(ICON)
Prudential
World
Fund, Inc.
Global Series
ANNUAL
REPORT
Oct. 31, 1996
(LOGO)
<PAGE>
Prudential World Fund, Inc. -- Global Series
Performance At A Glance.
World stock markets rose nicely over the past 12 months, as
low inflation and
steady interest rates made equities the security of choice
for mutual fund
investors. Because of higher economic growth, the best gains
came in Europe
and the U.S., which outperformed the Pacific Basin, where
Japan's continuing
slump depressed stock market returns. As a result of our
large investments in
Europe and the U.S., the Prudential World Fund -- Global
Series delivered
handsome returns for the 12 months. Still, your Fund
performed significantly
below the average global fund (as measured by Lipper
Analytical Services),
because our economically sensitive stocks were hurt in late
1995 when the
European and U.S. markets briefly declined. More recently,
our performance
has improved.
Cumulative Total Returns1
As of 10/31/96
<TABLE>
<CAPTION>
One Five Ten
Since
Year Years Years
Inception2
<S> <C> <C> <C>
<C>
Class A 12.3% 75.5% N/A
74.2%
Class B 11.6 69.3 123.1%
363.6
Class C 11.6 N/A N/A
21.3
Class Z N/A N/A N/A
8.1
Lipper Global Fund Avg3 15.5 69.6 194.1
417.5
</TABLE>
Average Annual Total Returns1
As of 9/30/96
<TABLE>
<CAPTION>
One Five Ten
Since
Year Years Years
Inception2
<S> <C> <C> <C>
<C>
Class A 4.4% 11.1% N/A
7.8%
Class B 4.2 11.3 7.8%
13.2
Class C 8.2 N/A N/A
9.3
</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.
1Source: Prudential Mutual Fund Management and Lipper
Analytical Services. The
cumulative total returns do not take into account sales
charges. The average
annual returns do take into account applicable sales
charges. The Fund charges
a maximum front-end sales load of 5% for Class A shares and
a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%,
1% and 1% for six
years, for Class B shares. Class C shares have a 1% CDSC for
one year. Class B
shares will automatically convert to Class A shares on a
quarterly basis,
approximately seven years after purchase. Class Z shares
have been in
existence for less than one year.
2Inception dates: 1/22/90 Class A; 5/15/84 Class B; 8/1/94
Class C; 3/1/96
Class Z.
3Lipper average returns are for 153 funds for one year, 36
funds for five
years, 14 funds for 10 years and nine funds since inception
of the Class B
shares on 5/15/84.
How Investments Compared.
(As of 10/31/96)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money Funds
Source: Lipper Analytical Services. Financial markets
change, so a mutual
fund's past performance should never be used to predict
future results. The
risks to each of the investments listed above are different
- -- we provide
12-month total returns for several Lipper mutual fund
categories to show you
that reaching for higher yields means tolerating more risk.
The greater the
risk, the larger the potential reward or loss. In addition,
we've included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly) and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that is
usually exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share
value; they don't
fluctuate much in price but, historically, their returns
have been generally
among the lowest of the major investment categories.
<PAGE>
Dan Duane, Fund Manager
(PHOTO)
Portfolio
Manager's Report
The Prudential World Fund -- Global Series invests in U.S.
and foreign stocks.
Because it invests globally, the Fund is subject to the
special risks
associated with foreign investments, including currency,
political and social
risks, and illiquidity. There can be no assurance that the
Fund will achieve
its investment objective.
Our Growth Style.
As growth investors, we look for significant global changes
and then invest in
companies that we think can benefit over the long term. We
favor attractively
priced stocks with prospects of strong earnings growth.
We're also patient, so
we often hold stocks longer than other funds.
Strategy Session.
Europe Slows...
Over the past 12 months, we thought European stocks showed
the most growth
potential, because the economic recovery there seemed about
to take off after
years of slow growth. That's why we increased our European
holdings to 38% of
our assets as of October 31, up from 33% a year ago. But we
were still
cautious -- what looks to be economic strength can be
deceptive -- so we
invested in companies that enjoyed strong international
revenues. We also
bought stocks that we thought would benefit from the
corporate restructuring
that's been underway in Continental Europe for much of the
decade. Even with
slow revenue growth, these companies have increased profits
by cutting costs.
Our instincts about Europe were right, but we were too early
in making our
move -- the recovery lost steam after a slow start and our
stocks fell in late
1995. These same stocks, however, bounced back early this
year, as lower
interest rates and weaker European currencies helped many
companies report
nice profits, allaying fears of a recession. This early
volatility hurt our
returns for the 12 months, but added nicely to our
performance in the last
six months.
...But The U.S. Grows
We were cautious about the U.S., because we thought that
stock prices were
approaching a peak. As a result, we kept our holdings steady
at about 22% of
assets through the year, about half the level of a widely
watched global fund
performance yardstick -- the Morgan Stanley Capital
International World Index.
Slowing Pacific Growth.
In the Pacific Basin, overall economic growth was slowing,
as global demand
fell for the region's exports. However, we still saw
profitable investments in
the Pacific, especially in companies that did business with
China, where its
1.2 billion people are starting to demand Western-style
consumer goods. This
long-term trend led us to invest heavily in Hong Kong -- a
good move in
retrospect, as its Hang Seng stock index rose 29% in the
last 12 months.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 10/31/96.
(PIE CHART)
<PAGE>
What Went Well.
Hong Kong's China Connection.
Hong Kong had the best performing stock market in the
Pacific Basin over the
past 12 months, thanks to the many Hong Kong-domiciled
companies profiting
from booming economic growth in China. Worries about the
colony's transition
from British to Chinese control next summer seem to have
faded. Instead,
investors expect that Hong Kong will continue to gain from
China's ever-
growing appetite for consumer and industrial goods and
services. We shared
this sentiment and kept 8% of our assets in Hong Kong
stocks, four times the
weighting of Morgan Stanley's World Index. One of our more
successful
investments was Citic Pacific. This conglomerate not only
operates toll roads,
bridges and tunnels in China, but also distributes consumer
goods.
U.S. Technology.
U.S. technology stocks posted average gains of 20% or so for
the past 12
months, according to Standard & Poor's. Your Fund shared in
this success,
because software and computer networking stocks made up two
of our five
largest holdings (as of October 31). We had sold our
computer hardware stocks
in 1995, but we held on to our major software holdings.
Despite some
volatility last year, these stocks were among our biggest
gainers. Oracle, for
example, surged 65% over the year, while Microsoft climbed
52%.
And Not So Well.
Japan Languishes.
We were wrong about the end of Japan's longest-lasting
postwar economic slump.
Last year, we thought record low interest rates would spark
consumer spending
- -- the driving force behind economic growth -- and lead to
declines in the yen's
value, which would spur additional revenues from exports.
(The yield on 10-year
government bonds, for example, hit a low of 2.7% in July.)
But consumer
spending and export demand stayed sluggish, and the stocks
we held declined
due to investor pessimism.
Five Largest Holdings.
2.2% GKN PLC
Auto Parts
2.2% Citic Pacific, Ltd.
Conglomerate
2.1% Microsoft Corp.
Computer Software
2.0% Oracle Systems Corp.
Computer Software
1.9% Coca-Cola Amatil, Ltd.
Beverages & Tobacco
Expressed as a percentage of total net assets as of
10/31/96.
Looking Ahead.
U.S. stocks have outperformed foreign stocks over the last
few years, but that
could change if economic growth shifts to Europe and the
Pacific, which we
think is likely at some point. We are especially optimistic
about some of the
smaller Pacific stock markets like Hong Kong and The
Philippines. Even the
huge Japanese economy is expected to grow by a respectable
3% next year,
according to our economists. If that happens, Japanese
stocks could enjoy
strong price appreciation. In Europe, we think conditions
favor economic
expansion in 1997, helped by low interest rates and
increased competitive
efficiencies. Once we see convincing evidence of
sustainable recoveries in
Europe and Japan, we will begin to shift into the types of
stocks that do best
in the early stages of the business cycle -- basic
materials, industrial and
consumer cyclical.
- ------------------------------------------------------------
- -------------------
1
<PAGE>
President's Letter
December 2, 1996
(PHOTO)
Dear Shareholder:
For many investors, 1996 may well be the second year of back-
to-back, double-
digit stock market returns. In late November, the Dow Jones
Industrial Average
passed 6500 -- only weeks after breaking the 6000 mark in
mid-October.
America's economic expansion is entering its sixth year and
there seems little
evidence of an end to the continued modest growth and low
inflation we've
enjoyed for the last several years.
This is good news. For most investors it's meant an increase
in their share
values for college funds, retirement nest eggs or other long-
term financial
goals. However, as you read your year-end account statements
and make plans
for 1997, it's important to remember that there never is a
"sure thing" when
it comes to investment returns. Stock and bond markets go
down just as they
go up. (Did you notice the brief period of decline this past
summer?) No one
likes to see the value of their investments fall but such
periods remind us
we must keep our expectations realistic.
Regardless of the market's direction, a wise investor plans
for tomorrow's
needs today. Your Financial Advisor or Registered
Representative can help you:
- - Review your portfolio and suggest strategies for 1997,
such as diversifying
across different types of investments. Financial markets
seldom move in
lockstep. By investing in a mix of stock and bond funds
(foreign & domestic)
and money market funds you may be in a better position to
achieve your long-
term goals and to weather periods of uncertainty.
- - See why annuities have become popular retirement planning
tools. The
choices are broader than ever. Our new Discovery SelectSM
Variable Annuity
offers you many of the keys to successful retirement
planning, including
a personalized asset allocation program and a choice of
21 variable- or
fixed-rate investment options offering a broad array of
investment
objectives and styles.
- - Explain new retirement savings developments. For example,
Congress has
expanded the contribution limit on spousal IRAs. And
don't forget, it's not
too late for you to make a contribution to your IRA or
open one for 1996.
The IRS deadline is April 15, 1997, but it's best to act
sooner.
Why not contact your Financial Advisor or Registered
Representative today? If
you are interested in Discovery SelectSM call for a
prospectus, which contains
more complete information. Read it carefully before you
invest.
Sincerely,
Richard A. Redeker
President
P.S. Your 1997 Prudential IRA contribution may qualify you
for a waiver of the
annual custodial fee. Ask your financial representative for
details.
- ------------------------------------------------------------
- -------------------
2
Page>
Portfolio of Investments PRUDENTIAL
WORLD FUND, INC.
as of October 31, 1996 GLOBAL SERIES
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--94.6%
COMMON STOCKS--94.4%
- ------------------------------------------------------------
Argentina--0.6%
433,000 Banco Frances Rio Plata (Banking) $
3,789,508
- ------------------------------------------------------------
Australia--5.4%
430,100 Brambles Industries, Ltd. (Business
& Public Services)
7,120,635
525,974 Broken Hill Proprietary Co., Ltd.
(Other energy sources)
6,978,822
828,619 Coca-Cola Amatil, Ltd. (Beverages &
Tobacco)
11,388,260
3,000,000 Duke Group (Precious Metals)
0
1,720,800 Publishing & Broadcasting, Ltd.
(Broadcasting & Publishing)
7,742,510
---------
- ----
33,230,227
- ------------------------------------------------------------
Belgium--0.7%
5,500 Bekaert SA (Building Materials &
Components)
4,443,360
- ------------------------------------------------------------
Federal Republic of Germany--4.4%
185,000 Hoechst AG (Chemicals)
6,943,749
11,420 Linde AG (Machinery & Engineering)
7,056,119
49,900 SAP AG (Computer Software &
Services)
6,741,910
113,000 Siemens AG (Electrical &
Electronics)
5,827,622
---------
- ----
26,569,400
- ------------------------------------------------------------
Finland--1.0%
132,800 Nokia Corp. (Telecommunications
Equipment)
6,123,115
- ------------------------------------------------------------
France--4.8%
19,350 Carrefour (Retail)
10,717,679
20,796 Imetal SA (Misc. Materials &
Commodities)
3,235,926
39,400 Legrand SA (Electrical &
Electronics)
6,823,077
18,300 Plastic Omnium (Automobiles & Auto
Parts) $
1,515,591
10,000 SGS Thomson Microelectronics NV*
(Electronic Components)
528,895
105,100 Valeo SA (Automobiles & Auto Parts)
6,295,330
---------
- ----
29,116,498
- ------------------------------------------------------------
Hong Kong--7.3%
7,201,213 CDL Hotels International Ltd.
(Leisure & Tourism)
3,725,311
2,715,000 Citic Pacific, Ltd. (Multi-Industry)
13,202,452
2,102,000 Guoco Group, Ltd. (Banking)
11,118,673
928,000 Hutchison Whampoa, Ltd.
(Multi-Industry)
6,480,950
1,738,000 New World Development Co., Ltd.
(Property Development)
10,114,844
---------
- ----
44,642,230
- ------------------------------------------------------------
Ireland--1.1%
810,300 Bank of Ireland (Banking)
6,659,097
- ------------------------------------------------------------
Italy--2.3%
96,300 Gucci Group NV (Retail)
6,644,700
3,559,600 Telecom Italia Mobile SpA*
(Telecommunications-Unregulated)
7,335,682
---------
- ----
13,980,382
- ------------------------------------------------------------
Japan--15.3%
247,000 Daibiru Corp. (Property Investment)
2,795,858
313,000 Eisai Co., Ltd. (Health & Personal
Care)
5,602,773
402,000 Honda Motor Co., Ltd. (Automobiles &
Auto Parts)
9,594,525
473,000 JGC Corp. (Construction)
4,980,476
38,500 Keyence Corp. (Electronic Components
& Instruments)
4,459,264
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
3 -----
<PAGE>
Portfolio of Investments PRUDENTIAL
WORLD FUND, INC.
as of October 31, 1996 GLOBAL SERIES
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
Japan (cont'd.)
45,000 Kokusai Denshin Denwa Co., Ltd.
(Utilities Telephones) $
3,889,352
708,000 Mitsui Fudosan Co., Ltd. (Property
Investment)
8,759,531
148,700 Namco Ltd. (Recreation & Other
Consumer Goods)
4,449,322
780,000 Nichirei Corp. (Miscellaneous
Industrial)
4,660,905
26,300 Nippon TV Network (Broadcasting &
Publishing)
7,615,496
792,000 Nissan Chemical Industries
(Chemicals)
4,663,116
674,000 Nissan Motor Co., Ltd.* (Automobiles
& Auto Parts)
5,092,037
880 Nissen Co., Ltd. (Retail)
7,336
583,000 Onward Kashiyama & Co., Ltd.
(Textile-Apparel Manufacturing)
8,133,813
174,000 Sony Corp. (Appliances & Household
Durables)
10,427,938
340,000 Toyota Motor Corp. (Automobiles &
Auto Parts)
8,025,271
---------
- ----
93,157,013
- ------------------------------------------------------------
Malaysia--3.1%
4,320,000 IJM Corporation Berhad
(Construction)
9,404,314
1,837,000 Renong Berhad (Multi-Industry)
2,893,829
1,132,000 Resorts World Berhad (Leisure &
Tourism)
6,496,735
---------
- ----
18,794,878
- ------------------------------------------------------------
Mexico--2.3%
664,000 Apasco, SA (Building Materials &
Components)
4,077,193
1,848,200 Cifra, SA de CV* (Retail)
2,380,889
1,003,200 Fomento Economico Mexicano, SA de CV
(Beverages & Tobacco)
3,067,429
240,000 Kimberly-Clark de Mexico, SA de CV
(Forest Products & Paper)
4,661,654
---------
- ----
14,187,165
Netherlands--2.9%
26,600 Heineken NV (Beverages & Tobacco) $
5,016,062
40,300 Nutricia Verenigde Bedrijven NV
(Food & Household Products)
5,643,328
41,025 Royal Dutch Petroleum Co. (Energy
Sources)
6,763,477
---------
- ----
17,422,867
- ------------------------------------------------------------
New Zealand--0.1%
384,863 Fletcher Challenge Forestry, Ltd.
(Forest Products & Paper)
642,119
- ------------------------------------------------------------
Singapore--3.2%
529,100 Overseas Chinese Banking Corp., Ltd.
(Banking)
6,047,930
853,000 Overseas Union Bank (Banking)
5,813,845
1,083,250 Sembawang Maritime, Ltd. (Energy
Equipment & Services)
2,860,980
1,915,000 Wing Tai Holdings (Property
Development)
4,704,224
---------
- ----
19,426,979
- ------------------------------------------------------------
Spain--1.9%
29,600 Banco Popular Espanol SA (Banking)
5,646,805
247,862 Centros Commerciale Pryca (Retail)
5,680,373
---------
- ----
11,327,178
- ------------------------------------------------------------
Sweden--5.4%
271,000 Allgon AB (Electronic Components)
5,495,496
132,800 Astra AB (Health & Personal Care)
6,051,676
84,200 Hennes & Mauritz AB (Retail)
10,884,237
187,200 Mo och Domsjo AB (Forest Products &
Paper)
5,146,841
678,000 Skandinaviska Enskilda Banken
(Banking)
5,664,333
---------
- ----
33,242,583
</TABLE>
- ------------------------------------------------------------
- --------------------
- -----4 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments PRUDENTIAL
WORLD FUND, INC.
as of October 31, 1996 GLOBAL SERIES
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
United Kingdom--11.6%
1,131,000 British Sky Broadcasting PLC
(Broadcasting & Publishing) $
10,619,805
820,000 Dixons Group PLC (Retail)
7,345,972
715,900 GKN PLC (Automobiles & Auto Parts)
13,385,990
750,000 Hays PLC (Business & Public
Services)
6,285,598
304,000 Reed International PLC (Broadcasting
& Publishing)
5,659,496
722,900 Siebe PLC (Machinery & Engineering)
11,340,530
608,300 Standard Chartered PLC (Banking)
6,563,107
2,451,290 Vodafone Group PLC
(Telecommunications-Unregulated)
9,494,012
---------
- ----
70,694,510
- ------------------------------------------------------------
United States--21.0%
188,000 Baker Hughes Inc. (Oil & Gas
Equipment & Services)
6,697,500
121,000 Case Corp. (Machinery & Equipment)
5,626,500
177,400 Cisco Systems, Inc.* (Computer
Software & Services)
10,976,625
317,000 Companhia Brasileira De Distribuicao
(ADR) (Retail)
6,260,750
104,700 Disney (Walt) Co. (Leisure &
Tourism)
6,897,112
317,882 Mattel, Inc. (Recreation & Other
Consumer Goods)
9,178,843
335,800 MCI Communications Corp. (Utilities
Telephones)
8,436,975
92,100 Microsoft Corp.* (Computer Software
& Services)
12,640,725
227,800 Mirage Resorts, Inc.* (Leisure &
Tourism)
5,011,600
76,000 Mobil Corp. (Energy Sources)
8,873,000
74,800 Motorola, Inc. (Electrical &
Electronics)
3,440,800
286,500 Oracle Systems Corp.* (Computer
Software & Services)
12,122,531
101,800 SGS Thomson Microelectronics NV*
(Electronic Components)
5,331,775
123,500 Texas Instruments Inc. (Electronic
Components & Instruments)
5,943,438
124,000 Tiffany & Co. (Retail)
4,588,000
141,000 Time Warner, Inc. (Broadcasting &
Publishing) $
5,252,250
86,000 Transocean Offshore Inc. (Oil & Gas
Exploration/Production)
5,439,500
160,800 Viacom Inc.* (Broadcasting &
Publishing)
5,246,100
---------
- ----
127,964,024
---------
- ----
Total common stocks
(cost US$457,006,447)
575,413,133
---------
- ----
Warrants
WARRANTS*--0.2%
- ------------------------------------------------------------
Malaysia
229,625 Renong Berhad
expiring Nov. '00 @ MYR4.10
(Multi-Industry)
93,613
- ------------------------------------------------------------
Singapore--0.2%
324,400 United Overseas Bank, Ltd.
expiring June '97 @ SGD3.34
(Banking)
1,151,580
---------
- ----
Total warrants
(cost US$1,685,011)
1,245,193
---------
- ----
Total long-term investments
(cost US$458,691,458)
576,658,326
---------
- ----
Principal
Amount
(000)
SHORT-TERM INVESTMENTS--1.7%
- ------------------------------------------------------------
Repurchase Agreement--1.7%
Joint Repurchase Agreement Account,
$10,702 5.548%, 11/01/96
(cost US$10,702,000; Note 5)
10,702,000
---------
- ----
- ------------------------------------------------------------
Total Investments--96.3%
(cost US$469,393,458; Note 4)
587,360,326
Other assets in excess of
liabilities--3.7%
22,426,775
---------
- ----
Net Assets--100% $
609,787,101
---------
- ----
---------
- ----
</TABLE>
- ---------------
*Non-income producing security.
ADR--American Depository Receipt
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
5 -----
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Statement of Assets and Liabilities GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
October 31, 1996
<S>
<C>
Investments, at value (cost
US$469,393,458).............................................
.................. $587,360,326
Foreign currency, at value (cost
US$16,357,706)..............................................
............. 16,251,872
Cash........................................................
..............................................
150,081
Receivable for Fund shares
sold........................................................
................... 12,772,062
Dividends and interest
receivable..................................................
....................... 1,079,227
Receivable for investments
sold........................................................
................... 228,820
Deferred expenses and other
assets......................................................
.................. 14,097
- ----------------
Total
assets......................................................
..................................... 617,856,485
- ----------------
Liabilities
Payable for investments
purchased...................................................
...................... 5,916,647
Payable for Fund shares
reacquired..................................................
...................... 857,859
Accrued
expenses....................................................
...................................... 524,515
Management fee
payable.....................................................
............................... 385,716
Distribution fee
payable.....................................................
............................. 312,201
Withholding taxes
payable.....................................................
............................ 72,446
- ----------------
Total
liabilities.................................................
..................................... 8,069,384
- ----------------
Net
Assets......................................................
..........................................
$609,787,101
- ----------------
- ----------------
Net assets were comprised of:
Common stock, at
par.........................................................
.......................... $ 375,232
Paid-in capital in excess of
par.........................................................
.............. 443,721,827
- ----------------
444,097,059
Undistributed net investment
income......................................................
.............. 1,692,769
Accumulated net realized gain on investments and foreign
currency transactions.........................
46,116,378
Net unrealized appreciation on investments and foreign
currencies......................................
117,880,895
- ----------------
Net assets, October 31,
1996........................................................
...................... $609,787,101
- ----------------
- ----------------
Class A:
Net asset value and redemption price per share
($234,699,764 / 14,125,276 shares of common stock
issued and outstanding)...........................
$16.62
Maximum sales charge (5% of offering
price)......................................................
...... .87
- ----------------
Maximum offering price to
public......................................................
................. $17.49
- ----------------
- ----------------
Class B:
Net asset value, offering price and redemption price per
share
($326,977,505 / 20,487,988 shares of common stock
issued and outstanding)...........................
$15.96
- ----------------
- ----------------
Class C:
Net asset value, offering price and redemption price per
share
($7,693,316 / 482,078 shares of common stock issued
and outstanding)................................
$15.96
- ----------------
- ----------------
Class Z:
Net asset value, offering price and redemption price per
share
($40,416,516 / 2,427,885 shares of common stock issued
and outstanding).............................
$16.65
- ----------------
- ----------------
</TABLE>
- ------------------------------------------------------------
- --------------------
- -----6 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND, INC.
WORLD FUND, INC.
GLOBAL SERIES
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income October 31,
1996
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $833,471)................... $ 7,259,756
Interest................................ 713,180
--------------
- --
Total income......................... 7,972,936
--------------
- --
Expenses
Management fee.......................... 4,118,594
Distribution fee--Class A............... 557,370
Distribution fee--Class B............... 2,714,436
Distribution fee--Class C............... 55,155
Transfer agent's fees and expenses...... 1,328,000
Custodian's fees and expenses........... 430,000
Reports to shareholders................. 384,000
Registration fees....................... 114,000
Directors' fees and expenses............ 88,000
Legal fees and expenses................. 65,000
Audit fees and expenses................. 52,000
Insurance expense....................... 12,872
Miscellaneous........................... 16,001
--------------
- --
Total operating expenses............. 9,935,428
--------------
- --
Net investment loss........................
(1,962,492)
--------------
- --
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions
Net realized gain on:
Investment transactions................. 46,102,357
Foreign currency transactions........... 3,727,733
--------------
- --
49,830,090
--------------
- --
Net change in unrealized
appreciation/depreciation on:
Investments............................. 19,925,606
Foreign currencies......................
(4,059,414)
--------------
- --
15,866,192
--------------
- --
Net gain on investments and foreign
currencies.............................. 65,696,282
--------------
- --
Net Increase in Net Assets
Resulting from Operations.................. $ 63,733,790
--------------
- --
--------------
- --
</TABLE>
PRUDENTIAL WORLD FUND, INC.
WORLD FUND, INC.
GLOBAL SERIES
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended October 31,
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment loss........ $ (1,962,492) $
(2,260,923)
Net realized gain on
investment and foreign
currency transactions... 49,830,090
25,315,122
Net change in unrealized
appreciation/depreciation
of investments and
foreign currencies...... 15,866,192
1,174,619
---------------- --------
- -----
Net increase in net assets
resulting from
operations.............. 63,733,790
24,228,818
---------------- --------
- -----
Net equalization credits...... --
712,010
---------------- --------
- -----
Distributions paid to
shareholders
from net realized gains on
investments and foreign
currency transactions
Class A.................... (10,616,171)
(1,006,573)
Class B.................... (12,843,895)
(5,394,512)
Class C.................... (187,931)
(20,921)
Class Z.................... (30,717)
- --
---------------- --------
- -----
(23,678,714)
(6,422,006)
---------------- --------
- -----
Fund share transactions (net
of share conversions) (Note
6)
Proceeds from shares
sold.................... 639,187,000
323,054,908
Net asset value of shares
issued in reinvestment
of distributions........ 22,475,256
6,072,122
Cost of shares
reacquired.............. (586,163,045)
(338,953,005)
---------------- --------
- -----
Net increase (decrease) in net
assets from Fund share
transactions............... 75,499,211
(9,825,975)
---------------- --------
- -----
Total increase................ 115,554,287
8,692,847
Net Assets
Beginning of year............. 494,232,814
485,539,967
---------------- --------
- -----
End of year................... $ 609,787,101 $
494,232,814
---------------- --------
- -----
---------------- --------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
7 -----
<PAGE>
PRUDENTIAL
WORLD FUND, INC.
Notes to Financial Statements GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
Prudential World Fund, Inc. is registered under the
Investment Company Act of
1940, as an open-end, diversified management investment
company and currently
consists of two series: the Global Series (the ""Fund'') and
the International
Stock Series. At the time of the name change from Prudential
Global Fund, Inc.
to Prudential World Fund, Inc., the assets of the Global
Fund were designated
Global Series. The investment objective of the Fund is to
seek long-term
capital growth, with income as a secondary objective, by
investing in a
diversified portfolio of securities consisting of marketable
securities of
U.S. and non-U.S. issuers.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange
(whether domestic or
foreign) are valued at the last reported sales price on the
primary exchange on
which they are traded. Securities traded in the over-the-
counter market
(including securities listed on exchanges for which a last
sales price is not
available) are valued at the average of the last reported
bid and asked prices.
Short-term securities which mature in more than 60 days are
valued based upon
current market quotations. Short-term securities which
mature in 60 days or less
are valued at amortized cost which approximates market
value.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Fund's policy that its custodian or
designated
subcustodians, as the case may be under triparty repurchase
agreements, take
possession of the underlying collateral 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.
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 rate of exchange as reported by a major bank;
(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 year, the Fund
does not isolate
that portion of the results of operations arising as a
result of changes in the
foreign exchange rates from the fluctuations arising from
changes in the market
prices of securities held at fiscal year end. Similarly, the
Fund does not
isolate the effect of changes in foreign exchange rates from
the fluctuations
arising from changes in the market prices of long-term
portfolio securities sold
during the fiscal year.
Net realized gains on foreign currency transactions of
$3,727,733 represent net
foreign exchange gains or 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 and losses from
valuing foreign currency denominated assets and liabilities
(other than
investments) at fiscal year end exchange rates are reflected
as a component of
net unrealized appreciation on investments and foreign
currencies.
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.
Forward Currency Contracts: A forward currency contract is a
commitment to
purchase or sell a foreign currency at a future date at a
negotiated forward
rate. The Fund enters into forward currency contracts in
order to hedge its
exposure to changes in foreign currency exchange rates on
its foreign portfolio
holdings or on specific receivables and payables denominated
in a foreign
currency. The contracts are valued daily at current exchange
rates and any
unrealized gain or loss is included in net unrealized
appreciation or
depreciation on investments. Gain or loss is realized on the
settlement date of
the contract equal to the difference between the settlement
value of the
original and renegotiated forward contracts. This gain or
loss, if any, is
included in net realized gain (loss) on foreign currency
transactions. Risks may
arise upon entering into these contracts from the potential
inability of the
counterparties to meet the terms of their contracts.
- ------------------------------------------------------------
- --------------------
- -----8
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Notes to Financial Statements GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
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, and
interest income is
recorded on an accrual basis. Expenses are recorded on the
accrual basis which
may require the use of certain estimates by management.
Net investment income (other than distribution fees) and
unrealized and realized
gains or losses are allocated daily to each class of shares
of the Fund based
upon the relative proportion of net assets of each class at
the beginning of the
day.
Equalization: Effective November 1, 1995, the Fund
discontinued the accounting
practice of equalization. Equalization is a practice whereby
a portion of the
proceeds from sales and costs of repurchases of capital
shares, equivalent on a
per share basis to the amount of distributable net
investment income on the date
of the transaction, is credited or charged to undistributed
net investment
income. The balance of $3,655,851 of undistributed net
investment income at
October 31, 1995, resulting from equalization was
transferred to paid-in capital
in excess of par. Such reclassification has no effect on net
assets, results of
operations, or net asset value per share.
Reclassification of Capital Accounts: The Fund accounts and
reports for
distributions to shareholders in accordance with the
American Institute of
Certified Public Accountants Statement of Position 93-2:
Determination,
Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and
Return of Capital Distributions by Investment Companies. The
effect of applying
this statement was to increase undistributed net investment
income by
$3,926,050, decrease accumulated net realized gain on
investments and foreign
currency transactions by $3,727,733 and decrease paid-in
capital by $198,317 for
the year ended October 31, 1996.
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. These differences are primarily due to differing
treatments for
foreign currency transactions.
Federal Income Taxes: It is the Fund's policy to continue to
meet the
requirements of the Internal Revenue Code applicable to
regulated investment
companies and to distribute all of its taxable income to
shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends, interest and capital
gains have been
provided for in accordance with the Fund's understanding of
the applicable
country's tax rules and rates.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual
Fund Management LLC
(``PMF''). Pursuant to this agreement, PMF has
responsibility for all investment
advisory services and supervises the subadviser's
performance of such services.
PMF has entered into a subadvisory agreement with The
Prudential Investment
Corporation (``PIC''); PIC furnishes investment advisory
services in connection
with the management of the Fund. PMF pays for the cost of
the subadviser's
services, the compensation of officers of the Fund,
occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears
all other costs and
expenses.
The management fee paid PMF is computed daily and payable
monthly, at an annual
rate of .75 of 1% of the average daily net assets of the
Fund.
The Fund had distribution agreements with Prudential Mutual
Fund Distributors,
Inc. (``PMFD''), which acted as the distributor of the Class
A shares of the
Fund through January 1, 1996. Effective January 2, 1996
Prudential Securities
Incorporated (``PSI'') became the distributor of the Class A
shares of the Fund
and is serving the Fund under the same terms and conditions
as under the
arrangement with PMFD. PSI is also distributor of the Class
B, Class C and
Class Z shares of the Fund. The Fund compensated PMFD and
PSI for distributing
and servicing the Fund's Class A, Class B and Class C
shares, pursuant to plans
of distribution, (the ``Class A, B and C Plans'') regardless
of expenses
actually incurred by them. The distribution fees are accrued
daily and payable
monthly.
Pursuant to the Class A Plan, the Fund compensated PMFD
during the period
November 1, 1995 through January 1, 1996 and thereafter PSI
with respect to
Class A shares, for distribution-related activities at an
annual rate of up
to .30 of 1% of the average daily net assets of the Class A
shares. Pursuant to
the Class B and C Plans, the Fund compensated PSI for
distribution-related
activities at the annual rate of .75 of 1% of the average
daily net assets of
Class B shares up to the level of average daily net assets
as of February 26,
1986, plus 1% of the average daily
- ------------------------------------------------------------
- --------------------
9 -----
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Notes to Financial Statements GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
net assets in excess of such level of the Class B shares and
1% of
average daily net assets of Class C shares. Payments made
pursuant to the
Plans were .25 of 1%, .92% of 1% and 1% of the average daily
net assets of
Class A, B and C shares, respectively, for the year ended
October 31, 1996.
PMFD and PSI have advised the Fund that they have received
approximately
$283,800 in front-end sales charges resulting from sales of
Class A
shares during the year ended October 31, 1996. From these
fees, PMFD and PSI
paid such sales charges to affiliated broker-dealers, which
in turn paid
commissions to sales persons and incurred other distribution
costs.
PSI has advised the Fund that for the year ended October 31,
1996, it received
approximately $732,100 in contingent deferred sales charges
imposed upon certain
redemptions by Class B and C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC
are indirect,
wholly-owned subsidiaries of The Prudential Insurance
Company of America.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly
owned subsidiary of
PMF, serves as the Fund's transfer agent and during the year
ended October 31,
1996, the Fund incurred fees of approximately $1,297,000 for
the services of
PMFS. As of October 31, 1996, approximately $111,300 of such
fees were due to
PMFS. Transfer agent fees and expenses in the Statement of
Operations include
certain out-of-pocket expenses paid to non-affiliates.
For the year ended October 31, 1996, PSI and/or its foreign
affiliates earned
approximately $40,100 in brokerage commissions from
portfolio transactions
executed on behalf of the Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the year ended October 31, 1996 were $307,901,802 and
$272,113,751,
respectively.
The United States federal income tax basis of the Fund's
investments is
substantially the same as for financial reporting purposes
and, accordingly, as
of October 31, 1996 net unrealized appreciation for federal
income tax purposes
was $117,966,868 (gross unrealized appreciation--
$139,904,299; gross unrealized
depreciation--$21,937,431).
- ------------------------------------------------------------
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 October 31,
1996, the Fund had a 1.25% undivided interest in the
repurchase agreements
in the joint account. The undivided interest for the Fund
represents $10,702,000
in principal amount. As of such date, each repurchase
agreement in the joint
account and the value of the collateral therefor were as
follows:
Bear Stearns & Co., 5.53%, in the principal amount of
$277,000,000, repurchase
price $277,042,550, due 11/1/96. The value of the collateral
including accrued
interest is $282,667,606.
CS First Boston Corp., 5.56%, in the principal amount of
$100,000,000,
repurchase price $100,015,444, due 11/1/96. The value of the
collateral
including accrued interest is $102,000,453.
Deutsche Bank Securities Corp., 5.55%, in the principal
amount of $175,000,000,
repurchase price $175,026,799, due 11/1/96. The value of the
collateral
including accrued interest is $178,500,400.
Morgan Stanley & Co., Inc., 5.65%, in the principal amount
of $26,585,000,
repurchase price $26,589,172, due 11/1/96. The value of the
collateral including
accrued interest is $27,128,601.
Smith Barney Inc., 5.55%, in the principal amount of
$277,000,000, repurchase
price $277,042,704, due 11/1/96. The value of the collateral
including accrued
interest is $282,541,278.
- ------------------------------------------------------------
- --------------------
- -----10
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Notes to Financial Statements GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C shares and Class
Z. 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. Class C shares are sold
with a contingent
deferred sales charge of 1% during the first year. Class B
shares will
automatically convert to Class A shares on a quarterly basis
approximately seven
years after purchase. A special exchange privilege is also
available for
shareholders who qualify to purchase Class A shares at net
asset value.
Effective March 1, 1996, the Fund commenced offering Class Z
shares. Class Z
shares are not subject to any sales or redemption charge and
are offered
exclusively for sale to a limited group of investors. There
are
500 million authorized shares of common stock, $.01 par
value per share,
divided equally into four classes, designated Class A, Class
B, Class C and
Class Z common stock.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ----------- ---------
- ----
<S> <C> <C>
Year ended October 31, 1996:
Shares sold....................... 26,335,607 $
415,012,668
Shares issued in reinvestment of
distributions................... 680,446
10,109,525
Shares reacquired................. (28,068,715)
(443,294,595)
----------- ---------
- ----
Net increase in shares outstanding
before conversion............... (1,052,662)
(18,172,402)
Shares issued upon conversion from
Class B......................... 872,989
13,829,667
----------- ---------
- ----
Net decrease in shares
outstanding..................... (179,673) $
(4,342,735)
----------- ---------
- ----
----------- ---------
- ----
Year ended October 31, 1995:
Shares sold....................... 14,310,794 $
203,989,259
Shares issued in reinvestment of
distributions................... 73,418
983,611
Shares reacquired................. (15,121,426)
(217,547,014)
----------- ---------
- ----
Net decrease in shares outstanding
before conversion............... (737,214)
(12,574,144)
Shares issued upon conversion from
Class B......................... 10,085,947
130,068,677
----------- ---------
- ----
Net increase in shares
outstanding..................... 9,348,733 $
117,494,533
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class B Shares Amount
- ---------------------------------- ----------- ---------
- ----
<S> <C> <C>
Year ended October 31, 1996:
Shares sold....................... 10,835,882 $
164,171,609
Shares issued in reinvestment of
distributions................... 846,398
12,154,296
Shares reacquired................. (8,151,951)
(123,589,487)
----------- ---------
- ----
Net increase in shares outstanding
before conversion............... 3,530,329
52,736,418
Shares reacquired upon conversion
into Class A.................... (906,072)
(13,829,667)
----------- ---------
- ----
Net increase in shares
outstanding..................... 2,624,257 $
38,906,751
----------- ---------
- ----
----------- ---------
- ----
Year ended October 31, 1995:
Shares sold....................... 8,422,470 $
116,118,701
Shares issued in reinvestment of
distributions................... 390,179
5,070,014
Shares reacquired................. (8,836,648)
(120,783,109)
----------- ---------
- ----
Net decrease in shares outstanding
before conversion............... (23,999)
405,606
Shares reacquired upon conversion
into Class A.................... (10,370,444)
(130,068,677)
----------- ---------
- ----
Net decrease in shares
outstanding..................... (10,394,443)
$(129,663,071)
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class C
- ----------------------------------
Year ended October 31, 1996:
Shares sold....................... 343,501 $
5,317,184
Shares issued in reinvestment of
distributions................... 12,592
180,902
Shares reacquired................. (122,368)
(1,957,739)
----------- ---------
- ----
Net increase in shares
outstanding..................... 233,725 $
3,540,347
----------- ---------
- ----
----------- ---------
- ----
Year ended October 31, 1995:
Shares sold....................... 210,290 $
2,946,948
Shares issued in reinvestment of
distributions................... 1,419
18,497
Shares reacquired................. (46,329)
(622,882)
----------- ---------
- ----
Net increase in shares
outstanding..................... 165,380 $
2,342,563
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
11 -----
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Notes to Financial Statements GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z Shares Amount
- ---------------------------------- ----------- ---------
- ----
<S> <C> <C>
March 1, 1996(a) through
October 31, 1996:
Shares sold....................... 3,507,519 $
54,685,539
Shares issued in reinvestment of
distributions................... 1,895
30,533
Shares reacquired................. (1,081,529)
(17,321,224)
----------- ---------
- ----
Net increase in shares
outstanding..................... 2,427,885 $
37,394,848
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
- ---------------
(a) Commencement of offering of Class Z shares.
- ------------------------------------------------------------
Note 7. Distributions
On December 10, 1996, the Board of Directors of the Fund
declared a currency
gain dividend of $0.04 per share, short-term capital gain
distribution of $0.20
per share and a long-term capital gain distribution of $1.05
per share for Class
A, B, C and Z shares respectively, payable on December 19,
1996 to shareholders
of record on December 16, 1996.
- ------------------------------------------------------------
- --------------------
- -----12
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A
----------
- -----------------------------------------------
Year Ended October 31,
----------
- -----------------------------------------------
1996
1995(a) 1994(a) 1993(a) 1992(a)
--------
- -------- ------- ------- -------
<S> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 15.52
$ 14.89 $ 13.17 $ 9.58 $ 10.08
--------
- -------- ------- ------- -------
Income from investment operations
Net investment income (loss).................. --
.01 (.04) .02 .03
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... 1.83
.81 1.76 3.57 (.53)
--------
- -------- ------- ------- -------
Total from investment operations........... 1.83
.82 1.72 3.59 (.50)
--------
- -------- ------- ------- -------
Less distributions
Distributions paid to shareholders from net
realized gains on investment and foreign
currency transactions...................... (.73)
(.19) -- -- --
--------
- -------- ------- ------- -------
Total distributions........................ (.73)
(.19) -- -- --
--------
- -------- ------- ------- -------
Net asset value, end of year.................. $ 16.62
$ 15.52 $ 14.89 $ 13.17 $ 9.58
--------
- -------- ------- ------- -------
--------
- -------- ------- ------- -------
TOTAL RETURN(b):.............................. 12.33%
5.74% 13.06% 37.47% (4.96)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $234,700
$222,002 $73,815 $42,021 $13,973
Average net assets (000)...................... $222,948
$174,316 $58,455 $21,409 $14,758
Ratios to average net assets:
Expenses, including distribution fees...... 1.45%
1.51% 1.55% 1.56% 1.71%
Expenses, excluding distribution fees...... 1.20%
1.26% 1.30% 1.36% 1.51%
Net investment income (loss)............... (0.04)%
.10% (0.29)% 0.20% 0.22%
For Class A, B, C and Z shares:
Portfolio turnover rate(c).................... 52%
50% 49% 69% 58%
Average commission rate paid per share........ $ 0.0366
N/A N/A N/A N/A
</TABLE>
- ---------------
(a) Based on average shares outstanding, by class.
(b) Total return does not consider the effects 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.
(c) Portfolio turnover is calculated on the basis of the
Fund as a whole without
distinguishing between the classes of shares issued.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
13 -----
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B Class C
------------
- ------------------------------------------------ -------
- ----
Year
Year Ended October 31, Ended
------------
- ------------------------------------------------ October
31,
1996
1995(a) 1994(a) 1993(a) 1992(a) 1996
--------
- -------- -------- -------- -------- --------
- ---
<S> <C>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 15.03
$ 14.53 $ 12.94 $ 9.47 $ 10.05 $
15.03
--------
- -------- -------- -------- -------- ----
- -
Income from investment operations
Net investment income (loss).................. (.08)
(.11) (.13) (.04) (.05) (.05)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... 1.74
.80 1.72 3.51 (.53) 1.71
--------
- -------- -------- -------- -------- ----
- -
Total from investment operations........... 1.66
.69 1.59 3.47 (.58) 1.66
--------
- -------- -------- -------- -------- ----
- -
Less distributions
Distributions paid to shareholders from net
realized gains on investment and foreign
currency transactions...................... (.73)
(.19) -- -- -- (.73)
--------
- -------- -------- -------- -------- ----
- -
Total distributions........................ (.73)
(.19) -- -- -- (.73)
--------
- -------- -------- -------- -------- ----
- -
Net asset value, end of period................ $ 15.96
$ 15.03 $ 14.53 $ 12.94 $ 9.47 $
15.96
--------
- -------- -------- -------- -------- ----
- -
--------
- -------- -------- -------- -------- ----
- -
TOTAL RETURN(b):.............................. 11.57%
4.98% 12.29% 36.64% (5.77)% 11.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $326,978
$268,498 $410,520 $251,133 $178,438 $
7,693
Average net assets (000)...................... $294,230
$287,656 $345,771 $183,741 $210,464 $
5,516
Ratios to average net assets:
Expenses, including distribution fees...... 2.12%
2.19% 2.24% 2.24% 2.40% 2.20%
Expenses, excluding distribution fees...... 1.20%
1.27% 1.30% 1.36% 1.51% 1.20%
Net investment income (loss)............... (.67)%
(.84)% (0.97)% (0.39)% (0.47)% (.72)%
<CAPTION>
Class Z
- -----------
August 1, March 1,
Year
1994(d) 1996 (e)
Ended
Through Through
October 31,
October 31, October 31,
1995(a)
1994(a) 1996
-----------
- ----------- -----------
<S> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 14.53
$ 14.03 $ 15.42
-----
- ----- -----------
Income from investment operations
Net investment income (loss).................. (.11)
(.03) .06
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... .80
.53 1.18
-----
- ----- -----------
Total from investment operations........... .69
.50 1.24
-----
- ----- -----------
Less distributions
Distributions paid to shareholders from net
realized gains on investment and foreign
currency transactions...................... (.19)
- -- (.01)
-----
- ----- -----------
Total distributions........................ (.19)
- -- (.01)
-----
- ----- -----------
Net asset value, end of period................ $ 15.03
$ 14.53 $ 16.65
-----
- ----- -----------
-----
- ----- -----------
TOTAL RETURN(b):.............................. 4.98%
3.56% 12.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 3,733
$ 1,205 $40,416
Average net assets (000)...................... $ 2,284
$ 630 $26,452
Ratios to average net assets:
Expenses, including distribution fees...... 2.25%
2.63%(c) 1.20%(c)
Expenses, excluding distribution fees...... 1.25%
1.63%(c) 1.20%(c)
Net investment income (loss)............... (.76)%
(1.21)%(c) .55%(c)
</TABLE>
- ---------------
(a) Based on average shares outstanding, by class.
(b) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of less than a
full year are not
annualized.
(c) Annualized.
(d) Commencement of offering of Class C shares.
(e) Commencement of offering of Class Z shares.
- ------------------------------------------------------------
- --------------------
- -----14 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Independent Auditors' Report GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
The Shareholders and Board of Directors
Prudential World Fund, Inc.--Global Series
We have audited the accompanying statement of assets and
liabilities including
the portfolio of investments, of Prudential World Fund, Inc.-
- -Global Series, as
of October 31, 1996, the related statements of operations
for the year then
ended and of changes in net assets for each of the two years
in the period then
ended, and the financial highlights for each of the five
years in the period
then ended. These financial statements and financial
highlights are the
responsibility of the Fund's management. Our responsibility
is to express an
opinion on these financial statements and financial
highlights based on our
audits.
We conducted our audits in accordance with generally
accepted auditing
standards. Those standards require that we plan and perform
the audit to obtain
reasonable assurance about whether the financial statements
and financial
highlights are free of material misstatement. An audit
includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial
statements. Our procedures included confirmation of the
securities owned as of
October 31, 1996 by correspondence with the custodian and
brokers. An audit also
includes assessing the accounting principles used and
significant estimates made
by management, as well as evaluating the overall financial
statement
presentation. We believe that our audits provide a
reasonable basis for our
opinion.
In our opinion, such financial statements and financial
highlights present
fairly, in all material respects, the financial position of
Prudential World
Fund, Inc.--Global Series as of October 31, 1996, the
results of its operations,
the changes in its net assets, and its financial highlights
for the respective
stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
December 13, 1996
PRUDENTIAL WORLD FUND, INC.
Tax Information GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
As required by the Internal Revenue Code, we are to advise
you within 60 days of
the Fund's fiscal year end (October 31, 1996) as to the
federal tax status of
dividends and distributions paid by the Fund.
During the fiscal year ended October 31, 1996, the Fund paid
a long-term capital
gains distribution for Class A, Class B and Class C Shares
of $.73 per share and
$.01 per share for Class Z shares (taxable as capital gains
income). We wish to
advise you that the corporate dividends received deduction
for the Fund is zero.
For the purpose of preparing your annual federal income tax
return, however, you
should report the amounts as reflected on the appropriate
Form 1099-DIV or
substitute 1099-DIV.
- ------------------------------------------------------------
- --------------------
15 -----
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Supplemental Proxy Information GLOBAL
SERIES
- ------------------------------------------------------------
- --------------------
The Annual Meeting of Shareholders of the Prudential
World Fund, Inc.--Global
Series (the ``Fund'') was held on Wednesday, October 30,
1996 at the offices of
Prudential Securities Incorporated, One Seaport Plaza, New
York, New York. The
meeting was held for the following purposes:
(1) To elect Directors as follows: Edward D. Beach, Stephen
C. Eyre, Delayne D.
Gold, Robert F. Gunia, Don G. Hoff, Robert E. LaBlanc,
Mendel A. Melzer,
Richard A. Redeker, Robin B. Smith, Stephen Stoneburn,
and Nancy H. Teeters.
(2) To amend the Fund's fundamental investment restriction
to permit the Fund to
invest up to 10% of its total assets in shares of other
investment
companies.
(3) To approve the proposed elimination of the Fund's
fundamental investment
restriction relating to investment in securities of
unseasoned issuers.
(4) To amend the Fund's fundamental investment restriction
relating to
securities lending.
(5) To ratify the selection of Deloitte & Touche LLP as
independent public
accountants for the fiscal year ending October 31, 1997.
The results of the proxy solicitation on the above
matters were as follows:
<TABLE>
<CAPTION>
Director/Matter
Votes for Votes against
Abstentions
- ---------------- ------------- -----
- ------
<S>
<C> <C> <C>
(1) Edward D. Beach
17,649,913 --
724,562
Stephen C. Eyre
17,661,633 --
712,842
Delayne D. Gold
17,666,403 --
708,072
Robert F. Gunia
17,695,811 --
678,664
Don G. Hoff
17,695,210 --
679,265
Robert E. LaBlanc
17,699,110 --
675,365
Mendel A. Melzer
17,671,148 --
703,327
Richard A. Redeker
17,689,892 --
684,583
Robin B. Smith
17,682,046 --
692,429
Stephen Stoneburn
17,680,268 --
694,207
Nancy H. Teeters
17,674,066 --
700,409
(2) Investment Restrictions--shares of other invesment
companies
12,767,141 703,902
857,721
(3) Investment Restrictions--unseasoned issuers
12,428,459 982,462
917,843
(4) Investment Restrictions--securities lending
12,554,247 839,927
935,590
(5) Deloitte & Touche LLP
17,423,504 200,859
750,112
</TABLE>
- ------------------------------------------------------------
- --------------------
- ----- 16
<PAGE>
Comparing A $10,000 Investment.
Prudential World Fund, Inc. -- Global Series vs. the
Morgan Stanley Capital International World Index.
Prudential World Fund, Inc. -- Global Series
MSCI Index
Past performance is not indicative of future results.
Investment return and
principal value will fluctuate so an investor's shares, when
redeemed, may be
worth more or less than their original cost. The boxes on
top of the graphs
are designed to give you an idea how much the Fund's returns
can fluctuate
from year to year by measuring the best and worst calendar
years in terms of
total annual return since inception of each share class.
These graphs are furnished to you in accordance with SEC
regulations. They
compare a $10,000 investment in the Prudential World Fund,
Inc. -- Global
Series (Class A, Class B, Class C and Class Z) with a
similar investment in
the Morgan Stanley Capital International World Index by
portraying the initial
account values at the commencement of operations of Class A,
Class C and Class
Z shares and for 10 years for Class B shares, and subsequent
account values at
the end of this reporting period (October 31), as measured
on a quarterly
basis, beginning in 1990 for Class A shares, in 1986 for
Class B shares, in
1994 for Class C shares and in 1996 for Class Z shares. For
purposes of the
graphs, and unless otherwise indicated, in the accompanying
tables it has been
assumed (a) that the maximum applicable front-end sales
charge was deducted
from the initial $10,000 investment in Class A shares; (b)
the maximum
applicable contingent deferred sales charge was deducted
from the value of the
investment in Class B and Class C shares, assuming full
redemption on October
31, 1996; (c) all recurring fees (including management fees)
were deducted;
and (d) all dividends and distributions were reinvested.
Class B shares will
automatically convert to Class A shares, on a quarterly
basis, beginning
approximately seven years after purchase. This conversion
feature is not
reflected in the graph. Class Z shares do not have a sales
charge or a
distribution fee. Since Class Z shares have been in
existence less than one
year, no average annual total returns are shown. The graph
and accompanying
tables reflect the past subsidy and/or waiver of expenses
and/or management
fees.
The Morgan Stanley World Index is a weighted index comprised
of approximately
1,472 securities listed on the stock exchanges of the U.S.,
Europe, Canada,
Australia, New Zealand and the Far East. The World Index is
an unmanaged index
and 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 World Index may differ
substantially from
the securities in the Fund. The World Index is not the only
index that may be
used to characterize performance of stock funds and other
indexes may portray
different comparative performance.
Best Year: 1993 48.8%
Worst Year: 1994 -4.8%
Class A Average Annual Total
Returns - Class A
(GRAPH)
With Sales Load
7.7% Since Inception
10.8% for 5 Years
6.7% for 1 Year
Without Sales Load
8.5% Since Inception
11.9% for 5 Years
12.3% for 1 Year
Best Year: 1993 47.9%
Worst Year: 1990 -16.5%
Class B Average Annual Total
Returns - Class B
(GRAPH)
With Sales Load
13.1% Since Inception
8.4% for 10 Years
11.0% for 5 Years
6.6% for 1 Year
Without Sales Load
13.1% Since Inception
8.4% for 10 Years
11.1% for 5 Years
11.6% for 1 Year
Class C Average Annual Total
Returns - Class C
(GRAPH)
With Sales Load
9.0% Since Inception
10.6% for 1 Year
Without Sales Load
9.0% Since Inception
11.6% for 1 Year
Class Z
(GRAPH)
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
(LOGO)
Directors
Edward D. Beach
Stephen C. Eyre
Delayne D. Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer
Richard A. Redeker
Robin B. Smith
Stephen Stoneburn
Nancy H. Teeters
Officers
Richard A. Redeker, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Ellyn C. Vogin, Assistant Secretary
Manager
Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
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.
743969107 MF115E
743969206 Cat. #44014AY
743969305
743969404
(ICON)
Prudential
WorldFund, Inc. ----------------------------International
Stock Series
ANNUAL
REPORT
Sept. 30, 1996
and
Oct. 31, 1996
(LOGO)
<PAGE>
Prudential
World Fund,
Inc.
International
Stock Series
Performance At
A Glance.
Welcome to the Prudential World Fund --
International Stock Series (formerly
The Prudential Institutional Fund --
International Stock Fund). You can see
our report has a new and brighter look. We hope
you like it.
Foreign stocks climbed nicely over the last 13
months. Among them, European
stocks stood out, rising higher than any other
group outside the U.S. --
as interest rates fell and many companies
restructured to compete more
efficiently. Buoyed by our heavy investments in
Europe, the Prudential
World Fund (International Stock Series)
outperformed the average
international stock fund, as measured by Lipper
Analytical Services.
<TABLE>
Cumulative Total Returns1
As of 10/31/96
<CAPTION>
One One
Three Since
Month Year
Years Inception2
<S> <C> <C>
<C>
<C>
Class A .67% N/A
N/A
0.3%
Class B .61 N/A
N/A
0.2
Class C .61 N/A
N/A
0.2
Class Z .67
12.3% 35.6%
75.8
Lipper International Funds Avg3 -.71 10.7
23.0
64.3
</TABLE>
<TABLE>
Average Annual Total Returns1
As of 9/30/96
<CAPTION>
One Three
Since Year
Years
Inception2
<S> <C> <C>
<C>
Class A N/A N/A
- -5.3%
Class B N/A N/A
- -5.4
Class C N/A N/A
- -1.4
Class Z 9.4% 12.2%
15.4
</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.
1Source: Prudential Mutual Fund Management and
Lipper Analytical
Services. The cumulative total returns do not
take into account
sales charges. The average annual returns do
take into account
applicable sales charges. The Fund charges a
maximum frontend
sales load of 5% for Class A shares and a
declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%,
1% and 1% for
six years, for Class B shares. Class C shares
have a 1% CDSC for one year. Class B shares will
automatically convert to Class
A shares on a quarterly basis, approximately
seven years after
purchase. Class Z shares do not have a sales
charge or a distribution fee.
2Inception date: 9/23/96 for Class A, Class B
and Class C; 11/5/92
for Class Z. Class Z shares were issued on
9/20/96 in connection
with the reorganization of the International
Stock Fund, the assets
and liabilities of which were transferred and
exchanged for Class Z
shares of the Series. The Series is the
"accounting" survivor of
the reorganization. Accordingly, Class Z
performance results date
from the inception of the International Stock
Fund.
3Lipper average returns are for 376 funds for
one month, 324 funds
for one year, 147 funds for three years, and 101
funds since inception
of the Class Z shares on 11/5/92.
How Investments Compared.
(As of 10/31/96)
(GRAPH)
U.S. General General
U.S.
Growth Bond Muni Debt
Taxable Funds Funds
Funds Money Funds
Source: Lipper Analytical Services. Financial
markets change, so a
mutual fund's past performance should never be
used to predict future
results. The risks to each of the investments
listed above are
different -- we provide 12-month total returns
for several Lipper
mutual fund categories to show you that reaching
for higher yields
means tolerating more risk. The greater the
risk, the larger the
potential reward or loss. In addition, we've
included historical
20-year average annual returns. These returns
assume the reinvestment
of dividends.
U.S. Growth Funds will fluctuate a great deal.
Investors have received
higher historical total returns from stocks than
from most other
investments. Smaller capitalization stocks offer
greater potential
for long-term growth but may be more volatile
than larger capitalization
stocks.
General Bond Funds provide more income than
stock funds, which can help
smooth out their total returns year by year. But
their prices still
fluctuate (sometimes significantly) and their
returns have been
historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds
issued by state governments, state agencies
and/or municipalities. This investment
provides income that is usually exempt from
federal and state
income taxes.
Money Market Funds attempt to preserve a
constant share value;
they don't fluctuate much in price but,
historically, their returns
have been generally among the lowest of the
major investment categories.
<PAGE>
Peter F. Spano, Fund Manager
Portfolio Manager's
Report
(PICTURE)
The Prudential World Fund--International Stock
Series invests in stocks of
companies located outside the U.S. We use a
disciplined investment style to
seek bargain-priced stocks that we think will
provide our investors with
long-term capital appreciation. There are
special risks associated with
foreign investments, including political,
economic and
social risks, and
potential illiquidity. There can be no
assurance that the Fund will achieve
its objective.
Fund Changes.
On September 20, 1996, the assets and
liabilities of The Prudential
Institutional Fund - International Stock Fund
were transferred and exchanged
for Class Z shares of the International Stock
Series. The Series' investment
objective and policies are substantially similar
to that of the
International Stock Fund. In addition, Peter
Spano will continue as
portfolio manager. For the convenience of
shareholders from the
International Stock Fund, we are providing
financial statements
covering the 12-month period ended September 30,
1996 (the International
Stock Fund's fiscal year-end) and the one-month
period ended October 31,
1996 (which coincides with the fiscal year-end
for the International
Stock Series).
Strategy Session.
A Focus On Europe.
For most of the period, we held about two-thirds
of our assets in Europe,
which turned out to be the best performing
continent outside the U.S. This
was a major reason for the Series' good
performance. Although European
economic growth has been sluggish since last
year, stock prices there have
climbed on other good economic news: lower
interest rates and subdued
inflation. Interest rates fell across Europe, as
governments trimmed
spending to lower budget deficits.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 10/31/96.
(CHART)
The stocks of many European companies also rose
as a result of widespread
restructuring. As American businesses started
doing several years ago,
European companies are cutting costs and
shedding inefficient operations to
better compete in a global economy. That's
driving an increase in corporate
earnings, which has occurred across Europe even
as revenue growth remains slow.
Your Series benefitted from this trend, which
we see pushing stock prices
higher.
Within Europe, we selectively increased our
holdings in the U.K., Italy, the
Netherlands and France over the past period, as
they were the countries where
we discovered the best bargains. We sold our
single German stock, Volkswagen,
and cut back on our Norwegian holdings, because
they became fully valued.
A Tough Japanese Market.
We kept our investments in Japan relatively
small (5% of assets on October 31)
because we were worried about the slow pace of
economic recovery. That helped
our returns, because Japanese markets turned in
a flat performance (after
adjusting for currency movements). Japan is
emerging from a recession, but
consumer spending and export demand haven't
picked up significantly. As a
result, many Japanese companies cut back
production levels, delaying a full
recovery.
<PAGE>
What Went Well. Britain Restructures.
British companies continued to streamline their
operations, slashing costs to
become more efficient producers. We liked this
new competitiveness as our
holdings in the United Kingdom rose to 16.2% of
assets on October 31, up
from 9.6% 13 months earlier. We bought British
Steel, which has become a
low-cost producer in an out-of-favor industry.
We also invested in British
Telecom, which used to be the government-owned
telephone company. Since going
private in 1984, British Telecom has
restructured its operations to become one
of the world's major telecommunications
companies. In early November, it agreed
to buy MCI Communications to extend its global
reach into the U.S.
Low Interest Rates.
Moderate economic growth and low inflation
worldwide pushed interest rates to
record lows. That was especially good for banks
- -- and their stocks -- because
lower interest rates reduced the cost of their
product -money. We increased
our bank stocks to 13% of assets by October 31.
It was our largest sector. Our
third biggest holding, Bank of Nova Scotia, was
one of our best performers,
rising 49.8% over the past 13 months as Canada's
prime lending rate ended the
period at 5%, its lowest level in 40 years.
And Not So Well.
We didn't do so well in South Korea, where
ongoing tensions between North and
South and internal political strife have caused
many investors to avoid the
stock market there. Over the longer term,
however, we're very optimistic
about Korea and its prospects for faster
economic growth. One of our
favorite holdings is Pohang Iron & Steel, the
world's second biggest steel
maker. We think Pohang, as a low-cost producer,
is poised to benefit from
economic growth, especially in Asia.
In general, emerging stock markets, such as
Korea's, can provide high
returns, but they can also be very volatile, so
we've limited our holdings
in these markets to relatively small positions
in the portfolio. (Korea is
currently
less than
4%.)
Five Largest
Holdings.
2.6% Ciba-
Geigy
Chemica
ls
2.6%
Iberdrola
Utilities
2.5% Bank of
Nova
Scotia
Commerc
ial
Banking
2.4% Orkla
Food &
Household
Products
2.4% Lloyds
Abbey
Life
Insuran
ce
Expressed as a percentage of total net assets as
of 10/31/96.
Looking Ahead.
For several years now, U.S. stocks have
outperformed foreign stocks. We
think that at some point, foreign stocks will
begin to catch up. We continue
to like Europe, because we think the economy
will begin to pick up speed
early in 1997. Inflation has been subdued,
which helps keep interest rates
stable. We're also seeing signs that the German
economy is getting stronger,
which is important, because it's the engine that
drives European economic
expansion. In Japan, however, we see little sign
that export demand or
consumer spending will lead to faster economic
growth anytime soon.
- ------------------------------------------------
- -------------------------
1
<PAGE>
President's Letter
November 1, 1996
(PICTURE)
Dear Shareholder:
Last year, U.S. stocks and bonds generally
posted extraordinary returns.
Investors celebrated this performance by putting
record amounts of new money
into mutual funds in the first few months of
1996. According to figures
released by the Investment Company Institute, a
mutual fund industry trade
group, new investments in mutual funds reached
an all-time monthly high of
$33 billion in January of 1996. An additional
$66 billion was invested in
the following three months, although this rapid
inflow subsided somewhat
in late spring.
While we are pleased that mutual funds are
attracting new investors, we're
concerned that some of them may be "buying last
year's returns." Few expect
1995's virtual non-stop returns from the stock
and bond markets. In fact,
1996's markets have been volatile so far (stock
and bond prices go down
just as they go up). There's no better time
than now to be talking with
your Financial Advisor or Registered
Representative. She or he can help
you determine reasonable expectations about both
the potential performance
and risks associated with your investments.
Changes at Prudential.
There have been some important changes recently
at Prudential that were made
with you in mind. Prudential Mutual Funds has
moved under the umbrella of
Prudential's newly created "Prudential
Investments." This group manages
and administers nearly $190 billion in client
assets and provides mutual
funds, annuities, defined benefit and defined
contribution plans to our
individual and institutional investors. We plan
to improve the range and
quality of investment products and services that
we can provide you by
better leveraging Prudential's strengths. There
will, however, be no
change in the service you receive from your
Financial
Advisor, Registered
Representative or our Customer Service unit.
We're excited about our future and hope that you
are, too. Thank you for
your continued support and confidence in
Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
- ------------------------------------------------
- --------------------------
2
<PAGE>
PRUDENTIAL WORLD FUND
Portfolios of Investments
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Shares
Value (Note 1)
10/31/96 9/30/96 Description
10/31/96 9/30/96
<C> <C> <S>
<C> <C>
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
LONG-TERM INVESTMENTS
93.3% 93.3%
COMMON STOCKS ----------------------------------
- ------------------------------------------------
- ------------------------------------------
Argentina
3.1% 3.0%
60,000 50,000 Telecom Argentina (ADR)
(Utilities)
$ 2,265,000 $ 2,018,750
160,000 160,000 YPF Sociedad Anonima (ADR)
(Oil & Gas)
3,640,000 3,660,000
- ------------ ------------
5,905,000 5,678,750
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Australia
8.1% 8.0%
1,050,000 1,050,000 CSR, Ltd. (Multi-
Industry)
3,526,616 3,680,566
600,000 600,000 Mayne Nickless
Ltd. (Multi-
Industry)
3,973,384
4,059,187
385,000 385,000 National
Australia Bank Ltd.
(Commercial Banking)
4,223,899
4,051,669
1,400,000 1,200,000 Pioneer
International Ltd.
(Building Materials & Components)
3,726,236 3,275,835
- ------------ ------------
15,450,135 15,067,257 --------------------
- -------------------------------------------------
- -------------------------------------------------
- ------
Canada
4.7% 4.3%
154,000 154,000 Bank of Nova
Scotia
(Commercial Banking)
4,855,235
4,363,503
284,000 284,000 Canadian Tire
Corp., Ltd.,
Class A (Automotive Parts)
4,132,527
3,762,901
- ------------ ------------
8,987,762 8,126,404 ---------------------
- -------------------------------------------------
- -------------------------------------------------
- -----
Finland
0.7%
67,000 Outokumpu O.V.
(Metals-Non
Ferrous)
1,233,048 ---------------------------------------
- -------------------------------------------------
- ------------------------------------
France
5.8% 6.7%
3,132 Chargeurs Reunis
S.A. (Multi-
Industry)
115,856
34,075 30,075 Christian Dior
S.A.
(Textiles & Apparel)
4,523,819
3,518,089
9,800 Pathe S.A.
(Media)
2,503,428
24,000 24,000 Peugeot S.A.
(Automobile
Manufacturing)
2,497,462
2,644,769
49,000 49,000 Societe
Nationale Elf
Aquitaine (Energy)
3,910,816
3,832,959
- ------------ ------------
10,932,097 12,615,101 -------------------
- ------------------------------------------------
- ------------------------------------------------
- ---------
Italy
5.5% 5.4%
1,200,000 1,200,000 Banca Fideuram
S.P.A.
(Financial Services)
2,541,762
2,850,394
330,000 300,000 Benetton Group
S.P.A. (ADR)
(Textiles & Apparel)
3,900,398
3,375,984
2,790,000 2,790,000 Parmalat
Finanziaria S.P.A.
(Agriculture)
3,986,909
4,009,252
- ------------ ------------
10,429,069 10,235,630
</TABLE> ---------------------------------------
- ----------------------------------------
See Notes to Financial Statements.
3
<PAGE>
PRUDENTIAL WORLD FUND
Portfolios of Investments
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Shares
Value (Note 1)
10/31/96 9/30/96 Description
10/31/96 9/30/96
<C> <C> <S>
<C> <C>
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Japan
5.2% 5.6%
380,000 380,000 Hitachi, Ltd.
(Electrical
Equipment) $
3,367,701 $
3,684,849
205,000 205,000 Matsushita
Electric
Industrial Co., Ltd. (Electrical
Equipment)
3,273,812 3,441,975
54,000 54,000 Sony Corp.
(Electronics)
3,236,257 3,408,485
- ------------ ------------
9,877,770 10,535,309 --------------------
- ------------------------------------------------
- ------------------------------------------------
- --------
Netherlands
11.4% 11.4%
32,000 32,000 AKZO N.V.
(Chemicals)
4,025,419 3,880,489
30,000 30,000 Gamma Holding
N.V. (Textiles
& Apparel)
1,456,225
1,478,688
130,000 130,000 ING Groep N.V.
(Financial
Services)
4,046,246
4,058,937
98,000 98,000 KLM Royal Dutch
Airlines
(Airlines/Military Technology)
2,329,489
2,624,335
80,000 80,000 Knp Bt (kon) Nv
(Forestry &
Paper)
1,760,414
1,880,372
138,000 138,000 Pakhoed Holdings
N.V.
(Energy Equipment & Services)
4,287,126
3,953,692
120,000 120,000 Stork N.V.
(Machinery &
Engineering)
3,749,117
3,690,580
- ------------ ------------
21,654,036 21,567,093 -------------------
- ------------------------------------------------
- ------------------------------------------------
- ---------
New Zealand
5.3% 5.1%
1,700,000 1,575,000 Carter Holt
Harvey Ltd.
(Forestry & Paper)
3,821,845
3,468,678
700,000 700,000 Fisher & Paykel
Industries
Ltd. (Consumer Durable Goods)
2,558,501
2,398,098
1,470,000 1,470,000 Lion Nathan Ltd.
(Beverages
& Tobacco)
3,720,467
3,658,813
- ------------ ------------
10,100,813 9,525,589
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Norway
2.6% 3.5%
114,000 Nycomed A.S.A.,
Series B
(Drugs & Medical Supplies)
1,332,943
78,000 78,000 Orkla A.S. (Food
& Household
Products)
4,550,204
3,900,060
41,000 103,700 Unitor A.S.
(Business &
Public Services)
448,858
1,372,052
- ------------ ------------
4,999,062 6,605,055 --------------------
- ------------------------------------------------
- ------------------------------------------------
- --------
South Korea
3.8% 4.7%
98,000 98,000 Korea Zinc
(Metals-Non
Ferrous)
2,111,225
2,135,593
30,575 30,575 L.G.
Construction Ltd.
(Construction & Housing)
606,874
662,582
17,600 17,600 Pohang Iron &
Steel Co.,
Ltd. (Metal-Steel)
862,693
969,491
23,189 23,189 Samsung
Electronics Co.,
Ltd. (Manufacturing)
1,630,597
1,819,185
4,879 4,879 Samsung
Electronics Co.,
Ltd. (new shares) (Manufacturing)
333,632 367,402
10,001 42,361 Sam Yang Co.
(Misc.
Materials & Commodities)
346,177
1,584,691
60,020 60,020 Tong Yang Cement
Co.
(Construction & Housing)
1,329,339
1,366,073
- ------------ ------------
7,220,537 8,905,017
</TABLE>
- ------------------------------------------------
- -------------------------------
4
See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND
Portfolios of Investments
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Shares
Value (Note 1)
10/31/96 9/30/96 Description
10/31/96 9/30/96
<C> <C> <S>
<C> <C>
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Spain
6.7% 6.3%
87,000 87,000 Banco Bilbao
Vizcaya, S.A.
(Commercial Banking) $
4,219,007 $
4,013,716
26,000 24,000 Banco de
Andalucia S.A.
(Commercial Banking)
3,701,212
3,299,252
460,000 460,000 Iberdrola, S.A.
(Utilities)
4,875,244 4,463,061
- ------------ ------------
12,795,463 11,776,029
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Sweden
7.1% 7.3%
70,000 70,000 Electrolux AB
(Appliances)
3,891,666 3,935,552
155,000 145,000 SKF
International AB
(Consumer Goods)
3,425,714
3,490,680
175,000 175,000 Svedala Industri
AB
(Engineering & Construction)
2,737,989
3,037,507
170,000 157,000 Volvo AB
(Automobile
Manufacturing)
3,524,828
3,376,726
- ------------ ------------
13,580,195 13,840,465
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Switzerland
7.8% 8.1%
4,100 4,100 Ciba-Geigy Ltd.
(Chemicals)
5,033,272 5,243,084
15,000 15,000 Valora Holding
AG
(Merchandising) (a)
2,530,947 2,607,032
6,000 5,500 SMH-Swiss Corp.
for
Microelectronics and Watchmaking
Industries
Ltd. (Electronics)
3,666,325
3,700,869
6,300 6,300 Sulzer Brothers
Ltd.
(Machinery & Engineering)
3,571,474
3,701,746
- ------------ ------------
14,802,018 15,252,731
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
United Kingdom
16.2% 13.2%
400,076 400,076 Allied-Lyons PLC
(Beverages
& Tobacco)
3,086,022
2,811,176
1,325,000 633,000 British Steel PLC
(Steel)
3,681,753 1,961,408
731,000 731,000 British Telecom
PLC
(Telecommunications)
4,234,923
4,078,271
1,250,000 1,250,000 Coats Viyella
PLC (Textiles
& Apparel)
3,112,286
2,875,587
55,000 55,000 E D + F Manitoba
Group
(Financial Services) (a)
152,156
146,753
445,000 445,000 Lloyds Abbey
Life PLC
(Insurance)
4,544,142
4,366,432
400,000 Rank Group PLC
(Media)
2,659,073
350,000 350,000 National
Westminster Bank
PLC (Commercial Banking)
3,995,525
3,719,092
473,000 473,000 Takare PLC
(Health Services)
1,100,716 1,065,915
800,000 800,000 Tesco PLC (Food
& Household
Products)
4,335,232
3,799,687
- ------------ ------------
30,901,828 24,824,321
- ------------ ------------
Total long-term
investments
(cost
$152,381,088
and
$151,027,154, respectively)
177,635,785
175,787,799
</TABLE> ---------------------------------------
- ----------------------------------------
See Notes to Financial Statements.
5
<PAGE>
PRUDENTIAL WORLD FUND
Portfolios of Investments
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ---------
<TABLE>
<CAPTION>
Principal Amount
(000)
Value (Note 1)
10/31/96 9/30/96 Description
10/31/96 9/30/96
<C> <C> <S>
<C> <C>
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
SHORT-TERM INVESTMENTS
7.4% 6.5%
- ------------------------------------------------
- ------------------------------------------------
- ----------------------------
Repurchase Agreement
$ 12,277 Joint Repurchase
Agreement
Account, 5.72%, 10/1/96
(cost
$12,277,000; Note 5)
$
12,277,000
- ------------
$ 14,166 Joint Repurchase
Agreement
Account, 5.55%, 11/1/96
(cost
$14,166,000; Note 5)
$ 14,166,000
- ------------
Total
Investments--100.7% and 99.8%, respectively
(cost
$166,547,088 and $163,304,154, respectively;
Note 4) 191,801,785 188,064,799
Other assets
(liabilities) in excess of liabilities (other
assets)--
(0.7%) and 0.2%, respectively
(1,366,540)
322,196
- ------------ ------------
Net Assets--100%
$190,435,245 $188,386,995
- ------------ ------------
- ------------ ------------
</TABLE>
- ---------------
ADR--American Depository Receipt.
(a) Non-income producing security. -------------
- ------------------------------------------------
- ------------------
6
See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND
Statements of Assets and Liabilities
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
<S> <C>
Assets
October 31, 1996 September 30, 1996
Investments, at value (cost $166,547,088 and
$163,304,154, respectively)................
$191,801,785
$188,064,799
Cash............................................
............ ............................
- --
1,596
Foreign currency, at value (cost $228,722 and
$137,293, respectively)...................
231,404
136,025
Interest and dividends
receivable......................................
............ ..... 269,193
458,963
Receivable for Series shares
sold............................................
........... 742,693 306,010
Receivable for investments
sold............................................
............ . 951,838
199,543
Deferred expenses and other
assets..........................................
............ 17,849 19,379
- ---------------- ------------------
Total
assets..........................................
............ ................... 194,014,762
189,186,315
- ---------------- ------------------
Liabilities
Bank
overdraft.......................................
............ .......................
637,755 -Payable for investments
purchased.......................................
............ .... 1,624,017
355,479
Accrued
expenses........................................
............ .................... 220,527
168,560 Management fee
payable.........................................
............ ............. 162,415
132,985
Payable for Series shares
reacquired......................................
............ .. 934,803
127,536
Administration fee
payable.........................................
............ ......... --
14,760
- ---------------- ------------------
Total
liabilities.....................................
............ ................... 3,579,517
799,320
- ---------------- ------------------
Net
Assets..........................................
............ ........................
$190,435,245
$188,386,995
- ---------------- ------------------
- ---------------- ------------------
Net assets were comprised of:
Common Stock, at
par.............................................
............ ........ $114,819 $
114,300
Paid-in capital in excess of
par.............................................
........ 160,461,557 159,598,648
- ---------------- ------------------
160,576,376 159,712,948
Undistributed net investment
income..........................................
........ 1,905,396 2,217,711
Accumulated net realized gain on
investments.....................................
.... 2,696,743 1,696,470
Net unrealized appreciation on investments and
foreign
currencies.................... 25,256,730
24,759,866
- ---------------- ------------------
Net
assets..........................................
............ .....................
$190,435,245 $188,386,995
- ---------------- ------------------
- ---------------- ------------------
Class A:
Net
assets..........................................
............ ..................... $
5,169 $199.30
- ---------------- ------------------
- ---------------- ------------------
Shares of common stock issued and
outstanding.....................................
...
311.6 12.092
- ---------------- ------------------
- ---------------- ------------------
Net asset value and redemption price per
share.......................................
$ 16.59 $ 16.48
Maximum sales charge (5.0% of offering
price)........................................
0.87 0.87
- ---------------- ------------------
Maximum offering price to
public..........................................
........... $ 17.46 $ 17.35
- ---------------- ------------------
- ---------------- ------------------
Class B:
Net
assets..........................................
............ ..................... $
1,922 $199.20
- ---------------- ------------------
- ---------------- ------------------
Shares of common stock issued and
outstanding.....................................
...
115.98 12.092
- ---------------- ------------------
- ---------------- ------------------
Net asset value, offering price and
redemption price per
share....................... $ 16.57
$ 16.47
- ---------------- ------------------
- ---------------- ------------------
Class C:
Net
assets..........................................
............ .....................
$200.36 $199.20
- ---------------- ------------------
- ---------------- ------------------
Shares of common stock issued and
outstanding.....................................
...
12.092 12.092
- ---------------- ------------------
- ---------------- ------------------
Net asset value, offering price and
redemption price per
share....................... $ 16.57
$ 16.47
- ---------------- ------------------
- ---------------- ------------------
Class Z:
Net
assets..........................................
............ .....................
$190,427,954 $ 188,386,397
- ---------------- ------------------
- ---------------- ------------------
Shares of common stock issued and
outstanding.....................................
... 11,481,500 11,429,941
- ---------------- ------------------
- ---------------- ------------------
Net asset value, offering price and
redemption price per
share....................... $ 16.59
$ 16.48
- ---------------- ------------------
- ---------------- ------------------
</TABLE> ---------------------------------------
- ----------------------------------------
See Notes to Financial Statements.
7
<PAGE>
PRUDENTIAL WORLD FUND
Statements of Operations
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
October 1, 1996
Through Year Ended
Net Investment Income (Loss)
October 31, 1996 September 30, 1996
<S>
<C> <C>
Income
Interest........................................
............ ..................... $
54,004 $
650,936
Dividends (net of foreign withholding taxes of
$13,305
and $676,041,
respectively)...................................
............ ...................
111,180
4,497,460
- ---------------- ------------------
Total
income..........................................
............ ............ 165,184
5,148,396
- ---------------- ------------------
Expenses
Management
fee.............................................
............ .......... 162,415
1,849,447
Administration
fee.............................................
............ ...... -- 244,264
Custodian's fees and
expenses........................................
............ 32,000 350,000
Transfer agent
fees............................................
............ ...... 26,000
8,000
Audit
fee.............................................
............ ............... 20,000
15,500
Legal
fees............................................
............ ............... 20,000
15,000
Reports to
shareholders....................................
............ .......... 10,000
50,000
Registration
fees............................................
............ ........ 5,000
25,000
Amortization of organization
expenses........................................
....
1,137 13,421
Directors'
fees............................................
............ .......... 3,500
12,000
Miscellaneous...................................
............ .....................
12,162
8,566
- ---------------- ------------------
Total
expenses........................................
............ ............ 292,214
2,591,198
Expense recovery (Note
2)..............................................
............ . --
4,420
- ---------------- ------------------
Total expenses and expense
recovery........................................
......... 292,214 2,595,618
- ---------------- ------------------
Net investment income
(loss)..........................................
............ .. (127,030)
2,552,778
- ---------------- ------------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency Transactions
Net realized gain (loss) on:
Investment
transactions....................................
............ .......... 837,173
4,925,561
Foreign currency
transactions....................................
............ .... (22,185)
(171,664)
- ---------------- ------------------
814,988 4,753,897
- ---------------- ------------------
Net change in unrealized appreciation on:
Investments.....................................
............ .....................
494,052
7,445,086
Foreign
currencies......................................
............ ............. 2,812
(6,428)
- ---------------- ------------------
496,864 7,438,658
- ---------------- ------------------
Net gain on investments and foreign
currencies......................................
1,311,852 12,192,555
- ---------------- ------------------
Net Increase in Net Assets
Resulting from
Operations......................................
............ ......... $ 1,184,822
$ 14,745,333
- ---------------- ------------------
- ---------------- ------------------
</TABLE> ---------------------------------------
- ----------------------------------------
8
See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND
Statements of Changes in Net Assets
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
October 1, 1996
Through October
Increase (Decrease)
31, Year Ended September 30,
In Net Assets
1996 1996 1995
<S>
<C> <C> <C>
Operations
Net investment income
(loss)..........................................
$ (127,030) $2,552,778 $ 1,884,332
Net realized gain (loss) on investment and
foreign
currency
transactions....................................
............ ....... 814,988
4,753,897
(3,084,946)
Net change in unrealized appreciation of
investments and
foreign
currencies......................................
............ ....... 496,864
7,438,658
9,333,213
- --------------- ------------ ---------
- ---
Net increase in net assets resulting
from
operations..................
1,184,822 14,745,333 8,132,599
- --------------- ------------
- -----------Dividends and distributions
Dividends to shareholders from net
investment
income..................
Class
Z...............................................
............ .
- -- (1,739,771) (750,797)
- --------------- ------------ ---------
- ---
Distributions to shareholders from net
realized gains Class
Z...............................................
............ .
- -- -- (2,440,090)
- --------------- ------------ ---------
- ---
Series share transactions
Net proceeds from shares
sold.........................................
9,340,491 115,942,217 93,624,206
Net asset value of shares issued in in
reinvestment of
dividends and
distributions...................................
............ ....... -- 1,739,771
3,190,887
Cost of shares
redeemed........................................
....... (8,477,063) (78,985,777)
67,895,915
- --------------- ------------ ---------
- ---
Net increase in net assets from Series share
transactions............. 863,428
38,696,211 28,919,178
- --------------- ------------ ---------
- ---
Total
increase........................................
............ ....... 2,048,250
51,701,773
33,860,890
Net Assets
Beginning of
period..........................................
............ 188,386,995 136,685,222
102,824,332
- --------------- ------------ ---------
- ---
End of
period..........................................
............ ...... $ 190,435,245
18$8,386,995
$136,685,222
- --------------- ------------ ---------
- ---
- --------------- ------------ ---------
- ---
</TABLE>
- ------------------------------------------------
- -------------------------------
See Notes to Financial Statements.
9
<PAGE>
PRUDENTIAL WORLD FUND
Notes to Financial Statements
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
Prudential World Fund, Inc. (the ``Fund'') is
registered under the Investment
Company Act of 1940, as an open-end, diversified
management investment company
and consists of two series as a result of the
reorganization described in Note
7. The International Stock Series (the
``Series''), formerly a series of The
Prudential Institutional Fund (the ``Company''),
commenced investment operations
in November, 1992. Subsequent to September 30,
1996 (the Series' prior fiscal
year end) the Series' changed its fiscal year
end to October 31 in conjunction
with the reorganization.
The investment objective of the Series is to
achieve longterm growth of capital
through investment in equity securities of
foreign issuers. Income is a
secondary objective. The Series seeks to achieve
its objective primarily through
investment in a diversified portfolio of
securities which consist of equity
securities of foreign issuers. -----------------
- ------------------------------------------Note
1. Accounting Policies
The following is a summary of significant
accounting policies followed by the
Series in the preparation of its financial
statements. Securities Valuation: Securities
traded on an exchange (whether domestic or
foreign) are valued at the last reported sales
price on the primary exchange on
which they are traded. Securities traded in the
over-thecounter market
(including securities listed on exchanges for
which a last sales price is not
available) are valued at the average of the last
reported bid and asked prices.
Any security for which a reliable market
quotation is unavailable is valued at
fair value considering factors determined in
good faith by the investment
adviser under procedures established by and
under the general supervision of the
Series' Board of Directors.
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 Series 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 Series 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 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 Series are
presented at the foreign exchange
rates and market values at the close of the
fiscal period, the Series 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 Series
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
gains (losses) are included in the reported net
realized gains (losses) on
investment transactions.
Net realized gains (losses) on foreign currency
transactions represent net
foreign exchange gains or 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 Series' 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 investments and
foreign currencies.
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 Investment Income:
Securities transactions are
recorded on the trade date. Realized gains and
losses on sales of securities 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 (other than distribution
fees) and unrealized and realized
gains or losses are allocated daily to each
class of shares based --------------------------
- ------------------------------------------------
- -----
10
<PAGE>
PRUDENTIAL WORLD FUND
Notes to Financial Statements
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
upon the relative proportion of net assets of
each class at the beginning of
the day.
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 continue to meet
the requirements of the Internal Revenue Code
applicable to regulated investment
companies and to distribute all of its net
income to shareholders. Therefore, no
federal income tax provision is required.
Withholding taxes on foreign dividends, interest
and capital gains have been
provided for in accordance with the Series'
understanding of the applicable
country's tax rules and regulations.
Dividends and Distributions: The Series 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.
Reclassification of Capital Accounts: The Series
accounts for and reports
distributions to shareholders in accordance with
the American Institute of
Certified Accountants' Statement of Position 93-
2: Determination, Disclosure,
and Financial Statement Presentation of Income,
Capital Gains, and Return of
Capital Distributions by Investment Companies.
The effect of applying this
statement was to decrease undistributed net
investment income and increase
accumulated net realized gain on investments by
$177,909 and $185,285 for the
year ended September 30, 1996 and for the period
October 1, 1996 through October
31, 1996, respectively, due to realized and
recognized currency losses during
the periods. Net investment income, net realized
gains and net assets were not
affected by this change.
Deferred Organization Expenses: Approximately
$64,000 of costs were incurred in
connection with the organization and initial
registration of the Series and are
being amortized ratably over the period of
benefit not to exceed 60 months from
the date of the Series' commencement of
investment operations. -------------------------
- ----------------------------------Note 2.
Agreements
The Series had a management agreement with
Prudential Institutional Fund
Management, Inc. (``PIFM'') until September 22,
1996. Effective September 23,
1996, the Series has a management agreement with
Prudential Mutual Fund
Management LLC (``PMF'') (collectively the
``Managers''). Pursuant to these
agreements, the Managers have responsibility for
all investment advisory
services and supervises the subadviser's
performance of such services. The
Managers have a subadvisory agreement with
Mercator Asset Management, L.P.
(``Mercator''); Mercator furnishes investment
advisory services in connection
with the management of the Series. The Managers
pay for the subadviser's
services, compensation of officers of the
Series, occupancy and certain clerical
and bookkeeping costs of the Series. The Series
bears all other costs and
expenses.
The management fee paid PIFM was computed daily
and payable monthly at an annual
rate of 1.15% of the average daily net assets of
the Series through September
22, 1996. Effective September 23, 1996, the
management fee paid PMF is computed
daily and payable monthly at an annual rate of
1% of the average daily net
assets of the Series. PMF pays Mercator at an
annual rate of .75 of 1% of the
Series average daily net assets up to and
including $50 million, .60 of 1% of
the Series' average daily net assets in excess
of $50 million up to and
including $300 million and .45 of 1% of the
Series' average daily net assets in
excess of $300 million.
Prior to September 23, 1996, PIFM had
voluntarily agreed to subsidize a portion
of the operating expenses of the Series such
that the expense ratio did not
exceed 1.60% of the Series' average daily net
assets. Such expenses may be
recovered by PIFM so long as the total expense
ratio did not exceed 1.60% of the
Series' average daily net assets. PIFM recovered
$4,420 of the Series operating
expenses during the period October 1, 1995
through September 22, 1996.
The Series had an administration agreement with
PMF until
September 22, 1996.
The administration fee paid PMF was computed
daily and payable monthly at an
annual rate of .17% of the Company's daily
average net assets up to $250 million
and .15% of the Company's average daily net
assets in excess of $250 million.
Effective September 23, 1996, the Series has a
distribution agreement with
Prudential Securities Incorporated (``PSI'')
which acts as the distributor of
the Class A, Class B, Class C and Class Z shares
of the Series. The Fund
compensates PSI for distributing and servicing
the Fund's Class A, Class B and
Class C shares, pursuant to plans of
distribution, (the ``Class A, B and C
plans'') regardless of expenses actually
incurred by them. The distribution fees
are accrued daily and payable monthly. PSI also
incurs the expenses of
distributing the Series' Class Z shares under
the distribution agreement, none
of which is reimbursed or paid for by the
Series.
Pursuant to the Class A, B and C Plans, the
Series compensates PSI for
distribution-related activities at an annual
rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A,
B, and C shares, respectively.
Such expenses under the Plans were .25 of 1%, 1%
and 1% -----------------------------------------
- --------------------------------------
11
<PAGE>
PRUDENTIAL WORLD FUND
Notes to Financial Statements
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
of the average daily net assets of the Class A,
B and C shares for the periods
September 23, 1996 through September 30, 1996
and October 1, 1996 through
October 31, 1996.
PSI, PIFM and PMF are indirect, wholly-owned
subsidiaries of The Prudential
Insurance Company of America -------------------
- ----------------------------------------Note 3.
Other Transactions with Affiliates
Prudential Mutual Fund Services, Inc.
(``PMFS''), a whollyowned subsidiary of
PMF, serves as the Series' transfer agent.
During the periods September 23, 1996
through September 30, 1996 and October 1, 1996
through October 31, 1996, the
Series incurred fees of approximately $7,400 and
$26,000, respectively, for the
services of PMFS. As of September 30, 1996 and
October 31, 1996 these fees were
due to PMFS. Transfer agent fees and expenses in
the Statement of Operations
include certain out-of-pocket expenses paid to
nonaffiliates. Prior to
September 23, 1996 PMFS was paid .03 of 1% of
the Company's average daily net
assets up to $250 million and .02 of 1% of the
Company's average daily net
assets in excess of $250 million from the
administration fee paid to PMF. ----------------
- -------------------------------------------Note
4. Portfolio Securities
Purchases and sales of portfolio securities of
the Series, excluding short-term
investments for the year ended September 30,
1996 were $56,408,661 and
$22,148,491, respectively, and for the period
October 1, 1996 through October
31, 1996 were $8,083,093 and $7,566,333,
respectively.
The federal income tax basis and unrealized
appreciation/depreciation of the
Series' investments as of September 30, 1996 and
October 31, 1996 was as
follows:
<TABLE>
<CAPTION>
Net
Unrealiz
ed
Apprecia
tion/
Gross Unrealized
Date Basis
(Depreciation)
Appreciation Depreciation
- ------------------- ------------ --------
- ------ -
- ----------- ------------
<S> <C> <C>
<C> <C>
September 30, 1996 $163,304,154 $
24,760,645 $
31,703,166 $6,942,521
October 31, 1996 $166,547,088 $
25,254,697 $
33,309,225 $8,054,528
</TABLE>
- ------------------------------------------------
- -----------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 September
30, 1996 and October 31, 1996, the Series had a
1.23% and 1.66% undivided
interest in the joint account, respectively. The
undivided interest for the
Series represents $12,277,000 and $14,166,000,
respectively, in the principal
amount. As of such dates, each repurchase
agreement in the joint account and the
collateral therefor were as follows:
September 30, 1996
Bear, Stearns & Co., Inc., 5.72%, in the
principal amount of $333,000,000,
repurchase price $333,052,910, due 10/1/96. The
value of the collateral
including accrued interest was $339,757,925.
J.P. Morgan Securities, Inc., 5.70%, in the
principal amount of $109,000,000,
repurchase price $109,017,258, due 10/1/96. The
value of the collateral
including accrued interest was $111,181,257.
Goldman, Sachs & Co., Inc., 5.70%, in the
principal amount of $333,000,000,
repurchase price $333,052,725, due 10/1/96. The
value of the collateral
including accrued interest was $339,860,615.
Smith Barney, Inc., 5.75%, in the principal
amount of $224,000,000, repurchase
price $224,035,778, due 10/1/96. The value of
the collateral including accrued
interest was $228,481,010.
October 31, 1996
Bear, Stearns & Co., Inc., 5.53%, in the
principal amount of $277,000,000,
repurchase price $277,042,550, due 11/1/96. The
value of the collateral
including accrued interest was $282,667,606.
CS First Boston Corp., 5.56%, in the principal
amount of $100,000,000,
repurchase price $100,015,444, due 11/1/96. The
value of the collateral
including accrued interest was $102,000,453.
Deutsche Bank Securities Corp., 5.55%, in the
principal amount of $175,000,000,
repurchase price $175,026,979, due 11/1/96. The
value of the collateral
including accrued interest was $178,500,400.
Morgan Stanley & Co., Inc., 5.65%, in the
principal amount of $26,585,000,
repurchase price $26,589,172, due 11/1/96. The
value of the collateral including
accrued interest was $27,128,601.
Smith Barney, Inc., 5.55%, in the principal
amount of $277,000,000, repurchase
price $277,042,704, due 11/1/96. The value of
the collateral including accrued
interest was $282,541,278. ---------------------
- --------------------------------------Note 6.
Capital
Effective September 23, 1996, 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.
Class C shares are sold with a contingent
deferred sales ---------------------------------
- ----------------------------------------------
12
<PAGE>
PRUDENTIAL WORLD FUND
Notes to Financial Statements
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
charge of 1% during the first year. Class B
shares automatically convert to
Class A shares on a quarterly basis
approximately seven years after purchase.
Class Z shares are not subject to any sales
or redemption charge and are offered
exclusively for sale to a limited group of
investors.
A special exchange privilege is also available
for
shareholders who qualified to
purchase Class A shares at net asset value.
There are 500 million authorized shares of $.01
par value common stock, divided
into four classes, designated Class A, Class B,
Class C and Class Z common
stock, each of which consists of 125 million
authorized shares.
Transactions in shares of common stock for the
period October 1, 1996 through
October 31, 1996 and for the years ended
September 30, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ------------------------------------ ---------- --------
- ----
<S> <C> <C>
October 1, 1996 through
October 31, 1996:
Shares sold......................... 300 $
5,035
---------- --------
- ----
---------- --------
- ----
September 23, 1996(a) through
September 30, 1996:
Shares sold......................... 12 $
200
---------- --------
- ----
---------- --------
- ----
Class B
- ------------------------------------
October 1, 1996 through
October 31, 1996:
Shares sold......................... 104 $
1,737
---------- --------
- ----
---------- --------
- ----
September 23, 1996(a) through
September 30, 1996:
Shares sold......................... 12 $
200
---------- --------
- ----
---------- --------
- ----
Class C
- ------------------------------------
September 23, 1996(a) through
September 30, 1996:
Shares sold......................... 12 $
200
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ---------------
(a) Commencement of offering of Class A, Class B
and Class C shares.
<TABLE>
<CAPTION>
Class Z Shares
Amount
- ------------------------------------ ---------- --------
- ----
<S> <C> <C>
October 1, 1996 through
October 31, 1996:
Shares sold......................... 558,189 $
9,333,719
Shares reacquired...................
(506,630) (8,477,063)
---------- --------
- ----
Net increase in shares
outstanding....................... 51,559 $
856,656
---------- --------
- ----
---------- --------
- ----
Year ended September 30, 1996:
Shares sold......................... 7,376,874
$115,941,617
Shares issued in reinvestment of
dividends......................... 116,607
1,739,771
Shares reacquired...................
(5,027,997) (78,985,777)
---------- --------
- ----
Net increase in shares
outstanding....................... 2,465,484 $
38,695,611
---------- --------
- ----
---------- --------
- ----
Year ended September 30, 1995:
Shares sold......................... 6,497,880 $
93,624,206
Shares issued in reinvestment of
dividends and distributions....... 228,737
3,190,887
Shares reacquired...................
(4,691,305) (67,895,915)
---------- --------
- ----
Net increase in shares
outstanding....................... 2,035,312 $
28,919,178
---------- --------
- ----
---------- --------
- ----
</TABLE>
Of the shares outstanding at September 30, 1996
and October 31, 1996 PIFM and
affiliates owned 5,881,584 and 5,892,471 shares
of the Series, respectively. -------------------
- ----------------------------------------Note 7.
Reorganization
On May 17, 1996, the Trustees of the Company
approved an Agreement and a Plan of
Reorganization (the ``Plan of Reorganization'')
for the Company. The Plan of
Reorganization was approved by shareholders on
September 6, 1996. Under the Plan
of Reorganization, The Prudential Institutional
Fund, International Stock Fund
joined the Prudential Global Fund, Inc. to
become two separate series of a newly
named Prudential World Fund, Inc. Existing
shareholders of The Prudential
Institutional Fund, International Stock Fund
became Class Z shareholders in the
Series and the Series also began offering Class
A, B and C shares. -----------------------------
- ------------------------------------------------
- --
13
<PAGE>
PRUDENTIAL WORLD FUND
Financial Highlights
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Class A
Class B
----
- ------------------------ -------------------
- ----------
October 1, September 23, October 1,
September 23,
1996
1996(a) 1996 1996(a)
Through Through Through Through
October 31, September 30, October 31,
September 30,
1996
1996 1996 1996
----
- ------------------- ----------- ----
- ---------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 16.48
$ 16.54 $ 16.47 $ 16.54
---------
- ----- -----
Income from investment operations:
Net investment loss..................... (.01)
- -- (.02) --
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... .12
(.06) .12 (.07)
---------
- ----- -----
Total from investment operations..... .11
(.06) .10 (.07)
---------
- ----- -----
Net asset value, end of period.......... $ 16.59
$ 16.48 $ 16.57 $ 16.47
---------
- ----- -----
---------
- ----- -----
TOTAL RETURN(c)......................... .67%
(.36)% .61% (.42)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period............... $ 5,169
$ 199 $ 1,922 $ 199
Average net assets...................... $ 2,793
$ 199 $ 313 $ 199
Ratios to average net assets:(b)
Expenses, including distribution
fees.............................. 2.05%
2.46% 2.80% 3.21%
Expenses, excluding distribution
fees.............................. 1.80%
2.21% 1.80% 2.21%
Net investment income................ (1.03)%
.75% (1.78)% 0%
Portfolio turnover rate................. 4%
15% 4% 15%
Average commission rate paid per
share................................ $ .0256
$ .0222 $ .0256 $ .0222
</TABLE>
- ---------------
(a) Commencement of offering of Class A and
Class B shares. (b) Annualized.
(c) 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. Total
return
includes the effect
of expense subsidies/recoveries, as
applicable. ------------------------------------
- -------------------------------------------
14
See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL WORLD FUND
Financial Highlights
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
<TABLE>
<CAPTION>
Class C
Class Z
----
- ------------
- ------------- ------------------------------
- ------------
- --------
October 1, September 23,
October 1,
1996
1996(b) 1996
Through Through Through Year Ended
September 30,
October 31, September 30,
October 31, --------------------------
- --------
1996
1996 1996 1996
1995
1994
----
- ------------------- ----
- ------- -------- --
- ------
- --------
<S> <C>
<C> <C> <C>
<C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $
16.47
$ 16.54 $ 16.48 $ 15.25 $
14.84 $
12.35
--
- ----------- --------- -------- ----
- ---- ---
- -----
Income from investment operations:
Net investment income (loss)............
(.02)
- -- (.01) .22
.18(c)
.13(c)
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. .12
(.07) .12 1.20 .66 2.54
--
- ----------- --------- -------- ----
- ---- ---
- -----
Total from investment operations.....
.10
(.07) .11 1.42 .84 2.67
--
- ----------- --------- -------- ----
- ---- ---
- -----
Less distributions:
Dividends from net investment income....
- --
- -- -- (.19) (.10)
(.03)
Distributions from net realized gains...
- --
- -- -- -- (.33)
(.15)
--
- ----------- --------- -------- ----
- ---- ---
- -----
Total distributions..................
- --
- -- -- (.19) (.43)
(.18)
--
- ----------- --------- -------- ----
- ---- ---
- -----
Net asset value, end of period.......... $
16.57
$ 16.47 $ 16.59 $ 16.48 $
15.25 $
14.84
--
- ----------- --------- -------- ----
- ---- ---
- -----
--
- ----------- --------- -------- ----
- ---- ---
- -----
TOTAL RETURN(e).........................
.61%
(.42)% .67% 9.44%
5.95%
21.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).........
$ 200(f)
$ 199(f) $ 190,428 $188,386
$136,685
$102,824
Average net assets (000)................
$ 202(f)
$ 199(f) $ 191,228 $161,356
$118,927 $
68,476
Ratios to average net assets:
Expenses, including distribution
fees..............................
2.80%(d)
3.21%(d) 1.80%(d) 1.61%(c)
1.60%(c)
1.60%(c)
Expenses, excluding distribution
fees..............................
1.80%(d)
2.21%(d) 1.80%(d) 1.61%(c)
1.60%(c)
1.60%(c)
Net investment income................
(1.78)%(d)
0%(d) (.78)%(d) 1.58%(c) 1.58%(c)
1.08%(c) Portfolio turnover
rate.................
4%
15% 4% 15% 20%
21%
Average commission rate paid per
share................................ $
.0256
$ .0222 $ .0256 $ .0222
N/A
N/A
<CAPTION>
Nove
mb
er
5,
19
92
(a
)
Th
ro
ug
h
Septe
m
b
e
r
3
0
,
1
9
9
3
-----
- --------
<S> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $
10.00
-
- -----
Income from investment operations:
Net investment income (loss)............
.16(c)
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. 2.21
------
Total from investment operations..... 2.37
------
Less distributions:
Dividends from net investment income.... (.02)
Distributions from net realized gains... --
------
Total distributions.................. (.02)
------
Net asset value, end of period.......... $ 12.35
-
--
--
--
--
--
TOTAL RETURN(e)......................... 23.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $31,708
Average net assets (000)................ $14,491
Ratios to average net assets:
Expenses, including distribution
fees..............................
1.60%(c)(d)
Expenses, excluding distribution
fees..............................
1.60%(c)(d)
Net investment income................
1.44%(c)(d)
Portfolio turnover rate.................
15% Average commission rate paid per
share................................
N/A
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Commencement of offering of Class C shares.
(c) Net of expense subsidy/recovery.
(d) Annualized.
(e) 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. Total
return
includes the effect
of expense subsidies/recoveries, as
applicable.
(f) Figures are actual and are not rounded to
the nearest thousand.
- ------------------------------------------------
- -------------------------------
See Notes to Financial Statements.
15
<PAGE>
PRUDENTIAL WORLD FUND
Independent Auditors' Report
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
The Shareholders and Board of Directors
Prudential World Fund, Inc., International Stock
Series
We have audited the accompanying statements of
assets and liabilities, including
the portfolios of investments, of Prudential
World Fund, Inc., International
Stock Series, as of October 31, 1996 and
September 30, 1996, the related
statements of operations for the period October
1, 1996 through October 31, 1996
and the year ended September 30, 1996 and of
changes in net assets and the
financial highlights for each of the periods
presented. These financial
statements and financial highlights are the
responsibility of the Fund's
management. Our responsibility is to express an
opinion on these financial
statements and financial highlights based on our
audits.
We conducted our audits in accordance with
generally accepted auditing
standards. Those standards require that we plan
and perform the audit to obtain
reasonable assurance about whether the
financial statements and financial
highlights are free of material misstatement.
An audit
includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial
statements. Our procedures included
confirmation of the securities owned as of
September 30, 1996 and October 31, 1996 by
correspondence with the custodian and
brokers; where replies were not received from
brokers we performed other
auditing procedures. An audit also includes
assessing the accounting principles
used and significant estimates made by
management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and
financial highlights present
fairly, in all material respects, the financial
position of Prudential World
Fund, Inc., International Stock Series, as of
September 30, 1996 and October 31,
1996, the results of its operations, the
changes in its net assets, and its
financial highlights for the respective stated
periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
November 27, 1996
PRUDENTIAL WORLD FUND
Federal Income Tax Information INTERNATIONAL
STOCK SERIES
- ------------------------------------------------
- -------------------------------
We are required by the Internal Revenue Code to
advise you within 60 days of the
Series' fiscal period ended September 30, 1996
and October 31, 1996 as to the
federal tax status of dividends paid by the Fund
during its fiscal period ended
September 30, 1996 and October 31, 1996.
During the fiscal year ended September 30, 1996,
the Series paid a dividend of
$.19 per Class Z share, which represent
dividends from ordinary income. There
were no dividends paid during the period October
1, 1996 through October 31,
1996.
We wish to advise you that the corporate
dividends received deduction for the
Fund is zero. Only funds that invest in U.S.
equity securities are entitled to
pass-through a corporate dividends received
deduction. -------------------------------------
- ------------------------------------------
16
<PAGE>
PRUDENTIAL WORLD FUND
Supplemental Proxy Information
INTERNATIONAL STOCK SERIES ---------------------
- ------------------------------------------------
- ----------
A special meeting of shareholders with respect
to five of the seven existing
series of The Prudential Institutional Fund (the
``Fund'') was held on Friday,
September 6, 1996 at the offices of The
Prudential Insurance Company of America,
Prudential Plaza, 751 Broad Street, Newark, New
Jersey. The meeting was held for
the following purposes:
(1) To approve a Plan of Reorganization for
the Fund. (2) To transact such other
business as may properly come before the
meetings or
any adjournments thereof.
The results of the proxy solicitation on the
above
matters were as follows:
<TABLE>
<CAPTION>
Series Votes For
Votes Against Abstentions
- -------------------------- -----------
- ------------ -----------
<S> <C>
<C>
<C>
(1) Balanced Fund 5,925,653
13,311 47,021
Growth Stock Fund 12,657,912
23,910 55,333
Income Fund 4,650,714
99,967 11,636
International Stock Fund 8,342,241
10,262 31,219
Money Market Fund 48,861,914
726 140,282
(2) There was no other business voted upon at
the special meetings of shareholders.
</TABLE> ---------------------------------------
- ----------------------------------------
17
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund.
Some mutual fund shareholders won't ever read
this -- they don't read
annual and semi-annual reports. It's quite
understandable. These annual
and semi-annual reports are prepared to comply
with Federal regulations.
They 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, in hopes you'll find it
profitable to spend a few minutes familiarizing
yourself with your investment.
Here's what you'll find in the report:
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 "At A Glance" page where we compare
the Fund and the comparable
average calculated by Lipper Analytical
Services, 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 generally
smoothes out returns and gives
you an idea 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. And keep in mind
that past perfor-mance
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 look
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 also 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 advisor.
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 broadly based reference point commonly used by
investors to measure how
well they are doing. A definition of the
selected index is also provided.
Investors generally cannot invest directly in
an index.
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund.
When you invest through Prudential Mutual Funds,
you receive
financial
advice through a Prudential Securities financial
advisor or Prudential/Pruco
Securities registered representative. Your
advisor or representative can
provide you with the following services:
- ------------------------------------------------
- ---------------------------
There's No Reward Without Risk; But Is This Risk
Worth It?
Your financial advisor or registered
representative can help you match the
reward you seek with the risk you can tolerate.
And risk can be difficult
to gauge --sometimes even the simplest
investments bear surprising risks.
The educated investor knows that markets seldom
move in just one direction
- -- there are times when a market sector or asset
class will lose value or
provide little in the way of total return.
Managing your own expectations
is easier with help from someone who understands
the markets and who
knows you! -------------------------------------
- -----------------------------------
Keeping Up With The Joneses.
A financial advisor or registered representative
can help you wade through
the numerous mutual funds available to find the
ones that fit your own
individual investment profile and risk
tolerance. While the newspapers
and popular magazines are full of advice about
investing, they are aimed
at generic groups of people or representative
individuals, not at you
personally. Your financial advisor or registered
representative will
review your investment objectives with you. This
means you can make
financial decisions based on the assets and
liabilities in your current
portfolio and your risk tolerance -- not just
based on the current
investment fad.
- ------------------------------------------------
- ------------------------
Buy Low, Sell High.
Buying at the top of a market cycle and selling
at the bottom are among
the most common investor mistakes. But sometimes
it's difficult to hold
on to an investment when it's losing value every
month. Your financial
advisor or registered representative can answer
questions when you're
confused or worried about your investment, and
remind you that you're
investing for the long haul.
<PAGE>
Comparing A $10,000 Investment.
/ /Prudential World Fund, Inc.-------------
- -----------------------
International Stock Series
Prudential World Fund, Inc. --
International Stock Series vs. the Morgan
Stanley Capital -- MSCI Index
International World Index.
Average Annual Total Returns
Since Inception 15.2%
Three Years 10.7%
One Year 12.3%
(CHART)
CLASS Z
- ------------------------------------------------
- -----------------------
Past performance is not indicative of future
results. Investment return
and principal value will fluctuate so an
investor's shares, when redeemed,
will be worth more or less than their original
cost.
This graph is furnished to you in accordance
with SEC regulations. It
compares a $10,000 investment in the Prudential
World Fund, Inc.--
International Stock Series (Class Z shares) with
a similar investment in
the Morgan Stanley Capital International World
Index by portraying the
initial account values at the commencement of
operations of Class Z shares,
and subsequent account values at the end of this
reporting period (October
31), as measured on a quarterly basis, beginning
in 1992. For purposes
of the graph, and unless otherwise indicated, in
the accompanying table
it has been assumed (a) that all recurring fees
(including management fees)
were deducted; and (b) all dividends and
distributions were reinvested. No
graphs or average annual total returns are
available for Class A, Class B
and Class C shares since these share classes
have been in existence since
September 23, 1996. Class Z shares do not have a
sales charge or a
distribution fee. The graph and accompanying
table reflect the past
subsidy and/or waiver of expenses and/or
management fees.
The Morgan Stanley World Index is a weighted
index comprised of approximately
1,472 securities listed on the stock exchanges
of the U.S., Europe, Canada,
Australia, New Zealand and the Far East. The
World Index is an unmanaged
index and 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
World Index may differ
substantially from the securities in the Fund.
The World Index is not
the only index that may be used to characterize
performance of stock funds
and other indexes may portray different
comparative performance.
<PAGE>
Prudential Mutual Funds
Gateway
Center Three
100 Mulberry
Street
Newark, NJ
07102-4077
(800) 225-
1852
http://www.pr
udential.com
Directors
Edward D.
Beach
Stephen C. Eyre Delayne D.
Gold Robert F. Gunia Don G.
Hoff Robert E. LaBlanc
Mendel A. Melzer Robin B.
Smith Stephen Stoneburn
Nancy H. Teeters
Richard A. Redeker
Officers
Richard A. Redeker,
President David W. Drasnin,
Vice President Robert F.
Gunia, Vice President Grace
C. Torres, Treasurer
Stephen M. Ungerman,
Assistant Treasurer S. Jane
Rose, Secretary
Ellyn C. Vogin, Assistant
Secretary
Manager
Prudential Mutual Fund
Management LLC Gateway
Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Mercator Asset
Management, L.P. 2400
East Commercial
Boulevard Fort
Lauderdale, FL 33308
Distributor
Prudential Securities
Incorporated One
Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and
Trust Company One
Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund
Services, Inc. P.O. Box
15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche LLP
Two World Financial
Center
New York, NY 10281
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 periods 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.
743969503 MF115E3
743969602 Cat. #42M274N
743969701
743969800
