N-CSR 1 dncsr.htm PRUDENTIAL WORLD FUND, INC. Prudential World Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act file number:   811-03981
Exact name of registrant as specified in charter:   Prudential World Fund, Inc.
Address of principal executive offices:  

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Name and address of agent for service:  

Deborah A. Docs

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Registrant’s telephone number, including area code:   800-225-1852
Date of fiscal year end:   10/31/2007
Date of reporting period:   10/31/2007

 

Item 1 – Reports to Stockholders

 

 

LOGO

 

LOGO

 

OCTOBER 31, 2007   ANNUAL REPORT

 

Dryden International Equity Fund

FUND TYPE

Global/International stock

 

OBJECTIVE

Long-term growth of capital

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

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.

 

JennisonDryden, Dryden, Prudential Financial and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.

 

LOGO

 

 

December 14, 2007

 

Dear Shareholder:

 

We hope you find the annual report for the Dryden International Equity Fund informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.

 

Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.

 

JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of four leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors (PREI). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisers and Prudential Financial companies. PREI is a registered investment adviser and a unit of PIM.

 

Thank you for choosing JennisonDryden Mutual Funds.

 

Sincerely,

 

LOGO

 

Judy A. Rice, President

Dryden International Equity Fund

Dryden International Equity Fund   1

Your Fund’s Performance

 

 

Fund objective

The investment objective of the Dryden International Equity Fund is long-term growth of capital. There can be no assurance that the Fund will achieve its investment objective.

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. Class A and Class L shares have a maximum initial sales charge of 5.50% and 5.75%, respectively. Gross operating expenses: Class A, 1.39%; Class B, 2.09%; Class C, 2.09%; Class F, 1.84%; Class L, 1.59%; Class M, 2.09%; Class X, 2.09%; Class Z, 1.09%. Net operating expenses apply to: Class A, 1.34%; Class B, 2.09%; Class C, 2.09%; Class F, 1.84%; Class L, 1.59%; Class M, 2.09%; Class X, 2.09%; Class Z, 1.09%, after contractual reduction through 2/28/2008.

 

Cumulative Total Returns as of 10/31/07                  
      One Year         Five Years         Since Inception1  

Class A

   24.68 %   189.08 %   8.12 %

Class B

   23.73     177.92     2.00  

Class C

   23.73     177.92     2.00  

Class F

   N/A     N/A     18.11  

Class L

   N/A     N/A     17.49  

Class M

   N/A     N/A     16.92  

Class X

   N/A     N/A     16.92  

Class Z

   25.05     192.30     9.91  

MSCI EAFE® ND Index2

   24.91     183.98     **  

Lipper International Multi-Cap Growth Funds Avg.3

   31.75     191.34     ***  
     
Average Annual Total Returns4 as of 9/30/07                  
      One Year         Five Years         Since Inception1  

Class A

   17.57 %   23.24 %   –0.22 %

Class B

   18.52     23.66     –0.22  

Class C

   22.40     23.72     –0.23  

Class F

   N/A     N/A     N/A  

Class L

   N/A     N/A     N/A  

Class M

   N/A     N/A     N/A  

Class X

   N/A     N/A     N/A  

Class Z

   24.67     24.90     0.74  

MSCI EAFE® ND Index2

   24.86     23.55     **  

Lipper International Multi-Cap Growth Funds Avg.3

   28.86     23.55     ***  
2   Visit our website at www.jennisondryden.com

 

 

The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. The average annual total returns assume the payment of the maximum applicable sales charge. Class A and Class L shares are subject to a maximum front-end sales charge of 5.50% and 5.75%, respectively. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B, Class C, Class F, Class L, Class M, and Class X shares are subject to a maximum CDSC of 5%, 1%, 5%, 1%, 6%, and 6%, respectively. Class Z shares are not subject to a sales charge.

 

Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.

1Inception dates: Class A, Class B, Class C, and Class Z, 3/1/00; Class F, 12/18/06; Class L, Class M, and Class X, 3/19/07. The Since Inception returns for the MSCI EAFE® ND Index and the Lipper International Multi-Cap Growth Funds Average (Lipper Average) are measured from the closest month-end to inception date, and not from the Fund’s actual inception date.

2The Morgan Stanley Capital International Europe, Australasia, and Far East (MSCI EAFE® ND) Index is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The ND version of the MSCI EAFE Index reflects the impact of the maximum withholding taxes on reinvested dividends.

3The Lipper Average represents returns based on an average return of all funds in the Lipper International Multi-Cap Growth Funds category. Funds in the Lipper Average invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. Multi-cap funds typically have 25% to 75% of their assets invested in companies strictly outside of the United States with market capitalizations (on a three-year weighted basis) greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad Market Index (BMI). Multi-cap growth funds typically have an above-average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the S&P/Citigroup World ex-U.S. BMI.

4The average annual total returns take into account applicable sales charges. Class A, Class B, Class C, Class F, Class L, Class M, and Class X shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 1.00%, 1.00%, 0.75%, 0.50%, 1.00%, and 1.00%, respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

**MSCI EAFE® ND Index Closest Month-End to Inception cumulative total returns as of 10/31/2007 are 65.68% for Class A, Class B, Class C, and Class Z; 17.60% for Class F; and 12.99% for Class L, Class M, and Class X. MSCI EAFE® ND Index Closest Month-End to Inception average annual total returns as of 9/30/07 are 6.34% for Class A, Class B, Class C, and Class Z. Class F, Class L, Class M, and Class X shares have been in existence for less than one year and have no average annual total return performance information available.

***Lipper International Multi-Cap Growth Funds Average Closest Month-End to Inception cumulative total returns as of 10/31/07 are 41.04% for Class A, Class B, Class C, and Class Z; 23.17% for Class F; and 19.27% for Class L, Class M, and Class X. Lipper International Multi-Cap Growth Funds Average Closest Month-End to Inception average annual total returns as of 9/30/07 are 3.39% for Class A, Class B, Class C, and Class Z. Class F, Class L, Class M, and Class X shares have been in existence for less than one year and have no average annual total return performance information available.

Dryden International Equity Fund   3

Your Fund’s Performance (continued)

 

 

Investors cannot invest directly in an index. The returns for the MSCI EAFE® ND Index and the Lipper Average would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.

 

Five Largest Holdings in Long-Term Portfolio expressed as a percentage of net assets
as of 10/31/07		       

Nokia Oyj, Communications Equipment

    1.6 %

Toyota Motor Corp., Automobiles

    1.5  

Vodafone Group PLC, Wireless Telecommunication Services

    1.5  

BHP Billiton, Ltd., Metals & Mining

    1.5  

Banco Santander SA, Commercial Banks

    1.5  

Holdings are subject to change.

 

Five Largest Industries in Long-Term Portfolio expressed as a percentage of net assets
as of 10/31/07		  

Commercial Banks

    14.9 %

Oil, Gas & Consumable Fuels

    7.4  

Metals & Mining

    6.4  

Insurance

    5.6  

Pharmaceuticals

    4.4  

Industry weightings are subject to change.

4   Visit our website at www.jennisondryden.com

Strategy and Performance Overview

 

 

How did the Fund perform?

The Dryden International Equity Fund’s Class A shares returned 24.7% for the 12-month reporting period ended October 31, 2007, in line with the 24.9% return of the benchmark MSCI EAFE ND Index (the Index) but lagging the 31.75% return of the Lipper International Multi-Cap Growth Funds Average.

 

What were conditions like in the international stock markets?

The global economic expansion continued during the reporting period. By the end of 2006, the global economy recorded its strongest cumulative gross domestic product growth in a decade, lifting stock market indexes worldwide. This bullish trend held through the beginning of the summer of 2007. However, a crisis in debt securities tied to U.S. subprime mortgages (home loans made to borrowers with poor credit histories) began to rattle world equity markets in July, and then continued to intensify in August. A major European bank temporarily stopped withdrawals from three of its investment funds with exposure to the risky mortgages and some hedge funds suffered losses and sold assets.

 

Signs of market distress in early August prompted the European Central Bank, the U.S. Federal Reserve (the Fed), the Bank of Japan, and the Reserve Bank of Australia to inject massive amounts of cash into their banking systems. In mid-August, the Fed reduced the discount rate it charges banks to borrow from it by a half point. In mid-September, the Fed cut its target for the federal funds rate on overnight loans between banks and the discount rate by a half point. Finally, in late October, it cut both short-term rates by another quarter point, which lowered its target for the federal funds rate to 4.50% and the discount rate to 5.00%.

 

Global stock markets rebounded sharply in response to the Fed rate cuts, helping the Index return 24.9 % for the reporting period. The best performing region was the Nordic area comprised of Sweden, Norway, Denmark, and its frontrunner, Finland. Heavily weighted nations in the Index such as the United Kingdom and France posted returns consistent with the performance of the Index, but Germany outperformed. The Pacific region, home to some of the world’s most dynamic economies, ironically lagged the Index. The main factor contributing to the region’s lower returns was weakness in the Japanese stock market. As the Index’s most heavily weighted Asian country, Japan took hits on several fronts, including the recent market turmoil, its sluggish domestic economic growth, and a spiking yen that made its exports less competitive. Bright spots, such as Hong Kong and Singapore recorded new highs, but were unable to lift the Index. Australia’s economy soared in tandem with natural resources stocks.

Dryden International Equity Fund   5

Strategy and Performance Overview (continued)

 

 

Most sectors in the Index finished the reporting period firmly in positive territory. Like the previous year, materials outpaced other sectors. Industries within the materials and energy sectors benefited from rising commodity prices and strong global demand, particularly in nations such as China and India, whose economies expanded rapidly. The telecommunication services sector climbed out of last year’s doldrums amidst the prospect of industry consolidation and product innovation. Information technology companies providing Internet and mobile services to China faired well, but the sector’s overall performance was less than stellar. Among consumer-oriented stocks, the consumer staples sector, made up of industries that tend to do well even when an economy slows, performed better than the more cyclical consumer discretionary sector. In the latter, consumer durables and apparel posted a modest return but automobiles and components gained sharply.

 

Financials and healthcare were the weakest sectors in the Index. Banking stocks experienced severe distress due to the subprime mortgage crisis and the related global credit crunch. Real estate, while closing the period with positive returns and leading the financials sector, showed weakness due to the ripple effects of the crisis in mortgage lending. Healthcare stocks found support in equipment and service companies. However, disappointing results in pharmaceutical and biotechnology holdings effectively suppressed returns, which were nominally positive but by less than a full percentage point.

 

How is the Fund managed?

Quantitative Management Associates LLC (QMA) tries to outperform the Index by actively managing the Fund via a quantitative process that evaluates 1,000 stocks. Investing in both rapidly and slowly growing companies limits the Fund’s exposure to any particular style of investing and may reduce its volatility relative to the Index. When selecting stocks of more rapidly growing companies, QMA places a heavier emphasis on “news” or signals about their future growth prospects. For example, upward revisions in earnings forecasts by Wall Street analysts are used as an indication of good news. For slowly growing companies, QMA emphasizes attractive valuations and invests more heavily in stocks that are priced cheaply relative to their firms’ earnings prospects and book values.

 

Among rapidly growing companies, which stocks or related-group of stocks contributed most and detracted most from the Fund’s return?

Among rapidly growing companies, the largest contributors were shares of Hong Kong Exchanges & Clearing Ltd. (+329%), CSL Ltd. (+136%), and WorleyParsons Ltd. (+223%). The largest detractors were shares of Matsushita Electric Industrial Co. (-8%), Tokyo Electron Ltd. (-21%), and Foxconn International Holdings Ltd. (-17%).

6   Visit our website at www.jennisondryden.com

 

 

Among slowly growing companies, which stocks or related-group of stocks contributed most and detracted most from the Fund’s return?

Among slowly growing companies, the largest contributors were shares of Vodafone Group PLC (+60%), E.ON AG (+67%), and Nokia Corp. (+103%). The largest detractors were shares of Chuo Mitsui Trust Holdings (-32%), AstraZeneca PLC (-14%), and Mizuho Financial Group Inc. (-28%).

 

The Portfolio of Investments following this report shows the size of the Fund’s positions at period-end.

Dryden International Equity Fund   7

 

Fees and Expenses (Unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 invested on May 1, 2007, at the beginning of the period, and held through the six-month period ended October 31, 2007. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden Funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and

8   Visit our website at www.jennisondryden.com

 

expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Dryden International
Equity Fund 		  Beginning Account
Value
May 1, 2007		  

Ending Account
Value

October 31, 2007

   Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the Six-
Month Period*
         
Class A   Actual   $ 1,000.00   $ 1,090.40   1.36 %   $ 7.17
    Hypothetical   $ 1,000.00   $ 1,018.35   1.36 %   $ 6.92
         
Class B   Actual   $ 1,000.00   $ 1,086.10   2.11 %   $ 11.09
    Hypothetical   $ 1,000.00   $ 1,014.57   2.11 %   $ 10.71
         
Class C   Actual   $ 1,000.00   $ 1,086.10   2.11 %   $ 11.09
    Hypothetical   $ 1,000.00   $ 1,014.57   2.11 %   $ 10.71
         
Class F   Actual   $ 1,000.00   $ 1,088.30   1.86 %   $ 9.79
    Hypothetical   $ 1,000.00   $ 1,015.83   1.86 %   $ 9.45
         
Class L   Actual   $ 1,000.00   $ 1,089.40   1.61 %   $ 8.48
    Hypothetical   $ 1,000.00   $ 1,017.09   1.61 %   $ 8.19
         
Class M   Actual   $ 1,000.00   $ 1,086.10   2.11 %   $ 11.09
    Hypothetical   $ 1,000.00   $ 1,014.57   2.11 %   $ 10.71
         
Class X   Actual   $ 1,000.00   $ 1,086.10   2.11 %   $ 11.09
    Hypothetical   $ 1,000.00   $ 1,014.57   2.11 %   $ 10.71
         
Class Z   Actual   $ 1,000.00   $ 1,092.80   1.11 %   $ 5.86
    Hypothetical   $ 1,000.00   $ 1,019.61   1.11 %   $ 5.55
         

* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended October 31, 2007, and divided by the 365 days in the Fund’s fiscal year ended October 31, 2007 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.

Dryden International Equity Fund   9

Portfolio of Investments

 

as of October 31, 2007

 

Shares      Description    Value (Note 1)
       

LONG-TERM INVESTMENTS    97.9%

   

COMMON STOCKS    97.4%

        

Australia    6.7%

       
61,979     

AGL Energy, Ltd.

    $ 698,696
10,262     

Australia and New Zealand Banking Group, Ltd.

      289,719
64,621     

Babcock & Brown, Ltd.

      1,871,135
396,507     

BHP Billiton, Ltd.

      17,265,828
122,495     

Centro Properties Group

      806,365
269,238     

Challenger Financial Services Group, Ltd.

      1,608,908
3,714     

Cochlear, Ltd.

      238,819
244,086     

CSL, Ltd.

      8,385,459
186,970     

Downer EDI, Ltd.

      1,165,917
747,158     

Goodman Fielder, Ltd.

      1,471,271
231,032     

GPT Group

      999,585
616,927     

ING Industrial Fund

      1,616,672
340,551     

Macquarie Airports

      1,399,558
35,639     

Macquarie Bank, Ltd.

      2,846,347
548,881     

Macquarie Infrastructure Group

      1,629,309
470,115     

Mirvac Group

      2,549,472
54,996     

National Australian Bank, Ltd.

      2,225,025
53,426     

Origin Energy, Ltd.

      458,493
349,046     

Pacific Brands, Ltd.

      1,128,932
1,060,301     

Quantas Airways, Ltd.

      5,863,915
56,839     

Santos, Ltd.

      750,231
94,301     

Stockland

      792,166
36,556     

Suncorp-Metway, Ltd.

      694,525
172,697     

Westfield Group

      3,531,121
186,293     

Westpac Banking Corp.

      5,228,885
235,639     

Woolworths, Ltd.

      7,385,337
127,166     

WorleyParsons, Ltd.

      5,748,309
           
          78,649,999

Austria    0.1%

       
9,112     

Voestalpine AG

      819,268

Belgium    2.0%

       
112,874     

Belgacom SA

      5,393,950
201,481     

Dexia SA

      6,461,634
133,446     

Fortis

      4,264,241
79,794     

InBev NV

      7,531,509
           
          23,651,334

 

See Notes to Financial Statements.

Dryden International Equity Fund   11

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       

China

       
41,000     

Tencent Holdings, Ltd.

    $ 351,472

Denmark    1.0%

       
10,050     

Carlsberg A/S

      1,353,581
7,850     

Danisco A/S

      604,157
175,132     

Danske Bank A/S

      7,717,879
11,400     

Det Ostasiatiske Kompagni A/S (The East Asiatic Company, Ltd.)

      918,363
31,000     

H Lundbeck A/S

      887,160
17,430     

Sydbank A/S

      801,996
           
          12,283,136

Finland    2.3%

       
5,602     

Konecranes Oyj

      250,745
89,621     

Neste Oil Oyj

      3,220,826
472,008     

Nokia Oyj

      18,699,817
87,262     

OKO Bank PLC

      1,870,758
75,917     

Outokumpu Oyj (Class A)

      2,831,698
10,384     

Rautaruukki Oyj

      594,145
           
          27,467,989

France    10.3%

       
108,480     

Air France-KLM

      4,123,293
170,843     

AXA SA

      7,637,017
115,261     

BNP Paribas

      12,704,004
8,175     

Business Objects SA(a)

      491,199
10,314     

Casino Guichard Perrachon SA

      1,151,744
15,356     

CNP Assurances

      1,957,231
81,829     

Compagnie de Saint-Gobain

      8,770,229
9,998     

Compagnie Generale des Etablissements Michelin (Class B)

      1,338,618
167,122     

France Telecom SA

      6,163,433
47,499     

Lafarge SA

      7,723,275
22,995     

Lagardere SCA

      1,943,258
81,009     

Peugeot SA

      7,507,722
2,112     

PPR

      418,576
14,161     

Renault SA

      2,377,432
64,148     

Safran SA

      1,627,046
145,961     

Sanofi-Aventis

      12,799,998
19,389     

Schneider Electric SA

      2,669,551
54,200     

SCOR SE

      1,476,005
40,968     

Societe Generale

      6,875,574
52,469     

Suez SA

      3,412,556
7,459     

Thales SA

      464,817

 

See Notes to Financial Statements.

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Shares      Description    Value (Note 1)
       
207,843     

Total SA

    $ 16,754,492
228,567     

Vivendi

      10,290,233
           
          120,677,303

Germany    8.6%

       
62,769     

Allianz SE

      14,140,413
29,886     

Altana AG

      724,693
87,202     

BASF AG

      12,097,249
182,294     

Commerzbank AG

      7,742,247
23,291     

Continental AG

      3,518,869
18,643     

Daimler AG

      2,067,514
67,780     

Deutsche Bank AG

      9,080,861
55,770     

Deutsche Lufthansa AG

      1,648,824
81,773     

E.ON AG

      15,998,060
6,992     

Heidelberger Druckmaschinen AG

      286,425
56,714     

Hypo Real Estate Holding AG

      3,382,220
1,783     

MAN AG

      318,582
42,596     

Muenchener Rueckversicherungs-Gesellschaft AG

      8,144,669
36,997     

RWE AG

      5,042,975
18,218     

Salzgitter AG

      3,582,376
23,919     

Siemens AG

      3,270,045
132,894     

ThyssenKrupp AG

      8,830,083
17,839     

Wincor Nixdorf AG

      1,771,367
           
          101,647,472

Greece     0.9%

       
22,041     

Alpha Bank AE

      815,423
30,186     

Coca-Cola Hellenic Bottling Co. SA

      1,873,207
81,948     

National Bank of Greece SA

      5,695,465
41,378     

OPAP SA

      1,690,244
           
          10,074,339

Hong Kong    1.9%

       
139,000     

Cheung Kong Infrastructure Holdings, Ltd.

      544,595
288,000     

Esprit Holdings, Ltd.

      4,809,980
206,652     

Hong Kong Exchanges and Clearing, Ltd.

      6,898,556
114,000     

Hong Kong Electric Holdings, Ltd.

      586,099
208,000     

Hopewell Holdings

      1,077,808
208,000     

Li & Fung, Ltd.

      987,033
88,000     

Orient Overseas International, Ltd.

      908,497

 

See Notes to Financial Statements.

Dryden International Equity Fund   13

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       
192,500     

Swire Pacific, Ltd. (Class A)

    $ 2,749,260
692,000     

Wharf Holdings, Ltd.

      4,172,402
           
          22,734,230

Ireland    0.3%

       
47,743     

Allied Irish Banks PLC

      1,192,277
61,603     

Anglo Irish Bank Corp. PLC

      1,035,120
21,766     

Bank of Ireland

      401,679
6,461     

CRH PLC

      246,517
3,409     

Irish Life & Permanent PLC

      77,261
           
          2,952,854

Italy     2.9%

       
413,081     

Enel SpA

      4,945,483
181,173     

ENI SpA

      6,613,398
165,699     

Fiat SpA

      5,347,684
12,875     

Fondiaria-SAI SpA

      624,587
19,510     

Italcementi SpA

      448,220
2,076,380     

Telecom Italia SpA

      5,365,774
1,242,360     

UniCredito Italiano SpA

      10,635,689
23,660     

Union di Banche Italiane SCPA

      657,689
           
          34,638,524

Japan    18.8%

       
99,300     

Aisin Seiki Co., Ltd.

      4,080,251
22,000     

Ajinomoto Co., Inc.

      248,490
155,000     

Amada Co., Ltd.

      1,568,366
23,100     

Asahi Breweries, Ltd.

      382,030
44,700     

Astellas Pharma, Inc.

      1,984,296
111,300     

Bridgestone Corp.

      2,463,711
254,000     

Chiba Bank, Ltd. (The)

      2,038,669
53,000     

Chuo Mitsui Trust Holdings, Inc.

      424,080
52,400     

Coca-Cola West Holdings Co., Ltd.

      1,213,088
83,000     

COMSYS Holdings Corp.

      813,728
147,000     

Dainippon Ink & Chemicals, Inc.

      705,313
46,000     

Daito Trust Construction Co., Ltd.

      2,132,798
55,900     

Denso Corp.

      2,270,942
141,700     

FUJIFILM Holdings Corp.

      6,778,193
69,000     

Hachijuni Bank, Ltd. (The)

      527,058
60,000     

Hino Motors, Ltd.

      432,568
39,600     

Hitachi Construction Machinery Co., Ltd.

      1,624,220
70,353     

Hokkaido Electric Power Co., Inc.

      1,518,143
124,474     

Honda Motor Co., Ltd.

      4,661,160

 

See Notes to Financial Statements.

14   Visit our website at www.jennisondryden.com

 

Shares      Description    Value (Note 1)
       
3,100     

Idemitsu Kosan Co., Ltd.

    $ 361,024
591,000     

ITOCHU Corp.

      7,468,189
104,000     

JGC Corp.

      2,082,687
94,000     

Joyo Bank, Ltd. (The)

      582,927
39,100     

JS Group Corp.

      633,403
158,000     

Kamigumi Co., Ltd.

      1,286,495
325,000     

Kawasaki Kisen Kaisha, Ltd.

      4,511,082
307     

KDDI Corp.

      2,318,672
2,200     

Keyence Corp.

      506,992
287,700     

Komatsu, Ltd.

      9,645,619
40,000     

Komori Co.

      1,057,938
14,000     

Konica Minolta Holdings, Inc.

      245,078
60,500     

Kuraray Co., Ltd.

      790,003
27,200     

Kyocera Corp.

      2,311,950
148,000     

Kyowa Hakko Kogyo Co., Ltd.

      1,615,723
63,600     

Makita Corp.

      3,064,042
476,222     

Marubeni Corp.

      4,089,058
630,343     

Mitsubishi Chemical Holdings Corp.

      5,215,492
97,000     

Mitsubishi Gas Chemical Co., Inc.

      971,171
118,000     

Mitsubishi Heavy Industries, Ltd.

      687,209
173,000     

Mitsubishi Materials Corp.

      1,012,847
59,600     

Mitsubishi UFJ Financial Group, Inc.

      596,366
263,000     

Mitsui & Co., Ltd.

      6,821,710
458,000     

Mitsui O.S.K. Lines, Ltd.

      7,569,609
115,000     

Nikon Corp.

      3,690,552
18,900     

Nintendo Co., Ltd.

      12,002,987
379,000     

Nippon Mining Holdings, Inc.

      3,584,720
771,000     

Nippon Oil Corp.

      6,828,505
134,000     

Nippon Sheet Glass Co., Ltd.

      818,065
66,000     

Nippon Shokubai Co., Ltd.

      652,254
759     

Nippon Telegraph and Telephone Corp.

      3,473,671
45,000     

Nippon Yusen KK

      464,588
168,500     

Nissan Motor Co., Ltd.

      1,933,161
29,000     

Nisshinbo Industries, Inc.

      395,784
41,000     

NOK Corp.

      915,969
158,753     

NSK, Ltd.

      1,407,541
76     

NTT Data Corp.

      346,572
23,000     

Olympus Corp.

      957,828
90,700     

Omron Corp.

      2,230,747
318,000     

Ricoh Co., Ltd.

      6,285,445
153,000     

Sanwa Holdings Corp.

      806,897
89     

Sapporo Hokuyo Holdings, Inc.

      916,044
42,000     

Seino Holdings Corp.

      360,639

 

See Notes to Financial Statements.

Dryden International Equity Fund   15

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       
306,000     

Sekisui Chemical Co., Ltd.

    $ 2,094,225
394,000     

Sekisui House, Ltd.

      5,040,610
32,100     

Shin-Etsu Chemical Co., Ltd.

      2,059,088
18,000     

Shiseido Co., Ltd.

      433,340
36,600     

Stanley Electric Co., Ltd.

      813,952
48,400     

Sumco Corp.

      1,766,464
222,400     

Sumitomo Corp.

      3,875,078
84,000     

Sumitomo Electric Industries, Ltd.

      1,359,983
77,000     

Sumitomo Heavy Industries, Ltd.

      1,017,235
1,271,000     

Sumitomo Metal Industries, Ltd.

      6,290,955
139,000     

Sumitomo Metal Mining Co., Ltd.

      3,101,766
827     

Sumitomo Mitsui Financial Group, Inc.

      6,774,225
11,000     

Sumitomo Realty & Development Co., Ltd.

      388,247
7,000     

Suzuken Co., Ltd.

      225,997
18,200     

Takeda Pharmaceutical Co., Ltd.

      1,136,854
31,700     

TDK Corp.

      2,601,606
51,200     

Tokai Rika Co., Ltd.

      1,514,236
38,400     

Tokyo Electron, Ltd.

      2,255,085
324,000     

Tokyo Tatemono Co., Ltd.

      4,168,311
28,000     

Toshiba Corp.

      237,112
302,000     

Tosoh Corp.

      1,932,933
30,000     

Toyo Suisan Kaisha, Ltd.

      521,558
9,100     

Toyota Industries Corp.

      389,689
318,034     

Toyota Motor Corp.

      18,205,602
14,480     

USS Co., Ltd.

      948,449
68,300     

Yamaha Corp.

      1,588,586
13,700     

Yamaha Motor Co., Ltd.

      391,211
29,000     

Zeon Corp.

      273,848
           
          220,790,604

Luxembourg    0.2%

       
30,100     

Oriflame Cosmetics SA

      1,819,633

Netherlands    6.0%

       
241,294     

Aegon NV

      4,984,214
37,601     

European Aeronautic Defence and Space Co. NV

      1,276,697
25,849     

Fugro NV

      2,265,321
7,897     

Heineken NV

      552,510
272,718     

ING Groep NV

      12,262,137
18,540     

Koninklijke Ahold NV

      278,228
109,154     

Koninklijke DSM NV

      6,188,582
357,344     

Royal Dutch Shell PLC

      15,640,718
360,197     

Royal Dutch Shell PLC (Class B)

      15,690,697

 

See Notes to Financial Statements.

16   Visit our website at www.jennisondryden.com

 

Shares      Description    Value (Note 1)
       
166,307     

TNT NV

    $ 6,803,085
135,932     

Unilever NV

      4,408,659
           
          70,350,848

New Zealand    0.3%

150,996     

Fletcher Building, Ltd.

      1,387,316
784,679     

Telecom Corp. of New Zealand, Ltd.

      2,635,858
           
          4,023,174

Norway     0.4%

              
193,109     

DnB NOR ASA

      3,184,421
38,430     

Orkla ASA

      713,921
12,850     

Petroleum Geo-Services ASA

      378,307
           
          4,276,649

Portugal    0.8%

       
273,131     

Banco BPI SA

      2,389,674
228,597     

Banco Espirito Santo SA

      5,536,528
58,136     

Cimpor Cimentos de Portugal SGPS SA

      527,169
41,652     

Portugal Telecom SGPS SA

      574,959
5,866     

PT Multimedia Servicos de Telecomunicacoes e Multimedia SGPS SA

      79,788
169,040     

Sonae SGPS SA

      494,620
           
          9,602,738

Singapore    1.3%

       
89,000     

CapitaLand, Ltd.

      501,109
64,000     

City Developments, Ltd.

      706,646
72,000     

DBS Group Holdings, Ltd.

      1,126,928
6,000     

Haw Par Corp., Ltd.

      32,996
105,004     

Jardine Cycle & Carriage, Ltd.

      1,539,407
332,000     

Keppel Corp, Ltd.

      3,412,672
300,000     

SembCorp Industries, Ltd.

      1,239,154
878,800     

SembCorp Marine, Ltd.

      2,728,366
93,000     

Singapore Exchange, Ltd.

      1,019,057
221,000     

Singapore Petroleum Co., Ltd.

      1,262,053
123,000     

Singapore Press Holdings, Ltd.

      391,507
98,000     

UOL Group, Ltd.

      359,599
92,000     

Venture Corp., Ltd.

      892,535
           
          15,212,029

South Africa

       
16,930     

Mondi, Ltd.

      171,611

 

See Notes to Financial Statements.

Dryden International Equity Fund   17

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       

Spain    4.9%

       
50,178     

Acerinox SA

    $ 1,479,864
73,188     

ACS Actividades Cons y Serv

      4,527,934
268,684     

Banco Bilbao Vizcaya Argentaria SA

      6,760,398
115,450     

Banco Popular Espanol SA

      2,015,170
788,577     

Banco Santander SA

      17,134,286
77,476     

Ebro Puleva SA

      1,596,992
4,775     

Fomento de Construcciones y Contratas SA

      415,699
31,937     

Gas Natural SDG SA

      1,963,824
55,042     

Gestevision Telecinco SA

      1,582,652
44,911     

Inditex SA

      3,340,595
117,275     

Repsol YPF SA

      4,629,165
281,360     

Telefonica SA

      9,288,324
47,101     

Union Fenosa SA

      3,132,334
           
          57,867,237

Sweden    2.4%

       
11,900     

Alfa Laval AB

      942,326
90,750     

Boliden AB

      1,600,113
74,067     

Husqvarna AB (Class B)

      892,015
251,918     

Sandvik AB

      4,759,119
156,287     

Skandinaviska Enskilda Banken AB (Class A)

      4,785,514
285,300     

Svenska Cellulosa AB (Class B)

      5,030,439
231,800     

Svenska Handelbanken AB (Class A)

      7,681,599
99,300     

Swedish Match AB

      2,219,850
           
          27,910,975

Switzerland    6.2%

       
434,494     

ABB, Ltd.

      13,067,827
168,483     

Credit Suisse Group

      11,330,133
28,593     

Nestle SA

      13,193,162
76,430     

Novartis AG

      4,064,302
2,077     

Rieter Holding AG

      1,203,993
47,588     

Roche Holding AG

      8,117,566
31,014     

Swatch Group AG

      1,947,746
6,885     

Swiss Life Holding

      1,901,934
76,358     

Swiss Reinsurance Co.

      7,165,154
5,507     

Swisscom AG

      2,035,888
55,951     

UBS AG

      2,992,200
18,212     

Zurich Financial Services AG

      5,482,938
           
          72,502,843

 

See Notes to Financial Statements.

18   Visit our website at www.jennisondryden.com

 

Shares      Description    Value (Note 1)
       

United Kingdom    19.1%

       
46,124     

3i Group PLC

    $ 1,040,578
62,087     

Anglo American PLC

      4,278,301
213,784     

AstraZeneca PLC

      10,548,509
122,922     

Aviva PLC

      1,931,000
38,377     

Balfour Beatty PLC

      394,998
336,323     

Barclays PLC

      4,223,881
149,760     

Barratt Developments PLC

      2,031,863
62,455     

Bellway PLC

      1,396,027
279,337     

BHP Billiton PLC

      10,634,937
47,226     

Bovis Homes Group PLC

      651,539
854,257     

BP PLC

      11,101,629
75,258     

British Airways PLC(a)

      696,746
52,379     

British American Tobacco PLC

      1,993,088
52,041     

British Land Co. PLC

      1,172,987
976,855     

BT Group PLC

      6,621,644
201,580     

Capita Group PLC

      3,139,405
1,074,763     

Centrica PLC

      8,240,677
96,441     

Charter PLC(a)

      2,173,748
48,426     

Close Brothers Group PLC

      773,318
61,006     

Daily Mail & General Trust

      777,591
59,810     

Firstgroup PLC

      988,688
425,240     

GlaxoSmithKline PLC

      10,946,440
160,310     

Hays PLC

      457,500
479,577     

HBOS PLC

      8,705,440
507,232     

Home Retail Group

      4,598,448
497,725     

HSBC Holdings PLC

      9,842,107
20,083     

IMI PLC

      234,475
177,863     

Imperial Tobacco Group PLC

      8,997,997
19,363     

Inchcape PLC

      189,330
71,323     

International Power PLC

      725,198
48,973     

Investec PLC

      591,631
542,033     

Kingfisher PLC

      2,223,673
816,244     

Legal & General Group PLC

      2,377,805
280,194     

Lloyds TSB Group PLC

      3,178,130
40,829     

Marks & Spencer Group PLC

      553,521
141,007     

Michael Page International PLC

      1,284,201
147,309     

Mondi PLC

      1,365,334
237,933     

National Grid PLC

      3,965,303
61,257     

Next PLC

      2,812,373
19,232     

Northern Rock PLC

      73,780
437,638     

Old Mutual PLC

      1,674,368

 

See Notes to Financial Statements.

Dryden International Equity Fund   19

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       
30,561     

Persimmon PLC

    $ 666,594
188,786     

Reckitt Benckiser PLC

      10,948,041
108,995     

Resolution PLC

      1,655,560
135,717     

Rio Tinto PLC

      12,670,644
4,812,852     

Rolls-Royce Group PLC (Class B)(a)

      10,007
119,130     

Rolls-Royce Group PLC

      1,332,667
1,245,164     

Royal & Sun Alliance Insurance Group PLC

      4,082,972
1,179,090     

Royal Bank of Scotland Group PLC

      12,662,965
102,555     

SABMiller PLC

      3,081,363
67,079     

Scottish & Southern Energy PLC

      2,170,273
46,213     

Tate & Lyle PLC

      418,476
512,684     

Taylor Wimpey PLC

      2,638,415
906,586     

Tesco PLC

      9,199,134
67,735     

Trinity Mirror PLC

      565,832
186,044     

TUI Travel PLC(a)

      1,042,540
37,878     

Unilever PLC

      1,279,848
4,558,150     

Vodafone Group PLC

      17,913,008
64,221     

William Hill PLC

      826,582
102,500     

WPP Group PLC

      1,399,190
55,210     

Yell Group PLC

      522,333
           
          224,694,652
           
    

Total common stocks
(cost $903,148,567)

      1,145,170,913
           

PREFERRED STOCK    0.5%

       

Germany

        
2,279     

Porsche AG (cost $3,002,136)

      6,077,553
           
    

Total long-term investments
(cost $906,150,703)

      1,151,248,466
           
Principal Amount (000)        
       

SHORT-TERM INVESTMENTS     0.4%

   

U.S. Government Security     0.2%

       

United States

        
$2,550     

United States Treasury Bills, 3.82%, 12/20/2007(b)(c)
(cost $2,536,742)

      2,536,541
           

 

See Notes to Financial Statements.

20   Visit our website at www.jennisondryden.com

 

 

Shares      Description    Value (Note 1)
       

Affiliated Money Market Mutual Fund    0.2%

       
2,626,492     

Dryden Core Investment Fund - Taxable Money Market Series
(cost $2,626,492)(Note 3)(d)

    $ 2,626,492
           
    

Total short-term investments
(cost $5,163,234)

      5,163,033
           
    

Total Investments(f)    98.3%
(cost $911,313,937; Note 5)

      1,156,411,499
    

Other assets in excess of liabilities(e)    1.7%

      19,985,827
           
    

Net Assets    100.0%

    $ 1,176,397,326
           
(a) Non-income producing security.
(b) Rate quoted represents yield-to-maturity as of purchase date.
(c) All or portion of security segregated as collateral for financial futures contracts.
(d) Prudential Investments LLC, the manager of the Fund also serves as the manager of the Dryden Core Investment Fund - Taxable Money Market Series.
(e) Other assets in excess of liabilities included net unrealized appreciation on financial futures as follows:

 

Open future contracts outstanding at October 31, 2007:

 

Number of
Contracts		   Type   Expiration
Date		  

Value at
October 31,

2007

  

Value at
Trade

Date

   Unrealized
Appreciation
Long Positions:          
11   Hang Seng Stock Index   Nov. 07   $ 2,219,019   $ 2,138,689   $ 80,330
122   Nikkei 225 Index   Dec. 07     10,281,550     9,747,950     533,600
123   DJ Euro Stoxx 50 Index   Dec. 07     8,024,799     7,649,933     374,866
46   FTSE 100 Index   Dec. 07     6,454,806     6,167,460     287,346
             
          $ 1,276,142
             
(f) As of October 31, 2007, 142 securities representing $341,761,508 and 29.6% of the total market value was fair valued in accordance with the policies adopted by the Board of Directors.

 

See Notes to Financial Statements.

Dryden International Equity Fund   21

 

The industry classification of portfolio holdings and other assets in excess of liabilities shown as a percentage of net assets as of October 31 , 2007 was as follows:

 

Commercial Banks

    14.9 %

Oil, Gas & Consumable Fuels

    7.4  

Metals & Mining

    6.4  

Insurance

    5.6  

Pharmaceuticals

    4.4  

Automobiles

    4.1  

Diversified Telecommunication Services

    3.5  

Chemicals

    2.7  

Diversified Financial Services

    2.5  

Electric Utilities

    2.5  

Machinery

    2.5  

Capital Markets

    2.4  

Food Products

    2.1  

Trading Companies & Distributors

    1.9  

Household Durables

    1.8  

Multi-Utilities

    1.8  

Wireless Telecommunication Services

    1.7  

Auto Components

    1.6  

Communications Equipment

    1.6  

Electrical Equipment

    1.5  

Food & Staples Retailing

    1.5  

Media

    1.5  

Beverages

    1.4  

Electronic Equipment & Instruments

    1.3  

Marine

    1.1  

Real Estate Management & Development

    1.1  

Software

    1.1  

Tobacco

    1.1  

Airlines

    1.0  

Real Estate Investment Trusts (REITs)

    1.0  

Specialty Retail

    1.0  

Building Products

    0.9  

Construction Materials

    0.9  

Household Products

    0.9  

Industrial Conglomerates

    0.8  

Biotechnology

    0.7  

Construction & Engineering

    0.7  

Energy Equipment & Services

    0.7  

Air Freight & Logistics

    0.6  

Office Electronics

    0.6  

Paper & Forest Products

    0.6  

Commercial Services & Supplies

    0.5  

Transportation Infrastructure

    0.5  

Aerospace & Defense

    0.4  

Internet & Catalog Retail

    0.4  
22   Visit our website at www.jennisondryden.com

 

Leisure Equipment & Products

    0.4 %

Distributors

    0.3  

Hotels, Restaurants & Leisure

    0.3  

Multiline Retail

    0.3  

Semiconductors & Semiconductor Equipment

    0.3  

Affiliated Money Market Mutual Fund

    0.2  

Computers & Peripherals

    0.2  

Gas Utilities

    0.2  

Personal Products

    0.2  

Textiles, Apparel & Luxury Goods

    0.2  

U.S Government Security

    0.2  

Health Care Equipment & Supplies

    0.1  

Independent Power Producers & Energy Traders

    0.1  

Road & Rail

    0.1  
      
   98.3  

Other assets in excess of liabilities

    1.7  
      
   100.0 %
      

 

See Notes to Financial Statements.

Dryden International Equity Fund   23

Statement of Assets and Liabilities

 

as of October 31, 2007

 

Assets

   

Investments, at value:

   

Unaffiliated investments (cost $908,687,445)

    $ 1,153,785,007  

Affiliated investments (cost $2,626,492)

      2,626,492  

Cash

      2  

Foreign currency, at value (cost $17,889,274)

      18,259,790  

Receivables for investments sold

      4,619,393  

Dividends receivable

      2,054,239  

Foreign tax reclaim receivable

      1,141,081  

Receivable for Series shares sold

      413,719  

Due from broker—variation margin

      136,355  

Prepaid expenses

      49,211  
        

Total assets

      1,183,085,289  
        

Liabilities

         

Payable for investments purchased

      3,688,174  

Payable for Series shares reacquired

      1,137,478  

Management fee payable

      756,021  

Accrued expenses

      553,982  

Distribution fee payable

      316,224  

Transfer agent fee payable

      222,929  

Deferred directors’ fees

      13,155  
        

Total liabilities

      6,687,963  
        

Net Assets

    $ 1,176,397,326  
        
          

Net assets were comprised of:

   

Common stock, at par

    $ 1,126,506  

Paid-in capital in excess of par

      1,036,073,618  
        
     1,037,200,124  

Undistributed net investment income

      13,689,008  

Accumulated net realized loss on investments and foreign currency transactions

      (121,368,950 )

Net unrealized appreciation on investments and foreign currencies

      246,877,144  
        

Net assets, October 31, 2007

    $ 1,176,397,326  
        

 

See Notes to Financial Statements.

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Class A

       

Net asset value and redemption price per share

   

($557,878,469 ÷ 53,171,698 shares of common stock issued and outstanding)

    $ 10.49

Maximum sales charge (5.50% of offering price)

      .61
      

Maximum offering price to public

    $ 11.10
      

Class B

       

Net asset value, offering price and redemption price per share

   

($32,905,153 ÷ 3,260,012 shares of common stock issued and outstanding)

    $ 10.09
      

Class C

       

Net asset value, offering price and redemption price per share

   

($75,010,229 ÷ 7,433,921 shares of common stock issued and outstanding)

    $ 10.09
      

Class F

       

Net asset value, offering price and redemption price per share

   

($28,727,534 ÷ 2,841,107 shares of common stock issued and outstanding)

    $ 10.11
      

Class L

       

Net asset value and redemption price per share

   

($34,432,545 ÷ 3,287,055 shares of common stock issued and outstanding)

    $ 10.48

Maximum sales charge (5.75% of offering price)

      .64
      

Maximum offering price to public

    $ 11.12
      

Class M

       

Net asset value, offering price and redemption price per share

   

($68,244,370 ÷ 6,761,142 shares of common stock issued and outstanding)

    $ 10.09
      

Class X

       

Net asset value, offering price and redemption price per share

   

($25,427,932 ÷ 2,519,346 shares of common stock issued and outstanding)

    $ 10.09
      

Class Z

       

Net asset value, offering price and redemption price per share

   

($353,771,094 ÷ 33,376,343 shares of common stock issued and outstanding)

    $ 10.60
      

 

See Notes to Financial Statements.

Dryden International Equity Fund   25

Statement of Operations

 

Year Ended October 31, 2007

 

 

Net Investment Income

       

Income

   

Unaffiliated dividends (net of foreign withholding taxes of $2,812,563)

    $ 27,590,571

Interest

      200,226

Affiliated dividend income

      56,348

Affiliated income from securities loaned, net

      45,968
      

Total income

      27,893,113
      

Expenses

   

Management fee

      7,402,265

Distribution fee—Class A

      1,095,486

Distribution fee—Class B

      392,046

Distribution fee—Class C

      537,654

Distribution fee—Class F

      217,060

Distribution fee—Class L

      109,400

Distribution fee—Class M

      476,630

Distribution fee—Class X

      157,665

Transfer agent’s fees and expenses (including affiliated expense of $1,373,100)

      1,934,000

Custodian’s fees and expenses

      530,000

Reports to shareholders

      102,000

Legal fees and expenses

      71,000

Registration fees

      60,000

Loan interest expense (Note 7)

      40,144

Audit fee

      39,000

Directors’ fees

      33,000

Insurance

      12,000

Miscellaneous

      60,730
      

Total expenses

      13,270,080
      

Net investment income

      14,623,033
      

Realized And Unrealized Gain On Investments, Futures And Foreign Currency Transactions

       

Net realized gain on:

   

Investment transactions

      179,200,218

Foreign currency transactions

      510,676

Financial futures transactions

      1,779,429
      
     181,490,323
      

Net change in unrealized appreciation (depreciation) on:

   

Investments

      8,214,256

Foreign currencies

      255,127

Financial futures contracts

      917,547
      
     9,386,930
      

Net gain on investments and foreign currency transactions

      190,877,253
      

Net Increase In Net Assets Resulting From Operations

    $ 205,500,286
      

 

See Notes to Financial Statements.

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Statement of Changes in Net Assets

 

     Year Ended October 31,  
     2007        2006  

Increase (Decrease) In Net Assets

                    

Operations

        

Net investment income

    $ 14,623,033        $ 4,095,439  

Net realized gain on investments and foreign currency transactions

      181,490,323          19,004,077  

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

      9,386,930          48,931,280  
                   

Net increase in net assets resulting from operations

      205,500,286          72,030,796  
                   

Dividends from net investment income (Note 1)

        

Class A

      (1,073,236 )        (223,315 )

Class B

      (374,594 )        —  

Class C

      (114,787 )        —  

Class Z

      (4,300,460 )        (1,403,752 )
                   
     (5,863,077 )        (1,627,067 )
                   

Series share transactions (net of share conversions) (Note 6)

        

Net proceeds from shares sold

      165,224,236          103,089,748  

Net asset value of shares issued in connection with mergers (Note 8)

      638,140,587          —  

Net asset value of shares issued in reinvestment of dividends

      5,775,611          1,617,011  

Cost of shares reacquired

      (203,229,861 )        (78,038,521 )
                   

Net increase in net assets from Series share transactions

      605,910,573          26,668,238  
                   

Total increase

      805,547,782          97,071,967  

Net Assets

                    

Beginning of year

      370,849,544          273,777,577  
                   

End of year(a)

    $ 1,176,397,326        $ 370,849,544  
                   

(a) Includes undistributed net investment income of:

    $ 13,689,008        $ 4,159,706  
                   

 

See Notes to Financial Statements.

Dryden International Equity Fund   27

 

Notes to Financial Statements

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as an open-end, diversified management investment company and currently consists of two series: Dryden International Equity Fund (the “Series”) and Strategic Partners International Value Fund. These financial statements relate to the Dryden International Equity Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations in March 2000. The investment objective of the Series is to achieve long-term growth of capital. The Series seeks to achieve its objective primarily through investment in equity-related securities of foreign issuers.

 

Note 1. Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund and the Series in the preparation of its financial statements.

 

Securities Valuation: Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and ask prices, or at the last bid price on such day in the absence of an asked price. Securities traded via Nasdaq are valued at the official closing price provided by Nasdaq. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”), in consultation with the subadvisers, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker. Options on securities and indices traded on an exchange are valued at the last sale price as of the close of trading on the applicable exchange or, if there was no sale, at the mean between the most recently quoted bid and asked prices on such exchange. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities for which reliable market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign market and before the Funds’ normal pricing time, are valued at fair value in accordance with the Board

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of Directors’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values. As of October 31, 2007, 142 securities representing $341,761,508 and 29.6% of the total market value were fair valued in accordance with the policies adopted by the Board of Directors.

 

Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.

 

Short-term securities which mature in 60 days or less are valued at amortized cost, which approximates market value. The amortized cost method includes valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term debt securities that mature in more than 60 days are valued at current market quotations.

 

Foreign Currency Translation: The books and records of the Series 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 current 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.

 

The Series 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 long term securities held at the end of the fiscal year. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the fiscal year. Accordingly, realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.

 

 

Dryden International Equity Fund   29

Notes to Financial Statements

 

continued

 

 

Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from holdings 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 withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities (other than investments) at fiscal year end exchange rates are reflected as a component of net unrealized appreciation (depreciation) 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 or economic instability, or the level of governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from security and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Expenses are recorded on the accrual basis.

 

Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or losses are allocated daily to each class of shares 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 or loss on financial futures transactions. The Fund invests in financial futures contracts in

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order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, 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, interest rates and the underlying hedged assets.

 

Financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities.

 

Dividends and Distributions: The Series expects to pay dividends of net investment income and distributions of net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles, are recorded on the ex-dividend date.

 

Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is each Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.

 

Withholding taxes on foreign dividends are recorded net of reclaimable amounts, at the time the related income is earned.

 

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Note 2. Agreements

 

The Fund has a management agreement for the Series with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI entered into a subadvisory agreement with Quantitative Management Associates LLC (QMA). The subadvisory agreement provides that QMA furnishes investment advisory services in connection with the management of the Series. In connection therewith, QMA is obligated to keep certain books and records of the Series. PI pays for the services of QMA, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

Dryden International Equity Fund   31

Notes to Financial Statements

 

continued

 

 

The management fee paid to PI is computed daily and payable monthly, at an annual rate of .85 of 1% of the average daily net assets of the Series up to and including $300 million, .75 of 1% of the average daily net assets in excess of $300 million up to and including $1.5 billion and .70 of 1% of the Series’ average daily net assets over $1.5 billion. PI contractually agreed to subsidize and or cap the annual operating expenses so that annual operation expenses (exclusive of distribution and service (12b-1) fees) do not exceed 1.25% of the Series net assets. The effective management fee was .78% for the year ended October 31, 2007.

 

The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of Class A, Class B, Class C, Class F, Class L, Class M, Class X, and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B, Class C, Class F, Class L, Class M and Class X shares, pursuant to a plan of distribution, (the “Class A, B, C, F, L, M and X Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor for Class Z shares of the Series.

 

Pursuant to the Class A, B, C, F, L, M and X Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30 of 1%, 1%, 1%, .75 of 1%, .50 of 1%, 1%, and 1% of the average daily net assets of the Class A, B, C, F, L, M, and X shares, respectively. For the year ended October 31, 2007, PIMS contractually agreed to limit such fees to .25 of 1% of the average daily net assets of the Class A shares.

 

PIMS has advised the Series that they received approximately $428,000 in front-end sales charges resulting from sales of Class A shares during the year ended October 31, 2007. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the year ended October 31, 2007 it received approximately $2,000, $35,100, $2,000, $27,600, $52,200 and $23,500 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B, Class C, Class F, Class M, and Class X shareholders, respectively.

 

PI, QMA and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

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Note 3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series pays networking fees to affiliated and unaffiliated broker/dealers, including fees relating to the services of First Clearing, LLC (“First Clearing”), an affiliate of Pl. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. For the year ended October 31, 2007, the Series incurred approximately $312,400 in total networking fees, of which approximately $170,700 was paid to First Clearing. These amounts are included in transfer agents’s fees and expenses on the Statement of Operations.

 

The Series invests in the Taxable Money Market Series (the “Portfolio”), a portfolio of the Dryden Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Portfolio is a money market mutual fund registered under the Investment Company Act of 1940, as amended, and managed by PI.

 

Note 4. Portfolio Securities

 

Purchases and sales of investment securities, other than short-term investments, for the year ended October 31, 2007 aggregated $1,044,429,247 and $1,065,224,394, respectively.

 

Note 5. Tax Information

 

Distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting

principles, are recorded on the ex-dividends date. In order to present undistributed net investment income, accumulated net realized loss on investments and foreign currency transactions and paid-in capital in excess of par on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in-capital in excess of par, undistributed net investment income and accumulated net realized loss on investments and foreign currency transactions. For the year ended October 31, 2007, the adjustments were to increase undistributed net investment income by $769,346, increase accumulated net realized loss on investments and foreign currency transactions by $152,351,665 and increase paid-in-capital in excess of par by $151,582,319, due to the difference in the treatment for book and tax purposes of certain transactions involving foreign

Dryden International Equity Fund   33

Notes to Financial Statements

 

continued

 

currencies, passive foreign investment companies, reclassification of disallowed wash sales due to reorganization, reclassification of capital loss carryforward due to reorganization, reclassification of deferred director’s compensation due to reorganization and other book to tax adjustments. Net investment income, net realized gains and net assets were not affected by this change.

 

As of October 31, 2007, the Series had undistributed ordinary income of $14,544,567 and undistributed long-term capital gains of $42,217,132 on a tax basis.

 

For the years ended October 31, 2007 and October 31, 2006, the tax character of dividends paid as reflected in the Statement of Changes in Net Assets were $5,863,077 and $1,627,067, respectively, from ordinary income.

 

As of October 31, 2007, the Fund had a capital loss carryforward for tax purposes of approximately $162,319,000 of which $78,028,000 expires in 2009, $72,865,000 expires in 2010 and $11,426,000 expires in 2011. The Fund utilized approximately $131,614,000 of its capital loss carryforward to offset net taxable gains realized in the fiscal year ended October 31, 2007. Certain portions of the capital loss carryforwards were assumed by the Fund as a result of acquisitions. Utilization of these capital loss carryforwards were limited in accordance with income tax regulations.

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of October 31, 2007 was as follows:

 

Tax Basis of
Investments

  

Appreciation

  

Depreciation

  

Net
Unrealized
Appreciation

  

Other Cost
Basis
Adjustments

  

Total Net
Unrealized
Appreciation

$912,889,697   $253,036,834   $9,515,032   $243,521,802   $1,245,982   $244,767,784

 

The difference between book and tax basis is primarily attributable to deferred losses on wash sales and market to market of open passive foreign investment companies. The other cost basis adjustments are primarily attributable to appreciation (depreciation) of foreign currency and mark-to-market of receivables and payables.

 

Note 6. Capital

 

The Series offers Class A, Class B, Class C, Class F, Class L, Class M, Class X and Class Z shares. Class A and Class L shares are sold with a front-end sales charge of up

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to 5.50% and 5.75%, respectively. All investors who purchase Class A and L shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B and F shares are sold with a contingent deferred sales charge which declines from 5% to zero depending on the period of time the shares are held. Class B and F shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class C shares are sold with a contingent deferred sales charge of 1% during the first 12 months. Class M and X shares are sold with a contingent deferred sales charge which declines from 6% to zero depending on the period of time the shares are held. Class M and X shares will automatically convert to Class A shares on a quarterly basis approximately eight and ten years after purchase, respectively. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

There are 1 billion authorized shares of $.01 par value common stock divided as follows:

 

Share Class

    Authorized share capital
of each share class

A and Z

    225,000,000

B and C

    150,000,000

X

    100,000,000

F,L and M

    50,000,000

 

Class A

    Shares      Amount  

Year ended October 31, 2007:

      

Shares sold

    4,699,322      $ 44,139,225  

Shares issued in connection with the mergers

    43,788,390        387,365,365  

Shares issued in reinvestment of dividends

    116,682        1,026,803  

Shares reacquired

    (8,396,573 )      (79,714,451 )
               

Net increase (decrease) in shares outstanding before conversion

    40,207,821        352,816,942  

Shares issued upon conversion from Class B, F, M and X

    5,103,337        48,076,680  
               

Net increase (decrease) in shares outstanding

    45,311,158      $ 400,893,622  
               

Year ended October 31, 2006:

      

Shares sold

    3,802,085      $ 29,816,540  

Shares issued in reinvestment of dividends

    30,143        213,410  

Shares reacquired

    (1,759,296 )      (13,709,402 )
               

Net increase (decrease) in shares outstanding before conversion

    2,072,932        16,320,548  

Shares issued upon conversion from Class B

    181,369        1,385,391  
               

Net increase (decrease) in shares outstanding

    2,254,301      $ 17,705,939  
               
Dryden International Equity Fund   35

Notes to Financial Statements

 

continued

 

Class B

    Shares      Amount  

Year ended October 31, 2007:

      

Shares sold

    973,069      $ 8,834,305  

Shares issued in connection with the merger

    479,552        4,137,461  

Shares issued in reinvestment of dividends

    40,426        344,432  

Shares reacquired

    (1,149,863 )      (10,210,931 )
               

Net increase (decrease) in shares outstanding before conversion

    343,184        3,105,267  

Shares reacquired upon conversion into Class A

    (2,720,990 )      (24,322,099 )
               

Net increase (decrease) in shares outstanding

    (2,377,806 )    $ (21,216,832 )
               

Year ended October 31, 2006:

      

Shares sold

    770,278      $ 5,842,750  

Shares issued in reinvestment of dividends

    —        —  

Shares reacquired

    (1,449,171 )      (10,830,803 )
               

Net increase (decrease) in shares outstanding before conversion

    (678,893 )      (4,988,053 )

Shares reacquired upon conversion into Class A

    (187,762 )      (1,385,391 )
               

Net increase (decrease) in shares outstanding

    (866,655 )    $ (6,373,444 )
               

Class C

              

Year ended October 31, 2007:

      

Shares sold

    771,512      $ 7,021,256  

Shares issued in connection with the mergers

    6,424,357        55,305,505  

Shares issued in reinvestment of dividends

    12,234        104,237  

Shares reacquired

    (1,456,891 )      (13,392,767 )
               

Net increase (decrease) in shares outstanding

    5,751,212      $ 49,038,231  
               

Year ended October 31, 2006:

      

Shares sold

    441,017      $ 3,332,860  

Shares issued in reinvestment of dividends

    —        —  

Shares reacquired

    (696,970 )      (5,231,728 )
               

Net increase (decrease) in shares outstanding

    (255,953 )    $ (1,898,868 )
               

Class F

              

December 18, 2006* through October 31, 2007:

      

Shares sold

    2,043      $ 43,477  

Shares issued in connection with the merger

    4,458,745        38,141,130  

Shares reacquired

    (587,102 )      (5,339,701 )
               

Net increase (decrease) in shares outstanding before conversion

    3,873,686        32,844,906  

Shares reacquired upon conversion into Class A

    (1,032,579 )      (9,334,747 )
               

Net increase (decrease) in shares outstanding

    2,841,107      $ 23,510,159  
               
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Class L

    Shares      Amount  

March 19, 2007* through October 31, 2007:

      

Shares sold

    17,164      $ 153,156  

Shares issued in connection with the merger

    4,065,903        36,281,032  

Shares reacquired

    (796,012 )      (7,692,330 )
               

Net increase (decrease) in shares outstanding

    3,287,055      $ 28,741,858  
               

Class M

              

March 19, 2007* through October 31, 2007:

      

Shares sold

    80,560      $ 820,336  

Shares issued in connection with the merger

    9,740,447        84,013,342  

Shares reacquired

    (1,558,695 )      (14,616,030 )
               

Net increase (decrease) in shares outstanding before conversion

    8,262,312        70,217,648  

Shares reacquired upon conversion into Class A

    (1,501,170 )      (14,103,100 )
               

Net increase (decrease) in shares outstanding

    6,761,142      $ 56,114,548  
               

Class X

              

March 19, 2007* through October 31, 2007:

      

Shares sold

    42,707      $ 416,726  

Shares issued in connection with the merger

    2,941,125        25,373,808  

Shares reacquired

    (430,786 )      (4,045,067 )
               

Net increase (decrease) in shares outstanding before conversion

    2,553,046        21,745,467  

Shares reacquired upon conversion into Class A

    (33,700 )      (316,734 )
               

Net increase (decrease) in shares outstanding

    2,519,346      $ 21,428,733  
               

Class Z

              

Year ended October 31, 2007:

      

Shares sold

    10,977,676      $ 103,795,755  

Shares issued in connection with the merger

    844,417        7,522,944  

Shares issued in reinvestment of dividends

    484,796        4,300,139  

Shares reacquired

    (7,183,685 )      (68,218,584 )
               

Net increase (decrease) in shares outstanding

    5,123,204      $ 47,400,254  
               

Year ended October 31, 2006:

      

Shares sold

    8,110,954      $ 64,097,598  

Shares issued in reinvestment of dividends

    196,583        1,403,601  

Shares reacquired

    (6,119,945 )      (48,266,588 )
               

Net increase (decrease) in shares outstanding

    2,187,592      $ 17,234,611  
               
* Inception date.
Dryden International Equity Fund   37

Notes to Financial Statements

 

continued

 

 

Note 7. Borrowing

 

The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA is incurred at contracted market rates and a commitment fee for the unused amount is accrued daily and paid quarterly. Effective October 26, 2007, the Funds renewed SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Funds pay a commitment fee of .06 of 1% of the unused portion of the renewed SCA. The expiration date of the renewed SCA will be October 24, 2008. For the period from October 27, 2006 through October 26, 2007, the Funds paid a commitment fee of .07 of 1% of the unused portion of the agreement. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The Series utilized the line of credit during the year ended October 31, 2007. The average daily balance for the 141 days the Series had loans outstanding during the year was approximately $2,106,000 at a weighted average interest rate of 5.73%.

 

Note 8. Reorganization

 

On December 15, 2006, Dryden International Equity Fund acquired all of the net assets of the Jennison Global Growth Fund, Inc., pursuant to a plan of reorganization approved by the Jennison Global Growth Fund, Inc. shareholders on December 11, 2006. The acquisition was accomplished by a tax-free issue of Class A, Class C, Class F and Class Z shares for the corresponding classes of Jennison Global Growth Fund, Inc. During the acquisition the Series renamed Class B shares of Jennison Global Growth and issued Class F shares of Dryden International Equity Fund.

 

On March 16, 2007, Dryden International Equity Fund acquired all of the net assets of the Strategic Partners International Growth Fund pursuant to a plan of reorganization approved by the Strategic Partners International Growth Fund shareholders on December 29, 2006. The acquisition was accomplished by a tax-free issue of Class A, Class B, Class C, Class L, Class M and Class X shares for the corresponding classes of Strategic Partners International Growth Fund.

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Merged Funds

Jennison Global Growth Fund

Class

    Shares

A

    17,883,946

B

    2,162,099

C

    713,686

Z

    377,958

 

SP International Growth Fund

Class

    Shares

A

    2,035,463

B

    243,730

C

    2,517,110

L

    2,062,990

M

    4,948,802

X

    1,493,777

 

Acquiring Fund

Dryden International Equity Fund

Class

    Shares    Value

A

    39,754,913    $ 351,369,984

F

    4,458,745      38,141,130

C

    1,455,002      12,450,845

Z

    844,417      7,522,944

 

Dryden International Equity Fund

Class

    Shares    Value

A

    4,033,477    $ 35,995,381

B

    479,552      4,137,461

C

    4,969,355      42,854,660

L

    4,065,903      36,281,032

M

    9,740,447      84,013,342

X

    2,941,125      25,373,808

 

The aggregate net assets and unrealized appreciation/(depreciation) of the Merged funds immediately before the acquisition were:

 

     Total Net
Assets		    Unrealized
Appreciation

Jennison Global Growth Fund

    $ 409,484,903    $ 107,261,144

SP International Growth Fund

      228,655,684      56,235,689

 

The Fund acquired capital loss carryforward due to the reorganization with Jennison Global Growth Fund and SP International Growth Fund in the amounts of $50,010,130

Dryden International Equity Fund   39

Notes to Financial Statements

 

continued

 

 

and $93,730,145, respectively (amounts included in Note 5). The future utilization of the acquired capital loss carryforward may be limited under certain conditions defined in the Internal Revenue Code of 1986, as amended.

 

Note 9. New Accounting Pronouncements

 

On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Series’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The impact of the tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the year in which they arise. On December 22, 2006 the Securities and Exchange Commission delayed the effective date until the last net asset value calculation in the first required financial reporting period for its fiscal year beginning after December 15, 2006. The Series’ financial statements have not been impacted by the adoption of FIN 48. However, the conclusions regarding FIN 48 may be subject to review and adjusted at a later date based on factors including, but not limited to, further implementation guidance expected from FASB and on-going analysis of tax laws, regulations and interpretations thereof.

 

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (FAS 157). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact, if any, in the financial statements has not yet been determined.

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Financial Highlights

 

 

OCTOBER 31, 2007   ANNUAL REPORT

 

Dryden International Equity Fund

Financial Highlights

 

 

     Class A  
      Year Ended
October 31, 2007(d)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 8.54  
        

Income (loss) from investment operations:

   

Net investment income (loss)

      .16  

Net realized and unrealized gain on investment and foreign currency transactions

      1.92  
        

Total from investment operations

      2.08  
        

Less Dividends:

   

Dividends from net investment income

      (.13 )
        

Net asset value, end of year

    $ 10.49  
        

Total Return(a):

      24.68 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 557,878  

Average net assets (000)

    $ 438,194  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees(b)

      1.34 %

Expenses, excluding distribution and service (12b-1) fees

      1.09 %

Net investment income (loss)

      1.60 %

Portfolio turnover rate

      114 %
(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) The distributor of the Series has contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% of the average daily net assets of the Class A shares.
(c) Net of expense subsidy. If the investment manager had not subsidized expenses, the expense ratios (both including and excluding distribution and service (12b-1) fees) and the net investment income ratios would have been 1.68% 1.43% and 1.02%, respectively for the year ended October 31, 2005.
(d) Calculated based upon average shares outstanding during the year.

 

See Notes to Financial Statements.

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Class A  
Year Ended October 31,  
2006     2005     2004     2003  
     
$ 6.84     $ 5.75     $ 4.84     $ 3.74  
                             
     
  .08       .06       .03       (.02 )
  1.66       1.09       .88       1.12  
                             
  1.74       1.15       .91       1.10  
                             
     
  (.04 )     (.06 )     —       —  
                             
$ 8.54     $ 6.84     $ 5.75     $ 4.84  
                             
  25.55 %     20.13 %     18.80 %     29.41 %
     
$ 67,123     $ 38,323     $ 22,103     $ 20,050  
$ 52,174     $ 30,177     $ 20,760     $ 18,650  
     
  1.40 %     1.57 %(c)     2.02 %     2.13 %
  1.15 %     1.32 %(c)     1.77 %     1.88 %
  1.23 %     1.13 %(c)     .64 %     (.36 )%
  60 %     41 %     100 %     157 %

 

See Notes to Financial Statements.

Dryden International Equity Fund   43

Financial Highlights

 

continued

 

 

     Class B  
      Year Ended
October 31, 2007(c)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 8.22  
        

Income (loss) from investment operations:

   

Net investment income (loss)

      .06  

Net realized and unrealized gain on investment and foreign currency transactions

      1.88  
        

Total from investment operations

      1.94  
        

Less Dividends:

   

Dividends from net investment income

      (.07 )
        

Net asset value, end of year

    $ 10.09  
        

Total Return(a):

      23.73 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 32,905  

Average net assets (000)

    $ 39,205  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.09 %

Expenses, excluding distribution and service (12b-1) fees

      1.09 %

Net investment income (loss)

      .67 %
(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Net of expense subsidy. If the investment manager had not subsidized expenses, the expense ratios (both including and excluding distribution and service (12b-1) fees) and the net investment income ratios would have been 2.43% 1.43% and .28%, respectively for the year ended October 31, 2005.
(c) Calculated based upon average shares outstanding during the year.

 

See Notes to Financial Statements.

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Class B  
Year Ended October 31,  
2006     2005     2004     2003  
     
$ 6.59     $ 5.55     $ 4.71     $ 3.66  
                             
     
  .04       .02       (.01 )     (.05 )
  1.59       1.04       .85       1.10  
                             
  1.63       1.06       .84       1.05  
                             
     
  —       (.02 )     —       —  
                             
$ 8.22     $ 6.59     $ 5.55     $ 4.71  
                             
  24.73 %     19.08 %     17.83 %     28.34 %
     
$ 46,330     $ 42,878     $ 42,252     $ 40,587  
$ 45,041     $ 44,159     $ 42,334     $ 35,399  
     
  2.15 %     2.32 %(b)     2.77 %     2.88 %
  1.15 %     1.32 %(b)     1.77 %     1.88 %
  .46 %     .37 %(b)     (.11 )%     (1.14 )%

 

See Notes to Financial Statements.

Dryden International Equity Fund   45

Financial Highlights

 

continued

 

 

     Class C  
     

Year Ended

October 31, 2007(c)

  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 8.22  
        

Income (loss) from investment operations:

   

Net investment income (loss)

      .10  

Net realized and unrealized gain on investment and foreign currency transactions

      1.84  
        

Total from investment operations

      1.94  
        

Less Dividends:

   

Dividends from net investment income

      (.07 )
        

Net asset value, end of year

    $ 10.09  
        

Total Return(a):

      23.73 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 75,010  

Average net assets (000)

    $ 53,765  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.09 %

Expenses, excluding distribution and service (12b-1) fees

      1.09 %

Net investment income (loss)

      1.03 %
(a) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Net of expense subsidy. If the investment manager had not subsidized expenses, the expense ratios (both including and excluding distribution and service (12b-1) fees) and the net investment income ratios would have been 2.43% 1.43% and .28%, respectively for the year ended October 31, 2005.
(c) Calculated based upon average shares outstanding during the year.

 

See Notes to Financial Statements.

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Class C  
Year Ended October 31  
2006     2005     2004     2003  
     
$ 6.59     $ 5.55     $ 4.71     $ 3.66  
                             
     
  .04       .02       (.01 )     (.05 )
  1.59       1.04       .85       1.10  
                             
  1.63       1.06       .84       1.05  
                             
     
  —       (.02 )     —       —  
                             
$ 8.22     $ 6.59     $ 5.55     $ 4.71  
                             
  24.73 %     19.08 %     17.83 %     28.34 %
     
$ 13,825     $ 12,779     $ 13,669     $ 14,006  
$ 13,478     $ 13,700     $ 13,956     $ 12,640  
     
  2.15 %     2.32 %(b)     2.77 %     2.88 %
  1.15 %     1.32 %(b)     1.77 %     1.88 %
  .47 %     .37 %(b)     (.12 )%     (1.14 )%

 

See Notes to Financial Statements.

Dryden International Equity Fund   47

Financial Highlights

 

continued

 

 

     Class F  
     

December 18, 2006(a)
Through

October 31, 2007(d)

  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Period

    $ 8.56  
        

Income from investment operations:

   

Net investment income

      .09  

Net realized and unrealized gain on investment and foreign currency transactions

      1.46  
        

Total from investment operations

      1.55  
        

Net asset value, end of period

    $ 10.11  
        

Total Return(b):

      18.11 %

Ratios/Supplemental Data:

   

Net assets, end of period (000)

    $ 28,728  

Average net assets (000)

    $ 33,219  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      1.84 %(c)

Expenses, excluding distribution and service (12b-1) fees

      1.09 %(c)

Net investment income

      1.13 %(c)
(a) Inception date of Class F shares.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Annualized.
(d) Calculated based upon average shares outstanding during the period.

 

See Notes to Financial Statements.

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      Class L  
      March 19, 2007(a)
Through
October 31, 2007(d)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Period

    $ 8.92  
        

Income from investment operations:

   

Net investment income

      .11  

Net realized and unrealized gain on investment and foreign currency transactions

      1.45  
        

Total from investment operations

      1.56  
        

Net asset value, end of period

    $ 10.48  
        

Total Return(b):

      17.49 %

Ratios/Supplemental Data:

   

Net assets, end of period (000)

    $ 34,433  

Average net assets (000)

    $ 35,182  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      1.59 %(c)

Expenses, excluding distribution and service (12b-1) fees

      1.09 %(c)

Net investment income

      1.82 %(c)
(a) Inception date of Class L shares.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Annualized.
(d) Calculated based upon average shares outstanding during the period.

 

See Notes to Financial Statements.

Dryden International Equity Fund   49

Financial Highlights

 

continued

 

 

     Class M  
      March 19, 2007(a)
Through
October 31, 2007(d)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Period

    $ 8.63  
        

Income from investment operations

   

Net investment income

      .08  

Net realized and unrealized gain on investment and foreign currency transactions

      1.38  
        

Total from investment operations

      1.46  
        

Net asset value, end of period

    $ 10.09  
        

Total Return(b):

      16.92 %

Ratios/Supplemental Data:

   

Net assets, end of period (000)

    $ 68,244  

Average net assets (000)

    $ 76,639  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.09 %(c)

Expenses, excluding distribution and service (12b-1) fees

      1.09 %(c)

Net investment income

      1.41 %(c)
(a) Inception date of Class M shares.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Annualized.
(d) Calculated based upon the average shares outstanding during the period.

 

See Notes to Financial Statements.

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     Class X  
     

March 19, 2007(a)
Through

October 31, 2007(d)

  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Period

    $ 8.63  
        

Income from investment operations

   

Net investment income

      .08  

Net realized and unrealized gain on investment and foreign currency transactions

      1.38  
        

Total from investment operations

      1.46  
        

Net asset value, end of period

    $ 10.09  
        

Total Return(b):

      16.92 %

Ratios/Supplemental Data:

   

Net assets, end of period (000)

    $ 25,428  

Average net assets (000)

    $ 25,351  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.09 %(c)

Expenses, excluding distribution and service (12b-1) fees

      1.09 %(c)

Net investment income

      1.30 %(c)
(a) Inception date of Class X shares.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Annualized.
(d) Calculated based upon the average shares outstanding during the period.

 

See Notes to Financial Statements.

Dryden International Equity Fund   51

Financial Highlights

 

continued

 

 

     Class Z  
      Year Ended
October 31, 2007(c)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 8.62  
        

Income (loss) from investment operations:

   

Net investment income (loss)

      .16  

Net realized and unrealized gain on investment and foreign currency transactions

      1.97  
        

Total from investment operations

      2.13  
        

Less Dividends:

   

Dividends from net investment income

      (.15 )
        

Net asset value, end of year

    $ 10.60  
        

Total Return(a):

      25.05 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 353,771  

Average net assets (000)

    $ 301,553  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      1.09 %

Expenses, excluding distribution and service (12b-1) fees

      1.09 %

Net investment income (loss)

      1.73 %
(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Net of expense subsidy. If the investment manager had not subsidized expenses, the expense ratios (both including and excluding distribution and service (12b-1) fees) and the net investment income ratios would have been 1.43%, 1.43% and .73%, respectively for the year ended October 31, 2005.
(c) Calculated based upon the average shares outstanding during the year.

 

See Notes to Financial Statements.

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Class Z  
Year Ended October 31,  
2006     2005     2004     2003  
     
$ 6.90     $ 5.80     $ 4.88     $ 3.76  
                             
     
  .12       .05       .03       (.01 )
  1.65       1.12       .89       1.13  
                             
  1.77       1.17       .92       1.12  
                             
     
  (.05 )     (.07 )     —       —  
                             
$ 8.62     $ 6.90     $ 5.80     $ 4.88  
                             
  25.86 %     20.40 %     18.85 %     29.79 %
     
$ 243,572     $ 179,798     $ 12,881     $ 3,699  
$ 214,969     $ 53,026     $ 7,103     $ 3,533  
     
  1.15 %     1.32 %(b)     1.77 %     1.88 %
  1.15 %     1.32 %(b)     1.77 %     1.88 %
  1.48 %     .88 %(b)     .81 %     (.31 )%

 

See Notes to Financial Statements.

Dryden International Equity Fund   53

 

Report of Independent Registered Public

Accounting Firm

 

The Board of Directors and Shareholders of Prudential World Fund, Inc.—Dryden International Equity Fund:

 

We have audited the accompanying statement of assets and liabilities of the Prudential World Fund, Inc.—Dryden International Equity Fund (one of the portfolios constituting the Prudential World Fund, Inc., hereafter referred to as the “Fund”), including the portfolio of investments, as of October 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the fiscal year ended October 31, 2003, were audited by another independent registered public accounting firm, whose report dated December 22, 2003, expressed an unqualified opinion thereon.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of October 31, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.

 

LOGO

New York, New York

December 28, 2007

 

 

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Federal Income Tax Information

 

(Unaudited)

 

As required by the Internal Revenue Code, we wish to advise you as to the federal status of dividends paid by the Series during its fiscal year ended October 31, 2007.

 

During the fiscal year ended October 31, 2007, the Series paid dividends taxable as ordinary income of $0.132 for Class A shares, $0.068 for Class B shares, $0.068 for Class C shares and $0.15 for Class Z shares.

 

Further, we wish to advise you that 6.19% of ordinary income dividends paid during the fiscal year ended October 31, 2007 qualified for the corporate dividends received deduction available to corporate taxpayers.

 

For the fiscal year ended October 31, 2007, the Series designated 81.14% as qualified dividend income for the reduced tax rate under the Jobs and Growth Tax Reconciliation Act of 2003.

 

The Series has elected to give the benefit of foreign tax credits to its shareholders. Accordingly, shareholders who must report their gross income dividends and distributions in a federal tax return will be entitled to a foreign tax credit, or an itemized deduction, in computing their U.S. income tax liability. It is generally more advantageous to claim a credit rather than to take a deduction. For the fiscal year ended October 31, 2007, the Fund intends on passing through $2,799,935 of ordinary income distributions as a foreign tax credit based on foreign source income of $27,590,571.

 

For purposes of preparing your federal income tax return, however, you should report the amounts as reflected on the appropriate Form 1099-DIV or substitute Form 1099-DIV which you should receive in January 2008.

Dryden International Equity Fund   55

 

Management of the Fund

 

(Unaudited)

 

Information pertaining to the Directors of the Prudential World Fund, Inc./the Dryden International Equity Fund (the “Fund”) is set forth below. Directors who are not deemed to be “interested persons” of the Fund, as defined in the Investment Company Act of 1940 as amended, (the 1940 Act) are referred to as “Independent Directors.” Directors who are deemed to be “interested persons” of the Fund are referred to as “Interested Directors.” “Fund Complex”† consists of the Fund and any other investment companies managed by PI.

 

Independent Directors(2)

 

Linda W. Bynoe (55), Director since 2005(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): President and Chief Executive Officer (since March 1995) of Telemat, Ltd. (management consulting); formerly Vice President at Morgan Stanley & Co.

 

Other Directorships held: Director of Simon Property Group, Inc. (real estate investment trust) (since May 2003); Anixter International (communication products distributor) (since January 2006); Director of Northern Trust Corporation (since April 2006).

 

David E.A. Carson (73), Director since 2003(3) Oversees 63 portfolios in Fund complex

Principal occupations (last 5 years): Director (since October 2007) of ICI Mutual Insurance Company; formerly Chairman and Chief Executive Officer of People’s Bank (1998-2000).

 

Robert E. La Blanc (73), Director since 1984(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1981) of Robert E. La Blanc Associates, Inc. (telecommunications).

 

Other Directorships held:(4) Director of CA, Inc. (since 2002) (software company); FiberNet Telecom Group, Inc. (since 2003) (telecom company).

 

Douglas H. McCorkindale (68), Director since 2003(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): Formerly Chairman (February 2001-June 2006), Chief Executive Officer (June 2000-July 2005), President (September 1997-July 2005) and Vice Chairman (March 1984-May 2000) of Gannett Co. Inc. (publishing and media).

 

Other Directorships held:(4) Director of Continental Airlines, Inc. (since May 1993); Director of Lockheed Martin Corp. (aerospace and defense) (since May 2001).

 

Richard A. Redeker (64), Director since 2003(3) Oversees 60 portfolios in Fund complex

Principal occupations (last 5 years): Management Consultant; Director (since 2001) and Chairman of the Board (since 2006) of Invesmart, Inc.; Director of Penn Tank Lines, Inc. (since 1999).

 

Robin B. Smith (68), Director since 1996(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): Chairman of the Board (since January 2003) of Publishers Clearing House (direct marketing); formerly Chairman and Chief Executive Officer (August 1996-January 2003) of Publishers Clearing House.

 

Other Directorships held:(4) Formerly Director of BellSouth Corporation (1992-2006).

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Stephen G. Stoneburn (64), Director since 1996(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President and Chief Executive Officer (since June 1996) of Quadrant Media Corp. (publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media; Senior Vice President of Fairchild Publications, Inc. (1975-1989).

 

Clay T. Whitehead (69), Director since 1984(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1983) of YCO (new business development firm).

 

Interested Directors(1)

 

Judy A. Rice (59), President since 2003 and Director since 2000(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): President, Chief Executive Officer, Chief Operating Officer and Officer-In-Charge (since February 2003) of Prudential Investments LLC; Vice President (since February 1999) of Prudential Investment Management Services LLC; President, Chief Executive Officer and Officer-In-Charge (since April 2003) of Prudential Mutual Fund Services LLC; formerly Director (May 2003-March 2006) and Executive Vice President (June 2005-March 2006) of AST Investment Services, Inc.; formerly Executive Vice President (September 1999-February 2003) of Prudential Investments LLC; Member of Board of Governors of the Investment Company Institute.

 

Robert F. Gunia (61), Vice President since 1999 and Director since 1996(3) Oversees 145 portfolios in Fund complex

Principal occupations (last 5 years): Chief Administrative Officer (since September 1999) and Executive Vice President (since December 1996) of Prudential Investments LLC; President (since April 1999) of Prudential Investment Management Services LLC; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; Chief Administrative Officer, Executive Vice President and Director (since May 2003) of AST Investment Services, Inc.

 

Other Directorships held:(4) Vice President and Director (since May 1989) and Treasurer (since 1999) of The Asia Pacific Fund, Inc.

 

Information pertaining to the Officers of the Fund who are not also Trustees is set forth below.

 

Officers(2)

 

Kathryn L. Quirk (55), Chief Legal Officer since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since September 2004) of Prudential; Executive Vice President, Chief Legal Officer and Secretary (since July 2005) of Prudential Investments LLC and Prudential Mutual Fund Services LLC; formerly Managing Director, General Counsel, Chief Compliance Officer, Chief Risk Officer and Corporate Secretary (1997-2002) of Zurich Scudder Investments, Inc.

 

Deborah A. Docs (49), Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of PI; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

 

Jonathan D. Shain (49), Assistant Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of PI; Vice President and Assistant Secretary (since February 2001) of PMFS; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Dryden International Equity Fund   57

 

Claudia DiGiacomo (33), Assistant Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley, Austin Brown & Wood LLP (1999-2004).

 

Timothy J. Knierim (48), Chief Compliance Officer since 2007(3)

Principal occupations (last 5 years): Chief Compliance Officer of Prudential Investment Management, Inc. (since July 2007); formerly Chief Risk Officer of PIM and PI (2002-2007) and formerly Chief Ethics Officer of PIM and PI (2006-2007).

 

Valerie M. Simpson (49), Deputy Chief Compliance Officer since 2007(3)

Principal occupations (last 5 years): Vice President and Senior Compliance Officer (since March 2006) of PI; Vice President-Financial Reporting (since March 2006) for Prudential Life and Annuities Finance.

 

Grace C. Torres (48), Treasurer and Principal Financial and Accounting Officer since 1995(3)

Principal occupations (last 5 years): Assistant Treasurer (since March 1999) and Senior Vice President (since September 1999) of PI; Assistant Treasurer (since May 2003) and Vice President (since June 2005) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (since May 2003) of Prudential Annuities Advisory Services, Inc.; formerly Senior Vice President (May 2003-June 2005) of AST Investment Services, Inc.

 

John P. Schwartz (36), Assistant Secretary since 2006(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since April 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley, Austin Brown & Wood LLP (1997-2005).

 

M. Sadiq Peshimam (43), Assistant Treasurer since 2006(3)

Principal occupations (last 5 years): Vice President (since 2005) and Director (2000-2005) within Prudential Mutual Fund Administration.

 

Peter Parella (49), Assistant Treasurer since 2007(3)

Principal occupations (last 5 years): Vice President (since June 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004).

 

Andrew R. French (45), Assistant Secretary since 2006(3)

Principal occupations (last 5 years): Director and Corporate Counsel (since May 2006) of Prudential; Vice President and Assistant Secretary (since January 2007) of PI; Vice President and Assistant Secretary (since January 2007) of PMFS; formerly Senior Legal Analyst of Prudential Mutual Fund Law Department (1997-2006).

 

Noreen M. Fierro (43), Anti-Money Laundering Compliance Officer since October 2006(3)

Principal occupations (last 5 years): Vice President, Corporate Compliance (since May 2006) of Prudential; formerly Corporate Vice President, Associate General Counsel (April 2002-May 2005) of UBS Financial Services, Inc., in their Money Laundering Prevention Group; Senior Manager (May 2005-May 2006) of Deloitte Financial Advisory Services, LLP, in their Forensic and Dispute Services, Anti-Money Laundering Group.

 

† The Fund Complex consists of all investment companies managed by PI. The Funds for which PI serves as manager include Jennison Dryden Mutual Funds, Strategic Partners Funds, The Prudential Variable Contract Accounts 2, 10, 11. The Target Portfolio Trust, The Prudential Series Fund, The High Yield Income Fund, Inc., The High Yield Plus Fund, Inc., Nicholas-Applegate Fund, Inc., Advanced Series Trust and Prudential’s Gibraltar Fund, Inc.

 

(1)

“Interested” Directors, as defined in the 1940 Act, by reason of employment with the Manager, a Subadvisor or the Distributor.

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(2)

Unless otherwise noted, the address of the Directors and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102.

 

(3)

There is no set term of office for Directors and Officers. The Independent Directors have adopted a retirement policy, which calls for the retirement of Directors on December 31 of the year in which they reach the age of 75. The table shows the individual’s length of service as Directors and/or Officer.

 

(4)

This includes only directorships of companies required to register, or file reports with the SEC under the Securities and Exchange Act of 1934 (that is, “public companies”) or other investment companies registered under the 1940 Act.

 

Additional Information about the Directors is included in the Statement of Additional Information which is available without charge, upon request, by calling (800) 521-7466 or (732) 482-7555 (Calling from outside the U.S.)

Dryden International Equity Fund   59

Approval of Advisory Agreements

 

 

The Board of Directors (the “Board”) of Prudential World Fund, Inc. oversees the management of the Dryden International Equity Fund (the “Fund”) and, as required by law, determines annually whether to renew the Fund’s management agreement with Prudential Investments LLC (“PI”) and the Fund’s subadvisory agreement with Quantitative Management Associates LLC (“QMA”). In considering the renewal of the agreements, the Board, including all of the Independent Directors, met on June 6-7, 2007 and approved the renewal of the agreements through July 31, 2008, after concluding that renewal of the agreements was in the best interests of the Fund and its shareholders.

 

In advance of the meetings, the Board received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with their consideration. Among other things, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups. The mutual funds included in each Peer Universe or Peer Group were objectively determined solely by Lipper Inc., an independent provider of mutual fund data. The comparisons placed the Fund in various quartiles over one-, three- and five-year periods ending December 31, 2006, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).

 

In approving the agreements, the Board, including the Independent Directors advised by independent legal counsel, considered the factors they deemed relevant, including the nature, quality and extent of services provided, the performance of the Fund, the profitability of PI and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders. In their deliberations, the Directors did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with their deliberations, the Board considered information provided by PI throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 6-7, 2007.

 

The Directors determined that the overall arrangements between the Fund and PI, which serves as the Fund’s investment manager pursuant to a management agreement, and between PI and QMA, which serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PI, are fair and reasonable in light of the services performed, fees charged and such other matters as the Directors considered relevant in the exercise of their business judgment.

Dryden International Equity Fund  

Approval of Advisory Agreements (continued)

 

 

The material factors and conclusions that formed the basis for the Directors’ reaching their determinations to approve the continuance of the agreements are separately discussed below.

 

Nature, quality and extent of services

 

The Board received and considered information regarding the nature and extent of services provided to the Fund by PI and QMA. The Board considered the services provided by PI, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance, and other services to the Fund. With respect to PI’s oversight of the subadviser, the Board noted that PI’s Strategic Investment Research Group (“SIRG”), which is a business unit of PI, is responsible for monitoring and reporting to PI’s senior management on the performance and operations of the subadviser. The Board also considered that PI pays the salaries of all of the officers and non-independent Directors of the Fund. The Board also considered the investment subadvisory services provided by QMA, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PI’s evaluation of the subadviser, as well as PI’s recommendation, based on its review of the subadviser, to renew the subadvisory agreement.

 

The Board reviewed the qualifications, backgrounds and responsibilities of PI’s senior management responsible for the oversight of the Fund and QMA, and also reviewed the qualifications, backgrounds and responsibilities of QMA’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PI’s and QMA’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PI and QMA. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (“CCO”) as to both PI and QMA. The Board noted that QMA is affiliated with PI.

 

The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PI and the subadvisory services provided to the Fund by QMA, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PI and QMA under the management and subadvisory agreements.

 

Performance of Dryden International Equity Fund

 

The Board received and considered information about the Fund’s historical performance. The Board considered that the Fund’s gross and net performance (which reflects any subsidies, waivers or expense caps) in relation to its Peer Universe (the

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1 Although Lipper classifies the Fund in its International Multi-Cap Core Funds Performance Universe, the International Multi-Cap Growth Funds Performance Universe was utilized because PI believes that the funds included in this Universe provide a more appropriate basis for Fund performance comparisons.

 

Lipper Retail and Institutional International Multi-Cap Core Funds Performance Universe)1 was in the first quartile over the three-year period, and was in the second quartile over the one- and five-year periods. The Board also noted that the Fund outperformed its benchmark index during all periods. The Board concluded that, in light of the Fund’s competitive performance, it would be in the interest of the Fund and its shareholders for the Fund to renew the agreements.

 

Fees and Expenses

 

The Board considered the Fund’s contractual and actual management fees (which reflects any subsidies, expense caps or waivers) ranked in the Expense Group’s first and second quartiles, respectively. The Board further noted that the Fund’s total expenses ranked in the first quartile. The Board concluded that the management and subadvisory fees are reasonable in light of the services provided.

 

Costs of Services and Profits Realized by PI

 

The Board was provided with information on the profitability of PI and its affiliates in serving as the Fund’s investment manager. The Board discussed with PI the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. The Board did not separately consider the profitability of the subadviser, an affiliate of PI, as its profitability was reflected in the profitability report for PI. Taking these factors into account, the Board concluded that the profitability of PI and its affiliates in relation to the services rendered was not unreasonable.

 

Economies of Scale

 

The Board received and discussed information concerning whether PI realizes economies of scale as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase, but at the current level of assets the Fund does not realize the effect of those rate reductions. The Board took note that the Fund’s fee structure would result in benefits to Fund shareholders when (and if) assets

Dryden International Equity Fund  

Approval of Advisory Agreements (continued)

 

 

reach the levels at which the fee rate is reduced. These benefits will accrue whether or not PI is then realizing any economies of scale.

 

Other Benefits to PI and QMA

 

The Board considered potential ancillary benefits that might be received by PI and QMA and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PI included brokerage commissions received by affiliates of PI, transfer agency fees received by the Fund’s transfer agent (which is affiliated with PI), and benefits to the reputation as well as other intangible benefits resulting from PI’s association with the Fund. The Board concluded that the potential benefits to be derived by QMA included its ability to use soft dollar credits, brokerage commissions received by affiliates of QMA, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to the reputation. The Board concluded that the benefits derived by PI and QMA were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.

 

After full consideration of these factors, the Board concluded that the approval of the agreements was in the best interest of the Fund and its shareholders.

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Growth of a $10,000 Investment

 

LOGO

 

Average Annual Total Returns (With Sales Charges) as of 10/31/07  
     One Year     Five Years     Since Inception  

Class A

    17.82 %   22.26 %   0.28 %

Class B

    18.73     22.59     0.26  

Class C

    22.73     22.68     0.26  

Class F

    N/A     N/A     N/A  

Class L

    N/A     N/A     N/A  

Class M

    N/A     N/A     N/A  

Class X

    N/A     N/A     N/A  

Class Z

    25.05     23.93     1.24  
      
Average Annual Total Returns (Without Sales Charges) as of 10/31/07  
     One Year     Five Years     Since Inception  

Class A

    24.68 %   23.65 %   1.02 %

Class B

    23.73     22.68     0.26  

Class C

    23.73     22.68     0.26  

Class F

    N/A     N/A     N/A  

Class L

    N/A     N/A     N/A  

Class M

    N/A     N/A     N/A  

Class X

    N/A     N/A     N/A  

Class Z

    25.05     23.93     1.24  

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by

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calling (800) 225-1852. The maximum initial sales charge is 5.50%. Gross operating expenses: Class A, 1.39%; Class B, 2.09%; Class C, 2.09%; Class F, 1.84%; Class L, 1.59%; Class M, 2.09%; Class X, 2.09%; Class Z, 1.09%. Net operating expenses apply to: Class A, 1.34%; Class B, 2.09%; Class C, 2.09%; Class F, 1.84%; Class L, 1.59%; Class M, 2.09%; Class X, 2.09%; Class Z, 1.09%, after contractual reduction through 2/28/2008.

 

The returns in the graph and the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

 

Source: Prudential Investments LLC and Lipper Inc.

Inception dates: Class A, Class B, Class C, and Class Z, 3/1/00; Class F, 12/18/06; Class L, Class M, and Class X, 3/19/07.

 

The graph compares a $10,000 investment in the Dryden International Equity Fund (Class A shares) with a similar investment in the MSCI EAFE® Index by portraying the initial account values at the commencement of operations of Class A shares (March 1, 2000) and the account values at the end of the current fiscal year (October 31, 2007) as measured on a quarterly basis. For purposes of the graph, 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 shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The line graph provides information for Class A shares only. As indicated in the tables provided earlier, performance for Class B, Class C, Class F, Class L, Class M, Class X, and Class Z shares will vary due to the differing charges and expenses applicable to each share class (as indicated in the following paragraphs). Without a distribution and service (12b-1) fee waiver of 0.05% for Class A shares through October 31, 2007, the returns shown in the graph and for Class A shares in the tables would have been lower.

 

The MSCI EAFE® Index is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The MSCI EAFE® Index’s total returns include the reinvestment of all dividends, but do not include the effects of sales charges, operating expenses of a mutual fund, or taxes. These returns would be lower if they included the effects of sales charges, operating expenses, or taxes. The securities that comprise the MSCI EAFE® Index may differ substantially from the securities in the Fund. The MSCI EAFE® Index is not the only index that may be used to characterize performance of global/international stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index.

 

Class A and Class L shares are subject to a maximum front-end sales charge of 5.50%, and 5.75%, respectively, a 12b-1 fee of up to .30% and .50%, respectively annually, and all investors who purchase Class A and Class L shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class F shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1%, respectively for the first six years after purchase and 12b-1 fees of 1% and .75%, respectively, annually. Approximately seven years after purchase, Class B and Class F shares will automatically convert to Class A shares on a quarterly basis. Class C shares are not subject to a front-end sales charge, but charge a CDSC of 1% for Class C shares sold within 12 months from the date of purchase and an annual 12b-1 fee of 1%. Class M and Class X shares purchased are not subject to a front-end sales charge, but charge a CDSC of 6% and a 12b-1 fee of 1%. The CDSC for Class M and Class X shares decreases by 1% annually to 2% in the fifth and sixth years after purchase, 1% in the seventh year and 0% in the eighth year after purchase. Class M and Class X shares convert to Class A shares approximately eight years after purchase. The returns in the graph and tables reflect the share class expense structure in effect at the close of the fiscal period. The returns in the graph and the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

Dryden International Equity Fund  

 

n  MAIL   n  TELEPHONE   n  WEBSITE

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102

   (800) 225-1852   www.jennisondryden.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website.

 

DIRECTORS
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc • Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn • Clay T. Whitehead

 

OFFICERS
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Noreen M. Fierro, Acting Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer

 

MANAGER   Prudential Investments LLC    Gateway Center Three
100 Mulberry Street
Newark, NJ 07102
INVESTMENT SUBADVISER   Quantitative Management
Associates LLC		    Gateway Center Two
100 Mulberry Street
Newark, NJ 07102
DISTRIBUTOR   Prudential Investment
Management Services LLC		    Gateway Center Three

100 Mulberry Street
Newark, NJ 07102

CUSTODIAN   The Bank of New York    One Wall Street
New York, NY 10286
TRANSFER AGENT   Prudential Mutual Fund
Services LLC		    PO Box 9658
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP    345 Park Avenue

New York, NY 10154

FUND COUNSEL   Sullivan & Cromwell LLP    125 Broad Street
New York, NY 10004

 

An investor should consider the investment objectives, risks, charges, and expenses of the
Fund carefully before investing. The prospectus for the Fund contains this and other information about the Fund. An investor may obtain a prospectus by visiting our website
at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing.

 

E-DELIVERY

To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via
e-mail when new materials are available. You can cancel your enrollment or change your
e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery

website address.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Dryden International Equity Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each fiscal quarter.

 

The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge, upon request, by calling (800) 225-1852.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

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Dryden International Equity Fund                            
    Share Class   A   B   C   F   L   M   X   Z    
 

NASDAQ

   PJRAX   PJRBX   PJRCX   N/A   DEILX   DEIMX   DEIQX   PJIZX  
 

CUSIP

   743969859   743969867   743969875   743969842   743969834   743969826   743969818   743969883  
                   

MF190E    IFS-A141794    Ed. 12/2007

 

LOGO

 

LOGO

 

LOGO

 

(Formerly known as Strategic Partners International Value Fund)

 

OCTOBER 31, 2007   ANNUAL REPORT

 

Dryden International Value Fund

FUND TYPE

International stock

 

OBJECTIVE

Long-term growth of capital

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

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.

 

JennisonDryden, Dryden, Prudential Financial and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.

 

LOGO

 

 

December 14, 2007

 

Dear Shareholder:

 

We hope you find the annual report for the Dryden International Value Fund informative and useful. As a JennisonDryden mutual fund shareholder, you may be thinking about where you can find additional growth opportunities. You could invest in last year’s top-performing asset class and hope history repeats itself or you could stay in cash while waiting for the “right moment” to invest.

 

Instead, we believe it is better to take advantage of developing domestic and global investment opportunities through a diversified portfolio of stock and bond mutual funds. A diversified asset allocation offers two potential advantages. It helps you manage downside risk by not being overly exposed to any particular asset class, plus it gives you a better opportunity to have at least some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and tolerance for risk.

 

JennisonDryden Mutual Funds gives you a wide range of choices that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of four leading asset managers. They are recognized and respected in the institutional market and by discerning investors for excellence in their respective strategies. JennisonDryden equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors (PREI). Prudential Investment Management, Inc. (PIM) advises the JennisonDryden fixed income and money market funds. Jennison Associates, QMA, and PIM are registered investment advisers and Prudential Financial companies. PREI is a registered investment adviser and a unit of PIM.

 

Thank you for choosing JennisonDryden Mutual Funds.

 

Sincerely,

 

LOGO

 

Judy A. Rice, President

Prudential World Fund, Inc.

Dryden International Value Fund   1

Your Fund’s Performance

 

 

Fund objective

The investment objective of the Dryden International Value Fund is long-term growth of capital through investment in equity securities of foreign issuers. There can be no assurance that the Fund will achieve its investment objective.

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 5.50% (Class A shares). Gross operating expenses: Class A, 1.62%; Class B, 2.32%; Class C, 2.32%; Class Z, 1.32%. Net operating expenses apply to: Class A, 1.57%; Class B, 2.32%; Class C, 2.32%; Class Z, 1.32%, after contractual reduction through 2/28/2009.

 

Cumulative Total Returns as of 10/31/07                   
     One Year     Five Years     Ten Years  

Class A

    32.15 %   169.43 %   148.95 %

Class B

    31.17     159.45     130.55  

Class C

    31.17     159.38     130.79  

Class Z

    32.50     172.62     154.84  

MSCI EAFE® ND Index1

    24.91     183.98     142.36  

Lipper International Large-Cap Core Funds Avg.2

    26.23     159.52     127.54  
      
Average Annual Total Returns3 as of 9/30/07                   
     One Year     Five Years     Ten Years  

Class A

    23.58 %   21.08 %   7.44 %

Class B

    24.82     21.44     7.23  

Class C

    28.83     21.51     7.24  

Class Z

    31.09     22.73     8.30  

MSCI EAFE® ND Index1

    24.86     23.55     7.97  

Lipper International Large-Cap Core Funds Avg.2

    25.01     21.16     7.08  

 

The cumulative total returns do not reflect the deduction of applicable sales charges. If reflected, the applicable sales charges would reduce the cumulative total returns performance quoted. Class A shares are subject to a maximum front-end sales charge of 5.50%. Under certain circumstances, Class A shares may be subject to a contingent deferred sales charge (CDSC) of 1%. Class B and Class C shares are subject to a maximum CDSC of 5% and 1%, respectively. Class Z shares are not subject to a sales charge.

2   Visit our website at www.jennisondryden.com

 

 

Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.

1The Morgan Stanley Capital International Europe, Australasia, and Far East Index (MSCI EAFE® ND Index) is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The ND version of the MSCI EAFE Index reflects the impact of the maximum withholding taxes on reinvested dividends.

2The Lipper International Large-Cap Core Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper International Large-Cap Core Funds category. Funds in the Lipper Average invest at least 75% of their equity assets in companies strictly outside of the United States with market capitalizations (on a three-year weighted basis) greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad Market Index (BMI). Large-cap core funds typically have an average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the S&P/Citigroup World ex-U.S. BMI.

3The average annual total returns take into account applicable sales charges. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 1.00%, and 1.00%, respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class Z shares are not subject to a 12b-1 fee. The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

 

Investors cannot invest directly in an index. The returns for the MSCI EAFE® ND Index and the Lipper Average would be lower if they included the effects of sales charges, operating expenses, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.

 

Five Largest Holdings expressed as a percentage of net assets as of 10/31/07       

Nintendo Co., Ltd., Entertainment & Leisure

    2.0 %

BASF AG, Chemicals

    1.8  

Potash Corp. of Saskatchewan, Inc., Real Estate

    1.8  

Lloyds TSB Group PLC, Financial—Bank & Trust

    1.7  

China Mobile, Ltd., Telecommunications

    1.7  

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a percentage of net assets as of 10/31/07       

Telecommunications

    12.9 %

Financial—Bank & Trust

    11.4  

Oil, Gas & Consumable Fuels

    10.4  

Pharmaceuticals

    6.9  

Automobile Manufacturers

    5.1  

Industry weightings reflect only long-term investments and are subject to change.

Dryden International Value Fund   3

Strategy and Performance Overview

 

 

How did the Fund perform?

The Dryden International Value Fund’s Class A shares returned 32.15% for the 12-month reporting period ended October 31, 2007, significantly outperforming the 24.91% return of the benchmark MSCI EAFE ND Index (the Index) and the 26.23% return of the Lipper International Large-Cap Core Funds Average.

 

In early July 2007, the name of the Fund was changed to the Dryden International Value Fund. This was part of an initiative to eliminate the use of the Strategic Partners brand and did not affect management of the Fund.

 

What were conditions like in the international stock markets?

The global economic expansion continued during the reporting period. By the end of 2006, the global economy recorded its strongest cumulative gross domestic product growth in a decade, lifting stock market indexes worldwide. This bullish trend held through the beginning of the summer of 2007. Then a crisis in debt securities tied to U.S. subprime mortgages (home loans made to borrowers with poor credit histories) that began to rattle world equity markets in July intensified in August. A major European bank temporarily stopped withdrawals from three of its investment funds with exposure to the risky mortgages and some hedge funds suffered losses and sold assets.

 

Signs of market distress in early August prompted the European Central Bank, the U.S. Federal Reserve (the Fed), the Bank of Japan, and the Reserve Bank of Australia to inject massive amounts of cash into their banking systems. In mid-August, the Fed reduced its discount rate it charges banks to borrow from its discount window by a half point. In mid-September, the Fed cut the discount rate and its target for the federal funds rate on overnight loans between banks by a half point. Finally, in late October, both short-term rates were reduced another quarter point, which lowered the discount rate to 5.0% and the target for the federal funds rate to 4.5%.

 

Global stock markets rebounded sharply in response to the Fed rate cuts, helping the Index return 24.91% for the reporting period. The best performing region was the Nordic area comprised of Sweden, Norway, Denmark, and its frontrunner, Finland. Heavily weighted nations in the Index such as the United Kingdom and France posted returns consistent with the performance of the Index, but Germany outperformed. The Pacific region, home to some of the world’s most dynamic economies, ironically lagged the Index mainly due to weakness in the Japanese stock market. As the Index’s most heavily weighted Asian country, Japan took hits on several fronts, including the recent market turmoil, its sluggish domestic economic growth, and a spiking yen that made its exports less competitive. Bright spots, such as Hong Kong and Singapore recorded new highs, but were unable to lift the Index. Australia’s economy soared in tandem with natural resources stocks.

4   Visit our website at www.jennisondryden.com

 

 

Most sectors in the Index finished firmly in positive territory. Like the previous year, materials outpaced other sectors. Industries in the materials and energy sectors benefited from rising commodity prices and strong global demand, particularly from nations such as China and India whose economies expanded rapidly. The telecommunication services sector climbed out of last year’s doldrums amidst the prospect of industry consolidation and new product innovation. Industrials were fueled by strong capital goods, exhibiting resilient strength. Information technology companies providing Internet and mobile services to China, faired well, but the sector’s overall performance was less than stellar. The consumer staples sector, made up of industries that tend to do well even when an economy slows, performed better than the more cyclical consumer discretionary sector. In the latter, consumer durables and apparel posted a modest return, but automobiles and components gained sharply.

 

Financials and healthcare were the weakest sectors in the Index. Banking stocks experienced severe distress due to the subprime mortgage crisis and the related global credit crunch. Real estate, while closing the period with positive returns, led the financials sector, but showed weakness due to the ripple effects of the mortgage lending crisis. Healthcare stocks found support in equipment and service companies. However, disappointing results in pharmaceutical and biotechnology holdings effectively suppressed returns, which were nominally positive but by less than a percentage point.

 

How is the Fund managed?

The Fund is managed by LSV Asset Management and Thornburg Investment Management who were selected in part because of their complementary investment styles. LSV uses a quantitative deep value investment strategy and maintains a relatively large number of stocks in its portfolio. Thornburg uses traditional analysis of business fundamentals and a relative value strategy to select a portfolio with fewer and larger individual stock positions than LSV. Whereas LSV has no emerging market exposure, Thornburg may invest as much as 30% of its assets in that area. Emerging market stocks are not included in the Index.

 

What impact did the LSV strategy have on the Fund’s performance?

The portion of the Fund managed by LSV, facing considerable headwinds for most of the reporting period, posted a solid return that nevertheless underperformed the Index. The period saw the beginning of a turn in the market that favored stocks of companies with large market capitalizations. This development gathered steam from July through October, as the subprime mortgage crisis sent investors fleeing to shares of companies generating consistent, predictable earnings growth.

Dryden International Value Fund   5

Strategy and Performance Overview (continued)

 

 

The change posed a challenge for LSV, whose deep value strategy favors shares trading at low price-to-earnings ratios that are under duress or are largely ignored by investors. Its strategy typically creates a portfolio heavily invested in companies with smaller market capitalizations whose shares have lower valuation multiples than those in the Index. The market had favored these types of stocks for several years, but when they fell out of favor during the reporting period, the LSV portfolio underperformed the Index. Most notably, it was hurt by exposure to shares of U.K.-based companies, many of which were in the utilities, consumer staples, and financials sectors. Of the latter, banking stocks detracted most from the portfolio’s performance due to the subprime mortgage crisis.

 

What impact did Thornburg’s strategy have on the Fund’s performance?

Thornburg’s investment style worked well, enabling its portfolio of stocks and the overall Fund to significantly outperform the Index. In contrast to LSV, Thornburg’s relative value approach favored firms with higher valuations and higher earnings growth than those in the Index. These types of shares generally outperformed the broader stock market.

 

Contributing even more to the strong performance of the Thornburg portfolio was its roughly 25% exposure to companies not included in the Index, of which about 18% were emerging market stocks. For example, the portfolio benefited most from holding shares of companies located in Canada (excluded from the Index) and from having an underweight exposure to companies located in Japan (included in the Index). As previously mentioned, the Japanese stock market turned in a lackluster performance. That said, some shares of Japanese firms held by the portfolio performed well, as did shares of companies in China and Hong Kong, both of which are not included in the Index. From the perspective of sector allocation, holdings in the energy, materials, technology, and financial sectors aided the Thornburg portfolio’s performance.

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Fees and Expenses (Unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 invested on May 1, 2007, at the beginning of the period, and held through the six-month period ended October 31, 2007. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to Individual Retirement Accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of JennisonDryden Funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on

Dryden International Value Fund   7

 

Fees and Expenses (continued)

 

the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line for each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Dryden International
Value Fund 		  Beginning Account
Value
May 1, 2007		   Ending Account
Value
October 31, 2007		   Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses Paid
During the
Six-Month Period*
         
Class A   Actual   $ 1,000.00   $ 1,147.10   1.45 %   $   7.85
    Hypothetical   $ 1,000.00   $ 1,017.90   1.45 %   $   7.38
         
Class B   Actual   $ 1,000.00   $ 1,142.90   2.20 %   $ 11.88
    Hypothetical   $ 1,000.00   $ 1,014.12   2.20 %   $ 11.17
         
Class C   Actual   $ 1,000.00   $ 1,142.70   2.20 %   $ 11.88
    Hypothetical   $ 1,000.00   $ 1,014.12   2.20 %   $ 11.17
         
Class Z   Actual   $ 1,000.00   $ 1,148.80   1.20 %   $   6.50
    Hypothetical   $ 1,000.00   $ 1,019.16   1.20 %   $   6.11

* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended October 31, 2007, and divided by the 365 days in the Fund’s fiscal year ended October 31, 2007 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.

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Portfolio of Investments

 

as of October 31, 2007

Shares      Description    Value (Note 1)
       

LONG-TERM INVESTMENTS    99.7%

COMMON STOCKS

Australia    2.9%

       
129,488     

BlueScope Steel Ltd.

    $ 1,291,538
47,400     

Commonwealth Bank of Australia

      2,729,971
97,400     

CSR Ltd.

      310,883
186,200     

Pacific Brands Ltd.

      602,234
400,200     

Qantas Airways Ltd.

      2,213,276
59,235     

Santos Ltd.

      781,856
344,703     

Telestra Corp. Ltd.

      1,508,672
66,800     

Zinifex Ltd.

      1,057,151
           
          10,495,581

Austria    0.4%

       
14,700     

Voestalpine AG

      1,321,690

Belgium    0.6%

       
32,200     

AGFA-Gevaert NV

      447,306
9,428     

Dexia SA

      302,363
45,800     

Fortis

      1,463,530
           
          2,213,199

Brazil    0.7%

       
53,477     

Empresa Brasileira de Aeronautica SA, ADR

      2,608,073

Canada    5.0%

       
65,400     

Canadian National Railway Co.

      3,668,603
38,900     

Canadian Natural Resources Ltd.

      3,235,043
51,600     

Potash Corp. of Saskatchewan, Inc.

      6,337,512
94,244     

Rogers Communications, Inc. (Class B Stock)

      4,802,738
           
          18,043,896

China    4.8%

       
458,310     

China Merchants Bank Co. Ltd. (Class H Stock)

      2,363,174
299,604     

China Mobile Ltd.

      6,193,854
2,483,712     

China Petroleum and Chemical Corp. (Class H Stock)

      3,954,655
1,971,200     

Country Garden Holdings Co. Ltd.*

      3,248,211
1,297,200     

Soho China Ltd.*

      1,670,405
           
          17,430,299

 

See Notes to Financial Statements.

Dryden International Value Fund   9

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)
       

Denmark    2.6%

       
19,900     

Carlsberg A/S (Class B Stock)

    $ 2,680,226
24,445     

Danske Bank A/S

      1,077,265
21,200     

H Lundbeck A/S

      606,703
39,741     

Novo Nordisk A/S (Class B Stock)

      4,927,703
           
          9,291,897

Finland    3.4%

       
119,100     

Fortum Oyj

      5,163,559
122,900     

Nokia Oyj

      4,869,001
26,200     

Rautaruukki Oyj

      1,499,095
24,600     

Tietoenator Oyj

      603,285
           
          12,134,940

France    11.5%

       
35,450     

Air Liquide

      4,877,809
510     

Arkema*

      34,693
102,100     

AXA SA

      4,564,070
27,223     

BNP Paribas

      3,000,504
3,700     

Ciments Francais

      695,087
6,996     

CNP Assurances

      891,690
12,400     

Compagnie Generale des Establissements Michelin (Class B Stock)

      1,660,219
23,100     

Credit Agricole SA

      913,159
113,600     

France Telecom SA

      4,189,550
46,100     

Groupe Danone

      3,951,238
33,933     

LVMH Moet Hennessy Louis Vuitton SA

      4,368,748
20,000     

Natixis SA

      443,253
17,718     

PSA Peugeot Citroen SA

      1,642,062
8,005     

Renault SA

      1,343,926
27,500     

Sanofi-Aventis

      2,411,603
6,400     

Schneider Electric SA

      881,176
4,300     

Societe Generale

      721,660
15,500     

Thales SA

      965,901
29,500     

Thomson

      514,493
20,400     

Total SA

      1,644,470
9,100     

Valeo SA

      498,401
23,600     

Vivendi

      1,062,487
           
          41,276,199

 

See Notes to Financial Statements.

10   Visit our website at www.jennisondryden.com

 

Shares      Description    Value (Note 1)

Germany    6.2%

       
       
2,100     

Altana AG

    $ 50,892
46,600     

BASF AG

      6,446,440
15,900     

DaimlerChrysler AG

      1,749,265
19,500     

Deutsche Bank AG

      2,600,094
27,600     

E.ON AG

      5,393,264
27,700     

Heidelberger Druckmaschinen AG

      1,131,112
40,000     

ThyssenKrup AG

      2,665,315
20,619     

TUI AG*

      610,192
5,700     

Volkswagen AG

      1,633,997
           
          22,280,571

Greece    0.8%

       
74,036     

OPAP SA

      3,024,285

Guernsey    0.7%

       
72,594     

Amdocs Ltd.*

      2,497,234

Hong Kong    2.2%

       
989,458     

Chaoda Modern Agriculture Holdings Ltd.

      903,022
331,100     

Citic Pacific Ltd.

      2,087,875
112,848     

Hong Kong Exchanges and Clearing Ltd.

      3,767,146
124,847     

Orient Overseas International Ltd.

      1,288,900
           
          8,046,943

Ireland    1.1%

       
129,400     

Allied Irish Banks PLC

      3,237,714
32,900     

Irish Life & Permanent PLC

      749,645
           
          3,987,359

Israel    1.3%

       
107,400     

Teva Pharmaceutical Industries Ltd., ADR

      4,726,674

Italy    2.4%

              
38,600     

Banco Popolare di Verona Scarl*

      926,489
57,101     

Eni SpA

      2,084,371
20,900     

Finmeccanica SpA

      620,324
22,100     

Indesit Co. SpA

      391,836
565,397     

Intesa Sanpaolo SpA

      4,471,743
           
          8,494,763

 

See Notes to Financial Statements.

Dryden International Value Fund   11

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)

Japan    13.9%

       
       
33,973     

Alpine Electronics, Inc.

    $ 546,145
54,025     

Alps Electric Co. Ltd.

      676,379
53     

Asahi Breweries Ltd.

      877
97,300     

Asahi Kasei Corp.

      744,875
47,283     

Canon, Inc.

      2,392,491
175,214     

Cosmo Oil Co. Ltd.

      764,208
50,000     

Daiwa Securities Group, Inc.

      481,852
175,214     

Denki Kagaku Kogyo Kabushiki Kaisha

      1,030,740
38,100     

Fanuc Ltd.

      4,176,505
184,000     

Fuji Heavy Industries Ltd.

      956,352
56     

Hitachi Ltd.

      375
30,147     

Hokkaido Electric Power Co., Inc.

      650,540
68,726     

Honda Motor Co. Ltd.

      2,573,573
55     

Hosiden Corp.

      975
19,300     

Kansai Electric Power Co., Inc. (The)

      434,635
203,600     

Kurabo Industries Ltd.

      489,918
173,200     

Marubeni Corp.

      1,487,174
38,000     

Matsushita Electric Industrial Co. Ltd.

      725,638
103,178     

Mitsubishi Chemical Holdings Corp.

      853,700
22,700     

Nifco, Inc.

      531,109
11,096     

Nintendo Co. Ltd.

      7,046,833
114,200     

Nippon Oil Corp.

      1,011,434
30,000     

Nippon Shokubai Co. Ltd.

      296,479
340     

Nippon Telegraph and Telephone Corp.

      1,556,058
200     

Nippon Unipac Group, Inc.

      598,848
29,116     

Nipro Corp.

      555,509
186,500     

Nissan Motor Co. Ltd.

      2,139,670
80,700     

Nomura Holdings, Inc.

      1,438,012
47     

NSK Ltd.

      417
1,000     

NTT Docomo, Inc.

      1,454,893
55,200     

Oji Paper Co. Ltd.

      252,153
30,644     

Okasan Holdings, Inc.

      206,815
7     

Osaka Gas Co. Ltd.

      27
2,500     

Promise Co. Ltd.

      75,198
20,079     

Rengo Co. Ltd.

      144,979
34,500     

Ricoh Co. Ltd.

      681,912
146,000     

Sanwa Shutter Corp.

      769,980
4,200     

Seiko Epson Corp.

      99,247
78,000     

SMK Corp.

      668,111
27,400     

Sumitomo Corp.

      477,415
251     

Sumitomo Osaka Cement Co. Ltd.

      629

 

See Notes to Financial Statements.

12   Visit our website at www.jennisondryden.com

 

Shares      Description    Value (Note 1)
       
99,000     

Sumitomo Trust & Banking Co. Ltd. (The)

    $ 738,144
14,319     

Takefuji Corp.

      364,910
69,259     

Tanabe Seiyaku Co. Ltd.

      798,017
50,000     

Toppan Printing Co. Ltd.

      487,816
98,966     

Toyota Motor Corp.

      5,665,230
20,624     

Yamada Denki Co. Ltd.

      2,126,383
132,000     

Yokohama Rubber Co. Ltd. (The)

      983,816
           
          50,156,996

Liechtenstein    0.2%

       
2,900     

Verwaltungs und Privat Bank AG

      758,546

Mexico    1.8%

       
56,113     

America Movil SA de CV Series L, ADR

      3,669,229
691,098     

Wal-Mart de Mexico SA de CV Series V

      2,806,522
           
          6,475,751

Netherlands    2.8%

       
39,600     

Aegon NV

      817,985
57,300     

ING Groep NV, ADR

      2,576,363
103,500     

Koninklijke (Royal) KPN NV

      1,952,010
23,000     

Oce NV

      462,099
45,200     

Royal Dutch Shell PLC (Class A Stock)

      1,978,625
23,030     

Schlumberger Ltd.

      2,224,007
           
          10,011,089

New Zealand    0.2%

       
357,800     

Air New Zealand Ltd.

      588,029

Norway    0.5%

       
38,900     

Norsk Hydro ASA

      571,163
33,539     

Statoil ASA

      1,134,882
           
          1,706,045

Russia    1.4%

       
63,300     

OAO Gazprom, ADR

      3,152,340
485,000     

Sberbank

      2,085,500
           
          5,237,840

 

See Notes to Financial Statements.

Dryden International Value Fund   13

Portfolio of Investments

 

as of October 31, 2007 continued

Shares      Description    Value (Note 1)

Singapore    0.8%

       
       
377,970     

MobileOne Ltd.

    $ 550,559
248,141     

Neptune Orient Lines Ltd.

      888,919
106,400     

Singapore Airlines Ltd.

      1,452,435
           
          2,891,913

South Korea    0.8%

       
42,770     

Shinhan Financial Group Co. Ltd.

      2,794,326

Spain    2.9%

       
59,500     

Banco Bilbao Vizcaya Argentaria SA

      1,497,088
140,800     

Banco Santander Central Hispano SA

      3,059,318
56,547     

Repsol YPF SA

      2,232,065
112,200     

Telefonica SA

      3,703,973
           
          10,492,444

Sweden    1.0%

       
44,700     

Electrolux AB (Class B Stock)

      863,804
7,140     

Husqvarna AB (Class A Stock)

      85,709
156,200     

Nordea Bank AB

      2,793,479
           
          3,742,992

Switzerland    8.8%

       
9,400     

Baloise Holding AG

      998,912
2,017     

Ciba Specialty Chemicals AG

      100,206
37,300     

Credit Suisse Group

      2,508,348
1,709     

Georg Fischer AG

      1,282,045
2,279     

Givaudan SA

      2,238,866
10,900     

Nestle SA

      5,029,394
59,033     

Novartis AG

      3,139,186
2,263     

Rieter Holdings AG

      1,311,813
24,825     

Roche Holding AG

      4,234,651
18,800     

Swiss Re

      1,764,123
5,000     

Swisscom AG

      1,848,455
110,040     

UBS AG

      5,884,822
4,600     

Zurich Financial Services AG

      1,384,884
           
          31,725,705

United Kingdom    18.0%

       
58,000     

Alliance & Leicester PLC

      953,340
580,400     

ARM Holdings PLC

      1,792,140
50,600     

AstraZeneca PLC

      2,496,700
63,200     

Aviva PLC

      992,818

 

See Notes to Financial Statements.

14   Visit our website at www.jennisondryden.com

Shares      Description    Value (Note 1)  
       
193,571     

Barclays PLC

    $ 2,431,058  
296,400     

BP PLC

      3,851,912  
166,655     

Bradford & Bingley PLC

      1,070,767  
120,000     

Brit Insurance Holdings PLC

      809,681  
414,700     

BT Group PLC

      2,811,058  
70,100     

Carnival PLC

      3,273,753  
62,100     

Dairy Crest Group PLC

      777,977  
276,764     

DSG International PLC

      745,242  
145,600     

GKN PLC

      1,110,324  
37,300     

GlaxoSmithKline PLC

      960,169  
119,800     

HBOS PLC

      2,174,649  
560,063     

Kingfisher PLC

      2,297,641  
272,238     

Legal & General Group PLC

      793,058  
546,489     

Lloyds TSB Group PLC

      6,198,610  
273,700     

Marks & Spencer Group PLC

      3,710,569  
67,401     

Next PLC

      3,094,451  
200,998     

Northern Foods PLC

      443,012  
283,100     

Old Mutual PLC

      1,083,118  
55,300     

Reckitt Benckiser PLC

      3,206,947  
354,400     

Royal & Sun Alliance Insurance Group PLC

      1,162,100  
179,400     

Royal Bank of Scotland Group PLC

      1,926,686  
78,400     

Royal Dutch Shell PLC (Class B Stock)

      3,415,216  
117,118     

SABMiller PLC

      3,518,922  
47,000     

Tate & Lyle PLC

      425,602  
128,588     

TT Electronics PLC

      395,713  
77,725     

Vodafone Group PLC, ADR

      3,052,261  
983,000     

Vodafone Group PLC

      3,863,078  
             
          64,838,572  
             
    

Total long-term investments
(cost $253,182,349)

      359,293,851  
             

SHORT-TERM INVESTMENT    0.5%

   

Affiliated Money Market Mutual Fund

         
    

Dryden Core Investment Fund - Taxable Money Market Series

   
1,713,907     

(cost $1,713,907)(a)

      1,713,907  
             
    

Total Investments(b)    100.2%
(cost $254,896,256; Note 5)

      361,007,758  
    

Liabilities in excess of other assets(c)    (0.2)%

      (741,762 )
             
    

Net Assets     100%

    $ 360,265,996  
             

 

See Notes to Financial Statements.

Dryden International Value Fund   15

Portfolio of Investments

 

as of October 31, 2007 continued

 

The following abbreviations are used in portfolio descriptions:

ADR—American Depositary Receipt

EUR—Euro

JPY—Japanese Yen

MXP—Mexico Peso

* Non-income producing security.
(a) Prudential Investments LLC, the manager of the Fund also serves as manager of the Dryden Core Investment Fund-Taxable Money Market Series.
(b) As of October 31, 2007, 68 securities representing $90,489,678 and 25.1% of net assets were fair valued in accordance with the policies adopted by the Board of Directors.
(c) Liabilities in excess of other assets includes net unrealized appreciation (depreciation) on forward foreign currency contracts are as follows:

 

Forward foreign currency exchange contracts outstanding at October 31, 2007:

 

Purchase
Contract		       Notional
Amount
(000)		   Value at
Settlement
Date
Payable		   Current
Value		   Unrealized
Appreciation
(Depreciation)		  
Euros,
Expiring 11/05/07		   EUR   9   $ 13,085   $ 13,085   $ —  
                       
Sale Contract       Notional
Amount
(000)		   Value at
Settlement
Date
Receivable		   Current
Value		   Unrealized
Appreciation
(Depreciation)		  
Japanese Yen,
Expiring 11/05/07		   JPY   1,505   $ 13,085   $ 13,045   $ 40  
Mexican Peso
Expiring 12/06/07		   MXP   72,500     6,664,215     6,780,916     (116,701 )
                       
      $ 6,677,300   $ 6,793,961   $ (116,661 )
                       

 

See Notes to Financial Statements.

16   Visit our website at www.jennisondryden.com

 

 

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as October 31, 2007 was as follows:

 

Telecommunications

    12.9 %

Financial - Bank & Trust

    11.4  

Oil, Gas & Consumable Fuels

    10.4  

Pharmaceuticals

    6.9  

Automobile Manufacturers

    5.1  

Diversified Financials

    4.4  

Insurance

    3.9  

Real Estate

    3.8  

Utilities

    3.6  

Banks

    3.3  

Chemicals

    3.2  

Entertainment & Leisure

    3.1  

Food & Beverage

    2.8  

Retail & Merchandising

    2.5  

Metals & Mining

    1.8  

Electronic Components & Equipment

    1.6  

Automotive Parts

    1.5  

Financial Services

    1.3  

Transportation

    1.2  

Diversified Operations

    1.2  

Airlines

    1.2  

Building Materials

    1.1  

Food Products

    1.1  

Consumer Products & Services

    1.1  

Office Equipment

    1.0  

Aerospace

    1.0  

Gaming

    0.8  

Beverages

    0.7  

Conglomerates

    0.6  

Diversified Telecommunication Services

    0.6  

Semiconductor Components

    0.5  

Affiliated Money Market Mutual Fund

    0.5  

Business Services

    0.4  

Steel Producers/Products

    0.4  

Machinery & Equipment

    0.4  

Electronic Components

    0.3  

Machinery

    0.3  

Commercial Banks

    0.3  

Multimedia

    0.3  

Manufacturing

    0.2  

Aerospace & Defense

    0.2  

Computer Services & Software

    0.2  

Paper & Related Products

    0.2  

Medical Supplies & Equipment

    0.2  

Auto/trucks Parts & Equipment

    0.1  

Clothing & Apparel

    0.1  

Printing

    0.1  

Distribution/Wholesale

    0.1  

Miscellaneous Manufacturing

    0.1  

Paper & Forest Products

    0.1  

Appliances

    0.1  
      
   100.2  

Liabilities in excess of other assets

    (0.2 )
      
   100.0 %
      

 

See Notes to Financial Statements.

Dryden International Value Fund   17

Statement of Assets and Liabilities

 

as of October 31, 2007

Assets

       

Investments at Value:

   

Unaffiliated investments (cost $253,182,349)

    $ 359,293,851

Affiliated investments (cost $1,713,907)

      1,713,907

Foreign currency, at value (cost $650,322)

      665,304

Cash

      63,101

Receivable for Series shares sold

      675,451

Dividends receivable

      612,140

Foreign tax reclaim receivable

      543,481

Receivable for investments sold

      327,202

Prepaid expenses

      5,463

Unrealized appreciation on forward currency contracts

      40
      

Total Assets

      363,899,940
      

Liabilities

       

Payable for Series shares reacquired

      2,128,299

Payable for investments purchased

      819,672

Management fee payable

      295,420

Accrued expenses

      150,885

Unrealized depreciation on forward currency contracts

      116,701

Transfer agent fee payable

      71,450

Distribution fee payable

      47,343

Deferred directors’ fees payable

      2,578

Withholding tax payable

      1,596
      

Total Liabilities

      3,633,944
      

Net Assets

    $ 360,265,996
      
        

Net assets were comprised of:

   

Common stock, at par

    $ 105,664

Paid-in capital in excess of par

      209,923,693
      
     210,029,357

Undistributed net investment income

      4,125,714

Accumulated net realized gain on investments and foreign currency transactions

      40,031,751

Net unrealized appreciation on investments and foreign currencies

      106,079,174
      

Net Assets, October 31, 2007

    $ 360,265,996
      

 

See Notes to Financial Statements.

18   Visit our website at www.jennisondryden.com

 

Class A:

      

Net Asset Value and Redemption Price Per Share

   

($91,220,643 ÷ 2,675,468 shares of common stock issued and outstanding)

    $ 34.10

Maximum Sales Charge (5.5% of offering price)

      1.98
      

Offering Price Per Share

    $ 36.08
      

Class B:

      

Net Asset Value, Offering and Redemption Price Per Share

   

($16,278,997 ÷ 497,315 shares of common stock issued and outstanding)

    $ 32.73
      

Class C:

      

Net Asset Value, Offering and Redemption Price Per Share

   

($17,938,283 ÷ 547,407 shares of common stock issued and outstanding)

    $ 32.77
      

Class Z:

      

Net Asset Value, Offering and Redemption Price Per Share

   

($234,828,073 ÷ 6,846,206 shares of common stock issued and outstanding)

    $ 34.30
      

 

See Notes to Financial Statements.

Dryden International Value Fund   19

Statement of Operations

 

Year Ended October 31, 2007

Net Investment Income

 

Income

 

Unaffiliated dividend income (net of withholding taxes of $700,294)

    $ 10,464,993  

Affiliated dividend income

      240,888  

Interest

      38,089  

Affiliated income from securities lending

      150  
        

Total income

      10,744,120  
        

Expenses

   

Management fee

      3,228,052  

Distribution fees—Class A

      210,859  

Distribution fees—Class B

      166,272  

Distribution fees—Class C

      162,973  

Transfer agent’s fees and expenses (including affiliated expenses of $420,000)

      420,000  

Reorganization expenses (Note 9)

      249,000  

Custodian’s fees and expenses

      181,000  

Reports to shareholders

      50,000  

Registration fees

      40,000  

Legal fees

      26,000  

Audit fees

     22,000  

Directors’ fees

      16,000  

Insurance fees

      12,000  

Interest expense (Note 7)

      11,524  

Miscellaneous

      19,019  
        

Total expenses

      4,814,699  
        

Net investment income

      5,929,421  
        

Realized And Unrealized Gain (loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions

      43,700,342  

Foreign currency transactions

      (1,259,023 )
        
     42,441,319  
        

Net change in unrealized appreciation (depreciation) on:

   

Investments

      42,530,873  

Foreign currencies

      406,053  
        
     42,936,926  
        

Net gain on investments and foreign currencies

      85,378,245  
        

Net Increase In Net Assets Resulting From Operations

    $ 91,307,666  
        

 

See Notes to Financial Statements.

20   Visit our website at www.jennisondryden.com

Statement of Changes in Net Assets

 

     Year
Ended
October 31, 2007		        Year
Ended
October 31, 2006		  

Increase (Decrease) in Net Assets

                    

Operations

        

Net investment income

    $ 5,929,421        $ 3,457,990  

Net realized gain on investments and foreign currency transactions

      42,441,319          31,970,612  

Net change in unrealized appreciation on investments and foreign currencies

      42,936,926          32,016,938  
                   

Net increase in net assets resulting from operations

      91,307,666          67,445,540  
                   

Dividends and distributions (Note 1)

        

Dividends from net investment income

        

Class A

      (84,431 )        (1,338,851 )

Class B

      —          (279,268 )

Class C

      —          (186,171 )

Class Z

      (666,603 )        (3,990,294 )
                   
     (751,034 )        (5,794,584 )
                   

Distributions from net realized gains

        

Class A

      (3,720,197 )        (866,912 )

Class B

      (844,448 )        (289,255 )

Class C

      (765,891 )        (192,828 )

Class Z

      (8,886,383 )        (2,323,971 )
                   
     (14,216,919 )        (3,672,966 )
                   

Series share transactions (net of share conversions) (Note 6)

        

Net proceeds from shares sold

      105,826,182          92,737,158  

Net asset value of shares issued in reinvestment of dividends and distributions

      14,525,629          9,238,126  

Cost of shares reacquired

      (121,825,308 )        (124,275,889 )
                   

Net decrease in net assets from Series share transactions

      (1,473,497 )        (22,300,605 )
                   

Total increase

      74,866,216          35,677,385  

Net Assets

                    

Beginning of year

      285,399,780          249,722,395  
                   

End of year (a)

    $ 360,265,996        $ 285,399,780  
                   

(a) Includes undistributed net investment income of:

    $ 4,125,714        $ 76,399  
                   

 

See Notes to Financial Statements.

Dryden International Value Fund   21

 

Notes to Financial Statements

 

Prudential World Fund, Inc. (the “Fund”), is registered under the Investment Company Act of 1940 as an open-end diversified management investment company and currently consists of two series: Dryden International Value Fund (formerly Strategic Partners International Value Fund) (the “Series”) and the Dryden International Equity Fund. These financial statements relate to Dryden International Value Fund. The financial statements of the other Series are not presented herein. The investment objective of the Series is to achieve long-term growth of capital. Income is a secondary objective. The Series seeks to achieve its objective primarily through investment in common stock and preferred stock of foreign companies of all sizes.

 

Note 1. Accounting Policies

 

The following is a summary of significant accounting policies followed by the Fund and the Series in the preparation of its financial statements.

 

Securities Valuation: Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and ask prices, or at the last bid price on such day in the absence of an asked price. Securities traded via Nasdaq are valued at the Nasdaq official closing price (NOCP) on the day of valuation, or if there was no NOCP, at the last sale price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”), in consultation with the subadvisor(s), to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker. Options on securities and indices traded on an exchange are valued at the last sale price as of the close of trading on the applicable exchange or, if there was no sale, at the mean between the most recently quoted bid and asked prices on such exchange. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which reliable market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign market and before the Funds’ normal pricing time, are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any

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restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment advisor regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values. As of October 31, 2007, there were 68 securities representing $90,489,678 whose values were adjusted in accordance with procedures approved by the Board of Directors.

 

Short-term securities which mature in 60 days or less are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term securities which mature in more than 60 days are valued at current market quotations.

 

Securities Lending: The Fund may lend its portfolio securities to broker-dealers. The loans are secured by collateral at least equal at all times to the market value of the securities loaned. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities using the collateral in the open market. The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The Fund also continues to receive interest and dividends or amounts equivalent thereto, on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.

 

Foreign Currency Translation: The books and records of the Series 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 current rates of exchange.

 

(ii) Purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

Dryden International Value Fund   23

Notes to Financial Statements

 

continued

 

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the fiscal period, the Series 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 long-term securities held at the end of the fiscal period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the fiscal period. Accordingly, realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.

 

Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from the holding of foreign currencies, currency gains or losses realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on investments and 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 or the level of governmental supervision and 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 Series enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables 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 foreign currencies. 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. Forward currency contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities.

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Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized and unrealized gains or losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on the accrual basis. Net investment income or loss, (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.

 

Dividends and Distributions: The Series expects to pay dividends of net investment income and distributions of net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.

 

Taxes: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required.

 

Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Note 2. Agreements

 

The Fund has a management agreement for the Series with Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisors’ performance of such services. PI has entered into subadvisory agreements with LSV Asset Management (“LSV”) and Thornburg Investment Management (“Thornburg”) for the Series.

 

The subadvisory agreements provide that LSV and Thornburg furnish investment advisory services in connection with the management of the Series. In connection

Dryden International Value Fund   25

Notes to Financial Statements

 

continued

 

 

therewith, LSV and Thornburg are obligated to keep certain books and records of the Series. PI pays for the services of the subadvisors, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Fund bears all other costs and expenses.

 

The management fee paid to PI is computed daily and payable monthly at an annual rate of 1% of the average daily net assets up to $300 million, .95 of 1% of the next $700 million of average daily net assets and .90 of 1% of average daily net assets in excess of $1 billion of the Series. The effective management fee for the year ended October 31, 2007 was 1.00%.

 

Effective August 1, 2005, PI agreed to reimburse the Series in order to limit operating expenses (excluding interest, taxes and brokerage commissions) to 1.61%, 2.36%, 2.36% and 1.36% of the average daily net assets of the Class A, B, C and Z shares, respectively. This limitation is effective through February 28, 2009.

 

The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ 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 PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Series.

 

Pursuant to the Class A, B and C Plans, the Series compensates PIMS for distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively. For the year ended October 31, 2007, PIMS contractually agreed to limit such fee to .25 of 1% of the average daily net assets of the Class A shares.

 

PIMS has advised the Series that it received approximately $61,800 in front-end sales charges resulting from sales of Class A shares during the year ended October 31, 2007. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS advised the Series that for the year ended October 31, 2007, it received approximately $2,000, $14,400 and $2,700 in contingent deferred sales charges imposed upon certain redemptions by Class A, Class B and Class C shareholders, respectively.

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PI and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

Note 3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly owned subsidiary of Prudential, serves as the Fund’s transfer agent. The transfer agent fees and expenses in the Statement of Operations also include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Fund pays networking fees to affiliated and unaffiliated broker/dealers, including fees relating to the services of Wachovia Securities, LLC (“Wachovia”) and First Clearing, LLC (“First Clearing”), affiliates of Pl. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national clearing system. For the year ended October 31, 2007, the Series incurred approximately $58,000 in total networking fees, of which $39,700 was paid to Wachovia and First Clearing. These amounts are included in transfer agent’s fees and expenses on the Statement of Operations.

 

Prudential Investment Management, Inc. (“PIM”) is the Series’ security lending agent. For the year ended October 31, 2007, PIM has been compensated $64 for these services.

 

The Fund invests in the Taxable Money Market Series, a portfolio of Dryden Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Taxable Money Market Series is a money market mutual fund registered under the Investment Company Act of 1940, as amended, and managed by PI.

 

Note 4. Portfolio Securities

 

Purchases and sales of investment securities, other than short-term investments, for the year ended October 31, 2007 were $142,118,577 and $149,047,156, respectively.

 

Note 5. Distributions and Tax Information

 

Distributions to shareholders, which are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. In order to present undistributed net investment income and accumulated net realized gain on investments and foreign currency transactions on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to undistributed net investment income and accumulated net realized gain on investments and foreign currency transactions. For the tax year ended October 31, 2007 the adjustments were to decrease undistributed net investment income and increase accumulated net

Dryden International Value Fund   27

Notes to Financial Statements

 

continued

 

 

realized gain on investments and foreign currency transactions by $1,129,072 due to the treatment for book and tax purposes of foreign currency gains and losses and investments in passive foreign investment companies. Net investment income, net realized gains and net assets were not affected by this change.

 

For the year ended October 31, 2007, the tax character of dividends and distributions paid as reflected in the Statement of Changes in Net Assets were $751,034 from ordinary income and $14,216,919 from long-term capital gains. For the year ended October 31, 2006, the tax character of dividends and distributions paid as reflected in the Statement of Changes in Net Assets were $9,467,550 from ordinary income. For federal income tax purposes, dividends from net investment income and distributions from short-term capital gains are taxable as ordinary income. Long-term capital gain distributions are taxable as such.

 

As of October 31, 2007, accumulated undistributed earnings on a tax basis were $16,510,819 from ordinary income and $29,680,762 from long-term capital gains. This differs from the amount shown on the Statement of Assets and Liabilities primarily due to cumulative timing differences between financial and tax reporting.

 

At October 31, 2007, for federal income tax purposes, the Series had a capital loss carryforward of approximately $1,490,000 of which $1,156,000 expires in 2010 and $334,000 expires in 2011. The Series utilized approximately $1,629,000 of its capital loss carryforward to offset taxable gains realized during the year ended October 31, 2007. No capital gain distributions are expected to be paid to shareholders until net gains have been realized in excess of such carryforward. It is uncertain whether the Series will be able to realize the full benefit prior to the expiration date.

 

The federal income tax basis of the Series’s investments and the net unrealized appreciation as of October 31, 2007 was as follows:

 

Tax basis

   

Appreciation

   

Depreciation

   

Net Unrealized
Appreciation

$255,552,615    $111,036,693    $5,581,550    $105,455,143

 

The difference between book basis and tax basis was primarily attributable to deferred losses on wash sales and investments in passive foreign investment companies.

 

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Note 6. 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 5.50%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a CDSC which declines from 5% to zero depending upon the period of time the shares are held. Class C shares are sold with a CDSC of 1% during the first 12 months from the date of purchase. Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

There are 500 million authorized shares of $.01 par value common stock, divided equally into four classes, designated Class A, Class B, Class C and Class Z common stock.

 

Transactions in shares of common stock were as follows:

 

Class A

    Shares     Amount  

Year ended October 31, 2007:

     

Shares sold

    509,561     $ 15,096,601  

Shares issued in reinvestment of dividends and distributions

    129,319       3,497,301  

Shares reacquired

    (860,411 )     (25,963,618 )
              

Net increase (decrease) in shares outstanding before conversion

    (221,531 )     (7,369,716 )

Shares issued upon conversion from Class B

    194,536       5,558,092  
              

Net increase (decrease) in shares outstanding

    (26,995 )   $ (1,811,624 )
              

Year ended October 31, 2006:

     

Shares sold

    634,776     $ 15,680,256  

Shares issued in reinvestment of dividends and distributions

    92,600       2,039,054  

Shares reacquired

    (970,058 )     (23,458,112 )
              

Net increase (decrease) in shares outstanding before conversion

    (242,682 )     (5,738,802 )

Shares issued upon conversion from Class B

    141,546       3,378,301  
              

Net increase (decrease) in shares outstanding

    (101,136 )   $ (2,360,501 )
              
Dryden International Value Fund   29

Notes to Financial Statements

 

continued

 

 

Class B

    Shares     Amount  

Year ended October 31, 2007:

     

Shares sold

    100,519     $ 2,818,139  

Shares issued in reinvestment of dividends and distributions

    30,063       785,125  

Shares reacquired

    (160,949 )     (4,465,536 )
              

Net increase (decrease) in shares outstanding before conversion

    (30,367 )     (862,272 )

Shares reacquired upon conversion into Class A

    (201,681 )     (5,558,092 )
              

Net increase (decrease) in shares outstanding

    (232,048 )   $ (6,420,364 )
              

Year ended October 31, 2006:

     

Shares sold

    156,140     $ 3,771,471  

Shares issued in reinvestment of dividends and distributions

    25,034       537,475  

Shares reacquired

    (201,729 )     (4,810,645 )
              

Net increase (decrease) in shares outstanding before conversion

    (20,555 )     (501,699 )

Shares reacquired upon conversion into Class A

    (145,644 )     (3,378,301 )
              

Net increase (decrease) in shares outstanding

    (166,199 )   $ (3,880,000 )
              

Class C

             

Year ended October 31, 2007:

     

Shares sold

    71,193     $ 2,020,334  

Shares issued in reinvestment of dividends and distributions

    27,352       715,272  

Shares reacquired

    (158,776 )     (4,438,393 )
              

Net increase (decrease) in shares outstanding

    (60,231 )   $ (1,702,787 )
              

Year ended October 31, 2006:

     

Shares sold

    176,616     $ 4,305,549  

Shares issued in reinvestment of dividends and distributions

    16,596       356,650  

Shares reacquired

    (185,223 )     (4,441,582 )
              

Net increase (decrease) in shares outstanding

    7,989     $ 220,617  
              

Class Z

             

Year ended October 31, 2007:

     

Shares sold

    2,903,901     $ 85,891,108  

Shares issued in reinvestment of dividends and distributions

    351,107       9,527,931  

Shares reacquired

    (2,901,435 )     (86,957,761 )
              

Net increase (decrease) in shares outstanding

    353,573     $ 8,461,278  
              

Year ended October 31, 2006:

     

Shares sold

    2,762,586     $ 68,979,882  

Shares issued in reinvestment of dividends and distributions

    285,034       6,304,947  

Shares reacquired

    (3,671,082 )     (91,565,550 )
              

Net increase (decrease) in shares outstanding

    (623,462 )   $ (16,280,721 )
              
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Note 7. Borrowings

 

The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA is incurred at contracted market rates and a commitment fee for the unused amount is accrued daily and paid quarterly. Effective October 26, 2007, the Funds renewed the SCA with the banks. The commitment under the renewed SCA continues to be $500 million. The Funds pay a commitment fee of .06 of 1% of the unused portion of the renewed SCA. The expiration date of the renewed SCA will be October 24, 2008. For the period from October 27, 2006, through October 26, 2007, the Funds paid a Commitment fee of .07 of 1% of the unused portion of the agreement. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions.

 

The Series utilized the line of credit during for the year ended October 31, 2007. The average daily balance for the 21 days the Series had debt outstanding during the year was approximately $3,480,952 at a weighted average interest rate of approximately 5.64%.

 

Note 8. New Accounting Pronouncements

 

On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The impact of the tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the year in which they arise.

On December 22, 2006, the Securities and Exchange Commission delayed the effective date until the last net asset value calculation in the first required financial reporting period for its fiscal year beginning after December 15, 2006. The Fund’s financial statements have not been impacted by the adoption of FIN 48. However, the conclusions regarding FIN 48 may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance expected from FASB and on-going analysis of tax laws, regulations, and interpretations thereof.

 

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (FAS 157). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the

Dryden International Value Fund   31

Notes to Financial Statements

 

continued

 

 

implications of FAS 157 and its impact, if any, in the financial statements has not yet been determined.

 

Note 9. Other

 

On July 19, 2006, the Board of Directors of the Fund approved an Agreement and Plan of Reorganization (the “Plan”), which provided for the transfer of all the assets of the Class A, B, C and Z shares of the Series for like shares of Dryden International Equity Fund, a series of Prudential World Fund, Inc. and the assumption of the liabilities of the Series. The Plan was not approved by the shareholders of the Series.

 

The reorganization costs attributable to the Series are currently reflected in the Statement of Operations.

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Financial Highlights

 

 

OCTOBER 31, 2007   ANNUAL REPORT

 

Dryden International Value Fund

Financial Highlights

 

     Class A  
      Year Ended
October 31, 2007(b)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 27.12  
        

Income from investment operations:

   

Net investment income

      .51  

Net realized and unrealized gain on investment and foreign currency transactions

      7.85  
        

Total from investment operations

      8.36  
        

Less Dividends and Distributions:

   

Dividends from net investment income

      (.03 )

Distributions from net realized gains

      (1.35 )
        

Total dividends and distributions

      (1.38 )
        

Net Asset Value, end of year

    $ 34.10  
        

Total Return(a):

      32.15 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 91,221  

Average net assets (000)

    $ 84,344  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees(c)

      1.57 %

Expenses, excluding distribution and service (12b-1) fees

      1.32 %

Net investment income

      1.74 %

For Class A, B, C and Z shares:

   

Portfolio turnover rate

      44 %
(a) These total returns do not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Calculations are based on the average daily number of shares outstanding.
(c) The distributor of the Fund has contractually agreed to limit its distribution and service (12b-1) fees to .25 of 1% of the average daily assets of the Class A shares.
(d) Effective August 1, 2005 through February 28, 2009, the Manager of the Series agreed to reimburse the Series in order to limit operating expenses (excluding interest, taxes and brokerage commissions) to 1.61% of the average daily net assets of the Class A shares. If the Manager had not reimbursed the Series, the annual expenses (both including and excluding distribution and service (12b-1) fees) and net investment income ratios would be 1.62%, 1.37% and 1.15%, respectively, for the year ended October 31, 2005.

 

See Notes to Financial Statements.

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Class A  
                             
Year Ended October 31,  
2006(b)     2005(b)     2004(b)     2003(b)  
     
$ 21.88     $ 18.29     $ 16.07     $ 14.08  
                             
     
  .45       .24       .16       .14  
  5.61       3.53       2.20       1.89  
                             
  6.06       3.77       2.36       2.03  
                             
     
  (.50 )     (.18 )     (.14 )     (.04 )
  (.32 )     —       —       —  
                             
  (.82 )     (.18 )     (.14 )     (.04 )
                             
$ 27.12     $ 21.88     $ 18.29     $ 16.07  
                             
  28.59 %     20.71 %     14.77 %     14.44 %
     
$ 73,289     $ 61,347     $ 55,530     $ 41,889  
$ 67,590     $ 59,739     $ 49,953     $ 40,463  
     
  1.65 %     1.62 %(d)     1.61 %     1.72 %
  1.40 %     1.37 %(d)     1.36 %     1.47 %
  1.83 %     1.15 %(d)     .90 %     .97 %
     
  48 %     121 %     24 %     23 %

 

See Notes to Financial Statements.

Dryden International Value Fund   35

Financial Highlights

 

continued

 

 

     Class B  
      Year Ended
October 31, 2007(b)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 26.24  
        

Income from investment operations:

   

Net investment income

     .24  

Net realized and unrealized gain on investment and foreign currency transactions

      7.60  
        

Total from investment operations

      7.84  
        

Less Dividends and Distributions:

   

Dividends from net investment income

      —  

Distributions from net realized gains

      (1.35 )
        

Total dividends and distributions

      (1.35 )
        

Net Asset Value, end of year

    $ 32.73  
        

Total Return(a):

      31.17 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 16,279  

Average net assets (000)

    $ 16,627  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.32 %

Expenses, excluding distribution and service (12b-1) fees

      1.32 %

Net investment income

     .84 %
(a) These total returns do not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Calculations are based on the average daily number of shares outstanding.
(c) Effective August 1, 2005 through February 28, 2009, the Manager of the Series agreed to reimburse the Series in order to limit operating expenses (excluding interest, taxes and brokerage commissions) to 2.36% of the average daily net assets of the Class B shares. If the Manager had not reimbursed the Series, the annual expenses (both including and excluding distribution and service (12b-1) fees) and net investment income ratios would be 2.37%, 1.37% and 0.38%, respectively, for the year ended October 31, 2005.

 

See Notes to Financial Statements.

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Class B  
Year Ended October 31,  
2006(b)     2005(b)     2004(b)     2003(b)  
     
$ 21.19     $ 17.73     $ 15.58     $ 13.71  
                             
     
  .19       .08       .03       .03  
  5.49       3.42       2.15       1.84  
                             
  5.68       3.50       2.18       1.87  
                             
     
  (.31 )     (.04 )     (.03 )     —  
  (.32 )     —       —       —  
                             
  (.63 )     (.04 )     (.03 )     —  
                             
$ 26.24     $ 21.19     $ 17.73     $ 15.58  
                             
  27.51 %     19.77 %     13.98 %     13.64 %
     
$ 19,141     $ 18,978     $ 25,917     $ 33,651  
$ 19,346     $ 23,092     $ 33,863     $ 33,581  
     
  2.40 %     2.37 %(c)     2.36 %     2.47 %
  1.40 %     1.37 %(c)     1.36 %     1.47 %
  .78 %     .38 %(c)     .15 %     .20 %

 

See Notes to Financial Statements.

Dryden International Value Fund   37

Financial Highlights

 

continued

 

 

     Class C  
      Year Ended
October 31, 2007(b)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 26.27  
        

Income from investment operations:

   

Net investment income

      .27  

Net realized and unrealized gain on investment and foreign currency transactions

      7.58  
        

Total from investment operations

      7.85  
        

Less Dividends and Distributions:

   

Dividends from net investment income

      —  

Distributions from net realized gains

      (1.35 )
        

Total dividends and distributions

      (1.35 )
        

Net Asset Value, end of year

    $ 32.77  
        

Total Return(a):

      31.17 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 17,938  

Average net assets (000)

    $ 16,297  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      2.32 %

Expenses, excluding distribution and service (12b-1) fees

      1.32 %

Net investment income

      .94 %
(a) These total returns do not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Calculations are based on the average daily number of shares outstanding.
(c) Effective August 1, 2005 through February 28, 2009, the Manager of the Series agreed to reimburse the Series in order to limit operating expenses (excluding interest, taxes and brokerage commissions) to 2.36% of the average daily net assets of the Class C shares. If the Manager had not reimbursed the Series, the annual expenses (both including and excluding distribution and service (12b-1) fees) and net investment income ratios would be 2.37%, 1.37% and 0.40%, respectively, for the year ended October 31, 2005.

 

See Notes to Financial Statements.

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Class C  
Year Ended October 31,  
2006(b)     2005(b)     2004(b)     2003(b)  
     
$ 21.21     $ 17.74     $ 15.60     $ 13.73  
                             
     
  .23       .08       .06       .03  
  5.46       3.43       2.11       1.84  
                             
  5.69       3.51       2.17       1.87  
                             
     
  (.31 )     (.04 )     (.03 )     —  
  (.32 )     —       —       —  
                             
  (.63 )     (.04 )     (.03 )     —  
                             
$ 26.27     $ 21.21     $ 17.74     $ 15.60  
                             
  27.53 %     19.81 %     13.90 %     13.62 %
     
$ 15,962     $ 12,720     $ 13,040     $ 7,438  
$ 14,909     $ 13,293     $ 11,763     $ 6,988  
     
  2.40 %     2.37 %(c)     2.36 %     2.47 %
  1.40 %     1.37 %(c)     1.36 %     1.47 %
  .98 %     .40 %(c)     .33 %     .18 %

 

See Notes to Financial Statements.

Dryden International Value Fund   39

Financial Highlights

 

continued

 

 

     Class Z  
      Year Ended
October 31, 2007(b)		  

Per Share Operating Performance:

   

Net Asset Value, Beginning of Year

    $ 27.26  
        

Income from investment operations:

   

Net investment income

      .60  

Net realized and unrealized gain on investment and foreign currency transactions

      7.89  
        

Total from investment operations

      8.49  
        

Less Dividends and Distributions:

   

Dividends from net investment income

      (.10 )

Distributions from net realized gains

      (1.35 )
        

Total dividends and distributions

      (1.45 )
        

Net Asset Value, end of year

    $ 34.30  
        

Total Return(a):

      32.50 %

Ratios/Supplemental Data:

   

Net assets, end of year (000)

    $ 234,828  

Average net assets (000)

    $ 206,798  

Ratios to average net assets:

   

Expenses, including distribution and service (12b-1) fees

      1.32 %

Expenses, excluding distribution and service (12b-1) fees

      1.32 %

Net investment income

      2.02 %
(a) These total returns do not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Calculations are based on the average daily number of shares outstanding.
(c) Effective August 1, 2005 through February 28, 2009, the Manager of the Series agreed to reimburse the Series in order to limit operating expenses (excluding interest, taxes and brokerage commissions) to 1.36% of the average daily net assets of the Class Z shares. If the Manager had not reimbursed the Series, the annual expenses (both including and excluding distribution and service (12b-1) fees) and net investment income ratios would be 1.37%, 1.37% and 1.43%, respectively, for the year ended October 31, 2005.

 

See Notes to Financial Statements.

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Class Z  
Year Ended October 31,  
2006(b)     2005(b)     2004(b)     2003(b)  
     
$ 22.02     $ 18.41     $ 16.17     $ 14.17  
                             
     
  .28       .29       .20       .18  
  5.84       3.54       2.22       1.90  
                             
  6.12       3.83       2.42       2.08  
                             
     
  (.56 )     (.22 )     (.18 )     (.08 )
  (.32 )     —       —       —  
                             
  (.88 )     (.22 )     (.18 )     (.08 )
                             
$ 27.26     $ 22.02     $ 18.41     $ 16.17  
                             
  28.78 %     20.97 %     15.09 %     14.76 %
     
$ 177,008     $ 156,678     $ 295,418     $ 310,521  
$ 170,067     $ 264,624     $ 334,003     $ 276,808  
     
  1.40 %     1.37 %(c)     1.36 %     1.47 %
  1.40 %     1.37 %(c)     1.36 %     1.47 %
  1.13 %     1.43 %(c)     1.10 %     1.22 %

 

 

See Notes to Financial Statements.

Dryden International Value Fund   41

 

Report of Independent Registered Public

Accounting Firm

 

The Board of Directors and Shareholders of

Prudential World Fund, Inc.—Dryden International Value Fund:

 

We have audited the accompanying statement of assets and liabilities of the Prudential World Fund, Inc.—Dryden International Value Fund (one of the portfolios constituting the Prudential World Fund, Inc., hereafter referred to as the “Fund”), including the portfolio of investments, as of October 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended October 31, 2003, were audited by another independent registered public accounting firm, whose report dated December 22, 2003, expressed an unqualified opinion thereon.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of October 31, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.

 

LOGO

New York, New York

December 28, 2007

 

 

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Tax Information

 

(Unaudited)

 

We are required by Internal Revenue Code to advise you within 60 days of the Series’ fiscal year end (October 31, 2007) as to the federal tax status of dividends and distributions paid by the Series during such fiscal year. Accordingly, we are advising you in the fiscal year ended October 31, 2007, the Fund paid dividends of $0.031 per share for Class A and $0.101 per share for Class Z shares, from ordinary income, respectively. Additionally, the Fund paid distributions of $1.346 of long-term capital gains. For federal income tax purposes, dividends from net investment income and distributions from short-term capital gains are taxable as ordinary income. Long-term capital gain distributions are taxable as such.

 

For the fiscal year ended October 31, 2007, the Series designated 50.66% of the ordinary income dividends as qualified for the reduced tax rate under The Job and Growth Tax Relief Reconciliation Act of 2003.

 

The Fund intends to designate 100% of ordinary income dividends as qualified short-term capital gains (QSTCG) under the American Jobs Creation Act of 2004.

 

For the fiscal year ended October 31, 2007, the Series intends on passing through $678,648 of ordinary income distributions as a foreign tax credit from recognized foreign source income of $11,157,995.

 

In January 2008, you will be advised on IRS Form 1099DIV or Substitute Form 1099DIV as to the federal tax status of dividends and distributions received by you in calendar year 2007.

 

 

Dryden International Value Fund   43

 

Management of the Fund

 

(Unaudited)

 

Information pertaining to the Directors of the Prudential World Fund, Inc./the Dryden International Value Fund (the “Fund”) is set forth below. Directors who are not deemed to be “interested persons” of the Fund, as defined in the Investment Company Act of 1940 as amended, (the 1940 Act) are referred to as “Independent Directors.” Directors who are deemed to be “interested persons” of the Fund are referred to as “Interested Directors.” “Fund Complex”† consists of the Fund and any other investment companies managed by PI.

 

Independent Directors(2)

 

Linda W. Bynoe (55), Director since 2005(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): President and Chief Executive Officer (since March 1995) of Telemat, Ltd. (management consulting); formerly Vice President at Morgan Stanley & Co.

 

Other Directorships held: Director of Simon Property Group, Inc. (real estate investment trust) (since May 2003); Anixter International (communication products distributor) (since January 2006); Director of Northern Trust Corporation (since April 2006).

 

David E.A. Carson (73), Director since 2003(3) Oversees 63 portfolios in Fund complex

Principal occupations (last 5 years): Director (since October 2007) of ICI Mutual Insurance Company; formerly Chairman and Chief Executive Officer of People’s Bank (1988-2000).

 

Robert E. La Blanc (73), Director since 1984(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1981) of Robert E. La Blanc Associates, Inc. (telecommunications).

 

Other Directorships held:(4) Director of CA, Inc. (since 2002) (software company); FiberNet Telecom Group, Inc. (since 2003) (telecom company).

 

Douglas H. McCorkindale (68), Director since 2003(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): Formerly Chairman (February 2001-June 2006), Chief Executive Officer (June 2000-July 2005), President (September 1997-July 2005) and Vice Chairman (March 1984-May 2000) of Gannett Co. Inc. (publishing and media).

 

Other Directorships held:(4) Director of Continental Airlines, Inc. (since May 1993); Director of Lockheed Martin Corp. (aerospace and defense) (since May 2001).

 

Richard A. Redeker (64), Director since 2003(3) Oversees 60 portfolios in Fund complex

Principal occupations (last 5 years): Management Consultant; Director (since 2001) and Chairman of the Board (since 2006) of Invesmart, Inc.; Director of Penn Tank Lines, Inc. (since 1999).

 

Robin B. Smith (68), Director since 1996(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): Chairman of the Board (since January 2003) of Publishers Clearing House (direct marketing); formerly Chairman and Chief Executive Officer (August 1996-January 2003) of Publishers Clearing House.

 

Other Directorships held:(4) Formerly Director of BellSouth Corporation (1992-2006).

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Stephen G. Stoneburn (64), Director since 1996(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President and Chief Executive Officer (since June 1996) of Quadrant Media Corp. (publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media; Senior Vice President of Fairchild Publications, Inc. (1975-1989).

 

Clay T. Whitehead (69), Director since 1984(3) Oversees 61 portfolios in Fund complex

Principal occupations (last 5 years): President (since 1983) of YCO (new business development firm).

 

Interested Directors(1)

 

Judy A. Rice (59), President since 2003 and Director since 2000(3) Oversees 59 portfolios in Fund complex

Principal occupations (last 5 years): President, Chief Executive Officer, Chief Operating Officer and Officer-In-Charge (since February 2003) of Prudential Investments LLC; Vice President (since February 1999) of Prudential Investment Management Services LLC; President, Chief Executive Officer and Officer-In-Charge (since April 2003) of Prudential Mutual Fund Services LLC; formerly Director (May 2003-March 2006) and Executive Vice President (June 2005-March 2006) of AST Investment Services, Inc.; formerly Executive Vice President (September 1999-February 2003) of Prudential Investments LLC; Member of Board of Governors of the Investment Company Institute.

 

Robert F. Gunia (61), Vice President since 1999 and Director since 1996(3) Oversees 145 portfolios in Fund complex

Principal occupations (last 5 years): Chief Administrative Officer (since September 1999) and Executive Vice President (since December 1996) of Prudential Investments LLC; President (since April 1999) of Prudential Investment Management Services LLC; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; Chief Administrative Officer, Executive Vice President and Director (since May 2003) of AST Investment Services, Inc.

 

Other Directorships held:(4) Vice President and Director (since May 1989) and Treasurer (since 1999) of The Asia Pacific Fund, Inc.

 

Information pertaining to the Officers of the Fund who are not also Trustees is set forth below.

 

Officers(2)

 

Kathryn L. Quirk (55), Chief Legal Officer since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since September 2004) of Prudential; Executive Vice President, Chief Legal Officer and Secretary (since July 2005) of Prudential Investments LLC and Prudential Mutual Fund Services LLC; formerly Managing Director, General Counsel, Chief Compliance Officer, Chief Risk Officer and Corporate Secretary (1997-2002) of Zurich Scudder Investments, Inc.

 

Deborah A. Docs (49), Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of PI; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

 

Jonathan D. Shain (49), Assistant Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of PI; Vice President and Assistant Secretary (since February 2001) of PMFS; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Dryden International Value Fund   45

 

Claudia DiGiacomo (33), Assistant Secretary since 2005(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1999-2004).

 

Timothy J. Knierim (48), Chief Compliance Officer since 2007(3)

Principal occupations (last 5 years): Chief Compliance Officer of Prudential Investment Management, Inc. (since July 2007); formerly Chief Risk Officer of PIM and PI (2002-2007) and formerly Chief Ethics Officer of PIM and PI (2006-2007).

 

Valerie M. Simpson (49), Deputy Chief Compliance Officer since 2007(3)

Principal occupations (last 5 years): Vice President and Senior Compliance Officer (since March 2006) of PI; Vice President-Financial Reporting (since March 2006) for Prudential Life and Annuities Finance.

 

Grace C. Torres (48), Treasurer and Principal Financial and Accounting Officer since 1995(3)

Principal occupations (last 5 years): Assistant Treasurer (since March 1999) and Senior Vice President (since September 1999) of PI; Assistant Treasurer (since May 2003) and Vice President (since June 2005) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (since May 2003) of Prudential Annuities Advisory Services, Inc.; formerly Senior Vice President (May 2003-June 2005) of AST Investment Services, Inc.

 

John P. Schwartz (36), Assistant Secretary since 2006(3)

Principal occupations (last 5 years): Vice President and Corporate Counsel (since April 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley, Austin Brown & Wood LLP (1997-2005).

 

M. Sadiq Peshimam (43), Assistant Treasurer since 2006(3)

Principal occupations (last 5 years): Vice President (since 2005) and Director (2000-2005) within Prudential Mutual Fund Administration.

 

Peter Parella (49), Assistant Treasurer since 2007(3)

Principal occupations (last 5 years): Vice President (since June 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004).

 

Andrew R. French (45), Assistant Secretary since 2006(3)

Principal occupations (last 5 years): Director and Corporate Counsel (since May 2006) of Prudential; Vice President and Assistant Secretary (since January 2007) of PI; Vice President and Assistant Secretary (since January 2007) of PMFS; formerly Senior Legal Analyst of Prudential Mutual Fund Law Department (1997-2006).

 

Noreen M. Fierro (43), Anti-Money Laundering Compliance Officer since October 2006(3)

Principal occupations (last 5 years): Vice President, Corporate Compliance (since May 2006) of Prudential; formerly Corporate Vice President, Associate General Counsel (April 2002-May 2005) of UBS Financial Services, Inc., in their Money Laundering Prevention Group; Senior Manager (May 2005-May 2006) of Deloitte Financial Advisory Services, LLP, in their Forensic and Dispute Services, Anti-Money Laundering Group.

 

† The Fund Complex consists of all investment companies managed by PI. The Funds for which PI serves as manager include Jennison Dryden Mutual Funds, Strategic Partners Funds, The Prudential Variable Contract Accounts 2, 10, 11. The Target Portfolio Trust, The Prudential Series Fund, The High Yield Income Fund, Inc., The High Yield Plus Fund, Inc., Nicholas-Applegate Fund, Inc., American Skandia Trust, and Prudential’s Gibraltar Fund, Inc.

 

(1)

“Interested” Directors, as defined in the 1940 Act, by reason of employment with the Manager, a Subadvisor or the Distributor.

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(2)

Unless otherwise noted, the address of the Directors and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102.

 

(3)

There is no set term of office for Directors and Officers. The Independent Directors have adopted a retirement policy, which calls for the retirement of Directors on December 31 of the year in which they reach the age of 75. The table shows the individual’s length of service as Directors and/or Officer.

 

(4)

This includes only directorships of companies required to register, or file reports with the SEC under the Securities and Exchange Act of 1934 (that is, “public companies”) or other investment companies registered under the 1940 Act.

 

Additional Information about the Directors is included in the Statement of Additional Information which is available without charge, upon request, by calling (800) 521-7466 or (732) 482-7555 (Calling from outside the U.S.)

Dryden International Value Fund   47

Approval of Advisory Agreements

 

The Board of Directors (the “Board”) of Prudential World Fund, Inc. oversees the management of Dryden International Value Fund (formerly, Strategic Partners International Value Fund) (the “Fund”) and, as required by law, determines annually whether to renew the Fund’s management agreement with Prudential Investments LLC (“PI”) and the Fund’s subadvisory agreements with LSV Asset Management (“LSV”) and Thornburg Investment Management, Inc. (“Thornburg”). In considering the renewal of the agreements, the Board, including all of the Independent Directors, met on June 6-7, 2007 and approved the renewal of the agreements through July 31, 2008, after concluding that renewal of the agreements was in the best interests of the Fund and its shareholders.

 

In advance of the meetings, the Board received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with their consideration. Among other things, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups. The mutual funds included in each Peer Universe or Peer Group were objectively determined solely by Lipper Inc., an independent provider of mutual fund data. The comparisons placed the Fund in various quartiles over one-, three-, five-, and ten-year periods ending December 31, 2006, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).

 

In approving the agreements, the Board, including the Independent Directors advised by independent legal counsel, considered the factors they deemed relevant, including the nature, quality and extent of services provided, the performance of the Fund, the profitability of PI and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders. In their deliberations, the Directors did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with their deliberations, the Board considered information provided by PI throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 6-7, 2007.

 

The Directors determined that the overall arrangements between the Fund and PI, which serves as the Fund’s investment manager pursuant to a management agreement, and between PI and each of LSV and Thornburg, which serve as the Fund’s subadvisers pursuant to the terms of subadvisory agreements with PI, are fair and reasonable in light of the services performed, fees charged and such other matters as the Directors considered relevant in the exercise of their business judgment.

Dryden International Value Fund  

Approval of Advisory Agreements (continued)

 

Several of the material factors and conclusions that formed the basis for the Directors’ reaching their determinations to approve the continuance of the agreements are separately discussed below.

 

Nature, quality and extent of services

 

The Board received and considered information regarding the nature and extent of services provided to the Fund by PI, LSV and Thornburg. The Board considered the services provided by PI, including but not limited to the oversight of the subadvisers for the Fund, as well as the provision of fund recordkeeping, compliance, and other services to the Fund. With respect to PI’s oversight of the subadvisers, the Board noted that PI’s Strategic Investment Research Group (“SIRG”), which is a business unit of PI, is responsible for screening and recommending new subadvisers when appropriate, as well as monitoring and reporting to the Board on the performance and operations of the subadvisers. The Board also considered that PI pays the salaries of all of the officers and non-independent Directors of the Fund. The Board also considered the investment subadvisory services provided by LSV and Thornburg, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PI’s evaluations of the subadvisers, as well as PI’s recommendation, based on its review of each subadviser, to renew the subadvisory agreements.

 

The Board reviewed the qualifications, backgrounds and responsibilities of PI’s senior management responsible for the oversight of the Fund and LSV and Thornburg, and also reviewed the qualifications, backgrounds and responsibilities of the LSV and Thornburg portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PI’s and LSV’s and Thornburg’s organizational structure, senior management, investment operations, and other relevant information pertaining to PI, LSV and Thornburg. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (“CCO”) as to each of PI and LSV and Thornburg.

 

The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PI and the subadvisory services provided to the Fund by LSV and Thornburg, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PI and LSV and Thornburg under the management and subadvisory agreements.

 

Performance of Dryden International Value Fund

 

The Board received and considered information about the Fund’s historical performance. The Board considered that the Fund’s gross and net performance (which

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reflects any subsidies, waivers or expense caps) in relation to its Peer Universe (the Lipper Retail and Institutional International Large-Cap Core Funds and International Multi-Cap Core Funds Performance Universe)1 was in the first quartile over the one-year period and in the second quartile over the three- and ten-year periods, although the Fund’s net and gross performance was in the third quartile over the five-year period. The Board also noted that the Fund outperformed its benchmark index during the one-, three- and ten-year periods, although the Fund underperformed against the benchmark index during the five-year period. The Board further noted that because the Fund’s current subadvisers had assumed responsibility for the Fund during the fourth quarter of 2004, the Fund’s performance over longer time periods was not attributable to the current subadvisers. The Board concluded that, in light of the Fund’s competitive performance, it would be in the interest of the Fund and its shareholders for the Fund to renew the agreements.

 

Fees and Expenses

 

The Board considered that the Fund’s contractual and actual management fee (which reflects any subsidies, waivers or expense caps) ranked in the Expense Group’s second quartile, although the Fund’s total expenses ranked in the Expense Group’s fourth quartile. The Board considered PI’s recommendation to continue the existing cap on annual operating expenses of 1.36% (exclusive of 12b-1 fees and certain other fees) and concluded that, in light of the Fund’s management fee ranking and competitive performance, this recommendation was not unreasonable. The Board concluded that the management and subadvisory fees are reasonable in light of the services provided.

 

Costs of Services and Profits Realized by PI

 

The Board was provided with information on the profitability of PI and its affiliates in serving as the Fund’s investment manager. The Board discussed with PI the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. Taking these factors into account, the Board concluded that the profitability of PI and its affiliates in relation to the services rendered was not unreasonable.

 

1Although Lipper classifies the Fund in its International Large-Cap Core Funds Performance Universe, the International Large-Cap Core Funds and Multi-Cap Core Funds Performance Universe was utilized because PI believes that the funds included in this Universe provide a more appropriate basis for Fund performance comparisons.

Dryden International Value Fund  

Approval of Advisory Agreements (continued)

 

 

The Board considered information about the profitability of LSV or Thornburg, but concluded that the level of a subadviser’s profitability may not be as significant given the arm’s length nature of the process by which the subadvisory fee rates were negotiated by PI, LSV and Thornburg as well as the fact that PI compensates the subadvisers out of its management fee.

 

Economies of Scale

 

The Board received and discussed information concerning whether PI realizes economies of scale as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase, but at the current level of assets the Fund does not realize the effect of those rate reductions. The Board took note that the Fund’s fee structure would result in benefits to Fund shareholders when (and if) assets reach the levels at which the fee rate is reduced. These benefits will accrue whether or not PI is then realizing any economies of scale.

 

Other Benefits to PI, LSV and Thornburg

 

The Board considered potential ancillary benefits that might be received by PI, LSV and Thornburg and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PI included brokerage commissions received by affiliates of PI, transfer agency fees received by the Fund’s transfer agent (which is affiliated with PI), and benefits to the reputation as well as other intangible benefits resulting from PI’s association with the Fund. The Board concluded that the potential benefits to be derived by LSV and Thornburg included their ability to use soft dollar credits, brokerage commissions received by affiliates of LSV or Thornburg, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to the reputation. The Board concluded that the benefits derived by PI and LSV and Thornburg were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.

 

After full consideration of these factors, the Board concluded that the approval of the agreements was ion the interest of the Fund and its shareholders.

  Visit our website at www.jennisondryden.com

 

Growth of a $10,000 Investment

 

LOGO

 

Average Annual Total Returns (With Sales Charges) as of 10/31/07  
     One Year     Five Years     Ten Years  

Class A

    24.88 %   20.55 %   8.93 %

Class B

    26.17     20.91     8.71  

Class C

    30.17     21.00     8.72  

Class Z

    32.50     22.21     9.81  
      
Average Annual Total Returns (Without Sales Charges) as of 10/31/07  
     One Year     Five Years     Ten Years  

Class A

    32.15 %   21.92 %   9.55 %

Class B

    31.17     21.01     8.71  

Class C

    31.17     21.00     8.72  

Class Z

    32.50     22.21     9.81  

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The maximum initial sales charge is 5.50%. Gross operating expenses: Class A, 1.62%; Class B, 2.32%; Class C, 2.32%; Class Z, 1.32%. Net Operating Expenses apply to: Class A, 1.57%; Class B, 2.32%; Class C, 2.32%; Class Z, 1.32%, after contractual reduction through 2/28/2009.

 

The returns in the graph and the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

  Visit our website at www.jennisondryden.com

 

Source: Prudential Investments LLC and Lipper Inc.

 

The graph compares a $10,000 investment in the Dryden International Value Fund (Class A shares) with a similar investment in the MSCI EAFE® ND Index by portraying the initial account values at the beginning of the 10-year period for Class A shares (October 31, 1997) and the account values at the end of the current fiscal year (October 31, 2007) as measured on a quarterly basis. For purposes of the graph, 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 shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The line graph provides information for Class A shares only. As indicated in the tables provided earlier, performance for Class B, Class C, and Class Z shares will vary due to the differing charges and expenses applicable to each share class (as indicated in the following paragraphs). Without a contractual distribution and service (12b-1) fee waiver of 0.05% for Class A shares through October 31, 2007, the returns shown in the graph and for Class A shares in the tables would have been lower.

 

The MSCI EAFE® ND Index is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The MSCI EAFE® ND Index’s total returns include the reinvestment of all dividends, but do not include the effects of sales charges, operating expenses of a mutual fund, or taxes. These returns would be lower if they included the effects of sales charges, operating expenses, or taxes. The securities that comprise the MSCI EAFE® ND Index may differ substantially from the securities in the Fund. The MSCI EAFE® ND Index is not the only index that may be used to characterize performance of international stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index.

 

Class A shares are subject to a maximum front-end sales charge of 5.50%, a 12b-1 fee of up to 0.30% annually, and all investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%, in certain circumstances. Class B shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1%, respectively, for the first six years after purchase and a 12b-1 fee of 1% annually. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class C shares purchased are not subject to a front-end sales charge, but charge a CDSC of 1% for Class C shares sold within 12 months from the date of purchase, and an annual 12b-1 fee of 1%. Class Z shares are not subject to a sales charge or 12b-1 fees. The returns in the graph and tables reflect the share class expense structure in effect at the close of the fiscal period.

Dryden International Value Fund  

n MAIL   n TELEPHONE   n WEBSITE

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102

   (800) 225-1852   www.jennisondryden.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadvisers the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website.

 

DIRECTORS
Linda W. Bynoe • David E.A. Carson • Robert F. Gunia • Robert E. La Blanc •
Douglas H. McCorkindale • Richard A. Redeker • Judy A. Rice • Robin B. Smith •
Stephen G. Stoneburn • Clay T. Whitehead

 

OFFICERS
Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Noreen M. Fierro, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer

 

MANAGER   Prudential Investments LLC    Gateway Center Three
100 Mulberry Street
Newark, NJ 07102
INVESTMENT SUBADVISERS   LSV Asset Management



Thornburg Investment
Management, Inc.

    One North Wacker Drive

Suite 4000


Chicago, IL 60606



119 East Marcy Street


Santa Fe, NM 87501

DISTRIBUTOR   Prudential Investment
Management Services LLC		    Gateway Center Three
100 Mulberry Street
Newark, NJ 07102
CUSTODIAN   PFPC Trust Company    400 Bellevue Parkway
Wilmington, DE 19809
TRANSFER AGENT   Prudential Mutual Fund
Services LLC		    PO Box 9658
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP    345 Park Avenue
New York, NY 10154
FUND COUNSEL   Sullivan & Cromwell LLP    125 Broad Street
New York, NY 10004

 

An investor should consider the investment objectives, risks, charges, and expenses of the

Fund carefully before investing. The prospectus for the Fund contains this and other information about the Fund. An investor may obtain a prospectus by visiting our website at www.jennisondryden.com or by calling (800) 225-1852. The prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents on-line, go to www.icsdelivery.com/prudential/funds and enroll. Instead of receiving printed documents by mail, you will receive notification via e-mail when new materials are available. You can cancel your enrollment or change your e-mail address at any time by clicking on the change/cancel enrollment option at the icsdelivery website address.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Dryden International Value Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (800) SEC-0330 (732-0330). The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each fiscal quarter.

 

The Fund’s Statement of Additional Information contains additional information about the Fund’s Directors and is available without charge, upon request, by calling (800) 225-1852.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

 

LOGO

 

 

Dryden International Value Fund        
    Share Class   A   B   C   Z    
 

NASDAQ

   PISAX   PISBX   PCISX   PISZX  
 

CUSIP

   743969503   743969602   743969701   743969800  
           

MF115E    IFS-A141796    Ed. 12/2007

 

LOGO

Item 2 – Code of Ethics – – See Exhibit (a)

As of the end of the period covered by this report, the registrant has adopted a code of ethics (the “Section 406 Standards for Investment Companies – Ethical Standards for Principal Executive and Financial Officers”) that applies to the registrant’s Principal Executive Officer and Principal Financial Officer; the registrant’s Principal Financial Officer also serves as the Principal Accounting Officer.

The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant 800-225-1852, and ask for a copy of the Section 406 Standards for Investment Companies – Ethical Standards for Principal Executive and Financial Officers.

Item 3 – Audit Committee Financial Expert –

The registrant’s Board has determined that Mr. David E. A. Carson, member of the Board’s Audit Committee is an “audit committee financial expert,” and that he is “independent,” for purposes of this Item.

Item 4 – Principal Accountant Fees and Services –

(a) Audit Fees

For the fiscal years ended October 31, 2007 and October 31, 2006 KPMG LLP (“KPMG”), the Registrant’s principal accountant, billed the Registrant $48,262 and $107,200 (includes fees for consents issued in connection with SEC filings) respectively, for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings.

(b) Audit-Related Fees

None.

(c) Tax Fees

None.

(d) All Other Fees

None.

(e) (1) Audit Committee Pre-Approval Policies and Procedures

THE PRUDENTIAL MUTUAL FUNDS

AUDIT COMMITTEE POLICY

on

Pre-Approval of Services Provided by the Independent Accountants

The Audit Committee of each Prudential Mutual Fund is charged with the responsibility to monitor the independence of the Fund’s independent accountants. As part of this responsibility, the Audit Committee must pre-approve any independent accounting firm’s engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants, the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant’s independence. The Committee’s evaluation will be based on:

 

  •  

a review of the nature of the professional services expected to be provided,

 

  •  

a review of the safeguards put into place by the accounting firm to safeguard independence, and

 

  •  

periodic meetings with the accounting firm.

Policy for Audit and Non-Audit Services Provided to the Funds

On an annual basis, the scope of audits for each Fund, audit fees and expenses, and audit-related and non-audit services (and fees proposed in respect thereof) proposed to be performed by the Fund’s independent accountants will be presented by the Treasurer and the independent accountants to the Audit Committee for review and, as appropriate, approval prior to the initiation of such services. Such presentation shall be accompanied by confirmation by both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants. Proposed services shall be described in sufficient detail to enable the Audit Committee to assess the appropriateness of such services and fees, and the compatibility of the provision of such services with the auditor’s independence. The Committee shall receive periodic reports on the progress of the audit and other services which are approved by the Committee or by the Committee Chair pursuant to authority delegated in this Policy.

The categories of services enumerated under “Audit Services”, “Audit-related Services”, and “Tax Services” are intended to provide guidance to the Treasurer and the independent accountants as to those categories of services which the Committee believes are generally consistent with the independence of the independent accountants and which the Committee (or the Committee Chair) would expect upon the presentation of specific proposals to pre-approve. The enumerated categories are not intended as an exclusive list of audit, audit-related or tax services, which the Committee (or the Committee Chair) would consider for pre-approval.

Audit Services

The following categories of audit services are considered to be consistent with the role of the Fund’s independent accountants:

 

  •  

Annual Fund financial statement audits

  •  

Seed audits (related to new product filings, as required)

 

  •  

SEC and regulatory filings and consents

Audit-related Services

The following categories of audit-related services are considered to be consistent with the role of the Fund’s independent accountants:

 

  •  

Accounting consultations

 

  •  

Fund merger support services

 

  •  

Agreed Upon Procedure Reports

 

  •  

Attestation Reports

 

  •  

Other Internal Control Reports

Individual audit-related services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

Tax Services

The following categories of tax services are considered to be consistent with the role of the Fund’s independent accountants:

 

  •  

Tax compliance services related to the filing or amendment of the following:

 

  •  

Federal, state and local income tax compliance; and,

 

  •  

Sales and use tax compliance

 

  •  

Timely RIC qualification reviews

 

  •  

Tax distribution analysis and planning

 

  •  

Tax authority examination services

 

  •  

Tax appeals support services

 

  •  

Accounting methods studies

 

  •  

Fund merger support services

 

  •  

Tax consulting services and related projects

Individual tax services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

Other Non-audit Services

Certain non-audit services that the independent accountants are legally permitted to render will be subject to pre-approval by the Committee or by one or more Committee members to whom the Committee has delegated this authority and who will report to the full Committee any pre-approval decisions made pursuant to this Policy. Non-audit services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Proscribed Services

The Fund’s independent accountants will not render services in the following categories of non-audit services:

 

  •  

Bookkeeping or other services related to the accounting records or financial statements of the Fund

 

  •  

Financial information systems design and implementation

 

  •  

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

 

  •  

Actuarial services

 

  •  

Internal audit outsourcing services

 

  •  

Management functions or human resources

 

  •  

Broker or dealer, investment adviser, or investment banking services

 

  •  

Legal services and expert services unrelated to the audit

 

  •  

Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval of Non-Audit Services Provided to Other Entities Within the Prudential Fund Complex

Certain non-audit services provided to Prudential Investments LLC or any of its affiliates that also provide ongoing services to the Prudential Mutual Funds will be subject to pre-approval by the Audit Committee. The only non-audit services provided to these entities that will require pre-approval are those related directly to the operations and financial reporting of the Funds. Individual projects that are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000. Services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Although the Audit Committee will not pre-approve all services provided to Prudential Investments LLC and its affiliates, the Committee will receive an annual report from the Fund’s independent accounting firm showing the aggregate fees for all services provided to Prudential Investments and its affiliates.

(e) (2) Percentage of services referred to in 4(b)- (4)(d) that were approved by the audit committee –

Not applicable.

(f) Percentage of hours expended attributable to work performed by other than full time employees of principal accountant if greater than 50%.

Not applicable.

(g) Non-Audit Fees

Not applicable to Registrant for the fiscal years 2007 and 2006. The aggregate non-audit fees billed by KPMG for services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant for the fiscal years 2007 and 2006 was $44,700 and $317,300, respectively.

(h) Principal Accountant’s Independence

Not applicable as KPMG has not provided non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.

Item 5 – Audit Committee of Listed Registrants – Not applicable.

Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not applicable.

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

Item 10 – Submission of Matters to a Vote of Security Holders – Not applicable.

Item 11 – Controls and Procedures

 

  (a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

 

  (b) There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits

 

(a)    (1)    Code of Ethics – Attached hereto as Exhibit EX-99.CODE-ETH
   (2)    Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.
   (3)    Any written solicitation to purchase securities under Rule 23c-1. – Not applicable.
(b)    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Prudential World Fund, Inc.  
By (Signature and Title)*  

/s/ Deborah A. Docs

  
  Deborah A. Docs  
  Secretary  
Date December 20, 2007    
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)*  

/s/ Judy A. Rice

  
  Judy A. Rice  
  President and Principal Executive Officer  
Date December 20, 2007    
By (Signature and Title)*  

/s/ Grace C. Torres

  
  Grace C. Torres  
  Treasurer and Principal Financial Officer  
Date December 20, 2007    

*

Print the name and title of each signing officer under his or her signature.