(ICON)
Prudential
Global
Genesis
Fund, Inc.
ANNUAL
REPORT
May 31, 1996
(LOGO)
<PAGE>
Prudential Global Genesis Fund, Inc.
Performance At A Glance.
Small company stocks rose worldwide over the last year, propelled by
higher profits and lower interest rates. During the past 12 months,
the Prudential Global Genesis Fund, which invests in small companies
worldwide, posted double-digit returns, but still finished well behind
the average similar fund measured by Lipper Analytical Services. The
Fund would have benefitted from better stock selection in the U.S.
and Japan, as well as a greater allocation in the U.S., which was
the best performing market during the reporting period.
<TABLE>
Cumulative Total Returns1 As of 5/31/96
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 18.4% (18.3)4 88.3% (86.0)4 81.4% (79.1)4
Class B 17.5 (17.4)4 81.1 (78.8)4 132.3 (128.9)4
Class C 17.5 (17.4)4 N/A 14.1 (13.6)4
Lipper Global Small Co. Avg3 30.1 81.6 145.4
<CAPTION>
Average Annual Total Returns1 As of 6/30/96
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 6.6% (6.5)4 12.8% (12.5)4 8.5% (8.3)4
Class B 6.4 (6.3)4 13.0 (12.7)4 10.3 (10.1)4
Class C 10.4 (10.2)4 N/A 6.0 (5.7)4
</TABLE>
Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper Analytical
Services. The cumulative total returns do not take into account
sales charges. The average annual returns do take into account
applicable sales charges. The Fund charges a maximum 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; 1/29/88 Class B; 8/1/94 Class C.
3Lipper average returns are for 22 funds for one year, 8 funds for
five years, and 4 funds since inception of the Class B shares on
1/29/88.
4Without waivers and expense subsidies the Fund's average annual
and cumulative total returns would have been lower, as indicated
in parentheses ( ).
How Investments Compared.
(As of 5/31/96)
(GRAPH)
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>
Daniel J. Duane, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Global Genesis Fund invests mainly in common stocks of
small foreign and U.S. companies. There are special risks associated
with foreign investing, such as economic, political, social and
currency risks. There can be no assurance that the Fund's investment
objective will be achieved.
Growth Stocks.
The Prudential Global Genesis Fund follows a growth investment style,
looking for long-term social, demographic and economic themes that
may lead to above-average earnings growth for small companies around
the world. Portfolio Manager Dan Duane analyzes individual stocks,
and then considers how the economy and social and political developments
may affect their growth.
Strategy Session.
Quite simply, our strategy is to invest in small companies that
have superior earnings growth prospects. Since faster economic
growth in a country generally leads to faster corporate earnings
growth for companies in that country (and therefore rising stock
prices), we often end up being drawn to countries whose economies
are growing nicely. In recent years, economic growth in foreign
countries has tended to be higher than in the U.S., so we have
invested heavily overseas, particularly in Asia.
But last year was different. In 1995, the U.S. stock market gained
more than most other major stock markets in the world, despite only
modest economic growth. So on May 31, 1996, we held more of our
assets in the U.S. than in any other region of the world - 30%,
up from 18% a year ago.
At the same time, our stocks in Europe were a disappointment. Europe's
economy sagged suddenly last fall, marking the fastest end to a
post-World War II economic recovery on record. The sudden slowdown
prompted us to sell the European stocks that we bought in anticipation
of a growing economy. We reduced our exposure in continental Europe to
19% of assets from 26% a year earlier. For example, we sold our position
in Hornbach, a European version of Home Depot, and cut back our holdings
in Sidel, which makes machines that make recyclable plastic bottles,
and Nokia, the Finnish cellular telephone manufacturer.
U.S. Stocks-30%, But Not Quite Enough.
Expressed as a percentage of
total net assets as of 5/31/96.
(CHART)
<PAGE>
What Went Well.
Our U.S. retailers did well. We owned Borders Group, the book
superstore operator; Tiffany & Co., the jeweler; and Lewis
Galoob Toys.
We've also started to build up our holdings in the United Kingdom
(12% of total net assets on 5/31/96). One of our better performers
was Matthew Clark PLC, a beverage producer and distributor which
has been able to absorb some of its weaker competitors, plus expand
sales through its marketing prowess. In addition, we hold London
Clubs International, a casino.
The performance of our U.S. stocks was generally in line with
stock market averages over the last year, and that meant double-digit
increases. Three stocks that we own and did well were: Globalstar,
the satellite-based digital telecommunications system; Sierra On-Line,
the animated software company; and Qualcomm, the digital wireless
communications system manufacturer.
And Not So Well.
Couldn't Beat The U.S.
We'd like to explain why your Fund hasn't performed as well as other
global small company stock funds recently. We started out (on June 1,
1995) at a disadvantage - most of our assets were in Asia and Europe.
When the U.S. stock market performed far better than the others in 1995,
we were left behind.
Some of our stocks did well - our smaller machinery and telecommunications
stocks in Europe, and U.S. technology companies. But these holdings
could not overcome the generally poor performance of our Asian stocks.
Then, over the winter and into the spring, U.S. technology stocks
tumbled when semiconductor stocks fell because of rising supply and
falling demand. So, the stars from the first half of the reporting
period performed poorly in the second. Some of these stocks rebounded
this spring when economic growth surged.
Japan Didn't Work.
In Japan, our investment results were discouraging. We held 5% of assets
there on May 31, 1996. Although our Japanese stocks rose nicely over
the past six months, other stocks in the same market rose more, sometimes
by twice as much. So, not only did we not hold enough assets in Japan,
we also did not hold the right ones. We appreciate your confidence and
patience.
Looking Ahead.
We believe we've reached a turning point. In the last several months,
small company stocks have performed better than large company stocks
in the U.S., which has benefitted shareholders. Generally, these stocks
have improved because of renewed economic strength in the U.S. We're
excited about this, particularly since when market leadership rotates -
in this case to smaller stocks - it sometimes lasts for several years.
We also hope to see this trend broaden to encompass smaller stocks
around the world. If economic conditions improve worldwide as we expect
they will, then non-U.S. markets may once again outperform the U.S.
Five Largest Holdings.
2.5% Baan Co. N.V.
Software (Netherlands)
2.3% Globalstar
Telecommunications
(U.S.)
2.3% Barco Industries N.V.
Electronics (Belgium)
2.3% Borders Group
Retail (U.S.)
2.2% AGCO Corp.
Machinery (U.S.)
Expressed as a percentage of total net assets as of 5/31/96.
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 as of PRUDENTIAL GLOBAL GENESIS
May 31, 1996 FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------
LONG-TERM INVESTMENTS--88.5%
COMMON STOCKS--86.9%
- ----------------------------------------------------------------
Australia--4.4%
2,649,900 Burswood Property Trust (Leisure &
Tourism) $ 3,531,509
700,000 Publishing & Broadcasting, Ltd.
(Broadcasting & Publishing) 3,016,519
2,812,800 Sea World Property Trust, Ltd.
(Leisure & Tourism) 2,491,587
-------------
9,039,615
- ------------------------------------------------------------
Belgium--2.3%
30,200 Barco Industries N.V. (Electrical &
Electronics) 4,707,370
- ------------------------------------------------------------
Federal Republic of Germany--0.6%
21,750 Gildemeister AG (Machinery &
Engineering) 1,228,491
- ------------------------------------------------------------
Finland--1.9%
60,000 Raison Tehtaat OY (Food & Household
Products) 3,514,831
60,000 Raison Tehtaat OY (Rights) expiring
7/10/96 (Food & Household
Products) 498,541
-------------
4,013,372
- ------------------------------------------------------------
France--5.4%
17,185 Axime (Ex Segin)(a)* (Business &
Public Services) 2,335,145
13,048 Manutan (Wholesale & International
Trading) 2,330,226
12,800 Rexel (Electrical & Electronics) 3,153,101
12,980 Sidel SA (Machinery & Engineering) 3,207,520
-------------
11,025,992
- ------------------------------------------------------------
Hong Kong--7.8%
3,396,000 Chen Hsong Holdings (Machinery &
Engineering) 1,821,724
4,350,000 China Resources Enterprises
(Multi-Industry) $ 3,176,906
5,000,000 Esprit Asia Holdings, Ltd. (Retail) 1,664,232
2,081,099 First Pacific Co., Ltd. (Banking) 2,864,897
2,621,000 Goldlion Holdings, Ltd.
(Textile-Apparel Manufacturing) 2,151,332
504,000 Guoco Group, Ltd. (Banking) 2,456,058
6,593,000 Hung Hing Printing Group, Ltd.
(Forest Products & Paper) 1,874,876
-------------
16,010,025
- ------------------------------------------------------------
India--1.4%
74,000 Bajaj Auto Ltd. (GDR)(a)
(Automobiles & Auto Parts) 2,886,000
- ------------------------------------------------------------
Indonesia--0.7%
555,000 Semen Cibinong (Building Materials
& Component) 1,451,447
- ------------------------------------------------------------
Italy--0.8%
154,000 Sasib - Di Risparmio (Machinery &
Engineering) 345,452
312,000 Sasib S.P.A. (Machinery &
Engineering) 1,292,891
-------------
1,638,343
- ------------------------------------------------------------
Japan--5.0%
91,300 Misumi Corp. (Retail) 3,046,013
63,000 Nichiei Co., Ltd. (Financial
Services) 4,308,790
247,000 Nichiei Construction Co.
(Property Development) 2,861,313
90 Nissen Co., Ltd. (Retail) 1,351
-------------
10,217,467
- ------------------------------------------------------------
Korea--1.2%
31,514 Chung Ho Computer (Electrical &
Electronics) 2,551,676
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
3
<PAGE>
<PAGE>
Portfolio of Investments as of PRUDENTIAL GLOBAL GENESIS
May 31, 1996 FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
Malaysia--2.4%
350,000 Gadek Berhad (Multi-Industry) $ 2,215,367
233,333 Gadek Capital Berhad(a)
(Multi-Industry) 710,412
678,000 Hock Hua Bank Berhad (Banking) 1,996,355
-------------
4,922,134
- ------------------------------------------------------------
Netherlands--4.0%
143,000 Baan Company N.V.(a) (Data
Processing & Reproduction) 5,148,000
43,400 Hagemeyer (Wholesale &
International Trade) 2,993,367
-------------
8,141,367
- ------------------------------------------------------------
New Zealand--0.8%
1,500,000 Affco Holdings, Ltd. (Food &
Household Products) 641,591
804,475 Fletcher Challenge Ltd.
(Forest Products & Paper) 1,032,289
-------------
1,673,880
- ------------------------------------------------------------
Singapore--3.7%
375,000 Jurong Engineering Ltd.
(Machinery & Engineering) 1,300,178
318,000 Robinson & Co., Ltd. (Retail) 1,276,519
459,250 Sembawang Maritime, Ltd.
(Energy Equipment & Services) 1,292,099
1,210,000 Singapore Finance, Ltd.
(Financial Services) 2,136,305
735,000 Wing Tai Holdings (Property
Development) 1,597,940
-------------
7,603,041
- ------------------------------------------------------------
Spain--1.8%
18,900 Azkoyen S.A. (Machinery &
Engineering) 1,316,242
96,725 Centros Commerciales Pryca (Retail) 2,279,295
-------------
3,595,537
- ------------------------------------------------------------
Sweden--1.2%
34,650 Hennes & Mauritz B Free (Retail) 2,556,529
United Kingdom 11.7%
748,000 BBA Group (Industrial Components) $ 3,821,178
297,000 Capital Radio PLC (Broadcasting &
Publishing) 3,209,442
360,000 Carpetright PLC (Retail) 3,426,977
293,000 Clark (Matthew) & Sons
(Consumer Goods) 3,625,023
269,400 Dorling Kindersley Holdings, Ltd.
(Broadcasting & Publishing) 2,631,349
414,000 London Clubs International (Leisure
& Tourism) 3,315,209
200,000 Serco Group PLC
(Business & Public Services) 1,646,512
200,000 Spirax-Sarco Engineering PLC
(Machinery & Engineering) 2,286,822
-------------
23,962,512
- ------------------------------------------------------------
United States--29.8%
150,100 AGCO Corp. (Engineering &
Construction) 4,521,763
143,000 Borders Group, Inc.(a) (Diversified
Consumer Product) 4,683,250
75,000 Decisionone Corporation(a)
(Computer Software & Services) 2,175,000
105,000 Eclipse Surgical Technoligies,
Inc.(a) (Drugs & Medical
Supplies) 1,684,375
123,200 Galoob Lewis Toys, Inc.(a)
(Leisure) 2,679,600
82,300 Globalstar Telecommunications(a)
(Telecommunication-Services) 4,763,112
101,000 Haverty Furniture Cos., Inc.
(Retail) 1,363,500
111,900 Holophone Corp. (Electronics) 1,986,225
67,900 Jacobs Engineering Group, Inc.(a)
(Machinery & Engineering) 1,824,813
118,000 Landec Corp.(a) (Chemicals) 2,448,500
82,500 Maxis, Inc.(a) (Computer Software &
Services) 1,938,750
27,500 Objective Systems Integrators,
Inc.(a) (Computer Software &
Services) 1,237,500
25,000 Perceptron, Inc.(a) (Electrical
Equipment) 903,125
40,000 PIA Merchandising Services, Inc.(a)
(Trucking/Shipping) 650,000
- --------------------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
<PAGE>
Portfolio of Investments as of PRUDENTIAL GLOBAL GENESIS
May 31, 1996 FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ----------------------------------------------------------
- ----------------------------------------------------------
United States (cont'd.)
96,700 Primark Corp.(a)
(Computer Software & Services) $ 3,408,675
61,600 Qualcomm, Inc.(a)
(Telecommunications Equipment) 3,353,350
88,000 Sierra On-Line, Inc.(a) (Computer
Software & Services) 3,960,000
83,600 Softkey International, Inc.(a)
(Computer Software & Services) 2,079,550
99,400 T. Rowe Price & Associates, Inc.
(Financial Services) 2,783,200
33,000 Tiffany & Co. (Retail/Specialty) 2,503,875
100,000 Toolex Alpha N.V. (ADR)(a)
(Machinery) 2,525,000
100,000 United States Office Products
Co.(a) (Office Equipment &
Supplies) 3,800,000
126,500 Western National Corp. (Insurance) 2,245,375
26,200 Xylan Corp.(a) (Computer
Software & Services) 1,660,425
-------------
61,178,963
-------------
Total common stocks
(cost US$127,492,673) 178,403,761
-------------
PREFERRED STOCKS--1.0%
- ------------------------------------------------------------
Finland--1.0%
45,200 Nokia Corp. Series A
(Telecommunications Equipment)
(cost US$521,029) 1,977,939
-------------
Warrants
WARRANTS(a)--0.5%
- ------------------------------------------------------------
Malaysia--0.5%
350,000 Gadek Berhad
expiring 12/19/00 @ MYR 11.95
(Multi-Industry)
(cost US$506,882) 1,094,924
-------------
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
CORPORATE BONDS--0.1%
- ------------------------------------------------------------
Singapore--0.1%
SED 173,000 Sembawang Maritime, Ltd.
Convertible unsecured loan stock
1.50%, 10/25/98
(Energy Equipment & Services)
(cost US$110,310) $ 159,787
-------------
Total long-term investments
(cost US$128,630,894) 181,636,411
-------------
SHORT-TERM INVESTMENTS--1.1%
- ------------------------------------------------------------
Repurchase Agreement
United States--1.1%
US$2,111 Joint Repurchase Agreement Account,
5.32%, 06/03/96
(cost US$2,111,000; Note 5) 2,111,000
-------------
- ------------------------------------------------------------
Total Investments--89.6%
(cost US$130,741,894; Note 4) 183,747,411
Other assets in excess of
liabilities--10.4% 21,436,637
-------------
Net Assets--100% $ 205,184,048
-------------
-------------
- ---------------
(a) Non-income producing security.
ADR--American Depositary Receipt.
GDR--Global Depositary Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S>
<C>
Assets
May 31, 1996
Investments, at value (cost
$130,741,894)................................................................
.... $183,747,411
Foreign currency, at value (cost
$24,727,630)................................................................
24,835,566
Cash.........................................................................
................................ 13,284
Receivable for Fund shares
sold.........................................................................
..... 1,019,346
Receivable for investments
sold.........................................................................
..... 656,802
Dividends and interest
receivable...................................................................
......... 381,008
Other
assets.......................................................................
.......................... 7,405
------------
Total
assets.......................................................................
....................... 210,660,822
------------
Liabilities
Payable for investments
purchased....................................................................
........ 2,526,250
Payable for Fund shares
reacquired...................................................................
........ 2,101,458
Accrued expenses and other
liabilities..................................................................
..... 482,451
Management fee
payable......................................................................
................. 171,641
Distribution fee
payable......................................................................
............... 141,564
Withholding taxes
payable......................................................................
.............. 53,410
------------
Total
liabilities..................................................................
....................... 5,476,774
------------
Net
Assets.......................................................................
............................ $205,184,048
------------
------------
Net assets were comprised of:
Common stock, at
par..........................................................................
............ $ 97,395
Paid-in capital in excess of
par..........................................................................
156,227,294
------------
156,324,689
Accumulated net investment
loss...........................................................................
(786,496)
Accumulated net realized loss on investments and foreign currency
transactions............................ (3,468,665)
Net unrealized appreciation on investments and foreign currency
transactions.............................. 53,114,520
------------
Net assets, May 31,
1996.........................................................................
............ $205,184,048
------------
------------
Class A:
Net asset value and redemption price per share
($47,617,229 / 2,190,359 shares of common stock issued and
outstanding)................................ $21.74
Maximum sales charge (5% of offering
price)...............................................................
1.14
------------
Maximum offering price to
public..........................................................................
$22.88
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($155,291,524 / 7,440,161 shares of common stock issued and
outstanding)............................... $20.87
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($2,275,295 / 109,013 shares of common stock issued and
outstanding)................................... $20.87
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
6 See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL GLOBAL GENESIS 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 $291,774)............................. $ 3,770,375
Interest (net of foreign withholding taxes
of $115)................................. 359,703
-----------
Total income............................. 4,130,078
-----------
Expenses
Management fee.............................. 2,014,451
Distribution fee--Class A................... 112,676
Distribution fee--Class B................... 1,545,660
Distribution fee--Class C................... 18,088
Transfer agent's fees and expenses.......... 500,000
Custodian's fees and expenses............... 400,000
Reports to shareholders..................... 140,000
Registration fees........................... 112,000
Audit fees and expenses..................... 57,000
Legal fees and expenses..................... 40,000
Directors' fees and expenses................ 25,000
Miscellaneous............................... 64,650
-----------
Total expenses........................... 5,029,525
Less: Management fee waiver................. (260,558)
-----------
Net expenses............................ 4,768,967
-----------
Net investment income (loss)................... (638,889)
-----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions..................... (473,036)
Foreign currency transactions............... 192,008
-----------
(281,028)
-----------
Net change in unrealized
appreciation/depreciation on:
Investments................................. 34,776,263
Foreign currency transactions............... (676,783)
-----------
34,099,480
-----------
Net gain on investments and foreign currencies 33,818,452
-----------
Net increase in Net Assets
Resulting from Operations...................... $33,179,563
-----------
-----------
</TABLE>
PRUDENTIAL GLOBAL GENESIS FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended Year Ended
in Net Assets May 31, 1996 May 31, 1995
<S> <C> <C>
Operations
Net investment income
(loss)..................... $ (638,889) $ (1,332,713)
Net realized gain (loss) on
investments and foreign
currency transactions...... (281,028) 518,554
Net change in unrealized
appreciation/depreciation
of investments and foreign
currencies................. 34,099,480 (3,534,468)
------------- ------------
Net increase (decrease) in net
assets resulting from
operations.................... 33,179,563 (4,348,627)
------------- ------------
Net equalization (debits)
credits....................... (25,288) 104,845
------------- ------------
Dividends in excess of net
investment income (Note 1)
Class A....................... (195,472) (163,968)
Class B....................... (695,209) (365,083)
Class C....................... (8,179) (1,822)
------------- ------------
(898,860) (530,873)
------------- ------------
Distributions from net realized
gains on investment and
foreign currency transactions
Class A....................... -- (46,273)
Class B....................... -- (303,736)
Class C....................... -- (370)
------------- ------------
-- (350,379)
------------- ------------
Fund share transactions (Net of
share conversions) (Note 6)
Net proceeds from shares
subscribed................. 333,985,435 224,701,575
Net asset value of shares
issued
to shareholders in
reinvestment of dividends
and distributions.......... 827,626 831,367
Cost of shares reacquired..... (360,913,268) (225,259,494)
------------- ------------
Net increase (decrease) in net
assets from Fund share
transactions............... (26,100,207) 273,448
------------- ------------
Total increase (decrease)........ 6,155,208 (4,851,586)
Net Assets
Beginning of year................ 199,028,840 203,880,426
------------- ------------
End of year...................... $ 205,184,048 $199,028,840
------------- ------------
------------- ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
7
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
Prudential Global Genesis 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 companies with market capitalizations of less than U.S. $1 billion, as
measured at time of purchase.
- ------------------------------------------------------------
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 gain on foreign currency transactions of $192,008 represents net
foreign exchange gains 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. 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
- --------------------------------------------------------------------------------
8
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
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 on
such securities.
Dividends and Distributions: The Fund expects to pay dividends of net investment
income and distributions of net realized capital gains, if any, at least
annually. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of wash
sales, passive investment companies, and foreign currencies 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. The effect of applying
this statement was to decrease paid-in capital in excess of par by $26,623,
decrease accumulated net investment loss by $737,382, and increase accumulated
net realized loss on investments and foreign currency transactions by $710,759
for the year ended May 31, 1996. Net realized losses 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.
The management fee paid PMF is computed daily and payable monthly, at an annual
rate of 1% of the average daily net assets of the Fund. Prior to September 1,
1995, PMF voluntarily waived 50% of its management fee. Effective September 1,
1995, PMF eliminated its management fee waiver. For the year ended May 31, 1996,
management fees waived amounted to $260,558 ($.03 per share and .13% of average
net assets).
The Fund has distribution agreements with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), which acted as the distributor of the Class A shares of the
Fund through January 1, 1996. Effective January 2, 1996 Prudential Securities
Incorporated (``PSI'') became the distributor of the Class A shares of the Fund
and is serving the Fund under the same terms and conditions as under the
arrangement with PMFD. PSI is also distributor of the Class B and Class C shares
of the Fund. The Fund compensated PMFD and PSI for distributing and servicing
the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution, (the ``Class A, B and C Plans'') regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
Pursuant to the Class A, 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 C shares,
respectively. Such expenses under the Class A, Class B and Class C Plans were
.25% of 1%, 1% and 1%, respectively of the average daily net assets of the Class
A, Class B and Class C shares for the fiscal year ended May 31, 1996.
PMFD and PSI have advised the Fund that they have received approximately $83,000
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 $742,800 and $1,900 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, PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of America.
(``Prudential'')
- --------------------------------------------------------------------------------
9
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
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 $417,500 for the services of PMFS. As
of
May 31, 1996, approximately $43,800 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to non-affiliates. For the year ended May 31, 1996
PSI and/or its foreign affiliates earned approximately $14,900 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 $80,903,090 and $113,856,935,
respectively.
The federal income tax basis of the Fund's investments at May 31, 1996 was
$131,044,599 and accordingly, net unrealized appreciation for federal income tax
purposes was $52,702,812 (gross unrealized appreciation--$58,565,058; gross
unrealized depreciation--$5,862,246).
For federal income tax purposes, the Fund has a capital loss carryforward as of
May 31, 1996 of approximately $2,070,300 of which $1,125,300 expires in 2003 and
$945,000 expires in 2004. Accordingly, no capital gains distribution is expected
to be paid to shareholders until future net gains have been realized in excess
of such carryforward.
For federal income tax purposes, the Fund will elect to treat net capital losses
of approximately $1,374,700 and net currency losses of approximately $533,800
incurred in the seven months period ended May 31, 1996 as having incurred in the
following fiscal year.
- ------------------------------------------------------------
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
0.17% undivided interest in the repurchase agreements in the joint account. The
undivided interest for the Fund represented $2,111,000 in principal amount. As
of such date, each repurchase agreement in the joint account and the value of
the collateral therefor were as follows:
Bear, Stearns & Co., 5.32%, 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 Corporation, 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 $306,022,116.
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 $359,159,465, 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
at $.01 par value per share equally divided into three classes, designated Class
A, Class B and Class C common stock.
- --------------------------------------------------------------------------------
10
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
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......................... 8,715,437 $ 171,119,515
Shares issued in reinvestment of
dividends and distributions....... 9,315 180,140
Shares reacquired................... (9,127,818) (179,580,690)
---------- -------------
Net decrease in shares outstanding
before conversion................. (403,066) (8,281,035)
Shares issued upon conversion from
Class B........................... 204,786 4,094,014
---------- -------------
Net decrease in shares
outstanding....................... (198,280) $ (4,187,021)
---------- -------------
---------- -------------
Year ended May 31, 1995:
Shares sold......................... 4,919,941 $ 87,907,236
Shares issued in reinvestment of
dividends and distributions....... 10,178 190,928
Shares reacquired................... (4,974,729) (89,063,687)
---------- -------------
Net decrease in shares outstanding
before conversion................. (44,610) (965,523)
Shares issued upon conversion from
Class B........................... 874,774 14,922,433
---------- -------------
Net increase in shares
outstanding....................... 830,164 $ 13,956,910
---------- -------------
---------- -------------
<CAPTION>
Class B
- ------------------------------------
<S> <C> <C>
Year ended May 31, 1996:
Shares sold......................... 8,445,077 $ 161,457,654
Shares issued in reinvestment of
dividends and distributions....... 34,065 639,398
Shares reacquired................... (9,438,151) (180,608,303)
---------- -------------
Net decrease in shares outstanding
before conversion................. (959,009) (18,511,251)
Shares reacquired upon conversion
into Class A...................... (212,363) (4,094,014)
---------- -------------
Net decrease in shares
outstanding....................... (1,171,372) $ (22,605,265)
---------- -------------
---------- -------------
<CAPTION>
Class B Shares Amount
- ------------------------------------ ---------- -------------
<S> <C> <C>
Year ended May 31, 1995:
Shares sold......................... 7,639,531 $ 135,068,716
Shares issued in reinvestment of
dividends and distributions....... 36,014 638,262
Shares reacquired................... (7,748,055) (135,790,426)
---------- -------------
Net decrease in shares outstanding
before conversion................. (72,510) (83,448)
Shares reacquired upon conversion
into Class A...................... (902,163) (14,922,433)
---------- -------------
Net decrease in shares
outstanding....................... (974,673) $ (15,005,881)
---------- -------------
---------- -------------
<CAPTION>
Class C
- ------------------------------------
<S> <C> <C>
Year ended May 31, 1996:
Shares sold......................... 72,739 $ 1,408,266
Shares issued in reinvestment of
dividends and distributions....... 431 8,088
Shares reacquired................... (37,424) (724,275)
---------- -------------
Net increase in shares
outstanding....................... 35,746 $ 692,079
---------- -------------
---------- -------------
August 1, 1994* through
May 31, 1995:
Shares sold......................... 96,874 $ 1,725,623
Shares issued in reinvestment of
dividends and distributions....... 127 2,177
Shares reacquired................... (23,734) (405,381)
---------- -------------
Net increase in shares
outstanding....................... 73,267 $ 1,322,419
---------- -------------
---------- -------------
</TABLE>
- ---------------
* Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
11
<PAGE>
<PAGE>
Financial Highlights PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- -----------------------------------------------------
Year Ended May 31,
- -----------------------------------------------------
1996 1995 1994
1993 1992
------- ------- -------
------ ------
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE (b):
Net asset value, beginning of period.... $ 18.44 $ 18.75 $ 15.34
$12.62 $11.95
------- ------- -------
------ ------
Income from investment operations
Net investment income (loss)(a)......... .05 -- (.03)
.10 .02
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 3.34 (.21) 3.83
2.62 .65
------- ------- -------
------ ------
Total from investment operations..... 3.39 (.21) 3.80
2.72 .67
------- ------- -------
------ ------
Less distributions
Dividends from net investment income.... -- -- (.15)
-- --
Dividends in excess of net investment
income............................... (.09) (.08) --
-- --
Distributions from net realized gains on
investment and foreign currency
transactions......................... -- (.02) (.24)
-- --
------- ------- -------
------ ------
Total distributions.................. (.09) (.10) (.39)
-- --
------- ------- -------
------ ------
Net asset value, end of period.......... $ 21.74 $ 18.44 $ 18.75
$15.34 $12.62
------- ------- -------
------ ------
------- ------- -------
------ ------
TOTAL RETURN (c):....................... 18.41% (0.95)% 25.09%
21.55% 5.61%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $47,617 $44,051 $29,221
$3,435 $3,829
Average net assets (000)................ $45,070 $32,430 $16,909
$3,106 $3,771
Ratios to average net assets:(a)
Expenses, including distribution
fees.............................. 1.79% 1.42% 1.48%
1.49% 1.50%
Expenses, excluding distribution
fees.............................. 1.54% 1.17% 1.25%
1.29% 1.30%
Net investment income (loss)......... .26% .02% (.17)%
.79% .19%
For Class A, B and C shares:
Portfolio turnover rate................. 44% 64% 31%
67% 57%
Average commission rate per share....... $0.0090 N/A N/A
N/A N/A
</TABLE>
- ---------------
(a) Net of expense subsidies and/or fee waivers.
(b) Calculated based upon average shares outstanding, by class.
(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.
- --------------------------------------------------------------------------------
12 See Notes to Financial Statements.
<PAGE>
<PAGE>
Financial Highlights PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Class C
- ----------------------------------------------------------
- ----------------------
August 1,
Year 1994(d)
Year Ended May
31, Ended Through
- ---------------------------------------------------------- May 31, May
31,
1996 1995 1994
1993 1992 1996 1995
-------- -------- --------
------- ------- -------- ---------
<S> <C> <C> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE (b):
Net asset value, beginning of period.... $ 17.84 $ 18.22 $ 14.93
$ 12.38 $ 11.82 $ 17.84 $ 18.44
-------- -------- --------
------- ------- -------- ---------
Income from investment operations
Net investment income (loss)(a)......... (.09) (.13) (.16)
-- (.07) (.08 ) (.12)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 3.21 (.19) 3.74
2.55 .63 3.20 (.44)
-------- -------- --------
------- ------- -------- ---------
Total from investment operations..... 3.12 (.32) 3.58
2.55 .56 3.12 (.56)
-------- -------- --------
------- ------- -------- ---------
Less distributions
Dividends from net investment income.... -- -- (.05)
-- -- -- --
Dividends in excess of net investment
income............................... (.09) (.03) --
-- -- (.09 ) (.03)
Distributions from net realized gains on
investment and foreign currency
transactions......................... -- (.03) (.24)
-- -- -- (.01)
-------- -------- --------
------- ------- -------- ---------
Total distributions.................. (.09) (.06) (.29)
-- -- (.09 ) (.04)
-------- -------- --------
------- ------- -------- ---------
Net asset value, end of period.......... $ 20.87 $ 17.84 $ 18.22
$ 14.93 $ 12.38 $ 20.87 $ 17.84
-------- -------- --------
------- ------- -------- ---------
-------- -------- --------
------- ------- -------- ---------
TOTAL RETURN (c):....................... 17.51% (1.73)% 24.16%
20.60% 4.74% 17.51 % (2.90)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $155,292 $153,670 $174,659
$36,136 $35,644 $ 2,275 $ 1,307
Average net assets (000)................ $154,566 $173,591 $102,451
$31,561 $37,236 $ 1,809 $ 862
Ratios to average net assets:(a)
Expenses, including distribution
fees.............................. 2.54% 2.17% 2.25%
2.29% 2.30% 2.54 % 2.27%(e)
Expenses, excluding distribution
fees.............................. 1.54% 1.17% 1.25%
1.29% 1.30% 1.54 % 1.27%(e)
Net investment income (loss)......... (.48)% (.77)% (.91)%
(.01)% (.57)% (.44 )% (.90)%(e)
</TABLE>
- ---------------
(a) Net of expense subsidies and/or fee waivers.
(b) Calculated based upon average shares outstanding, by class.
(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 of Class C shares.
(e) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
13
<PAGE>
<PAGE>
Report of Independent Accountants PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
Prudential Global Genesis 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 Genesis 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, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
July 26, 1996
Tax Information (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- -------------------------------------------------------------------------------
We are required by the Internal Revenue Code 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 by the Fund during such fiscal year. Accordingly, we are advising
you that during its fiscal year ended May 31, 1996 the Fund paid distributions
from net investment income for Class A, Class B and Class C shares totalling
$.085 per share, which are taxable as ordinary income. Further, we wish to
advise you that 23.9% 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
DIV, 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.
- --------------------------------------------------------------------------------
14
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund.
Change Your Mind.
You can exchange your shares in most Prudential
Mutual Funds for shares in most other Prudential Mutual Funds,
without charges. This may be most helpful if your investment
needs change.
Reinvest Dividends Free Of Charge.
Reinvest your dividends and/or capital gains distributions
automatically - without charge.
Invest For Retirement.
There is no minimum investment for an IRA. Plus, you defer taxes
on your investment earnings by investing in an IRA.
If you'd like, you can contribute up to $2,000 a year in an IRA. If
you are married, you and your spouse (if not working outside the home)
can contribute up to $2,250 a year. (Withdrawals are taxed as ordinary
income and may be subject to a 10% penalty prior to age 59 1/2.)
Change Your Job.You can take your pension with you. Use a rollover IRA
to manage your company-sponsored retirement plan while retaining the
special tax-deferred advantages.
Invest In Your Children.
There's no fee to open a custodial account for a child's education
or other needs.
Take Income.
Would you like to receive monthly or quarterly checks
in any amount from your fund account? Just let us know. We'll take
care of it. Of course, there are minimum amounts. And shares redeemed
may be subject to tax, and Class B and C shares may be subject to
contingent deferred sales charges. We'll gladly answer your questions.
Keep Informed.
We want to keep you up-to-date. Of course, you receive account
activity statements every quarter. But you also receive annual
and semi-annual fund reports, as well as other important updates
on events that affect your investments, including tax information.
This material is only authorized for distribution when preceded or
accompanied by a current prospectus. Read the prospectus carefully
before you invest or send money.
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund.
When you invest through Prudential Mutual Funds, you receive financial
advice through a Prudential Securities financial advisor or
Prudential/Pruco Securities registered representative. Your advisor
or representative can provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help you match
the reward you seek with the risk you can tolerate. And risk can be
difficult to gauge -sometimes even the simplest investments bear
surprising risks. The educated investor knows that markets seldom
move in just one direction - there are times when a market sector
or asset class will lose value or provide little in the way of total
return. Managing your own expectations is easier with help from
someone who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help you wade
through the numerous mutual funds available to find the ones that
fit your own individual investment profile and risk tolerance. While
the newspapers and popular magazines are full of advice about
investing, they are aimed at generic groups of people or representative
individuals, not at you personally. Your financial advisor or registered
representative will review your investment objectives with you. This
means you can make financial decisions based on the assets and
liabilities in your current portfolio and your risk tolerance - not
just based on the current investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the bottom are
among the most common investor mistakes. But sometimes it's difficult
to hold on to an investment when it's losing value every month. Your
financial advisor or registered representative can answer questions
when you're confused or worried about your investment, and remind you
that you're investing for the long haul.
<PAGE>
Comparing A $10,000 Investment.
Prudential Global Genesis Fund, Inc. vs.
Morgan Stanley Capital International World Index.
--Prudential Global Genesis Fund, Inc.
---Morgan Stanley Capital
International World Index
Average Annual
Total Returns
- ----------------------- Class A
With Sales Load* (GRAPH)
8.9% Since Inception (8.7)
12.3% for 5 Years (12.1)
12.5% for 1 Year (12.3)
Without Sales Load*
9.8% Since Inception (9.6)
13.5 for 5 Years (13.2)
18.4% for 1 Year (18.3)
Average Annual
Total Returns
- ---------------------- Class B
With Sales Load* (GRAPH)
10.6% Since Inception (10.4)
12.5 for 5 Years (12.2)
12.5% for 1 Year (12.4)
Without Sales Load*
10.6% Since Inception (10.4)
12.6 for 5 Years (12.3)
17.5% for 1 Year (17.4)
Average Annual
Total Returns
- ------------------- Class C
With Sales Load* (GRAPH)
7.5% Since Inception (7.2)
16.5% for 1 Year (16.3)
Without Sales Load*
7.5% Since Inception (7.2)
17.5% for 1 Year (17.4)
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 Global Genesis
(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 1988 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.
* Without waivers and expense subsidies the value of the $10,000
investment in the Fund's average annual total return, as illustrated
above, would have been lower, as indicated in parentheses ( ).
<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 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
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.
744333105 MF136E
744333204 Cat. #430150J
744333303
