As filed with the Securities and Exchange Commission on March 1, 1996
Securities Act File No. 33-63943
Investment Company Act File No. 811-4661
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [x]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 9 [ ]
(Check appropriate box or boxes)
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THE GLOBAL TOTAL RETURN FUND, INC.
(Formerly, The Global Yield Fund, Inc.)
(Exact name of registrant as specified in charter)
ONE SEAPORT PLAZA, NEW YORK, NEW YORK 10292
(Address of Principal Executive Offices) (Zip Code)
----------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 214-1250
S. JANE ROSE, ESQ.
ONE SEAPORT PLAZA, NEW YORK, NEW YORK 10292
(Name and Address of Agent for Service of Process)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A Item No. Location
- ------------- --------
Part A
<S> <C>
Item 1. Cover Page ......................................................... Cover Page
Item 2. Synopsis ........................................................... Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information .................................... Fund Expenses; Financial Highlights;
How the Fund Calculates
Performance
Item 4. General Description of Registrant .................................. Cover Page; Fund Highlights;
How the Fund Invests; General
Information
Item 5. Management of the Fund ............................................. Financial Highlights; How the Fund is
Managed
Item 5A. Management's Discussion of Fund Performance ........................ Not Applicable
Item 6. Capital Stock and Other Securities ................................. Taxes, Dividends, and Distributions;
General Information
Item 7. Purchase of Securities Being Offered ............................... Shareholder Guide; How the Fund
Values its Shares
Item 8. Redemption or Repurchase ........................................... Shareholder Guide; How the Fund
Values its Shares; General
Information
Item 9. Pending Legal Proceedings .......................................... Not Applicable
Part B
Item 10. Cover Page ......................................................... Cover Page
Item 11. Table of Contents .................................................. Table of Contents
Item 12. General Information and History .................................... General Information
Item 13. Investment Objectives and Policies ................................. Investment Objective and Policies;
Investment Restrictions
Item 14. Management of the Fund ............................................. Directors and Officers; Manager;
Distributor
Item 15. Control Persons and Principal Holders of Securities ................ Not Applicable
Item 16. Investment Advisory and Other Services ............................. Manager; Distributor; Custodian,
Transfer and Dividend Disbursing
Agent and Independent Accountants
Item 17. Brokerage Allocation and Other Practices ........................... Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities ................................. Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Offered ....... Purchase and Redemption of Fund
Shares; Shareholder Investment
Account; Net Asset Value
Item 20. Tax Status ......................................................... Taxes
Item 21. Underwriters ....................................................... Distributor
Item 22. Calculation of Performance Data .................................... Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
The Global Total Return Fund, Inc.
- --------------------------------------------------------------------------------
Supplement dated March 1, 1996 to
Prospectus dated January 15, 1996
- --------------------------------------------------------------------------------
The following information supplements the Prospectus:
<TABLE>
<CAPTION>
FUND EXPENSES
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Shareholder Transaction Expenses<F1>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............. 4% None None
Maximum Sales Load or Deferred Sales Load
Imposed on Reinvested Dividends ................. None None None
Deferred Sales Load (as a percentage of original 5% during the first year,
purchase price or redemption price, whichever decreasing by 1% annually 1% on
is lower) ....................................... None to 1% in the fifth year and redemptions
1% in the sixth year and made within one
0% in the seventh year** year of purchase
Redemption Fees None* None None
Exchange Fees None None None
Annual Fund Operating Expenses*** Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
(as a percentage of average net assets)
Management Fees .75% .75% .75%
12b-1 Fees<F1> (After Reduction) .15%<F2> .75%<F2> .75%<F2>
Other Expenses .43% .43% .43%
---- ---- ----
Total Fund Operating Expenses 1.33% 1.93% 1.93%
==== ==== ====
Example 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period: Class A ............................... $ 53 $ 80 $110 $194
Class B ............................... $ 70 $ 91 $114 $203
Class C ............................... $ 30 $ 61 $104 $225
You would pay the following expenses on the same investment,
assuming no redemption: Class A ............................... $ 53 $ 80 $110 $194
Class B ............................... $ 20 $ 61 $104 $203
Class C ............................... $ 20 $ 61 $104 $225
<FN>
The above example is based on restated data for the Fund's fiscal year ended
December 31, 1995 and expenses expected to have been incurred if the Fund
operated as an open-end investment company during the entire fiscal year ended
December 31, 1995. The Fund operated as a closed-end fund prior to January 15,
1996. The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
The purpose of this table is to assist investors in understanding the various
costs and expenses that an investor in the Fund will bear, whether directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "How the Fund is Managed." "Other Expenses" includes an estimate of
operating expenses of the Fund, such as directors' and professional fees,
registration fees, reports to shareholders and transfer agency and custodian
(domestic and foreign) fees.
- ----------
* A 2% redemption fee will be imposed on redemptions of Class A shares
acquired prior to January 15, 1996 (including shares thereafter acquired
pursuant to the automatic reinvestment of dividends and distributions with
respect to those shares) until July 12, 1996. See "Shareholder Guide--How
To Sell Your Shares."
** Class B shares will automatically convert to Class A shares approximately
seven years after purchase. See "Shareholder Guide--Conversion
Feature--Class B Shares."
*** Estimated based on expenses expected to have been incurred if the Fund
operated as an open-end investment company during the entire fiscal year
ended December 31, 1995. The Fund operated as a closed-end Fund prior to
January 15, 1996.
<F1> Pursuant to rules of the National Association of Securities Dealers, Inc.,
the aggregate initial sales charges, deferred sales charges and asset-based
sales charges (12b-1 fees) on shares of the Fund may not exceed 6.25% of
total gross sales, subject to certain exclusions. This 6.25% limitation is
imposed on each class of the Fund rather than on a per shareholder basis.
Therefore, long-term shareholders of the Fund may pay more in total sales
charges than the economic equivalent of 6.25% of such shareholders'
investment in such shares. See "How the Fund is Managed--Distributor."
<F2> Although the Class A, Class B and Class C Distribution and Service Plans
provide that the Fund may pay up to an annual rate of .30 of 1%, 1% and 1%
of average daily net assets of the Class A, Class B and Class C shares,
respectively, the Distributor has agreed to limit its distribution fee with
respect to Class A, Class B and Class C shares of the Fund to no more than
.15 of 1%, .75 of 1% and .75 of 1% of the average daily net assets of the
Class A, Class B and Class C shares, respectively, for the fiscal year
ending December 31, 1996. Total operating expenses without such limitation
would be 1.48% for Class A shares and 2.18% for Class B and Class C shares.
See "How the Fund is Managed--Distributor."
</FN>
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
Class A Shares
(for a share outstanding throughout each of the indicated periods)
The following financial highlights with respect to the five-year period
ended December 31, 1995 have been audited by Deloitte & Touche LLP, independent
accountants, whose report thereon was unqualified. This information should be
read in conjunction with the financial statements and notes thereto, which
appear in the Statement of Additional Information. The following financial
highlights contain selected data for a Class A share of common stock
outstanding, total return, ratios to average net assets and other supplemental
data for the periods indicated. The information is based on data contained in
the financial statements. No Class B or Class C shares were outstanding during
these periods. The Fund operated as a closed-end investment company prior to
January 15, 1996. Further performance information is contained in the annual
report which may be obtained without charge. See "Shareholder Guide--Shareholder
Services--Reports to Shareholders."
<TABLE>
<CAPTION>
July 7, 1986(a)
Year Ended December 31, through
--------------------------------------------------------------------------------------- December 31,
1995(c) 1994(c) 1993(c) 1992(c) 1991(c) 1990(c) 1989(c) 1988(c) 1987(c) 1986(c)
------- ------- ------- ------- ------- ------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period ....... $ 7.46 $ 8.76 $ 8.10 $ 8.99 $ 8.96 $ 8.57 $ 9.41 $ 9.95 $ 9.58 $ 9.29(d)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment income ...... .54 .52 .64 .81 .84 .89 .94 .99 1.11 .45
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions .............. 1.25 (1.22) .74 (.90) (.19) .36 (.70) .08 1.21 .25
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations ............... 1.79 (.70) 1.38 (.09) .65 1.25 .24 1.07 2.32 .70
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions
Dividends from net
investment income ......... (.54) (.17) (.30) (.75) (.62) (.88) (.94) (.99) (1.16) (.41)
Distributions in excess of
net investment income(e) .. (.27) -- -- -- -- -- -- -- -- --
Distributions from net
capital gains ............. -- (.13) (.23) (.05) -- -- -- (.59) (.79) --
Distributions in excess of
net capital gains(e) ...... -- (.19) -- -- -- -- -- -- --
Tax return of capital
distributions(e) .......... -- (.30) -- -- -- -- (.14) -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions ....... (.81) (.60) (.72) (.80) (.62) (.88) (1.08) (1.58) (1.95) (0.41)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Capital charge resulting
from the issuance of
Fund shares ............... -- -- -- -- -- .02 -- (.03) -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period .................... $ 8.44 $ 7.46 $ 8.76 $ 8.10 $ 8.99 $ 8.96 $ 8.57 $ 9.41 $ 9.95 $ 9.58
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Market price per share,
end of period ............. $ 8.25 $ 6.13 $ 8.00 $ 7.50 $ 8.13 $ 8.00 $ 7.88 $ 9.38 $ 9.75 $ 8.75
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN(f): ........... 49.23% (16.12)% 16.50% 1.75% 9.42% 12.89% (5.06)% 13.15% 35.37% (1.68)%
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period (000) ....... $559,071 $493,645 $579,942 $535,647 $593,376 $591,339 $595,824 $638,200 $652,461 $627,899
Average net assets (000) ... $549,407 $536,230 $567,128 $570,812 $571,767 $596,824 $613,520 $669,379 $671,954 $613,909
Ratios to average net
assets:
Expenses ................. 1.02% 1.04% 1.02% 1.01% .99% 1.03% 1.07% 1.01% 0.96% 1.01%(b)
Net investment income .... 6.50% 6.45% 7.67% 9.39% 9.69% 10.03% 10.63% 10.00% 10.87% 10.03%(b)
Portfolio turnover rate .... 256% 583% 370% 192% 141% 221% 734% 371% 132% 0%
</TABLE>
- ----------
(a) Commencement of investment operations.
(b) Annualized.
(c) During these periods, the Fund operated as a closed-end investment company.
Effective January 15, 1996, the Fund commenced operations as an open-end
investment company. Accordingly, historical expenses and ratios of expenses
to average net assets are not necessarily indicative of future expenses and
related ratios.
(d) Net of underwriting discount (.70) and offering costs (.01).
(e) These captions are provided in accordance with the American Institute of
Certified Public Accountants' Statement of Position (SOP) 93-2,
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies
(SOP 93-2) which was applied effective January 1, 1993. Since then, the
Fund has been accounting and reporting for all distributions to
shareholders in conformity with SOP 93-2. In accordance with SOP 93-2,
distributions for years prior to 1993 have not been restated.
(f) 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.
2
<PAGE>
HOW THE FUND IS MANAGED
For the fiscal year ended December 31, 1995, the Fund's total expenses as a
percentage of average net assets was 1.02%. See "Financial Highlights." During
this period the Fund operated as a closed-end investment company.
MANAGER
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. (PMF OR THE MANAGER), ONE SEAPORT
PLAZA, NEW YORK, NEW YORK 10292, IS THE MANAGER OF THE FUND AND IS COMPENSATED
FOR ITS SERVICES AT AN ANNUAL RATE OF .75 OF 1% OF THE FUND'S AVERAGE DAILY NET
ASSETS UP TO $500 MILLION, .70 OF 1% OF SUCH ASSETS BETWEEN $500 MILLION AND $1
BILLION AND .65 OF 1% OF SUCH ASSETS IN EXCESS OF $1 BILLION. It was
incorporated in May 1987 under the laws of the State of Delaware. For the fiscal
year ended December 31, 1995, the Fund paid management fees to PMF of .75% of
the Fund's average net assets. See "Manager" in the Statement of Additional
Information.
TAXES, DIVIDENDS AND DISTRIBUTIONS
As of December 31, 1995, the Fund had a capital loss carryforward for
federal income tax purposes of approximately $17,105,000 which will expire in
2002. Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such carryforward
amount.
MF169 C-1
3
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Supplement dated March 1, 1996 to
Statement of Additional Information
dated January 15, 1996
The following information supplements the Statement of Additional
Information:
INVESTMENT OBJECTIVE AND POLICIES
PORTFOLIO TURNOVER
The Fund has no fixed policy with respect to portfolio turnover; however,
as a result of the Fund's investment policies, its annual portfolio turnover
rate may exceed 100% although the rate is not expected to exceed 250%. The
portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the average monthly value of the Fund's
portfolio securities, excluding securities having a maturity at the date of
purchase of one year or less. High portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs which
will be borne directly by the Fund. The Fund's portfolio turnover rate was 256%
and 583% for the fiscal years ended December 31, 1995 and 1994, respectively.
The Fund's portfolio turnover rate for the fiscal year ended December 31, 1994
was high as a result of the Subadviser's attempt to minimize impact of rising
yields in the global bond market on principal.
DIRECTORS AND OFFICERS
The Fund pays each of its Directors who is not an affiliated person of the
investment adviser annual compensation of $8,000, plus $1,500 for attendance in
person per meeting of The Board of Directors in addition to certain
out-of-pocket expenses. Directors received approximately $4,800 for
reimbursement of out-of-pocket expenses in the aggregate for the fiscal year
ended December 31, 1995. Directors may receive their Directors' fees pursuant to
a deferred fee agreement with the Fund. Under the terms of the agreement, the
Fund accrues daily the amount of such Directors' fees which accrue interest at a
rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury bills
at the beginning of each calendar quarter or, pursuant to an SEC exemptive
order, at the daily rate of return of the Fund. Payment of the interest so
accrued is also deferred and accruals become payable at the option of the
Director. The Fund's obligation to make payments of deferred Board of Directors'
fees, together with interest thereon, is a general obligation of the Fund.
The Board of Directors has nominated a new slate of Directors for the Fund
which will be submitted to shareholders at a special meeting scheduled to be
held in or about October 1996.
The following table sets forth the aggregate compensation paid by the Fund
to the Directors who are not affiliated with the Manager for the fiscal year
ended December 31, 1995 and the aggregate compensation paid to such Directors
for service on the Fund's board and that of all other investment companies
registered under the Investment Company Act of 1940 managed by Prudential Mutual
Fund Management, Inc. (Fund Complex) for the calendar year ended December 31,
1995.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement Estimated From Fund
Aggregate Benefits Accrued Annual And Fund
Compensation As Part of Fund Benefits Upon Complex Paid
Name and Position From Fund Expenses Retirement to Directors
----------------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Edward D. Beach, Director .............................. $18,500 None N/A $183,250(22/43)**
Thomas T. Mooney, Director ............................. $18,500 None N/A $129,625(14/19)**
Sir Michael Sandberg, Director ......................... $18,500 None N/A $ 26,500(2/2)**
Robin B. Smith, Director ............................... $18,500* None N/A $ 91,875*(10/19)**
Nancy Teeters, Director ................................ $18,500 None N/A $107,500(13/31)**
</TABLE>
- ----------
* All compensation for the year ended December 31, 1995 represents deferred
compensation. Aggregate compensation from the Fund for the fiscal year
ended December 31, 1995, including accrued interest, amounted to
approximately $19,600. Aggregate compensation from all of the funds in the
Fund Complex for the calendar year ended December 31, 1995, including
accrued interest, amounted to approximately $100,700.
** Indicates number of funds/portfolios in Fund Complex (including the Fund)
to which aggregate compensation relates.
MF169 C-2
B-1
<PAGE>
As of February 9, 1996, the Directors and officers of the Fund as a group
owned less than 1% of the outstanding common stock of the Fund.
As of February 9, 1996 the holders of more than 5% of the outstanding
shares of any class of beneficial interest were: Smith Barney, Inc., 333 West
34th Street, New York, NY which held 2,857,353 Class A shares (6.9%), Merrill
Lynch, Pierce, Fenner & Smith, 101 Hudson Street, Jersey City, NJ which held
2,290,713 Class A shares (5.6%) and Charles Schwab Co., 101 Montgomery Street,
San Francisco, CA which held 2,385,576 Class A shares (5.8%).
As of February 9, 1996, Prudential Securities was record holder of
8,850,566 shares (or 21.5% of the outstanding shares) of the Fund. In the event
of any meetings of shareholders, Prudential Securities will forward, or cause
the forwarding of, proxy materials to the beneficial owners for which it is the
record holder.
MANAGER
Prudential Mutual Fund Management, Inc. earned management fees of
$4,098,739, $3,968,777 and $4,201,489 for the fiscal years ended December 31,
1995, 1994 and 1993, respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Fund paid no brokerage commissions to Prudential Securities for the
fiscal years ended December 31, 1995, 1994 and 1993.
PURCHASE AND REDEMPTION OF FUND SHARES
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A* shares of the Fund are sold at a maximum sales charge of
4% and Class B* and Class C* shares are sold at net asset value. Using the
Fund's net asset value at December 31, 1995, the maximum offering price of the
Fund's shares is as follows:
<TABLE>
<CAPTION>
<S> <C>
Class A
Net asset value and redemption price per Class A share ................... $8.44
Maximum sales charge (4% of offering price) .............................. .34
-----
Offering price to public ................................................. $8.78
=====
Class B
Net asset value, offering price and redemption price per Class B share* .. $8.44
=====
Class C
Net asset value, offering price and redemption price per Class C share* .. $8.44
=====
</TABLE>
----------
* Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "Shareholder Guide--How to Sell
Your Shares--Contingent Deferred Sales Charges" in the Prospectus.
Class B and Class C shares did not exist on December 31, 1995 when the
Fund operated as a closed-end fund and since then the shares then
outstanding have been reclassified as Class A shares.
PERFORMANCE INFORMATION
GENERAL INFORMATION. The Fund operated as a closed-end investment company
prior to January 15, 1996. Thereafter, shares previously outstanding were
reclassified as Class A shares. No Class B or Class C shares were outstanding
during any of the periods for which performance is reported below.
AVERAGE ANNUAL TOTAL RETURN. The Fund may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B and Class C shares. See "How the Fund Calculates
Performance" in the Prospectus.
Average annual total return is computed according to the following formula:
P(1+T)(superior)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the one, five or
ten year periods (or fractional portion thereof) of a
hypothetical $1,000 investment made at the beginning of
the one, five or ten year periods.
Average annual total return does not take into account any federal or
state income taxes that may be payable upon redemption.
B-2
<PAGE>
The average annual total return for Class A shares for the one and five
year and since inception periods ended December 31, 1995 was 49.2%, 10.2% and
10.7%, respectively (based on market price and excluding commissions or sales
loads) and 20.5%, 7.3% and 10.5%, respectively, (based on net asset value and
assuming the maximum sales charge to which Class A shares are subject was in
effect but without regard to the distribution fee and other higher operating
expenses to which the Fund is subject as an open-end investment company).
AGGREGATE TOTAL RETURN. The Fund may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A, Class B and
Class C shares. See "How the Fund Calculates Performance" in the Prospectus.
Aggregate total return represents the cumulative change in the value of an
investment in the Fund and is computed according to the following formula:
ERV-P
-----
P
Where: P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five or ten year periods (or fractional
portion thereof) at the end of the one, five or ten year periods.
Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption.
The Fund's aggregate total return for Class A for the one and five year and
since inception periods ended December 31, 1995 was 49.2%, 62.4% and 161.7%,
respectively (based on market price) and 25.5%, 48.3% and 167.7%, respectively
(based on net asset value).
YIELD. The Fund may from time to time advertise its yield as calculated
over a 30-day period. Yield is calculated separately for Class A, Class B and
Class C shares. The yield will be computed by dividing the Fund's net investment
income per share earned during this 30-day period by the maximum offering price
per share on the last day of this period. Yield is calculated according to the
following formula:
a - b
YIELD = 2[ ( ------- +1)(superior6)-1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
Yield fluctuates and an annualized yield quotation is not a representation
by the Fund as to what an investment in the Fund will actually yield for any
given period.
The Fund's 30-day yields for the 30 days ended December 31, 1995 was 5.66%
(based on market price per share), 5.30% (based on net asset value per share and
assuming the maximum sales charge to which Class A shares are subject was in
effect but without regard to the distribution fee and other higher operating
expenses to which the Fund is subject as an open-end investment company) and
5.49% for the 30 days ended February 15, 1996 (based on net asset value and
assuming the maximum offering price of Class A shares on February 15, 1996).
B-3
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
PORTFOLIO OF INVESTMENTS AS OF DECEMBER 31, 1995
===================================================================
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
- ------------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS(a)--85.2%
- ------------------------------------------------------------------
Australia--2.1%
A$ 7,000 New South Wales Treasury
Corporation,
6.50%, 5/1/06 $ 4,508,115
10,750 Queensland Treasury
Corporation,
6.50%, 6/14/05 7,011,165
------------
11,519,280
- ------------------------------------------------------------------
Canada--5.8%
C$ 8,000 British Columbia Provincial Bond,
7.75%, 6/16/03 6,072,424
Canadian Government Bonds,
22,000 9.00%, 12/1/04 18,166,691
9,800 9.00%, 6/1/25 8,369,008
------------
32,608,123
- ------------------------------------------------------------------
Czech Republic--0.2%
CZK 30,000 Skoda Finance,
11.625%, 2/9/98 1,138,179
- ------------------------------------------------------------------
Denmark--7.1%
Danish Government Bonds,
DKr 76,600 8.00%, 5/15/03 14,706,838
91,940 7.00%, 12/15/04 16,471,706
44,750 8.00%, 3/15/06 8,504,644
------------
39,683,188
- ------------------------------------------------------------------
France--1.0%
National Bank of Hungary,
FF 27,500 8.00%, 11/12/99 5,471,924
- ------------------------------------------------------------------
Germany--10.7%
DM 9,215 DSL Finance,
7.375%, 2/15/00 6,964,003
German Government Bonds,
6,680 5.375%, 2/22/99 4,808,070
8,000 5.75%, 8/22/00 5,800,508
22,500 6.75%, 4/22/03 16,618,962
18,000 7.375%, 1/3/05 13,728,707
18,500 6.25%, 1/4/24 12,037,140
------------
59,957,390
- ------------------------------------------------------------------
Ireland--3.2%
Irish Government Bonds,
IEP 7,700 9.25%, 7/11/03 13,686,456
2,700 8.00%, 8/18/06 4,460,233
------------
18,146,689
- ------------------------------------------------------------------
Italy--4.9%
Lira 3,500,000 Bayerische Landesanstalt Bank,
10.625%, 5/12/00 2,230,752
Italian Government Bonds,
30,500,000 8.50%(b), 8/1/99 18,250,538
11,500,000 10.00%, 8/1/03 7,060,510
------------
27,541,800
- ------------------------------------------------------------------
Netherlands--6.9%
Dutch Government Bonds,
DG 7,700 9.00%, 7/1/00 5,555,240
37,000 7.00%, 6/15/05 24,685,901
12,000 7.50%, 1/15/23 8,204,616
------------
38,445,757
- ------------------------------------------------------------------
New Zealand--0.7%
NZ$ 6,000 New Zealand Government Bond,
10.00%, 7/15/97 4,027,595
- ------------------------------------------------------------------
See Notes to Financial Statements.
B-4
</TABLE>
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
PORTFOLIO OF INVESTMENTS AS OF DECEMBER 31, 1995
==================================================================
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
- ------------------------------------------------------------------
<C> <S> <C>
Spain--3.6%
Pts 790,000 Republic of Argentina,
12.80%, 12/9/97 $ 6,385,015
Spanish Government Bonds,
1,000,000 10.30%, 6/15/02 8,511,153
700,000 8.20%, 2/28/09 5,110,321
------------
20,006,489
- ------------------------------------------------------------------
United Kingdom--6.6%
(BP) 1,750 Guaranteed Export Finance
Corporation,
7.25%, 12/15/98 2,733,443
United Kingdom Treasury Bonds,
4,200 9.00%, 3/3/00 7,023,353
10,200 8.00%, 9/25/09 16,316,114
8,000 6.25%, 11/25/10 10,818,450
------------
36,891,360
- ------------------------------------------------------------------
United States--32.4%
Corporate Bonds--2.5%
US$ 2,000 Banco Nacional de Commercial
Exterior (Mexico),
7.50%, 7/1/00 1,727,500
3,000 Bancomer SA (Mexico),
8.00%, 7/7/98 2,775,000
Cemex SA (Mexico),
3,300 8.875%, 6/10/98 3,168,000
2,000 9.50%, 9/20/01 1,812,500
Financira Energetica Nacional
(Colombia),
3,900 9.00%, 11/8/99 4,070,625
------------
13,553,625
------------
Sovereign Bonds--2.0%
3,050 Argentina Cedulas,
Rural Mortgage Bonds,
Zero Coupon, 9/1/00 2,424,750
Republic of Brazil,
2,375 6.6875%(b), 1/1/01, IDU, FRB 2,045,469
4,500 6.00%, 9/15/13 2,497,500
3,000 Republic of Colombia,
8.75%, 10/6/99 3,154,692
2,000 Republic of Poland,
3.75%(b), 10/27/14, FRB 1,297,500
------------
11,419,911
Supranational Bond--0.6%
Corporacion Andina de Fomento,
US$ 500 6.625%, 10/14/98 493,500
3,000 7.375%, 7/21/00 3,007,500
------------
3,501,000
United States Government Obligations--27.3%
12,300 United States Treasury Bond,
7.50%, 11/15/24 14,784,969
United States Treasury Notes,
12,100 7.375%, 11/15/97 12,557,501
56,000 6.75%, 6/30/99 58,554,720
11,500 6.125%, 9/30/00 11,845,000
35,000 5.75%, 8/15/03 35,421,050
16,810 7.875%, 11/15/04 19,457,575
------------
152,620,815
------------
181,095,351
------------
Total long-term investments
(cost US$451,641,530) 476,533,125
------------
SHORT-TERM INVESTMENTS--12.7%
- ------------------------------------------------------------------
Australia--1.3%
A$ 9,600 Barclays Bank Time Deposit,
7.125%, 1/5/96 7,143,336
- ------------------------------------------------------------------
Czech Republic--0.5%
Unilever Euro Commercial Paper(c),
CZK 45,000 10.40%, 1/17/96 1,651,082
30,000 10.67%, 3/18/96 1,099,392
------------
2,750,474
- ------------------------------------------------------------------
Italy--0.3%
Lira 2,400,000 Mellon Bank Time Deposit,
10.25%, 1/5/96 1,513,764
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-5
</TABLE>
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
PORTFOLIO OF INVESTMENTS AS OF DECEMBER 31, 1995
==================================================================
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
- ------------------------------------------------------------------
<C> <S> <C>
New Zealand--2.1%
NZ$ 2,600 Mellon Bank Time Deposit,
8.25%, 1/5/96 $ 1,698,580
15,000 New Zealand Government Bond,
9.00%, 11/15/96 9,857,231
------------
11,555,811
- ------------------------------------------------------------------
Spain--0.7%
Pts 510,000 Barclays Bank Time Deposit,
9.0625%, 1/5/96 4,206,093
- ------------------------------------------------------------------
United Kingdom--0.6%
(BP) 2,100 Mellon Bank Time Deposit,
6.375%, 1/5/96 3,252,486
- ------------------------------------------------------------------
United States--7.2%
US$ 40,545 Joint Repurchase Agreement
Account,
5.846%, 1/2/96, (Note 4) 40,545,000
------------
Total short-term investments
(cost US$70,941,644) 70,966,964
------------
- ------------------------------------------------------------------
Total Investments--97.9%
(cost $522,583,174; Note 3) 547,500,089
Other assets in excess of
liabilities--2.1% 11,571,098
------------
Net Assets--100% $559,071,187
============
</TABLE>
- ---------------
Portfolio securities are classified according to the security's currency
denomination.
(a) Principal amount segregated as collateral for forward
currency contracts.
(b) Rate shown reflects current rate of variable rate
instruments.
(c) Percentages quoted represent yields to maturity as of
purchase date.
FRB--Floating Rate Bond.
IDU--Interest Due and Unpaid.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-6
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES THE GLOBAL TOTAL RETURN FUND, INC.
================================================================================================
<CAPTION>
Assets December 31, 1995
-----------------
<S> <C>
Investments, at value (cost $522,583,174)..........................................$547,500,089
Foreign currency, at value (cost $428,690)......................................... 431,421
Cash............................................................................... 238
Interest receivable................................................................ 14,002,482
Receivable for investments sold.................................................... 3,423,220
Other assets....................................................................... 200,612
Forward currency contracts--net amount receivable from counterparties............. 146,375
------------
Total assets.................................................................... 565,704,437
------------
Liabilities
Payable for investments purchased.................................................. 3,252,486
Due to transfer agent.............................................................. 1,409,302
Forward currency contracts--net amount payable to counterparties.................. 1,289,817
Management fee payable............................................................. 404,705
Accrued expenses and other liabilities............................................. 276,940
------------
Total liabilities............................................................... 6,633,250
------------
Net Assets.........................................................................$559,071,187
============
Net assets were comprised of:
Common stock, at par............................................................$ 662,077
Paid-in capital in excess of par................................................ 547,112,546
------------
547,774,623
Undistributed net investment income............................................. 4,469,000
Accumulated net realized loss on investments and foreign currency transactions.. (16,919,206)
Net unrealized appreciation on investments and foreign currencies............... 23,746,770
------------
Net assets, December 31, 1995......................................................$559,071,187
============
Net asset value per share:
($559,071,187 (div by) 66,207,699 shares of common stock outstanding)........... $8.44
=====
- -----------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
B-7
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
STATEMENT OF OPERATIONS
=============================================================
<TABLE>
<CAPTION>
Year Ended
Net Investment Income December 31, 1995
-----------------
<S> <C>
Income
Interest and discount earned (net of
foreign withholding taxes of
$88,452)........................... $ 41,317,528
------------
Expenses
Management fee........................ 4,098,739
Reports to shareholders............... 445,000
Custodian's fees and expenses......... 358,000
Transfer agent's fees and expenses.... 150,000
Registration fees..................... 120,000
Directors' fees....................... 114,000
Insurance............................. 113,000
Legal fees and expenses............... 80,000
Audit fee and expenses................ 51,000
Miscellaneous......................... 75,399
------------
Total expenses........................ 5,605,138
------------
Net investment income.................... 35,712,390
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions............... 50,522,172
Foreign currency transactions......... 9,449,667
Written options transactions..........) (4,631,293)
------------
55,340,546
------------
Net change in unrealized appreciation/
depreciation on:
Investments........................... 28,380,949
Foreign currencies....................) (684,435)
Written options....................... 304,000
------------
28,000,514
------------
Net gain on investments and foreign
currencies............................ 83,341,060
------------
Net Increase in Net Assets
Resulting from Operations................ $119,053,450
============
</TABLE>
THE GLOBAL TOTAL RETURN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
=============================================================
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended December 31,
in Net Assets ----------------------------
1995 1994
------------ ------------
<S> <C> <C>
Operations:
Net investment income.......... $ 35,712,390 $ 34,580,973
Net realized gain (loss) on
investment and foreign
currency transactions....... 55,340,546 (75,052,921)
Net change in unrealized
appreciation/depreciation on
investments and foreign
currency transactions....... 28,000,514 (5,772,110)
------------ ------------
Net increase (decrease) in net
assets resulting from
operations.................. 119,053,450 (46,244,058)
------------ ------------
Dividends and distributions:
Dividends from net investment
income...................... (35,712,390) (11,402,165)
Distribution from net realized
capital gains............... -- (8,933,149)
Distribution in excess of net
investment income........... (17,914,921) --
Tax return of capital
distribution................ -- (19,717,909)
------------ ------------
Total dividends and
distributions.................. (53,627,311) (40,053,223)
------------ ------------
Total increase (decrease)......... 65,426,139 (86,297,281)
Net Assets
Beginning of year................. 493,645,048 579,942,329
------------ ------------
End of year....................... $559,071,187 $493,645,048
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-8
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Notes to Financial Statements
================================================================================
The Global Total Return Fund, Inc., (the "Fund") was organized in Maryland on
May 6, 1986 as a closed-end, non-diversified management investment company.
Investment operations commenced on July 7, 1986. On December 6, 1995,
shareholders approved the conversion of the Fund to an open-end fund. Effective
January 15, 1996, the Fund began operating as an open-end fund (Note 6).
The investment objective of the Fund is to seek total return, the components of
which are current income and capital appreciation. The Fund invests primarily in
investment grade bonds, i.e., bonds rated within the four highest quality grades
as determined by Moody's Investor's Service or Standard & Poor's Rating's Group,
or in unrated securities of equivalent quality. In addition the Fund is
permitted to invest up to 10% of the Fund's total assets in bonds rated below
investment grade with a minimum rating of B, or on unrated securities of
equivalent quality. The ability of the issuers of the debt securities held by
the Fund to meet their obligations may be affected by economic developments in a
specific country or industry.
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities 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 value. 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 principal market makers.
Any security for which the primary market is on an exchange is valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Forward currency
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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian, or designated
subcustodians as the case may be under triparty repurchase agreements, takes
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 United States dollars. Foreign currency amounts are translated into United
States dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at the
current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the year, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at year end. Similarly, the Fund does not isolate
the effect of changes in foreign exchange rates from the fluctuations arising
from changes in the market prices of long-term debt securities sold during the
year. Accordingly, realized foreign currency gains (losses) are included in the
reported net realized losses on investment transactions.
Net realized gains on foreign currency transactions represents net foreign
exchange gains from sales and maturities of short-term securities and forward
currency contracts, disposition 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, discount and foreign taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net currency gains from valuing foreign currency denominated
assets (excluding investments) and liabilities at year end exchange rates are
reflected as a component of unrealized appreciation 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 and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
- --------------------------------------------------------------------------------
B-9
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Notes to Financial Statements
================================================================================
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at 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.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
When the Fund purchases an option, it pays a premium and an amount equal to that
premium is recorded as an investment. When the Fund writes an option, it
receives a premium and an amount equal to that premium is recorded as a
liability. The investment or liability is adjusted daily to reflect the current
market value of the option. If an option expires unexercised, the Fund realizes
a gain or loss to the extent of the premium received or paid. If an option is
exercised, the premium received or paid is an adjustment to the proceeds from
the sale or the cost of the purchase in determining whether the Fund has
realized a gain or loss. The difference between the premium and the amount
received or paid on effecting a closing purchase or sale transaction is also
treated as a realized gain or loss. Gain or loss on purchased options is
included in net realized gain (loss) on investment transactions. Gain or loss on
written options is presented separately as net realized gain (loss) on written
option transactions.
The Fund, as writer of an option, may have no control over whether the
underlying securities or currencies may be sold (called) or purchased (put). As
a result, the Fund bears the market risk of an unfavorable change in the price
of the security or currency underlying the written option. The Fund, as
purchaser of an option, bears the risk of the potential inability of the
counterparties to meet the terms of their contracts. There were not outstanding
options written at December 31, 1995.
Security Transactions and Net Investment Income: Security transactions are
recorded on the trade date. Realized and unrealized gains and losses from
security and currency transactions are calculated on the identified cost basis.
Interest income which is comprised of three elements: stated coupon, original
issue discount and market discount is recorded on the accrual basis. Expenses
are recorded on the accrual basis which may require the use of certain estimates
by management.
Dividends and Distributions: Dividends are declared quarterly. Distributions of
long-term capital gains, if any, will be declared annually. 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 currencies and loss deferrals.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' 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 was to increase undistributed net investment income by
$22,383,921 and reduce accumulated net realized losses on investments by
$22,383,921 for foreign currency gains realized or recognized during the year
ended December 31, 1995. Net investment income, net realized gains and net
assets were not affected by this change.
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 or excise 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.
- --------------------------------------------------------------------------------
NOTE 2. AGREEMENTS
The Fund has a management agreement with Prudential Mutual Fund Management, Inc.
("PMF"). Pursuant to this agreement PMF has responsibility for all investment
advisory services and supervises the subadviser's performance of such services.
PMF has entered into a subadvisory agreement with The Prudential Investment
Corporation ("PIC"); PIC furnishes investment advisory services in connection
with the management of the Fund. PMF pays for the cost of the subadviser's
services, the compensation of officers of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears all other costs and
expenses.
- --------------------------------------------------------------------------------
B-10
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Notes to Financial Statements
================================================================================
The management fee paid PMF was computed weekly through January 12, 1996 and
payable monthly at the annual rate of 0.75% of the Fund's average weekly net
assets up to US$500 million, 0.70% of such assets between US$500 million and
US$1 billion, and 0.65% of such assets in excess of US$1 billion. Effective
January 15, 1996, the computation is performed daily (Note 6).
PMF and PIC are indirect, wholly-owned subsidiaries of The Prudential Insurance
Company of America ("Prudential").
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments
and written options, for the year ended December 31, 1995 aggregated
$1,209,164,449 and $1,240,936,219, respectively.
Transactions in options written during the year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
(000) Received
--------- -----------
<S> <C> <C>
Options outstanding at
December 31, 1994...................... 76,000 $ 661,200
Options written......................... 124,863 828,787
Options terminated in closing purchase
transactions........................... (200,863) (1,489,987)
--------- -----------
Options outstanding at
December 31, 1995...................... 0 0
========= ===========
</TABLE>
At December 31, 1995, the Fund had outstanding forward currency contracts to
sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Sale Settlement Date Current Appreciation/
Contracts Receivable Value (Depreciation)
- --------------------- ---------------- ------------ ---------------
<S> <C> <C> <C>
British Pounds,
expiring 1/24/96.......... $ 19,708,747 $ 19,824,528 $ (115,781)
French Francs,
expiring
1/24/96-9/16/96........... 16,261,948 16,921,305 (659,357)
German Deutschemarks,
expiring 1/24/96.......... 80,682,921 80,954,794 (271,873)
Irish Punts,
expiring 1/24/96.......... 6,061,782 6,087,758 (25,976)
Italian Lira,
expiring 1/5/96........... 1,547,147 1,554,229 (7,082)
Japanese Yen,
expiring 1/24/96.......... 8,543,451 8,397,076 146,375
Netherlands Guilder,
expiring 1/24/96.......... 41,363,524 41,501,077 (137,553)
Swiss Francs,
expiring 1/24/96.......... $ 23,279,693 $ 23,351,888 $ (72,195)
---------------- ------------ ---------------
$197,449,213 $198,592,655 $ (1,143,442)
================ ============ ===============
</TABLE>
The United States federal income tax basis of the Fund's investments at December
31, 1995 was $522,654,922 and, accordingly, net unrealized depreciation for
United States federal income tax purposes was $24,845,167 (gross unrealized
appreciation--$25,160,223; gross unrealized depreciation--$315,056).
For federal income tax purposes, the Fund had a capital loss carryforward as of
December 31, 1995 of approximately $17,049,000 which will expire in 2002.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
The Fund has elected to treat appoximately $6,212,700 of net capital losses and
approximately $10,344,800 of net currency losses incurred in the two month
period ended December 31, 1994 as having been incurred in the current fiscal
year.
- --------------------------------------------------------------------------------
NOTE 4. 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 December 31, 1995, the
Fund had a 3.51% undivided interest in the joint account. The undivided interest
for the Fund represented $40,545,000 in the principal amount. As of such date,
each repurchase agreement in the joint account and the collateral therefor were
as follows:
Bear, Stearns & Co. Inc., 5.80%, in the principal amount of $262,000,000,
repurchase price $262,168,842, due 1/2/96. The value of the collateral including
accrued interest was $267,947,172.
BT Securities Corp., 5.75%, in the principal amount of $61,765,000, repurchase
price $61,804,460, due 1/2/96. The value of the collateral including accrued
interest was $63,059,883.
Goldman, Sachs & Co., 5.90%, in the principal amount of $365,000,000, repurchase
price $365,239,277, due 1/2/96. The value of the collateral including accrued
interest was $372,300,053.
Morgan Stanley & Co., 5.89%, in the principal amount of $103,000,000, repurchase
price $103,067,406, due 1/2/96. The value of the collateral including accrued
interest was $105,192,608.
Smith Barney, Inc., 5.83%, in the principal amount of $365,000,000, repurchase
price $365,236,438, due 1/2/96. The value of the collateral including accrued
interest was $372,300,416.
- --------------------------------------------------------------------------------
B-11
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Notes to Financial Statements
================================================================================
- --------------------------------------------------------------------------------
NOTE 5. CAPITAL
There are 200 million shares of $.01 par value common stock authorized. Of the
66,207,699 shares outstanding as of December 31, 1995, Prudential owned 12,020
shares.
- --------------------------------------------------------------------------------
NOTE 6. SUBSEQUENT EVENT
The Board of Directors and shareholders of the Fund approved the conversion of
the Fund from a closed-end fund to an open-end fund and approved specific
changes to the Fund's Articles of Incorporation and investment restrictions to
facilitate the conversion. Effective January 15, 1996 the Fund began operations
as an open-end fund and began offering three class of shares (Class A, B and C
shares) through Prudential Securities Incorporated, an indirect wholly-owned
subsidiary of Prudential. Accordingly, the Fund will compute its net asset value
and accept orders to redeem its outstanding shares on a daily basis. However, a
2% redemption fee, payable to the Fund, will be imposed on all redemptions of
Fund shares acquired prior to the conversion during the first six months
following the conversion. Also in conjunction with the conversion, Prudential
Mutual Fund Services, Inc., a wholly-owned subsidiary of PMF, commenced serving
as the Fund's transfer agent. Primarily as a result of Fund share redemptions
subsequent to the conversion, total net assets of the Fund declined to
approximately $358,100,000 as of February 8, 1996.
- --------------------------------------------------------------------------------
NOTE 7. QUARTERLY DATA
(UNAUDITED)
<TABLE>
<CAPTION>
Net realized and
unrealized
gains (losses) on Net increase (decrease)
investments in net assets
Net investment and foreign resulting from
income currencies operations
Quarterly Total ---------------------- ------------------------- --------------------------
period ended income Amount Per Share Amount Per Share Amount Per Shares
- ------------ ------ ------ --------- ------ --------- ------ ----------
<S> <C> <C> <C> <C> <C>
March 31, 1994 $10,004,223 $8,562,473 $ .13 $(37,140,649) $ (.56) $(28,578,176) $ (.43)
June 30, 1994 9,470,430 8,070,788 .12 (16,776,369) (.25) (8,705,581) (.13)
September 30, 1994 10,323,100 9,001,986 .14 (13,445,332) (.21) (4,443,346) (.07)
December 31, 1994 10,388,192 8,945,726 .13 (13,462,681) (.20) (4,516,955) (.07)
March 31, 1995 9,278,978 8,009,531 .12 44,611,081 .67 52,620,612 .79
June 30, 1995 9,974,241 8,605,514 .13 16,259,193 .25 24,864,707 .38
September 30, 1995 11,098,498 9,763,718 .15 5,977,614 .08 15,741,332 .23
December 31, 1995 10,965,811 9,333,627 .14 16,493,172 .25 25,826,799 .39
<CAPTION>
Dividends Share
and distributions price
Quarterly ----------------------- ---------------
period ended Amount Per share High Low
- ------------ ------ --------- ---- ---
<S> <C> <C> <C> <C>
March 31, 1994 $16,220,886 $.245 $8 1/4 $7
June 30, 1994 7,282,847 .11 7 1/8 6 1/2
September 30, 1994 8,273,528 .125 6 3/4 6 1/8
December 31, 1994 8,275,962 .125 6 5/8 6
March 31, 1995 8,275,962 .125 6 1/2 6
June 30, 1995 7,282,322 .11 7 6 3/8
September 30, 1995 9,599,716 .145 8 6 1/2
December 31, 1995 28,469,311 .43 8 3/8 7 7/8
</TABLE>
- --------------------------------------------------------------------------------
B-12
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Financial Highlights
================================================================================
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.............................. $ 7.46 $ 8.76 $ 8.10 $ 8.99 $ 8.96
-------- -------- -------- -------- --------
Net investment income........................................... .54 .52 .64 .81 .84
Net realized and unrealized gain (loss) on investments and
foreign currencies........................................... 1.25 (1.22) .74 (.90) (.19)
-------- -------- -------- -------- --------
Total from investment operations............................. 1.79 (.70) 1.38 (.09) .65
-------- -------- -------- -------- --------
Dividends from net investment income............................ (.54) (.17) (.30) (.75) (.62)
Distributions from net realized capital gains................... -- (.13) (.23) (.05) --
Distributions in excess of net investment income................ (.27) -- -- -- --
Distributions in excess of net capital gains.................... -- -- (.19) -- --
Tax return of capital distribution.............................. -- (.30) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions............................ (.81) (.60) (.72) (.80) (.62)
-------- -------- -------- -------- --------
Net asset value, end of year.................................... $ 8.44 $ 7.46 $ 8.76 $ 8.10 $ 8.99
======== ======== ======== ======== ========
Market price per share, end of year............................. $ 8.25 $ 6.13 $ 8.00 $ 7.50 $ 8.13
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN(a)...................................... 49.23% (16.12)% 16.50% 1.75% 9.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................................... $559,071 $493,645 $579,942 $535,647 $593,376
Average net assets (000)........................................ $549,407 $536,230 $567,128 $570,812 $571,767
Ratio of expenses to average net assets......................... 1.02% 1.04% 1.02% 1.01% .99%
Ratio of net income to average net assets....................... 6.50% 6.45% 7.67% 9.39% 9.69%
Portfolio turnover rate......................................... 256% 583% 370% 192% 141%
</TABLE>
- ---------------
(a) Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market value on the last day of each year reported. Dividends and
distributions are assumed for purposes of this calculation to be reinvested
at prices obtained under the dividend reinvestment plan. This calculation
does not reflect brokerage commissions.
Contained above is selected data for a share of common stock outstanding,
total investment return, ratios to average net assets and other
supplemental data for the years indicated. This information has been
determined based upon information provided in the financial statements and
market price data for the Fund's shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-13
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Independent Auditors' Report
================================================================================
The Shareholders and Board of Directors of
The Global Total Return Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of The Global Total Return Fund, Inc. as of
December 31, 1995, the related statements of operations for the year then ended
and of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1995, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Global Total
Return Fund, Inc. as of December 31, 1995, the results of its operations, the
changes in its net assets and its financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 8, 1996
- --------------------------------------------------------------------------------
B-14
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS:
(1) Financial Statements incorporated by reference in the Prospectus
constituting Part A of this Registration Statement:
Financial Highlights.
(2) Financial statements included in the Statement of Additional
Information constituting Part B of this Registration Statement:
Portfolio of Investments at December 31, 1995.
Statement of Assets and Liabilities at December 31, 1995.
Statement of Operations for the Fiscal Year Ended December 31,
1995.
Statement of Changes in Net Assets for the Fiscal Years ended
December 31, 1995 and 1994.
Notes to Financial Statements.
Financial Highlights.
Report of Independent Accountants.
(b) EXHIBITS:
1. (a) Articles of Incorporation. Incorporated by reference to
Registration Statement on Form N-2, File No. 33-5470, filed on
May 6, 1986.
(b) Amendment to Articles of Incorporation. Incorporated by
reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-2, File No. 33-5470, filed on April 27, 1989.
(c) Amendment to Articles of Incorporation. Incorporated by
reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-2, File No. 33-5470, filed on April 30, 1990.
(d) Amendment to Articles of Incorporation.*
(e) Amended and Restated Articles of Incorporation.*
2. (a) By-Laws. Incorporated by reference to Registration Statement
on Form N-2, File No. 33-5470, filed on May 6, 1986.
(b) Amended and Restated By-Laws.*
(c) Amended and Restated By-Laws.*
3. Not Applicable.
4. Instruments defining rights of shareholders.*
5. (a) Management Agreement Between the Registrant and Prudential
Mutual Fund Management, Inc. Incorporated by reference to
Post-Effective Amendment No. 3 to Registration Statement on Form
N-2, File No. 33-5470, filed on April 27, 1989.
(b) Subadvisory Agreement between Prudential Mutual Fund
Management, Inc. and The Prudential Investment Corporation.
Incorporated by reference to Post-Effective Amendment No. 3, File
No. 33-5470, filed on April 27, 1989.
(c) Amended Management Agreement between the Registrant and
Prudential Mutual Fund Management, Inc.*
(d) Amended Subadvisory Agreement between Prudential Mutual Fund
Management, Inc. and The Prudential Investment Corporation.*
6. (a) Distribution Agreement between the Registrant and Prudential
Securities Incorporated.*
(b) Selected Dealer Agreement.*
7. Not Applicable.
8. Custodian Contract between the Registrant and State Street Bank
and Trust Company.*
9. Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc.*
10. Opinion and Consent of Counsel. Incorporated by reference to
Pre-Effective Amendment No. 3 to Registration Statement on Form
N-2, File No. 33-5470, filed on June 30, 1986.
C-1
<PAGE>
11. Consent of Independent Accountants.**
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. (a) Distribution and Service Plan for Class A Shares.*
(b) Distribution and Service Plan for Class B Shares.*
(c) Distribution and Service Plan for Class C Shares.*
16. Schedule of Computation of Performance Quotations.*
27. Financial Data Schedules.**
----------
* Incorporated by reference to Registration Statement on Form
N-1A filed via EDGAR on November 3, 1995 (File No. 33-63943).
** Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of February 9, 1996 there were approximately 16,994 Class A, 2 Class B
and 2 Class C shareholders of record.
ITEM 27. INDEMNIFICATION
As permitted by Sections 17(h) and (i) of the Investment Company Act of
1940 (the 1940 Act) and pursuant to Article VII of the Fund's By-Laws (Exhibit 2
to the Registration Statement), officers, directors, employees and agents of the
Registrant will not be liable to the Registrant, any stockholder, officer,
director, employee, agent or other person for any action or failure to act,
except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of each Distribution Agreement (Exhibits 6(a)
and (b) to the Registration Statement), each Distributor of the Registrant may
be indemnified against liabilities which it may incur, except liabilities
arising from bad faith, gross negligence, willful misfeasance or reckless
disregard of duties.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (Securities Act) may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1940 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1940 Act and will be governed by the final adjudication of such
issue.
The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.
Section 9 of the Management Agreement (Exhibit 5(a) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b) to the
Registration Statement) limit the liability of Prudential Mutual Fund
Management, Inc. (PMF) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.
C-2
<PAGE>
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Sections 17(h) and 17(i) of such Act remain
in effect and are consistently applied.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Prudential Mutual Fund Management, Inc.
See "How the Fund is Managed--Manager" in the Prospectus constituting Part
A of this Registration Statement and "Manager" in the Statement of Additional
Information constituting Part B of this Registration Statement.
The business and other connections of the officers of PMF are listed in
Schedules A and D of Form ADV of PMF as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104, filed on March 30, 1995).
The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is One Seaport Plaza, New York, NY 10292.
<TABLE>
<CAPTION>
Name And Address Position With PMF Principal Occupations
- ---------------- ----------------- ---------------------
<S> <C> <C>
Brendan D. Boyle Executive Vice President, Executive Vice President, Director of Marketing and
Director of Marketing and Director, PMF; Senior Vice President, Prudential
Director Securities Incorporated (Prudential Securities); Chairman
and Director of Prudential Mutual Fund Distributors, Inc. (PMFD)
Stephen P. Fisher Senior Vice President Senior Vice President, PMF; Senior Vice President,
Prudential Securities; Vice President, PMFD
Frank W. Giordano Executive Vice Executive Vice President, General Counsel, Secretary and
President, General Director, PMF and PMFD; Senior Vice President, Prudential
Counsel, Secretary and Securities; Director, Prudential Mutual Fund Services,
Director Inc. (PMFS)
Robert F. Gunia Executive Vice Executive Vice President, Chief Financial and Administrative
President, Chief Officer, Treasurer and Director, PMF; Senior Vice
Financial and Administrative President, Prudential Securities; Executive Vice
Officer, Treasurer, and President, Chief Financial Officer, Treasurer, and
Director Director, PMFD; Director, PMFS
Theresa A. Hamacher Director Director, PMF; Vice President, The Prudential Insurance
Prudential Plaza Company of America (Prudential); Vice President, The
Newark, NJ 07102 Prudential Investment Corporation (PIC)
Timothy J. O'Brien Director President, Chief Executive Officer, Chief Operating Officer
Raritan Plaza One and Director, PMFD; Chief Executive Officer and Director,
Edison, NJ 08837 PMFS; Director, PMF
Richard A. Redeker President, Chief President, Chief Executive Officer and Director, PMF;
Executive Officer and Executive Vice President, Director and member of
Director Operating Committee, Prudential Securities; Director,
Prudential Securities Group, Inc. (PSG); Executive Vice
President, PIC; Director, PMFD; Director, PMFS
S. Jane Rose Senior Vice President, Senior Vice President, Senior Counsel and Assistant
Senior Counsel Secretary, PMF; Senior Vice President and Senior Counsel,
and Assistant Prudential Securities
Secretary
</TABLE>
(b) The Prudential Investment Corporation (PIC)
See "How the Fund is Managed--Manager" in the Prospectus constituting
Part A of this Registration Statement and "Manager" in the Statement of
Additional Information constituting Part B of this Registration Statement.
C-3
<PAGE>
The business and other connections of PIC's directors and executive
officers are as set forth below. Except as otherwise indicated, the address of
each person is Prudential Plaza, Newark, NJ 07102.
<TABLE>
<CAPTION>
Name And Address Position With PIC Principal Occupations
- ---------------- ----------------- ---------------------
<S> <C> <C>
William M. Bethke Senior Vice President Senior Vice President, Prudential; Senior Vice President, PIC
Two Gateway Center
Newark, NJ 07102
Barry M. Gillman Director Director, PIC
Theresa A. Hamacher Vice President Vice President, Prudential; Vice President, PIC; Director, PMF
Harry E. Knapp, Jr. President, Chairman of the President, Chairman of the Board, Chief Executive Officer
Board, Chief Executive and Director, PIC; Vice President, Prudential
Officer and Director
Richard A. Redeker Executive Vice President President, Chief Executive Officer and Director, PMF;
One Seaport Plaza Executive Vice President, Director and member of
New York, NY 10292 Operating Committee, Prudential Securities; Director,
PSG; Executive Vice President, PIC; Director, PMFD;
Director, PMFS
John L. Reeve Senior Vice President Managing Director, Prudential Asset Management Group; Senior
Vice President, PIC
Eric A. Simonson Vice President and Director Vice President and Director, PIC; Executive Vice President,
Prudential
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
Prudential Securities Incorporated
Prudential Securities is distributor for Prudential Jennison Fund, Inc.,
The Target Portfolio Trust, The BlackRock Government Income Trust, The Global
Government Plus Fund, Inc., The Global Total Return Fund, Inc., Global Utility
Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity
Fund), Prudential Allocation Fund, Prudential California Municipal Fund, Command
Government Fund, Command Money Fund, Command Tax-Free Fund, Prudential
Diversified Bond Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity
Income Fund, Prudential Europe Growth Fund, Inc., Prudential Global Fund, Inc.,
Prudential Global Genesis Fund, Inc., Prudential Global Limited Maturity Fund,
Inc., Prudential Global Natural Resources Fund, Inc., Prudential Government
Income Fund, Inc., Prudential Government Securities Trust, Prudential Growth
Opportunity Fund, Inc., Prudential High Yield Fund, Inc., Prudential
Institutional Liquidity Portfolio, Inc., Prudential Intermediate Global Income
Fund, Inc., Prudential MoneyMart Assets Inc., Prudential Mortgage Income Fund,
Inc., Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund,
Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc.,
Prudential Pacific Growth Fund, Inc., Prudential Special Money Market Fund,
Inc., Prudential Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund,
Inc. and Prudential Utility Fund, Inc. Prudential Securities is also a depositor
for the following unit investment trusts:
Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust
C-4
<PAGE>
(b) Information concerning the directors and officers of Prudential
Securities Incorporated is set forth below.
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name(1) Underwriter Registrant
- ------- ------------- ------------
<S> <C> <C>
Robert C. Golden .............. Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Alan D. Hogan ................. Executive Vice President, Chief Administrative Officer and Director None
George A. Murray .............. Executive Vice President and Director None
Leland B. Paton ............... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Martin Pfinsgraff ............. Executive Vice President, Chief Financial Officer and Director None
Vincent T. Pica, II ........... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Richard A. Redeker ............ Executive Vice President and Director President and
Director
Hardwick Simmons .............. Chief Executive Officer, President and Director None
Lee B. Spencer, Jr. ........... Executive Vice President, General Counsel and Director None
</TABLE>
- ----------
(1) The address of each person named is One Seaport Plaza, New York, NY 10292
unless otherwise indicated.
(c) Registrant has no principal underwriter who is not an affiliated person
of the Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at the
offices of State Street Bank and Trust Company, One Heritage Drive, North
Quincy, Massachusetts 02171, The Prudential Investment Corporation, Prudential
Plaza, 745 Broad Street, Newark, New Jersey 07102, the Registrant, One Seaport
Plaza, New York, New York 10292, and Prudential Mutual Fund Services, Inc.,
Raritan Plaza One, Edison, New Jersey 08837. Documents required by Rules
31a-1(b)(5), (6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Three
Gateway Center, documents required by Rules 31a-1(b)(4) and (11) and 31a-1(d) at
One Seaport Plaza and the remaining accounts, books and other documents required
by such other pertinent provisions of Section 31(a) and the Rules promulgated
thereunder will be kept by State Street Bank and Trust Company and Prudential
Mutual Fund Services, Inc.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth under the captions "How the Fund is
Managed--Manager" and "How the Fund is Managed--Distributor" in the
Prospectus and the captions "Manager" and "Distributor" in the Statement of
Additional Information, constituting Parts A and B, respectively, of this
Registration Statement, Registrant is not a party to any management-related
service contract.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State of
New York, on the 20th day of February, 1996.
THE GLOBAL TOTAL RETURN FUND, INC.
/s/ RICHARD A. REDEKER
--------------------------------------
(Richard A. Redeker, President)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ RICHARD A. REDEKER President and Director February 20, 1996
- ----------------------------
Richard A. Redeker
/s/ EDWARD D. BEACH Director February 20, 1996
- ----------------------------
Edward D. Beach
/s/ HARRY A. JACOBS, JR. Director February 20, 1996
- ----------------------------
Harry A. Jacobs, Jr.
/s/ THOMAS T. MOONEY Director February 20, 1996
- ----------------------------
Thomas T. Mooney
/s/ SIR MICHAEL SANDBERG Director February 20, 1996
- ----------------------------
Sir Michael Sandberg
/s/ ROBIN B. SMITH Director February 20, 1996
- ----------------------------
Robin B. Smith
/s/ NANCY H. TEETERS Director February 20, 1996
- ----------------------------
Nancy H. Teeters
/s/ EUGENE S. STARK Treasurer and Principal Financial February 20, 1996
- ---------------------------- and Accounting Officer
Eugene S. Stark
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
1. (a) Articles of Incorporation. Incorporated by reference to
Registration Statement on Form N-2, File No. 33-5470, filed on May 6,
1986.
(b) Amendment to Articles of Incorporation. Incorporated by reference
to Post-Effective Amendment No. 3 to Registration Statement on Form
N-2, File No. 33-5470, filed on April 27, 1989.
(c) Amendment to Articles of Incorporation. Incorporated by reference
to Post-Effective Amendment No. 4 to Registration Statement on Form
N-2, File No. 33-5470, filed on April 30, 1990.
(d) Amendment to Articles of Incorporation.*
(e) Amended and Restated Articles of Incorporation.*
2. (a) By-Laws. Incorporated by reference to Registration Statement on
Form N-2, File No. 33-5470, filed on May 6, 1986.
(b) Amended and Restated By-Laws.*
(c) Amended and Restated By-Laws.*
3. Not Applicable.
4. Instruments defining rights of shareholders.*
5. (a) Management Agreement Between the Registrant and Prudential Mutual
Fund Management, Inc. Incorporated by reference to Post-Effective
Amendment No. 3 to Registration Statement on Form N-2, File No.
33-5470, filed on April 27, 1989.
(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation. Incorporated by
reference to Post-Effective Amendment No. 3, File No. 33-5470, filed
on April 27, 1989.
(c) Amended Management Agreement between the Registrant and Prudential
Mutual Fund Management, Inc.*
(d) Amended Subadvisory Agreement between Prudential Mutual Fund
Management, Inc. and The Prudential Investment Corporation.*
6. (a) Distribution Agreement between the Registrant and Prudential
Securities Incorporated.*
(b) Selected Dealer Agreement.*
7. Not Applicable.
8. Custodian Contract between the Registrant and State Street Bank and
Trust Company.*
9. Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc.*
10. Opinion and Consent of Counsel. Incorporated by reference to
Pre-Effective Amendment No. 3 to Registration Statement on Form N-2,
File No. 33-5470, filed on June 30, 1986.
11. Consent of Independent Accountants.**
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. (a) Distribution and Service Plan for Class A Shares.*
(b) Distribution and Service Plan for Class B Shares.*
(c) Distribution and Service Plan for Class C Shares.*
16. Schedule of Computation of Performance Quotations.*
27. Financial Data Schedules.**
-----------
* Incorporated by reference to Registration Statement on Form N-1A filed
via EDGAR on November 3, 1995 (File No. 33-63943).
** Filed herewith.
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 1 to Registration
Statement No. 33-63943 of The Global Total Return Fund, Inc. of our report dated
February 8, 1996, appearing in the Statement of Additional Information, which is
a part of such Registration Statement, and to the references to us under the
headings "Financial Highlights" in the Prospectus, which is a part of such
Registration Statement, and "Custodian, Transfer and Dividend Disbursing Agent
and Independent Accountants" in the Statement of Additional Information.
Deloitte & Touche LLP
New York, New York
February 23, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000793159
<NAME> THE GLOBAL TOTAL RETURN FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 522,583,174
<INVESTMENTS-AT-VALUE> 547,500,089
<RECEIVABLES> 17,572,078
<ASSETS-OTHER> 632,271
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 565,704,438
<PAYABLE-FOR-SECURITIES> 3,252,486
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,380,765
<TOTAL-LIABILITIES> 6,633,251
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 547,774,623
<SHARES-COMMON-STOCK> 66,207,699
<SHARES-COMMON-PRIOR> 66,207,699
<ACCUMULATED-NII-CURRENT> 4,025,836
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,476,042)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,746,770
<NET-ASSETS> 559,071,187
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 41,317,528
<OTHER-INCOME> 0
<EXPENSES-NET> 5,605,138
<NET-INVESTMENT-INCOME> 35,712,390
<REALIZED-GAINS-CURRENT> 55,340,546
<APPREC-INCREASE-CURRENT> 28,000,514
<NET-CHANGE-FROM-OPS> 119,053,450
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35,712,390)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (17,914,921)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 65,426,139
<ACCUMULATED-NII-PRIOR> (49,875,831)
<ACCUMULATED-GAINS-PRIOR> (4,253,744)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 5,605,138
<AVERAGE-NET-ASSETS> 549,407,000
<PER-SHARE-NAV-BEGIN> 7.46
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 1.25
<PER-SHARE-DIVIDEND> (0.54)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.44
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
