ANNUAL REPORT November 30, 1994
Prudential
Global Natural
Resources Fund
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
January 6, 1995
Dear Shareholder:
1994 marked the end of a decade-long global economic slump, and we saw signs
of growth again in many of the world's economies. Unfortunately, this growth
was also accompanied by generally rising interest rates around the world, which
dampened stock activity in the U.S. and on most of the world's exchanges. The
Prudential Global Natural Resources Fund produced negative returns over the
past six months, and those returns were below average.
However, we are pleased to report that, for the last 12 months, the Fund
produced positive gains, and outperformed the average global natural resources
fund, as reported by Lipper Analytical Services, Inc.
The Fund's Objective
The Prudential Global Natural Resources Fund seeks long-term growth of
capital by investing primarily in the securities of foreign and domestic
companies that own, explore, mine, process or develop natural resources or
provide goods and services to these industries. We do not invest directly in
commodities. The Fund may also invest in asset-based securities, the value of
which is based on the market value of a natural resource or raw material.
Investors should keep in mind that there are special risks associated with
foreign investing, such as currency fluctuations, economic, political and
social developments. These risks are described in detail in the Fund's
prospectus. Moreover, while the Fund has not done so during this reporting
period, it may occasionally use derivatives, like options and futures, among
others.
The Market
Despite the world's emergence from global recession, global natural resource
stocks did not perform well in 1994. For the last six months, the average
global natural resource fund reported a -3.30% loss and the Fund is down 5.9%
(for Class B shares). The main reason behind the sector's lackluster
performance was rising short-term interest rates.
-1-
<PAGE>
The Commodity Research Bureau's Futures Index (CRB), one of several
indicators the Federal Reserve uses to monitor inflation, began to climb in
1993, prompting the Fed to begin raising short-term interest rates last
February. Rising short-term rates limited gains in equity markets around the
world, with the S&P 500 returning a meager 0.81% for the last six months ended
November 1994, and the Morgan Stanley Capital International Index (MSCI) a
0.39% total return for the same time period.
Commodity prices were split for the last six months. More inflation-sensitive
natural resources, like gold and silver, were weak while economically driven
commodities, like base metals, were strong. We remain bullish on our long-term
commodity price outlook, and believe prices will be driven largely by demand
from China, Eastern Europe and South America. As these emerging economies grow,
so, too, will their need for energy, food and other natural resources.
What we did well...
While the market, in general, was poor over the last six months, our basic
investment themes remain unchanged. We continue to look for strong performance
in the following groups:
- - Energy Issues. Energy issues make up the largest portion of the Fund's
portfolio, and include oil, oil service and natural gas stocks. Oil-related
stocks performed stronger than expected early this year, helped by higher oil
prices, but have been flat for the last six months. We are focusing on
companies that could benefit from a rise in natural gas and oil prices. For
example, we recently purchased CAMCO Inc. of Houston, TX, an oil service
company.
- - Base Metals. We're extremely bullish on base metals, particularly aluminum
and nickel. Producers of these metals suffered during the last few years,
following the fragmentation of the Soviet Union in 1991. Huge supplies of
aluminum, nickel and other base metals were dumped on to the world market by
the Soviet republics to earn badly needed hard currency. While the prices of
these commodities plummeted as a result, there are signs that supply is
diminishing and prices are starting to rise. As a result, we expect prices to
remain strong over the next few years.
- - Fertilizer Stocks. Over the last six months, fertilizer stocks have remained
attractive. Grain stockpiles continue to fall around the world, as worldwide
economic growth continues to keep grain demand high. Fertilizer demand,
consequently, has remained high as well. Our largest holding is a fertilizer
stock, Potash Corp. of Saskatchewan Inc.
-2-
<PAGE>
- - Precious Metal Stocks. For the last six months, precious metals stocks have
been weak performers, but we continue to believe the 15-year bear market in
this industry has ended. As world supply and demand come into equilibrium, we
expect prices will continue their rise.
- - Timberland Stocks. We continue to add to our timberland holdings, despite
weakness in these stocks over the last six months. Ultimately, we believe
increased restrictions on cutting spurred by the ''green movement'' worldwide
should serve to bolster timber prices.
...Where we saw performance falter
Our heavy weighting in energy issues, with roughly 15% of the Fund in
Canadian natural gas stocks, hurt the Fund's performance during the last six
months. Recent weakness in the natural gas sector came about suddenly and
unexpectedly. Current natural gas storage levels are at full capacity, and this
year's mild November has investors worried there will be excess supply come
spring. We view this recent weakness as a short-term blip, however, and remain
bullish long term on natural gas stocks.
The Next 12 Months...
Looking ahead, worldwide economic growth continues to gain steam, and we
expect the demand for raw materials will follow suit. However, we also don't
anticipate the world's markets to start producing healthy returns until U.S.
interest rates settle into a comfortable new trading range. For this reason,
we will continue to monitor U.S. interest rates closely. In the meantime, we
will look for stocks that complement our overall investment themes, including
stocks in the energy, base metals, forest products, fertilizers and precious
metals industries.
We are pleased you've chosen the Prudential Global Natural Resources Fund for
your natural resources investment.
Sincerely,
Lawrence C. McQuade
President
Leigh Goehring
Portfolio Manager
Media Mentions... The Prudential Global Natural Resources Fund has been in the
news, garnering mentions from Worth Financial Investments in November,
Individual Investor on November 8th and Financial World on June 21st.
-3-
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND Portfolio of Investments
November 30, 1994 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--94.9%
Common Stocks--88.3%
Australia--10.3%
500,000 Acacia Resources* ......... $ 833,660
(Metals - steel)
535,000 Alcan of Australia Ltd.* ... 1,068,775
(Non - ferrous metals)
49,800 Broken Hill Proprietary Co., 714,003
Ltd. ....................
(Energy sources)
215,300 Comalco, Ltd. ............. 802,315
(Non - ferrous metals)
83,000 CRA, Ltd. ................. 1,135,160
(Metals)
250,000 Delta Gold, Ltd.* ......... 507,111
(Gold)
550,000 Gold Mines of Kalgoorlie, 426,818
Ltd. ....................
(Gold)
266,000 Highland Gold, Ltd. ....... 265,695
(Gold)
190,000 Homestake Gold, Ltd.* ..... 220,440
(Gold)
400,000 M.I.M. Holdings, Ltd. ..... 749,910
(Non - ferrous metals)
166,500 Placer Pacific, Ltd. ...... 441,360
(Gold)
144,000 Plutonic Resources, Ltd. ... 656,110
(Industrial components)
141,464 Western Mining Corp. 804,335
Holdings, Ltd. . -----------
(Non - ferrous metals)
8,625,692
-----------
Canada--27.0%
115,000 Agnico-Eagle Mines, Ltd. ... 1,127,328
(Gold)
52,300 American Barrick Resources 1,091,838
Corp. ....................
(Gold)
151,000 Atcor Resources, Ltd.* .... 309,204
(Energy sources)
362,000 Beau Canada Exploration, $ 494,180
Ltd.* ...................
(Real estate)
45,000 Blue Range Resource Corp.*.. 290,001
(Energy sources)
82,000 Cabre Exploration, Ltd.* ... 707,076
(Utilities - electric &
gas)
44,000 Canadian Natural Resources, 511,201
Ltd.* .
(Energy sources)
40,000 Cominco Fertilizers, Ltd. .. 827,797
(Chemicals)
58,000 Cominco Ltd.* ............. 1,007,750
(Non - ferrous metals)
96,000 Discovery West Corp.* ..... 341,575
(Energy sources)
99,000 Dorset Exploration, Ltd.* .. 458,283
(Utilities - electric &
gas)
151,500 Elan Energy, Corp.* ....... 797,571
(Energy sources)
50,000 Ensign Resource Service 167,012
Group, Inc.*
(Utilities - electric &
gas)
40,000 Grad & Walker Energy Corp.* 283,194
(Utilities - electric &
gas)
65,200 INCO, Ltd.* ............... 1,793,000
(Non - ferrous metals)
90,000 Jordan Petroleum Ltd.* .... 592,256
(Exploration & production)
141,000 Morrison Petroleum, Ltd. ... 755,092
(Utilities - electric &
gas)
65,000 Musto Explorations, Ltd.* .. 595,886
(Non - ferrous metals)
100,000 Northrock Resources, Ltd.* . 626,293
(Exploration & production)
60,000 Pacific Forest Products, 490,143
Ltd.* ...................
(Forest products)
21,000 Pinnacle Resources, Ltd.* .. 278,292
(Utilities - electric &
gas)
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Canada--(cont'd.)
68,100 Placer Dome, Inc. ......... $ 1,273,336
(Gold)
105,700 Potash Corp. of Saskatchewan 3,760,883
Inc. .
(Chemicals)
75,000 Prime Resources Group, Inc.* 496,950
(Energy sources)
75,000 Rigel Energy Corp.* ....... 789,674
(Energy sources)
62,000 Talisman Energy, Inc.* .... 1,204,299
(Energy sources)
255,000 TVX Gold, Inc.* ........... 1,620,194
(Gold) -----------
22,690,308
-----------
Chile--0.2%
5,200 Sociedad Quimica y Minera de
Chile S.A. (ADR) ........ 145,600
(Energy sources) -----------
France--4.6%
65,000 Coflexip (ADR) ............ 1,417,813
(Gas pipelines)
27,178 Societe Nationale Elf 1,858,260
Aquitaine ...............
(Energy sources)
9,800 Total France Petroleum, Ltd. 612,784
-----------
(Energy sources)
3,888,857
-----------
New Zealand--2.5%
303,834 Carter Holt Harvey Ltd. ... 673,927
(Forest products)
192,874 Fernz Corp. ............... 618,081
(Chemicals)
430,000 Fletcher Forestry, Ltd. ... 499,852
(Forest products)
19,500 NZ Refining Co., Ltd. ..... 327,763
(Integrated oil) -----------
2,119,623
-----------
United Kingdom--0.9%
54,100 Rio Tinto-Zinc Corp., Plc... $ 717,358
-----------
(Non - ferrous metals)
United States--42.8%
32,000 Alumax, Inc.* ............. 840,000
(Non - ferrous metals)
18,000 Aluminum Company of America 1,469,250
(Non - ferrous metals)
8,800 Amerada Hess Corp. ........ 400,400
(Integrated oil)
18,100 American Oilfield Divers, 122,175
Inc.* ...................
(Integrated oil)
21,300 Aquila Gas Pipeline Corp. .. 154,425
(Energy sources)
32,000 Baker Hughes, Inc. ........ 576,000
(Oil services)
15,000 Battle Mountain Gold Co. ... 142,500
(Gold)
29,000 Cabot Oil & Gas Corp. ..... 485,750
(Exploration & production)
57,000 Calgon Carbon Corp. ....... 641,250
(Non - ferrous metals)
35,000 Camco, Inc. ............... 665,000
(Oil services)
23,300 Champion International Corp. 809,675
(Forest products)
79,000 Crestar Energy, Inc.* ..... 831,790
(Energy sources)
63,000 Cross Timbers Oil Co. ..... 921,375
(Exploration & production)
26,000 Dreco Energy Services, Ltd.* 224,250
(Oil services)
32,000 Enterra Corp.* ............ 632,000
(Oil services)
37,400 Freeport-McMoran Copper &
Gold, Inc. .............. 752,675
(Non - ferrous metals)
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
United States--(cont'd.)
83,000 Global Marine Inc.* ....... $ 332,000
(Oil services)
42,800 Hornbeck Offshore Services,
Inc.* . 548,375
(Energy sources)
86,200 ICO, Inc.* ................ 425,613
(Energy & oil services)
41,400 IMC Fertilizer Group, Inc.* 1,562,850
(Chemicals)
40,000 Kaiser Aluminum Corp.* .... 425,000
(Non - ferrous metals)
300,000 Marine Drilling Cos. Inc.*.. 1,031,250
(Oil services)
169,400 Mesa, Inc.* ............... 741,125
(Oil services)
69,000 Newfield Exploration Co.* .. 1,561,125
(Energy sources)
26,958 Newmont Mining Corp. ...... 987,337
(Gold)
44,500 Noble Affiliates, Inc. .... 1,223,750
(Exploration & production)
48,150 Noble Drilling Corp.* ..... 300,938
(Exploration & production)
55,000 Offshore Pipelines, Inc.* .. 1,134,375
(Gas pipelines)
26,200 Oryx Energy Co. ........... 317,675
(Exploration & production)
49,900 Pegasus Gold, Inc. ........ 617,513
(Gold)
140,000 Pride Petroleum Services, 717,500
Inc.* ...................
(Oil services)
41,700 Rayonier Timberlands, L.P... 1,167,600
(Forest products)
89,000 Reading & Bates Corp.* .... 522,875
(Oil services)
23,200 Reynolds Metals Co. ....... 1,093,300
(Non - ferrous metals)
167,300 Santa Fe Pacific Gold Corp.* $ 2,112,162
(Gold)
21,000 Seagull Energy Corp.* ..... 448,875
(Exploration & production)
37,900 Sonat Offshore Drilling, 739,050
Inc. ....................
(Exploration & production)
82,000 Stolt Comex Seaway* ....... 784,125
(Engineering)
29,250 Tejas Gas Corp.* .......... 1,279,687
(Gas pipelines)
46,100 The Vigoro Corp. .......... 1,336,900
(Chemicals)
100,000 Trident Holding, Inc. ..... 1,087,500
(Energy sources)
42,800 USX-Delhi Group ........... 508,250
(Gas pipelines)
26,000 USX Marathon Corp. ........ 468,000
(Integrated oil)
42,000 Varco International, Inc.*.. 267,750
(Oil services)
44,000 Western Co. of North America 748,000
(Oil services)
90,000 Western Gas Resources, Inc.* 1,833,750
-----------
(Oil & Gas - Domestic)
35,992,765
-----------
Total common stocks
(cost US$71,335,175)........ 74,180,203
-----------
Preferred Stocks--4.6%
United States--4.6%
AMAX Gold, Inc., Ser. B,
9,000 7.50%, Convertible ........ 452,250
(Gold)
Battle Mountain Gold Co.,
Ser.B,
8,000 $3.25, Convertible ........ 466,000
(Gold)
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
United States--(cont'd.)
Freeport-McMoran
Copper & Gold, Inc.,
25,000 $4.125, Convertible ....... $ 506,250
(Non - ferrous metals)
Hecla Mining Co.
21,000 7.00%, Convertible, Ser. B, 979,125
(Gold)
Noble Drilling Corp.
51,000 $1.50, Convertible ........ 1,115,625
(Exploration & production)
Reading & Bates Corp.
14,000 $1.625, Convertible ....... 309,750
(Oil services) -----------
Total preferred stocks
(cost US$4,070,230)......... 3,829,000
-----------
<CAPTION>
Principal
Amount
(000) Corporate Bonds--2.0%
- ----------
<C> <S> <C>
New Zealand--0.7%
Natural Gas Corp. Hldgs.,
NZ$ 760 10.50%, 10/14/97 .......... 630,360
(Oil services) -----------
United States--1.3%
Coeur D' Alene Mines Corp.,
Subordinated Conv. Deb.,
USD 881 6.375%, 1/31/04 790,645
250 7.00%, 11/30/02, .......... 285,000
(Gold) -----------
1,075,645
-----------
Total Corporate Bonds
(cost US$1,926,842)......... 1,706,005
-----------
Total long-term investments
(cost US$77,332,247)...... 79,715,208
-----------
<CAPTION>
Principal Description Value
Amount (Note 1)
(000)
<C> <S> <C>
SHORT-TERM INVESTMENTS--4.9%
Repurchase Agreement--4.9%
Joint Repurchase Agreement
Account,
USD 4,134 5.692%, 12/1/94,
(cost US$4,134,000; Note
5)........................ $ 4,134,000
-----------
Total Investments--99.8%
(cost US$81,466,247; Note
4)........................ 83,849,208
Other assets in excess of
liabilities--0.2%......... 146,145
-----------
Net Assets--100%............ $83,995,353
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security.
ADR--American Depository Receipt.
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets November 30, 1994
-----------------
<S> <C>
Investments, at value (cost $81,466,247).............................................. $83,849,208
Foreign currency, at value (cost $148,069)............................................ 152,942
Cash.................................................................................. 1,202
Receivable for Fund shares sold....................................................... 308,883
Receivable for investments sold....................................................... 304,207
Dividends and interest receivable..................................................... 207,867
Deferred expenses and other assets.................................................... 1,220
-----------------
Total assets...................................................................... 84,825,529
-----------------
Liabilities
Payable for investments purchased..................................................... 409,065
Payable for Fund shares reacquired.................................................... 297,492
Due to Distributor.................................................................... 67,039
Due to Manager fee payable............................................................ 53,796
Withholding taxes payable............................................................. 2,784
-----------------
Total liabilities................................................................. 830,176
-----------------
Net Assets............................................................................ $83,995,353
-----------------
-----------------
Net assets were comprised of:
Common stock, at par................................................................ $ 72,495
Paid-in capital in excess of par.................................................... 83,457,335
-----------------
83,529,830
Accumulated net investment loss..................................................... (780,345)
Accumulated net realized losses on investments and foreign currency transactions.... (1,143,354)
Net unrealized appreciation on investments and foreign currencies................... 2,389,222
-----------------
Net assets, November 30, 1994....................................................... $83,995,353
-----------------
-----------------
Class A:
Net asset value and redemption price per share
($7,407,338 / 625,166 shares of common stock issued and outstanding).............. $11.85
Maximum sales charge (5% of offering price)......................................... 0.62
-----------------
Maximum offering price to public.................................................... $12.47
-----------------
-----------------
Class B:
Net asset value, offering price and redemption price per share
($76,351,890 / 6,603,893 shares of common stock issued and outstanding)........... $11.56
-----------------
-----------------
Class C:
Net asset value, offering price and redemption price per share
($236,125 / 20,423 shares of common stock issued and outstanding)................. $11.56
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
November 30,
Net Investment Loss 1994
------------
<S> <C>
Income
Dividends (net of foreign
withholding taxes of $12,208)..... $ 385,126
Interest (net of foreign withholding
taxes of $3,375).................. 140,350
------------
Total income...................... 525,476
------------
Expenses
Distribution fee--Class A........... 9,017
Distribution fee--Class B........... 365,277
Distribution fee--Class C........... 534
Management fee...................... 301,410
Transfer agent's fees and
expenses............................ 103,000
Custodian's fees and expenses....... 57,000
Audit fee........................... 25,000
Registration fees................... 22,000
Directors' fees..................... 19,000
Reports to shareholders............. 13,000
Legal fees.......................... 10,000
Miscellaneous....................... 3,371
------------
Total expenses.................... 928,609
------------
Net investment loss................... (403,133)
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............. 983,662
Foreign currency transactions....... (233,687)
------------
749,975
------------
Net change in unrealized appreciation/
depreciation on:
Investment transactions............. (6,067,078)
Foreign currency.................... 3,545
------------
(6,063,533)
------------
Net loss on investments and foreign
currencies.......................... (5,313,558)
------------
Net Decrease in Net Assets
Resulting from Operations............. $(5,716,691)
------------
------------
</TABLE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
November 30, May 31,
1994 1994
------------ ------------
<S> <C> <C>
Increase (Decrease) in Net
Assets
Operations
Net investment loss..... $ (403,133) $ (322,515)
Net realized gain on
investment and foreign
currency
transactions.......... 749,975 896,441
Net change in unrealized
appreciation/depreciation
on investments and
foreign currencies.... (6,063,533) 1,063,092
------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ (5,716,691) 1,637,018
------------ ------------
Net equalization
credits................. 637 645
------------ ------------
Fund share transactions
(Note 6)
Net proceeds from shares
subscribed............ 32,443,905 69,044,435
Cost of shares
reacquired.............. (13,472,971) (37,990,053)
------------ ------------
Net increase in net
assets from Fund share
transactions.......... 18,970,934 31,054,382
------------ ------------
Total increase............ 13,254,880 32,692,045
Net Assets
Beginning of period....... 70,740,473 38,048,428
------------ ------------
End of period............. $ 83,995,353 $ 70,740,473
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND
Notes to Financial Statements
(Unaudited)
Prudential-Bache Global Natural Resources Fund, Inc., doing business as
Prudential Global Natural Resources Fund (the ``Fund''), is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund's investment objective is long-term growth of capital which it
seeks to achieve by investing primarily in equity securities of foreign and
domestic natural resource companies.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Fund in the preparation of
its financial statements.
Security 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.
Securities for which market quotations are not readily available, including
restricted securities, will be valued at fair value as determined in good faith
according to a pricing procedure developed by the Investment Adviser under
procedures established by and under the general supervision of the Fund's Board
of Directors. Options listed on exchanges are valued at their closing price on
the applicable exchange.
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 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 daily 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 Fund are presented using 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 the 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 losses on foreign currency transactions of $233,687 represents
net foreign exchange gains or losses from disposition 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 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 or economic instability the
level of governmental supervision and the regulation of foreign securities
markets.
Option Writing: When the Fund writes an option, an amount equal to the premium
received by the Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums received from writing
options which expire unexercised are treated by the Fund on the expiration date
as realized gains from options. The difference between the premium and the
amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid
-10-
<PAGE>
<PAGE>
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security or currency in determining whether the Fund has realized a gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
securities or currencies purchased by the Fund. The Fund, as writer of an
option may have no control over whether the underlying securities may be sold
(call) or purchased (put) and, as a result, bears the market risk of an
unfavorable change in the price of the security or currency underlying the
written option.
Securities Transactions and 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.
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: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
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. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
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 interest and dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the A.I.C.P.A.'s Statement of
Position 93-2: Determination, Disclosure, and Financial Statement Presentation
of Income; Capital Gain, and Return of Capital Distributions by Investment
Companies. For the six months ended November 30, 1994, the Fund increased
accumulated net investment loss by $233,687, and decreased accumulated net
realized loss on investments by $233,687. Net realized gains and net assets
were not affected by this change.
Dividends and Distributions: The Fund expects to pay dividends out of net
investment income and make distributions of any net capital gains, at least
annually, if any. 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 currencies and passive investment companies'
transactions.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``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 Fund's average daily net assets.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and with Prudential Securities Incorporated (``PSI''), which
acts as distributor of the Class B and Class C shares of the Fund (collectively
the ``Distributors''). The Fund compensates the Distributors 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.
On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B Plans under which the distribution plans became compensation plans,
effective August 1, 1994. Prior thereto, the distribution plans were
reimbursement plans, under which PMFD and PSI were reimbursed for expenses
actually incurred by them up to the amount permitted under the Class A and Class
B Plans, respectively. The Fund is not obligated to pay any prior or future
excess distribution costs (costs incurred by the Distributors in excess of
distribution fees paid by the Fund or contingent deferred sales charges received
by the Distributors). The rate of the distribution fees charged to Class A and
Class B shares of the Fund did not change under the amended plans
-11-
<PAGE>
<PAGE>
of distribution. The Fund began offering Class C shares on August 1, 1994.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
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 Class 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 November 30, 1994.
PMFD has advised the Fund that it has received approximately $46,300 in
front-end sales charges resulting from sales of Class A shares during the six
months ended November 30, 1994. From these fees, PMFD paid such sales charges
to dealers (PSI and Prusec) which in turn paid commissions to salespersons.
PSI advised the Fund that for the six months ended November 30, 1994, it
received approximately $189,200 in contingent deferred sales charges imposed
upon certain redemptions by Class B and C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PIC and PMF are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
With Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the six months ended November 30, 1994, the Fund incurred fees of
approximately $102,600 for the services of PMFS. As of November 30, 1994,
approximately $10,800 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 six months ended November 30, 1994, PSI and/or its foreign affiliates
earned approximately $500 in brokerage commissions from portfolio transactions
executed on behalf of the Fund.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments for the six months ended
November 30, 1994 aggregated $22,351,864 and $6,518,596, respectively.
The federal income tax basis of the Fund's investments at November 30, 1994
was $81,530,333 and accordingly, net unrealized appreciation for federal income
tax purposes was $2,318,875 (gross unrealized appreciation--$9,209,073; gross
unrealized depreciation--$6,890,198).
For federal income tax purposes, the Fund has a capital loss carryforward as
of May 31, 1994 of approximately $2,054,000 which will expire in 1999. Such
carryforward is after utilization of approximately $873,000 to offset the Fund's
net taxable gains realized and recognized in the year ended May 31, 1994.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until future net gains have been realized in excess of such
carryforward.
Note 5. Joint The Fund along with other
Repurchase affiliated registered invest-
Agreement Account ment 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. At May 31, 1994, the Fund had a 0.55% undivided interest in the
repurchase agreements in the joint account. The undivided interest for the Fund
represented $4,134,000 in principal amount. As of such date, each repurchase
agreement in the joint account and the value of the collateral therefor were as
follows:
Goldman, Sachs & Co., 5.70%, in the principal amount of $250,000,000,
repurchase price $250,039,583, due 12/1/94. The value of the collateral
including accrued interest is $255,000,187.
Morgan (J.P.) Securities Inc., 5.68%, in the principal amount of
$200,000,000, repurchase price $200,031,556, due 12/1/94. The value of the
collateral including accrued interest is $204,329,069.
Morgan Stanley & Co. Inc., 5.68%, in the principal amount of $200,000,000,
repurchase price $200,031,556, due 12/1/94. The value of the collateral
including accrued interest is $204,148,271.
Smith Barney, Inc., 5.72%, in the principal amount of $100,000,000,
repurchase price $100,015,889, due 12/1/94. The value of the collateral
including accrued interest is $102,000,653.
Note 6. Capital The Fund offers Class A,
Class B and Class C 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 charge of 1% during the first year. Each class of shares have
equal rights as to earnings, assets and voting privileges except that each class
bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. The Fund has authorized 5 million shares of
common stock $.01 par value per share
-12-
<PAGE>
<PAGE>
equally divided into three classes, designated Class A, Class B and Class C
common stock.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ---------- ------------
<S> <C> <C>
Six months ended November 30,
1994:
Shares sold................... 411,035 $ 5,275,602
Shares reacquired............. (304,345) (3,905,622)
---------- ------------
Net increase in shares
outstanding................. 106,690 $ 1,369,980
---------- ------------
---------- ------------
Year ended May 31, 1994:
Shares sold................... 1,369,919 $ 17,150,765
Shares reacquired............. (1,011,738) (12,620,595)
---------- ------------
Net increase in shares
outstanding................. 358,181 $ 4,530,170
---------- ------------
---------- ------------
<CAPTION>
Class B Shares Amount
- ------------------------------ ---------- ------------
<S> <C> <C>
Six months ended November 30,
1994:
Shares sold................... 2,145,133 $ 26,880,010
Shares reacquired............. (767,891) (9,536,064)
---------- ------------
Net increase in shares
outstanding................. 1,377,242 $ 17,343,946
---------- ------------
---------- ------------
Year ended May 31, 1994:
Shares sold................... 4,232,426 $ 51,893,670
Shares reacquired............. (2,098,628) (25,369,458)
---------- ------------
Net increase in shares
outstanding................. 2,133,798 $ 26,524,212
---------- ------------
---------- ------------
<CAPTION>
Class C
- ------------------------------
<S> <C> <C>
August 1, 1994* through
November 30, 1994:
Shares sold................... 22,952 $ 288,293
Shares reacquired............. (2,529) (31,285)
---------- ------------
Net increase in shares
outstanding................. 20,423 $ 257,008
---------- ------------
---------- ------------
- ---------------
* Commencement of offering of Class C shares.
</TABLE>
-13-
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL RESOURCES FUND
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------------------- ---------------------------------
January 22,
Six Months 1990* Six Months Year Ended May
Ended Year Ended May 31, through Ended 31,
November 30, --------------------------------- May 31, November 30, -----------------
1994 1994(D)(D) 1993(D)(D) 1992(D)(D) 1991 1990 1994 1994(D)(D) 1993(D)(D)
------------ ------ ------ ------ ------ ------------ ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period............... $12.55 $11.84 $10.02 $ 9.73 $10.17 $10.58 $ 12.29 $ 11.69 $ 9.97
----- ------ ------ ------ ------ ------ ------ ------- -------
Income from investment
operations
Net investment income
(loss)............... (.01) .01 .02 .01 .13 .04 (.07) (.08) (.07)
Net realized and
unrealized gain
(loss) on investment
and foreign currency
transactions......... (.69) .70 1.80 .38 (.39) (.45) (.66) .68 1.79
----- ------ ------ ------ ------ ----- ------ ------- -------
Total from investment
operations......... (.70) .71 1.82 .39 (.26) (.41) (.73) .60 1.72
----- ------ ------ ------ ------ ----- ------ ------- -------
Less distributions
Dividends from net
investment income.... -- -- -- (.09) (.18) -- -- -- --
Distributions from net
realized gains on
investment and
foreign currency
transactions......... -- -- -- -- (.01) -- -- --
----- ------ ------ ------ ------ ----- ------ ------- -------
Total
distributions........ -- -- -- (.10) (.18) -- -- -- --
----- ------ ------ ------ ------ ----- ------ ------- -------
Net asset value, end
of period............ $11.85 $12.55 $11.84 $10.02 $ 9.73 $10.17 $ 11.56 $ 12.29 $ 11.69
----- ------ ------ ------ ------ ----- ------ ------- -------
----- ------ ------ ------ ------ ----- ------ ------- -------
TOTAL RETURN@:........ (5.58)% 6.00% 18.16% 4.04% (2.59)% (3.88)% (5.94)% 5.13% 17.25%
RATIOS TO AVERAGE NET
ASSETS:
Net assets, end of
period (000)......... $7,407 $6,505 $1,898 $ 590 $ 770 $ 427 $ 76,352 $64,235 $36,150
Average net assets
(000)................ $7,194 $4,106 $ 758 $ 647 $ 664 $ 279 $ 72,856 $48,772 $23,464
Ratios to average net
assets:@@
Expenses, including
distribution
fees............... 1.63%(D) 1.89% 2.38% 2.59% 2.22% 2.72%(D) 2.38%(D) 2.65% 3.18%
Expenses, excluding
distribution
fees............... 1.38%(D) 1.65% 2.18% 2.39% 2.02% 2.52%(D) 1.38%(D) 1.65% 2.18%
Net investment income
(loss)............... (.12)%(D) .11% .13% .44% 1.47% 1.86%(D) (1.09)%(D) (.67)% (.67)%
Portfolio turnover.... 8% 19% 50% 36% 40% 34% 8% 19% 50%
<CAPTION>
Class C
------------
August 1,
1994**
through
November 30,
1992(D)(D) 1991 1990 1994
------- ------- ------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period............... $ 9.72 $ 10.14 $ 9.86 $12.47
------- ------- ------- -----
Income from investment
operations
Net investment income
(loss)............... (.08) .06 .02 (.03)
Net realized and
unrealized gain
(loss) on investment
and foreign currency
transactions......... .39 (.39) .92 (.88)
------- ------- ------- -----
Total from investment
operations......... .31 (.33) .94 (.91)
------- ------- ------- -----
Less distributions
Dividends from net
investment income.... (.05) (.09) (.06) --
Distributions from net
realized gains on
investment and
foreign currency
transactions......... (.01) -- (.60) --
------- ------- ------- -----
Total
distributions........ (.06) (.09) (.66) --
------- ------- ------- -----
Net asset value, end
of period............ $ 9.97 $ 9.72 $ 10.14 $11.56
------- ------- ------- -----
------- ------- ------- -----
TOTAL RETURN@:........ 3.26% (3.31)% 9.63% (7.30)%
RATIOS TO AVERAGE NET
ASSETS:
Net assets, end of
period (000)......... $23,228 $33,653 $47,579 $236
Average net assets
(000)................ $26,877 $40,090 $48,251 $162
Ratios to average net
assets:@@
Expenses, including
distribution
fees............... 3.39% 3.02%** 3.07% 2.38%(D)
Expenses, excluding
distribution
fees............... 2.39% 2.02%** 2.07% 1.38%(D)
Net investment income
(loss)............... (.34)% .58% .16% (.98)%(D)
Portfolio turnover.... 36% 40% 34% 8%
</TABLE>
- ---------------
* Commencement of offering of Class A shares.
** Commencement of offering of Class C shares.
(D) Annualized.
(D)(D) Calculated based upon average shares outstanding during the year.
@ 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.
@@ Because of the events referred to in ** and the timing of such, the
ratios for the Class C shares are not necessarily comparable to that of
Class A or B shares and are not necessarily indicative of future ratios.
See Notes to Financial Statements.
-14-
<PAGE>
Directors
Stephen C. Eyre
Delayne Dedrick Gold
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. La Blanc
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
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
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, NY 10022
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852, Collect (908) 417-7555
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
744334103 MF 135E
74433202 Prudential Mutual Fund Management (LOGO) Cat #4301492
