<PAGE>
Prudential
Pacific
Growth
Fund, Inc.
- --------------------------------------------------
Prudential Mutual Funds
BUILDING YOUR FUTURE
(LOGO)
ON OUR STRENGTH(SM)
ANNUAL REPORT OCTOBER 31, 1993
<PAGE>
PRUDENTIAL
PACIFIC
GROWTH FUND, INC. AT A GLANCE
The Fund seeks long-term growth of capital by investing primarily
in stocks of companies in the Pacific Basin region.
The chart shows comparative historical investment results for the
one-year, five-year and since inception periods ended October 31,
1993 for the Class A shares of the Fund, the Class B shares of the
Fund, the Lipper Pacific Region Average and the Morgan Stanley
Pacific Region Index, without taking into account front-end or
contingent deferred sales charges.
The chart also shows the average annual total returns for the one-
year, five-year and since inception periods ended September 30,
1993 for Class A and Class B shares taking into account any
applicable sales charges.
1Source: Lipper Analytical Services, Inc. Past performance is not
a guarantee of future results. Investment return and principal
value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. These
figures do not take into account sales charges. The Fund charges
a maximum front-end sales load of 5.25% for Class A shares. Class
B shares are subject to a declining contingent deferred sales charge
of 5%, 4%, 3%, 2%, 1% and 1%, during the first six years.
2Inception dates: 7/24/92 Class A; 7/24/92 Class B.
3Source: Prudential Mutual Fund Management. These averages take into
account applicable sales charges.
*These are the avereage returns of 33 funds in the pacific region fund
category, as determined by Lipper Analytical Services, Inc.
**The Morgan Stanley Pacific Region Index is an average weighted by
market value of the performance of 355 companies listed in the
stock markets of Japan, Hong Kong, Singapore/Malaysia, plus 61
Australian and New Zealand companies.
<PAGE>
Two mountain charts show the growth of an assumed investment
of $10,000 in Prudential Pacific Growth Fund. The charts represent
historical performance and are not a guarantee of future
performance of Class A shares or Class B shares.
The chart shows the growth of a $10,000 investment in Class A
shares from inception on July 24, 1992 through September 30, 1993,
and assumes a front-end sales charge of 5.25%. The chart shows the
value of the investment as of September 30, 1993 (i) with the
reinvestment of dividends and distributions in additional shares of
the Fund and (ii) with all dividends and distributions taken in
cash.
The chart shows the growth of a $10,000 investment in Class B
shares from inception on July 24, 1992 through September 30, 1993,
and does not assume the effect of a contingent deferred sales
charge on redemptions. The chart shows the value of the investment
as of September 30, 1993 (i) with the reinvestment of dividends and
distributions in additional shares of the Fund and (ii) with all
dividends and distributions taken in cash.
FIVE LARGEST HOLDINGS
% of Total
As of 10/31/93 Net Assets
- --------------------------------------------------
1. Murata Manufacturing 2.8%
Small electronic components
manufacturer
2. Sega Enterprises 2.3%
Video entertainment software
manufacturer
3. Wing Tai Holdings 2.0%
Housing construction company
4. Aoyama Trading 1.9%
Apparel retailing company
5. Tsutsumi Jewelry 1.8%
Jewelry manufacturing and
retailing
UNDERSTANDING
PERFORMANCE
Historical Investment Results represent the cumulative total returns
for a specified period. These returns assume the reinvestment
of dividends and distributions but do not take into account the
applicable sales charges.
Average Annual Total Returns are not actual yearly results but even
out performance so that investors can compare different funds
on an equal basis. These returns take into account sales charges and
would produce the same results as the historical total returns
if performance had been constant over the entire period.
<PAGE>
Bar chart showing asset allocation by country as a percent of net
assets. The chart shows that, as of October 31, 1993, the Fund had
37.1% of its net assets invested in Japan, 15.2% in Malaysia, 12.7%
in Hong Kong, 10.9% in Singapore, 6.9% in Australia, 5.4% in Korea,
1.9% in Thailand, 0.8% in Indonesia, 0.3% in India and 8.8% in
Cash.
LETTER TO SHAREHOLDERS
December 14, 1993
Dear Shareholder:
We are pleased to report that over the past year the Prudential Pacific
Growth Fund has benefitted from the strong returns of many Pacific Basin
stocks and has outperformed Morgan Stanley's Pacific Region Index, an
unmanaged index of 355 companies listed on the stock exchanges of Japan,
Hong Kong and Singapore/Malaysia, plus 61 Australian and New Zealand
companies.
The Prudential Pacific Growth Fund seeks long-term growth of capital
from a portfolio of common stocks and other securities of companies from
the Pacific Basin region. The Fund's objective and policies cause it to
be subject to greater investment risks than certain other mutual funds.
Foreign currency risk, or the chance the Fund's shares will fluctuate in
price based on changes in exchange rates, is one of these. Additional
risks include political and social developments that can also affect
performance.
Market Booms
Over the past 12 months, investing in the Pacific Rim markets has
been profitable for dollar-based investors. Japan was the world's
best-performing stock market during this period, as investors looked
for an end to the recession there. Japan's change in political
leadership should also benefit investors over the long term. The
gains made in this region owe greatly to the rise of the yen, which
augmented share returns as they were translated into U.S. dollars.
Market performance in the other Pacific Rim markets was positive
as well. The Hong Kong market was driven higher by optimism about
growth in China. In Australia, an end to the recession brought on by
lower interest rates helped its stock market gain. And in Singapore,
the government's calculated effort to boost local participation in the
equity market was successful.
Consumer Focus Grows in Japan
We have shifted our strategy in Japan. The Fund's holdings have been
restructured to increase emphasis on consumer-driven companies, while
diminishing the focus on public works companies. The new strategy
anticipates a more hospitable environment for consumers because of
Japan's new government. We took profits in engineering firms like
P.S. Corp., a public
-3-
<PAGE>
works construction firm and bought Higashi Nihon House,
a builder of single-family homes.
Our strategy for the rest of the portfolio generally remained
unchanged since last year. Hong Kong holdings were reduced to
protect profits gained during that market's advance. For example,
positions in New World Development and Cheung Kong Holdings were sold.
Southeast Asia and Australia
In Korea, our emphasis on construction firms continues. Korea is
much like Japan in the early 80s; a growing international force with
strong government support for exports. Pusan Steel Pipe and Dong-Ah
Construction are two of the larger holdings here. We expect these
companies to benefit from their ties to China, as well.
In Singapore, the government's decision to broaden the scope of
the nation's Central Provident Fund (CPF) had a dramatic, favorable
impact on the market. The CPF is a mandatory retirement plan to which
both employers and employees must contribute. Previously, investment
options were limited, but last spring, the government said that the CPF
would be permitted to buy shares of domestic companies and real estate.
In Australia, the Fund purchased a position in Broken Hill Proprietary,
a mining and steel concern, which is expected to benefit from the country's
improving economy.
Looking to 1994
Asia appears to be the "growth jewel" in the world's "investment crown".
The mature economies of the U.S. and Europe seem to be settling into
periods of slow, although steady, economic growth. On the other hand,
we believe Japan's trend toward a consumer-based economy should bode
well for all the booming nearby economies, including Malaysia, Singapore
and Korea or Indonesia. Investors who seek higher returns and have the
risk tolerance--and the patience to ride out possible market
fluctuations--should find opportunities there.
As always, we are pleased to have you as a shareholder of the
Prudential Pacific Growth Fund and to report our activities to you.
Sincerely,
Lawrence C. McQuade
President
Daniel J. Duane
Portfolio Manager
Pie chart showing asset allocation by type of investment as a
percent of net assets. As of October 31, 1993, the chart shows the
Fund had 87% of its net assets invested in stocks, 1.7% in bonds,
8.8% in cash and 2.5% in other investments.
-4-
<PAGE>
PORTFOLIO Q&A
Dan Duane
Following is an interview with Dan Duane, portfolio manager of the
Prudential Pacific Growth Fund.
Q. How do you think Hong Kong businesses will fare when it reverts
to China's control in 1997?
A. We have been selling portfolio holdings and
taking profits in Hong Kong during the year, in the
belief the greatest gains have already been made there.
That is not to say we don't see opportunities once the
administration of Hong Kong has passed to China. In fact,
some companies located in Hong Kong may thrive under the new
regime. Industries I expect to prosper include property investment
companies, trading companies and industrial firms. Once prices have
adjusted in these areas, I expect to begin searching for new growth
opportunities for the Fund's shareholders.
Q. Do you plan to begin investing more in China any time soon?
A. China is a rapidly growing economy with a lot of potential.
However, we prefer to avoid direct investment there until the political
and socioeconomic picture has clarified somewhat. Factors that concern me
include local accounting practices and management skills. In addition, I
will be watching for signs that Chinese plant managers are committed to
profitability, rather than simply maintaining employment levels. In the
meantime, I am pursuing opportunities in neighboring nations where companies
have longstanding cross-border ties. These could be termed ""indirect''
investments in China, and they may offer our shareholders a way to profit
from expected explosive growth there without facing all the risks inherent
in investments in new, emerging economies.
Q. How did the sharp drop in Japanese stock prices in November affect
the Fund?
A. Like most global funds with Japanese exposure, the Prudential
Pacific Growth Fund was not immune to the market downturn. Fortunately,
the Fund has been underweighted in Japan for some time--more than 40%
below the Morgan Stanley Pacific Region Index. In addition, we have been
less affected than the Japanese market because we've shied away from large
exporters and bank stocks, which were particularly hard hit.
Our long-term strategy in Japan is to find stocks of
medium-sized companies with strong growth prospects selling at
reasonable prices. However, we do expect to experience some short-term
volatility. Going forward, I still believe the Japanese economy is nearing
a bottom and the market should present some attractive buying opportunities.
-5-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments
October 31, 1993
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--91.2%
Common Stocks--84.6%
Australia--5.8%
2,746,000 AAPC, Ltd.* .............. $ 1,499,077
(Lodging)
426,000 Broken Hill Proprietary
Company, Ltd............. 5,025,545
(Energy sources)
1,915,447 BTR Nylex, Ltd. .......... 4,004,142
(Industrial components)
350,000 Coca Cola Amatil, Ltd. ... 2,400,021
(Food & household
products)
2,855,400 Sea World Property Trust, 1,748,898
Ltd. ...................
(Leisure & tourism)
1,238,500 West Australia Newspaper 3,487,757
........................ ------------
(General business)
18,165,440
------------
Hong Kong--12.7%
2,290,000 Amoy Properties, Ltd. .... 2,963,441
(Real estate)
4,598,000 Giordano Holdings, Ltd. 2,945,336
........................
(Merchandising)
1,122,600 Guoco Group, Ltd. ........ 4,902,976
(Financial services)
1,270,000 Hopewell Holdings, Ltd. 1,273,697
........................
(Real estate)
10,055,000 Hung Hing Printing Group, 3,545,755
Ltd. ...................
(General manufacturing)
1,324,000 Hutchison Whampoa, Ltd. 4,985,881
........................
(Multi-industry)
832,000 Hysan Development Co., Ltd. 2,411,750
........................
(Property related)
532,000 Jardine Matheson Holdings, 5,094,532
Ltd. .
(General trading)
2,790,000 JCG Holdings, Ltd. ....... $ 2,148,236
(Financial services)
1,548,000 Lamex Holdings, Ltd. ..... 610,986
(Furniture)
2,639,000 Liu Chong Hing Investment, 2,902,813
Ltd. .
(Real estate)
13,787,000 Techtronic Industries, Ltd. 2,587,006
........................
(Machinery)
11,636,000 UDL Holdings, Ltd. ....... 3,124,510
(Construction)
1,548,000 Yips Hang Cheung Holdings, 465,751
Ltd. ------------
(Chemicals)
39,962,670
------------
India--0.3%
53,000 Reliance Industries Ltd.* 907,625
........................ ------------
(Miscellaneous basic
industry)
Indonesia--0.8%
769,800 Kabel Metal Industries, 2,564,107
Ltd.* .................. ------------
(Wire & cable)
Japan--35.8%
263,000 Aiwa Co. ................. 4,294,373
(Consumer electronics)
80,000 Aoyama Trading Co. ....... 5,992,620
(Merchandising)
30,000 Autobacs Seven Co. ....... 3,653,136
(Merchandising)
42,400 Capcom Co., Ltd. ......... 3,610,258
(Recreation & other
consumer goods)
97,000 Higashi Nihon House ...... 5,413,745
(Housing)
27,000 Japan Associates Finance 2,964,022
Co.* ...................
(Financial services)
46,000 Juntendo Co. ............. 534,686
(Merchandising)
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Japan--(cont'd.)
378,000 Kamigumi Co., Ltd. ....... $ 4,289,114
(Transportation &
warehousing)
79,000 Koei Co. ................. 4,656,919
(Recreation & other
consumer goods)
86,000 Kyocera Corp. ............ 4,879,151
(Public works -
electronics)
112,000 Maezawa Industries ....... 4,577,122
(Public works -
construction)
157,000 Maruichi Steel Tube, Ltd. 2,853,229
........................
(Steel)
297,000 Mitsui Fudosan Co. ....... 3,589,206
(Real estate)
149,000 Mitsui Home Co. .......... 2,941,513
(Housing)
136,000 Mr. Max Corp. ............ 3,763,838
(Merchandising)
249,000 Murata Manufacturing Co., 8,751,753
Ltd. ...................
(Electronic components)
92,000 Namco .................... 2,333,948
(Recreation & other
consumer goods)
212,000 National House Industrial 4,185,240
........................
(Housing)
50,000 Nichiei Co. .............. 4,658,672
(Financial services)
125,000 Nissen Co., Ltd. ......... 5,362,085
(Merchandising)
109,000 P.S. Corp. ............... 2,202,122
(Public works -
construction)
576,000 Ricoh Co. ................ 3,804,576
(Data processing &
reproduction)
63,000 Secom Co., Ltd. .......... 3,928,782
(Security/investigation
services)
86,000 Sega Enterprises, Ltd. ... $ 7,187,823
(Recreation & other
consumer goods)
126,000 Sho-Bond Construction Co., 3,463,837
Ltd. .
(Public works -
construction)
138,000 Taihei Dengyo Co., Ltd. 3,233,579
........................
(Energy equipment &
services)
67,000 Tsutsumi Jewelry Co., Ltd. 5,748,155
........................ ------------
(Merchandising)
112,873,504
------------
Korea--3.6%
21,200 Daewoo Securities Co., Ltd. 543,152
........................
(Financial services)
1,060 Daishin Securities Co. ... 22,828
(Financial services)
47,470 Dong Ah Construction 1,286,704
Industry Co., Ltd.
(Housing)
9,195 Dong Ah Construction 163,881
Industry Co., Ltd.
(New shares)
(Housing)
40,539 Dong Shin Construction Co.* 687,399
........................
(Construction)
1,756 Dong Shin Construction Co.* 22,386
........................
(New shares)
(Construction)
119,814 Hanjin Heavy Industries* 1,542,256
........................
(Ship building)
72,960 Kun Young Construction 1,210,055
Corp. ..................
(Housing)
54,350 Pusan Steel Pipe ......... 1,674,998
(Steel)
57,880 Samsung Electronic Co. ... 2,951,489
(Electronics)
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Korea--(cont'd.)
873 Samsung Electronic Co.*.... $ 28,309
(New shares)
(Electronics)
44,540 Shinwon Corp.* ........... 1,356,128
(Merchandising) ------------
11,489,585
------------
Malaysia--14.2%
624,000 Arab-Malaysian Finance* 2,429,012
........................
(Banking)
1,000,000 Bedford Berhad ........... 2,073,471
(Real estate)
862,000 Golden Plus Holdings Berhad 3,102,539
........................
(Building materials)
921,000 Granite Industries Berhad* 5,188,529
........................
(Leisure & tourism)
1,134,000 Kedah Cement Holdings 1,854,434
Berhad .................
(Building materials &
components)
1,587,500 Magnum Corp. Berhad* ..... 3,912,699
(Leisure)
491,000 MGR Corp. Berhad* ........ 1,479,089
(Forest products)
850,000 Multi-Purpose Holdings 1,745,824
Berhad .................
(Consumer goods)
2,342,500 Pilecon Engineering Berhad 4,178,943
........................
(Machinery & engineering)
3,484,000 Renong Berhad* ........... 4,879,589
(Infrastructure)
1,003,000 Resorts World ............ 5,493,525
(Leisure & tourism)
1,440,000 RJ Reynolds Berhad ....... 2,309,769
(Tobacco)
300,000 Tanjong Plc .............. 1,995,227
(Leisure & tourism)
902,000 Technology Resources
Industries Berhad* ...... 3,987,559
(Telecommunication) ------------
44,630,209
------------
Singapore--9.9%
750,000 First Capital Corp.* ..... $ 3,190,986
(Construction)
114,750 First Capital Corp.*....... 459,289
(New shares)
(Construction)
1,193,000 Hong Leong Finance ....... 3,579,376
(Financial services)
276,000 Jurong Shipyard, Ltd. .... 2,348,566
(Capital goods)
1,499,000 Kim Eng Holdings ......... 3,193,582
(Financial services)
1,012,750 Sembawang Maritime, Ltd. 4,787,661
........................
(Transportation/shipping)
435,000 Sembawang Shipyards, Ltd. 3,619,287
........................
(Machinery & engineering)
502,000 Singapore Airlines, Ltd. 3,923,605
........................
(Transportation)
2,486,000 Wing Tai Holdings ........ 6,205,206
(Multi-industry) ------------
31,307,558
------------
Thailand--1.5%
265,800 Land & House, Ltd.* ...... 4,825,099
(Housing) ------------
Total common stocks
(cost $228,615,463)........ 266,725,797
------------
<CAPTION>
Warrants Warrants*--1.4%
- -----------
<C> <S> <C>
Japan--0.7%
Autobacs Seven Co.
150 expiring Feb. '95 @
Y=8,089................. 579,375
100 expiring Mar. '96 @ 368,750
Y=8,231 ................
(Merchandising)
300 Kamigumi Co., Ltd.
expiring Sept. '96 @
Y=902 ..................
(Transportation &
warehousing)
86,350
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Warrants Description (Note 1)
<C> <S> <C>
Japan--(cont'd.)
1,600 Mr. Max Corp.
expiring July '95 @
Y=2,194.40 .
(Merchandising)
$ 398,813
493 Nissen Co., Ltd.
expiring Nov. '96 @
Y=1,681 ................
(Merchandising)
614,421
------------
2,047,709
------------
Singapore--0.7%
190,200 Hong Leong Finance
expiring Nov. '98 @ SGD3.25
(Financial services)
238,095
616,000 United Overseas Bank, Ltd.
expiring Nov. '94 @ SGD3.16
(Banking)
2,096,691
------------
2,334,786
------------
Total warrants
(cost $3,058,123).......... 4,382,495
------------
<CAPTION>
Shares
----- Preferred Stocks--1.1%
<C> <S> <C>
Korea
64,330 Daewoo Securities Co., Ltd. 1,552,615
........................
(Financial services)
58,200 Daishin Securities Co. ... 1,217,377
(Financial services)
22,750 Mando Machinery Corp. .... 825,020
(Automobile parts) ------------
Total preferred stocks
(cost $3,806,891).......... 3,595,012
------------
<CAPTION>
Rights
--- Rights--1.1%
<C> <S> <C>
Australia
763,631 Bank of Melbourne, Ltd.*
(Banking)
(cost $3,126,593)........ 3,558,700
------------
Convertible Loan Stocks--1.3%
Malaysia--1.0%
1,593 IJM Corp. Berhad ......... $ 3,053,752
(Building related) ------------
Singapore--0.3%
631 Sembawang Maritime, Ltd. 994,327
........................ ------------
(Transportation/shipping)
Total convertible loan
stocks
(cost $2,585,118)........ 4,048,079
------------
<CAPTION>
Principal
Amount
(000) Convertible Bonds--1.7%
- -----------
<C> <S> <C>
Japan--0.6%
Y= 122,000 Capcom Co., Ltd.
3.90%, 9/30/96 ...........
(Recreation & other
consumer goods)
1,744,465
------------
Korea--0.7%
US$1,120 Samsung Electronic Co.
3.75%, 12/31/07 ..........
(Electronics)
2,105,600
------------
Thailand--0.4%
US$1,000 Land & House, Ltd.
5.00%, 4/29/03 ...........
(Housing)
1,405,000
------------
Total convertible bonds
(cost $4,425,654)........ 5,255,065
------------
Total long-term investments
(cost $245,617,842)...... 287,565,148
------------
SHORT-TERM INVESTMENTS--4.6%
US$ 14,519 Joint Repurchase Agreement
Account,
2.93%, 11/1/93 (Note 5).... 14,519,000
------------
Total Investments--95.8%
(cost $260,136,842; Note
4)....................... 302,084,148
Other assets in excess of
liabilities--4.2%........ 13,266,329
------------
Net Assets--100%........... $315,350,477
------------
------------
- ------------
<FN>
* Non-income producing security.
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
October 31,
Assets 1993
------------
<S> <C>
Investments, at value (cost $260,136,842)................................................ $302,084,148
Foreign currency (cost $4,605,134)....................................................... 4,562,732
Cash..................................................................................... 401,282
Receivable for Fund shares sold.......................................................... 14,900,259
Forward contracts-net amount receivable from counterparties.............................. 668,149
Dividends and interest receivable........................................................ 366,840
Deferred expenses and other assets....................................................... 149,436
------------
Total assets....................................................................... 323,132,846
------------
Liabilities
Payable for investments purchased........................................................ 6,560,076
Payable for Fund shares reacquired....................................................... 703,435
Due to Distributors...................................................................... 194,516
Due to Manager........................................................................... 175,531
Accrued expenses and other liabilities................................................... 148,811
------------
Total liabilities.................................................................. 7,782,369
------------
Net Assets............................................................................... $315,350,477
------------
------------
Net assets were comprised of:
Common stock, at par................................................................... $ 19,744
Paid-in capital in excess of par....................................................... 267,996,607
------------
268,016,351
Accumulated net realized gain on investment and foreign currency transactions.......... 4,739,794
Net unrealized appreciation on investments and foreign currencies...................... 42,594,332
------------
Net assets, October 31, 1993............................................................. $315,350,477
------------
------------
Class A:
Net asset value and redemption price per share
($64,353,319 / 3,996,399 shares of common stock issued and outstanding).............. $16.10
Maximum sales charge (5.25% of offering price)......................................... .89
------------
Maximum offering price to public....................................................... $16.99
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($250,997,158 / 15,747,841 shares of common stock issued and outstanding)............ $15.94
------------
------------
</TABLE>
See Notes to Financial Statements.
-10-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
October 31,
Net Investment Income 1993
-----------
<S> <C>
Income
Dividends (net of foreign
withholding
taxes of $142,102).............. $ 1,355,202
Interest (net of foreign
withholding
taxes of $1,344)................ 202,936
-----------
Total income.................. 1,558,138
-----------
Expenses
Management fee.................... 756,412
Distribution fee--Class A......... 52,529
Distribution fee--Class B......... 745,906
Custodian's fees and expenses..... 238,000
Transfer agent's fees and
expenses.......................... 147,000
Registration fees................. 81,000
Directors' fees................... 42,000
Amortization of organization
expense........................... 40,000
Reports to shareholders........... 35,000
Legal fees........................ 30,000
Audit fee......................... 20,000
Miscellaneous..................... 3,315
-----------
Total expenses................ 2,191,162
-----------
Net investment loss................. (633,024)
-----------
Realized and Unrealized Gain on
Investment and Foreign Currency
Transactions
Net realized gain on:
Investment transactions........... 4,980,679
Foreign currency transactions..... 436,108
-----------
5,416,787
-----------
Net change in unrealized
appreciation on:
Investments....................... 40,048,426
Foreign currencies................ 646,832
-----------
40,695,258
-----------
Net gain on investments and
foreign
currencies...................... 46,112,045
-----------
Net Increase in Net Assets
Resulting from Operations........... $45,479,021
-----------
-----------
</TABLE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
May 7, 1992*
Year Ended Through
Increase (Decrease) October 31, October 31,
in Net Assets 1993 1992
------------ ------------
<S> <C> <C>
Operations
Net investment loss...... $ (633,024) $ (94,650)
Net realized gain on
investment and foreign
currency
transactions........... 5,416,787 101,942
Net change in unrealized
appreciation on
investments and foreign
currencies............. 40,695,258 1,899,074
------------ ------------
Net increase in net
assets resulting from
operations............. 45,479,021 1,906,366
------------ ------------
Dividends to shareholders
from foreign currency
gains (Note 1)
Class A.................. (19,787) --
Class B.................. (31,474) --
------------ ------------
(51,261) --
------------ ------------
Fund share transactions
(Note 6)
Net proceeds from shares
subscribed............. 270,394,550 32,829,326
Net asset value of shares
issued to shareholders
in reinvestment of
distributions.......... 47,105 --
Cost of shares
reacquired............... (34,486,434) (868,196)
------------ ------------
Net increase in net
assets from Fund share
transactions........... 235,955,221 31,961,130
------------ ------------
Total increase............. 281,382,981 33,867,496
Net Assets
Beginning of period........ 33,967,496 100,000
------------ ------------
End of period.............. $315,350,477 $ 33,967,496
------------ ------------
------------ ------------
<FN>
-------------
* Commencement of operations.
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-11-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Notes to Financial Statements
Prudential Pacific Growth Fund, Inc. (the ``Fund'') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund was incorporated in Maryland on August 14, 1991 and had no
operations other than the issuance of 5,000 shares each of Class A and Class B
common stock for $100,000 on May 6, 1992 to Prudential Mutual Fund Management,
Inc. (``PMF''). The Fund commenced investment operations on July 24, 1992. The
investment objective of the Fund is to seek long-term capital growth by
investing primarily in common stocks, common stock equivalents and other
securities of companies doing business in or domiciled in the Pacific Basin
region.
Note 1. Accounting The following is a summary
Policies of significant accounting
policies followed by the Fund in the preparation
of its financial statements.
Securities Valuation: Securities traded on an exchange (whether domestic or
foreign) are valued at the last reported sales price on the primary exchange on
which they are traded. Securities traded in the over-the-counter market
(including securities listed on exchanges for which a last sales price is not
available) are valued at the average of the last reported bid and asked prices.
Any securities or other assets for which current market quotations are not
readily available are valued at fair value as determined in good faith under
procedures established by and under the general supervision and responsibility
of the Fund's Board of Directors. No such securities were held by the Fund at
October 31, 1993.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian takes possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction including accrued interest. If the seller
defaults and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at
the closing rates of exchange;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the year, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the fiscal year.
Net realized gains on foreign currency transactions of $436,108 represent net
foreign exchange gains from forward currency contracts, disposition of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on security transactions, and the difference between the amounts of
interest, dividends and foreign taxes recorded on the Fund's books and the U.S.
dollar equivalent amounts actually received or paid. Net currency gains and
losses from valuing foreign currency denominated assets and liabilities, other
than investments, at fiscal year end exchange rates are reflected as a component
of unrealized appreciation on foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Forward Currency Contracts: The Fund enters into forward currency contracts in
order to hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings. A forward contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The gain
or loss arising from the difference between the settlement value of the original
and renegotiated forward contracts, if any, is isolated and is included in net
realized gains from 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.
-12-
<PAGE>
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses from investment and
foreign currency transactions are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
Net investment income or loss (other than distribution fees) and unrealized
and realized gains or losses are allocated daily to each class of shares of the
Fund based upon the relative proportion of net assets of each class at the
beginning of the day.
Dividends and Distributions: The Fund expects to pay dividends of net investment
income and distributions of net realized capital and currency gains, if any,
annually. Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: It is the Fund's policy to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
Withholding taxes on foreign dividends and interest have been provided for in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
Deferred Organization Expenses: Approximately $200,000 of organization and
initial registration costs have been deferred and are being amortized over the
period of benefit not to exceed 60 months from the date the Fund commenced
investment operations.
Reclassification of Capital Accounts: Effective November 1, 1992, the Fund began
accounting and reporting for distributions to shareholders in accordance with
Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result of this statement, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. The effect caused by adopting this
statement was to decrease accumulated net investment loss and decrease
accumulated net realized gains on investments and foreign currency transactions
by $727,674 with respect to amounts reported through October 31, 1993. Net
investment income, net realized gains and net assets were not affected by this
change.
Note 2. Agreements The Fund has a manage-
ment agreement with PMF. Pursuant to this
agreement, PMF has responsibility for all investment advisory services and
supervises the subadviser's performance of such services. PMF has entered into a
subadvisory agreement with The Prudential Investment Corporation (``PIC''); PIC
furnishes investment advisory services in connection with the management of the
Fund. PMF pays for the cost of the subadviser's services, the compensation of
officers of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .75 of 1% of the average daily net assets of the Fund.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and Prudential Securities Incorporated (``PSI''), which acts
as distributor of the Class B shares of the Fund (collectively the
``Distributors''). To reimburse the Distributors for their expenses incurred in
distributing and servicing the Fund's Class A and B shares, the Fund, pursuant
to plans of distribution, pays the Distributors a reimbursement, accrued daily
and payable monthly.
Pursuant to the Class A Plan, the Fund reimburses PMFD for its
distribution-related expenses with respect to Class A shares at an annual rate
of up to .30 of 1% of the average daily net assets of the Class A shares. Such
expenses under the Class A Plan were .20 of 1% of the average daily net assets
of the Class A shares for the fiscal year ended October 31, 1993. PMFD pays
various broker-dealers, including PSI and Pruco Securities Corporation
(``Prusec''), affiliated broker-dealers, for account servicing fees and other
expenses incurred by such broker-dealers.
Pursuant to the Class B Plan, the Fund reimburses PSI for its
distribution-related expenses with respect to the Class B shares at an annual
rate of up to 1% of the average daily net assets of the Class B shares.
The Class B distribution expenses include commission credits for payment of
commissions and account servicing fees to financial advisers and an allocation
for overhead and other branch office distribution-related expenses, interest
and/or carrying charges, the cost of printing and
-13-
<PAGE>
mailing prospectuses to potential investors and of advertising incurred in
connection with the distribution of shares.
The Distributors recover the distribution expenses and service fees incurred
through the receipt of reimbursement payments from the Fund under the plans and
the receipt of initial sales charges (Class A only) and contingent deferred
sales charges (Class B only) from shareholders.
PMFD has advised the Fund that it has received approximately $1,305,500 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended October 31, 1993. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons and
incurred other distribution costs.
With respect to the Class B Plan, at any given time, the amount of expenses
incurred by PSI in distributing the Fund's shares and not recovered through the
imposition of contingent deferred sales charges in connection with certain
redemptions of shares may exceed the total payments made by the Fund pursuant to
the Plan. For the fiscal year ended October 31, 1993, PSI advised the Fund that
it received approximately $168,400 in contingent deferred sales charges imposed
upon certain redemptions by investors. PSI, as distributor, has also advised the
Fund that as of October 31, 1993, the amount of distribution expenses incurred
by PSI and not yet reimbursed by the Fund or recovered through contingent
deferred sales charges approximated $6,322,200. This amount may be recovered
through future payments under the Class B Plan or contingent deferred sales
charges.
In the event of termination or noncontinuation of the Class B Plan, the Fund
would not be contractually obligated to pay PSI, as distributor, for any
expenses not previously reimbursed or recovered through contingent deferred
sales charges.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of America
(``Prudential'').
Note 3. Other Prudential Mutual Fund
Transactions Services, Inc. (``PMFS''), a
With Affiliates wholly owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the year ended October 31, 1993, the Fund incurred fees of approximately
$128,000 for the services of PMFS. As of October 31, 1993, approximately $29,000
of such fees were due to PMFS. Transfer agent fees and expenses in the statement
of operations include certain out-of-pocket expenses paid to non-affiliates.
For the fiscal year ended October 31, 1993, PSI received approximately $6,500
in brokerage commissions from portfolio transactions executed on behalf of the
Fund.
Note 4. Portfolio Purchases and sales of
Securities investment securities, other
than short-term investments, for the year ended
October 31, 1993 were $258,325,430 and $43,659,682, respectively.
The United States federal income tax basis of the Fund's investments at
October 31, 1993 was $260,405,940 and accordingly, net unrealized appreciation
for federal income tax purposes was $41,678,208 (gross unrealized
appreciation--$45,195,586; gross unrealized depreciation--$3,517,378).
At October 31, 1993, the Fund had outstanding forward currency contracts to
sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value Appreciation
- ---------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Japanese Yen,
expiring 8/1/94-
8/25/94............. $ 22,000,000 $21,331,851 $668,149
--------------- ----------- --------------
</TABLE>
Note 5. Joint The Fund, along with other
Repurchase affiliated registered invest-
Agreement Account ment companies, transfers
uninvested cash balances into a single joint
account, the daily aggregate balance of which is invested in one or more
repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. At October 31, 1993, the Fund had a 1.1% undivided interest in the
repurchase agreements in the joint account. The undivided interest for the Fund
represented $14,519,000 in principal amount. As of such date, each repurchase
agreement in the joint account and the collateral therefor were as follows:
CS First Boston Corp., 2.93%, in the principal amount of $360,000,000,
repurchase price $360,087,900, due 11/1/93, collateralized by $47,400,000 U.S.
Treasury Notes, 6.75%, due 2/28/97; $40,000,000 U.S. Treasury Notes, 11.25%, due
2/15/95; $100,000,000 U.S. Treasury Bonds, 7.50%, due 11/15/16; $50,000,000 U.S.
Treasury Bonds, 10.375%, due 11/15/12 and $50,000,000 U.S. Treasury Bonds,
12.00%, due 5/15/05; aggregate value including accrued interest-- $368,368,052.
-14-
<PAGE>
Goldman Sachs & Co., 2.93%, in the principal amount of $450,154,000,
repurchase price $450,263,909, due 11/1/93, collateralized by $104,915,000 U.S.
Treasury Bonds, 12.00%, due 8/15/13 and $200,000,000 U.S. Treasury Bonds,
10.75%, due 8/15/05; aggregate value including accrued interest--$462,739,932.
Kidder Peabody & Co. Inc., 2.95%, in the principal amount of $305,000,000,
repurchase price $305,074,979, due 11/1/93, collateralized by $210,030,000 U.S.
Treasury Bonds, 9.875%, due 11/15/15; value including accrued
interest--$311,527,136.
Nomura Securities International, Inc., 2.90%, in the principal amount of
$60,889,000, repurchase price $60,903,715, due 11/1/93, collateralized by
$8,280,000 U.S. Treasury Notes, 7.75%, due 2/15/95; $25,000,000 U.S. Treasury
Notes, 7.375%, due 5/15/96 and $22,775,000 U.S. Treasury Notes, 8.875%, due
2/15/96; aggregate value including accrued interest--$62,140,276.
Smith Barney Shearson, Inc., 2.94%, in the principal amount of $175,000,000,
repurchase price $175,042,875, due 11/1/93, collateralized by $4,465,000 U.S.
Treasury Bonds, 12.00%, due 5/15/05; $11,435,000 U.S. Treasury Notes, 9.125%,
due 5/15/99; $75,000,000 U.S. Treasury Bonds, 8.125%, due 8/15/19 and
$50,000,000 U.S. Treasury Bonds, 8.00%, due 11/15/21; aggregate value including
accrued interest--$178,771,706.
Note 6. Capital The Fund offers both Class
A and Class B shares. Class A shares are sold with
a front-end sales charge of up to 5.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Both classes of shares have equal rights as
to earnings, assets and voting privileges except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan.
The Fund has authorized 2 billion shares of common stock at $.001 par value
per share equally divided into two classes, designated Class A and Class B
common stock. Of the 19,744,240 shares of common stock issued and outstanding at
October 31, 1993, PMF owned 5,000 Class A shares and 5,000 Class B shares and
Prudential owned 500,722 Class A shares.
Transactions in shares of common stock for the fiscal year ended October 31,
1993 and for the period ended October 31, 1992 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------- ---------- ------------
<S> <C> <C>
Year ended October 31, 1993:
Shares sold................. 3,564,128 $ 51,357,221
Shares issued in
reinvestment of
distributions............. 1,727 17,942
Shares reacquired........... (876,093) (12,582,153)
---------- ------------
Net increase in shares
outstanding............... 2,689,762 $ 38,793,010
---------- ------------
---------- ------------
Period ended October 31,
1992:
Shares sold................. 1,345,525 $ 13,479,169
Shares reacquired........... (43,888) (458,071)
---------- ------------
Net increase in shares
outstanding............... 1,301,637 $ 13,021,098
---------- ------------
---------- ------------
<CAPTION>
Class B
- ----------------------------
<S> <C> <C>
Year ended October 31, 1993:
Shares sold................. 15,458,343 $219,037,329
Shares issued in
reinvestment of
distributions............. 2,818 29,163
Shares reacquired........... (1,599,655) (21,904,281)
---------- ------------
Net increase in shares
outstanding............... 13,861,506 $197,162,211
---------- ------------
---------- ------------
Period ended October 31,
1992:
Shares sold................. 1,921,607 $ 19,350,157
Shares reacquired........... (40,272) (410,125)
---------- ------------
Net increase in shares
outstanding............... 1,881,335 $ 18,940,032
<CAPTION>
---------- ------------
---------- ------------
</TABLE>
Note 7. Dividends Subsequent to October 31,
and Distributions 1993, the Board of
Directors of the Fund declared dividends from net
investment income to Class A shareholders of $.064 per share and to Class B
shareholders of $.034 per share and both short-term and long-term capital gain
distributions to both Class A and Class B shareholders of $.174 and $.032 per
share, respectively, payable on December 29, 1993 to shareholders of record on
December 22, 1993.
-15-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
-------------------------- --------------------------
Year July 24, Year July 24,
Ended 1992* Ended 1992*
October Through October Through
31, October 31, 31, October 31,
1993+ 1992 1993+ 1992
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................... $ 10.65 $ 10.00 $ 10.63 $ 10.00
Income from investment operations
Net investment loss................................................ (.01) (.02) (.10) (.04)
Net realized and unrealized gains on
investment and foreign currency transactions..................... 5.48 .67 5.43 .67
---------- ----------- ---------- -----------
Total from investment operations............................... 5.47 .65 5.33 .63
---------- ----------- ---------- -----------
Less distributions
Distributions from foreign currency gains.......................... (.02) -- (.02) --
---------- ----------- ---------- -----------
Net asset value, end of period..................................... $ 16.10 $ 10.65 $ 15.94 $ 10.63
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
TOTAL RETURN#...................................................... 51.39% 6.50% 50.17% 6.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).................................... $ 64,353 $13,918 $ 250,997 $20,050
Average net assets (000)........................................... $ 26,264 $12,884 $ 74,590 $16,025
Ratios to average net assets:
Expenses, including distribution fees............................ 1.63% 2.72%** 2.37% 3.52%**
Expenses, excluding distribution fees............................ 1.43% 2.52%** 1.37% 2.52%**
Net investment loss.............................................. (.04)% (.75)%** (.83)% (1.55)%**
Portfolio turnover................................................. 44% 0% 44% 0%
----------------
<FN>
* Commencement of investment operations.
** Annualized.
# Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase
of shares on the first day and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for periods of less than a full year are not annualized.
+ Calculated based upon average shares outstanding during the year.
</TABLE>
See Notes to Financial Statements.
-16-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Prudential Pacific Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Prudential Pacific Growth Fund, Inc., including the portfolio of investments,
as of October 31, 1993, the related statements of operations for the year then
ended and of changes in net assets for the year ended October 31, 1993 and the
period May 7, 1992 (commencement of operations) to October 31, 1992 and the
financial highlights for the year ended October 31, 1993 and the period July
24, 1992 (commencement of investment operations) to October 31, 1992. 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.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the securities owned as of
October 31, 1993 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
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 audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Prudential Pacific
Growth Fund, Inc. as of October 31, 1993, the results of its operations, the
changes in its net assets and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
Deloitte & Touche
New York, New York
December 15, 1993
-17-
<PAGE>
The following two charts compare a $10,000 investment in Class
A shares and Class B shares, with a similar investment in the
Morgan Stanley Pacific Index. Included in the charts are the
average annual total returns for each Class for the one-year and
since inception periods with and without sales charges.
Past performance is not predictive of future performance and an investor's
shares may be worth more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in Prudential Pacific Growth Fund (Class A and
Class B) with a similar investment in the Morgan Stanley Capital International
``Pacific'' Index (Pacific Index) by portraying the initial account values at
the commencement of operations of each class and subsequent account values at
the end of each fiscal year (October 31), as measured on a quarterly basis,
beginning in 1992 for Class A and Class B shares. For purposes of the graphs
and, unless otherwise indicated, the accompanying tables, it has been assumed
that (a) the maximum sales charge was deducted from the initial $10,000
investment in Class A shares; (b) the maximum applicable contingent deferred
sales charge was deducted from the value of the investment in Class B shares
assuming full redemption on October 31, 1993; (c) all recurring fees (including
management fees) were deducted; and (d) all dividends and distributions were
reinvested.
The Pacific Index is a weighted index comprised of approximately 416
companies listed in the stock markets of Japan, Hong Kong, Singapore/Malaysia,
Australia, and New Zealand. The Pacific Index is an unmanaged index and includes
the reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the Fund.
The securities which comprise the Pacific Index may differ substantially from
the securities in the Fund's portfolio. The Pacific Index is not the only index
which may be used to characterize performance of Pacific region funds and other
indexes may portray different comparative performance.
-18-
<PAGE>
Directors
Stephen C. Eyre
Delayne D. Gold
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. La Blanc
Lawrence C. McQuade
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Domenick Pugliese, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche
1633 Broadway
New York, NY 10019
Legal Counsel
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, NY 10022
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
Collect (908) 417-7555
This report is not authorized for distribution
to prospective investors unless preceded or
accompanied by a current prospectus.
<PAGE>
The chart shows a graphic representation of the spectrum of risks
of various categories of Prudential Mutual Funds including stock
funds, tax-exempt bond funds, taxable bond funds and global taxable
bond funds. The chart rates the risk of individual Prudential
Mutual Funds relative to other Prudential Mutual Funds in each
category.
Under the category of stock funds, the chart lists from low risk to
high risk the following funds (beginning at the low end of the
spectrum):
FlexiFund (The Conservatively Managed Portfolio)
IncomeVertible Fund
FlexiFund (The Strategy Portfolio)
Equity Income Fund
Utility Fund
Global Utility Fund
Equity Fund
Growth Fund
Global Fund
Nicholas-Applegate Growth Equity Fund
Growth Opportunity Fund
Multi-Sector Fund
Global Natural Resources Fund
Global Genesis Fund
Pacific Growth Fund
Under the category of tax-exempt bond funds, the chart lists from
low risk to high risk the following funds (beginning at the low end
of the spectrum):
Municipal Bond Fund (Modified Term Series)
Municipal Bond Fund (Insured Series)
National Municipals Fund
Municipal Series Fund (State Series Fund)
California Municipal Fund (California Income Series)
Municipal Bond Fund (High Yield Series)
Under the category of taxable bond funds, the chart lists from low
risk to high risk the following funds (beginning at the low end of
the spectrum):
Adjustable Rate Securities Fund
The BlackRock Government Income Fund
Structured Maturity Fund (Income Portfolio)
Government Securities Trust (Intermediate Term Series)
GNMA Fund
Government Plus Fund
U.S. Government Fund
High Yield Fund
Under the category of global taxable bond funds, the chart lists
from low risk to high risk the following funds (beginning at the
low end of the spectrum):
Short-Term Global Income Fund (Global Assets Portfolio)
Short-Term Global Income Fund (Short-Term Global Income
Portfolio)
Intermediate Global Income Fund
For more complete information on any of the funds, including charges
and expenses, ask your Prudential Securities Financial
Advisor, your Pruco Securities Registered Representative, or call
1-800-225-1852 for a free prospectus. Please read the prospectus
carefully before you invest or send money.
743941106 MF157E
743941205 Cat #4445665
