<PAGE>
Letter to Shareholders
June 6, 1994
Dear Shareholder:
Over the past six months, evidence of the Pacific Basin's growing strategic and
commercial importance as global players figured prominently in world headlines.
These markets have also been strong. As a result, we are pleased to report
that the Prudential Pacific Growth Fund has produced above-average returns in
this environment.
The Pacific Basin markets returned an average 5.1% in U.S. dollar terms for the
period, according to Morgan Stanley's Pacific Region Index. (By comparison,
the S&P 500 declined 2.3%.) Japan has been the source of Asia's stock market
strength as the Nikkei average continues to rise despite a severe recession.
The strengthening yen has also been a positive factor for U.S. dollar-based
investors.
While Japan's market was rising, the region's smaller markets were volatile.
After a strong finish in 1993, Southeast Asian markets were hit hard by a sell-
off earlier this year. Since then, however, these markets have stabilized and
their growth has continued.
The Sun Rises in the East
Japan, the region's most developed country, is in a deep recession that has
underscored its economy's primary weaknesses: high costs and inefficient
distribution. The rising yen has also aggravated the slump, further depressing
overseas export profits. At the same time, bilateral trade talks with the
U.S. broke down. The talks were further delayed in April by the resignation
of Japan's newly-elected Prime Minister, Morihiro Hosokawa.
China, the world's third largest economy, instituted an austerity program
aimed at slowing its rapid growth. While China's gross domestic product
(GDP) grew by 13% last year, its inflation rate, which is fast eroding
purchasing power, tops 30% in some major cities. The repercussions of the
austerity plan were felt in Hong Kong, a market that is closely tied to
developments in Beijing.
-3-
<PAGE>
Japan's Future
Despite its economy, the Japanese stock market gained 23% (in U.S. dollars)
this year. While we have no ability to forecast future rates of growth, we
prefer to focus on secular themes like the shift from saving to spending.
For example, we added to the portfolio Nichiei, a financial company that makes
unsecured loans to both individuals and businesses. We also own the stock of
Murata, a cellular telephone components company that has benefitted from the
Japanese telephone deregulation.
The Silk Road
Once the Chinese government decided the country's economy was growing too
rapidly, they began to divert resources to state projects like railroads and
bridges. In fact, Beijing banned new private construction for the rest of the
year in order to slow price increases on building materials. As a result,
Hong Kong's property-related stocks, which were among the strongest performers
in 1993, fell soon after. We held our positions during the downturn and
gradually trimmed holdings as the market quieted down. We also sold positions
in Henderson Land and Cheung Kong Holdings.
The Tigers Roar
We have identified Singapore as one of Southeast Asia's strongest ""tiger''
nations for its fierce growth rate. The government is committed to attracting
foreign investment, increasing living standards and to developing its stock
market. The government also wants Singaporean companies to expand their
operations throughout the Pacific Rim.
We have also invested in Singaporean companies that should benefit from a
trade circle that has developed in Southeast Asia. For example, many of the
Pacific Rim countries are straining to generate enough electric power to
support their growth. As a result, we have bought Van Der Horst (VDH), an
engineering firm that builds and services power plants primarily in the
Pacific Rim. Two of VDH's biggest customers are Indonesia and The Philippines,
countries that are the next generation of ""tigers''. Singapore is also the
world leader in ship maintenance and repair. We own stock in Sembawang
Maritime, a firm that has the largest fleet of harbor tug boats in Southeast
Asia, which is also the largest salvage operator east of the Suez Canal.
In the Coming Year
Our outlook is generally optimistic, although the markets around the world
will likely follow the U.S. stock market's lead. Any bad news in the U.S.
could lead to volatility in Asia. Still, we believe the worst of the global
market's correction should be over soon and will look for companies that
-4-
appear inexpensive when the dust settles. The bright spots this year should
be in Japan and Southeast Asia. We will probably not invest heavily in Hong
Kong as long as the Chinese economic austerity plan remains in place. As far
as sectors are concerned, we plan to focus on high technology, consumer
durables and natural resources. In addition, we will likely avoid most
finance and property development companies, since they appear to have had
their run for now.
As always, we appreciate having you as a shareholder of the Prudential
Pacific Growth Fund and remain committed to managing it for your long-term
gain.
Sincerely,
Lawrence C. McQuade
President
Daniel J. Duane
Portfolio Manager
-5-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments
April 30, 1994 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--95.0%
Common Stocks--90.0%
Australia--8.4%
3,322,700 AAPC, Ltd.* ............. $ 2,614,576
(Lodging)
950,574 Bank of Melbourne, Ltd. 3,807,953
.......................
(Banking)
270,000 Brambles Industries, Ltd. 2,785,137
.......................
(Business & public
services)
715,500 Broken Hill Proprietary
Company, Ltd. ......... 8,701,141
(Energy sources)
3,352,473 BTR Nylex, Ltd. ......... 7,314,466
(Industrial components)
1,030,813 Coca Cola Amatil, Ltd. 6,267,819
.......................
(Food & household
products)
3,455,000 Sea World Property Trust, 2,570,388
Ltd. ..................
(Leisure & tourism)
1,498,500 West Australia Newspaper 4,341,396
.......................
(Publishing)
1,200,000 Western Mining Corp.
Holdings, Ltd. ........ 6,008,927
(Mining) ------------
44,411,803
------------
Hong Kong--10.1%
2,771,000 Amoy Properties, Ltd. ... 3,658,842
(Real estate)
1,184,800 Consolidated Electric 1,763,802
Power* ................
(Utilities - electric &
gas)
2,462,000 Giordano Holdings, Ltd. 1,107,516
.......................
(Merchandising)
2,127,600 Guoco Group, Ltd. ....... 9,846,301
(Financial services)
436,000 HSBC Holdings, PLC ...... 4,825,693
(Financial services)
12,167,000 Hung Hing Printing Group, 3,346,947
Ltd. .
(General manufacturing)
1,802,000 Hutchison Whampoa, Ltd. $ 7,406,373
.......................
(Multi-industry)
695,000 Hysan Development Co., 2,033,295
Ltd.* .................
(Real estate)
643,000 Jardine Matheson Holdings, 4,203,484
Ltd.
(General trading)
3,374,000 JCG Holdings, Ltd. ...... 2,151,087
(Financial services)
3,193,000 Liu Chong Hing Investment, 5,704,071
Ltd.
(Real estate)
1,000,000 New World Development Co.,
Ltd. .................. 3,068,000
(Real estate)
16,682,000 Techtronic Industries, 2,958,519
Ltd. ..................
(Machinery)
6,225,000 UDL Holdings, Ltd. ...... 902,532
(Construction) ------------
52,976,462
------------
India--0.4%
685,000 Indo Gulf Fertilizer & 2,157,750
Chemicals* ------------
(Basic industries)
Indonesia--0.5%
931,800 Kabel Metal Industries, 2,603,293
Ltd.* ................. ------------
(Wire & cable)
Japan--41.6%
159,000 Acom Co., Ltd. .......... 8,373,363
(Financial services)
406,000 Aiwa Co. ................ 10,390,786
(Consumer electronics)
50,000 Amano Corp. ............. 807,166
(Machinery &
engineering)
58,300 Autobacs Seven Co. ...... 7,460,380
(Merchandising)
24,680 Capcom Co., Ltd. ........ 1,190,393
(Recreation & other
consumer goods)
125,000 Enplas Corp. ............ 4,466,483
(Electronic components)
</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.)
118,000 Higashi Nihon House ..... $ 6,260,655
(Housing)
54,000 I O Data Device, Inc. ... 9,621,026
(Electronic components)
67,200 Japan Associates Finance 8,665,420
Co. ...................
(Financial services)
714,000 Kamigumi Co., Ltd. ...... 8,574,466
(Transportation &
warehousing)
79,200 Keyence Corp. ........... 8,419,726
(Electronic components)
116,600 Koei Co. ................ 8,034,255
(Recreation & other
consumer goods)
124,000 Kyocera Corp. ........... 7,811,792
(Public works -
electronics)
123,000 Maezawa Industries ...... 5,787,381
(Public works-
construction)
420,000 Mitsumi Electric Co., Ltd. 8,268,530
.......................
(Electronic components)
280,500 Mr. Max Corp. ........... 7,648,243
(Merchandising)
238,000 Murata Manufacturing Co., 10,308,101
Ltd. .
(Electronic components)
321,000 National House Industrial 5,877,153
.......................
(Housing)
156,000 Nichiei Co. ............. 13,897,037
(Financial services)
339,000 Nichiei Construction Co., 5,272,369
Ltd. ..................
(Construction)
220,400 Nissen Co., Ltd. ........ 8,678,020
(Merchandising)
88,750 Promise Co., Ltd. ....... 5,704,671
(Financial services)
204,000 Rohm Co., Ltd. .......... 8,132,690
(Electronic components)
96,000 Secom Co., Ltd. ......... $ 6,312,432
(Security/investigation
services)
108,000 Sho-Bond Construction Co., 3,348,755
Ltd. .
(Public works-
construction)
137,550 Sony Corp. .............. 8,800,817
(Entertainment)
640,000 Suzuki Motor Co., Ltd. 8,504,774
.......................
(Automotive)
157,000 Taihei Dengyo Co., Ltd. 4,605,374
.......................
(Energy equipment &
services)
270,000 Tokyo Electronic Co., Ltd. 8,584,506
.......................
(Technology)
80,000 Tsutsumi Jewelry Co., Ltd. 8,583,522
....................... ------------
(Merchandising)
218,390,286
------------
Korea--4.4%
55,830 Daewoo Securities Co., 2,128,964
Ltd.* .................
(Financial services)
14,239 Daishin Securities Co.* 326,138
.......................
(Financial services)
127,412 Dong Ah Construction
Industry Co., Ltd. .... 5,521,134
(Housing)
90,558 Dong Shin Construction Co. 1,233,302
.......................
(Construction)
119,814 Hanjin Heavy Industries* 1,898,748
.......................
(Shipbuilding)
73,660 Kun Young Construction 1,285,881
Corp.* ................
(Housing)
67,926 Pusan Steel Pipe Corp.* 2,295,877
.......................
(Steel)
69,333 Samsung Electronics Co. 6,850,035
.......................
(Electronics)
44,540 Shinwon Corp.* .......... 1,378,606
(Merchandising)
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Korea--(cont'd.)
4,602 Shinyoung Wacoal* ....... $ 136,744
(Financial services) ------------
23,055,429
------------
Malaysia--13.2%
755,000 Arab-Malaysian Finance 2,791,387
Berhad*
(Banking)
2,000,000 Bandar Raya Developments
Berhad 3,062,328
(Real estate)
1,572,000 Berjaya Sports Toto Berhad 2,817,940
.......................
(Real estate)
1,000 Dunlop Estates Berhad ... 2,988
(Miscellaneous basic
industry)
390,000 Genting Berhad .......... 4,369,421
(Financial services)
347,666 Golden Plus Holdings 1,597,002
Berhad ................
(Building materials)
1,614,000 Granite Industries Berhad* 4,369,981
.......................
(Leisure & tourism)
478,000 Hong Leong Industries 2,481,308
Berhad ................
(Building & related
industries)
3,000 Hong Leong Properties 4,213
Berhad .................
(Real estate)
1,000 Kedah Cement Holdings 1,554
Berhad .
(Building materials)
594,000 MGR Corp. Berhad ........ 3,238,749
(Forest products)
935,000 Multi-Purpose Holdings 1,592,262
Berhad .
(Consumer goods)
368,000 Pacific Chemical Berhad* 2,569,967
.......................
(Chemicals)
2,834,500 Pilecon Engineering Berhad 4,848,194
.......................
(Machinery &
engineering)
7,065,000 Renong Berhad ........... 9,603,984
(Infrastructure)
1,862,000 Resorts World ........... 10,430,593
(Leisure & tourism)
150,000 RJ Reynolds Berhad ...... $ 231,915
(Tobacco)
1,963,000 Technology Resources
Industries Berhad* .... 8,430,555
(Telecommunications)
2,131,000 Time Engineering Berhad 6,724,782
....................... ------------
(Engineering)
69,169,123
------------
New Zealand--1.5%
3,341,400 Fletcher Challenge, Ltd. 6,497,887
.......................
(Building & related
industries)
1,000,000 Fletcher Forestry, Ltd. 1,442,626
....................... ------------
(Forest products)
7,940,513
------------
Singapore--8.8%
1,021,750 First Capital Corp. ..... 3,515,798
(Construction)
1,443,000 Hong Leong Finance* ..... 4,120,734
(Financial services)
334,000 Jurong Shipyard, Ltd. ... 3,200,798
(Capital goods)
1,814,000 Kim Eng Holdings, Ltd. 3,220,117
.......................
(Financial services)
1,208,750 Sembawang Maritime, Ltd. 5,480,890
.......................
(Transportation/shipping)
747,000 Sembawang Shipyards, Ltd. 6,005,595
.......................
(Machinery &
engineering)
757,000 Singapore Airlines, Ltd. 5,939,927
.......................
(Transportation)
970,000 Van Der Horst, Ltd.* .... 4,616,670
(Technology)
6,016,000 Wing Tai Holdings ....... 10,369,745
(Multi-industry) ------------
46,470,274
------------
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Thailand--1.1%
157,801 Land & House, Ltd. ...... $ 3,597,211
(Housing)
300,000 Srithai Superware Plc* 2,317,315
....................... ------------
(Food & household
products)
5,914,526
------------
Total common stocks
(cost $414,170,265)....... 473,089,459
------------
Preferred Stocks--1.2%
Australia--0.1%
63,635 Bank of Melbourne, Ltd. 626,372
....................... ------------
(Banking)
Korea--1.1%
78,501 Daewoo Securities Co., 2,653,308
Ltd. ..................
(Financial services)
103,455 Daishin Securities Co. 2,087,801
.......................
(Financial services)
22,750 Mando Machinery Corp. ... 971,741
(Automotive Parts) ------------
5,712,850
------------
Total preferred stocks
(cost $5,774,376)......... 6,339,222
------------
<CAPTION>
Warrants Warrants*--1.5%
- -----------
<C> <S> <C>
Japan--0.8%
Autobacs Seven Co.
150 expiring Feb. '95 @
(YEN)8,089.............. 720,000
150 expiring Mar. '96 @ 690,000
(YEN)8,231 ............
(Automotive)
Kamigumi Co., Ltd.
300 expiring Sept. '96 @ 89,466
(YEN)902 ..............
(Transportation &
warehousing)
Mr. Max Corp.
1,600 expiring July '95 @ 468,458
(YEN)2,194.40 ..........
(Merchandising)
Nissen Co., Ltd.
493 expiring Nov. '96 @ $ 656,242
(YEN)1,681 ............
(Merchandising)
Nitori Company
8,250 expiring Feb. '98 @ 1,480,927
(YEN)3,268 ............ ------------
(Merchandising)
4,105,093
------------
Singapore--0.7%
Hong Leong Finance
190,200 expiring Nov. '98 @ 215,302
SGD3.25
(Financial services)
Kim Eng Holdings, Ltd.
362,800 expiring Feb. '97 @SGD2.00 315,012
.
(Financial services)
United Overseas Bank, Ltd.
678,000 expiring Nov. '94 @ 3,226,910
SGD3.16 ------------
(Banking)
3,757,224
------------
Total warrants
(cost $4,935,513)......... 7,862,317
------------
<CAPTION>
Rights Rights*
- -----------
<C> <S> <C>
Malaysia
Pilecon Engineering Berhad
944,833 expiring June '94 ....... 149,257
(Machinery & ------------
engineering)
<CAPTION>
Principal
Amount
(000) Convertible Bonds--1.2%
- -----------
<C> <S> <C>
India--0.7%
Gujarat Ambuja Cement
$3,000 3.50%, 6/30/99 .......... 3,780,000
(Building materials) ------------
Korea--0.5%
Samsung Electronic Co.
640 3.75%, 12/31/07 ......... 2,275,200
(Electronics) ------------
Total convertible bonds
(cost $6,224,972)......... 6,055,200
------------
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
<TABLE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Convertible Loan Stocks--1.1%
Malaysia--0.9%
1,809,000 IJM Corp. Berhad ........ $ 4,036,589
(Building & related
industries)
239,000 Time Engineering Berhad 709,583
....................... ------------
(Engineering)
4,746,172
------------
Singapore--0.2%
362,800 Kim Eng Holdings, Ltd.* 208,840
.......................
(Financial services)
631,000 Sembawang Maritime, Ltd. 933,431
....................... ------------
(Transportation/shipping)
1,142,271
------------
Total convertible loan
stocks
(cost $3,751,753)....... 5,888,443
------------
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Total long-term
investments
(cost $434,856,879)..... $499,383,898
SHORT-TERM INVESTMENT--1.0%
Repurchase Agreement
$ 5,028 Joint Repurchase Agreement
Account,
3.54%, 5/2/94, (Note 5)... 5,028,000
------------
Total Investments--96.0%
(cost $439,884,879; Note
4)...................... 504,411,898
Other assets in excess of
liabilities--4.0%....... 21,215,424
------------
Net Assets--100%.......... $525,627,322
------------
------------
</TABLE>
- ------------
* Non-income producing security.
-10- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
April 30,
Assets
1994
------------
<S>
<C>
Investments, at value (cost
$439,884,879)................................................ $504,411,898
Foreign currency (cost
$20,412,139)...................................................... 20,578,924
Cash..........................................................................
........... 26,022
Receivable for investments
sold.......................................................... 11,770,041
Receivable for Fund shares
sold.......................................................... 3,560,679
Dividends and interest
receivable........................................................ 1,050,500
Deferred expenses and other
assets....................................................... 141,677
------------
Total
assets.........................................................................
541,539,741
------------
Liabilities
Payable for investments
purchased........................................................ 12,698,488
Payable for Fund shares
reacquired....................................................... 1,253,633
Forward contracts-net amount payable to
counterparties................................... 953,649
Distribution fee
payable.................................................................
368,684
Accrued expenses and other
liabilities................................................... 321,196
Management fee
payable...................................................................
316,769
------------
Total
liabilities....................................................................
15,912,419
------------
Net
Assets........................................................................
....... $525,627,322
------------
------------
Net assets were comprised of:
Common stock, at
par................................................................... $
31,709
Paid-in capital in excess of
par....................................................... 466,515,685
------------
466,547,394
Accumulated net investment
loss........................................................ (2,322,454)
Accumulated net realized loss on investments and foreign currency
transactions......... (2,205,314)
Net unrealized appreciation on investments and foreign
currencies...................... 63,607,696
------------
Net assets, April 30
,1994............................................................. $525,627,322
------------
------------
Class A:
Net asset value and redemption price per share
($98,900,901 / 5,906,015 shares of common stock issued and
outstanding).............. $16.75
Maximum sales charge (5.25% of offering
price)......................................... .93
------------
Maximum offering price to
public....................................................... $17.68
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($426,726,421 / 25,803,155 shares of common stock issued and
outstanding)............ $16.54
------------
------------
</TABLE>
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
Net Investment Income 1994
----------------
<S> <C>
Income
Dividends (net of foreign
withholding taxes of
$285,520)....................... $ 2,338,968
Interest (net of foreign
withholding taxes of $1,849).... 233,256
----------------
Total income.................... 2,572,224
----------------
Expenses
Management fee.................... 1,674,017
Distribution fee--Class A......... 107,564
Distribution fee--Class B......... 1,801,753
Custodian's fees and expenses..... 342,000
Transfer agent's fees and
expenses.......................... 320,000
Registration fees................. 60,000
Directors' fees................... 21,000
Reports to shareholders........... 21,000
Amortization of organization
expense........................... 20,000
Audit fee......................... 17,000
Legal fees........................ 17,000
Miscellaneous..................... 3,790
----------------
Total expenses.................. 4,405,124
----------------
Net investment loss................. (1,832,900)
----------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions........... (1,815,460)
Foreign currency transactions..... 265,950
----------------
(1,549,510)
----------------
Net change in unrealized
appreciation/depreciation on:
Investments....................... 22,579,713
Foreign currencies................ (1,566,349)
----------------
21,013,364
----------------
Net gain on investments and
foreign currencies.............. 19,463,854
----------------
Net Increase in Net Assets
Resulting from Operations........... $ 17,630,954
----------------
----------------
</TABLE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) April 30, October 31,
in Net Assets 1994 1993
---------------- ----------------
<S> <C> <C>
Operations
Net investment loss.... $ (1,832,900) $ (633,024)
Net realized gain
(loss) on investment
and foreign currency
transactions......... (1,549,510) 5,416,787
Net change in
unrealized
appreciation/depreciation
on investments and
foreign currencies... 21,013,364 40,695,258
---------------- ----------------
Net increase in net
assets resulting from
operations........... 17,630,954 45,479,021
---------------- ----------------
Distributions in excess
of net investment
income (Note 1)
Class A................ (293,320) (19,787)
Class B................ (658,425) (31,474)
---------------- ----------------
(951,745) (51,261)
---------------- ----------------
Distributions to
shareholders from net
realized gains
Class A................ (944,124) --
Class B................ (3,989,283) --
---------------- ----------------
(4,933,407) --
---------------- ----------------
Fund share transactions
(Note 6)
Net proceeds from
shares subscribed.... 324,014,408 270,394,550
Net asset value of
shares issued
to shareholders in
reinvestment of
distributions........ 5,612,542 47,105
Cost of shares
reacquired............. (131,095,907) (34,486,434)
---------------- ----------------
Net increase in net
assets from Fund
share transactions... 198,531,043 235,955,221
---------------- ----------------
Total increase........... 210,276,845 281,382,981
Net Assets
Beginning of period...... 315,350,477 33,967,496
---------------- ----------------
End of period............ $ 525,627,322 $ 315,350,477
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-12-
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Notes to Financial Statements
(Unaudited)
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 poli-
cies 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
April 30, 1994.
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 or designated
subcustodians, as the case may be under triparty repurchase agreements, 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 period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the fiscal period.
Net realized gains on foreign currency transactions of $265,950 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 period 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 contract, 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.
-13-
<PAGE>
<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: The Fund accounts and reports
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 applying this statement was to decrease accumulated net
investment loss and increase accumulated net realized losses on investments and
foreign currency transactions by $462,191 with respect to amounts reported
through April 30, 1994. Net investment income, net realized gains and net assets
were not affected by this change.
Note 2. Agreements The Fund has a management
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 two months ended December 31, 1993. Effective
January 1, 1994, the Class A Plan distribution expenses were increased to .25 of
1% of the average daily net assets. 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 mailing prospectuses to
potential investors and of advertising incurred in connection with the
distribution of shares.
-14-
<PAGE>
<PAGE>
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 $1,090,600 in
front-end sales charges resulting from sales of Class A shares during the six
months ended April 30, 1994. 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 six months ended April 30, 1994, PSI advised the Fund that it
received approximately $402,100 in contingent deferred sales charges imposed
upon certain redemptions by investors. PSI, as distributor, has also advised the
Fund that as of April 30, 1994, the amount of distribution expenses incurred by
PSI and not yet reimbursed by the Fund or recovered through contingent deferred
sales charges approximated $10,789,900. 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 Ser-
Transactions vices, Inc. (``PMFS''), a
With Affiliates wholly owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the six months ended April 30, 1994, the Fund incurred fees of approximately
$295,000 for the services of PMFS. As of April 30, 1994, approximately $61,000
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.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the six months ended
April 30, 1994 were $281,332,434 and $90,277,937, respectively.
The United States federal income tax basis of the Fund's investments at April
30, 1994 was $440,085,809 and accordingly, net unrealized appreciation for
federal income tax purposes was $64,326,089 (gross unrealized
appreciation--$79,644,568; gross unrealized depreciation--$15,318,479).
At April 30, 1994, the Fund had outstanding forward currency contracts, both
to purchase and sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Settlement
Foreign Currency Date Current Appreciation
Purchase Contracts Payable Value (Depreciation)
- -------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
Australian Dollars,
expiring 5/2/94......... $5,911,596 $5,931,697 $ 20,101
Korean Won,
expiring 5/2/94......... 39,274 39,202 (72)
---------- ---------- --------------
$5,950,870 $5,970,899 $ 20,029
---------- ---------- --------------
---------- ---------- --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contracts Receivable Value Depreciation
- ----------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Japanese Yen,
expiring
8/1/94-2/16/95....... $ 42,000,000 $42,973,678 $ (973,678)
--------------- ----------- --------------
--------------- ----------- --------------
</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 April 30, 1994, the Fund had a 0.5% undivided interest in the
repurchase agreements in the joint account. The undivided interest for the Fund
represented $5,028,000 in principal amount. As of such date, each repurchase
agreement in the joint account and the value of the collateral therefor was as
follows:
Barclays de Zoete Wedd, Inc., 3.55%, in the principal amount of $53,000,000,
repurchase price $53,015,679, due 5/2/94. The value of the collateral including
accrued interest is $54,060,428.
Goldman Sachs & Co., 3.50%, in the principal amount of $315,000,000,
repurchase price $315,091,875, due 5/2/94. The value of the collateral including
accrued interest is $321,300,231.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 3.55%, in the principal amount
of $315,000,000, repurchase price $315,093,188, due 5/2/94. The value of the
collateral including accrued interest is $321,300,584.
-15-
<PAGE>
<PAGE>
Morgan (J.P.) Securities, Inc., 3.58%, in the principal amount of
$295,000,000, repurchase price $295,088,008, due 5/2/94. The value of the
collateral including accrued interest is $300,901,625.
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 31,709,170 shares of common stock issued and outstanding at
April 30, 1994, PMF owned 5,000 Class A shares and 5,000 Class B shares and
Prudential owned 508,851 Class A shares.
Transactions in shares of common stock for the six months ended April 30,
1994 and for the year ended October 31, 1993 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ---------- ------------
<S> <C> <C>
Six months ended April 30,
1994:
Shares sold................... 4,776,477 $ 80,179,584
Shares issued in reinvestment
of
distributions............... 68,502 1,139,181
Shares reacquired............. (2,935,363) (49,269,288)
---------- ------------
Net increase in shares
outstanding................. 1,909,616 $ 32,049,477
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
<CAPTION>
Class B
- ------------------------------
<S> <C> <C>
Six months ended April 30,
1994:
Shares sold................... 14,757,688 $243,834,824
Shares issued in reinvestment
of
distributions............... 271,772 4,473,361
Shares reacquired............. (4,974,146) (81,826,619)
---------- ------------
Net increase in shares
outstanding................. 10,055,314 $166,481,566
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
</TABLE>
-16-
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class A
Class B
- -----------------------------------------
- -----------------------------------------
Year July 24,
Year July 24,
Six Months Ended 1992*
Six Months Ended 1992*
Ended October Through
Ended October Through
April 30, 31, October
31, April 30, 31, October 31,
1994 1993(D) 1992
1994 1993(D) 1992
---------- ----------
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 16.10 $ 10.65 $
10.00 $ 15.94 $ 10.63 $ 10.00
---------- ----------
- ----------- ---------- ---------- -----------
Income from investment operations
Net investment loss.................. -- (.01)
(.02) (.06) (.10) (.04)
Net realized and unrealized gains on
investment and foreign currency
transactions....................... .92 5.48
.67 .90 5.43 .67
---------- ----------
- ----------- ---------- ---------- -----------
Total from investment
operations....................... .92 5.47
.65 .84 5.33 .63
---------- ----------
- ----------- ---------- ---------- -----------
Less distributions
Distributions in excess of net
investment income.................. (.06) (.02)
-- (.03) (.02) --
Distributions from net realized
gains.............................. (.21) --
-- (.21) -- --
---------- ----------
- ----------- ---------- ---------- -----------
Total distributions................ (.27) (.02)
-- (.24) (.02) --
---------- ----------
- ----------- ---------- ---------- -----------
Net asset value, end of period....... $ 16.75 $ 16.10 $
10.65 $ 16.54 $ 15.94 $ 10.63
---------- ----------
- ----------- ---------- ---------- -----------
---------- ----------
- ----------- ---------- ---------- -----------
TOTAL RETURN#........................ 5.73% 51.39%
6.50% 5.28% 50.17% 6.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...... $ 98,901 $ 64,353 $
13,918 $ 426,726 $ 250,997 $ 20,050
Average net assets (000)............. $ 86,830 $ 26,264 $
12,884 $ 363,693 $ 74,590 $ 16,025
Ratios to average net assets:
Expenses, including distribution
fees............................. 1.35%** 1.63%
2.72%** 2.12%** 2.37% 3.52%**
Expenses, excluding distribution
fees............................. 1.12%** 1.43%
2.52%** 1.12%** 1.37% 2.52%**
Net investment loss................ (.21)%** (.04)%
(.75)%** (.97)%** (.83)% (1.55)%**
Portfolio turnover................... 22% 44%
%0 22% 44% %0
</TABLE>
----------------
* 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.
(D) Calculated based upon average shares outstanding during the year.
See Notes to Financial Statements.
-17-
