<PAGE>
(ICON)
Prudential
Global
Genesis
Fund, Inc.
ANNUAL
REPORT
May 31, 1999
(LOGO)
<PAGE>
Prudential Global Genesis Fund, Inc.
Performance at a Glance
Last summer's global economic crisis had a disproportionately
negative impact on the stocks of small firms. Investors prepared
for the worst by fleeing to large, blue-chip, U.S. growth
companies, driving small-company stock prices to historic
lows vis a vis large-cap stocks (stocks of firms with high
total market value). Although investor sentiment changed
toward the end of our reporting period, the Lipper Average
showed a 6% decline for the 12 months ended May 31, 1999.
The Prudential Global Genesis Fund fared even worse primarily
because its holdings tended to be among the smaller of the small
companies. However, our holdings particularly benefited from
the recovery of investor confidence, and we were ahead of the
Lipper Average for 1999 through May. Our strong stock selection
in Japan and the United States and our global emphasis on
higher-quality small companies helped.
<TABLE>
Cumulative Total Returns1 As of 5/31/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -9.25% 24.76% N/A 92.93%
Class B -9.92 20.04 94.08% 141.26
Class C -9.92 N/A N/A 18.61
Class Z -9.01 N/A N/A 14.24
Lipper Global
Small-Cap Fund Avg.3 -5.90 57.78 125.20 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 6/30/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -3.54% 4.77% N/A 7.01%
Class B -4.21 4.85 7.16% 8.23
Class C -1.22 N/A N/A 4.39
Class Z 1.79 N/A N/A 7.34
</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.
1 Source: Prudential Investments Fund Management LLC and
Lipper, 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 charge 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 B
shares will automatically convert to Class A shares,
on a quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months.
Class C shares bought before November 2, 1998, have
a 1% CDSC if sold within one year. Class Z shares are
not subject to a sales charge or distribution and
service (12b-1) fee.
2 Inception dates: Class A, 1/22/90; Class B, 1/29/88 ;
Class C, 8/1/94; Class Z, 9/16/96.
3 Lipper average returns are for all funds in each share
class for the one-, five-, and ten-year periods in the
Global Small-Cap Fund category.
***Lipper Since Inception returns are 117.89% for Class
A, 177.57% for Class B, 58.85% for Class C, and 14.35%
for Class Z, based on all funds in each share class.
How Investments Compared
(As of 5/31/99)
(GRAPH)
Source: Lipper, Inc. 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
returns 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 have been historically 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.
U.S. Taxable Money 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>
Portfolio Manager's Report
(PHOTO)
Steve Auth
Fund Manager
Investment Goals and Style
The Prudential Global Genesis Fund seeks to achieve
long-term growth of capital by investing primarily in
common stocks and other equity securities of smaller
foreign and U.S. companies. The Fund is subject to all
the risks associated with foreign investing, including
currency, political and social risks, and potential
illiquidity. There can be no assurance that the Fund
will achieve its investment objective.
Performance Review
A change in investor sentiment
We believe that toward the end of our reporting period,
there was a significant shift in our favor in the investing
environment. For some time now, deep uncertainties about the
economic future have made investors unusually conservative.
In 1997, Asian economies contracted sharply: Japan's consumer
tax increase triggered a recession, while the rest of the
region saw a flight of foreign investment and credit after
Thailand devalued its currency. In mid-1998, Russia defaulted
on some of its debt, threatening a global financial crisis.
Investors were afraid the global economy would spiral down,
and they avoided as much risk as they could. They particularly
avoided the smaller growth-oriented companies we favor. Our
performance suffered.
As we neared the end of 1998, it became clearer that
the U.S. economy would not be significantly hampered by
overseas events, and that Europe would continue its
economic growth, albeit at a somewhat slower pace.
Another jolt came early in 1999 when Brazil devalued
its currency, but it created surprisingly little turmoil
either domestically or in the rest of Latin America. This
was a critical cue about the stability of the global economy.
Investors once again looked for opportunities to profit from
growth. They turned to the relatively inexpensive stocks of
smaller companies, at first in the United Kingdom and Japan,
and later in the United States. Over the last three months of
our reporting period, our return was a positive 11%, well ahead
of the Lipper Average for that period. In our view, the
resurgence of economic confidence is good for the dynamic
companies in which we invest and also good for their stocks.
We believe we are emerging from what has been a very difficult
period.
We also were hurt by cheap oil
The Asian economic slowdown and the return of Iraqi oil shipments
pushed oil prices well below profitable levels for most producers.
Oil service stocks, whose prospects are related to drilling activity,
plummeted. Our shares of Veritas, Rowan, and British Borneo pulled
down our return significantly in the first half of our reporting
period and were among our largest losses of the year. We sold
all three.
Wireless telecoms and the Internet: rapid growth
We believe certain themes have worldwide growth potential.
One is wireless telecommunications. Communication is a basic
human need, and most of the world has an inadequate infrastructure
to meet telephone demand. Wireless is cheaper and faster than
installing
<PAGE>
wires, is more flexible, lends itself better to entrepreneurial
activity, and is more convenient for customers. Western Wireless
and Vanguard Cellular Systems were among the largest contributors
to our annual return, each more than doubling in the year. We
took our profits on Vanguard. We also had a nice return on
Clearnet Communications, a Canadian firm, which was among
our 10 largest holdings at the end of our reporting period.
A related theme is the growth of the Internet. Two of the
largest contributors to our return during this period were
Internet related: MiningCo.com (now About.com)--an online World
Wide Web directory, and TeleBanc Financial--an electronic bank
that is being acquired by E*Trade. We took our profits on the
former. On the other hand, we lost money on P-Com, which makes
a radio-based alternative to networking cable. We sold the last
of our shares after the end of the reporting period.
Looking forward, Commscope is among our 10 largest holdings. It
manufactures the copper cables used for home connections. We
believe such Internet infrastructure companies are a relatively
inexpensive way to benefit from Internet growth.
Portfolio Composition
Sectors expressed as a percentage of net assets as of 5/31/99
U.S. & Canada 53%
Continental Europe 19
United Kingdom 12
Japan 9
Asia/Pacific Basin (ex-Japan) 4
Latin America 2
Cash & Equivalents 1
Restructuring uses outsourcers
As more businesses are forced to compete with global
competitors, productivity gains become very important.
Many of our holdings help other companies focus on their
core competencies for greater efficiency. For example, one
of our five largest holdings is American Management Systems.
It customizes software systems, primarily for telecommunications
companies and the U.S. government.
We also have slightly smaller positions in Mailwell and Remec,
both of which we bought very inexpensively. Mailwell sells and
delivers office supplies. That industry is consolidating, and
Mailwell is growing rapidly through acquisitions. Remec is a
contract manufacturer of microwave equipment for telecommunications
companies and the U.S. government. Contract manufacturers allow
technical companies to focus on their design and marketing
strengths, outsourcing the actual production.
More leisure spending presents opportunity
We believe the markets for family-oriented recreation are
growing as economic progress brings more consumer wealth and
leisure time. Our two largest holdings at period end were
Imax--creator of a unique large-image movie system, and
Family Golf Centers--the largest golf range operator in
North America. Family Golf has been acquiring smaller
operators, and it reported declining sales at sites
acquired in 1998. Its stock price dropped, and we took
advantage of the opportunity to increase our holdings.
Sites it owned before 1998 are performing well; we expect
it to digest its acquisitions in 1999.
Five Largest Holdings
Expressed as a percentage of net assets as of 5/31/99
Imax Corp. 1.8%
Electronic Components
Family Golf Centers, Inc. 1.3
Leisure & Tourism
Dentsply International, Inc. 1.3
Dental Supplies
American Mgmt. Systems, Inc. 1.3
Data Processing & Reproduction
Eaton Vance Corp. 1.2
Financial Services
1
<PAGE>
Review Cont'd.
We benefited from our Japanese and U.S. stock selection
In Japan, we have a long-term focus on the high-quality stocks
that we believe are models for what Japan's economy will look
like in the 21st century. "High quality," for stocks, means
strong balance sheets and a focus on profits--not just market
share. For example, a Japanese leisure company--Avex--was among
the larger contributors to our return. Avex is a music production
company targeted at the high-spending teen and young adult market.
These groups have a lot of money to spend in Japan, and Avex has
targeted their taste for upbeat pop music.
U.S. small companies are very cheap
Given the global opportunities, why are half our assets
invested in North America? In the 12-month period ended
March 1999 (when U.S. small companies began to recover),
the Russell 2000 Index of small-company stocks had fallen
by 16.3% while the Salomon EMI World Index had declined by
only 8.6%. There are values in small-company stocks around
the world, and some of the greatest values now are in the
United States: good-quality growth companies selling at
value stock prices. That's why our five largest holdings
are in the United States. In addition to firms we have
mentioned, they include Dentsply (a dental equipment
and supply company with 1998 net income growth of 53%)
and Eaton Vance (an investment manager with 1998 net
income growth of 24%).
Looking Ahead
The world is a safer place
We have reduced our European exposure to finance a greater focus
on other regions. As investors come to believe the world is a
safer place, we expect them to continue their movement into
the inexpensive U.S. small-company stocks. Such stocks rose
sharply in the last months of our reporting period; we believe
this is just the beginning because they are still bargains.
We expect the trend toward better value in growth stocks also
to benefit Latin American and Asian emerging market stocks.
The discount that investors have demanded for the greater
volatility in these regions should continue to shrink from
the exceptionally high levels of 1998.
We believe the Japanese economy may be bottoming, and
companies there may be beginning the long-needed process
of restructuring. We are focusing on young firms that
reflect the new profit- and consumer-oriented Japanese
economy, with a few restructuring stories as well. Foreign
investors have returned to Japan, but the early money has
gone to the familiar. We expect that investors will soon
also recognize the strength of the new economy, and the
share prices of these lesser-known companies will
approach their true value.
2
<PAGE>
A Message to Our Shareholders July 16, 1999
(PHOTO)
Dear Shareholder:
In the last couple of years, the recurring possibility of a
global economic crisis caused investors to focus on securities
they perceived to be safe. In the equity market, they focused on
the stocks of a handful of very large companies that were perceived
to be well-buffeted from an economic slowdown. These stocks became
very expensive--out of proportion to their earnings expectations.
As a result, there was a substantial disparity in value between
large and small companies and between growth and value stocks.
Since earlier this year, however, that gap has narrowed
significantly amid news of strong U.S. economic growth
and faster-than-expected global stability. While the
long-term prospects of U.S. growth stocks are still
very good, many of the smaller and economically sensitive
companies favored by our value managers now are posting
very attractive returns.
In the bond market, U.S. Treasuries and select European
government bonds were the major beneficiaries of the flight
to quality that occurred in recent years. When this trend
reversed itself toward the end of 1998, other sectors of
the bond market rebounded. However, with a strong U.S.
economy comes the threat of higher inflation, which erodes
the value of bonds' fixed interest payments. The recent
inflation concerns jolted the bond market and helped send
long-term interest rates to a 19-month high.
The winds of change in the equity market and the recent
turbulence in the bond market not only highlight the value
of professional portfolio management, but they illustrate
why investors should have a well-diversified asset allocation
strategy. It is also a good practice to rebalance your holdings,
when necessary, to keep your asset allocation consistent with
your long-term objectives and risk tolerance. A properly
diversified portfolio of value- and growth-oriented equity
funds, domestic and international bond funds, and money
market funds could help you weather inevitable market
turbulence and achieve more consistent returns over time.
Prudential offers a wide range of mutual funds to help
our shareholders diversify, as well as several balanced
and diversified funds to allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual funds.
Sincerely,
John R. Strangfeld
President
Prudential Global Genesis Fund, Inc.
3
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--97.7%
COMMON STOCKS--96.6%
- ------------------------------------------------------------
Australia--0.9%
19,000 Broken Hill Proprietary Co., Ltd.
(Oil & Gas
Exploration/Production) $ 194,913
57,232 Fosters Brewing Group Ltd. (Foods) 162,010
165,600 Pasminco Ltd. (Oil & Gas
Exploration/Production) 162,019
13,800 Rio Tinto Ltd.(a) (Oil & Gas
Exploration/Production) 193,523
------------
712,465
- ------------------------------------------------------------
Austria--0.3%
4,875 Boehler-Uddeholm AG (Steel & Metals) 237,907
- ------------------------------------------------------------
Belgium--0.5%
10,687 Union Miniere S.A. (Steel & Metals) 391,463
- ------------------------------------------------------------
Brazil--0.2%
6,300,000 Companhia Siderurgica Nacional(a)
(Steel & Metals) 119,307
- ------------------------------------------------------------
Canada--0.3%
19,500 Sierra Wireless, Inc.(a)
(Telecommunications) 195,794
- ------------------------------------------------------------
France--5.3%
2,695 Atos S.A.(a) (Data Processing &
Reproduction) 238,719
9,831 Carbone Lorraine S.A. (Industrial
Components) 495,647
1,588 Castorama Dubois (Industrial
Components) 387,236
5,644 Compagnie Generale de Geophysique
S.A. (Oil & Gas
Exploration/Production) $ 259,379
2,369 Geodis (Transportation/Shipping) 172,564
2,979 Groupe SEB S.A. (Consumer Goods) 238,264
22,963 Lagardere S.C.A. (Diversified
Industries) 896,169
16,039 Lectra Systemes(a) (Computer
Software & Services) 119,507
5,862 Pechiney S.A.(a) (Diversified
Industries) 227,003
10,111 Rhodia S.A. (Chemicals) 171,853
15,954 Societe Generale D'Enterprises
S.A.(a) (Construction) 760,291
3,294 Vallourec S.A. (Steel & Metals) 115,338
------------
4,081,970
- ------------------------------------------------------------
Germany--1.8%
26,643 Fag Kugelfischer Georg Schaefer AG
(Basic Industries-Manufacturing) 249,882
328 Linde AG (Machinery & Engineering) 191,071
1,421 Mobil AG (Oil & Gas Services) 114,023
2,890 Pfandbriefbank Hypothek (Banking) 249,968
7,063 SGL Carbon AG (Industrial
Components) 493,144
1,576 Sixt AG (Auto Related) 115,786
------------
1,413,874
- ------------------------------------------------------------
Hong Kong--1.0%
166,000 Amoy Properties Ltd. (Real Estate) 137,000
278,000 China Merchants Direct Investments
Ltd. (Holding Company) 179,245
2,021,000 Lung Kee (Bermuda) Holdings Ltd.
(Industrial Components) 252,796
300,000 Shun Tak Holdings Ltd. (Holding
Company) 93,814
43,500 Wing Hang Bank Ltd. (Banking) 122,847
------------
785,702
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Indonesia--0.3%
3,839,000 PT Bank Internasional Indonesia
(Banking) $ 106,376
370,000 PT Bank Pan Indonesia Tbk (Banking) 59,237
2,000 PT Indosat (Persero) Tbk
(Telecommunication Services) 4,064
93,500 PT Ramayana Lestari Sentosa Tbk
(Retail) 50,665
74,900 PT Telekomunikasi Indonesia
(Telecommunication Services) 34,821
------------
255,163
- ------------------------------------------------------------
Ireland--1.5%
19,305 Allied Irish Banks PLC (Banking) 254,691
42,823 Anglo Irish Bank Corp. PLC (Banking) 116,027
12,446 CRH PLC (Building & Products) 212,383
33,004 DCC PLC (Diversified Industries) 268,269
100,041 Jefferson Smurfit Group PLC
(Containers & Packaging) 260,632
------------
1,112,002
- ------------------------------------------------------------
Italy--1.0%
2,920 Banca Popolare di Brescia (Banking) 115,175
43,250 Bulgari SpA (Retail) 260,960
17,119 Class Editori SpA (Printing) 143,610
274,274 Finmeccanica SpA (Aerospace/Defense) 251,236
------------
770,981
- ------------------------------------------------------------
Japan--8.9%
5,700 Aucnet, Inc. (Auto Related) 187,623
3,600 Avex, Inc. (Consumer Goods) 349,572
1,100 Bellsystem, Inc. (Communications) 376,563
13,000 C Uyemura & Co., Ltd. (Chemicals) 427,913
21,000 Daikin Industries Ltd. (Diversified
Industries) 188,364
2,900 Fancl Corp. (Consumer Goods) 341,261
10,900 FP Corp. (Miscellaneous) 347,128
2,860 Fuji S Ware ABC (Technology) 144,036
3,400 Fuji Seal, Inc. (Containers &
Packaging) 307,768
22,000 Ibiden Co., Ltd. (Electronic
Components) $ 354,839
5,800 Itoen Ltd. (Beverages) 331,715
25,000 Kawasumi Laboratories, Inc. (Medical
Technology) 348,914
11,518 Ministop Co., Ltd. (Foods) 295,722
11,100 Misumi Corp. (Industrial Components) 358,978
7,400 Nichiha Corp. (Construction) 79,225
4,330 Nichii Gakkan Co. (Health Services) 340,285
6,700 Riso Kagaku Corp. (Office Equipment
& Supplies) 308,756
2,100 Ryohin Keikaku Co., Ltd. (Retail) 411,117
57,000 S.T. Chemical Co., Ltd. (Chemicals) 399,638
5,500 Shimamura Co., Ltd. (Retail) 325,420
28,000 Sumitomo Bakelite Co., Ltd.
(Chemicals) 211,982
6,200 World Co., Ltd. (Textiles & Apparel) 373,980
------------
6,810,799
- ------------------------------------------------------------
Mexico--0.7%
21,600 Carso Global Telecom (Finance) 120,123
80,400 Cifra S.A. de C.V.(a) (Retail) 139,934
29,200 Geo Puebla S.A. de C.V. (Real
Estate) 111,267
435,200 Grupo Financiero Bancomer(a)
(Banking) 148,802
------------
520,126
- ------------------------------------------------------------
Netherlands--2.1%
5,644 Aalberts Industries N.V. (Industrial
Components) 123,514
4,064 Cap Gemini N.V. (Computer Software &
Services) 194,603
5,121 Getronics N.V. (Technology) 197,454
6,987 Koninklijke Ahrend N.V. (Office
Equipment & Supplies) 125,964
3,284 Koninklijke Hoogovens N.V. (Steel &
Metals) 126,966
16,105 Nutreco Holding N.V. (Basic
Industries-Manufacturing) 595,797
4,345 United Pan-Europe Communications
N.V. (Telecommunications) 266,015
------------
1,630,313
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Norway--0.5%
88,950 Agresso Group ASA (Computer Software
& Services) $ 266,641
11,646 Tandberg Television ASA
(Telecommunication Services) 119,314
------------
385,955
- ------------------------------------------------------------
The Philippines--0.2%
232,400 Ayala Land, Inc. (Real Estate) 74,820
16,700 Manila Electric Co. (Electrical
Power) 57,495
------------
132,315
- ------------------------------------------------------------
South Korea--0.7%
6,400 Housing & Commercial Bank, Korea
(Banking) 175,402
12,250 Kookmin Bank (Banking) 185,426
8,800 Samsung Electronics(a) (Electronics) 186,263
------------
547,091
- ------------------------------------------------------------
Spain--1.8%
8,095 Aldeasa S.A. (Retail) 242,529
33,015 Indra Sistemas S.A.
(Telecommunications) 312,053
34,928 NH Hoteles S.A. (Leisure & Tourism) 445,881
195,561 Tubacex S.A. (Steel & Metals) 356,640
------------
1,357,103
- ------------------------------------------------------------
Sweden--1.3%
14,710 Enator AB (Computer Software &
Services) 370,122
10,554 Mo och Domsjo AB (Containers &
Packaging) 250,220
12,195 NetCom Systems AB (Telecommunication
Services) 370,619
------------
990,961
- ------------------------------------------------------------
Switzerland--2.4%
1,758 Mikron Holding AG(a) (Machinery &
Engineering) 407,419
326 PubliGroupe S.A. (Advertising) $ 198,481
580 Saurer AG(a) (Machinery &
Engineering) 292,373
178 Stratec Holding AG(a) (Medical
Technology) 309,388
416 Sulzer AG (Diversified Industries) 243,200
543 The Swatch Group AG (Consumer Goods) 359,037
------------
1,809,898
- ------------------------------------------------------------
Thailand--0.5%
7,300 Banpu Public Co., Ltd. (Oil & Gas
Exploration/Production) 17,109
17,800 BEC World Public Co., Ltd. (Media) 93,508
64,400 Electricity Generating Co., Ltd.(a)
(Electrical Power) 137,058
34,100 Thai Farmers Bank Public Co., Ltd.
(Banking) 93,701
32,420 Thai Storage Battery Public Co.,
Ltd. PLC (Auto Related) 27,512
------------
368,888
- ------------------------------------------------------------
United Kingdom--11.7%
119,612 Aegis Group PLC (Media) 233,672
187,273 Aggregate Industries PLC (Building &
Products) 235,406
24,238 Alliance Unichem PLC (Drugs &
Medical Supplies) 175,917
59,328 Arcadia Group PLC (Retail) 231,805
49,552 Arriva PLC (Auto Related) 294,379
51,525 Associated British Ports Holdings
PLC (Transportation/Shipping) 227,719
84,973 Billiton PLC (Steel & Metals) 265,331
33,183 Bodycote International PLC
(Diversified Industries) 446,342
15,216 Britannic PLC (Insurance) 239,755
26,827 British Energy PLC (Electrical
Power) 238,847
53,100 Capita Group PLC (Merchandising) 525,054
54,202 Cattles PLC (Financial Services) 297,268
13,053 Dixons Group PLC(a) (Electrical
Goods) 237,026
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United Kingdom (cont'd.)
39,254 Dorling Kindersley Holdings PLC
(Printing) $ 234,458
11,652 EMAP PLC (Communications) 244,238
112,862 Finelist Group PLC (Auto Related) 361,452
41,142 First Group PLC (Transportation) 239,147
31,230 Geest PLC (Foods) 252,543
66,524 Headlam Group PLC
(Distribution/Wholesalers) 407,457
25,265 ITNET PLC (Technology) 135,935
49,258 Jarvis PLC (Construction) 370,721
38,359 Kwik-Fit Holdings PLC (Auto Related) 336,605
39,976 Lex Service PLC (Auto Related) 359,436
154,630 Mayflower Corp. PLC (Auto Related) 484,075
84,888 Mowlem (John) & Co. PLC
(Construction) 198,459
21,300 Northern Rock PLC (Financial
Services) 176,848
29,444 NXT PLC (Technology) 234,330
70,973 Securicor PLC (Diversified
Industries) 636,434
10,851 Sema Group PLC (Computer Software &
Services) 92,960
87,902 Skillsgroup PLC (Computer Software &
Services) 371,600
147,614 Skyepharma PLC(a) (Drugs & Medical
Supplies) 134,733
------------
8,919,952
- ------------------------------------------------------------
United States--52.7%
48,900 Advanced Lighting Solutions, Inc.(a)
(Building & Construction) 354,525
12,500 Aerial Communications, Inc.(a)
(Cellular Communications) 135,938
5,400 Alpharma, Inc. (Medical Technology) 137,855
38,800 Alternative Resources Corp.(a)
(Miscellaneous) 295,850
32,600 Alterra Healthcare Corp.(a) (Health
Services) 399,350
30,200 American Management Systems, Inc.(a)
(Data Processing & Reproduction) 958,850
15,300 Amerin Corp.(a) (Insurance) 411,187
15,500 AmeriSource Health Corp.(a) (Drugs &
Medical Supplies) 458,219
51,800 Amkor Technology, Inc.(a)
(Semiconductor & Related Devices) 479,150
15,100 Applied Power, Inc. (Basic
Industries--Manufacturing) $ 366,175
25,700 Architel Systems Corp.(a) (Computer
Software & Services) 197,568
22,400 ARM Financial Group, Inc. (Financial
Services) 336,000
26,000 Arrow Electronics, Inc. (Electronic
Components) 451,750
32,400 Billing Concepts Corp. (Commercial
Services) 405,000
5,000 Black Box Corp. (Computer Software &
Services) 228,125
109,600 Brightpoint, Inc.(a)
(Distribution/Wholesalers) 623,350
40,400 Capital Senior Living Communities LP
(Health Services) 439,350
5,000 Carramerica Realty Corp. (Real
Estate) 124,688
11,800 CBRL Group, Inc. (Restaurants) 204,287
68,300 Cellstar Corp.(a)
(Distribution/Wholesalers) 533,594
12,100 Centerpoint Properties Trust (Real
Estate) 434,087
4,900 CIA de Telecomunicaciones de Chile
S.A. (ADR) (Telecommunications) 106,575
74,500 Clearnet Communications, Inc.
(Cellular Communications) 898,656
33,300 Commscope, Inc. (Communications) 874,125
8,700 Compania Anon Nacl Tele De Vez (ADR)
(Telecommunications) 202,819
10,400 Computer Horizons Corp.(a)
(Technology) 190,450
10,300 Cytyc Corp.(a) (Medical Technology) 213,725
35,900 DENTSPLY International, Inc. (Dental
Supplies) 969,300
8,500 Devon Energy Corp. (Oil & Gas
Exploration/Production) 295,375
11,700 Dollar Tree Stores, Inc.(a) (Retail) 393,412
30,200 Eaton Vance Corp. (Financial
Services) 924,875
7,500 Electro Scientific Industries,
Inc.(a) (Electronic Components) 281,250
106,950 Family Golf Centers, Inc.(a)
(Leisure & Tourism) 972,577
14,700 Financial Security Assurance
Holdings Ltd. (Financial
Services) 834,225
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States (cont'd.)
31,700 Foodmaker, Inc.(a) (Restaurants) $ 855,900
12,800 Galileo Technology Ltd.(a)
(Semiconductor & Related Devices) 398,400
33,300 Gaylord Container Corp.(a)
(Containers & Packaging) 278,887
12,900 Graco, Inc. (Machinery &
Engineering) 421,669
6,100 Grupo Televisa S.A. (ADR)(a) (Media) 255,056
69,950 HA-LO Industries, Inc.(a)
(Information Services) 843,772
12,500 Healthcare Financial Partners, Inc.
(Financial Services) 421,875
9,500 Henry Schein, Inc.(a) (Health Care) 286,781
15,500 Hollywood Entertainment Corp.(a)
(Retail) 399,125
15,100 Hyperion Solutions Corp.(a)
(Computer Software & Services) 234,994
15,700 ICG Communications, Inc.(a)
(Telecommunications) 299,281
60,900 Imax Corp.(a) (Electronic
Components) 1,339,800
24,500 Invivo Corp.(a) (Health Care) 294,000
300 Juno Online Services, Inc.(a)
(Computer Software & Services) 3,675
20,800 Kilroy Realty Corp.(a) (Real Estate) 514,800
17,900 Lam Research Corp.(a) (Semiconductor
& Related Devices) 496,725
18,600 Liberty Property Trust (Real Estate) 448,725
62,400 Mail-Well, Inc.(a) (Printing) 924,300
14,800 Marine Drilling Co., Inc.(a) (Oil &
Gas Exploration/Production) 212,750
3,400 MarketWatch.com, Inc.(a)
(Information Services) 176,375
20,529 Medical Assurance, Inc.(a)
(Insurance) 573,529
3,800 Medical Manager Corp.(a) (Medical
Technology) 188,100
38,900 Merkert American Corp.(a) (Foods) 413,312
18,700 Modis Professional Services, Inc.
(Commercial Services) 275,825
7,400 Mylan Laboratories, Inc. (Drugs &
Medical Supplies) 187,775
14,800 National Data Corp. (Computer
Software & Services) 696,525
80,400 Natural Microsystems Corp.(a)
(Telecommunications) 487,425
13,700 Network Associates, Inc.(a)
(Computer Software & Services) $ 201,219
7,596 New Holland N.V. (Machinery &
Engineering) 121,137
13,600 Newfield Exploration Co.(a) (Oil &
Gas Exploration/Production) 345,100
24,800 Nichols Research Corp.(a)
(Electronics) 502,200
22,000 Northwest Pipe Co.(a) (Steel &
Metals) 363,000
1,800 Novellus Systems, Inc.(a)
(Semiconductor & Related Devices) 87,863
20,800 Optimal Robotics Corp.(a)
(Technology) 187,200
48,300 P.Com, Inc. (Network Systems) 212,822
27,700 Pairgain Technologies, Inc.(a)
(Telecommunications) 344,519
10,300 Parexel International Corp.(a)
(Medical Technology) 246,556
12,200 Parkway Properties, Inc. (Real
Estate) 403,362
3,700 RCN Corp. (Chemicals) 153,781
67,100 Remec, Inc. (Aerospace/Defense) 872,300
40,800 Renaissance Worldwide, Inc.
(Information Services) 295,800
21,300 Res-Care, Inc.(a) (Health Services) 441,975
2,400 Safeguard Scientifics, Inc.
(Technology) 175,500
45,600 Scientific Games Holdings Corp.(a)D
(Consumer Goods) 817,950
17,300 Skywest, Inc. (Airlines) 402,225
11,200 Stewart Enterprises, Inc.
(Miscellaneous) 206,500
13,600 Synopsys, Inc.(a) (Technology) 603,500
10,200 Tech Data Corp.(a)
(Distribution/Wholesalers) 375,169
3,440 Telebanc Financial Corp.(a)
(Financial Services) 228,760
6,200 Telecomunicacoes Brasileiras S.A.
(ADR)(a) (Telecommunications) 517,700
1,800 Telefonos de Mexico S.A. (ADR)(a)
(Telecommunications) 143,888
6,800 Teligent, Inc.(a) (Telecommunication
Services) 334,050
15,800 The BISYS Group, Inc.(a) (Data
Processing & Reproduction) 867,519
15,200 The Cheesecake Factory, Inc.
(Restaurants) 419,900
7,500 The PMI Group, Inc. (Insurance) 438,750
8,300 Tower Automotive, Inc.(a) (Auto
Related) 189,862
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States (cont'd.)
5,800 Twinlab Corp. (Foods) $ 53,288
11,000 United Natural Foods, Inc. (Foods) 294,250
7,100 USWeb Corp.(a) (Commercial Services) 180,163
62,100 Vari-Lite International, Inc.(a)
(Electrical Equipment) 143,606
9,500 Visual Networks, Inc.(a) (Computers) 280,250
8,000 Voicestream Wireless Corp.(a)
(Telecommunication Services) 218,500
21,600 Western Wireless Corp.(a)
(Telecommunication Services) 529,200
16,000 Whole Foods Market, Inc. (Foods) 664,000
14,800 Windmere-Durable Holdings, Inc.
(Consumer Goods) 194,250
4,000 Worldgate Communications, Inc.(a)
(Technology) 148,000
2,500 Zebra Technologies Corp.(a)
(Commercial Services) 80,313
------------
40,347,570
------------
Total common stocks
(cost US$69,665,882) 73,897,599
------------
PREFERRED STOCKS--1.1%
- ------------------------------------------------------------
Brazil--0.6%
11,800 Companhia Vale do Rio Doce(a) (Oil &
Gas Exploration/Production) 207,794
1,980,000 Petroleo Brasileiro S.A.(a) (Oil &
Gas Exploration/Production) 280,081
------------
487,875
- ------------------------------------------------------------
Germany--0.5%
6,118 Fielmann AG (Retail) 238,446
677 Fresenius AG (Medical Technology) 105,826
------------
344,272
Total preferred stocks
(cost US$887,146) 832,147
------------
WARRANTS(a)--0.0%
------------------------------------------------------------
Canada--0.0%
6,600 Sedna Geotech, Inc.
Expiring 10/23/99 @ CAD 0 (Oil & Gas
Exploration/Production) $ 0
- ------------------------------------------------------------
Hong Kong--0.0%
149,200 Innovative International Holdings
Ltd.
Expiring 8/31/99 @ HKD .01 (Auto
Related) 192
------------
Total warrants
(cost US$0) 192
------------
RIGHTS--0.0%
- ------------------------------------------------------------
Portugal--0.0%
4,467 BPI-SGPS S.A.
Expiring 6/18/99 @ EUR 6.97
(Banking) 31,282
- ------------------------------------------------------------
South Korea--0.0%
1,745 Samsung Electronics
Expiring 6/15/99 @ KRW 3,900
(Electronics) 5,739
------------
Total rights
(cost US$0) 37,021
------------
Total long-term investments
(cost US$70,553,028) 74,766,959
------------
- ------------------------------------------------------------
Total Investments--97.7%
(cost US$70,553,028; Note 4) 74,766,959
Other assets in excess of
liabilities--2.3% 1,754,893
------------
Net Assets--100% $ 76,521,852
------------
------------
</TABLE>
- ---------------
D All or partial amount of security is segregated as collateral for financial
futures transactions. Aggregate market value of $760,550 segregated at
5/31/99.
(a) Non-income producing security.
ADR-American Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as
of May 31, 1999 PRUDENTIAL GLOBAL GENESIS FUND, INC.
- ------------------------------------------------------------
The industry classification of portfolio holdings and other net assets in excess
of liabilities shown as a percentage of net assets as of May 31, 1999 was as
follows:
Financial Services................................ 4.2%
Computer Software & Services...................... 3.9
Diversified Industries............................ 3.8
Telecommunications................................ 3.8
Retail............................................ 3.5
Electronic Components............................. 3.2
Auto Related...................................... 3.1
Consumer Goods.................................... 3.0
Real Estate....................................... 2.9
Oil & Gas Exploration/Production.................. 2.8
Foods............................................. 2.8
Industrial Components............................. 2.8
Data Processing & Reproduction.................... 2.7
Technology........................................ 2.6
Steel & Metals.................................... 2.6
Distribution/Wholesalers.......................... 2.5
Insurance......................................... 2.2
Banking........................................... 2.2
Health Services................................... 2.1
Telecommunication Services........................ 2.1
Medical Technology................................ 2.0
Communications.................................... 2.0
Restaurants....................................... 1.9
Semi-Conductor & Related Devices.................. 1.9
Machinery & Engineering........................... 1.9
Leisure & Tourism................................. 1.9
Construction...................................... 1.8
Chemicals......................................... 1.8
Information Services.............................. 1.7
Printing.......................................... 1.7
Basic Industries-Manufacturing.................... 1.6%
Aerospace/Defense................................. 1.5
Containers & Packaging............................ 1.4
Cellular Communications........................... 1.4
Dental Supplies................................... 1.3
Drugs & Medical Supplies.......................... 1.2
Commercial Services............................... 1.2
Miscellaneous..................................... 1.1
Electronics....................................... 0.9
Media............................................. 0.8
Health Care....................................... 0.8
Merchandising..................................... 0.7
Building & Products............................... 0.6
Electrical Power.................................. 0.5
Airlines.......................................... 0.5
Transportation/Shipping........................... 0.5
Textiles & Apparel................................ 0.5
Building & Construction........................... 0.5
Office Equipment and Supplies..................... 0.5
Holding Companies................................. 0.4
Computers......................................... 0.4
Beverages......................................... 0.4
Transportation.................................... 0.3
Electrical Goods.................................. 0.3
Network Systems................................... 0.3
Advertising....................................... 0.2
Electrical Equipment.............................. 0.2
Finance........................................... 0.2
Oil & Gas Services................................ 0.1
------
Total Investments................................. 97.7
Other assets in excess of liabilities............. 2.3
------
Net Assets........................................ 100.0%
------
------
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets May 31, 1999
<S> <C>
Investments, at value (cost $70,553,028)..................................................................... $74,766,959
Foreign currency, at value (cost $1,608,637)................................................................. 1,594,998
Cash......................................................................................................... 560,185
Receivable for investments sold.............................................................................. 2,296,340
Forward currency contracts - net amount receivable from counterparties....................................... 574,599
Dividends and tax reclaim receivable......................................................................... 178,640
Receivable for Fund shares sold.............................................................................. 24,261
Prepaid expenses and other assets............................................................................ 2,096
------------
Total assets.............................................................................................. 79,998,078
------------
Liabilities
Payable for investments purchased............................................................................ 2,633,387
Forward currency contracts - net amount payable to counterparties............................................ 311,163
Accrued expenses and other liabilities....................................................................... 252,901
Payable for Fund shares purchased............................................................................ 160,194
Management fee payable....................................................................................... 66,412
Distribution fee payable..................................................................................... 46,281
Withholding taxes payable.................................................................................... 5,888
------------
Total liabilities......................................................................................... 3,476,226
------------
Net Assets................................................................................................... $76,521,852
------------
------------
Net assets were comprised of:
Common stock, at par...................................................................................... $ 59,512
Paid-in capital in excess of par.......................................................................... 88,205,341
------------
88,264,853
Distributions in excess of net investment income.......................................................... (20,003 )
Accumulated net realized loss on investments and foreign currency transactions............................ (16,175,180 )
Net unrealized appreciation on investments and foreign currency translations.............................. 4,452,182
------------
Net assets, May 31, 1999..................................................................................... $76,521,852
------------
------------
Class A:
Net asset value and redemption price per share
($30,577,544 / 2,235,891 shares of common stock issued and outstanding)................................ $13.68
Maximum sales charge (5% of offering price)............................................................... .72
------------
Maximum offering price to public.......................................................................... $14.40
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($44,890,291 / 3,632,408 shares of common stock issued and outstanding)................................ $12.36
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($787,033 / 63,689 shares of common stock issued and outstanding)...................................... $12.36
Maximum sales charge (1% of offering price)............................................................... .12
------------
Offering price to public.................................................................................. $12.48
------------
------------
Class Z:
Net asset value, offering price and redemption price per share
($266,984 / 19,218 shares of common stock issued and outstanding)...................................... $13.89
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
PRUDENTIAL GLOBAL GENESIS FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Loss May 31, 1999
<S> <C>
Income
Dividends (net of foreign withholding taxes
of $104,138)............................ $ 1,034,417
Interest................................... 135,130
------------
Total income............................ 1,169,547
------------
Expenses
Management fee............................. 921,415
Distribution fee--Class A.................. 87,947
Distribution fee--Class B.................. 556,786
Distribution fee--Class C.................. 8,954
Custodian's fees and expenses.............. 325,000
Transfer agent's fees and expenses......... 271,000
Registration fees.......................... 46,000
Audit fees and expenses.................... 32,000
Directors' fees and expenses............... 20,000
Reports to shareholders.................... 14,000
Legal fees and expenses.................... 5,000
Miscellaneous.............................. 8,018
------------
Total expenses.......................... 2,296,120
------------
Net investment loss........................... (1,126,573 )
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized loss on:
Investment transactions.................... (12,806,219 )
Foreign currency transactions.............. 101,137
Financial futures contracts................ (521,817 )
------------
(13,226,899 )
------------
Net change in unrealized
appreciation/depreciation on:
Investment transactions.................... (940,383 )
Foreign currency transactions.............. (259,313 )
Financial futures contracts................ (76,139 )
------------
(1,275,835 )
------------
Net loss on investments and foreign
currencies................................. (14,502,734 )
------------
Net Decrease in Net Assets
Resulting from Operations..................... $(15,629,307)
------------
------------
</TABLE>
PRUDENTIAL GLOBAL GENESIS FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended May 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment (loss)....... $ (1,126,573) $ (1,887,686)
Net realized gain (loss) on
investments and foreign
currency transactions.... (13,226,899) 15,509,133
Net change in unrealized
appreciation/depreciation
on investments and
foreign currencies....... (1,275,835) (393,231)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations............... (15,629,307) 13,228,216
-------------- --------------
Distributions from net realized
gains on investment and
foreign currency
transactions
Class A..................... (1,572,601) (14,893,328)
Class B..................... (2,669,626) (32,320,533)
Class C..................... (43,207) (507,925)
Class Z..................... (13,402) (200,133)
-------------- --------------
(4,298,836) (47,921,919)
-------------- --------------
Fund share transactions (Net of
share conversions) (Note 5)
Net proceeds from shares
subscribed............... 36,835,124 158,861,747
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions........ 4,115,350 44,797,423
Cost of shares reacquired... (77,430,853) (215,610,962)
-------------- --------------
Net decrease in net assets
from Fund share
transactions............. (36,480,379) (11,951,792)
-------------- --------------
Total decrease................. (56,408,522) (46,645,495)
Net Assets
Beginning of year.............. 132,930,374 179,575,869
-------------- --------------
End of year.................... $ 76,521,852 $ 132,930,374
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<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 readily available, including restricted securities, are
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.
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.
Repurchase Agreements: 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 period, 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 period 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 period.
Net realized gain on foreign currency transactions 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 May 31,
1999 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.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivable and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses from investment and
currency transactions are calculated on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on an
accrual basis.
- --------------------------------------------------------------------------------
13
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
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.
Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the Fund is required to pledge to the broker an amount of cash and/or other
assets equal to a certain percentage of the contract amount. This amount is
known as the 'initial margin.' Subsequent payments, known as 'variation margin,'
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on financial futures
contracts.
The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value. Under a variety of circumstances, the Fund may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and the underlying
assets.
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, accounting for passive foreign investment companies and foreign currency
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 accumulated net investment loss by $1,106,570,
increase accumulated net realized loss on investments and foreign currency
transactions by $1,293,403 and increase paid-in capital in excess of par by
$186,833 for redemptions utilized as distributions for federal income tax
purposes and net operating loss for the year ended May 31, 1999. Net realized
losses and net assets were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadvisor's performance of such
services. PIFM 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. PIFM pays for the services of PIC,
the cost of 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 PIFM is computed daily and payable monthly, at an annual
rate of 1% of the average daily net assets of the Fund.
The Fund had distribution agreements with Prudential Securities Incorporated
('PSI'), which acted as the distributor of the Class A, Class B, Class C and
Class Z shares of the Fund through June 30, 1998. Effective July 1, 1998,
Prudential Investment Management Services LLC ('PIMS') became the distributor of
the Fund and serves the Fund under the same terms and conditions as under the
arrangement with PSI. 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.
No distribution or service fees are paid to PSI as distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for its
distribution related activities at an annual rate of up to .30 of 1%, 1%
- --------------------------------------------------------------------------------
14
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
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, Class B and Class C shares,
respectively, for the year ended May 31, 1999.
PSI and PIMS have advised the Fund that they received approximately $16,900 and
$900 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended May 31, 1999. From these fees, PSI
and PIMS paid such sales charges to dealers, which in turn paid commissions to
salespersons and incurred other distribution costs.
PSI and PIMS have advised the Fund that for the year ended May 31, 1999, they
received approximately $116,300 and $400 in contingent deferred sales charges
imposed upon redemptions by certain Class B and Class C shareholders,
respectively.
PIC, PSI, PIFM and PIMS are indirect, wholly owned subsidiaries of The
Prudential Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to either
agreement during the year ended May 31, 1999. The purpose of the agreements is
to serve as an alternative source of funding for capital share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the year ended May 31, 1999, the
Fund incurred fees of approximately $267,000 for the services of PMFS. As of May
31, 1999, approximately $20,000 of such fees were due to PMFS. Transfer agent
fees and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended May 31, 1999 aggregated $135,679,343 and $174,038,431,
respectively.
The federal income tax basis of the Fund's investments at May 31, 1999 was
$71,918,015 and accordingly, net unrealized depreciation for federal income tax
purposes was $2,848,944 (gross unrealized appreciation--$8,204,092; gross
unrealized depreciation--$5,355,148).
For federal income tax purposes, the Fund has a capital loss carryforward as of
May 31, 1999, of approximately $12,061,400 which expires in 2007. Accordingly,
no capital gains distribution is expected to be paid to shareholders until net
gains have been realized in excess of this amount. In addition, the Fund will
elect to treat net capital losses of approximately $2,483,800 incurred in the
seven month period ended May 31, 1999 as having been incurred in the following
fiscal year.
At May 31, 1999 the Fund had outstanding forward currency contracts both to
purchase and sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Forward Currency Settlement Current
Purchase Contracts Date Payable Value Depreciation
- ------------------------ --------------- ----------- -------------
<S> <C> <C> <C>
Japanese Yen
expiring 7/6/99 -
7/13/99 $ 3,000,000 $ 2,688,837 $ (311,163)
--------------- ----------- -------------
--------------- ----------- -------------
<CAPTION>
Value at
Forward Currency Settlement Current
Sale Contracts Date Receivable Value Appreciation
- ------------------------ --------------- ----------- -------------
<S> <C> <C> <C>
Euro Currency
expiring 9/2/99 $ 5,600,000 $ 5,275,671 $ 324,329
Hong Kong Dollar
expiring 4/26/00 894,083 891,938 2,145
Japanese Yen
expiring 6/21/99 -
12/1/99 5,237,711 4,989,586 248,125
--------------- ----------- -------------
$11,731,794 $11,157,195 $ 574,599
--------------- ----------- -------------
--------------- ----------- -------------
</TABLE>
During the fiscal year ended May 31, 1999, the Fund entered into financial
futures contracts. Details of open contracts at May 31, 1999 are as follows:
<TABLE>
<CAPTION>
Value at Value at
Number of Expiration May 31, Trade Unrealized
Contracts Type Date 1999 Date Appreciation
- ----------- ----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Long Position:
1 Hang Seng June 1999 1,205,000 1,205,000 --
</TABLE>
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z 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. Prior to November 2, 1998 Class C shares
were sold with a contingent deferred sales charge of 1%
- --------------------------------------------------------------------------------
15
<PAGE>
Notes to Financial Statements PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
during the first year. Effective November 2, 1998 Class C shares are sold with a
front-end sales charge of 1% and a contingent deferred sales charge of 1% during
the first 18 months. Class B shares will automatically convert to Class A shares
on a quarterly basis approximately seven years after purchase. Effective
September 16, 1996 the Fund commenced offering Class Z shares. Class Z shares
are not subject to any sales or redemption charge and are offered exclusively
for sale to a limited group of investors.
The Fund has authorized 500 million shares of common stock at $.01 par value per
share equally divided into four classes, designated Class A, Class B, Class C
and Class Z common stock.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------------ ---------- -------------
<S> <C> <C>
Year ended May 31, 1999:
Shares sold......................... 1,307,033 $ 17,119,393
Shares issued in reinvestment of
dividends and distributions....... 125,209 1,518,783
Shares reacquired................... (2,413,140) (31,601,691)
---------- -------------
Net decrease in shares outstanding
before conversion................. (980,898) (12,963,515)
Shares issued upon conversion from
Class B........................... 229,265 3,092,944
---------- -------------
Net decrease in shares
outstanding....................... (751,633) $ (9,870,571)
---------- -------------
---------- -------------
Year ended May 31, 1998:
Shares sold......................... 5,019,452 $ 105,272,172
Shares issued in reinvestment of
dividends and distributions....... 1,015,441 14,134,947
Shares reacquired................... (6,145,726) (127,189,388)
---------- -------------
Net decrease in shares outstanding
before conversion................. (110,833) (7,782,269)
Shares issued upon conversion from
Class B........................... 421,183 8,102,359
---------- -------------
Net increase in shares
outstanding....................... 310,350 $ 320,090
---------- -------------
---------- -------------
<CAPTION>
Class B
- ------------------------------------
<S> <C> <C>
Year ended May 31, 1999:
Shares sold......................... 1,636,557 $ 19,242,095
Shares issued in reinvestment of
dividends and distributions....... 231,285 2,544,131
Shares reacquired................... (3,767,958) (44,643,135)
---------- -------------
Net decrease in shares outstanding
before conversion................. (1,900,116) (22,856,909)
Shares reacquired upon conversion
into Class A...................... (251,572) (3,092,944)
---------- -------------
Net decrease in shares
outstanding....................... (2,151,688) $ (25,949,853)
---------- -------------
---------- -------------
<CAPTION>
Class B Shares Amount
- ------------------------------------ ---------- -------------
<S> <C> <C>
Year ended May 31, 1998:
Shares sold......................... 2,217,860 $ 41,493,238
Shares issued in reinvestment of
dividends and distributions....... 2,349,000 29,996,731
Shares reacquired................... (4,280,118) (75,664,364)
---------- -------------
Net decrease in shares outstanding
before conversion................. 286,742 (4,174,395)
Shares reacquired upon conversion
into Class A...................... (450,967) (8,102,359)
---------- -------------
Net decrease in shares
outstanding....................... (164,225) $ (12,276,754)
---------- -------------
---------- -------------
<CAPTION>
Class C
- ------------------------------------
<S> <C> <C>
Year ended May 31, 1999:
Shares sold......................... 19,424 $ 223,833
Shares issued in reinvestment of
dividends and distributions....... 3,823 42,055
Shares reacquired................... (44,892) (538,422)
---------- -------------
Net decrease in shares
outstanding....................... (21,645) $ (272,534)
---------- -------------
---------- -------------
Year ended May 31, 1998:
Shares sold......................... 557,352 $ 11,511,610
Shares issued in reinvestment of
dividends and distributions....... 36,604 467,431
Shares reacquired................... (601,469) (12,299,491)
---------- -------------
Net decrease in shares
outstanding....................... (7,513) $ (320,450)
---------- -------------
---------- -------------
<CAPTION>
Class Z
- ------------------------------------
<S> <C> <C>
Year ended May 31, 1999:
Shares sold......................... 19,195 $ 249,803
Shares issued in reinvestment of
dividends and distributions....... 844 10,381
Shares reacquired................... (48,824) (647,605)
---------- -------------
Net decrease in shares
outstanding....................... (28,785) $ (387,421)
---------- -------------
---------- -------------
Year ended May 31, 1998:
Shares sold......................... 32,016 $ 584,727
Shares issued in reinvestment of
dividends and distributions....... 14,095 198,314
Shares reacquired................... (26,276) (457,719)
---------- -------------
Net increase in shares
outstanding....................... 19,835 $ 325,322
---------- -------------
---------- -------------
</TABLE>
- --------------------------------------------------------------------------------
16
<PAGE>
Financial Highlights PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------
Year Ended May 31,
--------------------------------------------------------
1999(b) 1998 1997 1996(b) 1995(b)
-------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 15.82 $ 21.30 $ 21.74 $ 18.44 $ 18.75
-------- ------- ------- ------- -------
Income from investment operations
Net investment income (loss)......... (.10) (.20) (.14) .05(a) --
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (1.44) 1.37 1.45 3.34 (.21)
-------- ------- ------- ------- -------
Total from investment
operations..................... (1.54) 1.17 1.31 3.39 (.21)
-------- ------- ------- ------- -------
Less distributions
Dividends in excess of net investment
income............................ -- -- -- (.09) (.08)
Distributions from net realized gains
on investment transactions........ (.60) (6.65) (1.75) -- (.02)
-------- ------- ------- ------- -------
Total distributions............... (.60) (6.65) (1.75) (.09) (.10)
-------- ------- ------- ------- -------
Net asset value, end of year......... $ 13.68 $ 15.82 $ 21.30 $ 21.74 $ 18.44
-------- ------- ------- ------- -------
-------- ------- ------- ------- -------
TOTAL RETURN (c):.................... (9.25)% 9.81% 6.74% 18.41% (0.95)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)........ $30,578 $47,259 $57,032 $47,617 $44,051
Average net assets (000)............. $35,179 $50,309 $47,563 $45,070 $32,430
Ratios to average net assets:
Expenses, including distribution
fees........................... 2.03% 1.88% 1.91% 1.79%(a) 1.42%(a)
Expenses, excluding distribution
fees........................... 1.78% 1.63% 1.66% 1.54%(a) 1.17%(a)
Net investment income (loss)...... (.77)% (.71)% (.49)% .26%(a) .02%(a)
For Class A, B, C and Z shares:
Portfolio turnover rate.............. 156% 198% 60% 44% 64%
</TABLE>
- ---------------
(a) Net of expense subsidies and/or fee waivers.
(b) Calculated based upon average shares outstanding.
(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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 17
<PAGE>
Financial Highlights PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------
Year Ended May 31,
------------------------------------------------------------
1999(b) 1998 1997 1996(b) 1995(b)
-------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 14.47 $ 20.18 $ 20.87 $ 17.84 $ 18.22
-------- -------- -------- -------- --------
Income from investment operations
Net investment (loss)................ (.18) (.26) (.33) (.09)(a) (.13)(a)
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (1.33) 1.20 1.39 3.21 (.19)
-------- -------- -------- -------- --------
Total from investment
operations..................... (1.51) .94 1.06 3.12 (.32)
-------- -------- -------- -------- --------
Less distributions
Dividends in excess of net investment
income............................ -- -- -- (.09) (.03)
Distributions from net realized gains
on investment transactions........ (.60) (6.65) (1.75) -- (.03)
-------- -------- -------- -------- --------
Total distributions............... (.60) (6.65) (1.75) (.09) (.06)
-------- -------- -------- -------- --------
Net asset value, end of year......... $ 12.36 $ 14.47 $ 20.18 $ 20.87 $ 17.84
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN (c):.................... (9.92)% 9.04% 5.83% 17.51% (1.73)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)........ $44,890 $ 83,669 $120,067 $155,292 $153,670
Average net assets (000)............. $55,679 $101,836 $133,073 $154,566 $173,591
Ratios to average net assets:
Expenses, including distribution
fees........................... 2.78% 2.63% 2.66% 2.54%(a) 2.17%(a)
Expenses, excluding distribution
fees........................... 1.78% 1.63% 1.66% 1.54%(a) 1.17%(a)
Net investment (loss)............. (1.51)% (1.48)% (1.26)% (.48)%(a) (.77)%(a)
</TABLE>
- ---------------
(a) Net of expense subsidies and/or fee waivers.
(b) Calculated based upon average shares outstanding.
(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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 18
<PAGE>
Financial Highlights PRUDENTIAL GLOBAL GENESIS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
-------------------------------------------------------- -------------------
August 1,
1994(d)
Year Ended May 31, Through Year Ended May 31,
------------------------------------------ May 31, -------------------
1999(b) 1998 1997 1996(b) 1995(b) 1999(b) 1998
-------- ------ ------ ------- --------- -------- ------
PER SHARE OPERATING PERFORMANCE:
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $14.47 $20.18 $20.87 $17.84 $ 18.44 $16.01 $21.39
-------- ------ ------ ------- --------- -------- ------
Income from investment operations
Net investment income (loss)......... (.18) (.26) (.27) (.08 )(a) (.12)(a) (.06) (.38)
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. (1.33) 1.20 1.33 3.20 (.44) (1.46) 1.65
-------- ------ ------ ------- --------- -------- ------
Total from investment
operations..................... (1.51) .94 1.06 3.12 (.56) (1.52) 1.27
-------- ------ ------ ------- --------- -------- ------
Less distributions
Dividends in excess of net investment
income............................ -- -- -- (.09 ) (.03) -- --
Distributions from net realized gains
on investment transactions........ (.60) (6.65) (1.75) -- (.01) (.60) (6.65)
-------- ------ ------ ------- --------- -------- ------
Total distributions............... (.60) (6.65) (1.75) (.09 ) (.04) (.60) (6.65)
-------- ------ ------ ------- --------- -------- ------
Net asset value, end of period....... $12.36 $14.47 $20.18 $20.87 $ 17.84 $13.89 $16.01
-------- ------ ------ ------- --------- -------- ------
-------- ------ ------ ------- --------- -------- ------
TOTAL RETURN (c):.................... (9.92)% 9.04% 5.83% 17.51 % (2.90)% (9.01)% 10.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...... $ 787 $1,234 $1,874 $2,275 $ 1,307 $ 267 $ 768
Average net assets (000)............. $ 895 $1,739 $1,958 $1,809 $ 862 $ 388 $ 662
Ratios to average net assets:
Expenses, including distribution
fees........................... 2.78% 2.63% 2.66% 2.54 %(a) 2.27%(a)(f) 1.78% 1.63%
Expenses, excluding distribution
fees........................... 1.78% 1.63% 1.66% 1.54 %(a) 1.27%(a)(f) 1.78% 1.63%
Net investment (loss)............. (1.53)% (1.43)% (1.24)% (.44 )%(a) (.90)(a)(f) (.46)% (.43)%
<CAPTION>
September 16,
1996(e)
Through
May 31,
1997
--------------
PER SHARE OPERATING PERFORMANCE:
<S> <C>
Net asset value, beginning of
period............................ $20.46
-----
Income from investment operations
Net investment income (loss)......... .03
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions............. 2.65
-----
Total from investment
operations..................... 2.68
-----
Less distributions
Dividends in excess of net investment
income............................ --
Distributions from net realized gains
on investment transactions........ (1.75)
-----
Total distributions............... (1.75)
-----
Net asset value, end of period....... $21.39
-----
-----
TOTAL RETURN (c):.................... 13.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...... $ 603
Average net assets (000)............. $ 188
Ratios to average net assets:
Expenses, including distribution
fees........................... 1.66%(f)
Expenses, excluding distribution
fees........................... 1.66%(f)
Net investment (loss)............. (.87)%(f)
</TABLE>
- ---------------
(a) Net of expense subsidies and/or fee waivers.
(b) Calculated based upon average shares outstanding.
(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 one full year are not
annualized.
(d) Commencement of offering of Class C shares.
(e) Commencement of offering of Class Z shares.
(f) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 19
<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, 1999, 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 periods
presented, 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,
1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
July 20, 1999
- --------------------------------------------------------------------------------
20
<PAGE>
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, 1999) as to the federal income tax status of
dividends paid during such fiscal year. Accordingly, we are advising you that
during its fiscal year ended May 31, 1999, the Fund paid a long-term capital
gain distribution of $.05 which is taxable as 20% rate gains, and a short-term
capital gain distribution of $.55 which is taxable as ordinary income. The Fund
utilized redemptions as distributions in the amount of $0.20 and $0.01 per Class
A, B, C and Z share of short-term capital gains and long-term capital gains
respectively. Further, we wish to advise you that 0% of the ordinary income
dividend paid in the fiscal year ended May 31, 1999 qualified for the corporate
dividends received deduction available to corporate taxpayers.
In January 2000, you will be advised on IRS Form 1099 DIV or substitute Form
1099, as to the federal tax status of the distributions received by you in
calendar 1999. 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, 1999.
- --------------------------------------------------------------------------------
21
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they don't
read annual and semiannual reports. It's quite understandable.
These annual and semi-annual reports are prepared to comply with
federal regulations, and are often written in language
that is difficult to understand. So, when most people run into
those particularly daunting sections of these reports, they
don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our
report to make it easier to understand and more pleasant
to read. We hope you'll find it profitable to spend a few
minutes familiarizing yourself with your investment. Here's
what you'll find in the report:
Performance at a Glance
Since an investment's performance is often a shareholder's
primary concern, we present performance information in two
different formats. You'll find it first on the "Performance
at a Glance" page where we compare the Fund and the comparable average
calculated by Lipper, Inc., a nationally recognized mutual fund
rating agency. We report both the cumulative total returns and
the average annual total returns. The cumulative total return
is the total amount of income and appreciation the Fund has
achieved in various time periods. The average annual total
return is an annualized representation of the Fund's performance.
It gives you an idea of how much the Fund has earned in an
average year for a given time period. Under the performance box,
you'll see legends that explain the performance information,
whether fees and sales charges have been included in returns,
and the inception dates for the Fund's share classes.
See the performance comparison charts at the back of the report
for more performance information. Please keep in mind that past
performance is not indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports
on successful--and not-so-successful--strategies in this
section of your report. Look for recent purchases and sales
here, as well as information about the sectors the portfolio
manager favors, and any changes that are on the drawing board.
Portfolio of Investments
This is where the report begins to appear technical, but it's
really just a listing of each security held at the end of the
reporting period, along with valuations and other information.
Please note that sometimes we discuss a security in the
Portfolio Manager's Report that doesn't appear in this listing
because it was sold before the close of the reporting period.
<PAGE>
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the Fund's
holdings), liabilities (how much the Fund owes), and net assets
(the Fund's equity, or holdings after the Fund pays its debts)
as of the end of the reporting period. It also shows how we
calculate the net asset value per share for each class of
shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but remember
that the money or new shares are being paid or issued to you.
The net asset value fluctuates daily, along with the value of
every security in the portfolio.
Statement of Operations
This is the income statement, which details income (mostly
interest and dividends earned) and expenses (including what
you pay us to manage your money). You'll also see capital
gains here--both realized and unrealized.
Statement of Changes in Net Assets
This schedule shows how income and expenses translate into
changes in net assets. The Fund is required to pay out the
bulk of its income to shareholders every year, and this
statement shows you how we do it--through dividends and
distributions--and how that affects the net assets. This
statement also shows how money from investors flowed into
and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can intimidate
readers, but it does contain useful information. The Notes
provide a brief history and explanation of your Fund's
objectives. In addition, they outline how Prudential
Mutual Funds prices securities. The Notes also explain
who manages and distributes the Fund's shares and, more
importantly, how much they are paid for doing so. Finally,
the Notes explain how many shares are outstanding and the
number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a per-share basis. It is designed to help you understand
how the Fund performed, and to compare this year's performance
and expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies that the information is fairly presented and
complies with generally accepted accounting principles.
Tax Information
This is information which we report annually about how
much of your total return is taxable. Should you have
any questions, you may want to consult a tax adviser.
Performance Comparison
These charts are included in the annual report and are
required by the Securities Exchange Commission. Performance
is presented here as a hypothetical $10,000 investment in the
Fund since its inception or for 10 years (whichever is shorter).
To help you put that return in context, we are required to
include the performance of an unmanaged, broad-based securities
index as well. The index does not reflect the cost of buying
the securities it contains or the cost of managing a mutual fund. Of
course, the index holdings do not mirror those of the fund--the
index is a broad-based reference point commonly used by investors
to measure how well they are doing. A definition of the selected
index is also provided. Investors cannot invest
directly in an index.
<PAGE>
Comparing a $10,000 Investment
- -----------------------------------------------------------
Prudential Global Genesis Fund, Inc. vs. the Morgan Stanley
Capital International World Index
Class A
(GRAPH)
Average Annual Total Returns
With Sales Load
Since Inception 6.69%
Five Years 3.46%
One Year -13.79%
Without Sales Load
Since Inception 7.28%
Five Years 4.52%
One Year -9.25%
Class B
(GRAPH)
Average Annual Total Returns
With Sales Load
Since Inception 8.09%
Ten Years 6.87%
Five Years 3.51%
One Year -14.92%
Without Sales Load
Since Inception 8.09%
Ten Years 6.87%
Five Years 3.72%
One Year -9.92%
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.
The lines beneath the graphs are designed to give
you an idea of 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 the inception of each
share class.
These graphs compare a $10,000 investment in the Prudential
Global Genesis Fund, Inc. (Class A, B, C, and Z shares) with
a similar investment in the Morgan Stanley Capital International
World Index (the MSCI World Index) by portraying the account
values at the commencement of operations of Class A, C, and Z
shares, at the beginning of the ten-year period for Class B
shares, and at the end of the fiscal year (May 31), as measured
on a quarterly basis, beginning in 1990 for Class A, 1989 for
Class B, 1994 for Class C, and 1996 for Class Z shares. For
purposes of the graphs, and unless otherwise indicated, it
has been assumed that (a) the maximum applicable front-end
sales charge was deducted from the initial $10,000 investment in Class
A and Class C shares; (b) the maximum applicable contingent
deferred sales charges were deducted from the value of the
investment in Class B and Class C shares, assuming full
redemption on May 31, 1999; (c) all recurring fees (including
management fees) were deducted; and (d) all dividends
<PAGE>
Class C
(GRAPH)
Average Annual Total Returns
With Sales Load
Since Inception 3.38%
One Year -11.82%
Without Sales Load
Since Inception 3.60%
One Year -9.92%
Class Z
(GRAPH)
Average Annual Total Returns
Since Inception 5.05%
One Year -9.01%
and distributions were reinvested. Class B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. This
conversion feature is not reflected in the graphs. Class
Z shares are not subject to a sales charge or distribution
and service (12b-1) fee.
The MSCI World Index is a weighted index comprising approximately
1,500 companies listed on the stock exchanges of the United
States, 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 MSCI World
Index. The MSCI World Index is unmanaged, and the total return
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 MSCI World Index may differ substantially from the
securities in the Fund. The MSCI World Index is not the
only index that may be used to characterize performance
of global equity funds. Other indexes may portray different
comparative performance. Investors cannot invest directly
in an index. These graphs are furnished to you in accordance
with SEC regulations.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Robert C. Rosselot, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
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 744333303 MF136E
744333204 744333402
