PRUDENTIAL DEVELOPING MARKETS FUND, N-30D, 1999-08-04

PRUDENTIAL DEVELOPING MARKETS FUND
N-30D, 1999-08-04

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<PAGE>

(ICON)

Prudential
Developing
Markets
Equity
Fund

ANNUAL
REPORT
May 31, 1999

(LOGO)

<PAGE>

Prudential Developing Markets Equity Fund
A Series of Prudential Developing Markets Fund

Performance at a Glance
Considering that our reporting period included a Russian
debt default, global financial panic, and a Brazilian
currency devaluation, developing market stocks had a
remarkably positive net return. Indeed, the recovery
from the steep bear market in August was quicker than
we expected. Although our large cash balances and
conservative holdings cushioned our fall when stock
prices tumbled, they also kept us from fully participating
in the strong recovery. We trailed the Lipper Average over
the full period primarily because we didn't keep up during
the strong gains of March and April 1999.

<TABLE>
Cumulative Total Returns1 As of 5/31/99
<CAPTION>
Since
Inception2
<S> <C>
Class A 1.60%
Class B 0.90
Class C 0.90
Class Z 1.90
Lipper Emerging
Markets Fund Avg.3 4.28
</TABLE>

<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 6/30/99
One Since
Year Inception2
<S> <C> <C>
Class A 9.53% 9.41%
Class B 9.40 10.26
Class C 12.26 12.09
Class Z 15.60 15.39
</TABLE>

Past performance is not indicative of future results. Principal
and investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.

1 Source: Prudential Investments Fund Management LLC and Lipper,
Inc. The cumulative total returns do not take into account sales
charges. The average annual total returns do take into account
applicable sales charges. The Fund charges a maximum front-end
sales charge of 5% for Class A shares. Class B shares are subject
to a declining contingent deferred sales charge (CDSC) of 5%,
4%, 3%, 2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a quarterly basis,
approximately seven years after purchase. Class C shares are
subject to a front-end sales charge of 1% and a CDSC of 1%
for 18 months. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fee.

2 Inception date: Class A, B, C, and Z, 6/26/98.

3 The Lipper Since Inception return is for all funds in
each share class in the Emerging Markets Fund category.

How Investments Compared
(As of 5/31/99)
(GRAPH)

Source: Lipper, Inc. Financial markets change, so a mutual
fund's past performance should never be used to predict future
results. The risks to each of the investments listed above are
different--we provide 12-month total returns for several Lipper
mutual fund categories to show you that reaching for higher
returns means tolerating more risk. The greater the risk,
the larger the potential reward or loss. In addition, we've
included historical 20-year average annual returns. These
returns assume the reinvestment of dividends.

U.S. Growth Funds will fluctuate a great deal. Investors
have received higher historical total returns from stocks
than from most other investments. Smaller capitalization
stocks offer greater potential for long-term growth, but
may be more volatile than larger capitalization stocks.

General Bond Funds provide more income than stock funds,
which can help smooth out their total returns year by year.
But their prices still fluctuate (sometimes significantly),
and their returns have been historically lower than those of
stock funds.

General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment provides income that is usually exempt from
federal and state income taxes.

U.S. Taxable Money Funds attempt to preserve a constant
share value; they don't fluctuate much in price but,
historically, their returns have been generally among
the lowest of the major investment categories.

<PAGE>

Portfolio Manager's Report

(PHOTO)
Maria Elena Carrion
Fund Manager

Investment Goals and Style

The Prudential Developing Markets Equity Fund's objective is
long-term growth of capital. We pursue our objective by
investing primarily in equity-related securities of
companies whose principal activities are in countries
that are defined as developing by the International
Finance Corporation, the World Bank, or the United
Nations. The Fund looks for above-average growth in
earnings per share; high return on invested capital;
healthy balance sheets; strong competitive advantages;
effective research, product development, and marketing;
efficient service; pricing flexibility; strength of
management; and a security's price. There can be no
assurance that the Fund's investment objective will be achieved.

Performance Review
Investors: Cured of anxiety attacks?

We believe there was a significant shift in the investing environment
toward the end of our reporting period. For some time now, deep
uncertainties about the economic future have made investors
unusually conservative, creating an unfriendly environment for
developing market stocks. When Russia defaulted on some of its
debt in mid-1998, it threatened a global financial crisis.
Investors, afraid the global economy would spiral down,
avoided as much risk as they could, including exposure to
any developing countries. These markets began to recover
toward the end of 1998, but then another jolt came in January
1999 when Brazil devalued its currency. Surprisingly, the
devaluation created relatively little economic turmoil either
domestically or in other developing countries, and no stock
market panic. Investors took this as a critical cue about the
future stability of the global economy and financial markets--
developing market stocks moved up sharply again in March and
April. (There was a small consolidation in May.)

Our conservative holdings didn't keep up
Through most of the year, we were positioned defensively. We
had completely sold our Russian exposure and held large cash
balances when Russia devalued its currency and defaulted on
certain bonds. Later in the reporting period, we anticipated
the Brazilian devaluation, with more than a quarter of our
assets in cash and less than a quarter in Latin America.
Although these moves reduced the impact of the two crises
on our return, we also benefited less from the subsequent
upward bounces. We did move to reposition the portfolio
after each crisis, but we were cautious in our timing. (In
fact, we particularly like Russia and Brazil in mid-1999.)
The net result of our moves was that we trailed the Lipper
Average over our reporting period by a few percentage points.
Given the turbulence in developing country markets during the
past two years, we think that was not an unreasonable price
for caution.

Turbulent markets hurt financial stocks
Our return was hurt particularly by many of our financial
services stocks, such as Firstrand (South Africa), Grupo
Financiero Bancomer and Grupo Financiero Inburso (both Mexico),
and Unibanco (Brazil). This sector suffered because its cost of
funds rose at the end of the third quarter of 1998 when
interest rates for emerging market countries rose sharply.
Without the Brazilian devaluation hanging over their heads,
and in

<PAGE>

today's more promising economic environment, we
believe the Latin American financial stocks are
sound investments.

We did well on Taiwan's technology
Substantial contributions to our return came from two
technology companies in Taiwan: Asustek Computer--one
of our largest holdings through much of the period--more
than doubled; Advance Semiconductor Engineering--a smaller
holding--also rose significantly.

In addition, Asian financial companies that rebounded from
the crisis made large contributions to our return: Housing
& Commercial Bank (Korea)--among our larger holdings at
period end--and Overseas Chinese Bank (Singapore) were
particularly large factors. We took our profits on the latter.

We believe commodity prices have bottomed

Most of the world's commodity producers are in the
developing markets, so the prospect of a price recovery
is a global theme for us. Commodity prices reached
historically low levels because first, the economy of
the former Soviet Union (then the world's third largest)
contracted dramatically after 1989, then (in 1997) Asian
economies followed. World demand for many commodities
dropped early in the 1990s and then grew only slowly.
As commodity prices kept declining, companies saw no
sense in maintaining inventories that would drop in
value, so they allowed them to shrink. This added
supply. In addition, in the past two years, energy
prices were held back by unusually warm winters. Now,
the revival of Asian economies is increasing the demand
for many commodities, global inventories are low, and
there is little excess production capacity. Prices of
commodity company stocks are up significantly in 1999,
but we believe they have considerable room to move.

Commodity stocks typically rise before the recovery of
the commodity itself, as canny investors can foresee
the shift in supply/demand balance. So far, the primary
commodity that has recovered is oil, which rose early
in 1999 when OPEC announced new production constraints.
Oil companies made up 8% of our portfolio on May 31,
including three of our 10 largest holdings: Lukoil
(Russia), Petrobras (Petrol Brasileiros, Brazil),
and YPF Sociedad Anonima (Argentina). We already
have had substantial gains on our Petrobras shares.

Five Largest Holdings
Expressed as a percentage of net assets as of 5/31/99

LUKoil Holding 2.9%
Russia - Oil & Gas
Exploration/Production

Telecomunicacoes Brasileiras SA 2.8
Brazil - Telecommunications

Grupo Televisa SA 2.7
Mexico - Media
Asustek Computers, Inc. 2.7
Taiwan - Computers
Petrol Brasileiros 2.5
Brazil - Oil & Gas
Exploration/Production

1
<PAGE>
Review Cont'd.

It's better after the devaluation

Both Russia and Brazil devalued their currencies during our
reporting period. A currency devaluation is a decline in
purchasing power, compared to currencies of other countries.
Afterward, businesses in devaluing countries have lower
domestic costs, compared to firms elsewhere, than they did
formerly. Exporters can either reduce prices to increase market
share or increase their profit margins.

Commodity producers, whose costs are primarily local labor,
particularly benefit. In Russia, we like the oil sector, whose
stocks are very inexpensive compared with those of other oil
companies. In Brazil, we favor companies that are among the
lowest-cost producers in their industries: Companhia Siderurgica
Nacional (CSN) is the largest integrated steel producer in Latin
America; Companhia Vale do Rio Doce (CVRD) is the world's largest
producer of iron ore and pellets; Aracruz Celulose, a pulp and
paper company, was among the largest contributors to our return,
as paper stocks already had a substantial upward move. Aracruz
Celulose is the world's No.1 producer of bleached eucalyptus
kraft pulp, which is used to make high-quality tissue,
printing, and writing papers.

Looking Ahead
Opportunities everywhere
After five years of trailing the global averages, developing
market stocks look like extremely compelling values. Moreover,
some of the risks associated with these stocks may have been
substantially attenuated because the currency devaluations of
the most important at-risk countries are now behind us. One of
the few situations in which you can find low prices and reduced
risk together is the recovery point after a fall. We believe
that is where we are now. With global growth accelerating,
the wind may be in the sails of the developing markets.

In addition to the focuses we have mentioned, we also like
eastern Europe, which stands to benefit from the accelerating
European economy in the second half of 1999. In Asia, our
largest focus is Korea. Korea has made the most dramatic
reformation of its economy of any Asian nation and is
beginning to reap the rewards. Domestic sales are picking
up, and Gross Domestic Product (GDP) growth is accelerating.
The attraction here is the size of the potential upside.

Portfolio Composition
Countries expressed as a percentage of net assets as of 5/31/99

Asia/Pacific Basin 37%
Latin America 33
Continental Europe 13
Africa 7
Cash & Equivalents 10

2
<PAGE>

A Message to Our Shareholders July 16, 1999
(PHOTO)

Dear Shareholder:

In the last couple of years, the recurring possibility of
a global economic crisis caused investors to focus on
securities they perceived to be safe. In the equity market,
they focused on the stocks of a handful of very large companies
that were perceived to be well-buffeted from an economic slowdown.
These stocks became very expensive--out of proportion to their
earnings expectations. As a result, there was a substantial
disparity in value between large and small companies and
between growth and value stocks.

Since earlier this year, however, that gap has narrowed
significantly amid news of strong U.S. economic growth
and faster-than-expected global stability. While the
long-term prospects of U.S. growth stocks are still
very good, many of the smaller and economically sensitive
companies favored by our value managers now are posting
very attractive returns.

In the bond market, U.S. Treasuries and select European
government bonds were the major beneficiaries of the
flight to quality that occurred in recent years. When
this trend reversed itself toward the end of 1998,
other sectors of the bond market rebounded. However,
with a strong U.S. economy comes the threat of higher
inflation, which erodes the value of bonds' fixed
interest payments. The recent inflation concerns jolted
the bond market and helped send long-term interest rates
to a 19-month high.

The winds of change in the equity market and the recent
turbulence in the bond market not only highlight the value
of professional portfolio management, but they illustrate
why investors should have a well-diversified asset allocation
strategy. It is also a good practice to rebalance your holdings,
when necessary, to keep your asset allocation consistent with
your long-term objectives and risk tolerance. A properly
diversified portfolio of value- and growth-oriented equity
funds, domestic and international bond funds, and money market
funds could help you weather inevitable market turbulence and
achieve more consistent returns over time. Prudential offers a
wide range of mutual funds to help our shareholders diversify,
as well as several balanced and diversified funds to allow
one-decision diversification.

Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

John R. Strangfeld
President
Prudential Developing Markets Equity Fund

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--90.0%
COMMON STOCKS--83.4%
- ------------------------------------------------------------
Argentina--2.6%
35,500 CEI Citicorp Holdings SA
(Class B Shares) $ 120,792
9,800 YPF Sociedad Anonima (ADR) 412,825
-----------
533,617
- ------------------------------------------------------------
Brazil--6.9%
11,100 Aracruz Celulose SA (ADR) 213,675
20,800 Companhia Cervejaria Brahma (ADR) 213,200
10,300,000 Sider Nacional Cia 195,058
7,000 Telecomunicacoes Brasileiras SA
(ADR)(a) 584,500
6,400 Telesp Participacoes SA (ADR)(a) 140,000
3,200 Unibanco-Uniao de Bancos Brasileiros
SA (GDR) 72,200
-----------
1,418,633
- ------------------------------------------------------------
Chile--2.5%
5,700 Chilectra SA (ADR) 130,387
6,900 Cia de Telecomunicaciones de Chile
SA (ADR) 150,075
6,100 Enersis SA (ADR) 119,713
3,200 Sociedad Quimica y Minera de Chile
SA
(Series B Shares) (ADR) 111,600
-----------
511,775
- ------------------------------------------------------------
Egypt--2.3%
5,300 Al-Ahram Beverages Co. S.A.E
(GDR)(a) 159,795
21,100 Egypt Mobile Phone 318,100
-----------
477,895
Greece--3.8%
10,675 Chipita International SA(a) $ 253,295
9,100 Minoan Lines 261,150
2,930 Titan Cement Co. SA 270,574
-----------
785,019
- ------------------------------------------------------------
Hong Kong--0.2%
194,000 Jiangsu Expressway Co., Ltd. 32,772
- ------------------------------------------------------------
Hungary--1.9%
4,100 EGIS Gyogyszergyar Rt. 85,451
2,200 Gedeon Richter Rt. 81,733
4,300 MOL Magyar Olaj-es Gazipari Rt.
(GDR) 104,920
5,997 Pannonplast Rt. 118,475
-----------
390,579
- ------------------------------------------------------------
India--6.4%
8,000 Bajaj Auto, Ltd. (GDR) 137,000
700 Bajaj Auto, Ltd.(a) 11,988
7,800 Hindalco Industries, Ltd. (GDR) 111,930
8,200 ICICI, Ltd. 72,160
1,770 Infosys Technologies, Ltd.(a) (ADR) 88,057
100 Larsen & Toubro, Ltd. 1,248
13,500 Larsen & Toubro, Ltd. (GDR) 168,412
23,900 Mahanagar Telephone Nigam, Ltd.
(GDR) 216,295
9,500 Mahindra & Mahindra, Ltd. (GDR) 45,125
10,800 Ranbaxy Laboratories, Ltd. (GDR)(a) 145,800
19,800 State Bank of India (GDR) 208,395
10,400 Videsh Sanchar Nigam, Ltd. (GDR)(a) 117,520
-----------
1,323,930
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Indonesia--1.8%
7,946,000 PT Bank Internasional Indonesia $ 220,179
1,500 PT Indosat (Persero) Tbk 3,048
130,500 PT Ramayana Lestari Sentosa Tbk 70,714
147,400 PT Telekomunikasi 68,526
-----------
362,467
- ------------------------------------------------------------
Israel--2.1%
50,100 Bank Hapoalim, Ltd. 126,880
71,700 Bank Leumi Le Israel 134,796
11,000 Blue Square-Israel, Ltd. (ADR) 167,750
-----------
429,426
- ------------------------------------------------------------
Malaysia--0.3%
31,000 Malaysian Pacific Industries Berhad 61,723
- ------------------------------------------------------------
Mexico--13.4%
125,900 Cifra SA de CV (Series V shares) 219,126
155,800 Control Comerc Mexicana 150,826
58,800 Corporacion GEO SA de CV(a)
(Series B shares) 224,058
93,000 Corporativo Fragua SA (Series B
shares) 102,195
43,600 Fomento Economico Mexico
SA de CV(a) 144,585
55,100 Grupo Carso Global Telecom 306,426
545,600 Grupo Financiero Bancomer SA de CV 186,549
15,900 Grupo Financiero Inbursa SA de CV
(Series B shares) 46,668
116,600 Grupo Industrial Bimbo SA de CV
(Series A shares) 225,995
13,500 Grupo Televisa SA (ADR) 564,469
5,100 Telefonos de Mexico SA (ADR)
(Class L shares) 407,681
21,800 Tubos de Acero de Mexico SA 199,814
-----------
2,778,392
The Philippines--1.8%
130,700 Ayala Land, Inc. $ 42,078
53,100 Manila Electric Company
(Series B shares) 182,814
5,000 Metropolitan Bank & Trust Company 48,292
2,000 Philippine Long Distance Telephone 56,242
187,000 SM Prime Holdings (Class B shares) 40,791
-----------
370,217
- ------------------------------------------------------------
Poland--1.7%
7,200 Bank Handlowy w Warszawie (GDR) 81,900
3,200 Bank Rozwoju Eksportu SA 85,965
15,100 Orbis SA(a) 119,319
12,600 Telekomunikacja Polska SA (GDR)(a) 75,915
-----------
363,099
- ------------------------------------------------------------
Russia--4.6%
25,300 AO Tatneft (ADR) 72,738
16,600 LUKoil Holding (ADR) 601,750
37,000 Surgutneftegaz (ADR) 277,500
-----------
951,988
- ------------------------------------------------------------
South Africa--4.3%
5,900 Anglo American Corp. of South
Africa, Ltd. 267,202
12,700 Barlow, Ltd. 59,022
3,900 Impala Platinum Holdings, Ltd. 93,375
11,300 Imperial Holdings, Ltd. 91,994
101 Nedcor, Ltd. 2,020
13,900 Sasol, Ltd. 77,965
37,970 South African Breweries, Ltd.(a) 304,855
-----------
896,433
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
South Korea--11.3%
14,300 Housing & Commercial Bank, Korea $ 391,913
12,000 Kookmin Bank 181,642
7,900 Korea Electric Power Corp. 241,827
15,190 L.G. Chemical, Ltd. 298,458
14,032 L.G. Securities Co. 236,657
12,910 Medison Co., Ltd. 164,389
3,980 Pusan City Gas Co., Ltd. 100,687
9,000 Samsung Electro-Mechanics Company 190,496
2,761 Samsung Electronics (GDR) 192,084
14,600 Shinhan Bank 142,202
4,460 Sindo Ricoh Co.(a) 188,051
210 Sk Telecom Co., Ltd. (ADR) 2,993
-----------
2,331,399
- ------------------------------------------------------------
Taiwan--8.9%
10,000 Advanced Semiconductor Engineering,
Inc. (GDR)(a) 157,500
36,000 Asustek Computer, Inc. (GDR)(a) 555,300
223,000 Bank Sinopac 146,621
30,000 Cathay Life Insurance Co., Ltd. 102,752
118,799 Compal Electronics, Inc. 317,887
50,000 D-Link Corp. 117,737
5,000 Hon Hai Precision Industry 29,358
32,000 President Chain Store Corp. 101,284
1,000 Quanta Computer, Inc. 18,746
197,000 Taishin International Bank 135,551
43,000 Taiwan Semiconductor Manufacturing
Company 154,511
-----------
1,837,247
- ------------------------------------------------------------
Thailand--3.8%
7,000 Advanced Info Service PLC 85,237
19,800 Bangkok Bank Public Co., Ltd. 61,342
31,000 Bank of Ayudhya Public Co., Ltd. 22,548
14,400 BEC World Public Co., Ltd. 75,647
58,700 Eastern Water Resources Development
& Management Public Co., Ltd. 77,487
53,000 Electricity Generating Public Co.,
Ltd. 112,796
14,000 PTT Exploration & Producton Co.,
Ltd. 113,901
42,000 Thai Farmers Bank Public Co., Ltd. 115,409
40,700 Thai Military Bank Public Co., Ltd. 25,218
4,200 The Siam Cement Co., Ltd. 109,073
-----------
798,658
- ------------------------------------------------------------
Turkey--1.3%
2,958,000 Akbank T.A.S. 48,663
5,916,000 Akbank T.A.S.(a) 97,325
1,061,700 Vestel Elektronik Sanayi ve Ticaret
A.S. 121,221
-----------
267,209
- ------------------------------------------------------------
Venezuela--1.5%
3,700 C.A. La Electricidad de Caracas
(ADR)(a) 84,637
9,900 Compania Anonima Nacional Telefonos
de Venezuela (ADR) 230,794
-----------
315,431
-----------
Total common stocks
(cost $15,023,308) 17,237,909
-----------
PREFERRED STOCKS(a)--6.5%
- ------------------------------------------------------------
Brazil
15,900 Companhia Vale do Rio Doce 279,994
5,500,000 Gerdau Metalurgica SA 127,338
15,400,000 Gerdau SA 231,178
3,600,000 Petrol Brasileiros 509,238
21,100,000 Sider de Tubarao 188,828
-----------
Total preferred stocks
(cost $1,119,047) 1,336,576
-----------
------------------------------------------------------------
RIGHTS(a)--0.1%
------------------------------------------------------------
Greece--0.0%
1,200 Alpha Credit Bank
Expiring 6/9/99 4,098
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
South Korea--0.1%
1,785 Samsung Electro-Mechanics Company
Expiring 6/15/99 $ 5,869
383 Samsung Electronics (GDR)
Expiring 6/23/99 4,069
-----------
9,938
-----------
Total rights
(cost $0) 14,036
-----------
Total long-term investments
(cost $16,142,355) 18,588,521
-----------
SHORT-TERM INVESTMENT--0.3%
Principal Amount
(000)
------------------------------------------------------------
Repurchase Agreement--0.3%
United States
$ 51 Joint Repurchase Agreement Account,
4.795%, 6/1/99
(cost $51,000; Note 5) 51,000
-----------
- ------------------------------------------------------------
Total Investments--90.3%
(cost $16,193,355; Note 4) 18,639,521
Other assets in excess of
liabilities--9.7% 2,004,155
-----------
Net Assets--100% $20,643,676
-----------
-----------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
PLC--Public Limited Company.

The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of May 31, 1999 was as
follows:

Oil & Gas Exploration/Production...................... 12.0%
Telecommunications Services........................... 11.7
Banking............................................... 11.4
Utilities............................................. 5.7
Computers............................................. 5.3
Steel & Metals........................................ 4.7
Beverage.............................................. 4.0
Retail................................................ 3.9
Media................................................. 3.9
Electronic Components................................. 3.6
Finance............................................... 3.2
Mining................................................ 2.7
Food Processing....................................... 2.3
Building & Products................................... 1.8
Real Estate-Development............................... 1.5
Transportation-Road & Rail............................ 1.4
Medical Products & Services........................... 1.2
Manufacturing......................................... 1.2
Pharmaceutical........................................ 1.1
Chemicals............................................. 1.1
Forestry & Paper...................................... 1.0
Automobile Manufacturing.............................. 1.0
Office Equipment & Supplies........................... 0.9
Diversified Operations................................ 0.7
Lodging............................................... 0.6
Electrical Goods...................................... 0.6
Audio/Visual.......................................... 0.6
Insurance............................................. 0.5
Aerospace/Defense..................................... 0.4
Short-term investment................................. 0.3
-----
90.3%
Other assets in excess of liabilities................. 9.7
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Statement of Assets and Liabilities PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets May 31, 1999
<S> <C>
Investments, at value (cost $16,193,355)..................................................................... $18,639,521
Foreign currency, at value (cost $1,043,359)................................................................. 1,073,995
Cash......................................................................................................... 361,072
Receivable for investments sold.............................................................................. 934,908
Deferred organization costs and other assets................................................................. 87,349
Dividends and interest receivable............................................................................ 65,966
------------
Total assets.............................................................................................. 21,162,811
------------
Liabilities
Payable for investments purchased............................................................................ 382,407
Accrued expenses............................................................................................. 78,243
Withholding tax payable...................................................................................... 35,291
Management fee payable....................................................................................... 22,974
Distribution fee payable..................................................................................... 220
------------
Total liabilities......................................................................................... 519,135
------------
Net Assets................................................................................................... $20,643,676
------------
------------
Net assets were comprised of:
Shares of beneficial interest, at par..................................................................... $ 2,028
Paid-in capital in excess of par.......................................................................... 20,188,684
------------
20,190,712
Accumulated net investment loss........................................................................... (121,775 )
Accumulated net realized loss on investments and foreign currency transactions............................ (1,873,770 )
Net unrealized appreciation on investments and foreign currency translations.............................. 2,448,509
------------
Net assets, May 31, 1999..................................................................................... $20,643,676
------------
------------
Class A:
Net asset value and redemption price per share $10.16
($41,321 / 4,069 shares of beneficial interest issued and outstanding).................................
Maximum sales charge (5% of offering price)............................................................... .53
------------
Maximum offering price to public.......................................................................... $10.69
------------
------------
Class B:
Net asset value, offering price and redemption price per share $10.09
($148,443 / 14,717 shares of beneficial interest issued and outstanding)............................... ------------
------------
Class C:
Net asset value, redemption price per share $10.09
($73,513 / 7,288 shares of beneficial interest issued and outstanding).................................
Sales charge (1% of offering price)....................................................................... .10
------------
Offering price to public.................................................................................. $10.19
------------
------------
Class Z:
Net asset value, offering price and redemption price per share $10.18
($20,380,399 / 2,001,488 shares of beneficial interest issued and outstanding)......................... ------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a)
Through
Net Investment Loss May 31, 1999
<S> <C>
Income
Dividends (net of foreign withholding taxes
of $33,447)............................. $ 259,318
Interest................................... 216,994
----------------
Total income............................ 476,312
----------------
Expenses
Management fee............................. 212,953
Distribution fee--Class A.................. 66
Distribution fee--Class B.................. 551
Distribution fee--Class C.................. 246
Custodian's fees and expenses.............. 146,000
Registration fees.......................... 94,000
Audit fee and expenses..................... 35,000
Reports to shareholders.................... 25,000
Amortization of organization expenses...... 11,627
Legal fees and expenses.................... 10,000
Trustees' fees............................. 3,500
Transfer agent's fees and expenses......... 1,000
Miscellaneous.............................. 1,958
----------------
Total expenses.......................... 541,901
----------------
Net investment loss........................... (65,589)
----------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions.................... (1,874,015)
Foreign currency transactions.............. (127,884)
Financial futures contracts................ 245
----------------
(2,001,654)
----------------
Net unrealized appreciation on:
Investments................................ 2,446,166
Foreign currencies......................... 2,343
----------------
2,448,509
----------------
Net gain on investments and foreign
currencies................................. 446,855
----------------
Net Increase in Net Assets
Resulting from Operations..................... $ 381,266
----------------
----------------
</TABLE>
- ---------------
(a) Commencement of investments operations.

PRUDENTIAL DEVELOPING MARKETS FUND
PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a)
Increase (Decrease) in Through
Net Assets May 31, 1999
<S> <C>
Operations
Net investment loss....................... $ (65,589)
Net realized loss on investment and
foreign
currency transactions.................. (2,001,654)
Net unrealized appreciation of investments
and foreign currencies................. 2,448,509
----------------
Net increase in net assets resulting from
operations............................. 381,266
----------------
Series share transactions (Note 6)
Net proceeds from shares sold............. 20,346,784
Cost of shares reacquired................. (134,374)
----------------
Net increase in net assets from Series
share transactions..................... 20,212,410
----------------
Total increase............................... 20,593,676
Net Assets
Beginning of period.......................... 50,000
----------------
End of period................................ $ 20,643,676
----------------
----------------
</TABLE>
- ---------------
(a) Commencement of investment operations.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
Prudential Developing Markets Fund (the 'Fund') is registered under the
Investment Company Act of 1940, as an open-end, diversified management
investment company presently consisting of two series: Prudential Developing
Markets Equity Fund (the 'Series') and Prudential Latin America Equity Fund. The
Fund was organized as a business trust in Delaware on October 24, 1997. The
Series had no significant operations other than the issuance of 1,250 shares
each of Class A, Class B, Class C and Class Z shares of beneficial interest for
$50,000 on June 16, 1998 to Prudential Investments Fund Management LLC ('PIFM').
Prudential Developing Markets Equity Fund commenced investment operations on
June 26, 1998.

The investment objective of the Series is to achieve long-term growth of capital
through investment in equity related securities of companies whose principal
activities are in developing markets throughout the world. Under normal
circumstances, the Series intends to invest at least 65% of its total assets in
such securities.

- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund and the Series in the preparation of its financial statements.

Security Valuation: Securities listed on a securities exchange are valued at the
last sales price on such exchange on the day of valuation, or, if there was no
sale on such day, at the mean between the last bid and asked prices on such day
or at the bid price on such day in the absence of an asked price. Securities
that are actively traded in the over-the-counter market, including listed
securities for which the primary market is believed by the Manager, in
consultation with the Subadvisor, to be over-the-counter, are valued by an
independent pricing agent or principal market maker. Futures contracts and
options traded on a commodities exchange or board of trade are valued at the
last sales price at the close of trading on such exchange or board of trade or,
if there was no sale on the applicable commodities exchange or board of trade on
such day, at the mean between the most recently quoted bid and asked prices on
such exchange or board of trade. Privately placed securities including equity
securities for which market prices may be obtained from primary dealers shall be
valued at the bid prices provided by such primary dealers. Securities for which
reliable market quotations are not readily available are valued by the Valuation
Committee or Board of Trustees in consultation with the Manager or Subadvisor.

Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.

In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying securities, the value of which exceeds the
principal amount of the repurchase transaction including accrued interest. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.

All securities are valued as of 4:15 p.m., New York time.

Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:

(i) market value of investment securities, other assets and liabilities - at the
closing daily rates of exchange.

(ii) purchases and sales of investment securities, income and expenses - at the
rate of exchange prevailing on the respective dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term portfolio securities sold
during the period. Accordingly, realized foreign currency losses are included in
the reported net realized loss on investment transactions.

Net realized losses on foreign currency transactions represent net foreign
exchange losses from holdings of foreign currencies, currency gains or losses
realized between the trade and settlement dates on security transactions, and
the difference between the amounts of dividends, interest and foreign taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net unrealized currency gains or losses from valuing foreign
currency denominated assets and liabilities (other than investments) at fiscal
period end exchange rates are reflected as a component of net unrealized
appreciation on foreign currencies.
- --------------------------------------------------------------------------------
10

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.

Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses from investment and
currency transactions are calculated on the identified cost basis. Dividend
income is recorded on the ex-dividend date; interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.

Net investment income (loss), other than distribution fees, and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.

Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the Fund is required to pledge to the broker an amount of cash and/or other
assets equal to a certain percentage of the contract amount. This amount is
known as the 'initial margin.' Subsequent payments, known as 'variation margin,'
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on futures contracts.

The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value. Under a variety of circumstances, the Fund may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and the underlying
assets.

Dividends and Distributions: The Fund expects to pay dividends of net investment
income and distributions of net realized capital and currency gains, if any,
annually. Dividends and distributions are recorded on the ex-dividend date.

Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.

Taxes: For federal income tax purposes, each series in the Fund is treated as a
separate taxpaying entity. It is the intent of the Series to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Therefore, no federal income tax provision is required.

Withholding taxes on foreign dividends have been provided for in accordance with
the Fund's understanding of the applicable country's tax rules and rates. In
addition, certain countries impose taxes on capital gains realized on the sale
of portfolio securities, and as such, taxes have been accrued on the unrealized
gain on such securities.

Deferred Organization Cost: The Series incurred approximately $62,000 in
connection with the organization of the Series. Organization costs are being
amortized over a period of 60 months ending June 2003.

Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants (AICPA) Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease accumulated net realized loss on investments and
foreign currency transactions by $127,884, increase accumulated net investment
loss by $56,186 and decrease paid-in capital in excess of par by $71,698 due to
nondeductible stock issuance expenses and realized foreign currency losses. Net
investment loss, net realized loss and net assets were not affected by these
changes.

- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the Subadvisor's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'), PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
Subadvisor's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
- --------------------------------------------------------------------------------
11

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
The management fee paid PIFM is computed daily and payable monthly at an annual
rate of 1.25% of the average daily net assets of the Fund.

The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS') which acts as the distributor of the Class A, Class B,
Class C and Class Z shares of the Fund. The Fund compensates PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution, (the 'Class A, B and C Plans'), regardless of
expenses actually incurred by PIMS. The distribution fees are accrued daily and
payable monthly. No distribution or service fees are paid to PIMS as distributor
for Class Z shares of the Fund.

Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were .25 of 1%, 1% and 1% of the average daily net
assets of the Class A, B and C shares respectively, for the period ended May 31,
1999.

PIMS has advised the Series that for the period ended May 31, 1999, it received
approximately $600 in front-end sales charges resulting from sales of Class C
shares. No front-end sales charges were received from sales of Class A shares.

PIMS has advised the Series that for the period ended May 31, 1999, it received
approximately $500 in contingent deferred sales charges imposed upon redemptions
by Class B shareholders. No contingent deferred sales charges were received upon
redemptions by Class C shareholders.

PIMS, PIFM and PIC are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.

As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to either
agreement during the period ended May 31, 1999. The purpose of the agreements is
to serve as an alternative source of funding for capital share redemptions.

Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the period ended May 31, 1999, the
Series incurred fees of approximately $300 for the services of PMFS. As of May
31, 1999 approximately $50 of such fees were due to PMFS. Transfer agent fees
and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to nonaffiliates.

- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term
investments, for the period ended May 31, 1999 were $63,801,002 and $45,791,072,
respectively.

The United States federal income tax basis of the Series' investments as of May
31, 1999 was $16,229,331 and accordingly, net unrealized appreciation on
investments for federal income tax purposes was $2,410,190 (gross unrealized
appreciation--$3,004,154, gross unrealized depreciation--$593,964).

For federal income tax purposes, the Series has a capital loss carryforward at
May 31, 1999 of approximately $1,837,800 which expires in 2007. Accordingly, no
capital gains distributions are expected to be paid to shareholders until net
gains have been realized in excess of such amount. In addition, the Series is
electing to treat net currency losses of approximately $86,500 incurred in the
seven-month period ended May 31, 1999 as having been incurred in the following
fiscal year.

- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment companies, transfers
uninvested cash balances into a single joint account, the daily aggregate
balance of which is invested in one or more repurchase agreements collateralized
by U.S. Treasury or federal agency obligations. As of May 31, 1999, the Series
had a .01% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Series represents $51,000 in principal amount. As
of such date, each repurchase agreement in the joint account and the collateral
therefor were as follows:

Bear, Stearns & Co. Inc., 4.82%, in the principal amount of $200,000,000,
repurchase price $200,107,111, due 6/1/99. The value of the collateral including
accrued interest was $204,177,828.

Credit Suisse First Boston Corp., 4.60%, in the principal amount of $85,711,000,
repurchase price $85,754,808, due 6/1/99. The value of the collateral including
accrued interest was $88,385,257.
- --------------------------------------------------------------------------------
12

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
Deutsche Bank Securities Inc., 4.83%, in the principal amount of $200,000,000,
repurchase price $200,107,333, due 6/1/99. The value of the collateral including
accrued interest was $204,000,179.

Morgan (J.P.) Securities, Inc., 4.82%, in the principal amount of $200,000,000,
repurchase price $200,107,111, due 6/1/99. The value of the collateral including
accrued interest was $204,000,892.

- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Prior to November 2, 1998 Class C shares
were sold with a contingent deferred sales charge of 1% during the first year.
Effective November 2, 1998, Class C shares are sold with a front-end sales
charge of 1% and a contingent deferred sales charge of 1% during the first 18
months. Class B shares automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. A special exchange privilege is
also available for shareholders who qualified to purchase Class A shares at net
asset value. Class Z shares are not subject to any sales or redemption charge
and are offered exclusively for sale to a limited group of investors. Of the
2,027,562 shares of beneficial interest issued and outstanding at May 31, 1999,
Prudential owned 2,012,687.

The Fund has authorized an unlimited number of shares of beneficial interest at
$.001 par value.

Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- -------------------------------------- --------- -----------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold........................... 2,819 $ 25,830
--------- -----------
--------- -----------
<CAPTION>
Class B
- --------------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold........................... 13,881 $ 134,932
Shares reacquired..................... (414) (3,466)
--------- -----------
Net increase in shares outstanding.... 13,467 $ 131,466
--------- -----------
--------- -----------
<CAPTION>
Class C
- --------------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold........................... 18,225 $ 183,754
Shares reacquired..................... (12,187) (130,697)
--------- -----------
Net increase in shares outstanding.... 6,038 $ 53,057
--------- -----------
--------- -----------
<CAPTION>
Class Z
- --------------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold........................... 2,000,257 $20,002,268
Shares reacquired..................... (19) (211)
--------- -----------
Net increase in shares outstanding.... 2,000,238 $20,002,057
--------- -----------
--------- -----------
</TABLE>
- ---------------
(a) Commencement of investment operations.
- --------------------------------------------------------------------------------
13

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Financial Highlights PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a) Through May 31, 1999
-------------------------------------------
Class A Class B Class C Class Z
------- ------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $10.00 $10.00 $10.00 $ 10.00
------- ------- ------- -------
Income from investment operations:
Net investment loss(d).................................... (.05 ) (.10 ) (.10 ) (.03)
Net realized and unrealized gain on investment and foreign
currency transactions.................................. .21 .19 .19 .21
------- ------- ------- -------
Total from investment operations....................... .16 .09 .09 .18
------- ------- ------- -------
Net asset value, end of period............................ $10.16 $10.09 $10.09 $ 10.18
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN(a)........................................... 1.60% .90% .90% 1.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................... $ 41 $ 148 $ 74 $20,380
Average net assets (000).................................. $ 29 $ 59 $ 27 $18,337
Ratios to average net assets:(b)
Expenses, including distribution fees.................. 3.43% 4.18% 4.18% 3.18%
Expenses, excluding distribution fees.................. 3.18% 3.18% 3.18% 3.18%
Net investment loss.................................... (.55)% (1.21)% (1.21)% (.38)%
Portfolio turnover rate................................... 345% 345% 345% 345%
</TABLE>
- ---------------
(a) Total return does not consider the effect of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total return for periods of less than a full year is not
annualized.
(b) Annualized.
(c) Commencement of investment operations.
(d) Calculated based upon weighted average shares outstanding during the period.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Report of Independent Accountants PRUDENTIAL DEVELOPING MARKETS EQUITY FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Prudential Developing Markets Fund--
Prudential Developing Markets Equity Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Developing Markets
Fund--Prudential Developing Markets Equity Fund (the 'Fund') at May 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the period June 26, 1998 (commencement of operations)
through May 31, 1999, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as 'financial statements') are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at May 31, 1999 by correspondence with the custodian
and brokers, provides a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
July 20, 1999
- --------------------------------------------------------------------------------
15

<PAGE>

Comparing a $10,000 Investment

Prudential Developing Markets Equity Fund vs. the Morgan Stanley
Capital International Emerging Markets Free Index

Class A
(GRAPH)

Class B
(GRAPH)

Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

These graphs compare a $10,000 investment in the Prudential
Developing Markets Equity Fund (Class A, B, C, and Z shares)
with a similar investment in the Morgan Stanley Capital International
Emerging Markets Free Index (the MSCI EMF Index) by portraying the
account values at the commencement of operations of Class A, B, C,
and Z shares, and at the end of the fiscal year (May 31), as
measured on a quarterly basis, beginning in 1998 for Class A,
B, C, and Z shares. For purposes of the graphs, and unless
otherwise indicated, it has been assumed that (a) the maximum
applicable front-end sales charge was deducted from the initial
$10,000 investment in Class A and Class C shares; (b) the maximum
applicable contingent deferred sales charges were deducted from
the value of the investment in Class B and Class C shares,
assuming full redemption on May 31, 1999; (c) all recurring
fees (including management fees) were deducted; and (d) all
dividends and distributions were reinvested. Since the Fund
has been in existence less than a year, no average annual
total returns are

<PAGE>

Class C
(GRAPH)

Class Z
(GRAPH)

presented. Class B shares will automatically convert to Class
A shares, on a quarterly basis, approximately seven years after
purchase. This conversion feature is not reflected in the graphs.
Class Z shares are not subject to a sales charge or distribution
and service (12b-1) fee.

The MSCI EMF Index is a weighted index comprising approximately
965 companies representing countries from Asia, Africa, Europe,
and North and South America. MSCI Free Indexes account for the
actual buyable securities available to foreign investors by
taking into account local market restrictions on share ownership
by foreigners. These indexes are calculated in U.S. dollars,
without dividends reinvested. The MSCI EMF Index is unmanaged,
and the total return includes the reinvestment of all dividends,
but does not reflect the payment of transaction costs and advisory
fees associated with an investment in the Fund. The securities in
the MSCI EMF Index may differ substantially from the securities
in the Fund. The MSCI EMF Index is not the only index that may
be used to characterize performance of global equity funds.
Other indexes may portray different comparative performance.
Investors cannot invest directly in an index.

These graphs are furnished to you in accordance with SEC regulations.

<PAGE>

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Robert C. Rosselot, Secretary

Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

The views expressed in this report and information about the Fund's
portfolio holdings are for the period covered by this report and are
subject to change thereafter.

This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current prospectus.

74431P108 74431P306 MF179E
74431P207 74431P405

<PAGE>

(ICON)
Prudential
Latin
America
Equity
Fund

ANNUAL
REPORT
May 31, 1999

(LOGO)

<PAGE>

Prudential Latin America Equity Fund
A Series of Prudential Developing Markets Fund

Performance at a Glance
In a period that included a global financial panic (triggered by
a Russian debt default) and a Brazilian currency devaluation, the
remarkable news is that the Latin American stock market decline
was in the single digits. Recovery from Brazil's devaluation was
very swift, by historical standards, reflecting strong investor
confidence in Latin America's commitment to free markets and
economic discipline. We outperformed the Lipper Average
primarily because we anticipated the Brazilian devaluation
with a very defensive portfolio.

<TABLE>
Cumulative Total Returns1 As of 5/31/99
<CAPTION>
Since
Inception2
<S> <C>
Class A -7.00%
Class B -7.70
Class C -7.70
Class Z -6.90
Lipper Latin
American Fund Avg.3 -8.89
</TABLE>

<TABLE>
Average Annual Total Returns1As of 6/30/99
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class A -3.96% -3.15%
Class B -4.70 -2.86
Class C -1.71 -0.90
Class Z 1.29 2.07
</TABLE>

Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

1 Source: Prudential Investments Fund Management LLC and Lipper,
Inc. The cumulative total returns do not take into account sales
charges. The average annual total returns do take into account
applicable sales charges. The Fund charges a maximum
front-end sales charge of 5% for Class A shares. Class B shares
are subject to a declining contingent deferred sales charge (CDSC)
of 5%, 4%, 3%, 2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a
quarterly basis, approximately seven years after purchase. Class
C shares are subject to a front-end sales charge of 1% and a CDSC
of 1% for 18 months. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fee.

2 Inception date: Class A, B, C, and Z, 6/26/98.

3 The Lipper Since Inception return is for all funds in each
share class in the Latin American Fund category.

How Investments Compared
(As of 5/31/99)
(GRAPH)

Source: Lipper, Inc. Financial markets change, so a mutual
fund's past performance should never be used to predict future
results. The risks to each of the investments listed above are
different--we provide 12-month total returns for several Lipper
mutual fund categories to show you that reaching for higher returns
means tolerating more risk. The greater the risk, the larger the
potential reward or loss. In addition, we've included historical
20-year average annual returns. These returns
assume the reinvestment of dividends.

U.S. Growth Funds will fluctuate a great deal. Investors have
received higher historical total returns from stocks than from
most other investments. Smaller capitalization stocks offer
greater potential for long-term growth, but may be more volatile
than larger capitalization stocks.

<PAGE>

Portfolio Manager's Report

(PHOTO)
Maria Elena Carrion
Fund Manager

Investment Goals and Style
The Prudential Latin America Equity Fund's objective is
long-term growth of capital by investing primarily in
equity-related securities of companies domiciled or doing
business principally in Latin America. The Fund looks for
above-average growth in earnings per share; high return on
invested capital; healthy balance sheets; strong competitive
advantages; effective research, product development, and
marketing; efficient service; pricing flexibility; strength
of management; and general operating characteristics that
will allow the companies to compete successfully in their
marketplace. The Fund is subject to all the risks associated
with foreign investing, including currency, political and
social risks, and potential illiquidity. There can
be no assurance that the Fund's investment objective will
be achieved.

Performance Review
A new stability in Latin American markets

We recognize a 7% decline in asset value is disappointing,
but it could have been much worse. Recall that in Asia's 1997
crisis, the MSCI Far East Emerging Market Index showed a 44%
12-month loss to U.S. dollar-based investors. In the past, a crisis
in one emerging market hurt all, and we feared that when Russia
defaulted on some bonds, it would drive capital from Latin
America. Moreover, we believed that Brazil's current account
deficit, which was a large 4% of Gross Domestic Product (GDP),
would force a currency devaluation. It did. In the past, that
also would have driven investors from Latin American markets.
Instead, despite the January devaluation, market reaction was
focused and proportionate. By March, Brazil was able to begin
to reduce its interest rates gradually, and its stock prices
began to recover. This bodes well for the future of Latin
American stocks.

We were right about the
Brazilian devaluation

When we opened the Fund, Brazil's currency policy was
a "crawling peg"--a limit on the price movements of the
real (Brazil's currency) against the U.S. dollar to 7% a
year. We believed the real was overvalued: a large current
account deficit meant Brazil was sending more money
abroad than was coming into the country. Its exports
were too expensive and imports too cheap when translated
into reals. We anticipated that Brazil would be forced to
devalue the real and would face an economic
recession. (A devaluation would increase the costs of
imported goods reducing the purchasing power in Brazil.
That would slow its economy.)

To defend against a devaluation, we maintained a high
cash balance (about 40% in January). We also had invested
less in Brazil (as low as 18%) than its benchmark weight.
Instead, we focused on Mexico, whose well-managed economy
has much stronger trade links to the United States than
to Brazil. These steps were the primary reason we beat
the Lipper Average. Our Mexican investments benefited
from the strong U.S. economy and also from a jump in
oil prices. Mexican companies--Grupo Televisa (the
largest Spanish-language media company in the world),
Telmex, and Cifra (a majority Wal-Mart-owned retail
chain)--were among the largest contributors to our
return. In our reduced Brazil holdings, we had focused
on export-oriented companies, such as
Aracruz Celulose (paper) and Companhia Vale do Rio Doce
(iron). These, too, made substantial contributions to
our performance.

<PAGE>

These defensive moves paid off when Brazil decided in January to
allow the real to reach its natural market-driven level. As we
expected, the result was an economic contraction in Brazil and
Argentina, while Mexico's economy continued to expand.

Some financial stocks were
hurt by the uncertainty

Our return was hurt somewhat by our financial services
stocks, such as Grupo Financiero Bancomer and Grupo
Financiero Inburso (both Mexico), and Unibanco (Brazil).
This sector suffered because its cost of funds rose at
the end of the third quarter of 1998 when interest rates
throughout the region rose sharply.

Its cheaper currency now
gives Brazil an advantage

The cheaper real gives Brazilian exports a competitive
advantage. Consequently, we have increased our Brazilian
holdings to 34% of our assets, favoring commodity producers
who now enjoy some of the lowest production costs in the
world. Petrobras (oil), Companhia Vale do Rio Doce, and
Gerdau (steel) were among our 10 largest holdings on May
31. We took some profits on Aracruz Celulose, which more
than quadrupled in value, but it remains in our portfolio.

Commodity producers
enjoy growing demand

We have focused on commodity producers elsewhere in Latin
America as well. Commodity prices had reached historically
low levels because first, the economy of the former Soviet
Union (then the world's third largest) contracted dramatically after
1989, then (in 1997) Asian economies followed. World demand
for many commodities actually dropped early in the 1990s
and then increased only slowly. As commodity prices kept
declining, companies saw no sense in maintaining inventories
that would drop in value, so they allowed them to shrink. In
addition, in the past two years, energy prices were held
back by unusually warm winters as well. Now, the revival
of Asian economies is increasing the demand for many
commodities, global inventories are low, and there is
little excess production capacity. Prices of commodity
company stocks are up significantly in 1999, but we
believe they have considerable room to move. In addition
to our Brazilian producers, we have a substantial position in
YPF Sociedad Anonima (oil, Argentina).

Mexico's economy is growing

Although Latin American economies are surviving Brazil's
devaluation better than might have been expected, Mexico
has the only large economy that has actually grown over
the past year. We think it will continue to do well. We
favor companies that are positioned to benefit from growth.
On May 31, Mexico was our largest country concentration,
with Telmex (telecommunications) and Grupo Televisa (media)
among our top five holdings. We also have large holdings in
Carso Global Telecom (a telecommunications holding company
that owns nearly a quarter of Telmex and nearly half of
U.S.-based Prodigy

Portfolio Composition
Countries expressed as a percentage of net assets as of 5/31/99

Mexico 35%
Brazil 34
Argentina 7
Chile 7
Venezuela 4
Cash & Equivalents 13

Five Largest Holdings
Expressed as a percentage of net assets as of 5/31/99

Telecomunicacoes Brasileiras SA 7.5%
Brazil-Telecommunications

Grupo Televisa SA 7.2
Mexico-Media

YPF Sociedad Anonima 5.3
Argentina-Oil & Gas
Exploration/Production

Telefonos de Mexico SA 5.2
Mexico-Telecommunications

Petrol Brasileiros 4.8
Brazil-Oil & Gas
Exploration/Production

1
<PAGE>

Review Cont'd.

Communications) and Corporation Geo (an international housing
construction firm).

In contrast, we are underweighting Argentina compared with our
benchmark. We believe it will continue to be adversely affected
by the devaluation in Brazil, its largest trading partner, and
will also be hurt by any increase in U.S. interest rates.
Since the Argentine currency is pegged to the U.S. dollar--the
exchange rate is fixed--it is likely to rise in value with the
dollar as a result of higher U.S. interest rates. Argentina's
Brazilian customers, who already have seen a rise in the price
of imports when their own currency fell, will see a further
increase in the cost of Argentine imports. Sales are likely
to decline.

Looking Ahead
Last year we were pessimistic about the near-term outlook
for Latin America. We were right. Brazil, Argentina, Chile,
and Venezuela have seen their economies shrink. Only Mexico,
which survived its crisis a few years earlier, has been growing. But
we have been pleasantly surprised by the way Brazil managed
its crisis. Now, we expect a resumption and acceleration of
economic growth in Latin America continuing into the year
2000. As the global economy speeds up, the increased demand for
commodities should relieve a sector that has been a wet
blanket on Latin American economies for some time. The
process of privatization of inefficient government
monopolies continues.

Together with the greater focus on fiscal discipline, it
should create an environment that fosters both domestic
and foreign investment. We are more optimistic than we
have been for some time.

2
<PAGE>

A Message to Our Shareholders July 16, 1999
(PHOTO)

Dear Shareholder:

In the last couple of years, the recurring possibility of a
global economic crisis caused investors to focus on securities
they perceived to be safe. In the equity market, they focused
on the stocks of a handful of very large companies that were
perceived to be well-buffeted from an economic slowdown. These
stocks became very expensive--out of proportion to their earnings
expectations. As a result, there was a substantial disparity in
value between large and small companies and between
growth and value stocks.

In the bond market, U.S. Treasuries and select European
government bonds were the major beneficiaries of the
flight to quality that occurred in recent years. When
this trend reversed itself toward the end of 1998, other
sectors of the bond market rebounded. However, with a
strong U.S. economy comes the threat of higher inflation,
which erodes the value of bonds' fixed interest payments.
The recent inflation concerns jolted the bond market and
helped send long-term interest rates to a 19-month high.

The winds of change in the equity market and the recent
turbulence in the bond market not only highlight the value
of professional portfolio management, but they illustrate
why investors should have a well-diversified asset allocation
strategy. It is also a good practice to rebalance your holdings,
when necessary, to keep your asset allocation consistent with
your long-term objectives and risk tolerance. A properly
diversified portfolio of value- and growth-oriented equity
funds, domestic and international bond funds, and money
market funds could help you weather inevitable market
turbulence and achieve more consistent returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders diversify, as well as several
balanced and diversified funds to allow one-decision
diversification.

Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

John R. Strangfeld
President
Prudential Latin America Equity Fund

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--87.2%
COMMON STOCKS--62.1%
- ------------------------------------------------------------
Argentina--6.8%
22,900 CEI Citicorp Holdings SA (Class B
shares) $ 77,919
6,300 YPF Sociedad Anonima (ADR) 265,388
----------
343,307
- ------------------------------------------------------------
Brazil--8.8%
7,100 Aracruz Celulose SA (ADR) 136,675
13,400 Companhia Cerveja Brahma (ADR) 137,350
6,600,000 Sider Nacional Cia 124,988
2,000 Unibanco-Uniao de Bancos Brasileiros
SA (GDR) 45,125
----------
444,138
- ------------------------------------------------------------
Chile--6.8%
4,000 Chilectra SA (ADR) 91,500
4,500 CIA de Telecomunicaciones de Chile SA
(ADR) 97,875
3,900 Enersis SA (ADR) 76,537
2,200 Sociedad Quimica Y Minera de Chile SA
(Series B shares) (ADR) 76,725
----------
342,637
- ------------------------------------------------------------
Mexico--35.5%
35,200 Carso Global Telecom (Series A
shares) 195,757
81,400 Cifra SA de CV (Series V shares) 141,674
100,700 Controladora Comerical Mexicana SA de
CV 97,485
42,800 Corporacion GEO SA de CV
(Series B shares) 163,089
62,000 Corporativo Fragua SA (Series B
shares) 68,130
29,000 Fomento Economico Mexico SA(a) 96,169
273,200 Grupo Financiero Bancomer SA de CV 93,411
10,100 Grupo Financiero Inbursa SA de CV
(Series B shares) $ 29,645
75,000 Grupo Industrial Bimbo SA de CV
(Series A shares) 145,366
8,700 Grupo Televisa SA (GDR) 363,769
3,300 Telefonos de Mexico SA (ADR)
(Class L shares) 263,794
14,100 Tubos de Acero de Mexico SA (ADR) 129,238
----------
1,787,527
- ------------------------------------------------------------
Venezuela--4.2%
2,300 C.A. La Electricidad de Caracas (ADR) 52,613
6,600 Compania Anonima Nacional Telefonos
de Venezuela (ADR) 153,862
----------
206,475
----------
Total common stocks
(cost $2,713,169) 3,124,084
----------
PREFERRED STOCKS--25.1%
- ------------------------------------------------------------
Brazil
11,500 Companhia Vale do Rio Doce(a) 202,512
10,300,000 Gerdau SA(a) 154,619
3,600,000 Gerdau Metalurgica SA(a) 83,349
1,700,000 Petrol Brasileiros(a) 240,473
13,600,000 Sider De Tubarao(a) 121,709
4,500 Telecomunicacoes Brasileiras SA(a)
(ADR) 375,750
4,000 Telesp Participacpoes SA, $1.21 (ADR) 87,500
----------
Total preferred stocks
(cost $1,083,773) 1,265,912
----------
Total long-term investments
(cost $3,796,942) 4,389,996
----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Portfolio of Investments as of
May 31, 1999 PRUDENTIAL LATIN AMERICA EQUITY FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
SHORT-TERM INVESTMENT--9.4%
- ------------------------------------------------------------
Repurchase Agreement
United States
$ 472 Joint Repurchase Agreement Account,
4.795%, 6/1/99
(cost $472,000; Note 5) $ 472,000
----------
- ------------------------------------------------------------
Total Investments--96.6%
(cost $4,268,942; Note 4) 4,861,996
Other assets in excess of
liabilities--3.4% 170,754
----------
Net Assets--100% $5,032,750
----------
----------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
GDR--Global Depository Receipt.

The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of May 31, 1999 was as
follows:

Telecommunications.................................... 23.3%
Oil & Gas Exploration/Production...................... 10.1
Steel & Metals........................................ 9.8
Media................................................. 7.2
Retail................................................ 6.1
Beverages............................................. 4.6
Mining................................................ 4.0
Real Estate-Development............................... 3.3
Food Processing....................................... 2.9
Banking............................................... 2.8
Forest & Paper........................................ 2.7
Utilities............................................. 2.6
Manufacturing......................................... 2.4
Finance............................................... 2.1
Electrical & Electronics.............................. 1.8
Chemicals............................................. 1.5
Short-term investment................................. 9.4
-----
96.6%
Other assets in excess of liabilities................. 3.4
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Statement of Assets and Liabilities PRUDENTIAL LATIN AMERICA EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets May 31, 1999
<S> <C>
Investments, at value (cost $4,268,942)...................................................................... $4,861,996
Foreign currency, at value (cost $85,153).................................................................... 85,123
Cash......................................................................................................... 19,533
Receivable for investments sold.............................................................................. 184,246
Deferred organization costs and other assets................................................................. 41,661
Dividends and interest receivable............................................................................ 24,796
Receivable for Series shares sold............................................................................ 5,015
------------
Total assets.............................................................................................. 5,222,370
------------
Liabilities
Payable for investments purchased............................................................................ 103,733
Accrued expenses and other liabilities....................................................................... 77,814
Management fee payable....................................................................................... 5,711
Withholding taxes payable.................................................................................... 2,167
Distribution fee payable..................................................................................... 195
------------
Total liabilities......................................................................................... 189,620
------------
Net Assets................................................................................................... $5,032,750
------------
------------
Net assets were comprised of:
Shares of beneficial interest, at par..................................................................... $ 541
Paid-in capital in excess of par.......................................................................... 5,164,106
------------
5,164,647
Accumulated net investment loss........................................................................... (62,356)
Accumulated net realized loss on investments and foreign currency transactions............................ (662,565)
Net unrealized appreciation on investments and foreign currency translations.............................. 593,024
------------
Net assets, May 31, 1999..................................................................................... $5,032,750
------------
------------
Class A:
Net asset value and redemption price per share $9.30
($96,150 / 10,341 shares of beneficial interest issued and outstanding)................................
Maximum sales charge (5% of offering price)............................................................... .49
------------
Maximum offering price to public.......................................................................... $9.79
------------
------------
Class B:
Net asset value, offering price and redemption price per share $9.23
($233,835 / 25,344 shares of beneficial interest issued and outstanding)............................... ------------
------------
Class C:
Net asset value and redemption price per share $9.23
($15,351 / 1,664 shares of beneficial interest issued and outstanding).................................
Sales charge (1% of offering price)....................................................................... .09
------------
Offering price to public.................................................................................. $9.32
------------
------------
Class Z:
Net asset value, offering price and redemption price per share $9.31
($4,687,414 / 503,323 shares of beneficial interest issued and outstanding)............................ ------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
PRUDENTIAL LATIN AMERICA EQUITY FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a)
Through
Net Investment Loss May 31, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $10,235).................... $ 80,872
Interest................................ 53,522
----------------
Total income......................... 134,394
----------------
Expenses
Management fee.......................... 49,884
Distribution fee--Class A............... 84
Distribution fee--Class B............... 629
Distribution fee--Class C............... 98
Custodian's fees and expenses........... 113,000
Registration fees....................... 86,000
Audit fee and expenses.................. 35,000
Reports to shareholders................. 25,000
Legal fees and expenses................. 15,000
Amortization of organizational costs.... 8,304
Trustees' fees.......................... 3,500
Transfer agent's fees and expenses...... 1,000
Miscellaneous........................... 1,267
----------------
Total expenses....................... 338,766
----------------
Net investment loss........................ (204,372)
----------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized loss on:
Investment transactions................. (662,565)
Foreign currency transactions........... (64,716)
----------------
(727,281)
----------------
Net unrealized appreciation/depreciation on:
Investments............................. 593,054
Foreign currencies...................... (30)
----------------
593,024
----------------
Net loss on investments and foreign
currencies.............................. (134,257)
----------------
Net Decrease in Net Assets
Resulting from Operations $ (338,629)
----------------
----------------
</TABLE>
- ---------------
(a) Commencement of investment operations.

PRUDENTIAL DEVELOPING MARKETS FUND
PRUDENTIAL LATIN AMERICA EQUITY FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a)
Increase (Decrease) In Through
Net Assets May 31, 1999
<S> <C>
Operations
Net investment loss......................... $ (204,372)
Net realized loss on investment and foreign
currency transactions.................... (727,281)
Net unrealized appreciation of investments
and foreign currencies................... 593,024
----------------
Net decrease in net assets resulting from
operations............................... (338,629)
----------------
Series share transactions (Note 6)
Net proceeds from shares sold............... 5,502,477
Cost of shares redeemed..................... (181,098)
----------------
Net increase in net assets from Series share
transactions............................. 5,321,379
----------------
Total increase................................. 4,982,750
Net Assets
Beginning of period............................ 50,000
----------------
End of period.................................. $5,032,750
----------------
----------------
</TABLE>
- ---------------
(a) Commencement of investment operations.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL LATIN AMERICA EQUITY FUND
- --------------------------------------------------------------------------------
Prudential Developing Markets Fund (the 'Fund') is registered under the
Investment Company Act of 1940, as an open-end, diversified management
investment company presently consisting of two series: Prudential Developing
Markets Equity Fund and Prudential Latin America Equity Fund (the 'Series'). The
Fund was organized as a business trust in Delaware on October 24, 1997. The
Series had no significant operations other than the issuance of 1,250 shares
each of Class A, Class B, Class C and Class Z shares of beneficial interest for
$50,000 on June 16, 1998 to Prudential Investments Fund Management LLC ('PIFM').
Prudential Latin America Equity Fund commenced investment operations on June 26,
1998.

The investment objective of the Series is to achieve long-term growth of capital
through investments in equity related securities of companies domiciled in or
doing business principally in Latin America. 'Latin America' is defined as
Mexico and all countries located in Central America and South America. Under
normal circumstances, the Series intends to invest at least 65% of its total
assets in such securities.

Securities Valuation: Securities listed on a securities exchange are valued at
the last sales price on such exchange on the day of valuation, or, if there was
no sale on such day, at the mean between the last bid and asked prices on such
day or at the bid price on such day in the absence of an asked price. Securities
that are actively traded in the over-the-counter market, including listed
securities for which the primary market is believed by the Manager, in
consultation with the Subadvisor, to be over-the-counter, are valued by an
independent pricing agent or principal market maker. Futures contracts and
options traded on a commodities exchange or board of trade are valued at the
last sales price at the close of trading on such exchange or board of trade or,
if there was no sale on the applicable commodities exchange or board of trade on
such day, at the mean between the most recently quoted bid and asked prices on
such exchange or board of trade. Privately placed securities including equity
securities for which market prices may be obtained from primary dealers shall be
valued at the bid prices provided by such primary dealers. Securities for which
reliable market quotations are not readily available are valued by the Valuation
Committee or Board of Trustees in consultation with the Manager or Subadvisor.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.

In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Series' policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying securities, the value of which exceeds the
principal amount of the repurchase transaction including accrued interest. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.

All securities are valued as of 4:15 p.m., New York time.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:

(i) market value of investment securities, other assets and liabilities - at the
closing daily rates of exchange.

(ii) purchases and sales of investment securities, income and expenses - at the
rate of exchange prevailing on the respective dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term portfolio securities sold
during the period. Accordingly, these realized foreign currency losses are
included in the reported net realized loss on investment transactions.

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Notes to Financial Statements PRUDENTIAL LATIN AMERICA EQUITY FUND
- --------------------------------------------------------------------------------
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.

Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.

Deferred Organization Cost: The Series incurred approximately $45,000 in
connection with the organization of the Series. Organization costs are being
amortized over a period of 60 months ending June 2003.

Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants (AICPA) Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease paid-in capital by $206,732, decrease accumulated
net investment loss by $142,016 and decrease accumulated net realized loss on
investments and foreign currency transactions by $64,716 due to the Fund
experiencing a net investment loss, realized foreign currency losses and
nondeductible stock issuance expenses. Net investment loss, net realized loss
and net assets were not affected by these changes.

- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the Subadvisor's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
Subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.

The management fee paid PIFM is computed daily and payable monthly at an annual
rate of 1.25% of the average daily net assets of the Fund.

PIMS has advised the Series that for the period ended May 31, 1999, it received
approximately $600 in front-end sales charges resulting from sales of Class A
shares. No front-end sales charges were received from sales of Class C shares.
PIMS has advised the Series that for the period ended May 31, 1999, it has not
received any contingent deferred sales charges imposed upon redemptions by Class
B and Class C shareholders.
- --------------------------------------------------------------------------------
9

As of March 11, 1999, the Series, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Series did not borrow any amounts pursuant to either
agreement during the period ended May 31, 1999. The purpose of the agreements
are to serve as an alternative source of funding for capital share redemptions.

- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the period ended May 31, 1999, the
Series incurred fees of approximately $400 for the services of PMFS. As of May
31, 1999 approximately $100 of such fees were due to PMFS. Transfer agent fees
and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to nonaffiliates.

- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments,
for the period ended May 31, 1999 were $18,974,834 and $14,517,817,
respectively.

The United States federal income tax basis of the Series' investments as of May
31, 1999 was $4,291,348 and accordingly, net unrealized appreciation on
investments for federal income tax purposes was $570,648 (gross unrealized
appreciation--$662,017, gross unrealized depreciation--$91,369).

For federal income tax purposes, the Series has a capital loss carryforward at
May 31, 1999 of approximately $640,200 which expires in 2007. Accordingly, no
capital gains distributions are expected to be paid to shareholders until net
gains have been realized in excess of such amount. In addition, the Series is
electing to treat net currency losses of approximately $60,200 incurred in the
seven-month period ended May 31, 1999 as having been incurred in the following
fiscal year.

Note 5. Joint Repurchase Agreement Account
The Series, along with other affiliated registered investment companies,
transfers uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. As of May 31,
1999, the Series had a .07% undivided interest in the repurchase agreements in
the joint account. The undivided interest for the Series represents $472,000 in
principal amount. As of such date, each repurchase agreement in the joint
account and the collateral therefore were as follows:

Bear, Stearns & Co. Inc., 4.82%, in the principal amount of $200,000,000,
repurchase price $200,107,111, due 6/1/99. The value of the collateral including
accrued interest was $204,177,828.

Credit Suisse First Boston Corp., 4.60%, in the principal amount of $85,711,000,
repurchase price $85,754,808, due 6/1/99. The value of the collateral including
accrued interest was $88,385,257.

Deutsche Bank Securities, Inc., 4.83%, in the principal amount of $200,000,000,
repurchase price $200,107,333, due 6/1/99. The value of the collateral including
accrued interest was $204,000,179.

Morgan (J.P.) Securities, Inc., 4.82%, in the principal amount of $200,000,000,
repurchase price $200,107,111, due 6/1/99. The value of the collateral including
accrued interest was $204,000,892.

- ------------------------------------------------------------
Note 6. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares
are sold with a front-end sales charge of up to 5%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Prior to November 2, 1998 Class C shares
were sold with a contingent deferred sales charge of 1% during the first year.
Effective November 2, 1998, Class C shares are sold with a front-end sales
charge of 1% and a contingent deferred sales charge of 1% during the first 18
months. Class B shares automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. A special exchange privilege is
also available for shareholders who qualified to purchase Class A shares at net
asset value. Class Z shares are not subject to any sales or redemption charge
and are offered exclusively for sale to a limited group of investors. Of the
540,672 shares of beneficial interest issued and outstanding at May 31, 1999,
Prudential owned 503,750.
- --------------------------------------------------------------------------------
10

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ----------- -------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold....................... 12,779 $ 119,093
Shares reacquired................. (3,688) (33,811)
----------- -------------
Net increase in shares
outstanding..................... 9,091 $ 85,282
----------- -------------
----------- -------------
<CAPTION>
Class B
- ----------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold....................... 38,116 $ 339,380
Shares reacquired................. (14,022) (126,738)
----------- -------------
Net increase in shares
outstanding..................... 24,094 $ 212,642
----------- -------------
----------- -------------
<CAPTION>
Class C
- ----------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold....................... 414 $ 4,264
----------- -------------
----------- -------------
<CAPTION>
Class Z
- ----------------------------------
<S> <C> <C>
June 26, 1998(a) through
May 31, 1999:
Shares sold....................... 504,850 $ 5,039,740
Shares reacquired................. (2,777) (20,549)
----------- -------------
Net increase in shares
outstanding..................... 502,073 $ 5,019,191
----------- -------------
----------- -------------
</TABLE>
- ---------------
(a) Commencement of investment operations.
- --------------------------------------------------------------------------------
11

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Financial Highlights PRUDENTIAL LATIN AMERCIA EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 26, 1998(a) through May 31, 1999
-----------------------------------------------
<S> <C> <C> <C> <C>
Class A Class B Class C Class Z
-------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................ $10.00 $10.00 $10.00 $10.00
-------- -------- -------- --------
Income from investment operations:
Net investment loss(d)...................................................... (.20) (.29) (.46) (.40)
Net realized and unrealized gain (loss) on investment and foreign currency
transactions............................................................. (.50) (.48) (.31) (.29)
-------- -------- -------- --------
Total from investment operations......................................... (.70) (.77) (.77) (.69)
-------- -------- -------- --------
Net asset value, end of period.............................................. $ 9.30 $ 9.23 $ 9.23 $ 9.31
-------- -------- -------- --------
-------- -------- -------- --------
TOTAL RETURN(b)............................................................. (7.00)% (7.70)% (7.70)% (6.90)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............................................. $ 96 $ 234 $ 15 $4,687
Average net assets (000).................................................... $ 36 $ 68 $ 11 $4,207
Ratios to average net assets:(c)
Expenses, including distribution fees.................................... 8.72% 9.47% 9.47% 8.47%
Expenses, excluding distribution fees.................................... 8.47% 8.47% 8.47% 8.47%
Net investment loss...................................................... (2.61)% (3.95)% (6.07)% (5.16)%
Portfolio turnover rate..................................................... 448% 448% 448% 448%
</TABLE>

- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effect of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total return for periods of less than a full year are not
annualized.
(c) Annualized.
(d) Calculated based upon weighted average shares outstanding during the period.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>
PRUDENTIAL DEVELOPING MARKETS FUND
Report of Independent Accountants PRUDENTIAL LATIN AMERICA EQUITY FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Prudential Developing Markets Fund--
Prudential Latin America Equity Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Developing Markets
Fund--Prudential Latin America Equity Fund (the 'Fund') at May 31, 1999, and the
results of its operations, the changes in its net assets and the financial
highlights for the period June 26, 1998 (commencement of operations) through May
31, 1999, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
'financial statements') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at May 31,
1999 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
July 20, 1999
- --------------------------------------------------------------------------------
13
<PAGE>

Getting
The Most
From Your
Prudential
Mutual
Fund

Some mutual fund shareholders won't ever read this--they don't read
annual and semiannual reports. It's quite understandable. These
annual and semi-annual reports are prepared to comply with
federal regulations, and are often written in language that
is difficult to understand. So, when most people run into
those particularly daunting sections of these reports, they
don't read them.

We think that's a mistake.

At Prudential Mutual Funds, we've made some changes to our
report to make it easier to understand and more pleasant
to read. We hope you'll find it profitable to spend a few
minutes familiarizing yourself with your investment. Here's
what you'll find in the report:

Performance at a Glance
Since an investment's performance is often a shareholder's
primary concern, we present performance information in two
different formats. You'll find it first on the "Performance
at a Glance" page where we compare the Fund and the comparable average
calculated by Lipper, Inc., a nationally recognized mutual
fund rating agency. We report both the cumulative total
returns and the average annual total returns. The cumulative
total return is the total amount of income and appreciation
the Fund has achieved in various time periods. The average
annual total return is an annualized representation of the
Fund's performance. It gives you an idea of how much the
Fund has earned in an average year for a given time period.
Under the performance box, you'll see legends that explain
the performance information, whether fees and sales charges
have been included in returns, and the inception dates for
the Fund's share classes.

See the performance comparison charts at the back of the
report for more performance information. Please keep in
mind that past performance is not indicative of future results.

Portfolio Manager's Report
The portfolio manager who invests your money for you
reports on successful--and not-so-successful--strategies
in this section of your report. Look for recent purchases
and sales here, as well as information about the sectors
the portfolio manager favors, and any changes that are on
the drawing board.

Portfolio of Investments
This is where the report begins to appear technical, but
it's really just a listing of each security held at the
end of the reporting period, along with valuations and
other information. Please note that sometimes we discuss
a security in the Portfolio Manager's Report that doesn't
appear in this listing because it was sold before the close
of the reporting period.

<PAGE>

Statement of Assets and Liabilities

The balance sheet shows the assets (the value of the Fund's
holdings), liabilities (how much the Fund owes), and net
assets (the Fund's equity, or holdings after the Fund pays
its debts) as of the end of the reporting period. It also
shows how we calculate the net asset value per share for
each class of shares. The net asset value is reduced by
payment of your dividend, capital gain, or other distribution,
but remember that the money or new shares are being paid or
issued to you. The net asset value fluctuates daily, along
with the value of every security in the portfolio.

Statement of Operations

This is the income statement, which details income (mostly
interest and dividends earned) and expenses (including what
you pay us to manage your money). You'll also see capital
gains here--both realized and unrealized.

Statement of Changes in Net Assets

This schedule shows how income and expenses translate into
changes in net assets. The Fund is required to pay out the
bulk of its income to shareholders every year, and this
statement shows you how we do it--through dividends and
distributions--and how that affects the net assets. This
statement also shows how money from investors flowed into
and out of the Fund.

Notes to Financial Statements

This is the kind of technical material that can intimidate
readers, but it does contain useful information. The Notes
provide a brief history and explanation of your Fund's
objectives. In addition, they outline how Prudential Mutual
Funds prices securities. The Notes also explain who manages
and distributes the Fund's shares and, more importantly, how
much they are paid for doing so. Finally, the Notes explain
how many shares are outstanding and the number issued and
redeemed over the period.

Financial Highlights

This information contains many elements from prior pages,
but on a per-share basis. It is designed to help you understand
how the Fund performed, and to compare this year's performance
and expenses to those of prior years.

Independent Auditor's Report

Once a year, an outside auditor looks over our books and certifies
that the information is fairly presented and complies with
generally accepted accounting principles.

Tax Information

This is information which we report annually about how much
of your total return is taxable. Should you have any questions,
you may want to consult a tax adviser.

Performance Comparison

These charts are included in the annual report and are required
by the Securities Exchange Commission. Performance is presented
here as a hypothetical $10,000 investment in the Fund since its
inception or for 10 years (whichever is shorter). To help
you put that return in context, we are required to include the
performance of an unmanaged, broad-based securities index as
well. The index does not reflect the cost of buying the securities
it contains or the cost of managing a mutual fund. Of
course, the index holdings do not mirror those of the fund--the
index is a broad-based reference point commonly used by investors
to measure how well they are doing. A definition of the selected
index is also provided. Investors cannot invest
directly in an index.

<PAGE>
Comparing a $10,000 Investment

Prudential Latin America Equity Fund vs. the Morgan Stanley
Capital International Emerging Markets Free Latin America Index

Class A
(GRAPH)

Class B
(GRAPH)

Past performance is not indicative of future results. Principal
and investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.

These graphs compare a $10,000 investment in the Prudential Latin
America Equity Fund (Class A, B, C, and Z shares) with a similar
investment in the Morgan Stanley Capital International Emerging
Markets Free Latin America Index (the MSCI EMF Latin
America Index) by portraying the account values at the commencement
of operations of Class A, B, C, and Z shares, and at the end of
the fiscal year (May 31), as measured on a quarterly basis,
beginning in 1998 for Class A, B, C, and Z shares. For
purposes of the graphs, and unless otherwise indicated, it
has been assumed that (a) the maximum applicable front-end
sales charge was deducted from the initial $10,000 investment
in Class A and Class C shares; (b) the maximum applicable contingent
deferred sales charges were deducted from the value of the
investment in Class B and Class C shares, assuming full
redemption on May 31, 1999; (c) all recurring fees (including
management fees) were deducted; and (d) all dividends and distributions
were reinvested. Since the Fund has been in existence less
than a year, no average

<PAGE>

Class C
(GRAPH)

Class Z
(GRAPH)

annual total returns are presented. Class B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. This
conversion feature is not reflected in the graphs. Class
Z shares are not subject to a sales charge or distribution
and service (12b-1) fee.

The MSCI EMF Latin America Index is a weighted index comprising
approximately 190 companies representing Latin American
countries. MSCI Free Indexes account for the actual buyable
securities available to foreign investors by taking into account
local market restrictions on share ownership by foreigners.
These indexes are calculated in U.S. dollars, without dividends
reinvested. The MSCI EMF Latin America Index is unmanaged, and
the total return includes the reinvestment of all dividends,
but does not reflect the payment of transaction costs and
advisory fees associated with an investment in the Fund.
The securities in the MSCI EMF Latin America Index may
differ substantially from the securities in the Fund.
The MSCI EMF Latin America Index is not the only index
that may be used to characterize performance of global
equity funds. Other indexes may portray different comparative
performance. Investors cannot invest directly in an index. These
graphs are furnished to you in
accordance with SEC regulations.