(ICON)
The Global
Total Return
Fund, Inc.
SEMI
ANNUAL
REPORT
June 30, 1997
(LOGO)
<PAGE>
The Global Total Return Fund, Inc.
Performance At A Glance.
A strengthening U.S. dollar and
rising U.S. interest rates crimped
returns of
investors in foreign bond markets
during the six months ended June
30. Still,
despite unfavorable market
conditions, your Global Total
Return Fund performed
better than competing funds as
measured by Lipper Analytical
Services. That's
because of our holdings in emerging
market debt and our decision to
limit our
exposure to foreign currencies.
Cumulative Total Returns1 As of
6/30/97
<TABLE>
<CAPTION>
Six
One Five Ten
Since
Months
Year Years Years
Inception2
<S> <C>
<C> <C> <C> <C>
Class A 1.9%
10.3% 53.3% 53.3%
208.2%
Class B 1.6
9.8 N/A N/A
13.8
Class C 1.6
9.8 N/A N/A
13.8
Class Z N/A
N/A N/A N/A
2.8
Lipper Gen.
World Inc. Avg3 0.9
9.3 37.1 N/A
***
</TABLE>
Average Annual Total Returns1
As of 6/30/97
<TABLE>
<CAPTION>
One
Five Ten Since
Year
Years Years Inception2
<S> <C>
<C> <C> <C>
Class A 5.9%
8.0% 9.3% 10.4%
Class B 4.8
N/A N/A 6.6
Class C 8.8
N/A N/A 9.3
</TABLE>
Dividends & Yields
As of 6/30/97
<TABLE>
<CAPTION>
Total
Dividends 30-Day
Paid for
Six Mos. SEC Yield
<S> <C>
<C>
Class A $0.39
5.01%
Class B $0.37
4.62
Class C $0.37
4.69
Class Z $0.39
5.35
</TABLE>
Past performance is not indicative
of future results. Investment
return and
principal value will fluctuate so
that an investor's shares, when
redeemed,
may be worth more or less than the
original cost. Past performance
numbers,
with the exception of one-year
returns, do not fully reflect the
higher
operating expenses incurred since
the Fund commenced operations as an
open-end
mutual fund on January 15, 1996. If
these expenses had been applied
since the
Fund's inception, past performance
returns would have been lower.
Prior to
January 15, 1996 the Fund operated
as a closed-end fund with shares
being
traded on the New York Stock
Exchange.
1Source: Prudential Investments
Fund Management and Lipper
Analytical Services.
The cumulative total returns do not
take into account applicable sales
charges.
The average annual total returns do
take into account applicable sales
charges.
The Fund charges a maximum front
end sales load of 4% for Class A
shares.
Class B shares are subject to a
declining contingent deferred sales
charge
(CDSC) of 5%, 4%, 3%, 2%, 1% and 1%
for six years. Class C shares have
a 1%
CDSC for one year. Class B shares
will automatically convert to Class
A shares
on a quarterly basis, after
approximately seven years.
2Inception dates: 7/7/86 Class A;
1/15/96 Class B and Class C;
3/17/97 Class Z.
3These are the cumulative total
returns of 131 funds in the Lipper
General
World Income Fund category for one
year, and 38 funds for five years.
*** Lipper Since Inception returns
are: Class A, 112.9%; Class B and
Class C,
10.0%; and Class Z, 3.2% for all
funds in each Lipper share class.
How Investments Compared.
(As of 6/30/97)
(CHART)
Source: Lipper Analytical Services.
Financial markets change, so a
mutual
fund's past performance should
never be used to predict future
results. The
risks to each of the investments
listed above are different -- we
provide
12-month total returns for several
Lipper mutual fund categories to
show you
that reaching for higher returns
means tolerating more risk. The
greater the
risk, the larger the potential
reward or loss. In addition, we've
included
historical 20-year average annual
returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a
great deal. Investors have received
higher
historical total returns from
stocks than from most other
investments. Smaller
capitalization stocks offer greater
potential for long-term growth but
may be
more volatile than larger
capitalization stocks.
General Bond Funds provide more
income than stock funds, which can
help smooth
out their total returns year by
year. But their prices still
fluctuate
(sometimes significantly) and their
returns have been historically
lower than
those of stock funds.
General Municipal Debt Funds invest
in bonds issued by state
governments, state
agencies and/or municipalities.
This investment provides income
that is usually
exempt from federal and state
income taxes.
Money Market Funds attempt to
preserve a constant share value;
they don't
fluctuate much in price but,
historically, their returns have
been generally
among the lowest of the major
investment categories.
<PAGE>
Gabriel Irwin and Simon Wells, Fund
Managers
(PHOTOS)
Portfolio
Managers' Report
Your Fund seeks to maximize total
return, which is current income
plus any
capital appreciation of its
underlying bonds. The Fund invests
primarily in
intermediate-term, investment grade
bonds issued throughout the world.
The
Fund may also invest up to 10% of
total investments in bonds rated
below
investment grade with a minimum
rating of "B" by Standard & Poor's
or Moody's
or of comparable quality in our
view. Lower rated securities carry
a greater
risk of loss of principal and
interest than higher rated
securities. There are
special risks associated with
foreign investing, including
social, political
and currency risks and potential
illiquidity. There can be no
assurance that
the Fund's investment objective
will be achieved.
How We Invest.
We look to invest in countries with
well-managed economies and
currencies.
These are critical factors in
determining a bond's value and its
prospects for
appreciation. Once we have
identified our preferred countries,
we look at
specific types of bonds and
issuers. It's a top-down investment
philosophy
that governs our broad country and
currency allocation.
Strategy Session.
- -----------------------------------
- -----------------------------------
- ---------
U. S. Rates Rise.
After posting double-digit returns
in 1996, global bonds faced more
difficult
times in the first quarter of 1997
as the U.S. economy expanded
rapidly,
driving interest rates higher. When
economic growth is too strong, it
can lead
to inflationary pressures that
erode the value of a bond's fixed
interest and
principal payments. Fearing this,
investors drove world bond prices
lower and
yields higher. Then, in March, the
U.S. Federal Reserve increased
short-term
interest rates by a quarter
percentage point to 5.5%.
After the Federal Reserve acted,
U.S. economic growth slowed, so
investors bid
bond prices higher and the 30-year
U.S. Treasury bond yield tumbled
back below
7%.
Through this period, we modestly
adjusted duration, a measure of
your Fund's
sensitivity to interest rate
changes. We shortened duration when
we expected
interest rates to rise, and
lengthened as they fell, ending
duration at 4.2
years on June 30. We were careful
not to extend duration too much as
summer
began because we expect interest
rates to edge higher later in the
year.
Fewer Dollars.
We slightly trimmed the Fund's
substantial holding in dollar-bloc
currencies
(United States, Australia, Canada
and New Zealand) to 78% of total
investments
as of June 30, 1997 from 83% at the
start of the reporting period. Our
outlook
on the U.S. dollar remains
favorable, but we believe the
currency, which has
soared in value, will eventually
come back to a more realistic
level.
Arrivederci Roma.
The expectation of currency union
in Europe made Italian bonds very
attractive
last year, providing investors with
a 27% return in 1996 in local
currency
terms, according to Salomon
Brothers. Your Fund held 5% of
total investments
in Italian bonds at the beginning
of 1997, but we sold them because
we
believed the risk of losses
outweighed the possibility for
further gains.
<PAGE>
What Went Well.
- -----------------------------------
- ------------------------
Hello, Sweden.
We used proceeds from the sale of
Italian and German bonds to buy
Swedish
bonds, which appreciated amid lower-
than-expected inflation and falling
interest rates.
Currency Jitters.
Currency risk is an integral part
of investing in global bonds.
Fortunately,
we avoided trouble in Europe and
Asia by selling Czech bonds and
entering into
contracts to sell Indonesian
rupiahs on a future date in
exchange for U.S.
dollars. Here's what happened:
- - Investors sold the Czech koruna
in May betting that the govern-
ment would be forced to devalue the
currency in an effort to narrow the
country's trade deficit. As
expected, the Czech National Bank
freed the koruna
from certain trading restrictions,
thereby allowing the value of the
currency
to tumble. Earlier in the year, we
could see the koruna might weaken
so we
sold our Czech bonds.
- - As the reporting period was
ending, sign of instability in
Southeast Asia
caused us to become wary of
currencies there. Shortly after, we
entered into
forward contracts to sell
Indonesian rupiahs. Doing this
removed the risk of
owning rupiahs from the Fund's
Indonesian bonds. Shifting the
currency risk to
U.S. dollars proved to be a wise
choice because a sharp decline in
the value of
the Thai baht in July triggered a
region-wide currency scare that
spilled over
on to many Southeast Asian
currencies including the rupiah.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 6/30/97.
(CHART)
Five Largest Holdings.
7.6% U.S. Treasury Note
6/30/99
6.4% U.S. Treasury Note
11/15/04
5.8% German Gov't Bond
1/03/05
4.2% Swedish Gov't Bond
2/09/05
3.7% Canadian Gov't Bond
12/01/04
Expressed as a percentage of total
investments as of 6/30/97.
And Not So Well.
- -----------------------------------
- ------------------------
A Yen For Yen.
Over the past six months, your Fund
did not hold any Japanese
government bonds
or currency. Official Japanese
interest rates have remained at
historically low
levels making the country's
currency and bonds less attractive
to yield-hungry
investors. Yet some investors clung
to the notion during the second
quarter
that Japanese interest rates would
soon rise because the economy had
strengthened sufficiently to
withstand higher rates. As a
result, the Japanese
yen gained against the U.S. dollar
in the spring. Our performance
would have
been better had we held yen at that
time.
Looking Ahead.
- -----------------------------------
- ------------------------
After the reporting period, we
adjusted our holdings in Australia
and New
Zealand because we were concerned
about slower economic growth in
both
countries. Moderating growth
typically leads to lower interest
rates that tend
to hurt a currency's value by
decreasing returns when that weaker
currency is
sold for U.S. dollars. (In
Australia, short-term interest
rates have already
slid beneath the level of
comparable rates in the United
States.) So we entered
into contracts to sell Australian
and New Zealand dollars at a future
date in
exchange for U.S. dollars. These
transactions have shifted into U.S.
dollars
most of the currency risk on our
Australian bonds and all of the
currency risk
on our New Zealand bonds. We are
generally cautious about bonds
because we
expect global interest rates to
edge higher later in the year.
However, the
vast world bond market still offers
a variety of attractive investment
opportunities.
1
<PAGE>
President's Letter
August 4, 1997
- -----------------------------------
- -----------------------------------
- ---------
Dear Shareholder:
With the midpoint of 1997 behind
us, I'm pleased to report that the
recent
news from the financial markets has
been decidedly upbeat. The Dow
Jones
Industrial Average has gained more
than 20% through the end of June,
while
lower long-term interest rates have
made bonds an attractive
investment.
This stands in contrast to April
when the Dow fell 10% from a record
high on
fears of higher interest rates and
surging inflation. Interest rates
have
since fallen as the economy slowed
and the Dow has reached several new
highs.
The market swings we've seen this
year illustrate the importance of
"staying
the course" to your financial goal.
We realize that maintaining
investment
discipline when faced with market
uncertainty isn't easy. Here are
some
thoughts that may help:
- - Keep Your Expectations Realistic.
The best investors know that
financial
markets rise and fall -- and so
too, will the value of their
investments.
Over time, however, stocks have
been shown to produce very
attractive returns
that were well ahead of
inflation. And where income is the
primary goal,
bonds have also provided
attractive returns.
- - Remember Your Time Horizon. If
your investment goals are long term
(several
years or more), your time horizon
should be too. During this period,
it's
not unusual for stocks and bonds
to experience several periods of
market
uncertainty.
- - We're On Your Side. Your
Prudential Securities Financial
Advisor or Pruco
Securities Registered
Representative can help you
understand what's happening
in the financial markets. They
can assist you in making informed
decisions
based upon a thorough knowledge
of your financial needs and long-
term goals.
Call him or her today.
Thank you for your continued
confidence in Prudential mutual
funds. We'll do
everything we can to keep you
informed and to earn your trust.
Sincerely,
Brian M. Storms President,
Prudential Mutual Funds & Annuities
2
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -------------------------
- -----------------------------------
- -------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description
Value (Note 1)
<C> <S>
<C>
- -----------------------------------
- -------------------------
LONG-TERM INVESTMENTS--85.7%
- -----------------------------------
- -------------------------
Australia--5.5%
A$ 7,000 New South Wales
Treasury
Corporation,
6.50%,
5/1/06 $
4,997,252
8,000 Queensland
Treasury
Corporation,
8.00%,
8/14/01
6,347,376
- ------------
11,344,628
- -----------------------------------
- -------------------------
Canada--8.0%
C$ 7,000 British
Columbia Provincial
Bonds,
7.75%,
6/16/03
5,508,730
8,800 Canadian
Government Bonds,
9.00%,
12/1/04
7,463,182
4,000 Province of
Quebec,
9.25%,
4/1/02
3,293,042
- ------------
16,264,954
- -----------------------------------
- -------------------------
Denmark--6.0%
Danish
Government Bonds,
DKr 19,000 8.00%, 5/15/03
3,238,086(a)
33,000 7.00%, 12/15/04
5,325,841
21,750 8.00%, 3/15/06
3,686,741(a)
- ------------
12,250,668
- -----------------------------------
- -------------------------
France--1.6%
FF 17,500 National Bank
of Hungary,
8.00%,
11/12/99
3,230,391
- -----------------------------------
- -------------------------
Germany--8.8%
German
Government Bonds,
DM 2,000 6.75%, 4/22/03
1,249,210(a)
18,000 7.375%, 1/3/05
11,568,549(a)
4,000 6.25%, 1/4/24
2,218,138(a)
5,000 Republic of
Colombia,
7.25%,
12/21/00
3,051,232
- ------------
18,087,129
Greece--2.4%
Hellenic
Republic,
GRD 625,000 10.70%,
12/31/99 $
2,330,763
680,000 12.60%,
12/31/03
2,558,180
- ------------
4,888,943
- -----------------------------------
- -------------------------
Netherlands--4.0%
Dutch
Government Bonds,
NLG 10,500 7.00%, 6/15/05
5,904,744(a)
3,750 7.50%, 1/15/23
2,185,348(a)
- ------------
8,090,092
- -----------------------------------
- -------------------------
New Zealand--3.4%
NZ$ 3,250 Federal
National Mortgage
Association,
7.25%,
6/20/02
2,212,607
6,600 New Zealand
Government Bonds,
8.00%,
2/15/01
4,650,703(a)
- ------------
6,863,310
- -----------------------------------
- -------------------------
Poland--0.3%
PLZ 2,000 Polish
Goverment Bonds,
16.00%,
10/12/98 572,081
- -----------------------------------
- -------------------------
Spain--3.3%
Spanish
Government Bonds,
Pts 125,000 10.30%, 6/15/02
1,017,918(a)
750,000 8.20%, 2/28/09
5,771,739(a)
- ------------
6,789,657
- -----------------------------------
- -------------------------
Sweden--4.1%
SEK 67,000 Swedish
Government Bonds,
6.00%,
2/9/05
8,473,472
</TABLE>
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
3
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -------------------------
- -----------------------------------
- -------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description
Value (Note 1)
<C> <S>
<C>
- -----------------------------------
- -------------------------
United Kingdom--7.2%
BP 300 Powergen PLC,
8.875%,
3/26/03 $ 522,692
400 Republic of
Argentina,
11.50%,
8/14/01 711,228
United Kingdom
Treasury Bonds,
3,650 7.75%, 9/8/06
6,319,583(a)
3,700 8.75%, 8/25/17
7,177,353
- ------------
14,730,856
- -----------------------------------
- -------------------------
United States--31.1%
Corporate Bonds--4.9%
US$ 1,000 Banco Ganadero
S.A.,
9.75%,
8/26/99
1,051,000
3,750 Empresas La
Moderna S.A.
(Mexico),
11.375%,
1/25/99 3,956,250
2,900 Financiera
Energetica Nacional
(Columbia),
9.00%,
11/8/99
3,005,850
1,000 Petroleas
Mexicano (Mexico),
6.8125%,
3/8/99 1,000,000
1,000 Romanian
Commercial Bank
9.125%,
3/10/00 995,000
- ------------
10,008,100
Sovereign Bonds--7.5%
1,500 Ministry Of
Finance (Russia),
10.00%,
6/26/07 1,496,250
1,250 Municpality of
Rio De Janeiro,
10.375%,
7/12/99 1,301,562
1,455 Republic of
Argentina,
6.75%,
3/31/05, FBR
1,367,700
2,175 Republic of
Brazil,
6.50%,
1/1/01, FBR/IDU
2,145,094
1,928 Republic of
Croatia,
6.50%,
7/31/06, FRN
1,896,249
1,500 Republic of
Poland,
6.9375%,
10/27/24, FRB 1,466,250
US$ 2,000 Republic of
Poland,
4.00%,
10/27/14, FRN $
1,712,500
1,000 Sultan of Oman,
7.125%,
3/20/02 1,002,500
3,000 United Mexican
States,
7.875%,
8/6/01, FRN 3,005,700
- ------------
15,393,805
Supranational Bonds--2.6%
Corporacion
Andina de Fomento,
500 6.625%,
10/14/98
502,500
4,800 7.375%, 7/21/00
4,867,200
- ------------
5,369,700
U.S. Government Obligations--16.1%
United States
Treasury Notes,
15,000 6.75%, 6/30/99
15,182,850
5,000 6.125%, 9/30/00
4,978,100(a)
11,810 7.875%,
11/15/04
12,745,588(a)
- ------------
32,906,538
- ------------
63,678,143
- ------------
Total long-term
investments
(cost
US$174,265,524)
175,264,324
- ------------
SHORT-TERM INVESTMENTS--12.1%
- -----------------------------------
- -------------------------
Hungarian--0.6%
HUF 230,000 Hungary
Government Bonds,
23.50%,
5/17/98 1,264,640
- -----------------------------------
- -------------------------
Indonesia--1.9%
IND 2,000,000 Asia Pulp And
Paper,
14.45%(b),
1/27/98 756,002
2,000,000 Bakrie And
Brothers, NCD,
17.50%(b),
2/19/98 738,961
Bank Negara
Indonesia, NCD,
2,000,000 13.75%(b),
11/7/97 787,025
4,000,000 12.65%(b),
12/7/97 1,550,751
- ------------
3,832,739
</TABLE>
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
4
<PAGE>
Portfolio of Investments as of
June 30, 1997 (Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -------------------------
- -----------------------------------
- -------------------------
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description
Value (Note 1)
<C> <S>
<C>
- -----------------------------------
- -------------------------
Poland--1.4%
PLZ 2,000 General
Electric Capital
Corporation,
18.25%,
2/27/98 $ 595,572
1,500 ING Poland,
21.50%,
8/4/97 455,206
Polish Treasury
Bills,
1,500 20.75%(b),
8/20/97 443,191
1,500 21.125%(b),
10/8/97 430,780
4,000 21.82%(b),
4/15/98 1,038,509
- ------------
2,963,258
- -----------------------------------
- -------------------------
Spain--1.5%
Pts 450,000 Republic of
Argentina,
12.80%,
12/9/97 3,129,671
- -----------------------------------
- -------------------------
United States--6.7%
Repurchase Agreement--4.2%
US$ 8,598 Joint
Repurchase Agreement
Account,
5.96%,
7/1/97, (Note 5)
8,598,000
- ------------
U.S. Government Obligations--2.5%
US$ 5,000 United States
Treasury Notes,
7.375%,
11/15/97 $ 5,031,250
- ------------
13,629,250
- ------------
Total short-
term investments
(cost
US$25,832,578)
24,819,558
- ------------
- -----------------------------------
- -------------------------
Total Investments--97.8%
(cost
$200,098,102; Note 4)
200,083,882
Other assets in
excess of
liabilities-
- -2.2% 4,503,038
- ------------
Net Assets--
100% $204,586,920
- ------------
- ------------
</TABLE>
- ---------------
Portfolio securities are classified
according to the security's
currency denomination.
(a) Principal amount segregated as
collateral for forward currency
contracts.
Aggregate value of segregated
securities--US$55,534,477
(b) Percentages quoted represent
yield-to-maturity as of purchase
date.
FRB--Floating Rate Bond.
FRN--Floating Rate Note.
IDU--Interest Due and Unpaid Bonds.
NCD--Negotiable Certificates of
Deposit.
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
5
<PAGE>
Statement of Assets and Liabilities
(Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
<TABLE>
Assets
June 30, 1997
<S>
<C>
Investments, at value (cost
$200,098,102)......................
...................................
.......... $200,083,882
Forward currency contracts - net
amount receivable from
counterparties.....................
................. 560,881
Interest
receivable.........................
...................................
.............................
4,057,925
Receivable for Fund shares
sold...............................
...................................
........... 580,375
Other
assets.............................
...................................
................................
8,053
- -------------
Total
assets.............................
...................................
.............................
205,291,116
- -------------
Liabilities
Bank
overdraft..........................
...................................
.................................
43,458
Payable for Fund shares
reacquired.........................
...................................
.............. 363,578
Accrued
expenses...........................
...................................
..............................
144,360
Due to
Manager............................
...................................
...............................
126,844
Due to
Distributor........................
...................................
...............................
25,956
- -------------
Total
liabilities........................
...................................
.............................
704,196
- -------------
Net
Assets.............................
...................................
..................................
$204,586,920
- -------------
- -------------
Net assets were comprised of:
Common stock, at
par................................
...................................
.................. $
251,188
Paid-in capital in excess of
par................................
...................................
...... 202,086,418
- -------------
202,337,606
Undistributed net investment
income.............................
...................................
...... 5,219,803
Accumulated net realized gain on
investment and foreign currency
transactions.......................
..... (3,456,029)
Net unrealized appreciation on
investments and foreign
currencies.........................
............... 485,540
- -------------
Net assets, June 30,
1997...............................
...................................
................. $204,586,920
- -------------
- -------------
Class A:
Net asset value and redemption
price per share
($202,337,191 / 24,842,786
shares of common stock issued and
outstanding).......................
...... $8.14
Maximum sales charge (4.00% of
offering
price).............................
.................................
.34
- -------------
Maximum offering price to
public.............................
...................................
............ $8.48
- -------------
- -------------
Class B:
Net asset value, offering price
and redemption price per share
($1,407,901 / 172,723 shares
of common stock issued and
outstanding).......................
........... $8.15
- -------------
- -------------
Class C:
Net asset value, offering price
and redemption price per share
($670,699 / 82,314 shares of
common stock issued and
outstanding).......................
.............. $8.15
- -------------
- -------------
Class Z:
Net asset value, offering price
and redemption price per share
($171,129 / 21,006 shares of
common stock issued and
outstanding).......................
.............. $8.15
- -------------
- -------------
</TABLE>
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
6
<PAGE>
THE GLOBAL TOTAL RETURN FUND, INC.
Statement of Operations (Unaudited)
- -----------------------------------
- -------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income
June 30, 1997
<S>
<C>
Income
Interest and discount earned
(net of
foreign withholding taxes of
$290)...... $ 8,775,920
- -------------
Expenses
Management
fee.............................
800,231
Distribution fee--Class
A.................. 159,528
Distribution fee--Class
B.................. 2,196
Distribution fee--Class
C.................. 355
Transfer agent's fees and
expenses......... 188,000
Reports to
shareholders....................
124,000
Custodian's fees and
expenses..............
109,000
Registration
fees..........................
50,000
Legal fees and
expenses....................
26,000
Audit
fee................................
.. 18,000
Directors' fees and
expenses...............
14,000
Insurance
expense..........................
3,000
Miscellaneous......................
........ 2,231
- -------------
Total
expenses..........................
1,496,541
- -------------
Net investment
income.........................
7,279,379
- -------------
Realized and Unrealized Gain
(Loss) on Investments and Foreign
Currency Transactions
Net realized gain on:
Investment
transactions....................
916,527
Foreign currency
transactions..............
6,495,023
- -------------
7,411,550
- -------------
Net change in unrealized
appreciation/depreciation of:
Investments........................
........ (11,009,224)
Foreign
currencies.........................
88,517
- -------------
(10,920,707)
- -------------
Net loss on investments and foreign
currencies.........................
........ (3,509,157)
- -------------
Net Increase in Net Assets
Resulting from
Operations..................... $
3,770,222
- -------------
- -------------
</TABLE>
THE GLOBAL TOTAL RETURN FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
- -----------------------------------
- -------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease)
June 30, December 31,
in Net Assets
1997 1996
<S>
<C> <C>
Operations:
Net investment income........ $
7,279,379 $ 20,756,821
Net realized gain on
investment and foreign
currency transactions.....
7,411,550 24,249,957
Net change in unrealized
appreciation/depreciation
on investments and foreign
currencies................
(10,920,707) (12,340,523)
-
- ------------ -----------------
Net increase in net assets
resulting from
operations................
3,770,222 32,666,255
-
- ------------ -----------------
Dividends and distributions
(Note 1)
Dividends from net
investment income
Class A...................
(7,257,090) (20,751,908)
Class B...................
(18,729) (4,899)
Class C...................
(3,119) (14)
Class Z...................
(441) --
-
- ------------ -----------------
(7,279,379) (20,756,821)
-
- ------------ -----------------
Distributions in excess of
net investment income
Class A...................
(2,674,390) (14,747,171)
Class B...................
(15,126) (8,065)
Class C...................
(1,809) (12)
Class Z...................
(954) --
-
- ------------ -----------------
(2,692,279) (14,755,248)
-
- ------------ -----------------
Fund share transactions (Note 6)
Net proceeds from shares
sold......................
3,494,113 12,515,494
Net asset value of shares
issued in reinvestment of
dividends and
distributions.............
2,214,968 5,694,812
Cost of shares reacquired....
(24,866,530) (344,489,874)(a)
-
- ------------ -----------------
Net decrease in net assets
from Fund share
transactions..............
(19,157,449) (326,279,568)
-
- ------------ -----------------
Total decrease..................
(25,358,885) (329,125,382)
Net Assets
Beginning of period.............
229,945,805 559,071,187
-
- ------------ -----------------
End of period................... $
204,586,920 $ 229,945,805
-
- ------------ -----------------
-
- ------------ -----------------
</TABLE>
- ---------------
(a) Net of $4,870,794 redemption
fee retained by the Fund.
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
7
<PAGE>
Notes to Financial Statements
(Unaudited) THE GLOBAL TOTAL
RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
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 and
commenced investment operations on
July 7, 1986. On January 12, 1996
the Fund
concluded operations as a closed-
end investment company and
effective January
15, 1996, the Fund began operating
as an open-end fund.
The Fund's investment objective is
to seek total return, the
components of which
are current income and capital
appreciation. The Fund invests
primarily in debt
securities issued or guaranteed by
governments, semi-governmental
entities,
governmental agencies,
supranational entities and other
governmental entities in
the United States and in other
countries and denominated in the
currencies of
such countries. The bonds are
primarily of investment grade,
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 debt securities held by the Fund
to meet their obligations may be
affected by
economic and political developments
in a specific country or region.
- -----------------------------------
- -------------------------
Note 1. Accounting Policies
The following is a summary of
significant accounting policies
followed by the
Fund in the preparation of its
financial statements.
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 rate.
Portfolio securities that are
actively traded in the
over-the-counter market, including
listed securities for which the
primary
market is believed to be over-the-
counter, are valued at the mean
between the
most recently quoted bid and asked
prices provided by 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
exchange contracts are valued at
the current cost of covering or
offsetting the
contract on the day of valuation.
Securities and assets for which
market
quotations are not readily
available are valued at fair value
as determined in
good faith by or under the
direction of the Board of Directors
of the Fund.
Short-term securities which mature
in more than 60 days are valued at
current
market quotations. Short-term
securities which mature in 60 days
or less are
valued at amortized cost which
approximates market value.
In connection with transactions in
repurchase agreements with U.S.
financial
institutions, it is the Fund's
policy that its custodian or
designated
subcustodians under triparty
repurchase agreements as the case
may be, take
possession of the underlying
collateral securities, the value of
which exceeds
the principal amount of the
repurchase transaction including
accrued interest.
To the extent that any repurchase
transaction exceeds one business
day, the
value of the collateral is marked-
to-market on a daily basis to
ensure the
adequacy of the collateral. If the
seller defaults and the value of
the
collateral declines or if
bankruptcy proceedings are
commenced with respect to
the seller of the security,
realization of the collateral by
the Fund may be
delayed or limited.
Foreign Currency Translation: The
books and records of the Fund are
maintained
in 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 period, the Fund does not
isolate that
portion of the results of
operations arising as a result of
changes in the
foreign exchange rates from the
fluctuations arising from changes
in the market
prices of the securities held at
period end. Similarly, the Fund
does not
isolate the effect of changes in
foreign exchange rates from the
fluctuations
arising from changes in the market
prices of long-term debt securities
sold
during the period. Accordingly,
such realized foreign currency
gains and losses
are included in the reported net
realized gains on investment
transactions.
Net realized gains on foreign
currency transactions represent net
foreign
exchange gains and losses from
sales and maturities of short-term
securities and
forward currency contracts, holding
of foreign currencies, currency
gains or
losses realized between the trade
and settlement dates on securities
transactions, and the difference
between the amounts of interest,
discount and
foreign taxes recorded on the
Fund's books and the U.S. dollar
equivalent
amounts actually received or paid.
Net currency gains and losses from
valuing
foreign currency denominated assets
(excluding investments) and
liabilities at
period end exchange rates are
reflected as a component of net
unrealized
appreciation on investments and
foreign currencies.
- -----------------------------------
- -----------------------------------
- ----------
- -----
8
<PAGE>
Notes to Financial Statements
(Unaudited) THE GLOBAL TOTAL
RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
Foreign security and currency
transactions may involve certain
considerations
and risks not typically associated
with those of U.S. companies as a
result of,
among other factors, the
possibility of political or
economic instability and
the level of governmental
supervision and regulation of
foreign securities
markets.
Forward Currency Contracts: A
forward currency contract is a
commitment to
purchase or sell a foreign currency
at a future date at a negotiated
forward
rate. The Fund enters into forward
currency contracts in order to
hedge its
exposure to changes in foreign
currency exchange rates on its
foreign portfolio
holdings or on specific receivables
and payables denominated in a
foreign
currency. The contracts are valued
daily at current exchange rates and
any
unrealized gain or loss is included
in net unrealized appreciation or
depreciation on investments. Gain
or loss is realized on the
settlement date of
the contract equal to the
difference between the settlement
value of the
original and renegotiated forward
contracts. This gain or loss, if
any, is
included in net realized gain
(loss) on foreign currency
transactions. Risks may
arise upon entering into these
contracts from the potential
inability of the
counterparties to meet the terms of
their contracts.
Security Transactions and Net
Investment Income: Security
transactions are
recorded on the trade date.
Realized and unrealized gains and
losses from
security and currency transactions
are calculated on the identified
cost basis.
Interest income is recorded on the
accrual basis. Expenses are
recorded on the
accrual basis which may require the
use of certain estimates by
management.
Net investment income (other than
distribution fees), and unrealized
and
realized gains or losses are
allocated daily to each class of
shares based upon
the relative proportion of net
assets of each class at the
beginning of the day.
Taxes: It is the Fund's policy to
continue to meet the requirements
of the
Internal Revenue Code applicable to
regulated investment companies and
to
distribute all of its taxable
income to shareholders. Therefore,
no federal
income 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.
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 currency transactions.
Reclassification of Capital
Accounts: The Fund accounts for and
reports
distributions to shareholders in
accordance with the AICPA Statement
of Position
93-2: Determination, Disclosure,
and Financial Statement
Presentation of Income,
Capital Gain, and Return of Capital
Distributions by Investment
Companies. The
effect of applying this Statement
of Position was to reclassify
$5,128,298 of
foreign currency gains from
accumulated net realized gain on
investments to
undistributed net investment
income. Net investment income, net
realized gains
and net assets were not affected by
this change.
- -----------------------------------
- -------------------------
Note 2. Agreements
The Fund has a management agreement
with Prudential Investments Fund
Management
LLC ('PIFM'). Pursuant to this
agreement, PIFM has responsibility
for all
investment advisory services and
supervises the subadviser's
performance of such
services. PIFM has entered into a
subadvisory agreement with The
Prudential
Investment Corporation ('PIC'); PIC
furnishes investment advisory
services in
connection with the management of
the Fund. PIFM pays for the cost of
the
subadviser's services, compensation
of officers of the Fund, occupancy
and
certain clerical and bookkeeping
costs of the Fund. The Fund bears
all other
costs and expenses.
The management fee paid PMF is
computed daily and payable monthly
at an annual
rate of .75% of the Fund's average
daily net assets up to US$500
million, .70%
of such assets between US$500
million and US$1 billion, and .65%
of such assets
in excess of US$1 billion.
The Fund has a distribution
agreement with Prudential
Securities Incorporated
('PSI'), which acts as the
distributor of the Class A, B, C
and Z shares of the
Fund. The Fund compensates PSI for
distributing and servicing the
Fund's Class
A, Class B and Class C shares,
pursuant to plans of distribution
(the 'Class A,
B and C Plans'), regardless of
expenses actually incurred by PSI.
The
distribution fees are accrued daily
and payable monthly. No
distribution or
service fees are paid to PSI as
distributor of the Class Z shares
of the Fund.
Pursuant to the Class A, B and C
Plans, the Fund compensates PSI for
distribution-related activities at
an annual rate of up to .30 of 1%,
1% and 1%
of the average daily net assets of
the Class A, B, and C shares,
respectively.
Such expenses under the Plans were
.15 of 1%, .75 of 1%
- -----------------------------------
- -----------------------------------
- ----------
- -----
9
<PAGE>
Notes to Financial Statements
(Unaudited) THE GLOBAL TOTAL
RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
and .75 of 1% of the average daily
net assets of the Class A, B and C
shares,
respectively, for the six months
ended June 30, 1997.
PSI has advised the Fund that it
has received approximately $18,400
in front-end
sales charges resulting from sales
of Class A shares during the six
months ended
June 30, 1997. From these fees, PSI
paid such sales charges to Pruco
Securities
Corporation, an affiliated broker-
dealer, which in turn paid
commissions to
salespersons and incurred other
distribution costs.
PSI has advised the Fund that for
the six months ended June 30, 1997,
it
received approximately $200 in
contingent deferred sales charges
imposed upon
certain redemptions by Class B
shareholders.
PSI, PIFM and PIC are indirect,
wholly-owned subsidiaries of The
Prudential
Insurance Company of America.
The Fund, along with other
affiliated registered investment
companies (the
'Funds'), entered into a credit
agreement (the 'Agreement') on
December 31, 1996
with an unaffiliated lender. The
maximum commitment under the
Agreement is
$200,000,000. The Agreement expires
on December 30, 1997. Interest on
any such
borrowings outstanding will be at
market rates. The purpose of the
Agreement is
to serve as an alternative source
of funding for capital share
redemptions. The
Fund has not borrowed any amounts
pursuant to the Agreement as of
June 30, 1997.
The Funds pay a commitment fee at
an annual rate of .055 of 1% on the
unused
portion of the credit facility. The
commitment fee is accrued and paid
quarterly
on a pro-rata basis by the Funds.
- -----------------------------------
- -------------------------
Note 3. Other Transactions with
Affiliates
Prudential Mutual Fund Services LLC
('PMFs'), a wholly-owned subsidiary
of PIFM,
serves as the Fund's transfer agent
and during the six months ended
June 30,
1997, the Fund incurred fees of
approximately $157,000 for the
services of PMFS.
As of June 30, 1997, approximately
$27,000 of such fees were due to
PMFS.
Transfer agent fees and expenses in
the Statement of Operations include
certain
out-of-pocket expenses paid to non-
affiliates.
- -----------------------------------
- -------------------------
Note 4. Portfolio Securities
Purchases and sales of investment
securities, other than short-term
investments
for the six months ended June 30,
1997, aggregated $46,620,939 and
$62,874,033,
respectively.
At June 30, 1997, the Fund had
outstanding forward currency
contracts to sell
foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency
Settlement Date Current
Sale Contracts
Receivable Value
Appreciation
- --------------------------- ----
- ------------ ----------- --
- ------------
<S> <C>
<C> <C>
Australian Dollars,
expiring 7/30/97.......... $
4,389,708 $ 4,365,107 $
24,601
French Francs,
expiring 7/30/97..........
9,912,072 9,814,955
97,117
Netherlands Guilders,
expiring 7/30/97..........
24,348,251 24,123,571
224,680
New Zealand Dollars,
expiring 7/30/97..........
5,017,642 4,948,850
68,792
Spanish Pesetas,
expiring 7/30/97..........
1,083,013 1,069,299
13,714
Swiss Francs,
expiring 7/30/97..........
11,095,603 10,963,626
131,977
----
- ------------ ----------- --
- ------------
$
55,846,289 $55,285,408
$ 560,881
----
- ------------ ----------- --
- ------------
----
- ------------ ----------- --
- ------------
</TABLE>
The United States federal income
tax basis of the Fund's investments
at June 30,
1997 was $200,119,412 and,
accordingly, net unrealized
depreciation for United
States federal income tax purposes
was $35,530 (gross unrealized
appreciation--$5,880,394; gross
unrealized depreciation--
$5,915,924).
For federal income tax purposes,
the Fund had a capital loss
carryforward as of
December 31, 1996 of approximately
$4,983,000 which expires 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.
- -----------------------------------
- -------------------------
Note 5. Joint Repurchase Agreement
Account
The Fund, along with other
affiliated registered investment
companies, transfers
uninvested cash balances into a
single joint account, the daily
aggregate
balance of which is invested in one
or more repurchase agreements
collateralized
by U.S. Treasury or federal agency
obligations. As of June 30, 1997,
the Fund
has a 1.3% undivided interest in
the joint account. The undivided
interest for
the Fund represents $8,598,000 in
the principal amount. As of such
date, each
repurchase agreement in the joint
account and the collateral therefor
were as
follows:
Dean Witter Reynolds, Inc., 5.90%,
in the principal amount of
$100,000,000,
repurchase price $100,016,389, due
7/1/97. The value of the collateral
including
accrued interest is $102,000,893.
Deutsche Bank Securities Corp.,
5.95%, in the principal amount of
$184,000,000,
repurchase price $184,030,411, due
7/1/97. The value of the collateral
including
accrued interest is $187,680,112.
- -----------------------------------
- -----------------------------------
- ----------
- -----
10
<PAGE>
Notes to Financial Statements
(Unaudited) THE GLOBAL TOTAL
RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
J.P. Morgan Securities, 6.00%, in
the principal amount of
$170,000,000,
repurchase price $170,028,333, due
7/1/97. The value of the collateral
including
accrued interest is $173,400,988.
SBC Warburg, Ltd., 5.95%, in the
principal amount of $227,000,000,
repurchase
price $227,037,518, due 7/1/97. The
value of the collateral including
accrued
interest is $232,448,194.
- -----------------------------------
- -------------------------
Note 6. Capital
The Fund offers Class A, Class B,
Class C and Class Z shares. Class A
shares are
sold with a front-end sales charge
of up to 4.0%. Class B shares are
sold with a
contingent deferred sales charge
which declines from 5% to zero
depending on the
period of time the shares are held.
Class C shares are sold with a
contingent
deferred sales charge of 1% during
the first year. Class B shares will
automatically convert to Class A
shares on a quarterly basis
approximately seven
years after purchase. A special
exchange privilege is also
available for
shareholders who qualified to
purchase Class A shares at net
asset value.
Effective March 17, 1997, the Fund
commenced offering Class Z shares.
Class Z
shares are not subject to any sales
or redemption charge and are
offered
exclusively for sale to a limited
group of investors.
There are 2 billion authorized
shares of common stock at $.01 par
value per
share, divided equally into Class
A, B, C and Z shares.
Transactions in shares of common
stock for the six months ended June
30, 1997
and the period January 15, 1996
through December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
Class A
Shares Amount
- ----------------------------------
- ----------- -------------
<S>
<C> <C>
Six months ended June 30, 1997:
Shares sold.......................
168,907 $ 1,382,191
Shares issued in reinvestment of
dividends and distributions.....
269,745 2,184,632
Shares reacquired.................
(3,004,937) (24,820,185)
- ----------- -------------
Net decrease in shares
outstanding.....................
(2,566,285) $ (21,253,362)
- ----------- -------------
- ----------- -------------
<CAPTION>
Class A
Shares Amount
- ----------------------------------
- ----------- -------------
<S>
<C> <C>
January 15, 1996(a) through
December 31, 1996:
Shares sold.......................
1,452,073 $ 12,309,850
Shares issued in reinvestment of
dividends and distributions.....
677,779 5,685,377
Shares reacquired.................
(40,928,480) (344,455,702)(b)
- ----------- -------------
Net decrease in shares
outstanding.....................
(38,798,628) $(326,460,475)
- ----------- -------------
- ----------- -------------
<CAPTION>
Class B
- ----------------------------------
<S>
<C> <C>
Six months ended June 30, 1997:
Shares sold.......................
154,434 $ 1,272,642
Shares issued in reinvestment of
dividends and distributions.....
3,032 24,590
Shares reacquired.................
(5,649) (46,342)
- ----------- -------------
Net increase in shares
outstanding.....................
151,817 $ 1,250,890
- ----------- -------------
- ----------- -------------
January 15, 1996(a) through
December 31, 1996:
Shares sold.......................
23,745 $ 205,444
Shares issued in reinvestment of
dividends and distributions.....
1,121 9,422
Shares reacquired.................
(3,960) (34,172)
- ----------- -------------
Net increase in shares
outstanding.....................
20,906 $ 180,694
- ----------- -------------
- ----------- -------------
<CAPTION>
Class C
- ----------------------------------
<S>
<C> <C>
Six months ended June 30, 1997:
Shares sold.......................
81,752 $ 668,714
Shares issued in reinvestment of
dividends and distributions.....
537 4,355
- ----------- -------------
Net increase in shares
outstanding.....................
82,289 $ 673,069
- ----------- -------------
- ----------- -------------
January 15, 1996(a) through
December 31, 1996:
Shares sold.......................
23 $ 200
Shares issued in reinvestment of
dividends and distributions.....
2 13
- ----------- -------------
Net increase in shares
outstanding.....................
25 $ 213
- ----------- -------------
- ----------- -------------
<CAPTION>
Class Z
- ----------------------------------
<S>
<C> <C>
March 17, 1997(c) through
June 30, 1997:
Shares sold.......................
20,835 $ 170,566
Shares issued in reinvestment of
dividends and distributions.....
171 1,391
Shares reacquired.................
- -- (3)
- ----------- -------------
Net increase in shares
outstanding.....................
21,006 $ 171,954
- ----------- -------------
- ----------- -------------
</TABLE>
- ---------------
(a) Prior to January 15, 1996, the
Fund operated as a
closed-end, investment company.
(b) Net of $4,870,794 redemption
fee retained by the Fund.
(c) Commencement of offering of
Class Z shares.
- -----------------------------------
- -----------------------------------
- ----------
- -----
11
<PAGE>
Financial Highlights (Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
<TABLE>
<CAPTION>
Class A (b)
- -----------------------------------
- -----------------------------------
- -----
<S>
<C> <C> <C>
<C> <C> <C>
Six Months
Ended Year
Ended December 31,
June 30, ---------------------
- -----------------------------------
- ----
1997 1996 1995
1994 1993 1992
<CAPTION>
- ---------- -------- -------
- - -------- -------- ---
- -----
<S>
<C> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period................ $ 8.38
$ 8.44 $ 7.46 $ 8.76
$ 8.10 $ 8.99
- ---------- -------- -------
- - -------- -------- ---
- -----
Income from investment operations
Net investment
income.............................
.. .28 .62
.54 .52 .64
.81
Net realized and unrealized gain
(loss) on
investment and foreign currency
transactions..... (.13)
.32 1.25 (1.22)
.74 (.90)
- ---------- -------- -------
- - -------- -------- ---
- -----
Total from investment
operations.................
.15 .94 1.79
(.70) 1.38 (.09)
- ---------- -------- -------
- - -------- -------- ---
- -----
Less distributions
Dividends from net investment
income................
(.28) (.62) (.54)
(.17) (.30) (.75)
Distributions in excess of net
investment income.... (.11)
(.50) (.27) --
- -- --
Distributions from capital
gains....................
- -- -- --
(.13) (.23) (.05)
Distributions in excess of capital
gains............ --
- -- -- --
(.19) --
Tax return of capital
distributions.................
- -- -- --
(.30) -- --
- ---------- -------- -------
- - -------- -------- ---
- -----
Total
distributions......................
........ (.39)
(1.12) (.81) (.60)
(.72) (.80)
- ---------- -------- -------
- - -------- -------- ---
- -----
Redemption fee retained by
Fund.....................
- -- .12 --
- -- -- --
- ---------- -------- -------
- - -------- -------- ---
- -----
Net asset value, end of
period...................... $
8.14 $ 8.38 $ 8.44
$ 7.46 $ 8.76 $ 8.10
- ---------- -------- -------
- - -------- -------- ---
- -----
- ---------- -------- -------
- - -------- -------- ---
- -----
Per share market price, end of
year................. N/A
N/A $ 8.25 $ 6.13 $
8.00 $ 7.50
- -------- -------- --------
- --------
- -------- -------- --------
- --------
TOTAL INVESTMENT RETURN BASED ON
(a):
Market
price..............................
....... N/A N/A
49.23% (16.12)% 16.50%
1.75%
Net asset
value..............................
.... 1.86% 13.15%
25.45% (8.10)% 18.12%
(.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).....................
$202,337 $229,770 $559,071
$493,645 $579,942 $535,647
Average net assets
(000)............................
$214,467 $299,026 $549,407
$536,230 $567,128 $570,812
Ratios to average net assets:
Expenses, including distribution
fees............ 1.40%(c)
1.33% 1.02% 1.04%
1.02% 1.01%
Expenses, excluding distribution
fees............ 1.25%(c)
1.18% 1.02% 1.04%
1.02% 1.01%
Net investment
income............................
6.82%(c) 7.01% 6.50%
6.45% 7.67% 9.39%
For Class A, B, C, and Z shares:
Portfolio turnover
rate..........................
24% 32% 256%
583% 370% 192%
</TABLE>
- ---------------
(a) Total investment return based
on net asset value 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 return does not consider
the effect of sales load. Prior to
January
15, 1996 the Fund operated as a
closed-end investment company and
total
investment return was
calculated based on market value
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 period 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. Total return
for periods
of less than a full year are
not annualized.
(b) Prior to January 15, 1996 the
Fund operated as a closed-end
investment
company.
(c) Annualized.
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
12
<PAGE>
Financial Highlights (Unaudited)
THE GLOBAL TOTAL RETURN FUND, INC.
- -----------------------------------
- -----------------------------------
- ---------
<TABLE>
<CAPTION>
Class B
Class C
- --------------------------- ---
- ------------------------------
January 15,
January 15,
Six Months 1996(d)
Six Months 1996(d)
Ended Through
Ended Through
June 30, December 31,
June 30, December 31,
1997 1996
1997 1996
<CAPTION>
- ---------- ------------ ---
- --------- ----------------
<S>
<C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period................ $ 8.39
$ 8.51 $ 8.39
$ 8.51
- ----- ----- --
- --- -----
Income from investment operations
Net investment
income.............................
.. .24 .57
.24 .57
Net realized and unrealized gain
(loss) on
investment and foreign currency
transactions..... (.11)
.26 (.11)
.26
- ----- ----- --
- --- -----
Total from investment
operations.................
.13 .83
.13 .83
- ----- ----- --
- --- -----
Less distributions
Dividends from net investment
income................ (.24)
(.57) (.24)
(.57)
Distributions in excess of net
investment income.... (.13)
(.50) (.13)
(.50)
- ----- ----- --
- --- -----
Total
distributions......................
........ (.37)
(1.07) (.37)
(1.07)
- ----- ----- --
- --- -----
Redemption fee retained by
Fund.....................
- -- .12 --
.12
- ----- ----- --
- --- -----
Net asset value, end of
period...................... $
8.15 $ 8.39 $
8.15 $ 8.39
- ----- ----- --
- --- -----
- ----- ----- --
- --- -----
TOTAL
RETURN(a):.........................
........... 1.58%
11.99% 1.58%
11.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).....................
$1,408 $ 175 $
671 $ 210(b)
Average net assets
(000)............................
$ 590 $ 52 $
95 $ 204(b)
Ratios to average net assets(c):
Expenses, including distribution
fees............ 2.00%
1.93% 2.00%
1.93%
Expenses, excluding distribution
fees............ 1.25%
1.18% 1.25%
1.18%
Net investment
income............................
6.22% 6.41%
6.22% 6.41%
<CAPTION>
Class Z
- -----------------
<S>
<C>
March 17,
1997(e)
through
June 30,
1997
- -----------------
<S>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period................ $
8.32
- -----
Income from investment operations
Net investment
income.............................
.. .26
Net realized and unrealized gain
(loss) on
investment and foreign currency
transactions..... (.04)
- -----
Total from investment
operations.................
.22
- -----
Less distributions
Dividends from net investment
income................
(.26)
Distributions in excess of net
investment income....
(.13)
- -----
Total
distributions......................
........ (.39)
- -----
Redemption fee retained by
Fund.....................
- --
- -----
Net asset value, end of
period......................
$ 8.15
- -----
- -----
TOTAL
RETURN(a):.........................
........... 2.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)..................... $
171
Average net assets
(000)............................
$ 19
Ratios to average net assets(c):
Expenses, including distribution
fees............ 1.25%
Expenses, excluding distribution
fees............ 1.25%
Net investment
income............................
6.97%
</TABLE>
- ---------------
(a) 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 return does not consider the
effect of
sales load. Total returns for
periods of less than a full year
are not
annualized.
(b) Figure is actual and not
rounded to nearest thousand.
(c) Annualized.
(d) Commencement of offering of
Class B and Class C shares.
(e) Commencement of offering of
Class Z shares.
- -----------------------------------
- -----------------------------------
- ----------
- -----
See Notes to Financial Statements.
13
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Donald D. Lennox
Douglas H. McCorkindale
Mendel A. Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Richard A. Redeker, President
Thomas A. Early, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant
Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant
Secretary
Manager
Prudential Investments Fund
Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment
Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report
and information about the Fund's
portfolio
holdings are for the period covered
by this report and are subject to
change
thereafter.
The accompanying financial
statements as of June 30, 1997 were
not audited and,
accordingly, no opinion is
expressed on them.
This report is not authorized for
distribution to prospective
investors unless
preceded or accompanied by a
current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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