INVESTMENT INCOME
<S> <C> <C>
INCOME Interest Income $ 370,650
EXPENSES: Management fee--Note 3(a) $ 45,613
Shareholder servicing costs--Note 3(b) 20,432
Auditing fees 18,005
Registration fees 17,547
Directors' fees and expenses--Note 3(c) 12,456
Organization expenses 6,502
Legal fees 5,913
Prospectus and shareholders' reports 4,685
Custodian fees 4,280
Loan commitment fees--Note 2 45
Miscellaneous 4,431
_________
Total Expenses 139,909
Less--expense reimbursement from the Manager due to
undertaking--Note 3(a) (51,897)
_________
Net Expenses 88,012
_________
INVESTMENT INCOME--NET 282,638
_________
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--Note 4:
Net realized gain (loss) on investments and foreign
currency transactions $ 204,337
Net realized gain (loss) on forward currency exchange
contracts 85,597
_________
Net Realized Gain (Loss) 289,934
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions (148,593)
_________
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 141,341
_________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 423,979
_________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
May 31, 1998 Year Ended
(Unaudited) November 30, 1997
___________ ___________
<S> <C> <C>
OPERATIONS:
Investment income--net $ 282,638 $ 569,985
Net realized gain (loss) on investments 289,934 499,174
Net unrealized appreciation (depreciation) on investments (148,593) (461,429)
___________ ___________
Net Increase (Decrease) in Net Assets Resulting from Operations 423,979 607,730
___________ ___________
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (528,291) (755,805)
Net realized gain on investments (115,181) --
___________ ___________
Total Dividends (643,472) (755,805)
___________ ___________
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold 3,099,424 2,809,403
Dividends reinvested 567,884 677,809
Cost of shares redeemed (1,223,749) (2,071,927)
___________ ___________
Increase (Decrease) in Net Assets from Capital Stock Transactions 2,443,559 1,415,285
___________ ___________
Total Increase (Decrease) in Net Assets 2,224,066 1,267,210
NET ASSETS:
Beginning of Period 12,046,222 10,779,012
___________ ___________
End of Period $14,270,288 $12,046,222
___________ ___________
Undistributed investment income (Distributions in excess of investment income)--net $ (146,383) $ 99,270
___________ ___________
CAPITAL SHARE TRANSACTIONS: Shares Shares
___________ ___________
Shares sold 244,584 220,169
Shares issued for dividends reinvested 45,132 53,428
Shares redeemed (96,639) (162,545)
___________ ___________
Net Increase (Decrease) in Shares Outstanding 193,077 111,052
___________ ___________
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
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 each period indicated. This information has been
derived from the Fund's financial statements.
Six Months Ended
May 31, 1998 Year Ended November 30,
____________ __________________________________________
PER SHARE DATA: (Unaudited) 1997 1996 1995 1994(1)
__________ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.97 $13.18 $13.07 $12.04 $12.50
_______ _______ _______ _______ _______
Investment Operations:
Investment income--net .30 .65 (2) .77 (2) .85 .65
Net realized and unrealized gain (loss)
on investments .10 .02 (2) .55 (2) 1.06 (.54)
_______ _______ _______ _______ _______
Total from Investment Operations .40 .67 (2) 1.32 (2) 1.91 .11
_______ _______ _______ _______ _______
Distributions:
Dividends from investment income--net (.53) (.88) (1.21) (.88) (.57)
Dividends from net realized gain on investments (.12) .-- .-- .-- .--
_______ _______ _______ _______ _______
Total Distributions (.65) (.88) (1.21) (.88) (.57)
_______ _______ _______ _______ _______
Net asset value, end of period $12.72 $12.97 $13.18 $13.07 $12.04
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______
TOTAL INVESTMENT RETURN 6.38% (3) 5.42% 10.96% 16.47% 1.29% (3)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 1.35% (3) 1.35% 1.34% .81% .--
Ratio of net investment income
to average net assets 4.34% (3) 5.10% 5.87% 6.76% 7.83% (3)
Decrease reflected in above expense ratios
due to undertakings by the Manager .80% (3) .75% .66% 1.12% 2.49% (3)
Portfolio Turnover Rate 128.99% (4) 274.83% 81.34% 20.46% 4.16% (4)
Net Assets, end of period (000's Omitted) $14,270 $12,046 $10,779 $16,480 $15,275
- -----------------------------
(1) From March 18, 1994 (commencement of operations) to November 30, 1994.
(2) Based on average shares outstanding.
(3) Annualized.
(4) Not 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") is registered under the Investment
Company Act of 1940 ("Act") as a non-diversified open-end management investment
company. The Fund' s investment objective is to seek total return. The Dreyfus
Corporation ("Manager") serves as the Fund's investment adviser. The Manager is
a direct subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of
Mellon Bank Corporation. Premier Mutual Fund Services, Inc. (the "Distributor")
is the distributor of the Fund's shares, which are sold to the public without a
sales charge.
As of May 31, 1998, MBIC Investment Corp., an indirect subsidiary of Mellon
Bank Corporation, held 558,022 shares of the Fund.
The Fund' s financial statements are prepared in accordance with generally
accepted accounting principles which may require the use of management estimates
and assumptions. Actual results could differ from those estimates.
(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. Forward currency exchange contracts
are valued at the forward rate.
(B) FOREIGN CURRENCY TRANSACTIONS: The Fund does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Net realized foreign exchange gains or losses arise from sales and maturities
of short-term securities, sales of foreign currencies, currency gains or losses
realized on securities transactions and the difference between the amount of
interest and foreign withholding taxes recorded on the Fund's books and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities, resulting from changes in
exchange rates. Such gains and losses are included with net realized and
unrealized gain or loss on investments.
(C) 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. Under the terms of the custodian agreement, the
Fund receives net earnings credits based on available cash balances left on
deposit.
(D) 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 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. This may result in
distributions that are in excess of investment income-net and net realized gain
on a fiscal year basis. 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.
DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
On May 29, 1998, the Board of Directors declared a cash dividend of $.045 per
share from undistributed investment income-net, payable on June 1, 1998
(ex-dividend date), to shareholders of record as of the close of business on May
29, 1998.
(E) FEDERAL INCOME TAXES: It is the policy of the Fund to continue 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 and excise taxes
NOTE 2--BANK LINE OF CREDIT:
The Fund participates with other Dreyfus-managed funds in a $600 million
redemption credit facility (" Facility" ) to be utilized for temporary or
emergency purposes, including the financing of redemptions. In connection
therewith, the Fund has agreed to pay commitment fees on its pro rata portion of
the Facility. Interest is charged to the Fund at rates based on prevailing
market rates in effect at the time of borrowings. During the period ended May
31, 1998, the Fund did not borrow under the Facility.
NOTE 3--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Pursuant to a management agreement with the Manager, the management fee is
computed at the annual rate of .70 of 1% of the value of the Fund's average
daily net assets and is payable monthly. The Manager has undertaken from
December 1, 1997 through May 31, 1998 to reduce the management fee paid by the
Fund, to the extent that the Fund's aggregate annual expenses (exclusive of
taxes, brokerage, interest on borrowings, commitment fees and extraordinary
expenses) exceed an annual rate of 1.35% of the value of the Fund's average
daily net assets. The expense reimbursement, pursuant to the undertaking,
amounted to $51,897 during the period ended May 31, 1998.
(B) Under the 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
the provision of certain services. 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. The Distributor may
make payments to Service Agents (a securities dealer, financial institution or
other industry professional) in respect of these services. The Distributor
determines the amounts to be paid to Service Agents. During the period ended May
31, 1998, the Fund was charged $16,290 pursuant to the Shareholder Services
Plan.
The Fund compensates Dreyfus Transfer, Inc., a wholly-owned subsidiary of the
Manager, under a transfer agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. During the period
ended May 31, 1998, the Fund was charged $3,609 pursuant to the transfer agency
agreement.
(C) Each director who is not an "affiliated person" as defined in the Act
receives from the Fund an annual fee of $1,000 and an attendance fee of $250 per
meeting. The Chairman of the Board receives an additional 25% of such
compensation.
DREYFUS GLOBAL BOND FUND, INC.
- -----------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
(A) The aggregate amount of purchases and sales of investment securities,
excluding short-term securities and forward currency exchange contracts, during
the period ended May 31, 1998 amounted to $11,277,130 and $11,840,557,
respectively.
In addition, the following summarizes open forward currency exchange contracts
at May 31, 1998:
<TABLE>
Foreign Unrealized
Currency Appreciation
Forward Currency Exchange Contracts Amount Proceeds Value (Depreciation)
_________________________________ _______________ _____________ ____________ ____________
Sales:
_____
<S> <C> <C> <C> <C>
Australian Dollar, expiring 6/17/98 5,438,000 $3,627,047 $3,388,418 $238,629
Dutch Guilder, expiring 6/17/98 1,400,000 688,299 696,275 (7,976)
German Deutsche Mark, expiring 6/17/98 1,304,000 720,961 730,942 (9,981)
Purchases: Cost
_________ _____________
British Pound, expiring 6/17/98 645,000 $1,052,128 1,051,544 (584)
New Zealand Dollar, expiring 6/17/98 1,300,000 690,072 694,070 3,998
Swedish Krona, expiring 6/17/98 574,000 74,009 73,184 (825)
_________
Total $223,261
_________
</TABLE>
The Fund enters into forward currency exchange contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings. 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. The Fund is also exposed to credit risk
associated with counter party nonperformance on these forward currency exchange
contracts which is typically limited to the unrealized gain on each open
contract.
(B) At May 31, 1998, accumulated net unrealized appreciation on investments
and forward currency exchange contracts was $44,770 consisting of $314,765 gross
unrealized appreciation and $269,995 gross unrealized depreciation.
At May 31, 1998, 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).
(reg.tm)
(reg.tm)
DREYFUS GLOBAL BOND FUND, INC.
200 Park Avenue
New York, NY 10166
INVESTMENT ADVISER
The Dreyfus Corporation
200 Park Avenue
New York, NY 10166
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT &
DIVIDEND DISBURSING AGENT
Dreyfus Transfer, Inc.
P.O. Box 9671
Providence, RI 02940
Printed in U.S.A. 098SA985
Global Bond
Fund, Inc.
Semi-Annual
Report
May 31, 1998
