(ICON)
Prudential
Natural
Resources
Fund, Inc.
- -------------------
(Formerly the
Prudential Global
Natural Resources
Fund, Inc.)
ANNUAL
REPORT
May 31, 1996
(LOGO)
<PAGE>
Prudential Natural Resources Fund, Inc.
Performance At A Glance.
Natural resources stock prices and the Prudential Natural Resources
Fund rose substantially over the past year. Demand for natural resources
surged in developing countries, boosting prices of these commodities
and stocks of the companies that produce them. Over the last 12 months,
your Fund performed much better than the average similar fund measured
by Lipper Analytical Services, largely as a result of its investment
in fertilizer and oil service industry stocks. The Fund -- along with
other natural resources funds -- performed better than the S&P 500
and the Morgan Stanley World Index, widely-quoted barometers of U.S.
and international stock performance, respectively.
<TABLE>
Cumulative Total Returns1 As of 5/31/96
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 33.5% 90.3% 78.2%
Class B 32.5 83.2 92.2
Class C 32.5 N/A 41.8
Lipper Nat. Resources. Avg3 27.5 66.6 66.5
<CAPTION>
Average Annual Total Returns1 As of 6/30/96
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 21.5% 12.5% 7.8%
Class B 21.9 12.6 7.2
Class C 25.9 N/A 17.5
</TABLE>
Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper Analytical
Services. The cumulative total returns do not take into account
sales charges. The average annual returns do take into account
applicable sales charges. The Fund charges a maximum front-end
sales load of 5% for Class A shares and a declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1% and 1% for
six years, for Class B shares. Class C shares have a 1% CDSC
for one year. Class B shares automatically convert to Class A
shares on a quarterly basis, after approximately seven years.
2Inception dates: 1/22/90 Class A; 9/28/87, Class B; 8/1/94 Class C.
3Lipper Natural Resources Average returns are for 36 funds for one
year, 18 funds for five years, and 11 funds since inception of the
Class B shares on 9/28/87.
How Investments Compared.
(As of 5/31/96)
(CHART)
Source: Lipper Analytical Services. Financial markets change, so a
mutual fund's past performance should never be used to predict future
results. The risks to each of the investments listed above are
different -- we provide 12-month total returns for several Lipper
mutual fund categories to show you that reaching for higher yields
means tolerating more risk. The greater the risk, the larger the
potential reward or loss. In addition, we've included historical
20-year average annual returns. These returns assume the reinvestment
of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors have received
higher historical total returns from stocks than from most other
investments. Smaller capitalization stocks offer greater potential
for long-term growth but may be more volatile than larger capitalization
stocks.
General Bond Funds provide more income than stock funds, which can help
smooth out their total returns year by year. But their prices still
fluctuate (sometimes significantly) and their returns historically
have been lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state governments,
state agencies and/or municipalities. This investment provides income
that is usually exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share value; they
don't fluctuate much in price but historically their returns have
been generally among the lowest of the major investment categories.
<PAGE>
Leigh R. Goehring, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Natural Resources Fund seeks long-term growth of
capital by investing in foreign and domestic companies that own,
explore, mine, process or develop natural resources or provide goods
and services for those industries. Natural resources generally include
precious metals such as gold, silver or platinum; ferrous and
nonferrous metals such as iron, aluminum and copper; strategic
metals such as uranium and titanium; hydrocarbons such as coal,
oil and natural gas; timber land, underdeveloped real property and
agricultural commodities. There can be no assurance that the Fund's
investment objective will be achieved.
Overview.
The values of natural resources are affected by a number of factors,
such as the weather, inflation and international politics. Natural
resources are found around the world, so the Fund will invest in
foreign stocks, which have special risks, such as currency fluctuations,
economic, political and social developments.
Strategy Session.
It's beginning to look like the 15-year-long bear market in natural
resources may finally be coming to an end. Consider:
- -- The price of gold hit $415 an ounce in January 1996 for the first
time in nearly six years because of short supply.
- -- The price of crude oil for future delivery rose in March 1996 to
its highest level since the 1990 Gulf War, topping $24 a barrel, up
from $17 a year ago, as suppliers let reserves fall, anticipating
United Nations approval of the sale of Iraqi oil. Gasoline hit $2 a
gallon in California and New York this spring when inventories
nationally fell to a 25-year low.
- -- As a result of the current Midwestern drought, the U.S. winter
wheat harvest might have been the smallest since 1978, according to
the U.S. Agriculture Department.
Rising grain and energy prices pushed the Knight-Ridder Commodities
Research Bureau Index to an eight-year high several times in April.
At the same time that the supply of many natural resources is falling,
demand appears to be rising. Worldwide growth, which ignited demand,
has been extraordinarily and persistently underestimated. Demand for
grain, oil and other commodities in countries such as China and India
have boomed as both embrace capitalism. Plus, political instability
in Russia, where the possibility of civil war has been discussed in
daily newspapers, could complicate matters further, pushing natural
resources prices even higher.
We anticipated this imbalance between growing worldwide demand for,
and a finite worldwide supply of, some natural resources for some
time now. This imbalance has benefitted our shareholders significantly
over the past 12 months.
An Interest In Energy.
Sectors expressed as a percentage of
total net assets as of 5/31/96.
(CHART)
<PAGE>
What Went Well.
We Got Energized.
Approximately 40% of our holdings were in energy stocks, including
about 10% in oil drilling companies. We own these stocks because we
expect worldwide demand for oil will grow faster than supply for the
next several years. We are especially interested in the off-shore
drilling industry, because of the shortage of rigs. The number of
oil drilling rigs peaked in 1985, and no new construction has taken
place in recent years. Still, demand persists --so much so that when
demand for large, semi-submersible rigs finally exceeded supply in
1995, day rental rates doubled. As might be expected, offshore drilling
stocks were outstanding performers in 1995, and we expect they will
continue to perform well in 1996, too. Some of the Fund's largest
positions are in Marine Drilling, Sonat Offshore and Reading & Bates.
Fertilizer Flourished.
Our interest in fertilizer, and potash in particular, has been
germinating since 1992, when we first started to invest in these
stocks. We expected worldwide demand for fertilizer to grow, following
the rising demand for grain. We were right. For example, China became
a massive consumer of grains in the last several years. Demand for
food worldwide continues to outpace supply. Despite strong grain
harvests over the last several years, world grain inventories
continue to decline sharply, hitting a 48-year low this year,
according to the U.S. Department of Commerce.
Most fertilizer stocks rose during the last year, and the Fund's
largest position, Potash Corporation of Saskatchewan, nearly doubled
in price. We decided to sell it -- and most of our fertilizer stocks -- in
the fall of 1995.
Five Largest
Holdings.
2.7% Noble Affiliates
Energy Sources
2.6% Marine Drilling
Energy Equipment
& Services
2.5% Cambior
Precious Metals
2.4% Cameco Corp.
Misc. Materials
& Commodities
2.4% Stillwater Mining
Metals-Non Ferrous
Expressed as a percentage of total net assets as of 5/31/96.
And Not So Well.
Last year we were disappointed by our natural gas holdings. Natural
gas prices collapsed in early 1995, and didn't recover until the end
of the year, so our Canadian gas stocks hurt us. During 1995, we
took advantage of weakening prices to add to our position. Canadian
gas supplies -- and gas prices -- are more prone to boom and bust
cycles that those in the U.S. because no new pipeline distribution
capacity in Canada has been built in recent years. We're expecting
the bust to end soon.
Looking Ahead.
Commodities prices -- and the stock prices of companies that produce
them -- have risen sharply over the last year. We firmly believe that
after 15 years, the prolonged bear market in commodity prices is
drawing to a close. Because of extremely strong economic growth now
taking place in some of the world's most populous places, we believe
the potential for natural resource demand has been seriously
underestimated. With world inventories low, and future supply
increases in most commodities relatively uncertain, we believe
that commodities prices could rise faster than inflation for the
next several years. This should be good news for the natural resources
investor.
1
<PAGE>
President's Letter July 1, 1996
(PICTURE)
Dear Shareholder:
Last year, U.S. stocks and bonds generally posted extraordinary returns.
Investors celebrated this performance by putting record amounts of new
money into mutual funds in the first few months of 1996. According to
figures released by the Investment Company Institute, a mutual fund
industry trade group, new investments in mutual funds reached an
all-time monthly high of $33 billion in January of 1996. An additional
$66 billion was invested in the following three months.
While we are pleased that mutual funds are attracting new investors,
we're concerned that some of them may be "buying last year's returns."
Few expect 1995's virtual non-stop returns from the stock and bond
markets. In fact, 1996's markets have been volatile so far (stock and
bond prices go down just as they go up). There's no better time than
now to be talking with your Financial Advisor or Registered Representative.
She or he can help you determine reasonable expectations about both the
potential performance and risks associated with your investments.
Board of Directors Election.
Late this summer, we'll be sending you a notice about a special
shareholder meeting to elect new Prudential mutual fund boards of
directors. Your Board of Directors has approved a proposal to place
a common board of experienced directors across many of Prudential's
mutual funds to improve business efficiency. The materials you'll
receive this summer will contain more complete information about
this proposal.
Changes at Prudential.
Finally, there have been some important changes recently at Prudential
that were made with you in mind. Prudential Mutual Funds has moved
under the umbrella of Prudential's newly created "Money Management
Group." This group manages and administers nearly $190 billion in
client assets and provides mutual funds, annuities, defined benefit
and defined contribution plans to our individual and institutional
investors. We plan to improve the range and quality of investment
products and services that we can provide you by better leveraging
Prudential's strengths. There will, however, be no change in the
service you receive from your Financial Advisor, Registered Representative
or our Customer Service unit.
We're excited about our future and hope that you are, too. Thank you
for your continued support and confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
Portfolio of Investments PRUDENTIAL GLOBAL NATURAL
as of May 31, 1996 RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--96.8%
COMMON STOCKS--91.8%
------------------------------------------------------------
Australia--5.8%
433,200 Acacia Resources(a) (Oil & Natural
Gas Production & Refining) $ 1,165,018
478,265 Capral Aluminium Ltd. (Metals-Non
Ferrous) 1,328,196
186,500 Comalco Ltd. (Metals-Non Ferrous) 1,093,907
77,400 CRA Ltd. (Metals-Non Ferrous) 1,254,484
216,600 Delta Gold NL(a) (Precious Metals) 587,694
164,800 Plutonic Resources Ltd. (Precious
Metals) 979,778
500,000 QNI Ltd. (Metals-Non Ferrous) 1,216,982
122,564 Western Mining Corp. Hldgs. Ltd.
(Metals-Non Ferrous) 928,204
------------
8,554,263
- ------------------------------------------------------------
Canada--32.8%
147,500 Agnico-Eagle Mines Ltd. (Precious
Metals) 2,950,000
110,000 Alberta Energy Co. Ltd. (Oil &
Natural Gas Production &
Refining) 2,103,650
168,800 Anderson Exploration Ltd.(a) (Oil &
Natural Gas Production &
Refining) 1,749,606
109,400 Archer Resources Ltd.(a) (Oil &
Natural Gas Production &
Refining) 371,321
45,700 Barrick Gold (Precious Metals) 1,444,387
391,900 Barrington Petroleum Ltd.(a)
(Exploration & Production) 1,244,354
663,600 Beau Canada Exploration Ltd.(a) (Oil
& Natural Gas Production &
Refining) 978,447
124,300 Blue Range Resource Corp.(a) (Oil &
Natural Gas Production &
Refining) 970,810
71,000 Cabre Exploration Ltd.(a) (Oil &
Natural Gas Production &
Refining) 919,891
225,800 Cambior Inc. (Precious Metals) 3,650,708
68,200 Cameco Corp. (Misc. Materials &
Commodities) 3,469,737
59,800 Canadian Natural Resources Ltd.(a)
(Oil & Natural Gas Production &
Refining) $ 1,032,314
64,700 Crestar Energy Inc.(a) (Oil &
Natural Gas Production &
Refining) 1,123,985
83,100 Discovery West Corp.(a) (Oil &
Natural Gas Production &
Refining) 291,153
85,800 Dorset Exploration Ltd.(a) (Oil &
Natural Gas Production &
Refining) 328,796
121,200 ELAN Energy Inc.(a) (Oil & Natural
Gas Production & Refining) 1,132,380
43,300 Ensign Resource Service Group Inc.
(Oil Services) 316,058
79,900 Grad & Walker Energy Corp.(a) (Oil &
Natural Gas Production &
Refining) 486,982
302,336 HCO Energy Ltd.(a) (Oil & Natural
Gas Production & Refining) 289,095
78,000 Jordan Petroleum Ltd.(a) (Oil &
Natural Gas Production &
Refining) 478,248
300,000 Kap Resources Ltd.(a) (Chemicals) 667,883
122,200 Morrison Petroleum Ltd. (Oil &
Natural Gas Production &
Refining) 664,518
104,000 Northrock Resources Ltd.(a) (Oil &
Natural Gas Production &
Refining) 664,234
160,700 Northstar Energy Corp.(a)
(Exploration & Production) 1,571,810
200,000 Pacific Forest Products Ltd.(a)
(Forest Products & Paper) 2,532,847
26,000 Paramount Resources Ltd. (Oil &
Natural Gas Production &
Refining) 288,467
35,600 Pinnacle Resources Ltd.(a) (Oil &
Natural Gas Production &
Refining) 415,766
62,100 Placer Dome Inc. (Precious Metals) 1,829,004
65,000 Prime Resources Group, Inc.(a)
(Precious Metals) 626,277
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
<PAGE>
Portfolio of Investments PRUDENTIAL GLOBAL NATURAL
as of May 31, 1996 RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Canada (cont'd.)
132,700 Repadre Capital Corp.(a) (Precious
Metals) $ 673,186
79,300 Rigel Energy Corp.(a) (Oil & Natural
Gas Production & Refining) 752,482
357,800 Rio Alto Exploration Ltd.(a)
(Exploration & Production) 1,828,175
50,800 Talisman Energy, Inc.(a) (Oil &
Natural Gas Production &
Refining) 1,216,234
102,300 Timberwest Forest Ltd. (Forest
Products & Paper) 1,112,606
350,000 Tiomin Resources Inc.(a) (Metals-Non
Ferrous) 996,350
100,000 Triton Mining Corp.(a) (Precious
Metals) 638,686
232,600 TVX Gold, Inc.(a) (Precious Metals) 2,122,263
196,000 Veritas Energy Services Inc.(a)
(Energy Equipment & Services) 2,489,343
145,000 Viridian Inc.(a) (Chemicals) 1,936,861
------------
48,358,914
- ------------------------------------------------------------
France--1.1%
22,316 Total France Petroleum Ltd.
(Integrated Producers) 1,618,847
- ------------------------------------------------------------
Japan--1.3%
58,000 Ace Koeki Co. Ltd. (Financial
Services) 989,018
46,000 Okato Shoji Co. Ltd.(a) (Financial
Services) 920,810
------------
1,909,828
- ------------------------------------------------------------
New Zealand--2.1%
185,174 Fernz Corp. (Chemicals) 544,370
1,209,500 Fletcher Challenge Ltd. (Forest
Products & Paper) 1,552,010
1,080,960 Tasman Agriculture (Miscellaneous
Industrial) 939,391
------------
3,035,771
South Africa--1.6%
11,500 Vaal Reefs Exploration & Mining Co.
Ltd.
(Metals-Non Ferrous) $ 1,181,724
26,200 Western Deep Levels Ltd. (Metals-Non
Ferrous) 1,204,598
------------
2,386,322
- ------------------------------------------------------------
United States--47.1%
168,500 Abacan Resources Corp.(a)
(Exploration & Production) 858,297
47,500 Aluminum Company of America
(Metals-Non Ferrous) 2,927,187
25,300 Anadarko Petroleum Corp. (Energy
Sources) 1,359,875
52,600 Arcadian Corp. (Chemicals) 1,052,000
113,600 Asia Pacific Resource
International(a) (Forest Products
& Paper) 781,000
70,000 Baker Hughes Inc. (Energy Equipment
& Services) 2,196,250
147,900 Brush Wellman Inc. (Metals-Non
Ferrous) 2,773,125
37,300 Camco Inc. (Energy Equipment &
Services) 1,226,237
83,137 Coflexip ADR (Energy Equipment &
Services) 1,558,819
74,800 Core Laboratories N.V.(a) (Oil
Services) 1,140,700
51,300 Cross Timbers Oil Co. (Energy
Sources) 1,147,838
25,900 Dawson Production Services Inc.(a)
(Oil Services) 314,038
40,568 Diamond Offshore Drilling Inc.(a)
(Exploration & Production) 1,942,193
47,700 Ensco International Inc.(a) (Energy
Equipment & Services) 1,448,887
51,100 Falcon Drilling Inc.(a) (Oil
Services) 1,239,175
54,100 First Mississippi Corp. (Chemicals) 1,338,975
62,911 FirstMiss Gold Inc.(a) (Gold) 2,461,393
28,800 Freeport-McMoran Copper & Gold Inc.
(Metals-Non Ferrous) 936,000
</TABLE>
- --------------------------------------------------------------------------------
- -----4 See Notes to Financial Statements.
<PAGE>
<PAGE>
Portfolio of Investments PRUDENTIAL GLOBAL NATURAL
as of May 31, 1996 RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States (cont'd.)
68,500 ICO, Inc. (Energy Equipment &
Services) $ 445,250
67,500 J. Ray McDermott, S.A.(a) (Energy
Equipment & Services) 1,687,500
88,900 Kloof Gold Mining Co. Ltd.
ADR (Metals-Non Ferrous) 1,133,475
80,200 Louisiana-Pacific Corp. (Forest
Products & Paper) 1,974,925
377,400 Marine Drilling Co., Inc.(a)
(Energy Equipment & Services) 3,821,175
44,800 Newfield Exploration Co.(a) (Energy
Sources) 1,668,800
40,558 Newmont Mining Corp. (Metals-Non
Ferrous) 2,443,619
201,022 NGC Corp. (Energy Sources) 3,115,841
119,000 Noble Affiliates, Inc. (Energy
Sources) 4,031,125
38,250 Noble Drilling Corp.(a) (Energy
Equipment & Services) 511,594
200,000 Nord Resources Corp.(a) (Metals-Non
Ferrous) 1,200,000
43,900 Pegasus Gold Inc.(a) (Precious
Metals) 658,500
61,400 Pride Petroleum Services, Inc.(a)
(Energy Equipment & Services) 1,059,150
46,900 Rayonier Inc. (Multi-Industry) 1,758,750
82,800 Reading & Bates Corp.(a) (Energy
Equipment & Services) 1,821,600
154,800 Santa Fe Pacific Gold Corp.
(Precious Metals) 2,360,700
30,100 SEACOR Holdings Inc.(a) (Energy
Equipment & Services) 1,444,800
31,800 Sonat Offshore Drilling Inc.
(Energy Equipment & Services) 1,685,400
118,500 Stillwater Mining Co.(a) (Metals-Non
Ferrous) 3,466,125
65,100 Stolt Comex Seaway(a) (Energy
Equipment & Services) 943,950
27,883 Tidewater Inc. (Energy Equipment &
Services) $ 1,150,174
45,700 TJ International Inc. (Forest
Products) 856,875
32,607 Weatherford Enterra Inc.(a)
(Energy Equipment & Services) 1,027,121
159,600 Western Gas Resources, Inc.
(Oil & Natural Gas Production &
Refining) 2,374,050
------------
69,342,488
------------
Total common stocks
(cost US$101,179,117) 135,206,433
------------
PREFERRED STOCKS--3.0%
- ------------------------------------------------------------
United States--3.0%
17,600 AMAX Gold Inc., Ser. B, 7.5%,
Convertible (Precious Metals) 928,400
20,900 Freeport-McMoran Copper & Gold Inc.,
$0.025 (Gold) 483,313
17,600 Hecla Mining Co., 7.00%,
Convertible, Ser. B, (Precious
Metals) 787,600
42,800 Noble Drilling Corp., $1.50,
Convertible (Oil Services) 1,455,200
11,100 Reading & Bates Corp., $1.625,
Convertible (Energy Equipment &
Services) 745,087
------------
Total preferred stocks
(cost US$3,491,038) 4,399,600
------------
WARRANTS(a)--0.1%
- ------------------------------------------------------------
Canada--0.1%
150,000 Kap Resources Ltd.,
Expiring 8/3/00 @CAD$2 (Chemicals)
(cost US$101,374) 153,284
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND, INC.
Portfolio of Investments as of May 31, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
CONVERTIBLE BONDS--1.9%
- ------------------------------------------------------------
Canada--0.5%
Golden Shamrock Mines Ltd.,
Sr. Sub. Deb.,
CAD 600 7.50%, 5/9/00
(Metals-Non Ferrous) $ 738,000
- ------------------------------------------------------------
New Zealand--0.6%
Natural Gas Corp. Hldgs. Ltd.,
NZ$ 760 10.50%, 10/14/97
(Gas Pipelines) 980,379
- ------------------------------------------------------------
United States--0.8%
Coeur D Alene Mines Corp.,
Sr. Sub. Deb., (Precious Metals)
US$ 1,131 6.375%, 1/31/04 1,142,310
------------
Total convertible bonds
(cost $2,487,013) 2,860,689
------------
Total long-term investments
(cost US$107,258,542) 142,620,006
------------
SHORT-TERM INVESTMENTS--3.2%
- ------------------------------------------------------------
Repurchase Agreement--3.2%
United States--3.2%
4,651 Joint Repurchase Agreement Account,
5.32%, 6/3/96,
(cost US$4,651,000; Note 5) 4,651,000
------------
- ------------------------------------------------------------
Total Investments--100%
(cost US$111,909,542; Note 4) 147,271,006
Liabilities in excess of
other assets (22,653)
------------
Net Assets--100% $147,248,353
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depositary Receipt.
- --------------------------------------------------------------------------------
- -----6 See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Statement of Assets and Liabilities RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
May 31, 1996
Investments, at value (cost
$111,909,542)................................................................
.... $147,271,006
Receivable for Fund shares
sold.........................................................................
..... 1,132,549
Dividends and interest
receivable...................................................................
......... 122,255
Other
assets.......................................................................
.......................... 4,919
------------
Total
assets.......................................................................
....................... 148,530,729
------------
Liabilities
Bank
overdraft....................................................................
........................... 70,921
Payable for investments
purchased....................................................................
........ 754,133
Accrued expenses and other
liabilities..................................................................
..... 162,965
Payable for Fund shares
reacquired...................................................................
........ 101,094
Due to
Distributors.................................................................
......................... 100,022
Due to
Manager......................................................................
......................... 90,239
Withholding taxes
payable......................................................................
.............. 3,002
------------
Total
liabilities..................................................................
....................... 1,282,376
------------
Net
Assets.......................................................................
............................ $147,248,353
------------
------------
Net assets were comprised of:
Common stock, at
par..........................................................................
............ $ 87,436
Paid-in capital in excess of
par..........................................................................
106,003,733
------------
106,091,169
Accumulated net investment
loss...........................................................................
(106,296)
Accumulated net realized gains on investments and foreign currency
transactions........................... 5,905,998
Net unrealized appreciation on investments and foreign
currencies......................................... 35,357,482
------------
Net assets, May 31,
1996.........................................................................
............ $147,248,353
------------
------------
Class A:
Net asset value and redemption price per share
($32,607,724 / 1,880,150 shares of common stock issued and
outstanding)................................ $17.34
Maximum sales charge (5% of offering
price)...............................................................
.91
Maximum offering price to
public..........................................................................
$18.25
Class B:
Net asset value, offering price and redemption price per share
($113,089,545 / 6,770,615 shares of common stock issued and
outstanding)............................... $16.70
Class C:
Net asset value, offering price and redemption price per share
($1,551,084 / 92,861 shares of common stock issued and
outstanding).................................... $16.70
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income (Loss) May 31, 1996
<S> <C>
Income
Dividends (net of foreign withholding taxes
of $64,739).............................. $ 1,331,527
Interest (net of foreign withholding taxes
of $7,711)............................... 277,793
------------
Total income............................. 1,609,320
------------
Expenses
Distribution fee--Class A................... 57,765
Distribution fee--Class B................... 843,964
Distribution fee--Class C................... 7,345
Management fee.............................. 811,776
Transfer agent's fees and expenses.......... 195,000
Custodian's fees and expenses............... 152,000
Reports to shareholders..................... 92,000
Registration fees........................... 64,000
Audit fee and expenses...................... 53,000
Directors' fees and expenses................ 38,500
Legal fees and expenses..................... 12,000
Miscellaneous............................... 9,508
------------
Total expenses........................... 2,336,858
------------
Net investment loss............................ (727,538)
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain on:
Investment transactions..................... 9,364,567
Written option transactions................. 137,287
Foreign currency transactions............... 2,210
------------
9,504,064
------------
Net change in unrealized appreciation/
depreciation on:
Investment transactions..................... 22,746,404
Foreign currency............................ (2,567)
------------
22,743,837
------------
Net gain on investments and foreign
currencies.................................. 32,247,901
------------
Net Increase in Net Assets
Resulting from Operations...................... $ 31,520,363
------------
------------
</TABLE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase in Year Ended May 31,
Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income (loss)... $ (727,538) $ (816,984)
Net realized gain on investment
and foreign currency
transactions................ 9,504,064 4,777,347
Net change in unrealized
appreciation/depreciation on
investments and foreign
currencies.................. 22,743,837 4,160,890
------------ ------------
Net increase in net assets
resulting from operations... 31,520,363 8,121,253
------------ ------------
Net equalization credits.......... 90,374 66,525
------------ ------------
Distributions from net realized
gains on investment and written
option transactions (Note 1)
Class A........................ (1,303,488) --
Class B........................ (4,284,054) --
Class C........................ (33,008) --
------------ ------------
(5,620,550) --
------------ ------------
Fund share transactions (net of
share conversions) (Note 6)
Proceeds from shares sold...... 122,535,276 67,667,069
Net asset value of shares
issued in reinvestment of
distributions............... 5,017,619 --
Cost of shares reacquired...... (107,356,234) (45,533,815)
------------ ------------
Net increase in net assets from
Fund share transactions..... 20,196,661 22,133,254
------------ ------------
Total increase.................... 46,186,848 30,321,032
Net Assets
Beginning of year................. 101,061,505 70,740,473
------------ ------------
End of year....................... $147,248,353 $101,061,505
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
- -----8 See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
Prudential Global Natural Resources Fund, Inc., (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 Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: Securities traded on an exchange 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 available, other than private placements, shall each be
valued at a price supplied by an independent pricing agent, which is, in the
opinion of such pricing agent, representative of the market value of such
securities as of the time of determination of net asset value. Securities for
which market quotations are not readily available, and for which the pricing
agent or principal market maker does not provide a valuation, 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 gains on foreign currency transactions of $2,210 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 and economic instability and
the level of governmental supervision and the regulation of foreign securities
markets.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
When the Fund purchases an option, it pays a premium and an amount equal to that
premium is recorded as an investment. When the Fund writes an option, it
receives a premium and an amount equal to that premium is recorded as a
liability. The investment
- --------------------------------------------------------------------------------
9 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
or liability is adjusted daily to reflect the current market value of the
option. If an option expires unexercised, the Fund realizes a gain or loss to
the extent of the premium received or paid. If an option is exercised, the
premium received or paid is an adjustment to the proceeds from the sale or the
cost basis of the purchase in determining whether the Fund has realized a gain
or loss. The difference between the premium and the amount received or paid on
effecting a closing purchase or sale transaction is also treated as a realized
gain or loss. Gain or loss on purchased options is included in net realized gain
(loss) on investment transactions. Gain or loss on written options is presented
separately as net realized gain (loss) on written option transactions.
The Fund, as writer of an option, has no control over whether the underlying
securities or currencies may be sold (called) or purchased (put). As a result,
the Fund bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. The Fund, as purchaser of
an
option, bears the risk of the potential inability of the counterparties to meet
the terms of their contracts.
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. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares of the Fund based
upon the relative proportion of net assets of each class at the beginning of the
day.
Equalization: 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 (loss) 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, dividends and (realized and unrealized)
capital gains have been provided for in accordance with the Fund's understanding
of the applicable country's tax rules and rates. In addition, certain countries
impose taxes on capital gains realized on the sale of portfolio securities, and
as such, taxes have been accrued where applicable on the unrealized gains of
such securities.
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 of wash
sales, foreign currencies and passive investment companies' transactions.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants, Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income; Capital Gain, and
Return of Capital Distributions by Investment Companies. During the fiscal year
ended May 31, 1996, the Fund reclassified $23,135 of foreign currency gains
which were recognized in the current year and reclassified tax-basis net
operating losses of $560,092. The net effect of these reclassifications was to
decrease accumulated net realized gains on investments and foreign currency
transactions and decrease accumulated net investment loss by $583,227 for the
fiscal year ended May 31, 1996. Net realized gains and net assets were not
affected by this change.
- ------------------------------------------------------------
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 services of PIC, 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.
- --------------------------------------------------------------------------------
- -----10
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
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 had a distribution agreement with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), which acted as the distributor of the Class A shares of the
Fund through January 1, 1996. Prudential Securities Incorporated (``PSI'')
became the distributor of the Class A shares of the Fund effective January 2,
1996 and is serving the Fund under the same terms and conditions as under the
arrangement with PMFD and continues as the distributor of the Class B and Class
C shares of the Fund. The Fund compensates PMFD and PSI for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution, (the ``Class A, B and C Plans'') regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI and PMFD for
the period June 1, 1995 through January 1, 1996 with respect to Class A shares,
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
year ended May 31, 1996.
PMFD and PSI have advised the Fund that they have received approximately $86,400
in front-end sales charges resulting from sales of Class A shares during the
year ended May 31, 1996. From these fees, PMFD and PSI paid such sales charges
to Pruco Securities Corporation, affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the year ended May 31, 1996, it received
approximately $300,400 and $2,300 in contingent deferred sales charges imposed
upon certain redemptions by Class B and Class C shareholders, respectively.
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 Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and during the year ended May 31, 1996,
the Fund incurred fees of approximately $158,000 for the services of PMFS. As
of
May 31, 1996, approximately $19,000 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain-out-of
pocket expenses paid to non-affiliates.
For the year ended May 31, 1996, PSI and/or its foreign affiliates earned
approximately $2,200 in brokerage commissions from portfolio transactions
executed on behalf of the Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments
for the year ended May 31, 1996 aggregated $54,127,772 and $43,972,323,
respectively.
The Fund will elect to treat net currency losses of approximately $21,000
incurred in the seven month period ended May 31, 1996 as having been incurred
in
the following year.
The federal income tax basis of the Fund's investments at May 31, 1996 was
$112,099,438 and accordingly, net unrealized appreciation for federal income tax
purposes was $35,167,586 (gross unrealized appreciation--$38,799,683 gross
unrealized depreciation--$3,632,097).
Transactions in options written during the year ended May 31, 1996 were as
follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
--------- --------
<S> <C> <C>
Options outstanding at May 31, 1995.... -- $ --
Options written........................ 530 160,905
Options terminated in closing purchase
transactions......................... (530) (160,905)
--- --------
Options outstanding at May 31, 1996.... -- $ --
--- --------
--- --------
</TABLE>
- ------------------------------------------------------------
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. At May 31, 1996, the Fund had
a
0.4% undivided interest in the repurchase agreements in the joint account. The
undivided interest for the Fund represented $4,651,000 in principal amount. As
of such date, each repurchase agreement in the joint account and the value of
the collateral therefor was as follows:
- --------------------------------------------------------------------------------
11 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
Bear, Stearns & Co., 5.32%, in the principal amount of $359,000,000, repurchase
price $359,159,157, due 6/3/96. The value of the collateral including accrued
interest is $367,322,500.
CS First Boston Corp., 5.35%, in the principal amount of $300,000,000,
repurchase price $300,133,750, due 6/3/96. The value of the collateral including
accrued interest is $306,002,116.
Chase Securities, Inc., 5.25%, in the principal amount of $173,690,000,
repurchase price $173,765,989, due 6/3/96. The value of the collateral including
accrued interest is $177,814,913.
Morgan Stanley & Co., 5.27%, in the principal amount of $59,000,000, repurchase
price $59,025,911, due 6/3/96. The value of the collateral including accrued
interest is $60,337,647.
Smith Barney, Inc., 5.33%, in the principal amount of $359,000,000, repurchase
price $359,159,456, due 6/3/96. The value of the collateral including accrued
interest is $366,180,343.
- ------------------------------------------------------------
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. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately seven
years after purchase.
The Fund has authorized 500 million shares of common stock $.01 par value per
share 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>
Year ended May 31, 1996:
Shares sold........................ 2,539,693 $ 38,555,696
Shares issued in reinvestment of
distributions.................... 79,485 1,097,686
Shares reacquired.................. (2,375,614) (35,670,241)
---------- ------------
Net increase in shares outstanding
before conversion................ 243,564 3,983,141
Shares issued upon conversion from
Class B.......................... 203,473 3,015,272
---------- ------------
Net increase in shares
outstanding...................... 447,037 $ 6,998,413
---------- ------------
---------- ------------
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended May 31, 1995:
Shares sold........................ 1,088,557 $ 13,699,912
Shares reacquired.................. (1,076,421) (13,660,360)
---------- ------------
Net increase in shares outstanding
before conversion................ 12,136 39,552
Shares issued upon conversion from
Class B.......................... 902,501 10,461,391
---------- ------------
Net increase in shares
outstanding...................... 914,637 $ 10,500,943
---------- ------------
---------- ------------
<CAPTION>
Class B
- -----------------------------------
<S> <C> <C>
Year ended May 31, 1996:
Shares sold........................ 5,634,740 $ 82,831,397
Shares issued in reinvestment of
distributions.................... 287,532 3,890,312
Shares reacquired.................. (4,990,847) (71,288,757)
---------- ------------
Net increase in shares outstanding
before conversion................ 931,425 15,432,952
Shares reacquired upon conversion
into Class A..................... (210,326) (3,015,272)
---------- ------------
Net increase in shares
outstanding...................... 721,099 $ 12,417,680
---------- ------------
---------- ------------
Year ended May 31, 1995:
Shares sold........................ 4,373,614 $ 53,315,314
Shares reacquired.................. (2,624,605) (31,785,126)
---------- ------------
Net increase in shares outstanding
before conversion................ 1,749,009 21,530,188
Shares reacquired upon conversion
and/or exchange into Class A..... (926,144) (10,461,391)
---------- ------------
Net increase in shares
outstanding...................... 822,865 $ 11,068,797
---------- ------------
---------- ------------
<CAPTION>
Class C
- -----------------------------------
<S> <C> <C>
Year ended May 31, 1996:
Shares sold........................ 73,169 $ 1,148,183
Shares issued in reinvestment of
distributions.................... 2,191 29,621
Shares reacquired.................. (27,858) (397,236)
---------- ------------
Net increase in shares
outstanding...................... 47,502 $ 780,568
---------- ------------
---------- ------------
August 1, 1994* through
May 31, 1995:
Shares sold........................ 52,700 $ 651,843
Shares reacquired.................. (7,341) (88,329)
---------- ------------
Net increase in shares
outstanding...................... 45,359 $ 563,514
---------- ------------
---------- ------------
</TABLE>
- ---------------
* Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
- -----12
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
Note 7. Name Change
On May 8, 1996, the Board of Directors approved a name change for the Prudential
Global Natural Resources Fund, Inc. Effective July 30, 1996 the Fund will change
its name to the Prudential Natural Resources Fund, Inc.
- --------------------------------------------------------------------------------
13 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Financial Highlights RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- -------------------------------------------------------------
Year
Ended May 31,
- -------------------------------------------------------------
1996(c) 1995(a)
1994(a) 1993(a) 1992(a)
------- -------
- --------- --------- ---------
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 13.73 $ 12.55 $
11.84 $ 10.02 $ 9.73
------- -------
- --------- --------- ---------
Income from investment operations
Net investment income (loss).................. (.01) (.03)
.01 .02 .01
Net realized and unrealized gain on investment
and foreign currency transactions.......... 4.42 1.21
.70 1.80 .38
------- -------
- --------- --------- ---------
Total from investment operations........... 4.41 1.18
.71 1.82 .39
------- -------
- --------- --------- ---------
Less distributions
Dividends from net investment income.......... -- --
-- -- (.09)
Distributions from net realized gains on
investment and foreign currency
transactions............................... (.80) --
-- -- (.01)
------- -------
- --------- --------- ---------
Total distributions........................ (.80) --
-- -- (.10)
------- -------
- --------- --------- ---------
Net asset value, end of year.................. $ 17.34 $ 13.73 $
12.55 $ 11.84 $ 10.02
------- -------
- --------- --------- ---------
------- -------
- --------- --------- ---------
TOTAL RETURN(b):.............................. 33.51% 9.40%
6.00% 18.16% 4.04%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $32,608 $19,682
$6,505 $1,898 $590
Average net assets (000)...................... $23,106 $10,791
$4,106 $758 $647
Ratios to average net assets:
Expenses, including distribution fees...... 1.57% 1.73%
1.89% 2.38% 2.59%
Expenses, excluding distribution fees...... 1.32% 1.48%
1.65% 2.18% 2.39%
Net investment income (loss).................. (.09)% (.25)%
.11% .13% .44%
For Class A, B and C shares:
Portfolio turnover............................ 41% 36%
19% 50% 36%
Average commission rate per share............. $ .0290 N/A
N/A N/A N/A
</TABLE>
- ---------------
(a) Calculated based upon average shares outstanding by class.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions.
(c) Calculated prior to Statement of Position 93-2 adjustments (See Note 1).
- --------------------------------------------------------------------------------
- -----14 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Financial Highlights RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
- --------------------------------------------------------------------
- --------
Year
Year
Ended May 31, Ended
- -------------------------------------------------------------------- May 31,
1996(e) 1995(a)
1994(a) 1993(a) 1992(a) 1996(e)
-------- ----------
- ---------- ---------- ---------- --------
<S> <C> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 13.35 $ 12.29
$ 11.69 $ 9.97 $ 9.72 $13.35
-------- ----------
- ---------- ---------- ---------- --------
Income from investment operations
Net investment loss........................... (.10) (.13)
(.08) (.07) (.08) (.10)
Net realized and unrealized gain on investment
and foreign currency transactions.......... 4.25 1.19
.68 1.79 .39 4.25
-------- ----------
- ---------- ---------- ---------- --------
Total from investment operations........... 4.15 1.06
.60 1.72 .31 4.15
-------- ----------
- ---------- ---------- ---------- --------
Less distributions
Dividends from net investment income.......... -- --
-- -- (.05) --
Distributions from net realized gains on
investment and foreign currency
transactions............................... (.80) --
-- -- (.01) (.80)
-------- ----------
- ---------- ---------- ---------- --------
Total distributions........................ (.80) --
-- -- (.06) (.80)
-------- ----------
- ---------- ---------- ---------- --------
Net asset value, end of period................ $ 16.70 $ 13.35
$ 12.29 $ 11.69 $ 9.97 $16.70
-------- ----------
- ---------- ---------- ---------- --------
-------- ----------
- ---------- ---------- ---------- --------
TOTAL RETURN(b):.............................. 32.49% 8.62%
5.13% 17.25% 3.26% 32.49%
<CAPTION>
RATIOS/SUPPLEMENTAL DATA:
<S> <C> <C>
<C> <C> <C> <C>
Net assets, end of period (000)............... $113,090 $80,774
$64,235 $36,150 $23,228 $1,551
Average net assets (000)...................... $84,396 $74,681
$48,772 $23,464 $26,877 $734
Ratios to average net assets:
Expenses, including distribution fees...... 2.32% 2.48%
2.65% 3.18% 3.39% 2.32%
Expenses, excluding distribution fees...... 1.32% 1.48%
1.65% 2.18% 2.39% 1.32%
Net investment loss........................... (.84)% (1.05)%
(.67)% (.67)% (.36)% (.84)%
<CAPTION>
<S> <C>
August 1,
1994(d)
through
May 31,
1995(a)
---------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 12.47
---------
Income from investment operations
Net investment loss........................... (.13)
Net realized and unrealized gain on investment
and foreign currency transactions.......... 1.01
---------
Total from investment operations........... .88
---------
Less distributions
Dividends from net investment income.......... --
Distributions from net realized gains on
investment and foreign currency
transactions............................... --
---------
Total distributions........................ --
---------
Net asset value, end of period................ $ 13.35
---------
---------
TOTAL RETURN(b):.............................. 7.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $606
Average net assets (000)...................... $294
Ratios to average net assets:
Expenses, including distribution fees...... 2.56%(c)
Expenses, excluding distribution fees...... 1.56%(c)
Net investment loss........................... (1.08)%(c)
</TABLE>
- ---------------
(a) Calculated based upon average shares by class.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
(d) Commencement of offering class C shares.
(c) Calculated prior to Statement of Position 93-2 adjustments (See Note 1).
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15 -----
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Report of Independent Accountants RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Prudential Global Natural Resources Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Global Natural Resources
Fund, Inc. (the ``Fund'') at May 31, 1996, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
``financial statements'') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1996 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
July 22, 1996
PRUDENTIAL GLOBAL NATURAL
Tax Information (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Service to advise you within 60 days of
the Fund's fiscal year end (May 31, 1996) as to the federal income tax status
of
dividends paid during such fiscal year. Accordingly, we are advising you that
during its fiscal year ended May 31, 1996, the Fund paid a long-term capital
gain distribution of $.75, which is taxable as such, and a short-term capital
gain distribution of $.05 which is taxable as ordinary income. Further, we wish
to advise you that 53.90% of the ordinary income dividends paid in the fiscal
year ended May 31, 1996 qualified for the corporate dividends received deduction
available to corporate taxpayers.
In January 1997, you will be advised on IRS Form 1099 DIV or substitute Form
1099, as to the federal tax status of the distributions received by you in
calendar 1996. The amounts that will be reported on such form 1099 DIV will be
the amounts to use on your federal income tax return and will differ from the
amounts which we must report for the Fund's fiscal year ended May 31, 1996.
- --------------------------------------------------------------------------------
- -----16
<PAGE>
<PAGE>
Comparing A $10,000 Investment.
- ----------------------------------------------------
Prudential Natural Resources Fund, Inc. vs. Morgan
Stanley Capital International World Index.
- --Prudential Natural
Resources Fund, Inc.
- --Morgan Stanley Capital
International World Index
Average Annual
Total Returns
- -------------------------- Class A
With Sales Load (GRAPH)
8.6% Since Inception
12.6% for 5 Years
26.8% for 1 Year
Without Sales Load
9.5% Since Inception
13.7% for 5 Years
33.5% for 1 Year
- --------------------------------------------------------------------
Average Annual
Total Returns
- ---------------------------- Class B
With Sales Load (GRAPH)
7.8% Since Inception
12.7% for 5 Years
27.5% for 1 Year
Without Sales Load
7.8% Since Inception
12.9% for 5 Years
32.5% for 1 Year
- -----------------------------------------------------------------------
Average Annual
Total Returns
- ------------------- Class C
With Sales Load (GRAPH)
21.0% Since Inception
31.5% for 1 Year
Without Sales Load
21.0% Since Inception
32.5% for 1 Year
- -------------------------------------------------------------------------
Past performance is no guarantee of future results. Investment return
and principal value will fluctuate so an investor's shares, when redeemed,
will be worth more or less than their original cost. The charts on the
right are designed to give you an idea how much the Fund's returns can
fluctuate from year to year by measuring the best and worst calendar
years in terms of total annual return since inception of each share
class.
These graphs are furnished to you in accordance with SEC regulations.
They compare a $10,000 investment in the Prudential Natural Resources
Fund (Class A, Class B and Class C) with a similar investment in the
Morgan Stanley Capital International World Index (the Index) by
portraying the initial account values at the commencement of
operations of each class, and subsequent account values at the
end of this reporting period (May 31), as measured on a quarterly
basis, beginning in 1990 for Class A shares, in 1987 for Class B
shares and in 1994 for Class C shares. For purposes of the graphs,
and unless otherwise indicated, in the accompanying tables it has
been assumed (a) that the maximum applicable front-end sales charge
was deducted from the initial $10,000 investment in Class A shares;
(b) the maximum applicable contingent deferred sales charge was
deducted from the value of the investment in Class B and Class C
shares, assuming full redemption on May 31, 1996; (c) all recurring
fees (including management fees) were deducted; and (d) all dividends
and distributions were reinvested. Class B shares will automatically
convert to Class A shares, on a quarterly basis, beginning approximately
seven years after purchase. This conversion feature is not reflected
in the graph.
The Index is a weighted index comprised of approximately 1,500 companies
listed on the stock exchanges of the U.S., Europe, Canada, Australia
New Zealand and the Far East. The combined market capitalization of
these companies represents approximately 60% of the aggregate market
value of the stock exchanges in the countries comprising the Index.
The Index is unmanaged and includes the reinvestment of all dividends,
but does not reflect the payment of transaction costs and advisory
fees associated with an investment in the Fund. The securities in
the Index may differ substantially from the securities in the Fund.
The Index is not the only one that may be used to characterize performance
of stock funds and other indexes may portray different comparative performance.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
(800) 225-1852
http:\\www.prudential.com
(LOGO)
Directors
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Louis A. Weil, III
Officers
Richard A. Redeker, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport PlazaNew York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential PlazaNewark, NJ 07101
Distributor
Prudential Securities Incorporated
One Seaport PlazaNew 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
Price Waterhouse, LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
744334103 MF135E
744334202 Cat. #4301492
744334301
