<PAGE>
(ICON)
Prudential
World
Fund, Inc.
- ---------------
International
Stock Series
SEMI
ANNUAL
REPORT
April 30, 1999
(LOGO)
<PAGE>
Prudential World Fund, Inc.
International Stock Series
Performance At A Glance
Over the six months ended April 30, 1999, international investors
regained confidence in global economic growth as Asia, Russia,
and Brazil stabilized (to varying degrees) after their financial
crises. At first, large growth stocks led the rebound, but value
stocks, such as the industrials and financials that made
up much of the Prudential World Fund--International Stock Series'
portfolio, moved ahead in the last two months of our reporting
period. We beat the Lipper Average by two percentage points
over the full six months.
<TABLE>
Cumulative Total Returns1 As of 4/30/99
<CAPTION>
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 17.36% 3.23% N/A 37.96%
Class B 16.89 2.42 N/A 35.22
Class C 16.89 2.42 N/A 35.22
Class Z 17.52 3.45 64.29% 143.27
Lipper International
Fund Avg.3 15.11 3.24 50.24 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 3/31/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A -6.71% N/A 8.47%
Class B -7.59 N/A 8.82
Class C -4.56 N/A 9.42
Class Z -1.63 9.53% 13.72
</TABLE>
Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper, Inc.
The cumulative total returns do not take into account sales charges.
The average annual total returns do take into account applicable
sales charges. The Series charges a maximum front-end sales charge
of 5% for Class A shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and
1%, for six years. Class B shares will automatically convert to
Class A shares, on a quarterly basis, approximately seven years
after purchase. Class C shares are subject to a
front-end sales charge of 1% and a CDSC of 1% for 18 months.
Class C shares bought before November 2, 1998, have a 1% CDSC
if sold within one year. Class Z shares are not subject to a
sales charge or distribution fee.
2 Inception dates: Class A, B, and C, 9/23/96; Class Z, 11/5/92.
3 Lipper average returns are for all funds in each share class
for the six-month, one-, and five-year periods in the
International Fund category.
*** Lipper Since Inception returns are 31.78% for Class A, B,
and C, and 119.36% for Class Z based on all funds in each share class.
How Investments Compared
(As of 4/30/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past performance should never be used to predict future
results. The risks to each of the investments listed
above are different--we provide 12-month total returns for
several Lipper mutual fund categories to show you that reaching
for higher returns means tolerating more risk. The greater the
risk, the larger the potential reward or loss. In addition,
we've included historical 20-year average annual returns.
These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors have
received higher historical total returns from stocks than from
most other investments. Smaller capitalization stocks offer
greater potential for long-term growth, but may be more
volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth out their total
returns year by year. But their prices still fluctuate
(sometimes significantly), and their returns have been
historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by
state governments, state agencies and/or municipalities.
This investment provides income that is usually exempt
from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant share
value; they don't fluctuate much in price but, historically, their
returns have been generally among the lowest of the major
investment categories.
<PAGE>
Portfolio Manager's Report
(PHOTO)
Peter F. Spano
Fund Manager
Investment Goals and Style
The Prudential World Fund--International Stock Series invests
in stocks of companies located outside the United States. We
use a value investment style to find stocks selling at low
prices, compared with their earnings, to attain our long-term
capital appreciation goal. There are special risks associated
with foreign investments, including political, economic and
social risks, and potential illiquidity. There can be no
assurance that the Series will achieve its investment
objective.
Performance Review
Industrials moved up sharply
Our basic strategy does not change: we search the foreign markets
for companies that are selling below what we consider fair value
and build our portfolio stock by stock. Recently, many of these
stocks have been industrials, such as basic materials and capital
equipment companies. Stock prices reflect investors' expectations
of earnings, so they tend to move before real changes take place.
When investors were panicky about a global economic slowdown,
industrial stocks became very inexpensive. When signs appeared
that Asia was bottoming and Brazil would survive, industrial
stocks moved up sharply. Our largest holding on April 30, 1999,
was Bouygues, a French conglomerate with a construction
industry core. Its shares rose 41% in six months. We had
similar gains on our recently acquired Rio Tinto PLC--a U.K.-
based company with global mining operations in a wide range
of commodities, and on British Steel--the world's fourth
largest steel producer.
Financials bounced up
Financial stocks are our largest industry focus. Before the Asian
crisis, many European banks were benefiting from the shift of
savings from bank accounts to bank-managed mutual funds. This
trend continued, and we benefited particularly from owning Banca
Popolare di Brescia, an Italian bank. It still is among our
largest holdings, but we took some profits to keep it from
becoming too large a portion of our portfolio.
Financial institutions were hard hit by the panic last summer
because it wasn't clear how exposed they were
to emerging market problems. However, they rebounded sharply
when investors regained their confidence. We owned a broad
selection of banks that performed well, including ING
(Netherlands), National Australia Bank, and UBS (Switzerland).
Japanese stocks moved up
We still own relatively little in Japan because we believe
that, even though the economy may be bottoming, it will be
some time before the restructuring of their industries will
be in full swing. The Japanese market, however, moved
up quickly as the Japanese government added liquidity (credit
and money supply) to the economy and foreign investors hurried
to get in on the recovery. Even the stocks of troubled banks
rose. We thought that earnings prospects in Japan still didn't
justify the prices of most stocks, so there were few value
opportunities. Nonetheless, we had added to our Sony and
Matsushita Electric holdings, global businesses that had
become inexpensive. Sony stock rebounded by 51% in the
half year.
<PAGE>
Looking Ahead
Two strong themes: recovery and restructuring
Enough investors have concluded that Asia is recovering to
drive up these thinly traded markets rapidly. We agree that
the regional economy has bottomed, but we believe that recovery
will take some time and that share prices have moved much faster
than circumstances warrant. Indeed, the Japanese market corrected
in May. Although we are cautious and skeptical about the reported
earnings numbers, we are looking for investment opportunities
in Asia--stocks of good companies selling at low prices for
their earnings prospects. We continue to be focused in Europe,
where the pace of restructuring is clearly rapid.
Portfolio Composition
Expressed as a percentage of net assets as of 4/30/99
Continental Europe 52%
United Kingdom 17
Pacific Basin (excl. Japan) 12
Japan 7
Cash & Equivalents 5
Canada 4
Argentina 3
Five Largest Holdings
Expressed as a percentage of net assets as of 4/30/99
Bouygues 3.6%
Construction & Housing
National Westminster Bank PLC 3.1
Commercial Banking
Banca Popolare di Brescia 2.9
Commercial Banking
Electrolux AB 2.8
Appliances
National Australia Bank 2.7
Commercial Banking
1
<PAGE>
A Message to Our Shareholders June 18, 1999
(PHOTO)
Dear Shareholder:
In the last couple of years, the recurring possibility of
a global economic crisis caused investors to focus on securities
they perceived to be safe. In the equity market, they focused on the stocks
of a handful of very large companies that were perceived to be
well-buffeted from an economic slowdown. These stocks became very
expensive--out of proportion to their earnings expectations. As a
result, there was a substantial disparity in value
between large and small companies and between growth and value stocks.
Since earlier this year, however, that gap has narrowed significantly
amid news of strong U.S. economic growth and faster-than-expected
global stability. While the long-term prospects of U.S. growth
stocks are still very good, many of the smaller and economically
sensitive companies favored by our value managers now are posting
very attractive returns.
In the bond market, U.S. Treasuries and select European
government bonds were the major beneficiaries of the flight to
quality that occurred in recent years. When this trend reversed
itself toward the end of 1998, other sectors of the bond market
rebounded. However, with a strong U.S. economy comes the
threat of higher inflation, which erodes the value of bonds'
fixed interest payments. The recent inflation concerns jolted
the bond market and helped send long-term interest rates to a
19-month high.
The winds of change in the equity market and the recent turbulence
in the bond market not only highlight the value of professional
portfolio management, they illustrate why investors should have
a well-diversified asset allocation strategy. It is also a good
practice to rebalance your holdings, when necessary, to keep
your asset allocation consistent with your long-term objectives
and risk tolerance. A properly diversified portfolio of value-
and growth-oriented equity funds, international bond funds, and
money market funds could help you weather inevitable market
turbulence and achieve more consistent returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders diversify, as well as several balanced and
diversified funds to allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual funds.
Sincerely,
John R. Strangfeld
President
Prudential World Fund, Inc.--International Stock Series
2
<PAGE>
Portfolio of Investments as PRUDENTIAL WORLD FUND, INC.
of April 30, 1999 (Unaudited) INTERNATIONAL STOCK SERIES
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -----------------------------------------------------------
LONG-TERM INVESTMENTS--94.8%
COMMON STOCKS
- ----------------------------------------------------------
Argentina--3.1%
200,000 Telecom Argentina (ADR) $ 6,900,000
191,700 YPF Sociedad Anonima (ADR) 8,051,400
------------
14,951,400
- ------------------------------------------------------------
Australia--8.2%
2,712,000 Cable & Wireless Optus, Ltd. 6,098,175
2,500,000 CSR, Ltd. 6,679,633
1,832,700 Mayne Nickless, Ltd. 6,375,414
680,000 National Australia Bank, Ltd. 13,230,701
2,900,000 Pioneer International, Ltd. 7,077,105
------------
39,461,028
- ------------------------------------------------------------
Canada--4.0%
260,000 Alcan Aluminum, Ltd. 8,190,098
475,000 Bank of Nova Scotia 11,270,800
------------
19,460,898
- ------------------------------------------------------------
Finland--0.6%
258,200 Stora Enso Oyj 3,017,449
- ------------------------------------------------------------
France--10.7%
68,200 Bouygues 17,354,075
86,000 Christian Dior SA 11,260,056
77,500 Elf Aquitaine SA 12,048,709
65,000 Peugeot SA 10,792,809
------------
51,455,649
- ------------------------------------------------------------
Germany--2.0%
96,400 Adidas-Salomon AG 9,501,987
- ------------------------------------------------------------
Italy--7.2%
460,000 Banca Popolare Di Bergamo
CreditoVaesino S.P.A. 11,602,931
406,200 Banca Popolare Di Brescia 13,983,387
5,082,000 Benetton Group S.P.A. 9,137,030
------------
34,723,348
Japan--6.9%
1,187,600 Hitachi, Ltd. $ 8,682,349
530,000 Matsushita Electric Industrial Co.,
Ltd. 10,086,774
38,300 Oriental Land Co., Ltd. 2,267,013
127,500 Sony Corp. 11,918,885
------------
32,955,021
- ------------------------------------------------------------
Netherlands--8.1%
212,000 AKZO N.V. 9,585,029
200,000 ING Groep N.V. 12,331,617
320,000 KLM N.V. 9,712,999
173,225 Koninklijke Pakhoed Holdings N.V. 4,012,141
164,050 Stork N.V. 3,504,686
------------
39,146,472
- ------------------------------------------------------------
New Zealand--1.6%
3,500,000 Carter Holt Harvey, Ltd. 5,126,488
700,000 Fisher & Paykel Industries, Ltd. 2,563,244
------------
7,689,732
- ------------------------------------------------------------
Norway--0.7%
305,600 Saga Petroleum 3,387,202
- ------------------------------------------------------------
South Korea--2.3%
330,000 Korea Electric Power Corp. 9,496,003
20,180 Pohang Iron & Steel Co., Ltd. 1,733,086
------------
11,229,089
- ------------------------------------------------------------
Spain--5.1%
615,400 Banco Bilbao Vizcaya SA 9,215,995
141,200 Banco de Andalucia SA 5,226,659
732,600 Iberdrola SA 10,266,071
------------
24,708,725
- ------------------------------------------------------------
Sweden--7.4%
660,000 Electrolux AB 13,405,074
205,200 Pharmacia & Upjohn 11,406,499
330,000 SKF AB 5,683,438
290,000 Svedala Industri AB 5,097,872
------------
35,592,883
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as PRUDENTIAL WORLD FUND, INC.
of April 30, 1999 (Unaudited) INTERNATIONAL STOCK SERIES
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Switzerland--9.9%
5,500 Novartis AG $ 8,056,084
13,000 Sulzer Brothers, Ltd. 8,263,037
17,525 The Swatch Group AG 12,507,183
32,000 UBS AG 10,873,073
33,000 Valora Holding AG 7,706,133
------------
47,405,510
- ------------------------------------------------------------
United Kingdom--17.0%
1,200,000 Allied Domecq PLC 9,340,714
1,295,100 British Airways PLC 10,263,214
2,353,000 British Steel PLC 5,572,251
777,500 British Telecom PLC 12,979,299
615,000 National Westminster Bank PLC 14,786,650
1,140,000 Rank Group PLC 4,739,351
765,000 Rio Tinto PLC 13,348,874
3,600,000 Tesco PLC 10,696,469
------------
81,726,822
------------
Total common stocks
(cost $347,401,837) 456,413,215
------------
<CAPTION>
Principal Amount
(000)
- ------------------------------------------------------------
SHORT-TERM INVESTMENT--4.4%
- ------------------------------------------------------------
Repurchase Agreement
$ 21,312 Joint Repurchase Agreement Account,
4.90%, 5/03/99
(cost $21,312,000; Note 5) 21,312,000
------------
- ------------------------------------------------------------
Total Investments--99.2%
(cost $368,713,837; Note 5) 477,725,215
Other assets in excess of
liabilities--0.8% 3,689,647
------------
Net Assets--100% $481,414,862
------------
------------
</TABLE>
- ---------------
ADR--American Depository Receipt.
The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of April 30, 1999 was as
follows:
Commercial Banking.................................. 18.8%
Appliances & Household Durables..................... 7.9
Telecommunications.................................. 5.4
Energy Sources...................................... 4.9
Recreation & Other Consumer Goods................... 4.9
Steel............................................... 4.3
Transportation - Airlines........................... 4.1
Utilities........................................... 4.1
Health & Personal Care.............................. 4.0
Merchandising....................................... 3.8
Construction & Housing.............................. 3.6
Machinery & Engineering............................. 3.5
Building Materials & Components..................... 2.9
Financial Services.................................. 2.5
Auto Manufacturing.................................. 2.2
Beverages & Tobacco................................. 2.0
Chemicals........................................... 2.0
Consumer Durable Goods.............................. 2.0
Textiles & Apparel.................................. 1.9
Electronics......................................... 1.8
Forestry & Paper.................................... 1.7
Metals - Nonferrous................................. 1.7
Business & Public Services.......................... 1.3
Industrial Components............................... 1.2
Leisure & Tourism................................... 1.0
Energy Equipment & Services......................... .9
Real Estate......................................... .4
Repurchase Agreements............................... 4.4
-----
99.2%
Other assets in excess of liabilities............... .8
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL WORLD FUND, INC.
(Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets April 30, 1999
<S> <C>
Investments excluding repurchase agreement at value (cost $368,713,837)..................................... $477,725,215
Cash........................................................................................................ 3,513
Foreign currency, at value (cost $989,713).................................................................. 987,648
Receivable for investments sold............................................................................. 6,932,940
Receivable for Series shares sold........................................................................... 2,255,830
Dividends and interest receivable........................................................................... 1,754,812
Deferred expenses and other assets.......................................................................... 2,864
--------------
Total assets............................................................................................. 489,662,822
--------------
Liabilities
Payable for Series shares reacquired........................................................................ 5,142,359
Payable for investments purchased........................................................................... 2,291,413
Management fee payable...................................................................................... 387,151
Accrued expenses............................................................................................ 184,036
Withholding taxes payable................................................................................... 138,929
Distribution fee payable.................................................................................... 104,072
--------------
Total liabilities........................................................................................ 8,247,960
--------------
Net Assets.................................................................................................. $481,414,862
--------------
--------------
Net assets were comprised of:
Common stock, at par..................................................................................... $ 225,657
Paid-in capital in excess of par......................................................................... 364,270,340
--------------
364,495,997
Distributions in excess of net investment income......................................................... (120,506)
Accumulated net realized gain on investments............................................................. 8,059,924
Net unrealized appreciation on investments and foreign currencies........................................ 108,979,447
--------------
Net assets, April 30, 1999.................................................................................. $481,414,862
--------------
--------------
Class A:
Net asset value and redemption price per share
($52,478,625 / 2,459,491 shares of common stock issued and outstanding)............................... $21.34
Maximum sales charge (5% of offering price).............................................................. 1.12
--------------
Maximum offering price to public......................................................................... $22.46
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($101,434,572 / 4,776,140 shares of common stock issued and outstanding).............................. $21.24
--------------
--------------
Class C:
Net asset value and redemption price per share
($15,777,537 / 742,896 shares of common stock issued and outstanding)................................. $21.24
Sales charge (1% of offering price)...................................................................... .21
--------------
Offering price to public................................................................................. $21.45
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($311,724,128 / 14,587,152 shares of common stock issued and outstanding)............................. $21.37
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
PRUDENTIAL WORLD FUND, INC.
INTERNATIONAL STOCK SERIES
Statements of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income April 30, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $507,027).................... $ 5,193,509
Interest................................. 936,228
--------------
Total income.......................... 6,129,737
--------------
Expenses
Management fee........................... 2,229,289
Distribution fee--Class A................ 61,326
Distribution fee--Class B................ 480,330
Distribution fee--Class C................ 74,120
Transfer agent's fees and expenses....... 500,000
Custodian's fees and expenses............ 153,000
Reports to shareholders.................. 45,000
Registration fees........................ 45,000
Audit fee and expenses................... 17,500
Legal fees and expenses.................. 17,000
Directors' fees.......................... 13,500
Miscellaneous............................ 17,324
--------------
Total expenses........................ 3,653,389
--------------
Net investment income....................... 2,476,348
--------------
Realized and Unrealized Gain
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions.................. 7,773,009
Foreign currency transactions............ (273,811)
--------------
7,499,198
--------------
Net change in unrealized appreciation
(depreciation) on:
Investments.............................. 63,924,592
Foreign currencies....................... (3,647)
--------------
63,920,945
--------------
Net gain on investments and foreign
currencies............................... 71,420,143
--------------
Net Increase in Net Assets
Resulting from Operations................... $ 73,896,491
--------------
--------------
</TABLE>
PRUDENTIAL WORLD FUND, INC.
INTERNATIONAL STOCK SERIES
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) April 30, October 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income....... $ 2,476,348 $ 5,103,635
Net realized gain (loss) on
investment and foreign
currency transactions.... 7,499,198 (336,142)
Net change in unrealized
appreciation
(depreciation) of
investments and foreign
currencies............... 63,920,945 6,169,963
------------- -------------
Net increase in net assets
resulting from
operations............... 73,896,491 10,937,456
------------- -------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A.................. (384,801) (355,991)
Class B.................. (50,664) (388,835)
Class C.................. (7,740) (55,588)
Class Z.................. (2,927,029) (2,669,202)
------------- -------------
(3,370,234) (3,469,616)
------------- -------------
Distributions from net
realized capital gains
Class A.................. -- (791,091)
Class B.................. -- (1,944,176)
Class C.................. -- (277,943)
Class Z.................. -- (5,084,194)
------------- -------------
-- (8,097,404)
------------- -------------
Series share transactions (net
of conversions) (Note 6)
Net proceeds from shares
sold..................... 500,069,953 672,760,380
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 3,360,460 11,451,509
Cost of shares reacquired... (502,522,539) (647,270,258)
------------- -------------
Net increase in net assets
from Series share
transactions............. 907,874 36,941,631
------------- -------------
Total increase................. 71,434,131 36,312,067
Net Assets
Beginning of period............ 409,980,731 373,668,664
------------- -------------
End of period(a)............... $ 481,414,862 $ 409,980,731
------------- -------------
------------- -------------
- ---------------
(a) Includes undistributed net
investment income of....... $ 3,391,911 $ 3,884,785
------------- -------------
------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Notes to Financial Statements PRUDENTIAL WORLD FUND, INC.
(Unaudited) 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 currently consists of two series: the International Stock Series and the
Global Series. The International Stock Series (the 'Series') commenced
investment operations in November 1992. The investment objective of the Series
is to achieve long-term 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
Fund and the Series in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange (whether domestic or
foreign) and NASDAQ National Market System securities are valued at the last
sale price of such exchange system on the day of valuation or, if there was no
sale on such day, the mean between the last bid and asked prices on such day, or
at the bid price on such day in the absence of an asked price. Securities for
which reliable market quotations are not readily available are valued by the
Valuation Committee or Board of Directors in consultation with the manager or
subadvisor.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying securities, the value of which exceeds the
principal amount of the repurchase transaction including accrued interest. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities - at the
closing daily rates of exchange.
(ii) purchases and sales of investment securities, income and expenses - at the
rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term portfolio securities sold
during the period. Accordingly, 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 Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net unrealized currency gains or losses from
valuing foreign currency denominated assets and liabilities (other than
investments) at 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 Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses from investment and
currency transactions are calculated on the identified cost basis. Dividend
income is recorded on the ex-dividend date; interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Net investment income other than distribution fees, and unrealized and realized
gains or losses are allocated daily to each class of shares based upon the
relative proportion of net assets of each class at the beginning of the day.
Taxes: 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
- --------------------------------------------------------------------------------
7
<PAGE>
Notes to Financial Statements PRUDENTIAL WORLD FUND, INC.
(Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
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 have been provided for in accordance with
the Fund's understanding of the applicable country's tax rules and rates.
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.
Reclassification of Capital Accounts: The Series accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gains, and
Return of Capital Distributions by Investment Companies. The effect for the
Series of applying this statement was to decrease undistributed net investment
income by $3,111,405 and increase accumulated net realized gain on investments
by $241,032 and increase paid-in capital in excess of par by $2,870,373 for
redemptions utilized as distributions for federal income tax purposes and for
realized foreign currency losses during the six months ended April 30, 1999. Net
investment income, net realized gains and net assets were not affected by this
change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with Mercator Asset
Management, L.P. ('Mercator'), a limited partnership where The Prudential Asset
Management Company, Inc. ('PAMCI') is a limited partner. Mercator furnishes
investment advisory services in connection with the management of the Series.
PIFM pays for the cost of the subadviser's services, the compensation of
officers and employees of the Fund, occupancy and certain clerical and
bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid PIFM is computed daily and payable monthly at an annual
rate of 1% of the average daily net assets of the Series. PIFM 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.
The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS') which acts as the distributor of the Class A, Class B,
Class C and Class Z shares of the Fund. The Fund compensates PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution, (the 'Class A, B and C Plans'), regardless of
expenses actually incurred by them. The distribution fees are accrued daily and
payable monthly. No distribution or service fees are paid to PIMS as distributor
for Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B, and C shares, respectively.
Such expenses under the Plans were .25 of 1%, 1% and 1% of the average daily net
assets of the Class A, B and C shares respectively, for the six months ended
April 30, 1999.
PIMS has advised the Series that they received approximately $35,500 and $7,000
in front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the six months ended April 30, 1999. From these fees, PSI
and PIMS paid such sales charges to affiliated broker-dealers, which in turn
paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 1999, they
received approximately $169,000 and $2,000 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIMS, PIFM and PAMCI are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The
- --------------------------------------------------------------------------------
8
<PAGE>
Notes to Financial Statements PRUDENTIAL WORLD FUND, INC.
(Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
commitment fee was .055 of 1% on the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to either agreement during the six
months ended April 30, 1999. The purpose of the agreements are to serve as an
alternative source of funding for capital share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended April 30, 1999,
the Series incurred fees of approximately $482,000 for the services of PMFS. As
of April 30, 1999 approximately $76,000 such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term
investments, for the six months ended April 30, 1999 were $51,696,138 and
$25,040,913, respectively.
The federal income tax basis of the Series' investments as of April 30, 1999 was
substantially the same as for financial reporting purposes and accordingly, net
unrealized appreciation on investments for federal income tax purposes was
$109,011,378 (gross unrealized appreciation--$127,925,718, gross unrealized
depreciation--$18,914,340).
- ------------------------------------------------------------
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 April 30, 1999, the Series
had a 3.7% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Series represents $21,312,000 in the principal
amount. As of such date, each repurchase agreement in the joint account and the
collateral therefor were as follows:
Bear, Stearns & Co., Inc., 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,641,618.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 4.90%, in the principal amount of
$121,448,000, repurchase price $121,497,591, due 5/3/99. The value of the
collateral including accrued interest was $123,877,485.
Salomon Smith Barney Inc., 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,037,359.
Warburg Dillon Read LLC, 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,001,025.
- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Prior to November 2, 1998, Class C shares were sold with a contingent
deferred sales charge of 1% during the first year. Class B shares automatically
convert to Class A shares on a quarterly basis approximately seven years after
purchase. A special exchange privilege is also available for shareholders who
qualified to purchase Class A shares at net asset value. Class Z shares are not
subject to any sales or redemption charge and are offered exclusively for sale
to a limited group of investors.
There are 500 million authorized shares of $.01 par value common stock, divided
equally into four classes, designated Class A, Class B, Class C and Class Z
common stock.
As of April 30, 1999, 2,684 of the outstanding shares were owned by the
Prudential.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ----------- -------------
<S> <C> <C>
Six months ended April 30, 1999:
Shares sold....................... 2,256,325 $ 43,970,837
Shares issued in reinvestment of
dividends and distributions..... 20,402 378,859
Shares reacquired................. (2,455,578) (48,025,562)
----------- -------------
Net decrease in shares outstanding
before conversion............... (178,851) (3,675,866)
Shares issued upon conversion from
Class B......................... 60,939 1,175,834
----------- -------------
Net decrease in shares
outstanding..................... (117,912) $ (2,500,032)
----------- -------------
----------- -------------
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
Notes to Financial Statements PRUDENTIAL WORLD FUND, INC.
(Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ----------- -------------
<S> <C> <C>
Year ended October 31, 1998:
Shares sold....................... 3,579,531 $ 68,487,089
Shares issued in reinvestment of
dividends and distributions..... 64,964 1,127,781
Shares reacquired................. (3,130,800) (59,424,795)
----------- -------------
Net increase in shares outstanding
before conversion............... 513,695 10,190,075
Shares issued upon conversion from
Class B......................... 79,872 1,517,622
----------- -------------
Net increase in shares
outstanding..................... 593,567 $ 11,707,697
----------- -------------
----------- -------------
<CAPTION>
Class B
- ----------------------------------
<S> <C> <C>
Six months ended April 30, 1999:
Shares sold....................... 942,163 $ 18,306,762
Shares issued in reinvestment of
dividends and distributions..... 2,633 48,820
Shares reacquired................. (1,273,280) (24,816,769)
----------- -------------
Net decrease in shares outstanding
before conversion............... (328,484) (6,461,187)
Shares reacquired upon conversion
into Class A.................... (61,342) (1,175,834)
----------- -------------
Net decrease in shares
outstanding..................... (389,826) $ (7,637,021)
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold....................... 2,837,939 $ 54,447,404
Shares issued in reinvestment of
dividends and distributions..... 130,869 2,267,954
Shares reacquired................. (2,530,182) (47,519,258)
----------- -------------
Net increase in shares outstanding
before conversion............... 438,626 9,196,100
Shares reacquired upon conversion
into Class A.................... (80,332) (1,517,622)
----------- -------------
Net increase in shares
outstanding..................... 358,294 $ 7,678,478
----------- -------------
----------- -------------
<CAPTION>
Class C Shares Amount
- ---------------------------------- ----------- -------------
<S> <C> <C>
Six months ended April 30, 1999:
Shares sold....................... 634,597 $ 12,350,836
Shares issued in reinvestment of
dividends and distributions..... 405 7,502
Shares reacquired................. (677,233) (13,250,938)
----------- -------------
Net decrease in shares
outstanding..................... (42,231) $ (892,600)
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold....................... 878,403 $ 16,772,243
Shares issued in reinvestment of
dividends and distributions..... 18,693 323,948
Shares reacquired................. (793,470) (15,123,933)
----------- -------------
Net increase in shares
outstanding..................... 103,626 $ 1,972,258
----------- -------------
----------- -------------
<CAPTION>
Class Z
- ----------------------------------
<S> <C> <C>
Six months ended April 30, 1999:
Shares sold....................... 21,756,565 $ 425,441,518
Shares issued in reinvestment of
dividends and distributions..... 157,358 2,925,279
Shares reacquired................. (21,175,375) (416,429,270)
----------- -------------
Net increase in shares
outstanding..................... 738,548 $ 11,937,527
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold....................... 27,696,101 $ 533,053,644
Shares issued in reinvestment of
dividends and distributions..... 445,125 7,731,826
Shares reacquired................. (27,308,803) (525,202,272)
----------- -------------
Net increase in shares
outstanding..................... 832,423 $ 15,583,198
----------- -------------
----------- -------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights (Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
October 1, September 23,
Six Months 1996 1996(c)
Ended Year Ended October 31, Through Through
April 30, ------------------------- October 31, September 30,
1999 1998 1997(e) 1996 1996
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 18.33 $ 18.24 $ 16.59 $ 16.48 $ 16.54
---------- ---------- ---------- ----- -----
Income from investment operations:
Net investment income (loss).............. .11 .27 .24 (.01) --
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions........................... 3.05 .40 1.85 .12 (.06)
---------- ---------- ---------- ----- -----
Total from investment operations....... 3.16 .67 2.09 .11 (.06)
---------- ---------- ---------- ----- -----
Less distributions:
Dividends from net investment income...... (.15) (.18) (.24) -- --
Distributions from net realized capital
gains.................................. -- (.40) (.20) -- --
---------- ---------- ---------- ----- -----
Total distributions.................... (.15) (.58) (.44) -- --
---------- ---------- ---------- ----- -----
Net asset value, end of period............ $ 21.34 $ 18.33 $ 18.24 $ 16.59 $ 16.48
---------- ---------- ---------- ----- -----
---------- ---------- ---------- ----- -----
TOTAL RETURN(a)........................... 17.36% 3.85% 12.85% .67% (.36)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $ 52,479 $ 47,237 $ 36,184 $ 5,169(d) $ 199(d)
Average net assets (000).................. $ 49,467 $ 44,708 $ 18,779 $ 2,793(d) $ 199(d)
Ratios to average net assets:
Expenses, including distribution
fees................................ 1.61%(b) 1.62% 1.75% 2.05%(b) 2.46%(b)
Expenses, excluding distribution
fees................................ 1.36%(b) 1.37% 1.50% 1.80%(b) 2.21%(b)
Net investment income (loss)........... 1.14%(b) 1.28% 1.40% (1.03)%(b) .75%(b)
Portfolio turnover rate................... 6% 15% 9% 4% 15%
</TABLE>
- ---------------
(a) Total return does not consider the effect of sales load. 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.
(b) Annualized.
(c) Commencement of offering of Class A shares.
(d) Figures are actual and are not rounded to the nearest thousand.
(e) Calculated based upon weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights (Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
October 1, September 23,
Six Months 1996 1996(c)
Ended Year Ended October 31, Through Through
April 30, ------------------------- October 31, September 30,
1999 1998 1997(e) 1996 1996
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 18.18 $ 18.13 $ 16.57 $ 16.47 $ 16.54
---------- ---------- ---------- ----- -----
Income from investment operations:
Net investment income (loss).............. .04 .10 .12 (.02) --
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions........................... 3.03 .43 1.84 .12 (.07)
---------- ---------- ---------- ----- -----
Total from investment operations....... 3.07 .53 1.96 .10 (.07)
---------- ---------- ---------- ----- -----
Less distributions:
Dividends from net investment income...... (.01) (.08) (.20) -- --
Distributions from net realized capital
gains.................................. -- (.40) (.20) -- --
---------- ---------- ---------- ----- -----
Total distributions.................... (.01) (.48) (.40) -- --
---------- ---------- ---------- ----- -----
Net asset value, end of period............ $ 21.24 $ 18.18 $ 18.13 $ 16.57 $ 16.47
---------- ---------- ---------- ----- -----
---------- ---------- ---------- ----- -----
TOTAL RETURN(a)........................... 16.89% 3.05% 12.04% .61% (.42)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $101,435 $ 93,896 $ 87,155 $ 1,922(d) $ 199(d)
Average net assets (000).................. $ 96,862 $ 98,444 $ 47,584 $ 313(d) $ 199(d)
Ratios to average net assets:
Expenses, including distribution
fees................................ 2.36%(b) 2.37% 2.50% 2.80%(b) 3.21%(b)
Expenses, excluding distribution
fees................................ 1.36%(b) 1.37% 1.50% 1.80%(b) 2.21%(b)
Net investment income (loss)........... .39%(b) .53% .65% (1.78)%(b) 0%(b)
Portfolio turnover rate................... 6% 15% 9% 4% 15%
</TABLE>
- ---------------
(a) Total return does not consider the effect of sales load. 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.
(b) Annualized.
(c) Commencement of offering of Class B shares.
(d) Figures are actual and are not rounded to the nearest thousand.
(e) Calculated based upon weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights (Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------
October 1, September 23,
Six Months 1996 1996(c)
Ended Year Ended October 31, Through Through
April 30, ------------------------- October 31, September 30,
1999 1998 1997(e) 1996 1996
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 18.18 $ 18.13 $ 16.57 $ 16.47 $ 16.54
---------- ---------- ---------- ----- -----
Income from investment operations:
Net investment income..................... .04 .10 .12 (.02) --
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions........................... 3.03 .43 1.84 .12 (.07)
---------- ---------- ---------- ----- -----
Total from investment operations....... 3.07 .53 1.96 .10 (.07)
---------- ---------- ---------- ----- -----
Less distributions:
Dividends from net investment income...... (.01) (.08) (.20) -- --
Distributions from net realized gains..... -- (.40) (.20) -- --
---------- ---------- ---------- ----- -----
Total distributions.................... (.01) (.48) (.40) -- --
---------- ---------- ---------- ----- -----
Net asset value, end of period............ $ 21.24 $ 18.18 $ 18.13 $ 16.57 $ 16.47
---------- ---------- ---------- ----- -----
---------- ---------- ---------- ----- -----
TOTAL RETURN(a)........................... 16.89% 3.05% 12.04% .61% (.42)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $ 15,777 $ 14,271 $ 12,354 $ 200(d) $ 199(d)
Average net assets (000).................. $ 14,947 $ 14,345 $ 7,473 $ 202(d) $ 199(d)
Ratios to average net assets:
Expenses, including distribution
fees................................ 2.36%(b) 2.37% 2.50% 2.80%(b) 3.21%(b)
Expenses, excluding distribution
fees................................ 1.36%(b) 1.37% 1.50% 1.80%(b) 2.21%(b)
Net investment income (loss)........... .39%(b) .53% .65% (1.78)%(b) 0%(b)
Portfolio turnover rate................... 6% 15% 9% 4% 15%
</TABLE>
- ---------------
(a) Total return does not consider the effect of sales load. 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.
(b) Annualized.
(c) Commencement of offering of Class C shares.
(d) Figures are actual and are not rounded to the nearest thousand.
(e) Calculated based upon weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL WORLD FUND, INC.
Financial Highlights (Unaudited) INTERNATIONAL STOCK SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
--------------------------------------------------------------------------------------
October 1,
Six Months 1996
Ended Year Ended October 31, Through Year Ended September 30,
April 30, ------------------------- October 31, -------------------------
1999 1998 1997(d) 1996 1996 1995
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 18.38 $ 18.28 $ 16.59 $ 16.48 $ 15.25 $ 14.84
---------- ---------- ---------- ----------- ---------- ----------
Income from investment operations:
Net investment income (loss)............ .12 .30 .31 (.01) .22 .18(c)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 3.07 .41 1.82 .12 1.20 .66
---------- ---------- ---------- ----------- ---------- ----------
Total from investment operations..... 3.19 .71 2.13 .11 1.42 .84
---------- ---------- ---------- ----------- ---------- ----------
Less distributions:
Dividends from net investment income.... (.20) (.21) (.24) -- (.19) (.10)
Distributions from net realized gains... -- (.40) (.20) -- -- (.33)
---------- ---------- ---------- ----------- ---------- ----------
Total distributions.................. (.20) (.61) (.44) -- (.19) (.43)
---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period.......... $ 21.37 $ 18.38 $ 18.28 $ 16.59 $ 16.48 $ 15.25
---------- ---------- ---------- ----------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ----------
TOTAL RETURN(a)......................... 17.52% 4.08% 13.13% .67% 9.44% 5.95%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $311,724 $254,577 $237,976 $ 190,428 $188,386 $136,685
Average net assets (000)................ $288,277 $258,322 $219,419 $ 191,228 $161,356 $118,927
Ratios to average net assets:
Expenses, including distribution
fees.............................. 1.36% 1.37% 1.50% 1.80%(b) 1.61%(c) 1.60%(c)
Expenses, excluding distribution
fees.............................. 1.36% 1.37% 1.50% 1.80%(b) 1.61%(c) 1.60%(c)
Net investment income (loss)......... 1.39% 1.53% 1.65% (.78)%(b) 1.58%(c) 1.58%(c)
Portfolio turnover rate................. 6% 15% 9% 4% 15% 20%
<CAPTION>
1994
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 12.35
----------
Income from investment operations:
Net investment income (loss)............ .13(c)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 2.54
----------
Total from investment operations..... 2.67
----------
Less distributions:
Dividends from net investment income.... (.03)
Distributions from net realized gains... (.15)
----------
Total distributions.................. (.18)
----------
Net asset value, end of period.......... $ 14.84
----------
----------
TOTAL RETURN(a)......................... 21.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $102,824
Average net assets (000)................ $ 68,476
Ratios to average net assets:
Expenses, including distribution
fees.............................. 1.60%(c)
Expenses, excluding distribution
fees.............................. 1.60%(c)
Net investment income (loss)......... 1.08%(c)
Portfolio turnover rate................. 21%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total return for periods of less than a full
year are not annualized. Total return includes the effect of expense
subsidies/recoveries, as applicable.
(b) Annualized.
(c) Net of expense subsidy/recovery.
(d) Calculated based upon weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14
<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>
Getting The Most From Your Prudential Mutual Fund
How many times have you read these letters -- or other financial
materials -- and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help.
So we'll use this space from time to time to explain some of the
words you might have read, but not understood. And if you have a
favorite word that no one can explain to your satisfaction, please
write to us.
Basis Point: 1/100th of 1%. For example, one-half of one percent is
50 basis points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds
that separate mortgage pools into different maturity classes,
called tranches. These instruments are sensitive to changes in
interest rates and homeowner refinancing activity. They are
subject to prepayment and maturity extension risk.
Derivatives: Securities that derive their value from other
securities. The rate of return of these financial instruments
rises and falls -- sometimes very suddenly -- in response to
changes in some specific interest rate, currency, stock, or
other variable.
Discount Rate: The interest rate charged by the Federal Reserve
on loans to member banks.
Federal Funds Rate: The interest rate charged by one
bank to another on overnight loans.
Futures Contract: An agreement to purchase or sell a specific
amount of a commodity or financial instrument at a set price
at a specified date in the future.
Leverage: The use of borrowed assets to enhance return. The
expectation is that the interest rate charged on borrowed funds
will be lower than the return on the investment. While leverage
can increase profits, it can also magnify losses.
Liquidity: The ease with which a financial instrument (or
product) can be bought or sold (converted into cash) in the
financial markets.
Price/Earnings Ratio: The price of a share of stock divided
by the earnings per share for a 12-month period.
Option: An agreement to purchase or sell something, such
as shares of stock, by a certain time for a specified price.
An option need not be exercised.
Spread: The difference between two values; often used to describe
the difference between "bid" and "asked" prices of a security,
or between the yields of two similar maturity bonds.
Yankee Bond: A bond sold by a foreign company or government in
the U.S. market and denominated in U.S. dollars.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Robert C. Rosselot, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
The views expressed in this report and information about the
Series' portfolio holdings are for the period covered by
this report, and are subject to change thereafter.
The accompanying financial statements as of April 30, 1999,
were not audited and, accordingly, no opinion is expressed
on them.
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current
prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
(800) 225-1852 New York, NY
743969503
743969602 MF115E4
743969701 743969800
