ANNUAL REPORT October 31,1994
Prudential
Pacific Growth Fund, Inc.
(ICON)
(LOGO)
<PAGE>
Letter to Shareholders
December 15, 1994
Dear Shareholder:
International investors have enjoyed moderate returns from Pacific Basin
stocks this year as most of the region's economies began to profit from the
global economic recovery. Of course, growth has been accompanied by generally
rising rates around the world. This held back stock returns in the U.S., which
in turn dampened stock market activity on most of Asia's financial exchanges.
We're pleased to report that the Prudential Pacific Growth Fund, Inc. has
achieved modest gains this year.
FUND PERFORMANCE
<TABLE>
<CAPTION>
Cumulative Total Returns Average Annual Returns1
As of 10/31/94 As of 9/30/94
Since Since
1-Yr. Incep.* 1-Yr. Incep.
<S> <C> <C> <C> <C>
Class A 6.7% 72.0% 5.4% 25.0%
Class B 5.8 68.9 5.0 25.9
Class C N/A -0.4% N/A N/A
Lipper Avg.2 9.3 63.3(D) N/A N/A
</TABLE>
Past performance is not indicative of future results. Principal and
investment return will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
1 Source: Prudential Mutual Fund Management Inc. Cumulative total returns do
not take into account sales charges. Average annual returns do take into
account applicable sales charges. The Fund charges a maximum front-end sales
load of 5.0% for Class A shares and a contingent deferred sales charge of 5%,
4%, 3%, 2%, 1% and 1% for six years, for Class B shares. Beginning in February
1995, Class B shares will automatically convert to Class A shares approximately
seven years after purchase. Class C shares are subject to a one-year contingent
deferred sales charge of 1%. Class C average annual total returns are not
reported since the share class has only been in existence since August.
2 These are the average returns of 36 funds in the Pacific region fund
category for one year and 33 since inception of the Class A and B shares, as
determined by Lipper Analytical Services, Inc.
*Inception dates: 7/24/92 Class A; 7/24/92 Class B; 8/1/94 Class C.
(D) Since 7/24/92
The Fund's Objective
The Prudential Pacific Growth Fund seeks long-term capital growth from a
diversified portfolio of Pacific Basin stocks, as well as bonds. The Fund is
not intended to be a complete investment program, and it is considered
speculative in nature. Since it invests globally, it is subject to the risks
associated with foreign investing, including currency, political and social
risks. The Fund occasionally uses derivatives like options and futures, but did
not during the most recent reporting period.
-1-
<PAGE>
The Market
Against a backdrop of largely expanding global economies, 1994 marks what
appears to be a lull in one of the strongest U.S. bull stock markets in many
decades. And Wall Street's woes have lead to jittery equity markets in Asia.
Still, there's an underlying tone of confidence in global earnings and growth
and it's reflected in returns: the S&P 500 is up a meager 3.6% through the end
of October 1994, while the Morgan Stanley Capital International index is up
9.3% in the same time.
Why are Asian stock market returns uneven while the U.S. economy is thriving?
The U.S. Federal Reserve, with one eye on growing gross domestic product and
the other on rising commodities prices (a historical precursor to inflation),
began in February to dampen growth by raising short-term interest rates. But
around the world, investors are not so much afraid of resurging inflation as
concerned the move to stave it off may also crush the global economic recovery.
The U.S. stock market slumped on the news and many Asian exchanges followed
suit.
What we did well...
In general, our growth investing style would not lend itself to spectacular
returns when interest rates are rising, but we made three good moves in Asia.
- - The global recovery and deregulation have spurred demand for technology and
many Asian companies have profited. The U.S. embraced the technological
revolution five years ago, but the industrialized and developing countries of
the world have a long way to go before there's a computer in every office,
much less every kitchen. And even in the U.S. we see room for growth since
ever-falling prices are stimulating demand beyond what was predicted even two
years ago. For instance, in Malaysia we purchased Technology Resources, which
operates data communications systems.
- - Korea was one of our favorite places to invest, and Samsung is one of our
better purchases. Once again, the boom in electronic demand is behind this
semi-conductor manufacturer's good performance. We also continue to look in
Korea for companies that will profit from ties to China--a market we believe
may open up tremendously. But that's still in the future, and hasn't been
one of our real growth themes this year.
-2-
<PAGE>
Looking for the Basics
The global recovery has been accompanied by a growing demand for basic
materials, or commodities. For our Pacific Basin investments, we shifted a
portion of the portfolio that way earlier this year into companies like
Fletcher Challenge, a forest products and paper producer in New Zealand, and
Western Mining, a nickel mine in Australia. These have already begun to show
results as the world's manufacturers step up their demand for raw materials.
Interest rates are the barometer
Looking into the next 12 months, we plan to keep our eye on U.S. interest
rates. The Pacific Basin's stock markets probably won't start producing
healthy returns until interest rates settle in to a comfortable new trading
range. In the meantime, we'll keep looking for basic goods producers and hope
that interest rates don't rise so high they choke off the global recovery. If
interest rates spike another percentage point higher, you can expect us to buy
much more defensive stocks. But with growth continuing at a moderate pace, we
also feel confident that technology stocks will be good performers for the
foreseeable future, so they are likely to form a big part of our strategy this
year.
In closing, we are optimistic, but realistic. Despite weak performance
throughout much of this year, we believe there is an underlying tone of
confidence in the stock markets. The transition from a disinflationary economy
to one that is more inflationary is bound to make the stock markets jumpy, but
with strong earnings growth, we expect to find more stability around the bend.
We're pleased you've chosen to weather this transition with us.
Sincerely,
Lawrence C. McQuade
President
Daniel J. Duane
Portfolio Manager
-3-
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments
October 31, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--97.2%
Common Stocks--90.8%
Australia--12.7%
3,655,000 AAPC, Ltd. .............. $ 2,605,459
(Lodging)
2,246,799 Australian National 2,419,124
Industries, Ltd.
(Multi-industry)
950,574 Bank of Melbourne, Ltd. .. 3,063,384
(Financial services)
297,000 Brambles Industries, Ltd.. 2,972,845
(Business & public
services)
787,000 Broken Hill Proprietary
Co., Ltd. ............. 12,073,438
(Energy sources)
3,687,673 BTR Nylex, Ltd. ......... 6,544,495
(Industrial components)
1,483,913 Coca Cola Amatil, Ltd. ... 9,365,981
(Food & household
products)
1,635,000 Nine Network Australia,
Ltd. .................. 4,929,123
(Broadcasting &
publishing)
3,800,500 Sea World Property Trust,
Ltd. .................. 2,963,162
(Leisure & tourism)
1,498,500 West Australia Newspaper,
Ltd. ................... 3,916,745
(Publishing)
3,234,000 Western Mining Corp. 20,147,810
Holdings, Ltd. ------------
(Non-ferrous metals)
71,001,566
------------
Hong Kong--10.7%
2,771,000 Amoy Properties, Ltd. ... 3,442,679
(Real estate)
1,914,000 CITIC Pacific, Ltd. ..... 5,759,090
(Transportation)
2,504,800 Consolidated Electric
Power ................. 5,851,123
(Utilities - electric &
gas)
2,340,600 Guoco Group, Ltd. ....... 11,056,283
(Financial services)
495,604 HSBC Holdings, PLC ...... $ 5,868,741
(Financial services)
12,167,000 Hung Hing Printing Group,
Ltd. ................... 2,629,593
(General manufacturing)
1,982,000 Hutchison Whampoa, Ltd.... 9,157,163
(Multi-industry)
707,000 Jardine Matheson Holdings,
Ltd. ................... 5,878,704
(General trading)
319,300 Liu Chong Hing Bank (New)* 417,358
(Financial services)
3,193,000 Liu Chong Hing Investment,
Ltd.................... 3,904,988
(Real estate)
1,000,000 New World Development Co.,
Ltd. .................. 3,190,112
(Real estate)
18,350,000 Techtronic Industries, 2,588,506
Ltd. .................. ------------
(Machinery &
engineering)
59,744,340
------------
India--0.4%
685,000 Indo Gulf Fertilizer
Industries ............ 2,157,750
(Basic industries) ------------
Indonesia--0.5%
1,863,600 Kabel Metal Industries, 2,682,363
Ltd. .................. ------------
(Wire & cable)
Japan--36.3%
218,000 Acom Co., Ltd. .......... 8,009,082
(Financial services)
392,000 Aiwa Co. ................ 10,679,876
(Consumer electronics)
58,300 Autobacs Seven Co. ...... 7,340,144
(Merchandising)
920 DDI Corp. ............... 8,336,017
(Telecommunications)
693,000 Hino Motors, Ltd. ....... 6,829,876
(Automotive)
31,000 Hirose Electric Co., Ltd.. 1,839,525
(Electronics components
and instruments)
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Japan--(cont'd.)
62,400 Japan Associates Finance
Co. ................... $ 9,208,669
(Financial services)
785,000 Kamigumi Co., Ltd. ...... 8,587,203
(Transportation &
warehousing)
211,000 Kato Denki Co. .......... 5,770,382
(Merchandising)
87,000 Keyence Corp. ........... 10,504,644
(Electronics)
43,200 Koei Co. ................ 1,783,282
(Recreation & other
consumer goods)
291,000 Kokusai Securities Co.,
Ltd. .................. 4,834,984
(Financial services)
150,000 Kyocera Corp. ........... 11,424,149
(Public works -
electronics)
1,017,000 Minebea Co. ............. 8,826,594
(Industrial components)
195,100 Murata Manufacturing Co.,
Ltd. ................... 7,973,127
(Electronics)
188,600 Nichiei Co. ............. 12,164,603
(Financial services)
242,400 Nissen Co., Ltd. ........ 9,906,130
(Merchandising)
1,153,000 Nisshin Steel Co. ....... 6,056,521
(Metals)
257,000 Rohm Co., Ltd. .......... 11,271,930
(Financial services)
106,000 Secom Co., Ltd. ......... 7,022,910
(Security/investigation
services)
440,000 Shin-Etsu Chemical Co.,
Ltd. .................. 9,353,973
(Chemicals)
151,500 Sony Corp. .............. 8,583,436
(Entertainment)
1,100,000 Sumitomo Chemical, Co. ... 6,493,291
(Chemicals)
285,000 Suzuki Motor Corp., Ltd... 3,617,647
(Automotive)
342,000 Tokyo Electronic Co., Ltd. $ 11,435,294
(Electronics)
55,000 Tsutsumi Jewelry Co., Ltd. 5,199,174
(Merchandising) ------------
203,052,463
------------
Korea--4.6%
60,160 Daewoo Securities Co.,
Ltd. .................. 2,679,144
(Financial services)
15,405 Daishin Securities Co. ... 343,987
(Financial services)
37,600 Dong Ah Construction 1,410,324
Industry Co., Ltd. ....
(Construction & housing)
119,814 Hanjin Heavy Industries*.. 1,893,817
(Shipbuilding)
46,000 Hanyang Chemical, Corp.... 1,304,146
(Chemicals)
37,400 Lucky Co., Ltd.* ........ 1,252,688
(Chemicals)
3,000 Mando Machinery Corp.* ... 195,697
(Automotive parts)
9,500 Pohang Iron & Steel Co.,
Ltd.* ................. 899,768
(Metals)
3,673 Samsung Electronics Co. 615,123
(New)*
(Electronics)
69,673 Samsung Electronics Co. .. 11,904,237
(Electronics)
5,860 Shinsegae, Co.* ......... 707,184
(Merchandising)
44,540 Shinwon Corp.* .......... 2,307,598
(Textiles & apparel)
4,602 Shinyoung Wacoal* ....... 147,213
(Financial services) ------------
25,660,926
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Malaysia--9.6%
350,000 Berjaya South Island $ 3,834,866
Berhad* ...............
(Textiles and apparel)
1,000 Dunlop Estates Berhad ... 3,267
(Miscellaneous services)
643,000 Genting Berhad .......... 5,912,933
(Financial services)
478,000 Hong Leong Industries
Berhad ................ 2,562,551
(Building & related
industries)
1,000 Kedah Cement Holdings
Berhad ................ 1,503
(Building materials)
892,400 Malaysian Helicopter, Co.. 2,200,007
(Transportation)
368,000 Pacific Chemical Berhad .. 2,232,048
(Chemicals)
1,500 Pilecon Engineering Berhad 2,489
(Machinery &
engineering)
7,771,000 Renong Berhad ........... 12,163,566
(Infrastructure)
2,048,000 Resorts World Holdings ... 12,982,821
(Leisure & tourism)
2,454,000 Technology Resources
Industries Berhad* .... 9,554,801
(Data processing &
reproduction)
810,000 Time Engineering Berhad 2,408,921
....................... ------------
(Engineering)
53,859,773
------------
New Zealand--2.5%
4,720,500 Fletcher Challenge, Ltd... 12,733,199
(Forest products &
paper)
1,100,000 Fletcher Forestry, Ltd. 1,456,487
....................... ------------
(Forest products &
paper)
14,189,686
------------
Singapore--12.2%
1,123,750 First Capital Corp. ..... 4,439,883
(Construction)
316,000 Fraser & Neave, Ltd. .... $ 3,745,504
(Beverages & tobacco)
1,587,000 Hong Leong Finance, Ltd... 6,053,950
(Financial services)
183,000 Kim Eng Holdings, Ltd. ... 228,127
(Financial services)
1,265,000 Overseas Union Bank ..... 7,238,419
(Financial services)
1,329,750 Sembawang Maritime, Ltd... 6,386,060
(Transportation)
943,000 Singapore Airlines, Ltd... 9,057,424
(Transportation)
1,209,000 United Overseas Bank, Ltd. 13,259,468
(Financial services)
970,000 Van Der Horst, Ltd.* .... 4,361,035
(Machinery &
engineering)
6,618,000 Wing Tai Holdings ....... 13,524,518
(Conglomerates) ------------
68,294,388
------------
Thailand--1.3%
157,801 Land & House Public Co.,
Ltd. .................. 3,241,749
(Construction & housing)
1,370,000 Sahavirya Steel Industry* 3,435,581
(Metals)
103,400 Srithai Superware Co. ... 576,680
(Food & household ------------
products)
7,254,010
------------
Total common stocks
(cost $444,134,703)..... 507,897,265
------------
Preferred Stocks--1.4%
Australia--0.1%
63,635 Bank of Melbourne, Ltd. 595,378
....................... ------------
(Financial services)
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Preferred Stocks--(cont'd.)
Korea--1.3%
76,530 Daewoo Securities Co.,
Ltd. .................. $ 1,948,892
(Financial services)
106,890 Daishin Securities Co. ... 1,542,037
(Financial services)
30,450 Mando Machinery Corp. ... 1,145,957
(Automotive)
28,354 Samsung Electronics Co. 2,667,691
....................... ------------
(Electronics)
7,304,577
------------
Total preferred stocks
(cost $9,019,435)....... 7,899,955
------------
Depository Receipts--1.3%
Indonesia--0.5%
67,200 PT Indonesia Satellite* .. 2,637,600
(Telecommunications)
Korea--0.8%
145,400 Pohang Iron & Steel Co., 4,780,025
Ltd.* ................. ------------
(Metals)
Total depository receipts
(cost $7,463,672)....... 7,417,625
------------
Convertible Loan Stocks--1.3%
Malaysia--1.1%
1,809,000 IJM Corp. Berhad ........ 5,220,651
(Construction & housing)
239,000 Time Engineering Berhad 710,781
....................... ------------
(Engineering)
5,931,432
------------
Singapore--0.2%
329,800 Kim Eng Holdings Ltd.* .. 207,810
(Financial services)
631,000 Sembawang Maritime, Ltd. 988,624
....................... ------------
(Transportation)
1,196,434
------------
Total convertible loan
stocks
(cost $3,731,237)....... $ 7,127,866
------------
Warrants*--0.9%
Australia--.01%
West Australian Newspaper,
Ltd.
214,071 expiring June '99 @ A$5.00 79,479
------------
(Publishing)
Japan--0.6%
Autobacs Seven Co.
150 expiring Feb. '95 @
(YEN)7,345.............. 648,750
150 expiring Mar. '96 @ 605,625
(YEN)7,483 ............
(Merchandising)
Kamigumi Co., Ltd.
300 expiring Sept. '96 @ 54,250
(YEN)896 ..............
(Transportation)
Nissen Co., Ltd.
493 expiring Nov. '96 @ 655,520
(YEN)1,385 ............
(Merchandising)
Nitori Co.
10,250 expiring Feb. '98 1,608,003
@(YEN)3,268 ........... ------------
(Merchandising)
3,572,148
------------
Malaysia--0.1%
Multi-Purpose Holdings
Berhad
187,000 expiring May '99 @ MYR4.00 172,694
(Consumer goods)
Pilecon Engineering Berhad
944,832 expiring July '99 @ 628,532
MYR4.22 ------------
(Machinery &
engineering)
801,226
------------
Singapore--0.1%
Hong Leong Finance, Ltd.
190,200 expiring Nov. '98 @ 243,580
SGD3.25
(Financial services)
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
<TABLE>
<CAPTION>
Value
Warrants Description (Note 1)
<C> <S> <C>
Singapore--(cont'd.)
Kim Eng Holdings, Ltd.*
392,400 expiring Feb. '97 @ $ 227,207
SGD1.00
(Financial services)
Singapore Finance
144,300 expiring June '99 @ 143,514
SGD1.50 ------------
(Financial services)
614,301
------------
Total warrants
(cost $3,353,163)....... 5,067,154
------------
<CAPTION>
Principal
Amount
(000) Convertible Bonds--1.5%
- ----------
<C> <S> <C>
India--1.0%
Gujarat Ambuja Cement
US$ 3,000 3.50%, 6/30/99 .......... 5,355,000
(Building materials) ------------
Thailand--0.5%
MDX Public Co.
3,864 4.75%, 9/17/03 .......... 3,178,140
(Real estate) ------------
Total convertible bonds
(cost $8,407,590)....... 8,533,140
------------
Total long-term
investments
(cost $476,109,800)..... 543,943,005
------------
SHORT-TERM INVESTMENTS--1.5%
Repurchase Agreement
Joint Repurchase Agreement Account,
8,450 4.77%, 11/1/94 (Note 5)
(cost $8,450,000)....... 8,450,000
------------
Total Investments--98.7%
(cost $484,559,800; Note
4)...................... 552,393,005
Other assets in excess of
liabilities--1.3%....... 7,194,839
------------
Net Assets--100%.......... $559,587,844
------------
------------
</TABLE>
- ------------
* Non-income producing security.
-8- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
October 31,
Assets 1994
------------
<S> <C>
Investments, at value (cost $484,559,800)................................................ $552,393,005
Foreign currency (cost $11,186,851)...................................................... 11,205,084
Receivable for investments sold.......................................................... 11,500,469
Receivable for Fund shares sold.......................................................... 1,453,155
Dividends and interest receivable........................................................ 439,061
Deferred expenses and other assets....................................................... 114,060
------------
Total assets......................................................................... 577,104,834
------------
Liabilities
Payable for investments purchased........................................................ 10,141,883
Payable for Fund shares reacquired....................................................... 4,914,400
Forward contracts--amount payable to counterparty........................................ 1,069,235
Accrued expenses and other liabilities................................................... 479,799
Distribution fee payable................................................................. 408,492
Management fee payable................................................................... 352,871
Deferred Thailand capital gains tax liability............................................ 150,310
------------
Total liabilities.................................................................... 17,516,990
------------
Net Assets............................................................................... $559,587,844
------------
------------
Net assets were comprised of:
Common stock, at par................................................................... $ 33,570
Paid-in capital in excess of par....................................................... 488,364,012
------------
488,397,582
Accumulated net realized gain on investments and foreign currency transactions......... 4,566,897
Net unrealized appreciation on investments and foreign currencies...................... 66,623,365
------------
Net assets, October 31 ,1994........................................................... $559,587,844
------------
------------
Class A:
Net asset value and redemption price per share
($98,920,598 / 5,854,538 shares of common stock issued and outstanding).............. $16.90
Maximum sales charge (5% of offering price)............................................ .89
------------
Maximum offering price to public....................................................... $17.79
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($459,949,480 / 27,672,102 shares of common stock issued and outstanding)............ $16.62
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($717,766 / 43,185 shares of common stock issued and outstanding).................... $16.62
------------
------------
</TABLE>
See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
October 31,
Net Investment Income 1994
----------------
<S> <C>
Income
Dividends (net of foreign
withholding taxes of
$576,714)....................... $ 4,835,029
Interest (net of foreign
withholding taxes of $1,868).... 433,687
----------------
Total income.................... 5,268,716
----------------
Expenses
Management fee.................... 3,726,394
Distribution fee--Class A......... 224,701
Distribution fee--Class B......... 4,045,063
Distribution fee--Class C......... 1,128
Custodian's fees and expenses..... 1,357,000
Transfer agent's fees and
expenses.......................... 787,000
Reports to shareholders........... 292,000
Registration fees................. 267,000
Directors' fees................... 42,000
Amortization of organization
expense........................... 40,000
Legal fees........................ 40,000
Audit fee......................... 38,000
Miscellaneous..................... 30,541
----------------
Total expenses.................. 10,890,827
----------------
Net investment loss................. (5,622,111)
----------------
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions (net of
Thailand capital gains tax of
$303,601)....................... 3,587,932
Foreign currency transactions..... (595,516)
----------------
2,992,416
----------------
Net change in unrealized
appreciation/depreciation on:
Investments (net of deferred
Thailand capital gains tax of
$150,310)......................... 25,885,899
Foreign currencies................ (1,856,866)
----------------
24,029,033
----------------
Net gain on investments and
foreign currencies.............. 27,021,449
----------------
Net Increase in Net Assets
Resulting from Operations........... $ 21,399,338
----------------
----------------
</TABLE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
Increase (Decrease) -----------------------------------
in Net Assets 1994 1993
---------------- ----------------
<S> <C> <C>
Operations
Net investment loss... $ (5,622,111) $ (633,024)
Net realized gain on
investment and
foreign currency
transactions........ 2,992,416 5,416,787
Net change in
unrealized
appreciation on
investments and
foreign
currencies.......... 24,029,033 40,695,258
---------------- ----------------
Net increase in net
assets resulting
from operations..... 21,399,338 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 sold......... 520,354,132 270,394,550
Net asset value of
shares
issued to
shareholders
in reinvestment of
distributions....... 5,612,542 47,105
Cost of shares
reacquired............ (297,243,493) (34,486,434)
---------------- ----------------
Net increase in net
assets from Fund
share
transactions........ 228,723,181 235,955,221
---------------- ----------------
Total increase.......... 244,237,367 281,382,981
Net Assets
Beginning of year....... 315,350,477 33,967,496
---------------- ----------------
End of year............. $ 559,587,844 $ 315,350,477
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-10-
<PAGE>
<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 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
October 31, 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 fiscal year, the Fund does not
isolate that portion of the results of operations arising as a result of changes
in the foreign exchange rates from the fluctuations arising from changes in the
market prices of securities held at the end of the fiscal year. Similarly, the
Fund does not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of long-term debt
securities sold during the fiscal year. Accordingly, realized foreign currrency
gains (losses) are included in the reported net realized gains on investment
transactions.
Net realized losses on foreign currency transactions of $595,516 represent
net foreign exchange losses 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 at fiscal year end exchange rates are reflected as a component of
unrealized appreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability 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
-11-
<PAGE>
<PAGE>
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.
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 due to timing differences concerning recognition of
income.
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, interest and capital gains 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 for and reports
distributions to shareholders in accordance with the A.I.C.P.A.'s 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 by $6,573,856 for current fiscal year
net operating losses and distributions in excess of book basis net investment
income and to increase accumulated net realized gain on investments and foreign
currency transactions by $1,768,094 for certain items which are classified
differently for book and tax purposes and to decrease paid-in capital in excess
of par by $8,341,950 with respect to amounts reported through October 31, 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 and Class C shares of the Fund
(collectively the ``Distributors''). The Fund compensates the Distributors for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution, (the ``Class A, B and C Plans'') regardless
of expenses actually incurred by them. The distribution fees are accrued daily
and payable monthly.
On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B Plans under which the distribution plans became compensation plans,
effective August 1, 1994. Prior thereto, the distribution plans were
reimbursement plans, under which PMFD and PSI were reimbursed for expenses
actually incurred by them up to the amount permitted under the Class A and Class
B Plans, respectively. The Fund is not obligated to pay any prior or future
excess distribution costs (costs incurred by the Distributors in excess of
distribution fees paid by the Fund or contingent deferred sales charges received
by the Distributors). The rate of the distribution fees charged to Class A and
Class B shares of the Fund did not change under the amended plans of
distribution. The Fund began offering Class C shares on August 1, 1994.
-12-
<PAGE>
<PAGE>
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, 1% and
1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Class A plan were assessed at an average
rate of .24 of 1% of the average daily net assets of the Class A shares for the
fiscal year ended October 31, 1994. Currently, the Class A Plan distribution
expenses are .25 of 1% of the average daily net assets. Such expenses under the
Class B and Class C Plans were 1% of the average daily net assets of both the
Class B and Class C shares for the fiscal year ended October 31, 1994.
PMFD has advised the Fund that it has received approximately $1,380,600 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended October 31, 1994. From these fees, PMFD paid such sales charges to
PSI and Pruco Securities Corporation, affiliated broker-dealers, which in turn
paid commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the fiscal year ended October 31, 1994, it
received approximately $1,080,500 in contingent deferred sales charges imposed
upon certain redemptions by Class B shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of America
(``Prudential'').
Note 3. Other 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 year ended October 31, 1994, the Fund incurred fees of approximately
$669,000 for the services of PMFS. As of October 31, 1994, approximately $64,000
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 year ended October
31, 1994 were $488,590,939 and $261,235,158, respectively.
The United States federal income tax basis of the Fund's investments at
October 31, 1994 was $490,115,443 and accordingly, net unrealized appreciation
for federal income tax purposes was $62,277,562 (gross unrealized
appreciation--$82,287,284; gross unrealized depreciation--$20,009,722).
At October 31, 1994, the Fund had an outstanding forward currency contracts
to sell foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contract Receivable Value Depreciation
- --------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Japanese Yen,
expiring 2/16/95... $ 20,000,000 $21,069,235 $ 1,069,235
--------------- ----------- --------------
--------------- ----------- --------------
</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, 1994, the Fund had a .94% undivided interest in the
repurchase agreements in the joint account. The undivided interest for the Fund
represented $8,450,000 in principal amount. As of such date, each repurchase
agreement in the joint account and the value of the collateral therefor were as
follows:
Smith Barney, Inc., 4.80%, in the principal amount of $260,000,000,
repurchase price $260,034,667, due 11/1/94. The value of the collateral
including accrued interest is $265,200,122.
Nomura Securities International, Inc., 4.77%, in the principal amount of
$100,000,000, repurchase price $100,013,250, due 11/1/94. The value of the
collateral including accrued interest is $102,000,391.
Goldman, Sachs & Co., 4.75%, in the principal amount of $275,000,000,
repurchase price $275,036,285, due 11/1/94. The value of the collateral
including accrued interest is $280,500,611.
CS First Boston Corp., 4.75%, in the principal amount of $265,000,000,
repurchase price $265,034,965, due 11/1/94. The value of the collateral
including accrued interest is $271,053,272.
Note 6. Capital The Fund offers Class A,
Class B and Class C shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a contingent
deferred sales charge of 1% during the first year. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately seven
years after purchase commencing on or about February 1995.
The Fund has authorized 2 billion shares of common stock at $.001 par value
per share equally divided into three classes, designated Class A, Class B and
Class C common
-13-
<PAGE>
<PAGE>
stock. Of the 33,569,825 shares of common stock issued and outstanding at
October 1994, PMF owned 5,000 Class A shares and 5,000 Class B shares and
Prudential owned 210,522 Class A shares.
Transactions in shares of common stock for the years ended October 31, 1994
and 1993 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ----------- -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares sold................... 8,481,016 $ 142,276,687
Shares issued in reinvestment
of distributions............ 68,502 1,139,181
Shares reacquired............. (6,691,379) (112,537,168)
----------- -------------
Net increase in shares
outstanding................. 1,858,139 $ 30,878,700
----------- -------------
----------- -------------
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 Shares Amount
- ------------------------------ ----------- -------------
<S> <C> <C>
Year ended October 31, 1994:
Shares sold................... 22,664,100 $ 375,017,028
Shares issued in reinvestment
of distributions............ 271,772 4,473,361
Shares reacquired............. (11,011,611) (182,353,187)
----------- -------------
Net increase in shares
outstanding................. 11,924,261 $ 197,137,202
----------- -------------
----------- -------------
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
----------- -------------
----------- -------------
<CAPTION>
Class C
- ------------------------------
<S> <C> <C>
August 1, 1994 through
October 31, 1994*
Shares sold................... 183,643 $ 3,060,417
Shares reacquired............. (140,458) (2,353,138)
----------- -------------
Net increase in shares
outstanding................. 43,185 $ 707,279
----------- -------------
----------- -------------
</TABLE>
- ------------
* Commencement of offering of Class C shares.
Note 7. Capital On December 1, 1994, the
Gain Distribution Board of Directors of the
Fund announced a distribution of long-term capital
gains of $.1025 per share payable to Class A, B and C shares on December 15,
1994 to shareholders of record on December 8, 1994.
-14-
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
Class C
-----------------------------------------
- ----------------------------------------- -----------
July 24, July
24, August 1,
1992*
1992* 1994@
Year Ended October 31, Through Year Ended October 31,
Through Through
------------------------- October 31, -------------------------
October 31, October 31,
1994(D) 1993(D) 1992 1994(D) 1993(D)
1992 1994(D)
---------- ---------- ----------- ---------- ----------
- ----------- -----------
<S> <C> <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 $ 16.68
---------- ---------- ----------- ---------- ----------
- ----------- -----------
Income from
investment
operations
Net investment
loss............... (.08) (.01) (.02) (.21) (.10)
(.04) (.06)
Net realized and
unrealized gains on
investment and
foreign currency
transactions....... 1.15 5.48 .67 1.13 5.43
.67 --
---------- ---------- ----------- ---------- ----------
- ----------- -----------
Total from
investment
operations....... 1.07 5.47 .65 .92 5.33
.63 (.06)
---------- ---------- ----------- ---------- ----------
- ----------- -----------
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.......... $ 16.90 $ 16.10 $ 10.65 $ 16.62 $ 15.94
$ 10.63 $ 16.62
---------- ---------- ----------- ---------- ----------
- ----------- -----------
---------- ---------- ----------- ---------- ----------
- ----------- -----------
TOTAL RETURN#........ 6.67% 51.39% 6.50% 5.79% 50.17%
6.30% (.36)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)....... $ 98,921 $ 64,353 $ 13,918 $ 459,949 $ 250,997
$ 20,050 $ 718
Average net assets
(000).............. $ 92,233 $ 26,264 $ 12,884 $ 404,506 $ 74,590
$ 16,025 $ 458
Ratios to average net
assets:##
Expenses, including
distribution
fees............. 1.57% 1.63% 2.72%** 2.33% 2.37%
3.52%** 3.00%**
Expenses, excluding
distribution
fees............. 1.33% 1.43% 2.52%** 1.33% 1.37%
2.52%** 2.00%**
Net investment
loss............. (.50)% (.04)% (.75)%** (1.27)% (.83)%
(1.55)%** (1.64)%**
Portfolio turnover... 56% 44% %0 56% 44%
%0 56%
</TABLE>
----------------
* Commencement of investment operations.
** Annualized.
@ Commencement of offering of Class C shares.
# 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.
## Because of the event referred to in @ and the timing of such, the ratios
for Class C shares are not necessarily comparable to that of Class A or
Class B shares and are not necessarily indicative of future ratios.
(D) Calculated based upon weighted average shares outstanding during the
period.
See Notes to Financial Statements.
-15-
<PAGE>
<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, 1994, the related statements of operations for the year then
ended and of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the two years in the period
then ended 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, 1994 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 audits provide 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, 1994, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
December 16, 1994
FEDERAL INCOME TAX INFORMATION
We are required by the Internal Revenue Code to advise you within 60 days of
the Fund's fiscal year end (October 31, 1994) as to the federal income tax
status of dividends paid by the Fund during such fiscal year. Accordingly, we
are advising you that in the fiscal year ended October 31, 1994, dividends were
paid from ordinary income totalling $.064 per Class A share and $.034 per Class
B share. In addition, the Fund paid a short-term capital gain distribution of
$.174 per share (Class A and Class B) which is taxable as ordinary income and a
long-term capital gain distribution of $.032 per share (Class A and Class B)
which is taxable as such.
In January 1995, you will be advised on IRS Form 1099, DIV or substitute Form
1099, as to the federal tax status of the distributions received by you in
calendar 1994.
-16-
<PAGE>
<PAGE>
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, Class
B, and Class C) 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 and 1994 for
Class C 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 and Class C shares assuming full redemption on
October 31, 1994; (c) all recurring fees (including management fees) were
deducted; and (d) all dividends and distributions were reinvested. Class B
shares will automatically convert to Class A shares on a quarterly basis
approximately five years after purchase. This conversion feature is expected to
be implemented on or about February 1995 and is not reflected in the graph.
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.
-17-
<PAGE>
Directors
Stephen C. Eyre
Delayne Dedrick 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 LLP
Two World Financial Center
New York, NY 10281
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.
743941106 MF 157E-2
743941205 (LOGO) Cat #444567Q
<PAGE>
