(ICON)
Prudential
Global
Natural
Resources
Fund, Inc.
SEMI
ANNUAL
REPORT
Nov. 30, 1995
(LOGO)
<PAGE>
Prudential Global Natural Resources Fund, Inc.
Performance At A Glance.
In the last six months, natural resources stock prices have fluctuated
considerably, due in part to some uncertainty about whether global
economic growth will continue. If the world's economies continue to
expand, more and more natural resources will be consumed, and this
demand should help increase stock prices of companies involved in natural
resources. Likewise, a lull in economic growth will lessen demand for
natural resources. The Prudential Global Natural Resources Fund performed
well in the midst of this uncertainty, producing higher returns than its
peers, according to Lipper Analytical Services.
<TABLE>
Cumulative Total Returns1 As of 11/30/95
<CAPTION>
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 4.0% 20.5% 58.1% 38.8%
Class B 3.6 19.6 52.3 50.3
Class C 3.6 19.6 N/A 10.9
Lipper Nat. Resources Avg3 1.9 12.2 42.1 43.1
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 12/31/95
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 20.1% 9.8% 5.7%
Class B 20.6 9.9 5.7
Class C 24.6 N/A 11.5
</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, Inc. and Lipper Analytical
Services, Inc. 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 contingent deferred sales charge 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 average returns are for 33 funds for one year, 18 funds for five
years, and 10 funds since inception of the Class B shares on 9/28/87.
How Investments Compared.
(As of 11/30/95)
(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 return averages 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 added historical 20-year
average annual returns to show that some of 1995's returns in the U.S.
market (so far) are higher than normal. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Smaller capitalization
stocks offer greater potential for long term growth but may be more
volatile than larger capitalization stocks. Investors have received
higher historical total returns from stocks than from most other
investments.
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 total returns have
been historically lower than those of stock funds.
Global Stock Funds, will fluctuate a great deal. Investments overseas
are subject to political, social, and currency risks that may affect
performance.
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 Goehring, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Global 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
to these industries.
Strategy Session.
Natural resources have traditionally been viewed as an inflation hedge. They
often retain their value when inflation is eroding the value of financial
instruments like stocks and bonds. In recent months, however, we have seen
a new development: prices of natural resources have generally moved fitfully
higher despite low inflation. We think they're rising because of the
prospects for continued economic growth, which will result in an imbalance
between growing worldwide demand for and a finite worldwide supply of some
natural resources. Our current strategy is to take advantage of this imbalance.
Currently, the Prudential Global Natural Resources Fund is emphasizing
investments in:
- -Energy, including natural gas and oil service stocks;
- -Base metals, especially aluminum;
- -Forest products, including lumber, which should benefit from a strong
U.S. housing construction market spurred on by lower interest rates.
The Fund has performed well compared to its peers over the past six months.
The gains were registered despite a brief period last fall when almost all
natural resources stock prices declined amid pessimism about global demand.
However, in November, the trend reversed when many commodities prices rose.
If this upward trend continues, it should help natural resources companies
by allowing them to charge higher prices for their products.
A Sector Fund.
The Fund invests in securities of
natural resource companies and may
be subject to more risk than a fund that
invests across sectors. Please see the
fund's prospectus for more information.
Geographic Breakdown.
Prudential Global Natural Resources Fund
as of 11/30/95. Subject to change.
(PIE CHART)
<PAGE>
What Went Well.
We Emphasized Energy.
Energy stocks continue to be the largest portion of the Fund, at 45%. We
have seen excellent performance in drilling stocks such as Reading & Bates
and natural gas providers, such as Anadarko Petroleum. Given the limited
supply of natural gas production, any measurable increase in demand for
natural gas could provide strong price and revenue results in the future.
We continue to see a favorable supply/demand relationship in the energy
sector which could provide strong results over the long term.
Growth From Fertilizer.
Through the last six months, our holdings of fertilizer stocks helped to
boost the Fund's returns. Fertilizer prices have risen dramatically this
year, largely as a result of increasing grain consumption in the
economically-improving Far East, particularly in China and India. As
prices of the material rose, so did the stocks of the companies that
produce them. We locked in profits by selling some of our largest holding,
Potash Corporation of Saskatchewan. We are still quite optimistic about the
long-term prospects for this company and it continues to be our largest
holding.
Precious Metals Shined.
Precious metals stocks, 18% of net assets, showed signs of life. We have
seen a sharp rise in the short-term cost of borrowing gold, even though
most precious metals stocks have been flat. This upward move could signal
a potential increase in gold prices and, in turn, gold stocks. Stocks we
especially like include Cambior, which continues to be one of our largest
holdings.
And Not So Well.
Our large percentage of assets in Canadian issues (37% of total net assets)
hurt us during the fierce political battle over Quebec's possible secession
from Canada. Although the vote eventually turned out to be good for the
long-term stability of Canadian companies, it caused a great deal of
short-term volatility in Canadian stock prices. Since most commodities
are priced in U.S. dollars and many Canadian natural resources companies
trade on U.S. exchanges, we do not believe that the continuing political
battles in Canada should affect these stock prices in the long run. But,
investors should be prepared and remain aware that these secession/language/
political battles could continue throughout 1996 and result in additional
bouts of volatility.
Looking Ahead.
Our outlook for the next six months remains positive, though with a touch
of caution. World economic growth continues to be the catalyst for long-term
demand among natural resources. A global low-interest rate environment would
also help out long-term growth. However, the cyclical nature of the natural
resources market can not be overlooked. If the current economic growth were
to reverse, we would have to expect more modest returns in the future than
we've enjoyed in the recent past.
Five Largest Holdings.*
3.5% Potash Corp.
(Chemicals)
2.7% Louisiana-Pacific Corp.
(Energy Sources)
2.6% Cameco Corp.
(Materials/Commodities)
2.2% Vigoro Corp.
(Chemicals)
2.1% Cambior Inc.
(Precious Metals)
* Expressed as a percentage of total net assets as of 11/30/95.
Portfolio holdings are subject to change.
1
<PAGE>
President's Letter January 5, 1995
(PICTURE)
Dear Shareholder:
For many investors, 1995 was a profitable year -- most stock and bond funds
enjoyed healthy returns from the U.S. markets. While climbing returns can
tempt even the most skittish investors to start buying again, it is important
to remember that the stock and bond markets go down just as they go up. At
times like these, remember the importance of working with your Financial
Advisor or Registered Representative to help you find investments that are
consistent with your risk tolerance and time horizon. Your Financial Advisor
or Registered Representative can help you maintain realistic expectations
about both the potential performance and risks associated with your
investments.
Shareholder Legislative Action Program.
From time to time we've been informing you about significant legislation
before Congress, such as the American Dream Savings Account, that may
potentially impact mutual fund investors. We want to make it easier for
you to share your views with your Congressional member. So, beginning in
1996, your shareholder reports will contain postage-paid message cards
that you simply drop in the mail if you want to let your senator or
representative know how you feel about pending legislation.
Fund Profiles.
Over the past year, we've worked to make your shareholder reports more
interesting, informative and easy to read. This year, we'll be turning
our attention to 'fund profiles.' Some mutual fund companies now offer
one to shareholders along with a full prospectus. The purpose of a fund
profile is to provide a very brief, reader-friendly summary of a fund's
objective, investments, risks and expenses. Would you like to see fund
profiles from us? Please call your Financial Advisor or Registered
Representative to share your views.
As always, thank you for your confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
Portfolio of Investments as of PRUDENTIAL GLOBAL NATURAL
November 30, 1995 (Unaudited) RESOURCES FUND, INC.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------
LONG-TERM INVESTMENTS--100.0%
COMMON STOCKS--93.1%
------------------------------------------------------------
<C> <S> <C>
Australia--6.4%
433,200 Acacia Resources(a) (Precious Metals) $ 750,105
463,600 Alcan of Australia, Ltd. (Metals -
Non Ferrous) 1,102,481
186,500 Comalco, Ltd. (Metals - Non Ferrous) 1,004,834
72,000 CRA, Ltd. (Metals - Non Ferrous) 1,141,838
216,600 Delta Gold, Ltd.(a) (Precious Metals
Sector) 531,190
164,800 Plutonic Resources, Ltd. (Precious
Metals Sector) 785,042
122,564 Western Mining Corp. Holdings, Ltd.
(Metals - Non Ferrous) 822,485
-----------
6,137,975
- ------------------------------------------------------------
Canada--35.3%
147,500 Agnico-Eagle Mines, Ltd. (Precious
Metals Sector) 1,844,496
23,700 Agrium, Inc. (Chemicals) 990,956
88,800 Anderson Exploration Ltd.(a) (Oil &
Gas Exploration/Production) 824,672
109,400 Archer Resources, Ltd.(a) (Oil & Gas
Exploration/Production) 366,155
130,800 Atcor Resources, Ltd.(a) (Oil & Gas
Exploration/Production) 375,240
45,700 Barrick Gold (Precious Metals Sector) 1,201,791
313,600 Beau Canada Exploration, Ltd.(a) (Oil
& Gas Exploration/Production) 320,647
80,400 Blue Range Resource Corp.(a) (Oil &
Gas Exploration/Production) 598,808
71,000 Cabre Exploration, Ltd.(a) (Oil & Gas
Exploration/Production) 757,292
185,000 Cambior Inc. (Precious Metals Sector) 2,058,277
68,200 Cameco Corp. (Misc. Materials &
Commodities) 2,545,993
59,800 Canadian Natural Resources, Ltd.(a)
(Oil & Gas Exploration/Production) 808,287
639,800 Chancellor Energy Resources, Inc.(a)
(Oil & Gas Exploration/Production) $ 291,792
68,100 Crestar Energy, Inc.(a) (Oil
Services) 932,997
83,100 Discovery West Corp.(a) (Oil & Gas
Exploration/Production) 250,623
85,800 Dorset Exploration, Ltd.(a) (Oil &
Gas Exploration/Production) 290,323
121,200 Elan Energy, Corp.(a) (Oil & Gas
Exploration/Production) 1,136,710
43,300 Ensign Resource Service Group, Inc.
(Oil Services) 159,256
79,900 Grad & Walker Energy Corp.(a) (Oil &
Gas Exploration/Production) 462,843
78,000 Jordan Petroleum, Ltd.(a) (Oil & Gas
Exploration/Production) 444,665
300,000 Kap Resources, Ltd.(a) (Chemicals) 772,371
122,200 Morrison Petroleum, Ltd. (Oil & Gas
Exploration/Production) 685,406
104,000 Northrock Resources, Ltd.(a) (Oil &
Gas Exploration/Production) 487,697
100,700 Northstar Energy Corp.(a) (Oil & Gas
Exploration/Production) 962,963
79,400 Pacific Forest Products, Ltd.(a)
(Forest & Paper) 868,789
26,000 Paramount Resources, Ltd. (Oil & Gas
Exploration/Production) 248,630
35,600 Pinnacle Resources, Ltd.(a) (Oil &
Gas Exploration/Production) 405,899
62,100 Placer Dome, Inc. (Precious Metals
Sector) 1,530,288
48,900 Potash Corp. of Saskatchewan, Inc.
(Chemicals) 3,385,717
65,000 Prime Resources Group, Inc.(a)
(Precious Metals Sector) 466,181
79,300 Rigel Energy Corp.(a) (Oil & Gas
Exploration/Production) 721,864
282,800 Rio Alto Exploration, Ltd.(a) (Oil &
Gas Exploration/Production) 915,311
145,000 Sherritt Inc.(a) (Chemicals) 1,786,568
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL GLOBAL NATURAL
November 30, 1995 (Unaudited) RESOURCES FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Canada (cont'd.)
50,800 Talisman Energy, Inc.(a) (Oil & Gas
Exploration/Production) $ 952,885
102,300 Timberwest Forest Ltd. (Forest &
Paper) 1,034,702
232,600 TVX Gold, Inc.(a) (Precious Metals
Sector) 1,539,888
96,000 Veritas Energy Services, Inc.(a)
(Energy Equipment & Services) 467,836
-----------
33,894,818
- ------------------------------------------------------------
France--1.4%
22,316 Total France Petroleum, Ltd.
(Integrated Producers) 1,374,202
- ------------------------------------------------------------
Netherlands--0.4%
39,400 Core Laboratories N.V.(a) (Oil
Services) 403,850
- ------------------------------------------------------------
New Zealand--3.3%
185,174 Fernz Corp. (Chemicals) 544,007
1,209,500 Fletcher Forestry Challenge, Ltd.
(Forest & Paper) 1,705,579
900,800 Tasman Agriculture (Miscellaneous
Industrial) 876,247
-----------
3,125,833
- ------------------------------------------------------------
United States--46.3%
30,000 Aluminum Co. of America (Metals - Non
Ferrous) 1,755,000
31,600 Anadarko Petroleum Corp. (Oil & Gas
Exploration/Production) 1,520,750
55,400 Arcadian Corp. (Chemicals) 1,149,550
48,500 Arethusa Offshore, Ltd.(a) (Oil
Services) 1,094,281
119,600 Asia Pacific Resource
International(a) (Forest Products) 538,200
39,300 Camco, Inc. (Oil Services) 923,550
87,537 Coflexip (Energy Equipment) 1,362,295
54,000 Cross Timbers Oil Co. (Oil & Gas
Exploration/Production) 931,500
50,200 Ensco International Inc.(a)
(Oil Services) $ 847,125
53,800 Falcon Drilling, Inc.(a) (Oil
Services) 689,313
56,900 First Mississippi Corp. (Chemicals) 1,450,950
62,911 FirstMiss Gold, Inc.(a) (Precious
Metals) 1,230,696
30,300 Freeport-McMoran Copper & Gold, Inc.
(Metals - Non Ferrous) 818,100
56,700 Hornbeck Offshore Services, Inc.(a)
(Oil Services) 1,024,144
72,100 ICO, Inc.(a) (Energy/Oil Services) 383,031
88,900 Kloof Gold Mining Co. Ltd.
ADR (Precious Metals) 841,772
94,400 Louisiana-Pacific Corp. (Forest
Products) 2,548,800
397,300 Marine Drilling Cos., Inc.(a) (Oil
Services) 1,614,031
71,100 J.R. McDermott(a) (Oil &
Gas-Domestic) 1,128,712
47,200 Newfield Exploration Co.(a) (Oil &
Gas Exploration/Production) 1,398,300
40,558 Newmont Mining Corp. (Precious
Metals) 1,749,064
188,294 NGC Corp. (Gas Pipelines) 1,671,109
74,300 Noble Affiliates, Inc. (Oil & Gas
Exploration/Production) 2,015,387
40,250 Noble Drilling Corp.(a) (Oil
Services) 296,844
43,900 Pegasus Gold, Inc.(a) (Precious
Metals) 576,188
64,600 Pride Petroleum Services, Inc.(a)
(Oil Services) 641,963
49,400 Rayonier, Inc. (Forest Products) 1,889,550
87,200 Reading & Bates Corp.(a) (Oil
Services) 1,144,500
154,800 Santa Fe Pacific Gold Corp. (Precious
Metals) 1,857,600
38,500 Sonat Offshore Drilling, Inc. (Oil
Services) 1,328,250
88,500 Stillwater Mining Co.(a) (Precious
Metals) 1,504,500
68,500 Stolt Comex Seaway(a) (Oil Services) 672,156
1 Tejas Gas Corp.(a) (Gas Pipelines) 49
48,100 TJ International, Inc. (Building
Materials & Components) 847,762
32,900 Varco International, Inc.(a) (Energy
Equipment) 300,213
39,000 Vigoro Corp. (Chemicals) 2,115,750
34,307 Weatherford Enterra, Inc.(a) (Energy
Equipment) 870,540
</TABLE>
- --------------------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL GLOBAL NATURAL
November 30, 1995 (Unaudited) RESOURCES FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
United States (cont'd.)
99,600 Western Gas Resources, Inc. (Gas
Pipelines) $ 1,618,500
-----------
44,350,025
-----------
Total common stocks
(cost US$77,876,367) 89,286,703
-----------
PREFERRED STOCKS--3.8%
- ------------------------------------------------------------
United States--3.8%
17,600 AMAX Gold, Inc., Convertible, Ser. B
(Precious Metals) 897,600
20,900 Freeport-McMoran Copper & Gold, Inc.,
$0.025 (Metals - Non Ferrous) 444,125
18,500 Hecla Mining Co.,
7.00%, Convertible, Ser. B, (Precious
Metals) 779,312
45,000 Noble Drilling Corp.,
$1.50, Convertible (Oil Services) 1,108,125
11,700 Reading & Bates Corp.,
$1.625, Convertible (Oil Services) 459,225
-----------
Total preferred stocks
(cost US$3,611,119) 3,688,387
-----------
WARRANTS(a)--0.2%
- ------------------------------------------------------------
Canada--0.2%
150,000 Kap Resources, Ltd.
Expires 8/3/00 (Chemicals)
(cost US$101,374) 182,059
-----------
Principal
Amount
(000)
- ---------
CONVERTIBLE BONDS--2.7%
- ------------------------------------------------------------
Canada--0.6%
CAD 600 Golden Shamrock Mines, Ltd.
7.50%, 5/9/00 (Precious Metals) 546,000
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
New Zealand--1.0%
NZ$ 760 Natural Gas Corp. Hldgs.
10.50%, 10/14/97 (Gas Pipelines) $ 967,521
- ------------------------------------------------------------
United States--1.1%
USD 1,131 Coeur D'Alene Mines Corp.,
Sr. Sub. Deb.
6.375%, 1/31/04 (Precious Metals) 1,068,795
-----------
Total convertible bonds
(cost US$2,484,941) 2,582,316
-----------
RIGHTS--0.2%
- ------------------------------------------------------------
Canada--0.2%
Sherritt Inc.
145,000 Expires 12/19/95 (Chemicals) 181,323
-----------
Total long-term investments before
outstanding options written
(cost US$84,073,801; Note 4) 95,920,788
-----------
OUTSTANDING OPTIONS WRITTEN--0.0%
PUT OPTIONS--0.0%
Contracts
- ---------
Potash Corp. Saskatchewan, Inc.
150 Expiring 12/16/95 @ 70.00 (Chemicals) (26,250)
140 Expiring 12/16/95 @ 75.00 (Chemicals) (7,000)
-----------
Total outstanding options written
(cost US$(76,627)) (33,250)
-----------
- ------------------------------------------------------------
Total Investments, Net of Outstanding Options Written--100.0%
(cost US$83,997,174) 95,887,538
Other liabilities in excess of
other assets--0.0% (17,458)
-----------
Net Assets--100% $95,870,080
-----------
-----------
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
Statement of Assets and PRUDENTIAL GLOBAL NATURAL
Liabilities (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
November 30, 1995
Investments, at value (cost
$84,073,801).................................................................
..... $95,920,788
Foreign currency, at value (cost
$452,880)....................................................................
451,175
Dividends and interest
receivable...................................................................
.......... 135,654
Receivable for investments and options
sold...................................................................
76,627
Receivable for Fund shares
sold.........................................................................
...... 35,018
Other
assets.......................................................................
........................... 1,425
-----------
Total
assets.......................................................................
........................ 96,620,687
-----------
Liabilities
Bank
overdraft....................................................................
............................ 236,710
Payable for Fund shares
reacquired...................................................................
......... 273,700
Accrued
expenses.....................................................................
......................... 78,001
Due to
Distributors.................................................................
.......................... 65,399
Due to
Manager......................................................................
.......................... 58,195
Outstanding put options written, at value (premium received
$76,627).......................................... 33,250
Withholding taxes
payable......................................................................
............... 5,352
-----------
Total
liabilities..................................................................
........................ 750,607
-----------
Net
Assets.......................................................................
............................. $95,870,080
-----------
-----------
Net assets were comprised of:
Common stock, at
par..........................................................................
............. $ 68,888
Paid-in capital in excess of
par...........................................................................
77,139,239
-----------
77,208,127
Accumulated net investment
loss............................................................................
(320,229)
Accumulated net realized gains on investments and foreign currency
transactions............................ 7,090,531
Net unrealized appreciation on investments and foreign
currencies.......................................... 11,891,651
-----------
Net assets, November 30,
1995.........................................................................
........ $95,870,080
-----------
-----------
Class A:
Net asset value and redemption price per share
($20,004,673 / 1,401,358 shares of common stock issued and
outstanding)................................. $14.28
Maximum sales charge (5% of offering
price)................................................................
.75
Maximum offering price to
public.......................................................................
.... $15.03
Class B:
Net asset value, offering price and redemption price per share
($75,293,390 / 5,446,042 shares of common stock issued and
outstanding)................................. $13.83
Class C:
Net asset value, offering price and redemption price per share
($572,017 / 41,376 shares of common stock issued and
outstanding)....................................... $13.83
</TABLE>
- --------------------------------------------------------------------------------
6 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Loss November 30, 1995
-----------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $39,013)..................... $ 718,935
Interest (net of foreign withholding
taxes of $5,136)...................... 98,893
-----------------
Total income.......................... 817,828
-----------------
Expenses
Distribution fee--Class A................ 25,030
Distribution fee--Class B................ 392,435
Distribution fee--Class C................ 3,205
Management fee........................... 371,820
Transfer agent's fees and expenses....... 105,500
Custodian's fees and expenses............ 80,000
Reports to shareholders.................. 40,000
Registration fees........................ 27,500
Audit fees and expenses.................. 25,000
Directors' fees and expenses............. 19,000
Legal fees and expenses.................. 16,000
Miscellaneous............................ 5,760
-----------------
Total expenses........................ 1,111,250
-----------------
Net investment loss......................... (293,422)
-----------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain on:
Investment transactions.................. 4,484,821
Foreign currency transactions............ 27,447
-----------------
4,512,268
-----------------
Net change in unrealized appreciation/
depreciation on:
Investment transactions.................. (768,073)
Options written.......................... 43,377
Foreign currency......................... 2,701
-----------------
(721,995)
-----------------
Net gain on investments and foreign
currencies............................... 3,790,273
-----------------
Net Increase in Net Assets
Resulting from Operations................... $ 3,496,851
-----------------
-----------------
</TABLE>
PRUDENTIAL GLOBAL NATURAL
RESOURCES FUND, INC.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Increase (Decrease) Ended Year Ended
in Net Assets November 30, 1995 May 31, 1995
----------------- ------------
<S> <C> <C>
Operations
Net investment loss......... $ (293,422) $ (816,984)
Net realized gain on
investment and foreign
currency transactions.... 4,512,268 4,777,347
Net change in unrealized
appreciation/depreciation
on investments and
foreign currencies....... (721,995) 4,160,890
----------------- ------------
Net increase in net assets
resulting from
operations............... 3,496,851 8,121,253
----------------- ------------
Net equalization (debits)
credits..................... (1,895) 66,525
----------------- ------------
Fund share transactions (net of
share conversions) (Note 5)
Proceeds from shares sold... 19,338,212 67,667,069
Cost of shares reacquired... (28,024,593) (45,533,815)
----------------- ------------
Net increase (decrease) in
net assets from Fund
share transactions....... (8,686,381) 22,133,254
----------------- ------------
Total increase (decrease)...... (5,191,425) 30,321,032
Net Assets
Beginning of period............ 101,061,505 70,740,473
----------------- ------------
End of period.................. $ 95,870,080 $101,061,505
----------------- ------------
----------------- ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements (Unaudited) 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 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 gains on foreign currency transactions of $27,447 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.
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.
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
- --------------------------------------------------------------------------------
8
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
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 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.
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, 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 on the unrealized gains of such securities.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income; Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease accumulated net realized gain on investments and
increase undistributed net investment income by $27,447 for the six months ended
November 30, 1995. 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.
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, 1995.
PMFD has advised the Fund that it has received approximately $21,400 in
front-end sales charges resulting from sales of Class A shares during the six
months ended November 30, 1995. From these fees, PMFD paid such
- --------------------------------------------------------------------------------
9 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
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, 1995, it
received approximately $147,200 and $1,200 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 six months ended
November 30, 1995, the Fund incurred fees of approximately $81,900 for the
services of PMFS. As of November 30, 1995, approximately $12,900 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, 1995, PSI and/or its foreign affiliates
earned approximately $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 six months ended November 30, 1995 aggregated $23,617,591 and
$31,841,692, respectively.
The federal income tax basis of the Fund's investments at November 30, 1995 was
$84,075,611 and accordingly, net unrealized appreciation for federal income tax
purposes was $11,845,177 (gross unrealized appreciation--$17,569,657 gross
unrealized depreciation--$5,724,480).
Transactions in options written during the six months ended November 30, 1995
were as follows:
<TABLE>
<CAPTION>
Number
of
Contracts Premiums
--------- --------
<S> <C> <C>
Options outstanding at May 31, 1995...... 0 $ 0
Options written.......................... 290 76,627
--- -------
Options outstanding at November 30,
1995................................... 290 $76,627
--- --------
--- --------
</TABLE>
Note 5. 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 commencing in February 1995.
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>
Six months ended November 30, 1995:
Shares sold........................ 467,058 $ 6,481,833
Shares reacquired.................. (545,801) (7,593,078)
---------- ------------
Net decrease in shares outstanding
before conversion................ (78,743) (1,111,245)
Shares issued upon conversion from
Class B and C.................... 46,988 665,820
---------- ------------
Net decrease in shares
outstanding...................... (31,755) $ (445,425)
---------- ------------
---------- ------------
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>
Six months ended November 30, 1995:
Shares sold........................ 934,716 $ 12,725,650
Shares reacquired.................. (1,489,801) (20,249,319)
---------- ------------
Net decrease in shares outstanding
before conversion................ (555,085) (7,523,669)
Shares reacquired upon conversion
into Class A..................... (48,389) (665,797)
---------- ------------
Net decrease in shares
outstanding...................... (603,474) $ (8,189,466)
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Notes to Financial Statements (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
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
into Class A..................... (926,144) (10,461,391)
---------- ------------
Net increase in shares
outstanding...................... 822,865 $ 11,068,797
---------- ------------
---------- ------------
<CAPTION>
Class C
- -----------------------------------
<S> <C> <C>
Six months ended November 30, 1995:
Shares sold........................ 9,541 $ 130,729
Shares reacquired.................. (13,522) (182,196)
---------- ------------
Net decrease in shares outstanding
before conversion................ (3,981) (51,467)
Shares reacquired upon conversion
into Class A..................... (2) (23)
---------- ------------
Net decrease in shares
outstanding...................... (3,983) $ (51,490)
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
- ---------------
* Commencement of offering of Class C shares.
</TABLE>
- ------------------------------------------------------------
Note 6. Distributions
On December 7, 1995, the Board of Directors of the Fund announced distributions
from net short-term capital gains of $.05 per share and from net long-term
capital gains of $.75 per share for Class A, B and C shares. These distributions
are payable on December 15, 1995 to shareholders of record on December 12, 1995.
- --------------------------------------------------------------------------------
11 -----
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Financial Highlights (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- -----------------------------------------------------------------------------
<S> <C> <C>
<C> <C> <C> <C> <C>
Six Months
Ended
Year Ended May 31,
November 30,
- ---------------------------------------------------
1995 1995
1994 1993 1992 1991
------------ -------
- ------ ------ ------ ------
PER SHARE OPERATING PERFORMANCE(b):
Net asset value, beginning of period.......... $ 13.73 $ 12.55
$11.84 $10.02 $ 9.73 $10.17
------ -------
- ------ ------ ------ ------
Income from investment operations
Net investment income (loss).................. -- (.03)
.01 .02 .01 .13
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... .55 1.21
.70 1.80 .38 (.39)
------ -------
- ------ ------ ------ ------
Total from investment operations........... .55 1.18
.71 1.82 .39 (.26)
------ -------
- ------ ------ ------ ------
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................ $ 14.28 $ 13.73
$12.55 $11.84 $10.02 $ 9.73
------ -------
- ------ ------ ------ ------
------ -------
- ------ ------ ------ ------
TOTAL RETURN(c):.............................. 4.01% 9.40%
6.00% 18.16% 4.04% (2.59)%
RATIOS TO AVERAGE NET ASSETS:
Net assets, end of period (000)............... $ 20,005 $19,682
$6,505 $1,898 $ 590 $ 770
Average net assets (000)...................... $ 20,024 $10,791
$4,106 $ 758 $ 647 $ 664
Ratios to average net assets:
Expenses, including distribution fees...... 1.64%(a) 1.73%
1.89% 2.38% 2.59% 2.22%
Expenses, excluding distribution fees...... 1.39%(a) 1.48%
1.65% 2.18% 2.39% 2.02%
Net investment income (loss).................. (.01)%(a) (.25)%
.11% .13% .44% 1.47%
Portfolio turnover............................ 24% 36%
19% 50% 36% 40%
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated based upon average shares outstanding during fiscal period
except 1991.
(c) 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.
- --------------------------------------------------------------------------------
12 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GLOBAL NATURAL
Financial Highlights (Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
- ------------------------------------------------------------------------
Six Months
Ended
Year Ended May 31,
November 30,
- -------------------------------------------------------
1995 1995
1994 1993 1992 1991
------------ -------
- ------- ------- ------- -------
<S> <C> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE(b):
Net asset value, beginning of period.......... $ 13.35 $ 12.29
$ 11.69 $ 9.97 $ 9.72 $ 10.14
------ -------
- ------- ------- ------- -------
Income from investment operations
Net investment income (loss).................. (.06) (.13)
(.08) (.07) (.08) .06
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... .54 1.19
.68 1.79 .39 (.39)
------ -------
- ------- ------- ------- -------
Total from investment operations........... .48 1.06
.60 1.72 .31 (.33)
------ -------
- ------- ------- ------- -------
Less distributions
Dividends from net investment income.......... -- --
-- -- (.05) (.09)
Distributions from net realized gains on
investment and foreign currency
transactions............................... -- --
-- -- (.01) --
------ -------
- ------- ------- ------- -------
Total distributions........................ -- --
-- -- (.06) (.09)
------ -------
- ------- ------- ------- -------
Net asset value, end of period................ $ 13.83 $ 13.35
$ 12.29 $ 11.69 $ 9.97 $ 9.72
------ -------
- ------- ------- ------- -------
------ -------
- ------- ------- ------- -------
TOTAL RETURN(c):.............................. 3.60% 8.62%
5.13% 17.25% 3.26% (3.31)%
RATIOS TO AVERAGE NET ASSETS:
Net assets, end of period (000)............... $ 75,293 $80,774
$64,235 $36,150 $23,228 $33,653
Average net assets (000)...................... $ 78,487 $74,681
$48,772 $23,464 $26,877 $40,090
Ratios to average net assets:
Expenses, including distribution fees...... 2.39%(a) 2.48%
2.65% 3.18% 3.39% 3.02%
Expenses, excluding distribution fees...... 1.39%(a) 1.48%
1.65% 2.18% 2.39% 2.02%
Net investment income (loss).................. (.76)%(a) (1.05)%
(.67)% (.67)% (.34)% .58%
Portfolio turnover............................ 24% 36%
19% 50% 36% 40%
<CAPTION>
Class C
--------------------------
<S> <C> <C>
August 1,
Six Months 1994(d)
Ended through
November 30 May 31,
1995 1995
------------ ---------
PER SHARE OPERATING PERFORMANCE(b):
Net asset value, beginning of period.......... $13.35 $ 12.47
----- ---------
Income from investment operations
Net investment income (loss).................. (.06) (.13)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... .54 1.01
----- ---------
Total from investment operations........... .48 .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................ $13.83 $ 13.35
----- ---------
----- ---------
TOTAL RETURN(c):.............................. 3.60% 7.06%
RATIOS TO AVERAGE NET ASSETS:
Net assets, end of period (000)............... $ 572 $ 606
Average net assets (000)...................... $ 641 $ 294
Ratios to average net assets:
Expenses, including distribution fees...... 2.39%(a) 2.56%(a)
Expenses, excluding distribution fees...... 1.39%(a) 1.56%(a)
Net investment income (loss).................. (.76)%(a) (1.08)%(a)
Portfolio turnover............................ 24% 36%
</TABLE>
- ---------------
(a) Annualized.
(b) Calculated based upon average shares outstanding during fiscal period
except 1991.
(c) 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.
(d) Commencement of offering class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13 -----
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this -- they don't read annual
and semi-annual reports. It's quite understandable. These annual and
semi-annual reports are prepared to comply with Federal regulations. They
are often written in language that is difficult to understand. So when most
people run into those particularly daunting sections of these reports, they
don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our report to make
it easier to understand and more pleasant to read, in hopes you'll find it
profitable to spend a few minutes familiarizing yourself with your investment.
Here's what you'll find in the report:
At A Glance
Since an investment's performance is often a shareholder's primary concern,
we present performance information in two different formats. You'll find it
first on the 'At A Glance' page where we compare the Fund and the comparable
average calculated by Lipper Analytical Services, Inc., a nationally
recognized mutual fund rating agency. We report both the cumulative total
returns and the average annual total returns. The cumulative total return
is the total amount of income and appreciation the Fund has achieved in
various time periods. The average annual total return is an annualized
representation of the Fund's performance -- it generally smoothes out returns
and gives you an idea how much the Fund has earned in an average year, for a
given time period. Under the performance box, you'll see legends that explain
the performance information, whether fees and sales charges have been
included in returns, and the inception dates for the Fund's share classes.
See the performance comparison charts at the back of the report for more
performance information. And keep in mind that past performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports on
successful -- and not-so-successful -- strategies in this section of
your report. Look for recent purchases and sales here, as well as
information about the sectors the portfolio manager favors and any
changes that are on the drawing board.
Portfolio Of Investments
This is where the report begins to look technical, but it's really just
a listing of each security held at the end of the reporting period, along
with valuations and other information. Please note that sometimes we
discuss a security in the Portfolio Manager's Report that doesn't appear
in this listing because it was sold before the close of the reporting
period.
<PAGE>
Statement Of Assets And Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes) and net assets (the Fund's equity,
or holdings after the Fund pays its debts) as of the end of the reporting
period. It also shows how we calculate the net asset value per share for
each class of shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but remember that the money
or new shares are being paid or issued to you and thus is not a realized
loss. The net asset value fluctuates daily along with the value of every
security in the portfolio.
Statement Of Operations
This is the income statement, which details income (mostly interest and
dividends earned) and expenses (including what you pay us to manage your
money). You'll also see capital gains here -- both realized and unrealized.
Statement Of Changes In Net Assets
This schedule shows how income and expenses translate into changes in net
assets, compared to last year's performance. The Fund is required to pay
out the bulk of its income to shareholders every year, and this statement
shows you how we do it -- through dividends and distributions -- and how
that affects the net assets. This statement also shows how money from
investors flowed into and out of the Fund.
Notes To Financial Statements
This is the kind of technical material that can intimidate readers, but
it does contain useful information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they also outline how
Prudential Mutual Funds prices securities. The Notes also explain who
manages and distributes the Fund's shares, and more importantly, how much
they are paid for doing so. Finally, the Notes explain how many shares are
outstanding and the number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages, but on a per
share basis. It is designed to help you understand how the Fund performed
and to compare this year's performance and expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and certifies that the
information we've presented is fair and complies with generally accepted
accounting principles.
Tax Information
This is information which we report annually about how much of your total
return is taxable. Should you have any questions, you may want to consult
a tax advisor.
Performance Comparison
These charts are included in the annual report and are required by the
Securities Exchange Commission. Performance is presented here as a
hypothetical $10,000 investment in the Fund since its inception or for
10 years (whichever is shorter). To help you put that return in context,
we are required to include the performance of an unmanaged, broad based
securities index, as well. The index does not reflect the cost of buying
the securities it contains or the cost of managing a mutual fund. Of
course, the index holdings do not mirror those of the fund -- the index
is a broadly based reference point commonly used by investors to measure
how well they are doing. A definition of the selected index is also
provided. Investors generally cannot invest directly in an index.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
How many times have you read these letters -- or other financial materials --
and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.
Basis Point: One 1/100th of 1%. For example, one half of one percentage
point is 50 basis points.
Call Option: A contract giving the holder a right to buy stocks or bonds
at a predetermined price (called the strike price) before a predetermined
expiration date. A buyer of a call option generally expects to benefit
from a rise in the price of the stock or bond.
Capital Gain/Capital Loss: The difference between the cost of a capital
asset (for example, a stock, bond or mutual fund share) and its selling
price. Under current law the federal income tax rate for individuals on
a long-term gain is 28%.
Collateralized Mortgage Obligations (CMOs): Pools of mortgage-backed
securities sliced in maturity ranges that bear differing interest rates.
These instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity
extension risk.
Derivatives: Securities that derive their value from another security.
The rate of return of these financial products rise and fall -- sometimes
very suddenly -- in response to changes in some specific interest rate,
currency, stock or other variable.
Discount Rate: The interest rate charged by the Federal Reserve on loans
to banks and other depository institutions.
Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.
Futures Contract: An agreement to deliver a specific amount of a commodity
or financial instruments at a set price at a stipulated time in the future.
Leverage: The use of borrowed assets to enhance return on equity. The
expectation is that the interest rate charged will be lower than the
return on the investment. While leverage can increase profits, it can
also magnify losses.
Liquidity: The ease with which a financial instrument (or mutual fund) can
be bought or sold (converted into cash) in the financial markets.
Option: An agreement to buy something, such as shares of stock, by a
certain time for a specified price. An option need not be exercised. In
fact, most expire unexercised.
Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.
Spread: The difference between two values; most often used to describe the
difference between prices bid and asked for a security.
Yankee Bond: A bond denominated in U.S. dollars but sold by a foreign
company or government in the U.S. market.
<PAGE>
Directors
Thomas R. Anderson
Robert R. Fortune
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Thomas A. Owens, Jr.
Richard A. Redeker
Merle T. Welshans
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite Morrison, Assistant 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
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The accompanying financial statements as of November 30, 1995 were not
audited and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
Internet Address:
http:\\www.prudential.com
<PAGE>
(LOGO)
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
744334103
744334202 MF135E2
744334301 Cat# 444159V
