<PAGE>
SEMIANNUAL REPORT JUNE 30, 2000
Prudential
Global Total Return Fund, Inc.
Fund Type Global debt
Objective Total return, made up of current income and
capital appreciation
Build On The Rock
(GRAPHIC)
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.
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
The Prudential Global Total Return Fund seeks total
return made up of current income and capital
appreciation. The Fund invests primarily in intermediate-
term, investment-grade debt securities issued around the
world. The Fund invests at least 65% of its total assets
in income-producing debt securities of the United States
and foreign governments, including developing countries.
The Fund can invest up to 35% of total assets in
corporate debt securities. The Fund may also invest up to
15% of total assets in bonds rated below investment
grade, with a minimum rating of "B" by Standard & Poor's
or Moody's, or of comparable quality in our view. Lower-
rated securities carry a greater risk of loss of
principal and interest than higher-rated securities.
There are special risks associated with foreign
investing, including social, political and currency
risks, as well as potential illiquidity. There can be no
assurance that the Fund's investment objective will be
achieved.
Currency Concentration
Expressed as a percentage of
total investments as of 6/30/00
42.0% Euro
32.5 United States
8.4 Other
6.1 Japan
5.3 United Kingdom
2.5 Australia
2.5 Canada
0.7 Cash Equivalents
Ten Largest Issuers
Expressed as a percentage of
net assets as of 6/30/00
24.7% German Government Bonds
8.5 U.S. Treasury Obligations
6.0 Government of Japan
5.3 Republic of Austria
4.2 United Kingdom Government Bonds
3.8 Republic of Italy
3.2 Swedish Government Bond
2.9 Federal National Mortgage
Association
2.8 Kingdom of Spain
2.5 New South Wales Treasury Corp.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 6/30/00
Six One Five Ten Since
Months Year Years Years Inception2
Class A -0.14% -0.82% 33.12% 100.27% 230.36%
Class B -0.39 -1.17 N/A N/A 19.97
Class C -0.39 -1.17 N/A N/A 19.97
Class Z 0.00 -0.54 N/A N/A 10.82
Lipper Global Income
Fund Avg.3 0.69 1.73 26.67 81.18 ***
Average Annual Total Returns1 As of 6/30/00
One Five Ten Since
Year Years Years Inception2
Class A -4.78% 5.03% 6.76% 8.60%
Class B -6.17 N/A N/A 3.97
Class C -3.15 N/A N/A 3.93
Class Z -0.54 N/A N/A 3.17
Distributions and Yields As of 6/30/00
Total Distributions 30-Day
Paid for Six Months SEC Yield
Class A $0.20 5.41%
Class B $0.18 5.09
Class C $0.18 5.04
Class Z $0.21 5.87
Past performance is not indicative of future results.
Principal and investment return will fluctuate, so that
an investor's shares, when redeemed, may be worth more or
less than their original cost. Past performance numbers,
with the exception of six-month and 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.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 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 B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. Class C
shares are subject to a front-end sales charge of 1% and
a CDSC of 1% for 18 months. Class Z shares are not
subject to a sales charge or distribution and service
(12b-1) fees.
2 Inception dates: Class A, 7/7/86; Class B and Class C,
1/15/96; and Class Z, 3/17/97.
3 Lipper average returns are for all funds in each share
class for the six-months, one-, five-, and ten-year
periods in the Global Income Fund category. The Lipper
average is unmanaged. Funds in the Global Income category
invest primarily in U.S. dollar debt securities of
issuers located in at least three
countries, one of which may be the United States.
***Lipper Since Inception returns are 181.42% for Class
A, 16.68% for Class B and Class C, and 9.70% for Class Z,
based on all funds in each share class.
1
<PAGE>
(LOGO) August 14, 2000
Dear Shareholder,
The first half of the year has been a challenging period
in the global fixed-income markets. During the six-month
reporting period ended June 30, 2000, Prudential Global
Total Return Fund's Class A shares fell 0.14%- -4.14% for
those subject to the initial Class A sales charge. This
compares to a 0.69% return for the Lipper Global Income
Fund Average.
These lackluster results are indicative of the overall
fixed-income environment. In the United States and
Europe, returns continued to be adversely affected by
rising interest rates. Both the Federal Reserve Board
(the "Fed") and the European Central Bank raised rates on
several occasions in an attempt to slow the pace of
economic growth. This led to falling bond prices in most
sectors of the fixed-income market.
Toward the end of the period, there were signs that
economic growth in the United States was moderating. This
prompted the Fed to hold rates steady at the end of June,
after raising them six consecutive times during the last
year. A rally throughout much of the bond market ensued.
In closing, I would like to add that it is important to
maintain a portfolio that is diversified across asset
classes, particularly during volatile
market times. To this end, your investment in the
Prudential Global
Total Return Fund, which provides an element of exposure
to the fixed-income markets, occupies an important place
within your portfolio.
We appreciate your confidence and look forward to serving
your investment needs in the future.
Sincerely,
John R. Strangfeld, President
Prudential Global Total Return Fund, Inc.
2
<PAGE>
Prudential Global Total Return Fund, Inc.
Semiannual Report June 30, 2000
Investment Adviser's Report
Rising interest rates take their toll
In our last report covering the end of 1999, we explained
that interest rates were on the rise in virtually every
market in which the Fund invests. Economies in both the
United States and abroad were growing more strongly than
anticipated. As a result, central banks had to increase
short-term rates in an attempt to slow growth and ward
off inflation.
In some ways, with respect to the global bond markets,
this year has been a mirror image of 1999. Year to date,
the Fed has raised its federal funds rate (the rate U.S.
banks charge each other for overnight loans) three times,
as it did in 1999. These actions have led to falling
prices in many sectors, since bond prices move in the
opposite direction of interest rates. Overseas, the
European Central Bank (ECB) has raised rates 125 basis
points (a basis point is one one-hundredth of a percent).
A glimmer of hope did emerge toward the end of the period
when the Fed decided to leave rates unchanged at the end
of June. This decision was based on encouraging
unemployment figures and signs indicating that U.S.
economic growth may be moderating. The Fed's decision not
to raise rates boosted bond prices both in the United
States and overseas, particularly in the emerging
markets.
A falling euro hurt the Fund
The Fund's returns relative to its benchmark were hurt
during the reporting period due to its exposure to the
euro currency. We believed that the euro was very
attractively priced, and with the positive growth outlook
for the European region, we felt that a substantial
rebound could occur. Unfortunately, we were only half
correct. Growth in Europe was, indeed, stronger than
anticipated. However, growth rates in the United States
were even stronger, and investors favored the dollar over
the euro. As a result, the euro fell sharply during much
of the period.
3
<PAGE>
Prudential Global Total Return Fund, Inc.
Semiannual Report June 30, 2000
Moving to lower the Fund's volatility
In recent months, we have made two noteworthy adjustments
in an effort to lower the Fund's volatility. First, we
have altered the Fund's currency policy to be more
dynamic and to be even more responsive to market changes.
Second, we have reallocated a large portion of the Fund's
emerging markets holdings to shorter-duration securities-
typically issues maturing in five years or less.
(Duration measures how much a portfolio's bonds will
fluctuate in price in response to a change in interest
rates. Like a portfolio's average maturity, duration is
expressed in years.) We believe this stance will allow us
to continue to pick up incremental yield versus other
bond markets, and will lower the Fund's susceptibility to
interest rate fluctuations.
Anticipating a changing policy in Japan
Overall, during the past year the Japanese bond market
has generated surprisingly strong results. The
combination of a long-awaited economic rebound, corporate
restructuring, and government intervention has caused
investors to embrace Japanese bonds. However, with fears
of disinflation (prices falling as opposed to rising) a
thing of the past, we anticipate that to stimulate
growth, the Bank of Japan will soon move away from the
zero interest rate policy it has employed. If it does,
the subsequent rise in interest rates would serve to
lower the prices of Japanese bonds.
Looking ahead
We are reasonably optimistic about the prospects for the
global debt markets. With regard to the U.S. economy, we
foresee three possible scenarios. First, economic growth
could reaccelerate, necessitating further interest rate
hikes by the Fed. Second, the economy could fall into a
recession. Third, we could experience a "soft landing,"
whereby growth falls to a more moderate and acceptable
level. While many experts believe a soft landing is the
most likely scenario, a resurgence of economic growth
cannot be ruled out. If this occurs, it would be
detrimental to bond prices, as a further round of rate
hikes has not been priced into the market. Rising rates
could also have a negative ripple effect in many emerging
market bonds.
4
<PAGE>
www.prudential.com (800) 225-1852
With economic growth still expanding in Europe, the ECB
could also engineer further rate increases this year.
However, additional rate hikes have already been factored
into the European fixed-income markets, and inflation
throughout much of Europe is very modest compared to the
United States. As such, European bond yields are more
attractive on a relative basis than U.S. bond yields. We
also believe there is greater potential for price
appreciation in the European debt markets. Therefore, we
have increased the Fund's weighting in European bonds.
Prudential Global Total Return Fund Management Team
Prudential Global Total Return Fund, Inc.
5
<PAGE>
Semiannual Report June 30, 2000
Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
<C> <S> <C> <C>
-----------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 92.0%
-------------------------------------------------------------------------------------
Australia 2.5%
A$ 10,070 New South Wales Treasury Corporation,
6.50%, 5/1/06 $ 5,997,643
-------------------------------------------------------------------------------------
Canada 2.5%
C$ 8,900 Province of Quebec,
6.50%, 10/1/07 6,045,058
-------------------------------------------------------------------------------------
Euro 40.8%
EURO 1,490 Callahan Nordrhein Westfalen (Germany),
14.00%, 7/15/10 1,430,173
480 Esat Telecom Group PLC (United Kingdom),
11.875%, 11/1/09 572,948
1,690 Flextronics International Ltd. (Singapore),
9.75%, 7/1/10 1,636,319
3,416 French Government Bond,
5.50%, 4/25/29 3,225,626
7,200 Kingdom of Spain,
Zero Coupon, 7/30/05 6,764,232
680 Level 3 Communications Inc.
10.75%, 3/15/08 617,658
500 Municipality of Sophia (France),
9.75%, 6/3/02 477,647
1,960 Netia Holdings B.V. (Netherlands),
13.75%, 6/15/10 1,917,472
12,838 Republic of Austria,
6.25%, 7/15/27 12,942,193
Federal Republic of Germany,
17,000 8.00%, 7/22/02 17,209,678
12,799 4.25%, 2/18/05 11,846,450
12,580 6.50%, 10/14/05 12,771,341
15,850 5.25%, 7/4/10 15,186,999
3,389 4.75%, 7/4/28 2,886,615
Republic of Italy,
2,695 4.75%, 4/15/03 2,552,817
7,015 4.75%, 7/1/05 6,560,166
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Global Total Return Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <S> <C> <C>
EURO 564 Republik Oestereic,
5.50%, 1/15/10 $ 535,812
---------------
99,134,146
-------------------------------------------------------------------------------------
Greece 0.5%
GRD 425,000 Republic of Greece,
6.50%, 10/22/19 1,236,632
-------------------------------------------------------------------------------------
Hungary 0.7%
HUF 480,000 Hungarian Government Bond,
15.00%, 7/24/01 1,843,500
-------------------------------------------------------------------------------------
Japan 6.0%
Japanese Government Bonds,
Y 985,000 1.80%, 6/21/10 9,423,544
525,000 2.30%, 5/20/30 5,053,991
---------------
14,477,535
-------------------------------------------------------------------------------------
New Zealand 2.9%
NZ$ 14,900 Federal National Mortgage Association,
7.25%, 6/20/02 6,937,888
-------------------------------------------------------------------------------------
Russia 0.2%
RUB 18,900 European Bank of Reconstruction Development,
Zero Coupon, 5/28/02 393,890
-------------------------------------------------------------------------------------
Sweden 3.2%
SEK 66,000 Swedish Government Bond,
6.00%, 2/9/05 7,728,212
-------------------------------------------------------------------------------------
United Kingdom 5.2%
BP 6,850 United Kingdom, Government Bonds
5.00%, 6/7/04 10,109,367
368 Banco Central del Uruguay, FRN,
7.375%, 2/19/07 519,138
1,300 Powergen PLC,
8.875%, 3/26/03 2,048,481
---------------
12,676,986
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <S> <C> <C>
United States 27.5%
Corporate Bonds 8.7%
US$ 750 Banco del Estado Chile,
8.39%, 8/1/01 $ 751,088
1,000 Central Bank Tunisia,
7.50%, 9/19/07 951,250
1,300 Cho Hung Bank, FRN,
11.0725%, 1/7/05 1,300,000
1,600 Embotelladura Andina S.A.
7.875%, 10/1/97 1,238,736
670 Hanvit Bank,
12.75%, 3/1/10 664,975
2,030 Industrial Bank of Korea,
8.375%, 9/30/02 2,030,000
3,930 Korea Development Bank,
6.625%, 11/21/03 3,774,765
Korea Electric Power Corp.,
7.00%, 10/1/02 850,351
875
5,170 6.375%, 12/1/03 4,909,088
2,000 Neuvo Grupo Isuacell S.A. del C.V.
14.25%, 12/1/06 2,090,000
1,300 Philippine Long Dist. Telephone,
10.50%, 4/15/09 1,157,000
1,300 Sakura Capital Funding (Cayman Island),
7.70%, 9/29/49 1,261,000
---------------
20,978,253
-------------------------------------------------------------------------------------
Sovereign Bonds 10.4%
500 Jamaican Government Bond,
9.625%, 7/2/02 485,000
1,350 Kingdom of Jordan,
6.00%, 12/23/23 892,778
4,300 Ministry of Finance (Russia),
10.00%, 6/26/07 3,327,125
2,250 Oman Sultanate (India),
7.125%, 3/20/02 2,171,250
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Global Total Return Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,100 Province of Ontario (Canada),
6.00%, 2/21/06 $ 2,935,700
1,800 Republic of Argentina, FRN,
7.375%, 3/31/05 1,640,340
2,750 Republic of Bulgaria,
2.75%, 7/28/12 2,021,250
3,300 Republic of Colombia,
7.25%, 2/23/04 2,735,700
4,330 Republic of Croatia, FRN,
7.0325%, 7/31/06 4,086,767
1,000 Republic of Italy,
7.00%, 9/18/01 998,000
1,700 Republic of Lithuania,
7.125%, 7/22/02 1,653,250
2,600 Republic of Panama,
8.25%, 4/22/08 2,353,000
---------------
25,300,160
-------------------------------------------------------------------------------------
U.S. Government Obligations 8.4%
United States Treasury Bonds,
4,985 8.875%, 8/15/17 6,354,330
4,600 8.75%, 5/15/20 5,904,514
8,070 United States Treasury Notes,
6.25%, 2/15/07 8,076,294
---------------
20,335,138
---------------
Total United States investments 66,613,551
---------------
Total long-term investments (cost
US$227,649,708) 223,085,041
---------------
SHORT-TERM INVESTMENTS 6.3%
Euro 0.4%
EURO 2,000 CESP-Companhia Energetica,
9.25%, 5/10/01 992,063
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount US$
(000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <S> <C> <C>
Hungary 1.4%
HUF 935,000 Republic of Hungary,
15.50%, 7/24/00 $ 3,460,027
-------------------------------------------------------------------------------------
United States 4.5%
Sovereign Bonds 0.9%
US$ 677 Republic of Brazil, FRN,
7.00%, 1/1/01 676,500
1,515 Trinidad & Tobago Republic,
9.75%, 11/3/00 1,504,395
---------------
2,180,895
-------------------------------------------------------------------------------------
Supranational Bonds 2.8%
Corporacion Andina de Fomento,
7.375%, 7/21/00 6,142,313
6,150
500 7.14%, 4/3/01, (FRN) 494,375
---------------
6,636,688
-------------------------------------------------------------------------------------
U.S. Government Obligations 0.1%
United States Treasury Bills,
125D 5.885%(a), 10/12/00 122,985
100D 5.92%(a), 12/21/00 97,153
---------------
220,138
-------------------------------------------------------------------------------------
Repurchase Agreement 0.7%
1,787 Joint Repurchase Agreement Account,
4.78% 7/3/00 (Note 5) 1,787,000
---------------
Total United States investments 10,824,721
---------------
Total short-term Investments (cost
US$15,916,521) 15,276,811
---------------
Total Investments 98.3%
(cost $243,566,229) 238,361,852
Other assets in excess of liabilities 1.7% 4,056,786
---------------
Net Assets 100% $ 242,418,638
---------------
---------------
</TABLE>
------------------------------
Portfolio securities are classified according to the security's currency
denomination.
(a) Percentages quoted represent yield-to-maturity as of purchase date.
D Pledged as initial margin on financial futures contracts.
FRN--Floating Rate Note.
See Notes to Financial Statements 11
<PAGE>
Prudential Global Total Return Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
June 30, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $243,566,229) $ 238,361,852
Foreign currency, at value (cost $1,609,770) 1,628,519
Interest receivable 5,948,049
Unrealized appreciation on forward currency contracts 3,076,275
Receivable for Fund shares sold 46,949
Other assets 8,672
-------------
Total assets 249,070,316
-------------
LIABILITIES
Payable for investments purchased 3,046,793
Unrealized depreciation on forward currency contracts 2,666,172
Payable for Fund shares reacquired 580,743
Management fee payable 150,934
Accrued expenses and other liabilities 112,787
Distribution fee payable 51,062
Due to broker - variation margin 34,953
Withholding tax payable 8,234
-------------
Total liabilities 6,651,678
-------------
NET ASSETS $ 242,418,638
-------------
-------------
Net assets were comprised of:
Common stock, at par $ 343,729
Paid-in capital in excess of par 306,455,478
-------------
306,799,207
Distributions in excess of net investment income (17,788,373)
Accumulated net realized loss on investment and
foreign currency transactions (41,740,083)
Net unrealized depreciation on investments and foreign
currencies (4,852,113)
-------------
Net assets, June 30, 2000 $ 242,418,638
-------------
-------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
June 30, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($223,878,161 /
31,746,724 shares of common stock issued and outstanding) $7.05
Maximum sales charge (4% of offering price) .29
-------------
Maximum offering price to public $7.34
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($6,947,718 / 984,257 shares of common stock issued and
outstanding) $7.06
-------------
-------------
Class C:
Net asset value and redemption price per share ($434,374 /
61,537 shares of common stock issued and outstanding) $7.06
Maximum sales charge (1% of offering price) .07
-------------
Maximum offering price to public $7.13
-------------
-------------
Class Z:
Net asset value, offering price and redemption price per share
($11,158,385 / 1,580,392 shares of common stock issued and
outstanding) $7.06
-------------
-------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Global Total Return Fund, Inc.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Year
Ended
June 30, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest (net of foreign withholding taxes of $10,031) $ 9,734,491
-------------
Expenses
Management fee 964,623
Distribution fee--Class A 297,225
Distribution fee--Class B 27,118
Distribution fee--Class C 1,859
Transfer agent's fees and expenses 320,000
Custodian's fees and expenses 150,000
Reports to shareholders 112,000
Legal fees and expenses 62,000
Registration fees 50,000
Audit fee and expenses 18,000
Directors' fees 6,000
Insurance 3,000
Miscellaneous 7,634
-------------
Total expenses 2,019,459
-------------
Net investment income 7,715,032
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions (21,209,618)
Foreign currency transactions (1,197,118)
Options written (22,878)
Financial futures contract transactions 18,988
-------------
(22,410,626)
-------------
Net change in unrealized appreciation/depreciation on:
Investments 14,404,826
Foreign currencies (60,269)
Financial futures contracts (126,953)
-------------
14,217,604
-------------
Net loss on investments and foreign currencies (8,193,022)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (477,990)
-------------
-------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 December 31, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 7,715,032 $ 10,578,315
Net realized loss on investment and foreign
currency transactions (22,410,626) (7,962,203)
Net change in unrealized
appreciation/depreciation on investments
and foreign currency transactions 14,217,604 (19,742,583)
------------- -----------------
Net decrease in net assets resulting from
operations (477,990) (17,126,471)
------------- -----------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A (6,488,733) (7,213,780)
Class B (179,390) (178,555)
Class C (12,012) (13,365)
Class Z (335,142) (224,615)
------------- -----------------
(7,015,277) (7,630,315)
------------- -----------------
Tax return of capital distributions
Class A -- (2,951,146)
Class B -- (82,514)
Class C -- (6,196)
Class Z -- (86,864)
------------- -----------------
-- (3,126,720)
------------- -----------------
Fund share transactions (Net of share
conversions) (Note 6 and 7)
Net proceeds from shares sold 4,358,179 181,565,604
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,981,820 3,609,392
Cost of shares reacquired (36,194,994) (43,791,864)
------------- -----------------
Increase (decrease) in net assets from Fund
share transactions (28,854,995) 141,383,132
------------- -----------------
Total increase (decrease) (36,348,262) 113,499,626
------------- -----------------
NET ASSETS
Beginning of period 278,766,900 165,267,274
------------- -----------------
End of period $ 242,418,638 $ 278,766,900
------------- -----------------
------------- -----------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited)
Prudential Global Total Return Fund, Inc., (the 'Fund'), is an open-end,
nondiversified management investment company whose investment objective is to
seek total return, the components of which are current income and capital
appreciation. The Fund invests primarily in governmental (including
supranational), semi-governmental or governmental agency debt securities or in
short-term bank debt securities or deposits in the United States and in foreign
countries denominated in U.S. dollars or in foreign currencies, including debt
securities issued or guaranteed by the U.S. Government and foreign governments,
their agencies, authorities or instrumentalities (U.S. Government Securities and
Foreign Government Securities, respectively). The remainder is generally
invested in corporate debt securities or longer term bank debt securities. The
bonds are primarily of investment grade, i.e., bonds rated within the four
highest quality grades as determined by Moody's Investors 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 15% of the Fund's total assets in
bonds rated below investment grade with a minimum rating of B, or in 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 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 on the
basis of valuations provided by an independent pricing agent or principal market
makers. Any security for which the primary market is on an exchange or NASDAQ
National Market System Securities are valued at the last sale price on such
exchange on the day of valuation or, if there was no sale on such day, at the
mean between the last bid and asked prices on such day or at the bid price on
such day in the absence of an asked price. 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.
16
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 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 or losses on foreign currency transactions represent
net foreign exchange gains or losses 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 and losses from
valuing foreign currency denominated assets (excluding investments) and
liabilities at period-end exchange rates are
17
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
reflected as a component of net unrealized appreciation or depreciation on
investments and foreign currencies.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S. companies
as a result of, among other factors, the possibility of political or economic
instability and the level of governmental supervision and regulation of foreign
securities markets.
Financial Futures Contracts: A financial futures contract is an
agreement to purchase (long) or sell (short) an agreed amount of securities at a
set price for delivery on a future date. Upon entering into a financial futures
contract, the Fund is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount. This amount
is known as the 'initial margin.' Subsequent payments, known as 'variation
margin,' are made or received by the Fund each day, depending on the daily
fluctuations in the value of the underlying security. Such variation margin is
recorded for financial statement purposes on a daily basis as unrealized gain or
loss. When the contract expires or is closed, the gain or loss is realized and
is presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value caused by changes in prevailing interest rates. Should
interest rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss. The use of
futures transactions involves the risk of imperfect correlation in movements in
the price of futures contracts and the underlying hedged assets.
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 with respect to securities 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 basis 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
18
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
on written options is presented separately as net realized gain (loss) on
written option transactions.
The Fund, as writer of an option, has 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.
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 and foreign currencies. 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, 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.
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 capital gains, if any, will be declared at least annually.
Dividends and distributions are recorded on the ex-dividend date.
19
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Income distributions and capital gain distributions are determined in
accordance with federal 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 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 distributions in excess of net investment income
by $18,469,884 and decrease accumulated net realized loss on investments by
$18,469,884 due to foreign currency losses realized and recognized during the
six months ended June 30, 2000. 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'), a wholly owned subsidiary of Prudential. The
subadvisory agreement provides that the subadvisor will furnish investment
advisory services in connection with the management of the Fund. In connection
therewith, the subadviser is obligated to keep certain books and records of the
Fund. PIFM continues to have responsibility for all investment advisory services
pursuant to the management agreement and supervises the subadviser's performance
of such services. The subadviser is reimbursed by PIFM for the reasonable costs
and expenses incurred by the subadviser in furnishing those services. PIFM pays
for the services of PIC, the cost of compensation of officers of the Fund,
occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears
all other costs and expenses.
The management fee paid PIFM is computed daily and payable monthly at an
annual rate of .75 of 1% of the Fund's average daily net assets 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.
Effective January 1, 2000, the subadvisory fee paid to PIC by PIFM is
computed daily and payable monthly at an annual rate of .375 of 1% of the Fund's
average daily net assets up to $500 million, .333 of 1% of such assets between
$500 million and $1 billion, and .293 of 1% of such assets in excess of $1
billion.
20
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
B, C and Z shares of the Fund. The Fund compensates PIMS for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution (the 'Class A, B and C Plans'), regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
No distribution or service fees are paid to PIMS as distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B, and C shares, respectively.
Such expenses under the Plans were .25 of 1%, .75 of 1% and .75 of 1% of the
average daily net assets of the Class A, B and C shares, respectively, for the
six months ended June 30, 2000.
PIMS has advised the Fund that it has received approximately $6,100 and
$300 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the six months ended June 30, 2000. From these
fees, PIMS paid such sales charges to dealers, which in turn paid commissions to
salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended June 30, 2000, it
received approximately $14,500 and $200 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIFM, PIC and PIMS 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 syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the period ended June 30, 2000.
21
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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,
2000, the Fund incurred fees of approximately $314,000 for the services of PMFS.
As of June 30, 2000, approximately $51,000 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 nonaffiliates.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments
for the six months ended June 30, 2000, aggregated $445,833,865 and
$458,776,778, respectively.
At June 30, 2000, the Fund had outstanding forward currency contracts to
purchase and sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Current Settlement Date
Purchase Contracts Value Payable Appreciation Depreciation
------------------------ ------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars,
expiring 7/26/00 $ 7,422,532 $ 7,592,364 $ -- $ 169,832
Danish Krone,
expiring 7/18/00 1,948,105 1,924,663 23,442 --
Euros,
expiring 7/17/00 -
7/19/00 152,986,105 150,930,957 2,084,165 29,017
Pound Sterling,
expiring 7/20/00 259,784 257,741 2,043 --
Japanese Yen,
expiring 7/19/00 22,660,960 22,436,127 224,833 --
Norwegian Krone,
expiring 7/13/00 2,574,055 2,510,098 63,957 --
------------ ---------------- -------------- --------------
$187,851,541 $185,651,950 $ 2,398,440 $ 198,849
------------ ---------------- -------------- --------------
------------ ---------------- -------------- --------------
</TABLE>
22
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Value at
Foreign Currency Current Settlement Date
Sale Contracts Value Receivable Appreciation Depreciation
------------------------ ------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars,
expiring 7/26/00 $ 12,305,692 $ 12,306,000 $ 308 $ --
Canadian Dollars,
expiring 7/17/00 2,643,684 2,665,118 21,434 --
Danish Krone,
expiring 7/18/00 1,948,105 1,959,945 11,840 --
Euros,
expiring 7/17/00 -
7/20/00 225,282,138 223,043,081 163,200 2,402,257
Pound Sterling,
expiring 7/20/00 5,690,751 5,646,003 -- 44,748
Japanese Yen,
expiring 7/19/00 14,404,480 14,417,647 33,485 20,318
New Zealand Dollars,
expiring 7/26/00 8,024,092 8,212,207 188,115 --
Swedish Krona,
expiring 7/19/00 8,986,650 9,246,103 259,453 --
------------ ---------------- -------------- --------------
$279,285,592 $277,496,104 $ 677,835 $ 2,467,323
------------ ---------------- -------------- --------------
------------ ---------------- -------------- --------------
</TABLE>
Transactions in written call options during the period ended June 30, 2000
were as follows:
<TABLE>
<CAPTION>
Number of Premiums
Contracts Received
---------- ---------
<S> <C> <C>
Options outstanding at December 31, 1999 -- --
Options written 4,000 $89,978
Options exercised (4,000) (89,978)
---------- ---------
Options outstanding at June 30, 2000 -- $ --
</TABLE>
The United States federal income tax basis of the Fund's investments at
June 30, 2000 was $244,561,587 and, accordingly, net unrealized depreciation for
United States federal income tax purposes was $6,199,735 (gross unrealized
appreciation--$2,595,873; gross unrealized depreciation--$8,795,608).
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
23
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
which is invested in one or more repurchase agreements collateralized by U.S.
Treasury or federal agency obligations. As of June 30, 2000, the Fund had a .35%
undivided interest in the joint account. The undivided interest for the Fund
represents $1,787,000 in the principal amount. As of such date, each repurchase
agreement in the joint account and the collateral therefor were as follows:
ABN AMRO Incorporated, 6.60%, in the principal amount of $100,000,000,
repurchase price $100,055,000, due 7/3/00. The value of the collateral including
accrued interest was $102,000,279.
Bear, Stearns & Co. Inc., 6.55%, in the principal amount of $125,000,000,
repurchase price $125,068,229, due 7/3/00. The value of the collateral including
accrued interest was $128,815,250.
Credit Suisse First Boston Corp., 6.65%, in the principal amount of
$125,000,000, repurchase price $125,069,270, due 7/3/00. The value of the
collateral including accrued interest was $129,282,822.
Warburg Dillon Read Inc., 6.30%, in the principal amount of $58,110,000,
repurchase price $58,140,508, due 7/3/00. The value of the collateral including
accrued interest was $59,275,285.
Warburg Dillon Read Inc., 6.55%, in the principal amount of $100,000,000,
repurchase price $100,054,583, due 7/3/00. The value of the collateral including
accrued interest was $102,000,550.
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%. 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 front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Prior to November 2, 1998, Class C shares were 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. 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.
24
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
-------------------------------------------------------- ----------- -------------
<S> <C> <C>
Six months ended June 30, 2000:
Shares sold 189,621 $ 1,366,817
Shares issued in reinvestment of dividends and
distributions 351,780 2,501,351
Shares reacquired (4,312,275) (30,870,859)
----------- -------------
Net increase in shares outstanding before conversion (3,770,874) (27,002,691)
Shares issued upon conversion from Class B 35,513 254,667
----------- -------------
Net increase in shares outstanding (3,735,361) $ (26,748,024)
----------- -------------
----------- -------------
Year ended December 31, 1999:
Shares sold 256,447 $ 1,936,647
Shares issued in connection with reorganization (Note 7) 20,010,669 159,581,878
Shares issued in reinvestment of dividends and
distributions 414,519 3,075,349
Shares reacquired (5,023,661) (37,816,441)
----------- -------------
Net increase in shares outstanding before conversion 15,657,974 126,777,433
Shares issued upon conversion from Class B 23,127 173,394
----------- -------------
Net increase in shares outstanding 15,681,101 $ 126,950,827
----------- -------------
----------- -------------
<CAPTION>
Class B
--------------------------------------------------------
<S> <C> <C>
Six months ended June 30, 2000:
Shares sold 158,540 $ 1,129,436
Shares issued in reinvestment of dividends and
distributions 19,492 138,682
Shares reacquired (233,348) (1,665,275)
----------- -------------
Net increase in shares outstanding before conversion (55,316) (397,157)
Shares reacquired upon conversion into Class A (35,513) (254,667)
----------- -------------
Net increase in shares outstanding (90,829) $ (651,824)
----------- -------------
----------- -------------
Year ended December 31, 1999:
Shares sold 217,107 $ 976,369
Shares issued in connection with reorganization (Note 7) 648,159 5,241,518
Shares issued in reinvestment of dividends and
distributions 28,530 212,311
Shares reacquired (247,247) (3,255,251)
----------- -------------
Net increase in shares outstanding
before conversion 646,549 3,174,947
Shares reacquired upon conversion into Class A (23,127) (173,394)
----------- -------------
Net increase in shares outstanding 623,422 $ 3,001,553
----------- -------------
----------- -------------
</TABLE>
25
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
-------------------------------------------------------- ----------- -------------
Six months ended June 30, 2000:
<S> <C> <C>
Shares sold 13,196 $ 95,012
Shares issued in reinvestment of dividends and
distributions 1,627 11,584
Shares reacquired (30,542) (217,920)
----------- -------------
Net increase in shares outstanding (15,719) $ (111,324)
----------- -------------
----------- -------------
Year ended December 31, 1999:
Shares sold 17,923 $ 145,005
Shares issued in connection with reorganization (Note 7) 49,309 386,351
Shares issued in reinvestment of dividends and
distributions 2,370 17,612
Shares reacquired (26,555) (198,104)
----------- -------------
Net increase in shares outstanding 43,047 $ 350,864
----------- -------------
----------- -------------
<CAPTION>
Class Z
--------------------------------------------------------
<S> <C> <C>
Six months ended June 30, 2000:
Shares sold 245,862 $ 1,766,914
Shares issued in reinvestment of dividends and
distributions 46,370 330,203
Shares reacquired (479,649) (3,440,940)
----------- -------------
Net increase in shares outstanding (187,417) $ (1,343,823)
----------- -------------
----------- -------------
Year ended December 31, 1999:
Shares sold 278,304 $ 2,122,619
Shares issued in connection with reorganization (Note 7) 1,481,032 11,175,217
Shares issued in reinvestment of dividends and
distributions 41,217 304,120
Shares reacquired (335,941) (2,522,068)
----------- -------------
Net increase in shares outstanding 1,464,612 $ 11,079,888
----------- -------------
----------- -------------
</TABLE>
Note 7. Reorganization
On May 26, 1999, the Board of Directors of the Fund approved an Agreement and
Plan of Reorganization (the 'Plan') which provided for the transfer of all of
the assets of the Class A, B, C and Z shares of the Prudential Global Limited
Maturity Fund, Inc. and the Prudential Intermediate Global Income Fund, Inc. in
exchange for like shares of the Fund and the Fund's assumption of the
liabilities of the Global Limited Maturity Fund, Inc. and Intermediate Global
Income Fund, Inc.
The Plan was approved by the shareholders of the Global Limited Maturity
Fund, Inc. and the Intermediate Global Income Fund, Inc. at a shareholder
meeting held on October 19, 1999. The reorganization took place on October 22,
1999. The Global Limited Maturity Fund, Inc. and the Intermediate Global Income
Fund, Inc. and the Fund incurred their pro rata share of the costs of
reorganization, including the costs of proxy solicitation.
26
<PAGE>
Prudential Global Total Return Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
The acquisition was accomplished by a tax-free exchange of the following
shares:
<TABLE>
<CAPTION>
Prudential Global
Global Limited Maturity Total Return
Fund, Inc.: Fund, Inc. Value
<S> <C> <C> <C> <C>
Class A 6,701,965 Class A 6,692,871 $49,296,112
B 92,971 B 93,350 688,151
C 4,375 C 4,393 32,384
Z 6,521 Z 6,530 48,187
<CAPTION>
Intermediate Global
Income Fund, Inc.:
<S> <C> <C> <C> <C>
Class A 13,210,252 A 13,317,798 $98,167,564
B 550,329 B 554,809 4,091,534
C 44,554 C 44,916 331,237
Z 1,464,579 Z 1,474,502 10,880,345
</TABLE>
The aggregate net assets and unrealized depreciation of the funds
immediately before the acquisition were:
<TABLE>
<CAPTION>
Unrealized
Net Assets Depreciation
----------- ------------
<S> <C> <C>
Global Limited Maturity Fund, Inc. $50,064,834 $ (3,937,015)
Intermediate Global Income Fund, Inc. 113,470,680 (6,836,162)
</TABLE>
The aggregate net assets of the Prudential Global Total Return Fund, Inc.
immediately before the acquisition was $134,835,274.
The future utilization of the acquired capital loss carryforwards from
Global Limited Maturity Fund, Inc. and Intermediate Global Income Fund, Inc. in
the amounts of $19,106,058 and $13,554,306, respectively, will be limited by
Section 382 of the Internal Revenue Code of 1986, as amended. For each fund, the
annual limitation is $2,728,533 and $6,184,152, respectively.
27
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
June 30, 2000(b)
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.26
----------------
Income from investment operations
Net investment income .21
Net realized and unrealized gain (loss) on investment and
foreign currencies (.22)
----------------
Total from investment operations (.01)
----------------
Less distributions
Dividends from net investment income (.20)
Distributions in excess of net investment income --
Distributions from net realized capital gains --
Tax return of capital distributions --
----------------
Total distributions (.20)
----------------
Redemption fee retained by Fund --
----------------
Net asset value, end of period $ 7.05
----------------
----------------
Per share market price, end of period N/A
---------------- ---
---------------- ---
TOTAL INVESTMENT RETURN BASED ON(a):
Market price N/A
Net asset value (0.14)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $223,878
Average net assets (000) $239,086
Ratios to average net assets:
Expenses, including distribution fees 1.57%(c)
Expenses, excluding distribution fees 1.32%(c)
Net investment income 6.00%(c)
For Class A, B, C, and Z shares:
Portfolio turnover rate 193%
</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 investment returns
for periods of less than a full year are not annualized.
(b) Calculated based upon weighted average shares outstanding during the period.
(c) Annualized.
(d) Prior to January 15, 1996 the Fund operated as a closed-end investment
company.
28 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A(d)
---------------------------------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------------------------------
1999(b) 1998(b) 1997(b) 1996 1995
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 8.03 $ 7.88 $ 8.38 $ 8.44 $ 7.46
---------------- ---------------- ---------------- ---------------- ----------------
.44 .52 .55 .62 .54
(.75) .16 (.18) .32 1.25
---------------- ---------------- ---------------- ---------------- ----------------
(.31) .68 .37 .94 1.79
---------------- ---------------- ---------------- ---------------- ----------------
(.33) (.35) (.68) (.62) (.54)
-- (.02) (.19) (.50) (.27)
-- (.16) -- -- --
(.13) -- -- -- --
---------------- ---------------- ---------------- ---------------- ----------------
(.46) (.53) (.87) (1.12) (.81)
---------------- ---------------- ---------------- ---------------- ----------------
-- -- -- .12 --
---------------- ---------------- ---------------- ---------------- ----------------
$ 7.26 $ 8.03 $ 7.88 $ 8.38 $ 8.44
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
N/A N/A N/A N/A $ 8.25
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
N/A N/A N/A N/A 49.23%
(3.95)% 8.92% 4.55% 13.15% 25.45%
$257,548 $158,932 $183,054 $229,770 $559,071
$166,940 $171,427 $204,795 $299,026 $549,407
1.75% 1.33% 1.39% 1.33% 1.02%
1.50% 1.18% 1.24% 1.18% 1.02%
6.00% 6.42% 6.73% 7.01% 6.50%
132% 46% 43% 32% 256%
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class B
-----------------
Six Months Ended
June 30, 2000(b)
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.26
-------
Income from investment operations
Net investment income .19
Net realized and unrealized gain (loss) on investment and
foreign currencies (.21)
-------
Total from investment operations (.02)
-------
Less distributions
Dividends from net investment income (.18)
Distributions in excess of net investment income --
Distributions from net realized capital gains --
Tax return of capital distributions --
-------
Total distributions (.18)
-------
Redemption fee retained by Fund --
-------
Net asset value, end of period $ 7.06
-------
-------
TOTAL INVESTMENT RETURN(a): (0.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 6.948
Average net assets (000) $ 7,271
Ratios to average net assets:
Expenses, including distribution fees 2.07%(c)
Expenses, excluding distribution fees 1.32%(c)
Net investment income 5.50%(c)
</TABLE>
------------------------------
(a) Total investment 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 investment return does
not consider the effect of sales load. Total investment returns for periods
of less than a full year are not annualized.
(b) Calculated based upon weighted average shares outstanding during the period.
(c) Annualized.
(d) Commencement of offering of Class B shares.
30 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------------------
Year Ended December 31, January 15, 1996(d)
---------------------------------------------------------- Through
1999(b) 1998(b) 1997(b) December 31, 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8.03 $ 7.89 $ 8.39 $ 8.51
------- ------- ------- -------
.40 .46 .49 .57
(.76) .16 (.16) .26
------- ------- ------- -------
(.36) .62 .33 .83
------- ------- ------- -------
(.28) (.30) (.64) (.57)
-- (.02) (.19) (.50)
-- (.16) -- --
(.13) -- -- --
------- ------- ------- -------
(.41) (.48) (.83) (1.07)
------- ------- ------- -------
-- -- -- .12
------- ------- ------- -------
$ 7.26 $ 8.03 $ 7.89 $ 8.39
------- ------- ------- -------
------- ------- ------- -------
(4.35)% 8.13% 3.98% 11.99%
$7,810 $3,625 $2,300 $ 175
$4,642 $3,048 $1,246 $ 52
2.25% 1.93% 1.99% 1.93%(c)
1.50% 1.18% 1.24% 1.18%(c)
5.49% 5.86% 6.13% 6.41%(c)
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class C
-----------------
Six Months Ended
June 30, 2000(b)
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.26
-------
Income from investment operations
Net investment income .19
Net realized and unrealized gain (loss) on investment and
foreign currencies (.21)
-------
Total from investment operations (.02)
-------
Less distributions
Dividends from net investment income (.18)
Distributions in excess of net investment income --
Distributions from net realized capital gains --
Tax return of capital distributions --
-------
Total distributions (.18)
-------
Redemption fee retained by Fund --
-------
Net asset value, end of period $ 7.06
-------
-------
TOTAL INVESTMENT RETURN(a): (0.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 434
Average net assets (000) $ 498
Ratios to average net assets:
Expenses, including distribution fees 2.07%(c)
Expenses, excluding distribution fees 1.32%(c)
Net investment income 5.52%(c)
</TABLE>
------------------------------
(a) Total investment 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 investment return does
not consider the effect of sales load. Total investment returns for periods
of less than a full year are not annualized.
(b) Calculated based upon weighted average shares outstanding during the period.
(c) Annualized.
(d) Commencement of offering of Class C shares.
(e) Figure is actual and not rounded to nearest thousand.
32 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights Cont'd. (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------------------------------
Year Ended December 31, January 15, 1996(d)
---------------------------------------------------------- Through
1999(b) 1998(b) 1997(b) December 31, 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8.03 $ 7.89 $ 8.39 $ 8.51
------- ------- ------- -------
.40 .46 .49 .57
(.76) .16 (.16) .26
------- ------- ------- -------
(.36) .62 .33 .83
------- ------- ------- -------
(.28) (.30) (.64) (.57)
-- (.02) (.19) (.50)
-- (.16) -- --
(.13) -- -- --
------- ------- ------- -------
(.41) (.48) (.83) (1.07)
------- ------- ------- -------
-- -- -- .12
------- ------- ------- -------
$ 7.26 $ 8.03 $ 7.89 $ 8.39
------- ------- ------- -------
------- ------- ------- -------
(4.35)% 8.13% 3.98% 11.99%
$ 561 $ 275 $ 190 $ 210(e)
$ 354 $ 220 $ 397 $ 204(e)
2.25% 1.93% 1.99% 1.93%(c)
1.50% 1.18% 1.24% 1.18%(c)
5.51% 5.84% 6.05% 6.41%(c)
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Prudential Global Total Return Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------
March 17,
Six Months 1997(d)
Ended Year Ended Through
June 30, December 31, December 31,
2000(b) 1999 1998(b) 1997(b)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 7.27 $ 8.03 $ 7.88 $ 8.32
------------- ------- ------- ------------
Income from investment
operations
Net investment income .22 .42 .52 .39
Net realized and unrealized gain
(loss) on investment and
foreign currencies (.22) (.71) .17 .05
------------- ------- ------- ------------
Total from investment
operations -- (.29) .69 .44
------------- ------- ------- ------------
Less distributions
Dividends from net investment
income (.21) (.34) (.36 ) (.69)
Distributions in excess of net
investment income -- -- (.02 ) (.19)
Distributions from net realized
capital gains -- -- (.16 ) --
Tax return of capital
distributions -- (.13) -- --
------------- ------- ------- ------------
Total distributions (.21) (.47) (.54 ) (.88)
------------- ------- ------- ------------
Redemption fee retained by Fund -- -- -- --
------------- ------- ------- ------------
Net asset value, end of period $ 7.06 $ 7.27 $ 8.03 $ 7.88
------------- ------- ------- ------------
------------- ------- ------- ------------
TOTAL INVESTMENT RETURN(a): 0.00% (3.74)% 9.07 % 5.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $11,158 $12,847 $2,435 $ 686
Average net assets (000) $11,790 $ 4,604 $1,771 $ 257
Ratios to average net assets:
Expenses, including
distribution fees 1.32%(c) 1.50% 1.18 % 1.24%(c)
Expenses, excluding
distribution fees 1.32%(c) 1.50% 1.18 % 1.24%(c)
Net investment income 6.25%(c) 6.11% 6.65 % 5.41%(c)
</TABLE>
------------------------------
(a) Total investment 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 investment return does
not consider the effect of sales load. Total investment returns for periods
of less than a full year are not annualized.
(b) Calculated based upon weighted average shares outstanding during the period.
(c) Annualized.
(d) Commencement of offering of Class Z shares.
34 See Notes to Financial Statements
<PAGE>
Prudential Global Total Return Fund, Inc.
Getting the Most From Your Prudential Mutual Fund
How many times have you read these reports-or other
financial materials-and stumbled across a word that you
don't understand?
Many shareholders have run into the same problem. We'd
like to help. So we'll use this space from time to time
to explain some of the words you might have read, but not
understood. And if you have a favorite word that no one
can explain to your satisfaction, please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one
percent is 50 basis points.
Collateralized Mortgage Obligations (CMOs): Mortgage-
backed bonds that separate mortgage pools into different
maturity classes called tranches. These instruments are
sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and
maturity extension risk.
Derivatives: Securities that derive their value from
other securities. The rate of return of these financial
instruments rises and falls-sometimes very suddenly-in
response to changes in some specific interest rate,
currency, stock, or other variable.
Discount Rate: The interest rate charged by the Federal
Reserve on loans to member banks.
Federal Funds Rate: The interest rate charged by one bank
to another on overnight loans.
Futures Contract: An agreement to purchase or sell a specific amount of
a commodity or financial instrument at a set price at a
specified date in the future.
<PAGE>
Prudential Global Total Return Fund, Inc.
Getting the Most From Your Prudential Mutual Fund
Leverage: The use of borrowed assets to enhance return.
The expectation is that the interest rate charged on
borrowed funds will be lower than the return on the
investment. While leverage can increase profits, it can
also magnify losses.
Liquidity: The ease with which a financial instrument (or
product) can be bought or sold (converted into cash) in
the financial markets.
Price/Earnings Ratio: The price of a share of stock
divided by the earnings per share for a 12-month period.
Option: An agreement to purchase or sell something, such
as shares of stock, by a certain time for a specified
price. An option need not be exercised.
Spread: The difference between two values; often used to
describe the
difference between "bid" and "asked" prices of a
security, or between the yields of two similar maturity
bonds.
Yankee Bond: A bond sold by a foreign company or
government on the U.S. market and denominated in U.S.
dollars.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Directors
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
William V. Healey, 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 Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
NASDAQ CUSIP
Class A GTRAX 744337106
Class B PBTRX 744337205
Class C PCTRX 744337304
Class Z PZTRX 744337403
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,
2000, were not audited and, accordingly, no opinion is
expressed on them.
[pb]
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Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF169E2 744337106 744337205 744337304 744337403
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