(ICON)
Prudential
Global
Genesis
Fund, Inc.
SEMI
ANNUAL
REPORT
Nov. 30, 1995
(LOGO)
<PAGE>
Prudential Global Genesis Fund, Inc.
Performance At A Glance.
In the past six months, stocks of small companies overseas advanced only
moderately -- despite tremendous gains produced by both small and large
company stocks in the United States. Foreign small company stocks were in
the doldrums, especially in Asia -- one of our regions of emphasis. In this
difficult market, we're disappointed that the Prudential Global Genesis
Fund produced below-average total returns, as reported by Lipper Analytical
Services.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 11/30/95
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 5.2% 8.2% 89.3% 61.1%
Class B 4.8 7.3 82.1 107.1
Class C 4.8 7.3 N/A 1.7
Lipper Global Small Co. Avg3 9.9 13.8 92.7 117.4
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 12/31/95
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 5.1% 12.8% 7.1%
Class B 4.8 12.2 9.8
Class C 8.8 N/A 2.3
</TABLE>
Past performance is not a guarantee of future results. Investment return and
principal value 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 total returns do take into account
applicable sales charges. The fund charges a maximum front end sales
load of 5% for Class A shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1% and 1%,
for six years. Class C shares have a 1% CDSC for one year. Class B shares
will 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.
3These are the average returns of 15 funds in the global small company
fund category for one year; seven funds for five years; and four funds
since inception, as determined by Lipper Analytical Services, Inc.
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.
Global Small Company Funds will also fluctuate a great deal and more than
large company stock funds. Investments overseas are subject to political,
social, and currency risks that may affect performance.
General Bond Funds provide more income than stock funds, which can help
smooth out their total returns year by year. But their prices still
fluctuate (sometimes significantly) and their returns have been historically
lower than those of stock funds.
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>
Dan Duane, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Global Genesis Fund invests mainly in common stocks of
smaller foreign and U.S. companies. There are special risks associated
with foreign investing, such as economic, political, social and currency
risks.
Strategy Session.
For several years, our strategy has been to concentrate on stocks of small
companies outside the U.S., because the European and Asian economies
appeared to be growing faster than in America. We still believe firmly
in our outlook, but other investors haven't embraced this theory as
strongly as we have.
That made it hard for us to perform as well as we'd like because we had
to swim against a strong current of negative sentiment throughout most of
1994 and 1995. Other investors were worried about a possible recession in
the U.S., currency fluctuations in Europe and in the U.S. dollar, as well
as publicized trading scandals. The tremendous bull market in U.S. stocks
didn't help much either. These obstacles were especially challenging for
small company investors because they tend to perceive that a small company's
earnings will be jeopardized more than a large company's in an uncertain
market, so they may not perform as well.
You may wonder why we are sticking with this strategy, given these factors.
It's because we still believe what we said six months ago: "The negative
investor sentiment that shook global markets overshadowed the fact that
the world's economies continued to strengthen and companies reported
strong corporate earnings in most world markets. This is the long-term
outlook upon which our strategy is based." Because we haven't seen a
change in fundamental economic conditions since then, we think
our broad strategy is still valid: to concentrate on stocks of fast-growing
small companies outside the United States.
On the other hand, how we get there may change a little.
- -First of all, we've shifted some assets back into the U.S. We're
concentrating on software producers, a big growth area.
- -In Europe, where it's no longer clear how long economic expansion will
last, we're shifting from pure business cycle companies (those that profit
in good economic times) to "secular change" companies (those that profit
by improving efficiency and increasing productivity.
- -In Asia, we're buying more Japanese companies since that country's economic
woes finally seem to have hit bottom. We're shifting some assets out of
Malaysia, where economic growth has been overheating and where we think
interest rates could rise.
- -In general, we're buying fewer industrial stocks (since economic growth
is more moderate than expected, sales may have peaked) and more financial
services (they'll profit from low interest rates, which we expect to stay
low and produce big gains from fixed income investments).
Media Mention.
The Prudential Global Genesis Fund
was one of the global/world stock
funds mentioned in a Forbes Magazine
article on mutual funds. The article
appeared in the December 25, 1995 issue.
<PAGE>
What Went Well.
We Held 18% in Technology Stocks.
U.S. technology stocks, 12% of total net assets, produced extraordinary
total returns in 1995.
Companies like Maxis, Sierra On-Line and Softkey have practically become
household names. They produced big gains in the first six months of 1995;
we owned them all. These companies have since given some profits back,
but are still priced higher than when we bought them. We're holding on
to these stocks as we believe they will continue to grow as countries
outside the U.S. expand their use of computers in daily life.
Emphasis on Europe.
Favoring Europe (at 29% of total net assets) helped offset our Asian
losses somewhat, as these stock markets produced better returns than
Asian companies did. We've begun to shift some assets from companies
that benefit early in the economic cycle (like the discount retailers
and auto-parts manufacturers we talked about six months ago) to high-end
retailers and companies that are in the midst of restructuring. We sold
several stocks at substantial profit--Hornbach's, for instance.
And Not So Well.
We Held 31% in Asia.
While we see tremendous opportunities in Asia--stocks are cheap, growth
trends are positive and the business climate is favorable--stock markets
in this region have performed miserably for about two years. We've
reduced our Asian holdings but even the amount we currently hold (31%
of total net assets) was a drag on performance this year, especially
late in the reporting period when investors were redeeming Asian mutual
funds at a rapid pace.
Underestimated the U.S. Economy.
U.S. stocks climbed to new highs and small company stocks were among the
best performers.
We could have had more of our total net assets in U.S. stocks, but they
were only 26% on 11/30/95.
Five Largest Holdings.*
3.2% Sidel SA Machinery & Engineering
2.6% Nokia Telecommunication Equip.
2.3% Adflex Solutions Electronics
2.3% First Pacific Co.Banking
2.0% Chung Ho ComputerElectronics
*Expressed as a percentage of total net assets as of 11/30/95.
Portfolio holdings are subject to change.
Looking Ahead.
We've been disappointed that global economic growth hasn't prompted better
returns for small company investors over the past six months. However,
we still stand by our general outlook: the world economies should continue
to grow throughout the coming year and small capitalization stocks should
produce good gains. Our outlook is somewhat dependent on a possible U.S.
interest rate cut -- and the whole world is waiting with us. But, small
company stocks generally don't fare well in times of uncertainty.
While we were wrong about Asia in our last report to you, we believe it
is the right place to be now. We'll be likely to shift assets towards
Asia, and reduce our Europe exposure in the coming months.
Geographic Breakdown
Prudential Global Genesis Fund
as of 11/30/95. Subject to change.
(PIE CHART)
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
November 30, 1995 (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
LONG-TERM INVESTMENTS--93.5%
COMMON STOCKS--89.9%
------------------------------------------------------------
Australia--5.5%
2,074,300 AAPC, Ltd. (Leisure & Tourism) $ 1,156,140
1,815,000 Australis Media Ltd.* (Broadcasting
& Publishing) 1,510,679
2,409,000 Burswood Property Trust (Leisure &
Tourism) 3,258,260
700,000 Publishing & Broadcasting, Ltd.
(Broadcasting & Publishing) 2,486,586
2,557,100 Sea World Property Trust, Ltd.
(Leisure & Tourism) 2,166,358
-------------
10,578,023
- ------------------------------------------------------------
Belgium--1.6%
27,500 Barco Industries N.V. (Electronics) 3,071,024
- ------------------------------------------------------------
Brazil--0.7%
132,000 Rhodia Ster S A* (GDR) (Chemicals) 1,303,500
- ------------------------------------------------------------
Denmark--0.8%
24,000 Danske Traelastko (Retail) 1,627,699
- ------------------------------------------------------------
Federal Republic of Germany--0.9%
15,800 Gildemeister AG* (Machinery &
Engineering) 1,659,423
4,050 Hornback Baumarkt AG (Retail) 167,905
-------------
1,827,328
- ------------------------------------------------------------
France--5.3%
13,048 Manutan (Merchandising) 1,457,789
9,216 Plastic Omnium SA (Automobiles &
Automotive Parts) 637,760
12,800 Rexel (Electronics) 2,105,327
19,470 Sidel SA (Machinery & Engineering) 6,131,422
-------------
10,332,298
Hong Kong--9.4%
3,430,000 Alco Holdings, Ltd. (Electronics) $ 638,564
3,396,000 Chen Hsong Holdings (Machinery &
Engineering) 1,778,160
4,350,000 China Resources Enterprises
(Multi-Industry) 1,898,065
5,000,000 Esprit Asia Holdings, Ltd. (Retail) 1,648,384
4,043,795 First Pacific Co., Ltd.*
(Multi-Industry) 4,391,537
2,621,000 Goldlion Holdings, Ltd. (Textile &
Apparel Manufacturing) 1,685,808
504,000 Guoco Group, Ltd. (Banking) 2,391,359
6,593,000 Hung Hing Printing Group, Ltd.
(Forest Products & Paper) 1,470,349
1,350,000 Jinhui Shipping
(Transportation-Shipping) 1,430,646
8,713,000 Techtronic Industries Co. Ltd.
(Machinery & Engineering) 811,051
-------------
18,143,923
- ------------------------------------------------------------
India--1.4%
74,000 Bajaj Auto Ltd.* (GDR) (Consumer
Durable Goods) 1,702,000
171,000 Gujarat Narmada Valley Fertilizers*
(GDR) (Materials) 983,250
-------------
2,685,250
- ------------------------------------------------------------
Indonesia--1.1%
1,666,667 Putra Surya Per Kasa (Property
Related) 729,874
536,400 Sekar Laut (Food & Household
Products) 187,922
505,000 Semen Cibinong (Construction &
Housing) 1,194,219
-------------
2,112,015
- ------------------------------------------------------------
Italy--0.6%
283,600 Sasib S.P.A. (Machinery &
Engineering) 1,186,544
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements. 3 -----
<PAGE>
<PAGE>
Portfolio of Investments as of
November 30, 1995 (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Japan--7.4%
67,000 Aiwa Co. (Appliances & Household
Durables) $ 1,418,198
90,000 Kato Denki Co. (Retail) 2,293,106
Keihanshin Real Estate
118,000 (Property Investment) 847,606
62,000 Misumi Corp. (Retail) 2,229,800
57,000 Nichiei Co. Ltd. (Financial
Services) 3,636,337
225,000 Nichiei Construction Co. (Property
Development) 1,882,993
72,980 Nissen Co., Ltd. (Retail) 2,088,310
-------------
14,396,350
- ------------------------------------------------------------
Korea--4.5%
44,406 Chung Ho Computer (Electronics) 3,860,640
11,800 Mando Machinery Corp. (Automobiles
& Parts) 635,437
18,812 Mando Machinery Corp.* (Automobiles
& Parts) 536,142
2,421 Samsung Electronics Co. (New)
(Electronic Components) 449,235
9,238 Samsung Electronics Co. (Electronic
Components) 1,738,156
181 Samsung Electronics Co.* (New)
(Electronic Components) 33,586
39,800 Shinwon Corp. (Retail) 1,564,835
-------------
8,818,031
- ------------------------------------------------------------
Malaysia--2.4%
391,000 East Asiatic Co. Berhad
(Miscellaneous Materials &
Commodities) 674,855
350,000 Gadek Berhad (Multi-Industry) 1,517,122
678,000 Hock Hua Bank Berhad (Banking) 1,936,990
243,500 Park May Berhad
(Transportation-Shipping) 508,551
-------------
4,637,518
- ------------------------------------------------------------
Netherlands--2.6%
65,000 Baan Company N.V.* (Computer
Software & Services) 2,949,375
43,400 Hagemeyer* (Wholesale &
International Trade) $ 2,190,756
-------------
5,140,131
- ------------------------------------------------------------
New Zealand--1.0%
379,000 Fletcher Challenge, Ltd. (Forest
Products & Paper) 940,232
731,375 Fletcher Forestry, Ltd. (Forest
Products & Paper) 1,031,350
-------------
1,971,582
- ------------------------------------------------------------
Singapore--4.9%
341,000 Jurong Engineering Ltd. (Machinery
& Engineering) 1,776,923
289,000 Robinson & Co., Ltd. (Retail) 1,198,618
459,250 Sembawang Maritime, Ltd. (Energy
Equipment & Services) 1,341,446
1,100,000 Singapore Finance, Ltd. (Financial
Services) 1,649,415
1,873,000 Wing Tai Holdings (Property
Development) 3,625,161
-------------
9,591,563
- ------------------------------------------------------------
Spain--1.5%
18,900 Azkoyen S.A. (Machinery &
Engineering) 1,045,825
96,725 Centros Commerciales (Pryca)
(Retail) 1,883,489
-------------
2,929,314
- ------------------------------------------------------------
Sweden--3.9%
193,600 Allgon AB (Telecommunication
Equipment) 3,187,536
34,650 Hennes & Mauritz B Free (Retail) 2,152,568
110,000 Iro AB* (Machinery & Engineering) 1,257,708
90,000 Iro AB (Machinery & Engineering) 1,029,034
-------------
7,626,846
- ------------------------------------------------------------
Thailand--0.4%
49,201 Land & House Public Co., Ltd.
(Property Development) 723,257
- --------------------------------------------------------------------------------
</TABLE>
4 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of
November 30, 1995 (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
United Kingdom--8.3%
748,000 BBA Group (Industrial Components) $ 3,179,980
297,000 Capital Radio PLC (Broadcasting &
Publishing) 2,311,426
360,000 Carpetright PLC (Retail) 2,195,055
269,400 Dorling Kindersley Holdings, Ltd.
(Broadcasting & Publishing) 2,191,552
955,000 London International Group, PLC*
(Health & Personal Care) 1,887,352
1,100,000 Morrison (Wm.) Supermarkets PLC
(Retail) 2,426,693
200,000 Spirax-Sarco Engineering PLC
(Machinery & Engineering) 1,853,724
-------------
16,045,782
- ------------------------------------------------------------
United States--25.7%
159,500 Adflex Solutions, Inc.*
(Electronics) 4,545,750
118,800 ADVO, Inc. (Advertising) 3,148,200
71,500 AGCO Corp. (Machinery) 3,083,437
130,000 Borders Group, Inc.* (Retail) 2,291,250
85,000 Equity Marketing, Inc.*
(Consumer Durable Goods) 1,136,875
109,100 ESS Technology, Inc.*
(Electronics) 3,600,300
112,000 Galoob Lewis Toys, Inc.*
(Consumer Durable Goods) 1,274,000
104,400 General Magic, Inc. (Electronics) 1,109,250
74,800 Globalstar Telecommunications*
(Telecommunications) 2,374,900
91,800 Haverty Furniture Cos., Inc.
(Merchandising) 1,308,150
415 Healthcare Services Group, Inc.*
(Commercial Services) 3,631
67,800 Holophone Corp.* (Electronics) 2,067,900
61,700 Jacobs Engineering Group, Inc.*
(Rights) (Machinery &
Engineering) 1,488,513
75,000 Maxis, Inc.* (Electronics) 3,075,000
25,000 Objective Systems Integrators,
Inc.*
(Computer Software & Services) 475,000
2,900 Pixar, Inc.* (Computer Software &
Services) 118,175
72,900 Primark Corp.* (Banks & Financial
Services) 2,013,863
61,600 Qualcomm, Inc.* (Telecommunication
Equipment) $ 2,548,700
80,000 Sierra On-Line, Inc.* (Electronics) 2,720,000
56,000 Softkey International, Inc.*
(Computer Software & Services) 1,890,000
171,300 Spectrum Holobyte, Inc.*
(Electronics) 1,477,463
49,700 T. Rowe Price & Associates, Inc.
(Financial Services) 2,627,887
34,000 The Learning Co.* (Electronics) 2,065,500
30,000 Tiffany & Co. (Retail/Specialty) 1,548,750
126,500 Western National Corp. (Insurance) 1,802,625
-------------
49,795,119
-------------
Total common stocks
(cost US$151,421,605) 174,543,097
-------------
PREFERRED STOCKS--3.0%
- ------------------------------------------------------------
Finland--2.6%
90,400 Nokia Corp. (Telecommunication
Equipment) 4,959,124
- ------------------------------------------------------------
Federal Republic of Germany--0.2%
416 Hornbach Baumarkt AG (Retail) 347,805
- ------------------------------------------------------------
Italy--0.2%
140,000 Sasib S.P.A. (Machinery) 305,566
-------------
Total preferred stocks
(cost US$1,965,188) 5,612,495
-------------
Warrants
WARRANTS*--0.3%
- ------------------------------------------------------------
Japan--0.3%
218 Nissen Co., Ltd.
expiring Nov. '96 @ Y1,681
(Retail) 270,434
3,300 Nitori Co.
expiring Feb. '98 @ Y3,268
(Retail) 333,929
-------------
Total warrants*
(cost US$693,883) 604,363
-------------
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements. 5 -----
<PAGE>
PRUDENTIAL GLOBAL GENESIS FUND, INC.
Portfolio of Investments as of November 30, 1995 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
CORPORATE BONDS--0.3%
- ------------------------------------------------------------
India--0.2%
Gujarat Ambuja Cement
USD$ 380 3.50%, 6/30/99
(Building & Related Industries) $ 475,000
- ------------------------------------------------------------
Singapore--0.1%
SED 173,000 Sembawang Maritime, Ltd.
Convertible Unsecured Loan
Stock, 1.50%, 10/25/98
(Transportation-Shipping) 204,828
-------------
Total corporate bonds
(cost US$614,961) 679,828
-------------
Total long-term investments
(cost US$154,695,637) 181,439,783
-------------
SHORT-TERM INVESTMENTS--2.2%
- ------------------------------------------------------------
REPURCHASE AGREEMENT--2.2%
US$4,178 Joint Repurchase Agreement Account,
5.90%, 12/1/95
(cost US$4,178,000; Note 5) 4,178,000
- ------------------------------------------------------------
Total Investments--95.7%
(cost US$158,873,637; Note 4) 185,617,783
Other assets in excess of
liabilities--4.3% 8,436,802
-------------
Net Assets--100% $ 194,054,585
-------------
-------------
- ---------------
* Non-income producing security.
GDR--Global Depository Receipt.
- --------------------------------------------------------------------------------
</TABLE>
6 See Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities (Unaudited)
PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
November 30, 1995
Investments, at value (cost
$158,873,637)................................................................
.... $185,617,783
Foreign currency, at value (cost
$11,257,142)................................................................
11,037,933
Cash.........................................................................
................................ 3,241
Receivable for investments
sold.........................................................................
..... 4,200,703
Dividends and interest
receivable...................................................................
......... 264,712
Receivable for Fund shares
sold.........................................................................
..... 224,032
------------
Total
assets.......................................................................
....................... 201,348,404
------------
Liabilities
Payable for investments
purchased....................................................................
........ 4,660,669
Payable for Fund shares
reacquired...................................................................
........ 2,015,950
Accrued expenses and other
liabilities..................................................................
..... 302,750
Due to
Manager......................................................................
......................... 163,201
Due to
Distributors.................................................................
......................... 136,076
Withholding taxes
payable......................................................................
.............. 15,173
------------
Total
liabilities..................................................................
....................... 7,293,819
------------
Net
Assets.......................................................................
............................ $194,054,585
------------
------------
Net assets were comprised of:
Common stock, at
par..........................................................................
............ $ 103,003
Paid-in capital in excess of
par..........................................................................
167,185,570
------------
167,288,573
Undistributed net investment
income.......................................................................
75,871
Accumulated net realized gain on investment and foreign currency
transactions............................. 192,162
Net unrealized appreciation on investment and foreign currency
transactions............................... 26,497,979
------------
Net assets, November 30,
1995.........................................................................
....... $194,054,585
------------
------------
Class A:
Net asset value and redemption price per share
($42,950,126 / 2,215,146 shares of common stock issued and
outstanding)................................ $19.39
Maximum sales charge (5% of offering
price)...............................................................
1.02
------------
Maximum offering price to
public..........................................................................
$20.41
------------
------------
Class B:
Net asset value, offering and redemption price per share
($149,314,510 / 7,989,382 shares of common stock issued and
outstanding)............................... $18.69
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($1,789,949 / 95,776 shares of common stock issued and
outstanding).................................... $18.69
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
PRUDENTIAL GLOBAL GENESIS 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 $137,523)............................. $ 1,466,138
Interest.................................... 192,201
-----------
Total income............................. 1,658,339
-----------
Expenses
Management fee, net of waiver of $260,558... 770,752
Distribution fee--Class A................... 56,327
Distribution fee--Class B................... 797,846
Distribution fee--Class C................... 8,155
Custodian's fees and expenses............... 270,000
Transfer agent's fees and expenses.......... 234,000
Reports to shareholders..................... 70,000
Registration fees........................... 44,000
Audit fees and expenses..................... 30,000
Legal fees and expenses..................... 22,000
Directors' fees and expenses................ 12,500
Miscellaneous............................... 12,507
-----------
Total expenses........................... 2,328,087
-----------
Net investment loss............................ (669,748)
-----------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain on:
Investments................................. 2,669,040
Foreign currency transactions............... 736,757
-----------
3,405,797
-----------
Net change in unrealized
appreciation/depreciation on:
Investments (net of change in deferred
Thailand capital gains tax of $30,486)... 8,464,904
Foreign currency transactions............... (981,965)
-----------
7,482,939
-----------
Net gain on investments and foreign
currencies.................................. 10,888,736
-----------
Net Increase in Net Assets
Resulting from Operations...................... $10,218,988
-----------
-----------
</TABLE>
PRUDENTIAL GLOBAL GENESIS 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......... $ (669,748) $ (1,332,713)
Net realized gain on
investment and foreign
currency transactions.... 3,405,797 518,554
Net change in unrealized
appreciation/depreciation
of investments and
foreign currencies....... 7,482,939 (3,534,468)
------------------ ------------
Net increase (decrease) in
net
assets resulting from
operations............... 10,218,988 (4,348,627)
------------------ ------------
Net equalization debits
(credits)................... (30,297) 104,845
------------------ ------------
Dividends to shareholders in excess
of net investment income (Note 1)
Class A..................... -- (163,968)
Class B..................... -- (365,083)
Class C..................... -- (1,822)
------------------ ------------
-- (530,873)
------------------ ------------
Distributions to shareholders
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............... 193,747,067 224,701,575
Net asset value of shares
issued
to shareholders in
reinvestment of dividends
and distributions........ -- 831,367
Cost of shares reacquired... (208,910,013) (225,259,494)
------------------ ------------
Net increase (decrease) in
net assets from Fund
share transactions....... (15,162,946) 273,448
------------------ ------------
Total decrease................. (4,974,255) (4,851,586)
Net Assets
Beginning of period............ 199,028,840 203,880,426
------------------ ------------
End of period.................. $ 194,054,585 $199,028,840
------------------ ------------
------------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
- ----- 8 See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements (Unaudited) 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 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 supervison of the Fund's Board of Directors.
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 $736,757 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.
Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares of the Fund based
upon the relative proportion of net assets of each class at the beginning of the
day.
Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
- --------------------------------------------------------------------------------
9 -----
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
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 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 increase undistributed net investment income by $736,757,
and decrease accumulated net realized gain on investments and foreign currency
transactions by $736,757 for the six months ended November 30, 1995. Net
realized gains and net assets were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund Management, Inc.
(``PMF''). Pursuant to this agreement, PMF has responsibility for all investment
advisory services and supervises the subadviser's performance of such services.
PMF has entered into a subadvisory agreement with The Prudential Investment
Corporation (``PIC''); PIC furnishes investment advisory services in connection
with the management of the Fund. PMF pays for the services of PIC, the
compensation of officers of the Fund, occupancy and certain clerical and
bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
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 six months ended
November 30, 1995, management fees waived amounted to $260,558 ($.02 per share
and .25% of average net assets, annualized).
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 Prudential Securities Incorporated (``PSI''), which acts as
distributor of the Class B shares 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 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 $32,300 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 sales charges
to
PSI and PRUCO Securities Corporation, affiliated broker-dealers, which in turn
paid commissions to salespersons and incurred other distribution costs.
PSI advised the Fund that for the six months ended November 30, 1995, it
received approximately $388,800 in contingent deferred sales charges imposed
upon certain redemptions by Class B and Class C shareholders.
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'')
- ------------------------------------------------------------
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
- --------------------------------------------------------------------------------
- ----- 10
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
$198,300 for the services of PMFS. As of November 30, 1995, approximately
$36,300 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.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended November 30, 1995 aggregated $35,586,657 and
$45,617,836, respectively.
The federal income tax basis of the Fund's investments at November 30, 1995 was
substantially the same as the basis for financial reporting and, accordingly,
net unrealized appreciation for federal income tax purposes was $26,744,146
(gross unrealized appreciation--$42,277,223; gross unrealized
depreciation--$15,533,077).
For federal income tax purposes, the Fund has a capital loss carryforward as of
May 31, 1995 of approximately $607,000 which will expire in 2003. Accordingly,
no capital gains distribution is expected to be paid to shareholders until
future net gains have been realized in excess of such carryforward.
The Fund will elect to treat net capital losses of approximately $1,869,500
incurred in the fiscal year ended May 31, 1995 as having been incurred in the
current 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 November 30, 1995, the Fund
had a .40% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Fund represented $4,178,000 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., 5.90%, in the principal amount of $295,000,000, repurchase
price $295,048,347, due 12/1/95. The value of the collateral including accrued
interest was $301,169,389.
CS First Boston Corporation, 5.91%, in the principal amount of $185,000,000,
repurchase price $185,030,371, due 12/1/95. The value of the collateral
including accrued interest was $188,765,433.
Goldman, Sachs & Co., 5.90%, in the principal amount of $160,025,000, repurchase
price $160,051,226, due 12/1/95. The value of the collateral including accrued
interest was $163,225,834.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 5.89%, in the principal amount of
$35,000,000, repurchase price $35,005,726, due 12/1/95. The value of the
collateral including accrued interest was $35,700,962.
Sanwa Bank Limited, 5.90%, in the principal amount of $75,000,000, repurchase
price $75,012,292, due 12/1/95. The value of the collateral including accrued
interest was $76,500,873.
Smith Barney, Inc., 5.89%, in the principal amount of $295,000,000, repurchase
price $295,048,265, due 12/1/95. The value of the collateral including accrued
interest was $300,900,696.
- ------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
11 -----
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
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......................... 4,958,677 $ 96,425,908
Shares reacquired................... (5,213,991) (101,560,956)
---------- -------------
Net decrease in shares
outstanding before conversion..... (255,314) (5,135,048)
Shares issued upon conversion from
Class B........................... 81,821 1,668,326
---------- -------------
Net decrease in shares
outstanding....................... (173,493) $ (3,466,722)
---------- -------------
---------- -------------
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>
Six months ended November 30, 1995:
Shares sold......................... 5,043,695 $ 96,740,883
Shares reacquired................... (5,581,159) (107,202,597)
---------- -------------
Net decrease in shares
outstanding before conversion..... (537,464) (10,461,714)
Shares reacquired upon conversion
into Class A...................... (84,687) (1,668,326)
---------- -------------
Net decrease in shares
outstanding....................... (622,151) $ (12,130,040)
---------- -------------
---------- -------------
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 Shares Amount
- ------------------------------------ ---------- -------------
<S> <C> <C>
Six months ended November 30, 1995:
Shares sold......................... 30,161 $ 580,276
Shares reacquired................... (7,652) (146,460)
---------- -------------
Net increase in shares
outstanding....................... 22,509 $ 433,816
---------- -------------
---------- -------------
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
---------- -------------
---------- -------------
- ---------------
* Commencement of offering of Class C shares.
</TABLE>
- ------------------------------------------------------------
Note 7. Dividend
On December 7, 1995, the Board of Directors of the Fund announced a dividend
from ordinary income of $.085 per share for Class A, B and C shares. This
dividend is payable on December 15, 1995 to shareholders of record on December
12, 1995.
- --------------------------------------------------------------------------------
12
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
A
- ---------------------------------------------------------------------
Six Months
Ended Year
Ended May 31,
November 30,
- ----------------------------------------------------
1995 1995 1994
1993 1992 1991
------------ ------- -------
------ ------ ------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
<C> <C> <C>
Net asset value(c), beginning of
period............................... $ 18.44 $ 18.75 $ 15.34
$12.62 $11.95 $12.62
------ ------- -------
------ ------ ------
Income from investment operations
Net investment income (loss)(b)......... (.01) -- (.03)
.10 .02 (.03)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... .96 (.21) 3.83
2.62 .65 (.64)
------ ------- -------
------ ------ ------
Total from investment operations..... .95 (.21) 3.80
2.72 .67 (.67)
------ ------- -------
------ ------ ------
Less distributions
Dividends from net investment income.... -- -- (.15)
-- -- --
Dividends in excess of net investment
income............................... -- (.08) --
-- -- --
Distributions paid to shareholders from
net realized gains on investment and
foreign currency transactions........ -- (.02) (.24)
-- -- --
------ ------- -------
------ ------ ------
Total distributions.................. -- (.10) (.39)
-- -- --
------ ------- -------
------ ------ ------
Net asset value, end of period.......... $ 19.39 $ 18.44 $ 18.75
$15.34 $12.62 $11.95
------ ------- -------
------ ------ ------
------ ------- -------
------ ------ ------
TOTAL RETURN (d):....................... 5.15% (0.95)% 25.09%
21.55% 5.61% (5.31)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 42,950 $44,051 $29,221
$3,435 $3,829 $4,059
Average net assets (000)................ $ 45,062 $32,430 $16,909
$3,106 $3,771 $2,569
Ratios to average net assets:
Expenses, including distribution
fees(b)........................... 1.67%(a) 1.42% 1.48%
1.49% 1.50% 2.72%
Expenses, excluding distribution
fees(b)........................... 1.42%(a) 1.17% 1.25%
1.29% 1.30% 2.52%
Net investment income (loss)(b)...... (0.08)%(a) 0.02% (0.17)%
.79% .19% (.61)%
Portfolio turnover rate................. 19% 64% 31%
67% 57% 95%
</TABLE>
- ---------------
(a) Annualized.
(b) Net of expense subsidies and/or fee waivers (all reported periods except
1991).
(c) Calculated based upon average shares outstanding during fiscal period
except 1991.
(d) 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.
- --------------------------------------------------------------------------------
13 -----
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
B
- --------------------------------------------------------------------------
Six Months
Ended
Year Ended May 31,
November 30,
- ---------------------------------------------------------
1995 1995 1994
1993 1992 1991
------------ -------- --------
------- ------- -------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C>
<C> <C> <C>
Net asset value(c), beginning of
period............................... $ 17.84 $ 18.22 $ 14.93
$ 12.38 $ 11.82 $ 12.58
------------ -------- --------
------- ------- -------
Income from investment operations
Net investment income (loss)(b)......... (.08) (.13)
(.16) -- (.07) (.15)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... .93 (.19) 3.74
2.55 .63 (.61)
------------ -------- --------
------- ------- -------
Total from investment operations..... .85 (.32) 3.58
2.55 .56 (.76)
------------ -------- --------
------- ------- -------
Less distributions
Dividends from net investment income.... -- --
(.05) -- -- --
Dividends in excess of net investment
income............................... -- (.03)
- -- -- -- --
Distributions paid to shareholders from
net realized gains on investment and
foreign currency transactions........ -- (.03)
(.24) -- -- --
------------ -------- --------
------- ------- -------
Total distributions.................. -- (.06)
(.29) -- -- --
------------ -------- --------
------- ------- -------
Net asset value, end of period.......... $ 18.69 $ 17.84 $ 18.22
$ 14.93 $ 12.38 $ 11.82
------------ -------- --------
------- ------- -------
------------ -------- --------
------- ------- -------
TOTAL RETURN (d):....................... 4.76% (1.73)%
24.16% 20.60% 4.74% (6.04)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $149,315 $153,670 $174,659
$36,136 $35,644 $40,200
Average net assets (000)................ $159,569 $173,591 $102,451
$31,561 $37,236 $37,689
Ratios to average net assets:(d)
Expenses, including distribution
fees(b)........................... 2.42%(a) 2.17%
2.25% 2.29% 2.30% 3.48%
Expenses, excluding distribution
fees(b)........................... 1.42%(a) 1.17%
1.25% 1.29% 1.30% 2.48%
Net investment income (loss)(b)...... (0.81)%(a) (0.77)%
(0.91)% (.01)% (.57)% (1.45)%
Portfolio turnover rate................. 19% 64%
31% 67% 57% 95%
<CAPTION>
Class C
--------------------------
<S> <C> <C>
August 1,
Six Months 1994(e)
Ended Through
November 30, May 31,
1995 1995
------------ ---------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C>
Net asset value(c), beginning of
period............................... $ 17.84 $ 18.44
------ ---------
Income from investment operations
Net investment income (loss)(b)......... (.08) (.12)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... .93 (.44)
------ ---------
Total from investment operations..... .85 (.56)
------ ---------
Less distributions
Dividends from net investment income.... -- --
Dividends in excess of net investment
income............................... -- (.03)
Distributions paid to shareholders from
net realized gains on investment and
foreign currency transactions........ -- (.01)
------ ---------
Total distributions.................. -- (.04)
------ ---------
Net asset value, end of period.......... $ 18.69 $ 17.84
------ ---------
------ ---------
TOTAL RETURN (d):....................... 4.76% (2.90)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 1,790 $ 1,307
Average net assets (000)................ $ 1,631 $ 862
Ratios to average net assets:(d)
Expenses, including distribution
fees(b)........................... 2.45%(a) 2.27%(a)
Expenses, excluding distribution
fees(b)........................... 1.45%(a) 1.27%(a)
Net investment income (loss)(b)...... (0.86)%(a) (0.90)%(a)
Portfolio turnover rate................. 19% 64%
</TABLE>
- ---------------
(a) Annualized.
(b) Net of expense subsidies and/or fee waivers (all reported periods
except 1991).
(c) Calculated based upon average shares outstanding during fiscal
period except 1991.
(d) 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.
(e) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
14
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive financial
advice through a Prudential Securities financial advisor or Prudential/Pruco
Securities registered representative. Your advisor or representative can
provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help you match
the reward you seek with the risk you can tolerate. And risk can be
difficult to gauge -- sometimes even the simplest investments bear
surprising risks. The educated investor knows that markets seldom move
in just one direction -- there are times when a market sector or
asset class will lose value or provide little in the way of total
return. Managing your own expectations is easier with help from someone
who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help you wade through
the numerous mutual funds available to find the ones that fit your own
individual investment profile and risk tolerance. While the newspapers
and popular magazines are full of advice about investing, they are aimed
at generic groups of people or representative individuals, not at you
personally. Your financial advisor or registered representative will
review your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in your current
portfolio and your risk tolerance -- not just based on the current
investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the bottom are among
the most common investor mistakes. But sometimes it's difficult to hold
on to an investment when it's losing value every month. Your financial
advisor or registered representative can answer questions when you're
confused or worried about your investment, and remind you that you're
investing for the long haul.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
How many times have you read these letters -- or other financial
materials -- and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So
we'll use this space from time to time to explain some of the words you
might have read, but not understood. And if you have a favorite word that
no one can explain to your satisfaction, please write to us.
Basis Point: 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
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Louis A. Weill, 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
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>
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