[PRUDENTIAL LOGO]
PROSPECTUS MARCH 8, 2000
PRUDENTIAL
GLOBAL TOTAL RETURN FUND, INC.
FUND TYPE Global debt
INVESTMENT OBJECTIVE Total return, made up of current income and capital
appreciation
BUILD
ON THE ROCK
[ROCK GRAPHIC]
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's shares nor has the SEC determined that this
prospectus is complete or accurate. It is a criminal offense to state otherwise.
TABLE OF CONTENTS
1 RISK/RETURN SUMMARY
1 Investment Objective and Principal Strategies
1 Principal Risks
3 Evaluating Performance
4 Fees and Expenses
6 HOW THE FUND INVESTS
6 Investment Objective and Policies
8 Other Investments and Strategies
12 Investment Risks
16 HOW THE FUND IS MANAGED
16 Board of Directors
16 Manager
16 Investment Adviser
17 Portfolio Managers
18 Distributor
19 FUND DISTRIBUTIONS AND TAX ISSUES
19 Distributions
20 Tax Issues
21 If You Sell or Exchange Your Shares
23 HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
23 How to Buy Shares
31 How to Sell Your Shares
35 How to Exchange Your Shares
37 Telephone Redemptions or Exchanges
38 FINANCIAL HIGHLIGHTS
38 Class A Shares
39 Class B Shares
40 Class C Shares
41 Class Z Shares
42 THE PRUDENTIAL MUTUAL FUND FAMILY
FOR MORE INFORMATION (Back Cover)
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
RISK/RETURN SUMMARY
This section highlights key information about PRUDENTIAL GLOBAL TOTAL RETURN
FUND, INC., which we refer to as "the Fund." Additional information follows this
summary.
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES
Our investment objective is to seek TOTAL RETURN, made up of CURRENT INCOME and
CAPITAL APPRECIATION. We normally invest at least 65% of the Fund's total assets
in income-producing debt securities of the U.S. and foreign governments,
supranational organizations, semi-governmental entities or government agencies,
authorities or instrumentalities and short-term bank debt securities or bank
deposits. We look for investment-grade securities denominated in U.S. dollars or
foreign currencies.
We may use a variety of hedging strategies to protect the value of the
Fund's investments, including derivatives and cross-currency hedges.
Our approach to global investing focuses on country and currency
selection. We look at fundamentals to identify relative value.
While we make every effort to achieve our objective, we can't guarantee
success.
PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. The Fund invests
in debt obligations which have credit, market and interest rate risks. Credit
risk is the possibility that an issuer of a debt obligation does not pay the
Fund interest or repay principal. Market risk, which may affect an industry, a
sector or the entire market, is the possibility that the market value of an
investment may move up or down and that its movement may occur quickly or
unpredictably. Interest rate risk refers to the fact that the value of most
DID YOU KNOW...
A SUPRANATIONAL ORGANIZATION is formed by the governments of different countries
to promote economic development. The World Bank, the European Investment Bank
and the Asian Development Bank are supranational entities. Securities of
SEMI-GOVERNMENTAL ENTITIES are issued by organizations owned by a national or
state government or are debts of a political unit that are not backed by the
national government's credit and taxing power. The Province of Ontario and the
City of Stockholm are examples of semi-governmental entities.
1
RISK/RETURN SUMMARY
bonds will fall when interest rates rise. The longer the maturity and the lower
the credit quality of a bond, the more likely its value will decline.
Since we invest in foreign securities, there are different risks than if we
invested only in obligations of the U.S. government and U.S. corporations. The
amount of income available for distribution may be affected by the Fund's
foreign currency gains or losses and certain hedging activities of the Fund.
Foreign markets, especially those in developing countries, are often more
volatile than U.S. markets and are generally not subject to regulatory
requirements comparable to U.S. issuers. In addition, changes in currency
exchange rates can reduce or increase market performance.
The Fund is nondiversified, meaning we can invest more than 5% of our
assets in the securities of any one issuer. Investing in a nondiversified mutual
fund involves greater risk than investing in a diversified fund because a loss
resulting from the decline in the value of one security may represent a greater
portion of the total assets of a nondiversified fund.
Some of our investment strategies -- such as using derivatives -- involve
above-average risks. The Fund may use risk management techniques to try to
preserve assets or enhance return. Derivatives may not fully offset the
underlying positions and this could result in losses to the Fund that would not
otherwise have occurred.
Like any mutual fund, an investment in the Fund could lose value, and you
could lose money. For more detailed information about the risks associated with
the Fund, see "How the Fund Invests -- Investment Risks."
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
RISK/RETURN SUMMARY
EVALUATING PERFORMANCE
A number of factors -- including risk -- can affect how the Fund performs. The
following bar chart shows the Fund's performance for each full calendar year of
operation for the last 10 years. The bar chart and table below demonstrate the
risk of investing in the Fund by showing how returns can change from year to
year and by showing how the Fund's average annual total returns compare with a
bond index and a group of similar mutual funds. Past performance does not mean
that the Fund will achieve similar results in the future.
ANNUAL RETURNS (CLASS A SHARES)
[BAR CHART - PLOT POINTS]
1990 16.72%
1991 10.91%
1992 -0.68%
1993 18.12%
1994 -6.78%
1995 25.45%
1996 13.15%
1997 4.55%
1998 8.92%
1999 -3.95%
BEST QUARTER: 11.06% (1st quarter of 1995) WORST QUARTER: 6.79% (3rd quarter of
1992)
* These annual returns do not include sales charges. If the sales charges were
included, the annual returns would be lower than those shown. Without the
distribution and service (12b-1) fee waiver, the annual returns would have
been lower, too.
AVERAGE ANNUAL RETURNS(1) (AS OF 12-31-99)
1 YR 5 YRS 10 YRS SINCE INCEPTION
Class A shares -7.79% 8.31% 7.75% 8.95% (since 7-7-86)4
Class B shares -9.35% N/A N/A 4.37% (since 1-15-96)
Class C shares -6.31% N/A N/A 4.54% (since 1-15-96)
Class Z shares -3.74% N/A N/A 3.75% (since 3-17-97)
Morgan GBI(2) -5.08% 6.69% 7.81% N/A(2)
Lipper Average(3) -2.43% 6.36% 6.60% N/A(3)
(1) The Fund's returns are after deduction of sales charges and expenses.
Without the distribution and service (12b-1) fee waiver, the annual
returns would have been lower.
(2) The J. P. Morgan Government Bond Index -- Global (Morgan GBI) is a
market-weighted index of the total return of government bonds of the
following nations: Australia, Belgium, Canada, Denmark, France,
Germany, Italy, Japan, the Netherlands, Spain, Sweden, the United
Kingdom and the United States. The Morgan GBI is an unmanaged index and
is traded, unhedged and measured in U.S. dollars. These returns do not
include the effect of any sales charges or operating expenses of a
mutual fund. The securities in the Morgan GBI may be very different
than those in the Fund. These returns would be lower if they included
the effect of sales charges and operating expenses. Morgan GBI returns
since the inception of each class are 8.03% for Class A, 4.11% for
Class B and Class C and 5.38% for Class Z shares.
Source: Lipper Inc.
(3) The Lipper Average is based on the average return of all mutual funds
in the Lipper Global Funds category and does not include the effect of
any sales charges. Again, these returns would be lower if they included
the effect of sales charges. Lipper returns since the inception of each
class are 179.94% for Class A, 15.26% for Class B and Class C and 8.83%
for Class Z shares. Source: Lipper Inc.
(4) Prior to 1-15-96, the Fund operated as a closed-end investment company.
3
RISK/RETURN SUMMARY
FEES AND EXPENSES
This table shows the sales charges, fees and expenses that you may pay if you
buy and hold shares of each class of the Fund -- Class A, B, C and Z. Each share
class has different sales charges -- known as loads -- and expenses, but
represents an investment in the same fund. Class Z shares are available only to
a limited group of investors. For more information about which share class may
be right for you, see "How to Buy, Sell and Exchange Shares of the Fund."
SHAREHOLDER FEES(1) (PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS Z
Maximum sales charge (load) imposed on 4% None 1% None
purchases (as a percentage of offering price)
Maximum deferred sales charge (load) None 5%(2) 1%(3) None
(as a percentage of the lower of original
purchase price or sale proceeds)
Maximum sales charge (load) imposed None None None None
on reinvested dividends and other
distributions
Redemption fees None None None None
Exchange fee None None None None
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS Z
Management fees .75% .75% .75% .75%
+ Distribution and service (12b-1) fees .30%(4) 1.00%(4) 1.00%(4) None
+ Other expenses .75% .75% .75% .75%
= Total annual Fund operating expenses 1.80% 2.50% 2.50% 1.50%
- - Fee waiver .05%(4) .25%(4) .25%(4) None
= NET ANNUAL FUND OPERATING EXPENSES 1.75% 2.25% 2.25% 1.50%
(1) Your broker may charge you a separate or additional fee for purchases
and sales of shares.
(2) The Contingent Deferred Sales Charge (CDSC) for Class B shares
decreases by 1% annually to 1% in the fifth and sixth years and 0% in
the seventh year. Class B shares convert to Class A shares
approximately seven years after purchase.
(3) The CDSC for Class C shares is 1% for shares redeemed within 18 months
of purchase.
(4) For the fiscal year ending 12-31-00, the Distributor of the Fund has
contractually agreed to reduce its distribution and service (12b-1)
fees to .25 of 1% of the average daily net assets of the Class A shares
and to .75 of 1% of the average daily net assets of both the Class B
and Class C shares.
4 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
RISK/RETURN SUMMARY
EXAMPLE
This example will help you compare the fees and expenses of the Fund's different
share classes and the cost of investing in the Fund with the cost of investing
in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then sell all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same, except for the Distributor's
reduction of distribution and service (12b-1) fees for Class A, Class B and
Class C shares during the first year. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
1 YR 3 YRS 5 YRS 10 YRS
Class A shares $571 $ 939 $1,331 $2,427
Class B shares $728 $1,055 $1,408 $2,564
Class C shares $426 $ 847 $1,395 $2,889
Class Z shares $153 $ 474 $ 818 $1,791
You would pay the following expenses on the same investment if you did not sell
your shares:
1 YR 3 YRS 5 YRS 10 YRS
Class A shares $571 $939 $1,331 $2,427
Class B shares $228 $755 $1,308 $2,564
Class C shares $326 $847 $1,395 $2,889
Class Z shares $153 $474 $ 818 $1,791
5
HOW THE FUND INVESTS
THE EURO
On January 1, 1999, 11 of the 15 member states of the European Union introduced
the "euro" as a common currency. During a three year transitional period, the
euro will coexist with each member states's national currency. By July 1, 2002,
the euro is anticipated to become the sole legal tender of the member states.
During the transition period, the Fund will treat the euro as a separate
currency from the national currency of any member state.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek TOTAL RETURN, made up of CURRENT
INCOME and CAPITAL APPRECIATION. This means we seek investments that will
increase in value, as well as pay the Fund interest and other income. While we
make every effort to achieve our objective, we can't guarantee success.
In pursuing our objective, we normally invest at least 65% of the Fund's
total assets in income-producing debt securities of the U.S. and foreign
governments, supranational organizations, semi-governmental entities or
government agencies, authorities or instrumentalities and short-term bank debt
securities or bank deposits. We can invest in developed countries and developing
or emerging market countries that we believe are stable. Securities of
developing countries may be subject to more abrupt or erratic market movements
than those of developed countries. We can invest in debt securities in U.S.
dollars and debt securities in foreign countries based on U.S. dollars or
foreign currencies.
The investment adviser has a team of fixed-income professionals, including
credit analysts and traders, with experience in many foreign fixed-income
securities markets. In selecting portfolio securities, the investment adviser
considers country and currency selection, economic conditions and interest rate
fundamentals. The investment adviser also evaluates individual debt securities
within each fixed-income sector based upon their relative investment merit and
considers factors such as yield, duration and potential for price appreciation
as well as credit quality, maturity and risk.
Some government securities are backed by the full faith and credit of the
issuing government which means that payment of principal and interest are
guaranteed, but market value is not. Other government issuers may be able to
borrow from a centralized treasury and some government issuers depend entirely
on their own resources to repay their debt.
6 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND INVESTS
We generally may invest up to 40% of the Fund's total assets in particular
currencies (even U.S. dollars) except for the euro. The Fund may invest up to
65% of its total assets in debt securities denominated in the euro. As a
"global" fund, we usually invest in issuers from at least three different
countries, including the United States.
Most of the Fund's debt securities are "investment-grade." This means major
rating services, like Standard & Poor's Ratings Group (S&P) or Moody's Investors
Service, Inc. (Moody's), have rated the securities within one of their four
highest quality grades. Debt obligations in the fourth highest grade are
regarded as investment-grade, but have speculative characteristics and are
riskier than higher-rated securities. A rating is an assessment of the
likelihood of timely repayment of interest and principal and can be useful when
comparing different debt obligations. These ratings are not a guarantee of
quality. The opinions of the rating agencies do not reflect market risk and they
may at times lag behind the current financial conditions of a company. We also
may invest in obligations that are not rated, but that we believe are of
comparable quality to the obligations described above.
The Fund has a dollar-weighted average maturity of not more than 10 years.
The maturity of a bond is simply the number of years until the principal is due
and payable. Weighted average maturity is calculated by adding the maturities of
all of the bonds in a portfolio and dividing by the number of bonds on a
weighted basis.
The Fund may also use a variety of "hedging" strategies intended to help
protect the value of the Fund's securities rather than to make a profit. These
may include derivative transactions and cross-currency hedges.
For more information, see "Investment Risks" below and the Statement of
Additional Information, "Description of the Fund, Its Investments and Risks."
The Statement of Additional Information -- which we refer to as the SAI --
contains additional information about the Fund. To obtain a copy, see the back
cover page of this prospectus.
The Fund's investment objective is a fundamental policy that cannot be
changed without shareholder approval. The Board can change investment policies
that are not fundamental.
7
HOW THE FUND INVESTS
OTHER INVESTMENTS AND STRATEGIES
In addition to the principal strategies, we also may use the following
investment strategies to try to increase the Fund's returns or protect its
assets if market conditions warrant.
OTHER DEBT SECURITIES
We can invest up to 35% of total assets in corporate debt instruments, other
nongovernment debt securities including convertible securities and intermediate
and long-term bank debt securities in the United States or foreign countries.
Up to 15% of the Fund's total assets may be invested in lower-rated
securities, which are riskier than investment-grade debt obligations and
considered "speculative" with respect to their capacity to pay principal and
interest. The Fund's investments in these high-yield or "junk" bonds will have a
minimum rating of B by Moody's or S&P or another major rating service at the
time they are purchased. The Fund may continue to hold such a security if it is
subsequently downgraded below B or is no longer rated by a major rating service.
TEMPORARY DEFENSIVE INVESTMENTS
In response to adverse market, economic or political conditions, we may
temporarily invest up to 100% of the Fund's assets in U.S. Treasury or other
U.S. dollar-denominated securities or high-quality money market instruments,
including commercial paper of domestic and foreign corporations, foreign
government securities, certificates of deposit, bankers' acceptances and time
deposits of domestic and foreign banks and short-term obligations issued or
guaranteed by the U.S. government and its agencies denominated in either U.S.
dollars or foreign currencies. Investing heavily in these securities limits our
ability to achieve our investment objective, but can help to preserve the Fund's
assets when the bond markets are volatile.
ZERO COUPON SECURITIES
We can invest in ZERO COUPON SECURITIES. These are bonds that are sold for a
price that is less than their stated value. Interest payments on a zero coupon
bond are not made during the life of the bond, but at the bond's maturity, the
holder gets the bond's stated value. The difference between the price paid for
the bond and the amount paid to the holder at the bond's maturity is the
8 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND INVESTS
holder's return. This type of security may experience greater fluctuation in
value and less liquidity than similarly rated bonds that pay interest at regular
intervals.
STRIPPED SECURITIES
The Fund can invest up to 10% of its total assets in "stripped securities" of
U.S. and foreign government debt securities. Stripped securities are those with
the principal and interest sold separately. This 10% limit is combined with
investments in similar U.S. and foreign government securities.
ADJUSTABLE/FLOATING RATE SECURITIES
The Fund can invest in adjustable or floating rate securities whose interest
rate is calculated by reference to a specific index and is reset periodically.
The value of adjustable or floating rate securities does not respond as quickly
to changing interest rates as do fixed rate securities.
REPURCHASE AGREEMENTS
The Fund also may use REPURCHASE AGREEMENTS, where a party agrees to sell a
security to the Fund and then repurchase it at an agreed-upon price at a stated
time. This creates a fixed return for the Fund and is, in effect, a loan by the
Fund.
DERIVATIVE STRATEGIES
We may use various derivative strategies to try to improve the Fund's
returns or protect its assets. We cannot guarantee that these strategies will
work, that the instruments necessary to implement these strategies will be
available or that the Fund will not lose money. Derivatives -- such as futures,
options, foreign currency forward contracts and options on futures -- involve
costs and can be volatile. With derivatives, the investment adviser tries to
predict whether the underlying investment -- a security, market index, currency,
interest rate or some other benchmark -- will go up or down at some future date.
We may use derivatives to try to reduce risk or to increase return consistent
with the Fund's overall investment objective. The investment adviser will
consider other factors (such as cost) in deciding whether to employ any
particular strategy or use any
9
HOW THE FUND INVESTS
particular instrument. Any derivatives we use may not match the Fund's
underlying holdings.
Because we are a global fund and invest in securities denominated in
different foreign currencies, we may use "currency hedges." Currency hedges can
help protect the Fund's net asset value from declining if a particular foreign
currency were to decrease in value compared to the U.S. dollar.
The Fund may invest without limit in commercial paper and other instruments
that are "indexed" to certain specific foreign currency exchange rates. This
means that the instrument's principal amount is adjusted upward or downward (but
not below zero) to reflect changes in the exchange rate between two currencies
from the time the instrument is outstanding until it matures. When the Fund
purchases one of these instruments, it pays with the currency in which the
instrument is denominated and, at maturity, it receives interest and principal
payments in the same currency. These instruments offer the potential for
realizing gains as a result of changes in foreign currency exchange rates that
can be used to hedge (or cross-hedge) against a decline in the U.S. dollar value
of the investments while providing an attractive money market rate of return.
OPTIONS. The Fund may purchase and sell put and call options on securities and
currencies traded on U.S. or foreign securities exchanges or in the
over-the-counter market. An OPTION is the right to buy or sell securities in
exchange for a premium. The options may be on debt securities, aggregates of
debt securities, financial indexes, U.S. government securities, foreign
government securities and foreign currencies. The Fund will sell only covered
options.
FUTURES CONTRACTS AND RELATED OPTIONS
FOREIGN CURRENCY FORWARD CONTRACTS. The Fund may purchase and sell financial
futures contracts and related options on debt securities, aggregates of debt
securities, financial indexes, U.S. government securities, corporate debt
securities, foreign government securities and foreign currencies. A FUTURES
CONTRACT is an agreement to buy or sell a set quantity of an underlying product
at a future date, or to make or receive a cash payment based on the value of a
securities index. The Fund also may enter into foreign currency forward
contracts to protect the value of its assets against future changes in the level
of foreign currency exchange rates. A FOREIGN CURRENCY FORWARD CONTRACT is an
obligation to buy or sell a given currency on a future date and at a set price.
10 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND INVESTS
For more information about these strategies, see the SAI, "Description of
the Fund, Its Investments and Risks -- Risk Management and Return Enhancement
Strategies."
ADDITIONAL STRATEGIES
The Fund also follows certain policies when it BORROWS MONEY (the Fund can
borrow up to 20% of the value of its total assets) and HOLDS ILLIQUID SECURITIES
(the Fund may hold up to 15% of its net assets in illiquid securities, including
securities with legal or contractual restrictions on resale, those without a
readily available market and repurchase agreements with maturities longer than
seven days). The Fund is "NONDIVERSIFIED," meaning it can invest more than 5% of
its assets in the securities of any one issuer. The Fund is subject to certain
other investment restrictions that are fundamental policies, which means they
cannot be changed without shareholder approval. For more information about these
restrictions, see the SAI.
11
HOW THE FUND INVESTS
INVESTMENT RISKS
As noted, all investments involve risk, and investing in the Fund is no
exception. Since the Fund's holdings can vary significantly from broad market
indexes, performance of the Fund can deviate from performance of the indexes.
This chart outlines the key risks and potential rewards of the Fund's principal
investments and certain other non-principal investments the Fund may make. See,
too, "Description of the Fund, Its Investments and Risks" in the SAI.
INVESTMENT TYPE
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING DEBT - The Fund's share price, yield and total - Bonds have generally outperformed money
SECURITIES return will fluctuate in response to market instruments over the long term,
bond market movements with less risk than stock
At least 65%
- Credit risk--the risk that the default - Most bonds will rise in value
of an issuer would leave the Fund when interest rates fall
with unpaid interest or principal.
The lower a bond's quality, the higher - Regular interest income
its potential volatility
- Investment-grade bonds have a lower
- Market risk--the risk that the market risk of default than junk bonds
value of an investment may move up or
down, sometimes rapidly or - Bonds with longer maturity dates
unpredictably. Market risk may affect typically have higher yields
an industry, a sector or the market as
a whole - High-quality debt obligations are
generally more secure than stocks since
- Interest rate risk--the value of most companies must pay their debts before
bonds will fall when interest rates they pay dividends
rise; the longer a bond's maturity and
the lower its credit quality, the more - Principal and interest on government
its value typically falls. It can lead securities may be guaranteed by the
to price volatility, particularly for issuing government
junk bonds and stripped securities
- Junk bonds offer higher yields and
- As a nondiversified fund, we will higher potential gains
have greater exposure to loss from a
single issuer
- Intermediate-term securities may be less
susceptible to loss of principal than
longer-term securities.
12 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND INVESTS
INVESTMENT TYPE (CONT'D)
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING DEBT - Not all government securities are
SECURITIES (CONT'D) insured or guaranteed by the
government, but only by the issuing
agency
- Junk bonds have a higher risk of
default, tend to be less liquid and may
be more difficult to value
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES - Foreign markets, economies and - Investors can participate in the growth
political systems may not be as stable of foreign markets and companies
Percentage varies as in the U.S., particularly those in operating in those markets
developing countries
- Currency risk--changing values of - Changing value of foreign currencies
foreign currencies can cause losses
- Debt securities issued by supranational - Opportunities for diversification
organizations or semi-governmental
issuers may be backed by limited assets
in the event of default
- May be less liquid than U.S. stocks and
bonds
- Differences in foreign laws, accounting
standards, public information, custody
and settlement practices provide less
reliable information on foreign
investments and involve more risks
13
HOW THE FUND INVESTS
INVESTMENT TYPE
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
DERIVATIVES - Derivatives such as futures, options - The Fund could make money and protect
and foreign currency forward contracts against losses if the investment
Percentage varies that are used for hedging purposes may analysis proves correct
not fully offset the underlying
positions and this could result in - Derivatives that involve leverage could
losses to the Fund that would not generate substantial gains at low cost
have otherwise occurred
- One way to manage the Fund's
- Derivatives used for risk management risk/return balance is by locking in
may not have the intended effects and the value of an investment ahead of
may result in losses or missed time
opportunities
- May be used to hedge against changes in
- The other party to a derivatives currency exchange rates
contract could default
- Derivatives that involve leverage could
magnify losses
- Certain types of derivatives involve
costs to the Fund that can reduce
returns
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES - May be difficult to value precisely - May offer a more attractive yield or
potential for growth than more widely
Up to 15% of net assets traded securities
- May be difficult to sell at the time or
price desired
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET - Limit potential for - May preserve the Fund's assets
INSTRUMENTS capital appreciation
Up to 100% on a temporary - See credit risk and market risk
basis
- ------------------------------------------------------------------------------------------------------------------------------------
14 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND INVESTS
INVESTMENT TYPE (CONT'D)
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
BORROWING - Leverage borrowing for - Leverage may magnify
Up to 20% investment may magnify losses investment gains
- Interest costs and borrowing
fees may exceed potential
investment gains
- ------------------------------------------------------------------------------------------------------------------------------------
ZERO COUPON BONDS - Generates "phantom - May lock in a higher
Up to 10% of net assets income" for the Fund rate of return than is
for tax purposes available in the market-
although no income place at time of maturity
is paid
- Typically subject to
greater volatility and
less liquidity in adverse
markets than other
income-producing
securities
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE/FLOATING - Value lags value of fixed - Can take advantage of
RATE SECURITIES rate securities when rising interest rates
Percentage varies interest rates change
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES - More volatile than securities - Value rises faster when
Up to 10% that have not separated interest rates fall
principal and interest
- ------------------------------------------------------------------------------------------------------------------------------------
15
HOW THE FUND IS MANAGED
BOARD OF DIRECTORS
The Fund's Board of Directors oversees the actions of the Manager, Investment
Adviser and Distributor and decides on general policies. The Board also oversees
the Fund's officers, who conduct and supervise the daily business operations of
the Fund.
MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NJ 07102-4077
Under a management agreement with the Fund, PIFM manages the Fund's
investment operations and administers its business affairs. PIFM also is
responsible for supervising the Fund's investment adviser. For the fiscal year
ended December 31, 1999, the Fund paid PIFM management fees of .75% of the
Fund's average net assets.
PIFM and its predecessors have served as manager or administrator to
investment companies since 1987. As of January 31, 2000, PIFM served as the
manager to all 43 of the Prudential mutual funds, and as manager or
administrator to 22 closed-end investment companies, with aggregate assets of
approximately $74.9 billion.
INVESTMENT ADVISER
The Prudential Investment Corporation, called Prudential Investments, is the
Fund's investment adviser and has served as an investment adviser to investment
companies since 1984. Its address is Prudential Plaza, 751 Broad Street, Newark,
NJ 07102. PIFM has responsibility for all investment advisory services,
supervises Prudential Investments and pays Prudential Investments for its
services.
Prudential Investments has entered into a service agreement with PRICOA
Asset Management Ltd. (PRICOA), a subsidiary of The Prudential Insurance Company
of America, for the provision of investment advisory services to the Fund and
pays PRICOA for its services. PRICOA, an indirect wholly-owned
16 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW THE FUND IS MANAGED
subsidiary of Prudential, is located at Cutlers Court, 115 Houndsditch,London
EC3A 7BR England. It was incorporated under U.K. law in January 1997 and as of
December 31, 1999 had approximately $2.0 billion under management.
PORTFOLIO MANAGERS
Prudential Investments' Fixed Income Group manages more than $116 billion for
Prudential's retail investors, institutional investors and policyholders.
Senior Managing Directors James J. Sullivan and Jack W. Gaston head the Group,
which is organized into teams specializing in different market sectors.
Top-down, broad investment decisions are made by the Fixed Income Policy
Committee, whereas bottom-up security selection is made by the sector teams.
Mr. Sullivan has overall responsibility for overseeing portfolio management
and credit research. Prior to joining Prudential Investments in 1998, he was a
managing director in Prudential's Capital Management Group, where he oversaw
portfolio management and credit research for Prudential's General Account and
subsidiary fixed-income portfolios. He has more than 16 years of experience in
risk management, arbitrage trading and corporate bond investing.
Mr. Gaston has overall responsibility for overseeing quantitative research
and risk management. Prior to this appointment in 1999, he was senior managing
director of the Capital Management Group where he was responsible for the
investment performance and risk management for Prudential's General Account and
subsidiary fixed-income portfolios. He has more than 20 years of experience in
investment management, including extensive experience applying quantitative
techniques to portfolio management.
The Fixed Income Investment Policy Committee is comprised of key senior
investment managers. Members include seven sector team leaders, the chief
investment strategist and the head of risk management. The Committee uses a
top-down approach to investment strategy, asset allocation and general risk
management, identifying sectors in which to invest.
The Global Bond Team, headed by GABRIEL IRWIN, is primarily responsible for
overseeing the day-to-day management of the Fund. This Team uses an approach
which is top-down in respect of country and currency selection but which also
focuses on individual securities, while staying within the guidelines of the
Investment Policy Committee and the Fund's investment restrictions and policies.
In addition, the Credit Research team of analysts supports the sector
17
HOW THE FUND IS MANAGED
teams, using bottom-up fundamentals as well as economic and industry trends.
Other sector teams may contribute to securities selection when appropriate.
GLOBAL BOND TEAM
ASSETS UNDER MANAGEMENT: $2.0 billion as of December 31, 1999.
TEAM LEADER: Gabriel Irwin. GENERAL INVESTMENT EXPERIENCE: 18 years.
PORTFOLIO MANAGERS: 5. AVERAGE GENERAL INVESTMENT EXPERIENCE: 11 years, which
includes team members with significant mutual fund experience.
SECTOR: Corporate and government securities of foreign issuers.
INVESTMENT STRATEGY: Focus is on a top-down, geographic-allocation process. They
seek to add value by exploiting yield variances between different countries and
credit qualities.
DISTRIBUTOR
Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. The Fund has Distribution
and Service Plans under Rule 12b-1 of the Investment Company Act. Under the
Plans and the Distribution Agreement, PIMS pays the expenses of distributing the
Fund's Class A, B, C and Z shares and provides certain shareholder support
services. The Fund pays distribution and other fees to PIMS as compensation for
its services for each class of shares other than Class Z. These fees--known as
12b-1 fees--are shown in the "Fees and Expenses" tables.
18 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
FUND DISTRIBUTIONS AND TAX ISSUES
Investors who buy shares of the Fund should be aware of some important tax
issues. For example, the Fund distributes DIVIDENDS of ordinary income and any
realized net CAPITAL GAINS to shareholders. These distributions are subject to
taxes, unless you hold your shares in a 401(k) plan, an Individual Retirement
Account (IRA) or some other qualified tax-deferred plan or account. Dividends
and distributions from the Fund also may be subject to state and local income
tax in the state where you live.
Also, if you sell shares of the Fund for a profit, you may have to pay
capital gains taxes on the amount of your profit, again unless you hold your
shares in a qualified tax-deferred plan or account.
The following briefly discusses some of the important federal tax issues
you should be aware of, but is not meant to be tax advice. For tax advice,
please speak with your tax adviser.
DISTRIBUTIONS
The Fund distributes DIVIDENDS of any net investment income to shareholders
typically every quarter. For example, if the Fund owns Utopia government bonds
and the bonds pay income, the Fund will pay out a portion of this income to its
shareholders, assuming the Fund's income is more than its costs and expenses.
The dividends you receive from the Fund will be taxed as ordinary income,
whether or not they are reinvested in the Fund.
The amount of income available for distribution to shareholders will be
affected by any foreign currency gains or losses generated by the Fund and
cannot be predicted. This fact, coupled with the different tax and accounting
treatment of certain currency gains and losses, increases the possibility that
distributions, in whole or in part, may be a return of capital to shareholders.
The Fund also distributes realized net CAPITAL GAINS to
shareholders--typically once a year. Capital gains are generated when the Fund
sells its assets for a profit. For example, if the Fund bought Utopia government
bonds for a total of $1,000 and more than one year later sold the bonds for a
total of $1,500, the Fund has net long-term capital gains of $500, which it will
pass on to shareholders (assuming the Fund's total gains are greater than any
losses it may have). Capital gains are taxed differently depending on how long
the Fund holds the security--if a security is held more than one year before it
is sold, LONG-TERM capital gains are taxed at the rate of 20%, but if the
security is
19
FUND DISTRIBUTIONS AND TAX ISSUES
held one year or less, SHORT-TERM capital gains are taxed at ordinary income
rates of up to 39.6%. Different rates apply to corporate shareholders.
For your convenience, Fund distributions of dividends and capital gains are
AUTOMATICALLY REINVESTED in the Fund without any sales charge. If you ask us to
pay the distributions in cash, we will send you a check if your account is with
the Transfer Agent. Otherwise, if your account is with a broker, you will
receive a credit to your account. Either way, the distributions may be subject
to taxes, unless your shares are held in a qualified tax-deferred plan or
account. For more information about automatic reinvestment and other shareholder
services, see "Step 4: Additional Shareholder Services" in the next section.
TAX ISSUES
FORM 1099
Every year, you will receive a Form 1099, which reports the amount of dividends
and capital gains we distributed to you during the prior year. If you own shares
of the Fund as part of a qualified tax-deferred plan or account, your taxes are
deferred, so you will not receive a Form 1099. However, you will receive a Form
1099 when you take any distributions from your qualified tax-deferred plan or
account.
Fund distributions are generally taxable to you in the calendar year they
are received, except when we declare certain dividends in the fourth quarter and
actually pay them in January of the following year. In such cases, the dividends
are treated as if they were paid on December 31 of the prior year. Corporate
shareholders are eligible for the 70% dividends-received deduction for certain
dividends.
WITHHOLDING TAXES
If federal tax law requires you to provide the Fund with your taxpayer
identification number and certifications as to your tax status, and you fail to
do this, or if you are otherwise subject to backup withholding, we will withhold
and pay to the U.S. Treasury 31% of your distributions and sale proceeds.
Dividends of net investment income and short-term capital gains paid to a
non-resident foreign shareholder generally will be subject to a U.S. withholding
tax of 30%. This rate may be lower, depending on any tax treaty the U.S. may
have with the shareholder's country.
20 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
FUND DISTRIBUTIONS AND TAX ISSUES
IF YOU PURCHASE JUST BEFORE RECORD DATE
If you buy shares of the Fund just before the record date (the date that
determines who receives the distribution), that distribution will be paid to
you. As explained above, the distribution may be subject to income or capital
gains taxes. You may think you've done well, since you bought shares one day and
soon thereafter received a distribution. That is not so because when dividends
are paid out, the value of each share of the Fund decreases by the amount of the
dividend to reflect the payout, although this may not be apparent because the
value of each share of the Fund also will be affected by the market changes, if
any. The distribution you receive makes up for the decrease in share value.
However, the timing of your purchase does mean that part of your investment came
back to you as taxable income.
QUALIFIED OR TAX-DEFERRED RETIREMENT PLANS
Retirement plans and accounts allow you to defer paying taxes on investment
income and capital gains. Contributions to these plans may also be tax
deductible, although distributions from these plans generally are taxable. In
the case of Roth IRA accounts, contributions are not tax deductible, but
distributions from the plan may be tax-free. Please contact your financial
adviser for information on a variety of Prudential mutual funds that are
suitable for retirement plans offered by Prudential.
IF YOU SELL OR EXCHANGE YOUR SHARES
If you sell any shares of the Fund for a profit, you have REALIZED A CAPITAL
GAIN, which is subject to tax unless you hold shares in a qualified tax-deferred
plan or account. The amount of tax you pay depends on how long you owned your
shares. If you sell shares of the Fund for a loss, you may have a capital loss,
which you may use to offset certain capital gains you have.
[RECEIPT FROM SALE GRAPHIC]
If you sell shares and realize a loss, you will not be permitted to use
the loss to the extent you replace the shares (including pursuant to the
reinvestment of a dividend) within a 61-day period (beginning 30 days before
the sale of the shares). If you acquire shares of the Fund and sell your
21
FUND DISTRIBUTIONS AND TAX ISSUES
shares within 90 days, you may not be allowed to include certain charges
incurred in acquiring the shares for purposes of calculating gain or loss
realized upon the sale of the shares.
Exchanging your shares of the Fund for the shares of another Prudential
mutual fund is considered a sale for tax purposes. In other words, it's a
"taxable event." Therefore, if the shares you exchanged have increased in value
since you purchased them, you have capital gains, which are subject to the taxes
described above.
Any gain or loss you may have from selling or exchanging Fund shares will
not be reported on Form 1099; however, proceeds from the sale or exchange will
be reported on Form 1099-B. Therefore, unless you hold your shares in a
qualified tax-deferred plan or account, you or your financial adviser should
keep track of the dates on which you buy and sell--or exchange--Fund shares, as
well as the amount of any gain or loss on each transaction. For tax advice,
please see your tax adviser.
AUTOMATIC CONVERSION OF CLASS B SHARES
We have obtained a legal opinion that the conversion of Class B shares into
Class A shares--which happens automatically approximately seven years after
purchase--is not a "taxable event" because it does not involve an actual sale of
your Class B shares. This opinion, however, is not binding on the Internal
Revenue Service. For more information about the automatic conversion of Class B
shares, see "Class B Shares Convert to Class A Shares After Approximately Seven
Years" in the next section.
22 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
HOW TO BUY SHARES
STEP 1: OPEN AN ACCOUNT
If you don't have an account with us or a securities firm that is permitted to
buy or sell shares of the Fund for you, call Prudential Mutual Fund Services LLC
(PMFS) at (800) 225-1852, or contact:
PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: INVESTMENT SERVICES
P.O. BOX 15020
NEW BRUNSWICK, NJ 08906-5020
To purchase by wire, call the number above to obtain an application. After
PMFS receives your completed application, you will receive an account number.
For additional information about purchasing shares of the Fund, see the back
cover page of this prospectus. We have the right to reject any purchase order
(including an exchange into the Fund) or suspend or modify the Fund's sale of
its shares.
STEP 2: CHOOSE A SHARE CLASS
Individual investors can choose among Class A, Class B, Class C, and Class Z
shares of the Fund, although Class Z shares are available only to a limited
group of investors.
Multiple share classes let you choose a cost structure that better meets
your needs. With Class A shares, you pay the sales charge at the time of
purchase, but the operating expenses each year are lower than the expenses of
Class B and Class C shares. With Class B shares, you only pay a sales charge if
you sell your shares within six years (that is why it is called a Contingent
Deferred Sales Charge, or CDSC), but the operating expenses each year are higher
than Class A share expenses. With Class C shares, you pay a 1% front-end sales
charge and a 1% CDSC if you sell within 18 months of purchase, but the operating
expenses are also higher than the expenses for Class A shares.
When choosing a share class, you should consider the following:
- The amount of your investment
- The length of time you expect to hold the shares and the impact of the
varying distribution fees
23
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
- The different sales charges that apply to each share class--Class A's
front-end sales charge vs. Class B's CDSC vs. Class C's low front-end
sales charge and low CDSC
- Whether you qualify for any reduction or waiver of sales charges
- The fact that Class B shares automatically convert to Class A shares
approximately seven years after purchase
- Whether you qualify to purchase Class Z shares.
See "How to Sell Your Shares" for a description of the impact of CDSCs.
SHARE CLASS COMPARISON. Use this chart to help you compare the Fund's different
share classes. The discussion following this chart will tell you whether you are
entitled to a reduction or waiver of any sales charges.
- ---------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
Minimum purchase $1,000 $1,000 $2,500 None
amount(1)
Minimum amount for $100 $100 $100 None
subsequent purchases(1)
Maximum initial 4% of the public None 1% of the public None
sales charge offering price offering price
Contingent Deferred None If sold during: 1% on sales None
Sales Charge (CDSC)(2) Year 1, 5% made within
Year 2, 4% 18 months
Year 3, 3% of purchase(2)
Year 4, 2%
Years 5/6, 1%
Year 7, 0%
Annual distribution .30 of 1% 1% (.75 of 1% 1% (.75 of 1% None
and service (12b-1) (.25 of 1% currently) currently)
fees shown as a currently)
percentage of average
net assets(3)
- ---------------------------------------------------------------------------------------------
1 The minimum investment requirements do not apply to certain retirement and
employee savings plans and custodial accounts for minors. The minimum
initial and subsequent investment for purchases made through the Automatic
Investment Plan is $50. For more information, see "Additional Shareholder
Services--Automatic Investment Plan."
2 For more information about the CDSC and how it is calculated, see "How to
Sell Your Shares--Contingent Deferred Sales Charge (CDSC)." Class C shares
bought before November 2, 1998 have a 1% CDSC if sold within one year.
3 These distribution fees are paid from the Fund's assets on a continuous
basis. Over time, the fees will increase the cost of your investment and
may cost you more than paying other types of sales charges. The service fee
for Class A, B and C shares is .25 of 1%. The distribution fee for Class A
shares is limited to .30 of 1% (including the .25 of 1% service fee) and is
.75 of 1% for Class B and Class C shares. For the fiscal year ending
12-31-00, the Distributor of the Fund has contractually agreed to reduce
its distribution and service (12b-1) fees for Class A shares to .25 of 1%
and for Class B and Class C shares to .75 of 1% of the average daily net
assets of each such class.
24 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
REDUCING OR WAIVING CLASS A'S INITIAL SALES CHARGE
The following describes the different ways investors can reduce or avoid paying
Class A's initial sales charge.
INCREASE THE AMOUNT OF YOUR INVESTMENT. You can reduce Class A's sales charge by
increasing the amount of your investment. This table shows how the sales charge
decreases as the amount of your investment increases.
- --------------------------------------------------------------------------------
SALES CHARGE AS % SALES CHARGE AS % DEALER
AMOUNT OF PURCHASE OF OFFERING PRICE OF AMOUNT INVESTED REALLOWANCE
Less than $50,000 4.00% 4.17% 3.75%
$50,000 to $99,999 3.50% 3.63% 3.25%
$100,000 to $249,999 2.75% 2.83% 2.50%
$250,000 to $499,999 2.00% 2.04% 1.90%
$500,000 to $999,999 1.50% 1.52% 1.40%
$1,000,000 and above* None None None
- --------------------------------------------------------------------------------
* If you invest $1 million or more, you can buy only Class A shares, unless
you qualify to buy Class Z shares.
To satisfy the purchase amounts above, you can:
- Invest with an eligible group of related investors
- Buy the Class A shares of two or more Prudential mutual funds at the
same time
- Use your RIGHTS OF ACCUMULATION, which allow you to combine the
current value of Prudential mutual fund shares you already own with
the value of the shares you are purchasing for purposes of determining
the applicable sales charge (note: you must notify the Transfer Agent
if you qualify for Rights of Accumulation)
- Sign a LETTER OF INTENT, stating in writing that you or a group of
related investors will purchase a certain amount of shares in the Fund
and other Prudential mutual funds within 13 months.
The Distributor may reallow Class A's sales charge to dealers.
BENEFIT PLANS. Certain group retirement and savings plans may purchase Class A
shares without the initial sales charge if they meet the required minimum for
amount of assets, average account balance or number of eligible employees. For
more information about these requirements, call Prudential at (800) 353-2847.
25
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
MUTUAL FUND PROGRAMS. The initial sales charge will be waived for investors in
certain programs sponsored by broker-dealers, investment advisers and financial
planners who have agreements with Prudential Investments Advisory Group relating
to:
- Mutual fund "wrap" or asset allocation programs where the sponsor
places Fund trades and charges its clients a management, consulting or
other fee for its services
- Mutual fund "supermarket" programs where the sponsor links its
clients' accounts to a master account in the sponsor's name and the
sponsor charges a fee for its services.
Broker-dealers, investment advisers or financial planners sponsoring these
mutual fund programs may offer their clients more than one class of shares in
the Fund in connection with different pricing options for their programs.
Investors should consider carefully any separate transaction and other fees
charged by these programs in connection with investing in each available share
class before selecting a share class.
OTHER TYPES OF INVESTORS. Other investors pay no sales charge, including certain
officers, employees or agents of Prudential and its affiliates, the Prudential
mutual funds, the subadvisers of the Prudential mutual funds and registered
representatives and employees of brokers that have entered into a dealer
agreement with the Distributor. To qualify for a reduction or waiver of the
sales charge, you must notify the Transfer Agent or your broker at the time of
purchase. For more information, see the SAI, "Purchase, Redemption and Pricing
of Fund Shares--Reduction and Waiver of Initial Sales Charge--Class A Shares."
WAIVING CLASS C'S INITIAL SALES CHARGE
BENEFIT PLANS. Certain group retirement plans may purchase Class C shares
without the initial sales charge. For more information, call Prudential at (800)
353-2847.
INVESTMENT OF REDEMPTION PROCEEDS FROM OTHER INVESTMENT COMPANIES. The initial
sales charge will be waived for purchases of Class C shares if the purchase is
made with money from the redemption of shares of any unaffiliated
26 Prudential Global Total Return Fund, Inc. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
investment company, as long as the shares were not held in an account at
Prudential Securities Incorporated (Prudential Securities) or one of its
affiliates. These purchases must be made within 60 days of the redemption. To
qualify for this waiver, you must do one of the following:
- Purchase your shares through an account at Prudential Securities
- Purchase your shares through an ADVANTAGE Account or an Investor
Account with Pruco Securities Corporation
- Purchase your shares through another broker.
This waiver is not available to investors who purchase shares directly from
the Transfer Agent. If you are entitled to the waiver, you must notify either
the Transfer Agent or your broker. The Transfer Agent may require any supporting
documents it considers appropriate.
QUALIFYING FOR CLASS Z SHARES
BENEFIT PLANS. Certain group retirement plans may purchase Class Z shares if
they meet the required minimum for amount of assets, average account balance or
number of eligible employees. For more information about these requirements,
call Prudential at (800) 353-2847.
MUTUAL FUND PROGRAMS. Class Z shares also can be purchased by participants in
any fee-based program or trust program sponsored by Prudential or an affiliate
that includes the Fund as an available option. Class Z shares also can be
purchased by investors in certain programs sponsored by broker-dealers,
investment advisers and financial planners who have agreements with Prudential
Investments Advisory Group relating to:
- Mutual fund "wrap" or asset allocation programs where the sponsor
places Fund trades, links its clients' accounts to a master account in
the sponsor's name and charges its clients a management, consulting or
other fee for its services
- Mutual fund "supermarket" programs, where the sponsor links its
clients' accounts to a master account in the sponsor's name and the
sponsor charges a fee for its services.
Broker-dealers, investment advisers or financial planners sponsoring these
mutual fund programs may offer their clients more than one class of shares in
the Fund in connection with different pricing options for their programs.
27
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
Investors should consider carefully any separate transaction and other fees
charged by these programs in connection with investing in each available share
class before selecting a share class.
OTHER TYPES OF INVESTORS. Class Z shares also can be purchased by any of the
following:
- Certain participants in the MEDLEY Program (group variable annuity
contracts) sponsored by Prudential for whom Class Z shares of the
Prudential mutual funds are an available option
- Current and former Directors/Trustees of the Prudential mutual funds
(including the Fund)
- Prudential, with an investment of $10 million or more.
In connection with the sale of shares, the Manager, the Distributor or one
of their affiliates may pay brokers, financial advisers and other persons a
commission of up to 4% of the purchase price for Class B shares, up to 2% of the
purchase price for Class C shares and a finder's fee for Class A or Class Z
shares from their own resources based on a percentage of the net asset value of
shares sold or otherwise.
CLASS B SHARES CONVERT TO CLASS A SHARES AFTER APPROXIMATELY SEVEN YEARS
If you buy Class B shares and hold them for approximately seven years, we will
automatically convert them into Class A shares without charge. At that time, we
will also convert any Class B shares that you received with reinvested dividends
and other distributions. Since the 12b-1 fees for Class A shares are lower than
for Class B shares, converting to Class A shares lowers your Fund expenses.
When we do the conversion, you will get fewer Class A shares than the
number of converted Class B shares if the price of the Class A shares is higher
than the price of Class B shares. The total dollar value will be the same, so
you will not have lost any money by getting fewer Class A shares. We do the
conversions quarterly, not on the anniversary date of your purchase. For more
information, see the SAI, "Purchase, Redemption and Pricing of Fund
Shares--Conversion Feature--Class B Shares."
28 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
STEP 3: UNDERSTANDING THE PRICE YOU'LL PAY
The price you pay for each share of the Fund is based on the share value.
The share value of a mutual fund--known as the NET ASSET VALUE or NAV--is
determined by a simple calculation: it's the total value of the Fund (assets
minus liabilities) divided by the total number of shares outstanding. For
example, if the value of the investments held by Fund XYZ (minus its
liabilities) is $1,000 and there are 100 shares of Fund XYZ owned by
shareholders, the price of one share of the fund--or the NAV--is $10 ($1,000
divided by 100). Portfolio securities are valued based upon market quotations
or, if not readily available, at fair value as determined in good faith under
procedures established by the Fund's Board. Most national newspapers report the
NAVs of most mutual funds, which allows investors to check the price of mutual
funds daily.
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES
The NAV of mutual fund shares changes every day because the value of a fund's
portfolio changes constantly. For example, if Fund XYZ holds Utopia government
bonds in its portfolio and the price of Utopia government bonds goes up, while
the value of the fund's other holdings remains the same and expenses don't
change, the NAV of Fund XYZ will increase.
- --------------------------------------------------------------------------------
We determine the NAV of our shares once each business day at 4:15 p.m. New
York time on days that the New York Stock Exchange (NYSE) is open for trading.
The NYSE is closed on national holidays and Good Friday. Because we invest in
foreign securities, the NAV can change on days when you cannot buy or sell
shares. We do not determine the NAV on days when we have not received any orders
to purchase, sell or exchange Fund shares, or when changes in the value of the
Fund's portfolio do not materially affect the NAV.
WHAT PRICE WILL YOU PAY FOR SHARES OF THE FUND? For Class A and Class C shares,
you'll pay the public offering price, which is the NAV next determined after we
receive your order to purchase, plus an initial sales charge (unless you're
entitled to a waiver). For Class B and Class Z shares, you will pay the NAV next
determined after we receive your order to purchase (remember, there are no
up-front sales charges for these share classes). Your broker may charge a
separate or additional fee for purchases of shares.
29
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
STEP 4: ADDITIONAL SHAREHOLDER SERVICES
As a Fund shareholder, you can take advantage of the following services and
privileges:
AUTOMATIC REINVESTMENT. As we explained in the "Fund Distributions and Tax
Issues" section, the Fund pays out--or distributes--its net investment income
and capital gains to all shareholders. For your convenience, we will
automatically reinvest your distributions in the Fund at NAV without any sales
charge. If you want your distributions paid in cash, you can indicate this
preference on your application, notify your broker or notify the Transfer Agent
in writing (at the address below) at least five business days before the date we
determine who receives dividends.
PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: ACCOUNT MAINTENANCE
P.O. BOX 15015
NEW BRUNSWICK, NJ 08906-5015
AUTOMATIC INVESTMENT PLAN. You can make regular purchases of the Fund for as
little as $50 by having the funds automatically withdrawn from your bank or
brokerage account at specified intervals.
RETIREMENT PLAN SERVICES. Prudential offers a wide variety of retirement plans
for individuals and institutions, including large and small businesses. For
information on IRAs, including Roth IRAs or SEP-IRAs for a one-person business,
please contact your financial adviser. If you are interested in opening a 401(k)
or other company-sponsored retirement plan (SIMPLES, SEP plans, Keoghs, 403(b)
plans, pension and profit-sharing plans), your financial adviser will help you
determine which retirement plan best meets your needs. Complete instructions
about how to establish and maintain your plan and how to open accounts for you
and your employees will be included in the retirement plan kit you receive in
the mail.
30 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
THE PRUTECTOR PROGRAM. Optional group term life insurance--which protects the
value of your Prudential mutual fund investment for your beneficiaries against
market declines--is available to investors who purchase their shares through
Prudential. Eligible investors who apply for PruTector coverage after the
initial 6-month enrollment period will need to provide satisfactory evidence of
insurability. This insurance is subject to other restrictions and is not
available in all states.
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan is available that will
provide you with monthly, quarterly, semi-annual or annual redemption checks.
Remember, the sale of Class B and Class C shares may be subject to a CDSC.
REPORTS TO SHAREHOLDERS. Every year we will send you an annual report (along
with an updated prospectus) and a semi-annual report, which contain important
financial information about the Fund. To reduce Fund expenses, we will send one
annual shareholder report, one semi-annual shareholder report and one annual
prospectus per household, unless you instruct us or your broker otherwise.
HOW TO SELL YOUR SHARES
You can sell your shares of the Fund for cash (in the form of a check) at any
time, subject to certain restrictions.
When you sell shares of the Fund--also known as redeeming your shares-- the
price you will receive will be the NAV next determined after the Transfer Agent,
the Distributor or your broker receives your order to sell. If your broker holds
your shares, your broker must receive your order to sell by 4:15 p.m. New York
time to process the sale on that day. Otherwise contact:
PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: REDEMPTION SERVICES
P.O. BOX 15010
NEW BRUNSWICK, NJ 08906-5010
31
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
Generally, we will pay you for the shares that you sell within seven days
after the Transfer Agent, the Distributor or your broker receives your sell
order. If you hold shares through a broker, payment will be credited to your
account. If you are selling shares you recently purchased with a check, we may
delay sending you the proceeds until your check clears, which can take up to 10
days from the purchase date. You can avoid delay if you purchase by wire,
certified check or cashier's check. Your broker may charge you a separate or
additional fee for sales of shares.
RESTRICTIONS ON SALES
There are certain times when you may not be able to sell shares of the Fund, or
when we may delay paying you the proceeds from a sale. This may happen during
unusual market conditions or emergencies when the Fund can't determine the value
of its assets or sell its holdings. For more information, see the SAI,
"Purchase, Redemption and Pricing of Fund Shares--Sale of Shares."
If you are selling more than $100,000 of shares, you want the check sent to
someone or some place that is not in our records or you are a business or a
trust and you hold your shares directly with the Transfer Agent, you will need
to have the signature on your sell order signature guaranteed by an "eligible
guarantor institution." An "eligible guarantor institution" includes any bank,
broker-dealer or credit union. For more information, see the SAI, "Purchase,
Redemption and Pricing of Fund Shares--Sale of Shares--Signature Guarantee."
CONTINGENT DEFERRED SALES CHARGE (CDSC)
If you sell Class B shares within six years of purchase or Class C shares within
18 months of purchase (one year for Class C shares purchased before November 2,
1998), you will have to pay a CDSC. To keep the CDSC as low as possible, we will
sell amounts representing shares in the following order:
- Amounts representing shares you purchased with reinvested dividends
and distributions
- Amounts representing the increase in NAV above the total amount of
payments for shares made during the past six years for Class B shares
and 18 months for Class C shares (one year for Class C shares
purchased before November 2, 1998)
32 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
- Amounts representing the cost of shares held beyond the CDSC period
(six years for Class B shares and 18 months for Class C shares).
Since shares that fall into any of the categories listed above are not
subject to the CDSC, selling them first helps you to avoid--or at least
minimize--the CDSC.
Having sold the exempt shares first, if there are any remaining shares that
are subject to the CDSC, we will apply the CDSC to amounts representing the cost
of shares held for the longest period of time within the applicable CDSC period.
As we noted before in the "Share Class Comparison" chart, the CDSC for
Class B shares is 5% in the first year, 4% in the second, 3% in the third, 2% in
the fourth and 1% in the fifth and sixth years. The rate decreases on the first
day of the month following the anniversary date of your purchase, not on the
anniversary date itself. The CDSC is 1% for Class C shares--which is applied to
shares sold within 18 months of purchase (one year for Class C shares purchased
before November 2, 1998). For both Class B and Class C shares, the CDSC is
calculated based on the lesser of the original purchase price or the redemption
proceeds. For purposes of determining how long you've held your shares, all
purchases during the month are grouped together and considered to have been made
on the last day of the month.
The holding period for purposes of determining the applicable CDSC will be
calculated from the first day of the month after initial purchase, excluding any
time shares were held in a money market fund.
WAIVER OF THE CDSC--CLASS B SHARES
The CDSC will be waived if the Class B shares are sold:
- After a shareholder is deceased or disabled (or, in the case of a
trust account, the death or disability of the grantor). This waiver
applies to individual shareholders, as well as shares owned in joint
tenancy, provided the shares were purchased before the death or
disability
- To provide for certain distributions--made without IRS penalty--from a
tax-deferred retirement plan, IRA or Section 403(b) custodial account
- On certain sales from a Systematic Withdrawal Plan.
33
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
For more information on the above and other waivers, see the SAI,
"Purchase, Redemption and Pricing of Fund Shares--Waiver of Contingent Deferred
Sales Charge--Class B Shares."
WAIVER OF THE CDSC--CLASS C SHARES
BENEFIT PLANS. The CDSC will be waived for purchases by certain group retirement
plans for which Prudential or brokers not affiliated with Prudential provide
administrative or recordkeeping services. The CDSC also will be waived for
certain redemptions by benefit plans sponsored by Prudential and its affiliates.
For more information, call Prudential at (800) 353-2847.
REDEMPTION IN KIND
If the sales of Fund shares you make during any 90-day period reach the lesser
of $250,000 or 1% of the value of the Fund's net assets, we can then give you
securities from the Fund's portfolio instead of cash. If you want to sell the
securities for cash, you would have to pay the costs charged by a broker.
SMALL ACCOUNTS
If you make a sale that reduces your account value to less than $500, we may
sell the rest of your shares (without charging any CDSC) and close your account.
We would do this to minimize the Fund's expenses paid by other shareholders. We
will give you 60 days' notice, during which time you can purchase additional
shares to avoid this action. This involuntary sale does not apply to
shareholders who own their shares as part of a 401(k) plan, an IRA or some other
qualified tax-deferred plan or account.
34 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
90-DAY REPURCHASE PRIVILEGE
After you redeem your shares, you have a 90-day period during which you may
reinvest any of the redemption proceeds in shares of the same Fund without
paying an initial sales charge. Also, if you paid a CDSC when you redeemed your
shares, we will credit your new account with the appropriate number of shares to
reflect the amount of the CDSC you paid. In order to take advantage of this
one-time privilege, you must notify the Transfer Agent or your broker at the
time of the repurchase. See the SAI, "Purchase, Redemption and Pricing of Fund
Shares--Sale of Shares."
RETIREMENT PLANS
To sell shares and receive a distribution from a retirement account, call your
broker or the Transfer Agent for a distribution request form. There are special
distribution and income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer or
plan trustee, you must arrange for the distribution request to be signed and
sent by the plan administrator or trustee. For additional information, see the
SAI.
HOW TO EXCHANGE YOUR SHARES
You can exchange your shares of the Fund for shares of the same class in certain
other Prudential mutual funds--including certain money market funds--if you
satisfy the minimum investment requirements. For example, you can exchange Class
A shares of the Fund for Class A shares of another Prudential mutual fund, but
you can't exchange Class A shares for Class B, Class C or Class Z shares. Class
B and Class C shares may not be exchanged into money market funds other than
Prudential Special Money Market Fund, Inc. After an exchange, at redemption the
CDSC will be calculated from the first day of the month after initial purchase,
excluding any time shares were held in a money market fund. We may change the
terms of the exchange privilege after giving you 60 days' notice.
35
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
If you hold shares through a broker, you must exchange shares through your
broker. Otherwise contact:
PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: EXCHANGE PROCESSING
P.O. BOX 15010
NEW BRUNSWICK, NJ 08906-5010
There is no sales charge for such exchanges. However, if you exchange--and
then sell--Class B shares within approximately six years of your original
purchase or Class C shares within 18 months of your original purchase, you must
still pay the applicable CDSC. If you have exchanged Class B or Class C shares
into a money market fund, the time you hold the shares in the money market
account will not be counted in calculating the required holding periods for CDSC
liability.
Remember, as we explained in the section entitled "Fund Distributions and
Tax Issues--If You Sell or Exchange Your Shares," exchanging shares is
considered a sale for tax purposes. Therefore, if the shares you exchange are
worth more than you paid for them, you may have to pay capital gains tax. For
additional information about exchanging shares, see the SAI, "Shareholder
Investment Account--Exchange Privilege."
If you own Class B or Class C shares and qualify to purchase Class A shares
without paying an initial sales charge, we will automatically exchange your
Class B or Class C shares which are not subject to a CDSC for Class A shares. We
make such exchanges on a quarterly basis if you qualify for this exchange
privilege. We have obtained a legal opinion that this exchange is not a "taxable
event" for federal income tax purposes. This opinion is not binding on the IRS.
FREQUENT TRADING
Frequent trading of Fund shares in response to short-term fluctuations in the
market--also known as "market timing"--may make it very difficult to manage the
Fund's investments. When market timing occurs, the Fund may have to sell
portfolio securities to have the cash necessary to redeem the market timer's
shares. This can happen at a time when it is not advantageous to sell any
securities, so the Fund's performance may be hurt. When large dollar amounts are
involved, market timing can also make it difficult to use long-term invest-
36 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
ment strategies because we cannot predict how much cash the Fund will have to
invest. When, in our opinion, such activity would have a disruptive effect on
portfolio management, the Fund reserves the right to refuse purchase orders and
exchanges into the Fund by any person, group or commonly controlled account. The
decision may be based on dollar amount, volume and frequency of trading. The
Fund may notify a market timer of rejection of an exchange or purchase order
after the day the order is placed. If the Fund allows a market timer to trade
Fund shares, it may require the market timer to enter into a written agreement
to follow certain procedures and limitations.
TELEPHONE REDEMPTIONS OR EXCHANGES
You may redeem or exchange your shares in any amount by calling the Fund at
(800) 225-1852 before 4:15 p.m. New York time. You will receive a redemption
amount based on that day's NAV.
The Fund's Transfer Agent will record your telephone instructions and request
specific account information before redeeming or exchanging shares. The Fund
will not be liable if it follows instructions that it reasonably believes are
made by the shareholder. If the Fund does not follow reasonable procedures, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions.
In the event of drastic economic or market changes, you may have difficulty in
redeeming or exchanging your shares by telephone. If this occurs, you should
consider redeeming or exchanging your shares by mail.
The telephone redemption or exchange privilege may be modified or terminated at
any time. If this occurs, you will receive a written notice from the Fund.
37
FINANCIAL HIGHLIGHTS
The financial highlights will help you evaluate the Fund's financial
performance. The TOTAL RETURN in each chart represents the rate that a
shareholder earned on an investment in that share class of the Fund, assuming
reinvestment of all dividends and other distributions. The information is for
each share class for the periods indicated.
Review each chart with the financial statements and report of independent
accountants, which appear in the annual report and the SAI and are available
upon request. Additional performance information for each share class is
contained in the annual report, which you can receive at no charge.
CLASS A SHARES
The financial highlights for three years ended December 31, 1999 were audited by
PricewaterhouseCoopers LLP, independent accountants, and the financial
highlights for the two years ended December 31, 1996 were audited by other
independent auditors, whose reports were unqualified.
CLASS A SHARES(FISCAL YEARS ENDED 12-31)
PER SHARE OPERATING PERFORMANCE 1999(2) 1998(2) 1997(2) 1996(1) 1995(1)
NET ASSET VALUE, BEGINNING OF YEAR $ 8.03 $ 7.88 $ 8.38 $ 8.44 $ 7.46
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .44 .52 .55 .62 .54
Net realized and unrealized gain
(loss) on investments and foreign
currencies (.75) .16 (.18) .32 1.25
TOTAL FROM INVESTMENT OPERATIONS (.31) .68 .37 .94 1.79
- ----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.33) (.35) (.68) (.62) (.54)
Distributions in excess of net
investment income -- (.02) (.19) (.50) (.27)
Distributions from net realized
capital gains -- (.16) -- -- --
Tax return of capital distributions (.13) -- -- -- --
TOTAL DISTRIBUTIONS (.46) (.53) (.87) (1.12) (.81)
Redemption fee retained by Fund -- -- -- .12 --
NET ASSET VALUE, END OF YEAR $ 7.26 $ 8.03 $ 7.88 $ 8.38 $ 8.44
TOTAL RETURN(3) (3.95)% 8.92% 4.55% 13.15% 25.45%
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000) $257,548 $158,932 $183,054 $229,770 $559,071
Average net assets (000) $166,940 $171,427 $204,795 $299,026 $549,407
RATIOS TO AVERAGE NET ASSETS:
Expenses, including distribution fees(4) 1.75% 1.33% 1.39% 1.33% 1.02%
Expenses, excluding distribution fees 1.50% 1.18% 1.24% 1.18% 1.02%
Net investment income 6.00% 6.42% 6.73% 7.01% 6.50%
Portfolio turnover 132% 46% 43% 32% 256%
1 Before 1-15-96, the Fund was a closed-end investment company.
2 Calculated based upon weighted average shares outstanding during the year.
3 Total return assumes reinvestment of dividends and any other distributions,
but does not include the effect of sales charges. It is calculated assuming
shares are purchased on the first day and sold on the last day of each
period reported.
4 The Distributor of the Fund agreed to limit its distribution fees to .25 of
1% of the average daily net assets of the Class A shares for 1999 and to
.15 of 1% of the average daily net assets for prior years.
38 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
FINANCIAL HIGHLIGHTS
CLASS B SHARES
The financial highlights for the three years ended December 31, 1999 were
audited by PricewaterhouseCoopers LLP, independent accountants, and the
financial highlights for the period ended December 31, 1996 were audited by
other independent auditors, whose reports were unqualified.
CLASS B SHARES(FISCAL PERIODS ENDED 12-31)
PER SHARE OPERATING PERFORMANCE 1999(2) 1998(2) 1997(2) 1996(1)
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.03 $ 7.89 $ 8.39 $ 8.51
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .40 .46 .49 .57
Net realized and unrealized gain
(loss) on investments and foreign
currencies (.76) .16 (.16) .26
TOTAL FROM INVESTMENT OPERATIONS (.36) .62 .33 .83
-------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.28) (.30) (.64) (.57)
Distributions in excess of net
investment income -- (.02) (.19) (.50)
Distributions from net realized
capital gains -- (.16) -- --
Tax return of capital distributions (.13) -- -- --
TOTAL DISTRIBUTIONS (.41) (.48) (.83) (1.07)
Redemption fee retained by Fund -- -- -- .12
NET ASSET VALUE, END OF PERIOD $ 7.26 $ 8.03 $ 7.89 $ 8.39
TOTAL RETURN(3) (4.35)% 8.13% 3.98% 11.99%
- -------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000) $7,810 $3,625 $2,300 $ 175
Average net assets (000) $4,642 $3,048 $1,246 $ 52
RATIOS TO AVERAGE NET ASSETS:
Expenses, including distribution fees(5) 2.25% 1.93% 1.99% 1.93%(4)
Expenses, excluding distribution fees 1.50% 1.18% 1.24% 1.18%(4)
Net investment income 5.49% 5.86% 6.13% 6.41%(4)
Portfolio turnover 132% 46% 43% 32%
1 For the period from 1-15-96 (when Class B shares were first offered)
through 12-31-96.
2 Calculated based upon weighted average shares outstanding during the year.
3 Total return assumes reinvestment of dividends and any other distributions,
but does not include the effect of sales charges. It is calculated assuming
shares are purchased on the first day and sold on the last day of each
period reported. Total return for periods of less than a full year is not
annualized.
4 Annualized.
5 The Distributor of the Fund agreed to limit its distribution fees to .75 of
1% of the average daily net assets of the Class B shares.
39
FINANCIAL HIGHLIGHTS
CLASS C SHARES
The financial highlights for the three years ended December 31, 1999 were
audited by PricewaterhouseCoopers LLP, independent accountants, and the
financial highlights for the period ended December 31, 1996 were audited by
other independent auditors, whose reports were unqualified.
CLASS C SHARES (FISCAL PERIODS ENDED 12-31)
PER SHARE OPERATING PERFORMANCE 1999(2) 1998(2) 1997(2) 1996(1)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.03 $ 7.89 $ 8.39 $ 8.51
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .40 .46 .49 .57
Net realized and unrealized gain
(loss) on investments and foreign
currencies (.76) .16 (.16) .26
TOTAL FROM INVESTMENT OPERATIONS (.36) .62 .33 .83
- ------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.28) (.30) (.64) (.57)
Distributions in excess of net
investment income -- (.02) (.19) (.50)
Distributions from net realized
capital gains -- (.16) -- --
Tax return of capital distributions (.13) -- -- --
TOTAL DISTRIBUTIONS (.41) (.48) (.83) (1.07)
Redemption fee retained by Fund -- -- -- .12
NET ASSET VALUE, END OF PERIOD $ 7.26 $ 8.03 $ 7.89 $ 8.39
TOTAL RETURN(3) (4.35)% 8.13% 3.98% 11.99%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000) $ 561 $ 275 $ 190 $210(4)
Average net assets (000) $ 354 $ 220 $ 397 $204(4)
RATIOS TO AVERAGE NET ASSETS:
Expenses, including distribution fees(6) 2.25% 1.93% 1.99% 1.93%(5)
Expenses, excluding distribution fees 1.50% 1.18% 1.24% 1.18%(5)
Net investment income 5.51% 5.84% 6.05% 6.41%(5)
Portfolio turnover 132% 46% 43% 32%
(1) For the period from 1-15-96 (when Class C shares were first offered)
through 12-31-96.
(2) Calculated based upon weighted average shares outstanding during the
period.
(3) Total return assumes reinvestment of dividends and any other
distributions, but does not include the effect of sales charges. It is
calculated assuming shares are purchased on the first day and sold on the
last day of each period reported. Total return for periods of less than a
full year is not annualized.
(4) Amounts are actual and not rounded to the nearest thousand.
(5) Annualized.
(6) The Distributor of the Fund agreed to limit its distribution fees to .75
of 1% of the average daily net assets of the Class C shares.
40 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
CLASS Z SHARES
The financial highlights were audited by PricewaterhouseCoopers LLP, independent
accountants, whose report was unqualified.
CLASS Z SHARES (FISCAL PERIODS ENDED 12-31)
PER SHARE OPERATING PERFORMANCE 1999(2) 1998(2) 1997(1,2)
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.03 $ 7.88 $8.32
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .42 .52 .39
Net realized and unrealized gain (loss)
on investments and foreign currencies (.71) .17 .05
TOTAL FROM INVESTMENT OPERATIONS (.29) .69 .44
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.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 (.47) (.54) (.88)
NET ASSET VALUE, END OF PERIOD $ 7.27 $ 8.03 $7.88
TOTAL RETURN(3) (3.74)% 9.07% 5.56%
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1999 1998 1997
- ----------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000) $12,847 $2,435 $ 686
Average net assets (000) $ 4,604 $1,771 $ 257
RATIOS TO AVERAGE NET ASSETS:
Expenses, including distribution fees 1.50% 1.18% 1.24%(4)
Expenses, excluding distribution fees 1.50% 1.18% 1.24%(4)
Net investment income 6.11% 6.65% 5.41%(4)
Portfolio turnover 132% 46% 43%
(1) For the period from 3-17-97 (when Class Z shares were first offered)
through 12-31-97.
(2) Calculated based upon weighted average shares outstanding during the
period.
(3) Total return assumes reinvestment of dividends and any other
distributions. It is calculated assuming shares are purchased on the
first day and sold on the last day of each period reported. Total return
for periods of less than a full year is not annualized.
(4) Annualized.
41
THE PRUDENTIAL MUTUAL FUND FAMILY
Prudential offers a broad range of mutual funds designed to meet your individual
needs. For more information about these funds, contact your financial adviser or
call us at (800) 225-1852. Read the prospectus carefully before you invest or
send money.
STOCK FUNDS
PRUDENTIAL EMERGING GROWTH FUND, INC.
PRUDENTIAL EQUITY FUND, INC.
PRUDENTIAL EQUITY INCOME FUND
PRUDENTIAL INDEX SERIES FUND
Prudential Small-Cap Index Fund
Prudential Stock Index Fund
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
PRUDENTIAL MID-CAP VALUE FUND
PRUDENTIAL REAL ESTATE SECURITIES FUND
PRUDENTIAL SECTOR FUNDS, INC.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
PRUDENTIAL SMALL-CAP QUANTUM FUND, INC.
PRUDENTIAL SMALL COMPANY VALUE FUND, INC.
PRUDENTIAL TAX-MANAGED FUNDS
Prudential Tax-Managed Equity Fund
PRUDENTIAL 20/20 FOCUS FUND
NICHOLAS-APPLEGATE FUND, INC.
Nicholas-Applegate Growth Equity Fund
TARGET FUNDS
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
ASSET ALLOCATION/BALANCED FUNDS
PRUDENTIAL BALANCED FUND
PRUDENTIAL DIVERSIFIED FUNDS
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Active Balanced Fund
GLOBAL FUNDS
GLOBAL STOCK FUNDS
PRUDENTIAL DEVELOPING MARKETS FUND
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
PRUDENTIAL EUROPE GROWTH FUND, INC.
PRUDENTIAL GLOBAL GENESIS FUND, INC.
PRUDENTIAL INDEX SERIES FUND
Prudential Europe Index Fund
Prudential Pacific Index Fund
PRUDENTIAL NATURAL RESOURCES FUND, INC.
PRUDENTIAL PACIFIC GROWTH FUND, INC.
PRUDENTIAL WORLD FUND, INC.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
GLOBAL UTILITY FUND, INC.
GLOBAL BOND FUNDS
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
42
BOND FUNDS
TAXABLE BOND FUNDS
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
PRUDENTIAL GOVERNMENT INCOME FUND, INC.
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Short-Intermediate Term Series
PRUDENTIAL HIGH YIELD FUND, INC.
PRUDENTIAL HIGH YIELD TOTAL RETURN FUND, INC.
PRUDENTIAL INDEX SERIES FUND
Prudential Bond Market Index Fund
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Income Portfolio
TARGET FUNDS
Total Return Bond Fund
TAX-EXEMPT BOND FUNDS
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
California Series
California Income Series
PRUDENTIAL MUNICIPAL BOND FUND
High Income Series
Insured Series
PRUDENTIAL MUNICIPAL SERIES FUND
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
PRUDENTIAL NATIONAL MUNICIPALS FUND, INC.
MONEY MARKET FUNDS
TAXABLE MONEY MARKET FUNDS
CASH ACCUMULATION TRUST
Liquid Assets Fund
National Money Market Fund
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Money Market Series
U.S. Treasury Money Market Series
PRUDENTIAL SPECIAL MONEY MARKET FUND, INC.
Money Market Series
PRUDENTIAL MONEYMART ASSETS, INC.
TAX-FREE MONEY MARKET FUNDS
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
California Money Market Series
PRUDENTIAL MUNICIPAL SERIES FUND
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
COMMAND FUNDS
COMMAND MONEY FUND
COMMAND GOVERNMENT FUND
COMMAND TAX-FREE FUND
INSTITUTIONAL MONEY MARKET FUNDS
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
Institutional Money Market Series
43 PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC. [PHONE GRAPHIC] (800) 225-1852
Notes
44
Notes
45
FOR MORE INFORMATION
Please read this prospectus before you invest in the Fund and keep it for future
reference. For information or shareholder questions contact
PRUDENTIAL MUTUAL FUND SERVICES LLC
P.O. BOX 15005
NEW BRUNSWICK, NJ 08906-5005
(800) 225-1852
(732) 482-7555 (Calling from outside the U.S.)
Outside Brokers Should Contact
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
P.O. BOX 15035
NEW BRUNSWICK, NJ 08906-5035
(800) 778-8769
Visit Prudential's website at
HTTP://WWW.PRUDENTIAL.COM
Additional information about the Fund can be obtained without charge and can be
found in the following documents
STATEMENT OF ADDITIONAL INFORMATION (SAI)
(incorporated by reference into this prospectus)
ANNUAL REPORT
(contains a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance)
SEMI-ANNUAL REPORT
You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows
BY MAIL
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-0102
BY ELECTRONIC REQUEST:
publicinfo@sec.gov
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CUSIP Numbers NASDAQ Symbols
Class A Shares: 744337-10-6 GTRAX
Class B Shares: 744337-20-5 -
Class C Shares: 744337-30-4 -
Class Z Shares: 744337-40-3 -
Investment Company Act File No. 811-4661
MF169A [RECYCLE SYMBOL GRAPHIC] Printed on Recycled Paper