(ICON)
Prudential
Pacific
Growth
Fund, Inc.
ANNUAL
REPORT
Oct. 31, 1995
(LOGO)
<PAGE>
Prudential Pacific Growth Fund, Inc.
Performance At A Glance.
It's been a difficult year for Pacific Basin stocks. A series of negative
surprises sent most stocks lower over the winter. The good news is that
prices have rebounded over the last six months, as economic growth and
corporate profits bounced back. Despite these gains, total return for the
year for Prudential Pacific Growth Fund and the Lipper average were both
negative, although the Fund did perform better than the Lipper average by
losing significantly less. The Morgan Stanley Pacific Index was even deeper
in negative territory, losing 11.0% for the year. However, for the most
recent six-month period ended October 31, we are pleased to report that
the Prudential Pacific Growth Fund had a positive performance, twice as
good in percentage terms as the average Pacific fund measured by Lipper
Analytical Services.
<TABLE>
Cumulative Total Returns1 As of 10/31/95
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class A -6.2% 61.3%
Class B -6.8 57.4
Class C -6.8 -7.2
Lipper Pacific Fund Avg3 -9.5 52.8
<CAPTION>
Average Annual Total Returns1 As of 9/30/95
One Since
Year Inception2
<S> <C> <C>
Class A -9.0% 15.0%
Class B -9.8 15.5
Class C -5.8 -4.7
</TABLE>
Past performance is not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper Analytical Services.
The cumulative total returns do not take into account sales charges. The
average annual returns do take into account applicable sales charges. The
Fund charges a maximum front end sales load of 5% for Class A shares. Class
B shares are subject to a declining contingent deferred sales charge (CDSC)
of 5%, 4%, 3%, 2%, 1% and 1%, for six years. Class C shares have a 1% CDSC
for one year. Class B shares will automatically convert to Class A shares
on a quarterly basis, approximately seven years after purchase.
2 Inception dates: 7/24/92 Class A and Class B; 8/1/94 Class C.
3 The Lipper Fund average includes 41 funds for six months; 36 for one
year, and 16 funds since inception, as determined by Lipper Analytical
Services, Inc.
How Investments Compared.
(GRAPH)
Source: Lipper Analytical Services. Financial markets change, so a mutual
fund's past performance should never be used to predict future results. The
risks to each of the investments listed above are different -- we provide
12-month total returns for several Lipper mutual fund categories to show you
that reaching for higher yields means tolerating more risk. The greater the
risk, the larger the potential reward or loss. In addition, we've added
historical 20-year average annual returns to show that some of 1995's
returns in the U.S. market (so far) are higher than normal. These returns
assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Smaller capitalization stocks
offer greater potential for long term growth but may be more volatile than
larger capitalization stocks. Investors receive higher historical total
returns from stocks than from most other investments.
General Bond Funds provide more income than stock funds, which can help
smooth out their total returns year by year. But their prices still fluctuate
(sometimes significantly) and their returns are historically lower than
those of stock funds.
Global Stock Funds will also fluctuate a great deal. Historically, foreign
investments have offered greater returns than domestic investments. However,
investments overseas are subject to political, social, and currency risks
that may affect performance.
Money Market Funds attempt to preserve a constant share value; they don't
fluctuate much in price but their returns are generally among the lowest
of the major investment categories.
<PAGE>
Dan Duane, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Pacific Growth Fund invests at least 65% of its assets in
stocks and other securities of companies doing business in, or domiciled
in, the Pacific Basin. It may also invest outside the region. The Fund
may invest in options on stocks, stock indices, foreign currencies and
futures contracts on foreign currencies, and may purchase and sell futures
contracts on foreign currencies and groups of currencies and on financial
or stock indices to hedge its portfolio. Because the Fund invests in
securities traded outside the U.S., it is subject to all the risks
associated with foreign investing, including currency, political and
social risks.
Strategy Session.
What We See Now.
Pacific Rim stocks are very attractively priced. Last winter, many foreign
markets struggled through currency turmoil, financial scandals and a
general crisis of confidence in the global stock markets. More recently,
disappointed emerging markets investors have been selling, perhaps for
tax-related reasons, depressing prices further. We don't think this
selling has anything to do with economic fundamentals; it could in
fact set the stage for better markets in 1996. Why? Economic growth
has been more robust in many foreign countries than in the U.S. and
while corporate earnings have exceeded expectations, they were not
reflected in November stock prices.
Our strategy is to emphasize economically-sensitive stocks, particularly
in the smaller Pacific Rim markets, where corporate earnings have been
strong.
- --We are adding to our holdings in Hong Kong, as companies there will
be prime beneficiaries of renewed growth in mainland China.
- --The Japanese economy has recently benefited from both the weakening
yen (which makes exports more attractive to overseas consumers) and
the government's action to strengthen the banking sector. We are adding
to our holdings here, where we have 31% of total net assets.
- --We are reducing our holdings in Malaysia, where the economy has been
growing so rapidly that it is overheating--we see no signs the government
will do anything to cool it down soon.
- --Around the world, we are also buying stocks of firms that cater
to the more affluent consumer as well as entertainment and leisure
companies. As the baby boomers age, we think they'll have more disposable
income to spend on the finer things in life.
A Growth Investor.
Daniel J. Duane, managing director and portfolio manager, works
with a team of investment professionals to identify long-term economic,
social and demographic themes that will lead to high earnings growth levels.
<PAGE>
What Went Well.
Technology Was Tops
In Japan And Korea.
We benefited by holding technology stocks. Electronics as a sector
represented 11% of our total net assets, and we focused on Japan and
Korea. We took profits in Samsung Electronics, after the Korean stock
nearly doubled. We are strong believers in the future of technology
stocks, but prefer software now to hardware since we worry that new
capacity now being added worldwide will eventually cause hardware
oversupply, despite continuing robust demand for personal computers.
Australia Was
The Real Thing.
Our Australian holdings performed well. We increased our holdings there
to 19% from 17% six months ago. Australia is where we hold our second
largest percentage of assets, after Japan (31%). Our favorite stock
down under is Coca-Cola Amatil, which has the distribution rights for
the beverage in Australia, as well as franchises in Indonesia and much
of Eastern Europe. We increased our stake in this company when the
stock weakened at mid-year.
And Not So Well.
We Lingered
In Malaysia.
We remained in Malaysia, where the stock market was weak, and so,
too, were our holdings. The economy there overheated, but the government
has not yet done enough to cool it down. We reduced our holdings
there to 6% from 11% by selling, among others, Resorts World Holdings
(leisure and tourism).
Looking Ahead.
We are optimistic that many global markets will catch up to the U.S.,
posting stronger gains in coming months. Most Pacific Rim investors
are more pessimistic than we are at this writing. The region is now
experiencing the negative effects of redemptions in U.S.-based mutual
funds investing in emerging markets. Nevertheless, we believe many
companies still show strong potential for increased earnings both
from productivity improvements and from the effects of economic growth.
Looking at all the stock markets worldwide, the Pacific Rim is our
favorite. Growth in China should take hold next year, which will
really boost sales and revenues for the Asian companies that sell
goods and services to China. Still, we wouldn't be surprised if
the lingering effects of the year's financial turmoil continues
to add an extra measure of volatility to global funds.
<TABLE>
<CAPTION>
Five Largest Holdings.*
<C> <S>
5.6% Western Mining Corp.
Metals-Nonferrous
3.9% Coca-Cola Amatil
Beverages & Tobacco
3.2% Broken Hill Proprietary
Other Energy Sources
3.2% Nintendo Co.
Recreation/Consumer
3.1% Wing Tai Holdings
Property Development
</TABLE>
*Expressed as a percentage of total net assets as of 10/31/95.
Portfolio holdings are subject to change.
Sector Breakdown.
Prudential Pacific Growth Fund, Inc.
As of 10/31/95
(CHART)
1
<PAGE>
President's Letter December 15, 1995
(PICTURE)
Dear Shareholder:
For many investors, 1995 was a profitable year -- most stock and bond funds
enjoyed healthy returns from the U.S. markets. While climbing returns can
tempt even the most skittish investors to start buying again, it is
important to remember that the stock and bond markets go down just as
they go up. At times like these, remember the importance of working with
your Financial Advisor or Registered Representative to help you find
investments that are consistent with your risk tolerance and time
horizon. Your Financial Advisor or Registered Representative can help
you maintain realistic expectations about both the potential performance
and risks associated with your investments.
American Dream Savings Account.
The U.S. Congress is now considering one of the most significant and
positive pieces of legislation to affect individual investors -- the
American Dream Savings Account. This legislation may improve the traditional
Individual Retirement Account (IRA) by allowing higher non- working
spouse contributions as well as tax-free and penalty-free withdrawals
from the account before age 59 1/2, for certain expenses. We will keep
our Financial Advisors and Registered Representatives updated on the
progress of this legislation, so call him or her to learn how you
may benefit.
Shareholder Legislative Action Program.
From time to time we've be informing you about significant legislation
before Congress, such as the American Dream Savings Account, that may
potentially impact mutual fund investors. We want to make it easier for
you to share your views with your Congressional member. So, beginning
in 1996, your shareholder reports will contain postage-paid message
cards that you simply drop in the mail if you want to let your senator
or representative know how you feel about pending legislation.
Fund Profiles.
Over the past year, we've worked to make your shareholder reports more
interesting, informative and easy to read. This year, we'll be turning
our attention to "fund profiles." Some mutual fund companies now offer
one to shareholders along with a full prospectus. The purpose of a
fund profile is to provide a very brief, reader-friendly summary of
a fund's objective, investments, risks and expenses. Would you like
to see fund profiles from us? Please call your Financial Advisor or
Registered Representative to share your views.
As always, thank you for your confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments as of
October 31, 1995
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--97.2%
COMMON STOCKS--93.3%
- ------------------------------------------------------------
Australia--17.9%
3,837,700 AAPC, Ltd. (Leisure & Tourism) $ 2,220,587
2,710,599 Australian National Industries, Ltd.
(Multi-Industry) 2,125,620
358,300 Brambles Industries, Ltd.
(Business & Public Services) 3,808,162
1,055,616 Broken Hill Proprietary Co., Ltd.
(Other Energy Sources) 14,289,626
2,233,941 Coca Cola Amatil, Ltd.
(Beverages & Tobacco) 17,280,192
1,942,900 Nine Network Australia, Ltd.
(Broadcasting & Publishing) 6,183,151
832,000 Qantas Airways, Ltd.
(Transportation-Airlines) 1,469,584
3,990,500 Sea World Property Trust, Ltd.
(Leisure & Tourism) 2,977,396
1,573,400 West Australia Newspaper, Ltd.
(Broadcasting & Publishing) 4,564,017
3,903,300 Western Mining Corp. Holdings, Ltd.
(Metals - Non Ferrous) 25,022,297
-------------
79,940,632
- ------------------------------------------------------------
Hong Kong--16.3%
3,345,000 Amoy Properties, Ltd.
(Property Investment) 3,223,294
2,200,000 CITIC Pacific, Ltd. (Multi-Industry) 6,872,065
3,023,800 Consolidated Electric Power
(Construction) 6,120,894
2,825,600 Guoco Group, Ltd. (Multi-Industry) 13,084,020
3,532,000 Hong Kong & Shanghai Hotels, Ltd.
(Leisure & Tourism) 4,431,389
597,604 HSBC Holdings, PLC (Banking) 8,695,879
12,167,000 Hung Hing Printing Group, Ltd.
(Forest Products & Paper) 2,525,841
1,472,000 Hutchison Whampoa, Ltd.
(Multi-Industry) 8,110,822
853,000 Jardine Matheson Holdings, Ltd.
(Multi-Industry) 5,203,300
1,100,000 New World Development Co., Ltd.
(Property Development) $ 4,282,592
1,393,000 New World Infrastructure, Ltd.(a)
(Construction) 2,450,403
18,350,000 Techtronic Industries Co., Ltd.
(Machinery & Engineering) 1,898,775
1,677,000 Wharf Holdings, Ltd.
(Multi-Industry) 5,661,364
-------------
72,560,638
- ------------------------------------------------------------
India--0.2%
685,000 Indo Gulf Fertilizer Industries(a)
(Basic Industries) 1,010,375
- ------------------------------------------------------------
Indonesia--0.4%
31,000 HM Sampoerna (Beverages & Tobacco) 286,658
1,545,100 Kabel Metal Indonesia
(Industrial Components) 1,403,245
-------------
1,689,903
- ------------------------------------------------------------
Japan--30.3%
218,000 Aiwa Co.
(Appliances & Household Durables) 4,733,105
75,600 Autobacs Seven Co. (Retail) 7,134,866
365,000 Daibiru Corp. (Property Investment) 3,712,469
1,340 DDI Corp.
(Telecommunications-Unregulated) 10,864,156
52,400 Japan Associates Finance Co.
(Financial Services) 5,099,071
211,000 Kato Denki Co. (Retail) 5,530,367
60,000 Keyence Corp.
(Electronic Components &
Instruments) 7,393,643
74,000 Kyocera Corp.
(Electronic Components &
Instruments) 6,064,743
760,000 Mitsui Fudosan Co., Ltd.
(Property Investment) 8,696,333
197,000 Nichiei Co., Ltd. (Financial
Services) 12,234,230
193,000 Nintendo Co., Ltd.
(Recreation & Other Consumer
Goods) 14,194,230
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
3
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments as of
October 31, 1995
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Japan cont'd.
400,000 Nippon Electric Glass
(Misc. Materials & Commodities) $ 7,393,643
525,000 Nippon Express Co.
(Transportation-Road & Rail) 4,261,614
290,880 Nissen Co., Ltd. (Retail) 8,392,137
394,000 Omron Corp.
(Electronic Components &
Instruments) 9,209,389
149,000 Onward Kashiyama & Co., Ltd.
(Textile-Apparel Manufacturing) 2,054,670
168,000 Rohm Co., Ltd.
(Electronic Components &
Instruments) 10,203,227
185,500 Sony Music Entertainment, Inc.
(Recreation & Other Consumer
Goods) 7,946,112
-------------
135,118,005
- ------------------------------------------------------------
Korea--4.8%
40,600 Mando Machinery Corp.
(Automobiles & Auto Parts) 2,493,890
18,812 Mando Machinery Corp.(a)
(Automobiles & Auto Parts) 644,311
12,740 Pohang Iron & Steel Co., Ltd.
(Metals - Steel) 1,108,912
14,829 Samsung Electronics Co., Ltd.
(New, Series 1)(a)
(Electronic Components &
Instruments) 3,265,617
1,113 Samsung Electronics Co., Ltd.
(New, Series 3)(a)
(Electronic Components &
Instruments) 240,739
55,308 Samsung Electronics Co., Ltd.(a)
(Electronic Components &
Instruments) 12,143,689
37,540 Shinwon Corp.(a) (Retail) 1,545,462
-------------
21,442,620
- ------------------------------------------------------------
Malaysia--6.4%
4,256,000 IJM Corporation Berhad
(Construction) 7,003,968
1,000 Kedah Cement Holdings Berhad
(Building Materials & Components) 1,559
2,415,000 Kuala Lumpur Kepong Berhad
(Misc. Materials & Commodities) $ 6,512,894
8,260,000 Renong Berhad (Multi-Industry) 12,617,638
843,000 Technology Resources Industries
Berhad(a)(Utilities-Telephones) 2,140,689
-------------
28,276,748
- ------------------------------------------------------------
New Zealand--3.2%
3,781,200 Fletcher Challenge, Ltd.
(Forest Products & Paper) 10,001,987
3,224,500 Fletcher Forestry Challenge, Ltd.
(Forest Products & Paper) 4,445,503
-------------
14,447,490
- ------------------------------------------------------------
Singapore--12.6%
1,327,000 City Developments, Ltd.
(Property Development) 8,220,354
1,290,750 First Capital Corp.
(Property Development) 3,490,736
582,000 Fraser & Neave, Ltd.
(Beverages & Tobacco) 6,880,991
1,909,000 Hong Leong Finance, Ltd.
(Financial Services) 5,784,439
1,527,000 Overseas Union Bank (Banking) 9,513,345
1,604,750 Sembawang Maritime, Ltd.
(Energy Equipment & Services) 5,430,588
314,000 United Overseas Bank, Ltd. (Banking) 2,756,531
7,987,000 Wing Tai Holdings
(Property Development) 13,853,557
-------------
55,930,541
- ------------------------------------------------------------
Thailand--1.2%
215,000 Bangkok Bank (Banking) 2,221,339
190,701 Land & House, Ltd.
(Property Development) 3,076,678
-------------
5,298,017
-------------
Total common stocks
(cost $373,590,889) 415,714,969
-------------
</TABLE>
- --------------------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC. Portfolio of Investments as of
October 31, 1995
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
PREFERRED STOCKS
- ------------------------------------------------------------
Australia--0.1%
63,635 Bank of Melbourne, Ltd. (Banking)
(cost $548,843) $ 654,053
-------------
DEPOSITORY RECEIPTS--1.4%
- ------------------------------------------------------------
Australia--0.5%
132,620 Qantas Airways, Ltd.
(Transportation-Airlines) 2,342,503
- ------------------------------------------------------------
Indonesia--0.9%
121,900 PT Indonesia Satellite
(Telecommunications) 4,037,938
-------------
Total depository receipts (cost
$5,984,489) 6,380,441
-------------
CONVERTIBLE LOAN STOCKS
- ------------------------------------------------------------
Singapore--0.2%
631,000 Sembawang Maritime, Ltd.
(Energy Equipment & Services)
(cost $402,346) 730,396
-------------
WARRANTS(a)--1.8%
- ------------------------------------------------------------
Australia
West Australian Newspaper, Ltd.
214,071 expiring June '99 @ A$5.00
(Broadcasting & Publishing) 65,193
- ------------------------------------------------------------
Japan--0.7%
Autobacs Seven Co.
150 expiring Mar. '96 @ (Y)7,440
(Retail) 283,125
Nissen Co., Ltd.
493 expiring Nov. '96 @ (Y)1,681
(Retail) 618,743
Nitori Co.
10,250 expiring Feb. '98 @ (Y)2,724
(Retail) 1,046,195
Onward Kashiyama & Co., Ltd.
927 expiring March '96 @ (Y)1,169
(Textile-Apparel Manufacturing) $ 1,222,481
-------------
3,170,544
- ------------------------------------------------------------
Singapore--1.1%
Hong Leong Finance, Ltd.
190,200 expiring Nov.'98 @ SGD3.25
(Financial Services) 165,626
Singapore Finance, Ltd.
144,300 expiring June '99 @ SGD1.50
(Financial Services) 76,619
United Overseas Bank, Ltd.
1,184,800 expiring June '97 @ SGD3.34
(Banking) 4,487,561
-------------
4,729,806
-------------
Total warrants
(cost $9,332,188) 7,965,543
-------------
Principal
Amount
(000)
- ---------
CONVERTIBLE BONDS
- ------------------------------------------------------------
India--0.4%
Gujarat Ambuja Cement
US$1,350 3.50%, 6/30/99 (Building Materials &
Components) (cost $2,020,598) 1,869,750
-------------
Total long-term investments
(cost $391,879,353) 433,315,152
SHORT-TERM INVESTMENTS
- ------------------------------------------------------------
Repurchase Agreement--2.6%
Joint Repurchase Agreement Account,
11,403 5.89%, 11/1/95, (cost $11,403,000;
Note 5) 11,403,000
-------------
- ------------------------------------------------------------
Total Investments--99.8%
(cost $403,282,353; Note 4) 444,718,152
Other assets in excess of
liabilities--0.2% 1,036,020
-------------
Net Assets--100% $ 445,754,172
-------------
-------------
</TABLE>
- ---------------
(a) Non-income producing security.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL PACIFIC GROWTH FUND, INC.
- -------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
October 31, 1995
Investments, at value (cost
$403,282,353)................................................................
.... $444,718,152
Cash.........................................................................
................................ 2,417,515
Foreign currency (cost
$2,012,928)..................................................................
......... 2,005,337
Forward currency contracts-net amount receivable from
counterparties......................................... 9,752,998
Receivable for investments
sold.........................................................................
..... 3,294,063
Dividends and interest
receivable...................................................................
......... 933,890
Receivable for Fund shares
sold.........................................................................
..... 583,571
Deferred expenses and other
assets.......................................................................
.... 73,562
------------
Total
assets.......................................................................
....................... 463,779,088
------------
Liabilities
Payable for Fund shares
reacquired...................................................................
........ 14,596,778
Forward currency contracts-net amount payable to
counterparties.............................................. 1,876,035
Accrued expenses and other
liabilities..................................................................
..... 502,589
Distribution fee
payable......................................................................
............... 325,353
Management fee
payable......................................................................
................. 295,363
Payable for investments
purchased....................................................................
........ 289,806
Withholding taxes
payable......................................................................
.............. 112,221
Deferred Thailand capital gains tax
liability................................................................
26,771
------------
Total
liabilities..................................................................
....................... 18,024,916
------------
Net
Assets.......................................................................
............................ $445,754,172
------------
------------
Net assets were comprised of:
Common stock, at
par..........................................................................
............ $ 28,833
Paid-in capital in excess of
par..........................................................................
410,049,346
------------
410,078,179
Undistributed net foreign exchange
gains..................................................................
5,673,168
Accumulated net realized loss on
investments..............................................................
(19,272,447)
Net unrealized appreciation on investments and foreign
currencies......................................... 49,275,272
------------
Net assets, October 31,
1995.........................................................................
........ $445,754,172
------------
------------
Class A:
Net asset value and redemption price per share
($98,998,227 / 6,286,560 shares of common stock issued and
outstanding)................................ $15.75
Maximum sales charge (5% of offering
price)...............................................................
.83
------------
Maximum offering price to
public..........................................................................
$16.58
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($344,312,820 / 22,387,242 shares of common stock issued and
outstanding).............................. $15.38
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($2,443,125 / 158,841 shares of common stock issued and
outstanding)................................... $15.38
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
6 See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Operations
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income October 31, 1995
----------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $686,766)................... $ 7,392,951
Interest................................ 538,790
----------------
Total income......................... 7,931,741
----------------
Expenses
Management fee.......................... 3,542,363
Distribution fee--Class A............... 254,800
Distribution fee--Class B............... 3,687,707
Distribution fee--Class C............... 16,242
Transfer agent's fees and expenses...... 910,000
Custodian's fees and expenses........... 700,000
Reports to shareholders................. 290,000
Registration fees....................... 110,000
Audit fee............................... 48,000
Directors' fees......................... 42,000
Amortization of organization expense.... 40,000
Legal fees.............................. 15,000
Miscellaneous........................... 41,668
----------------
Total expenses....................... 9,697,780
----------------
Net investment loss........................ (1,766,039)
----------------
Realized and Unrealized Gain (Loss) on
Investment and Foreign Currency
Transactions
Net realized loss on:
Investment transactions................. (13,436,387)
Foreign currency transactions........... (1,512,294)
----------------
(14,948,681)
----------------
Net change in unrealized
appreciation on:
Investments (net of deferred Thailand
capital gains tax of $123,539)....... (26,397,406)
Foreign currencies...................... 9,049,313
----------------
(17,348,093)
----------------
Net loss on investments and foreign
currencies.............................. (32,296,774)
----------------
Net Decrease in Net Assets
Resulting from Operations.................. $(34,062,813)
----------------
----------------
</TABLE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended October 31,
in Net Assets 1995 1994
<S> <C> <C>
Operations
Net investment loss......... $ (1,766,039) $ (5,622,111)
Net realized gain (loss) on
investment and foreign
currency transactions.... (14,948,681) 2,992,416
Net change in unrealized
appreciation on
investments and foreign
currencies............... (17,348,093) 24,029,033
--------------- -------------
Net increase (decrease) in
net assets resulting from
operations............... (34,062,813) 21,399,338
--------------- -------------
Net equalization credits.... 5,303 --
--------------- -------------
Distributions in excess of net
investment income (Note 1)
Class A..................... -- (293,320)
Class B..................... -- (658,425)
--------------- -------------
-- (951,745)
--------------- -------------
Distributions to shareholders
from net realized gains
Class A..................... (575,474) (944,124)
Class B..................... (2,780,214) (3,989,283)
Class C..................... (5,693) --
--------------- -------------
(3,361,381) (4,933,407)
--------------- -------------
Fund share transactions (net of
share conversion) (Note 6)
Net proceeds from shares
sold..................... 1,087,055,048 520,354,132
Net asset value of shares
issued in reinvestment of
distributions............ 3,169,310 5,612,542
Cost of shares reacquired... (1,166,639,139) (297,243,493)
--------------- -------------
Net increase (decrease) in
net assets from Fund
share transactions....... (76,414,781) 228,723,181
--------------- -------------
Total increase (decrease)...... (113,833,672) 244,237,367
Net Assets
Beginning of year.............. 559,587,844 315,350,477
--------------- -------------
End of year.................... $ 445,754,172 $ 559,587,844
--------------- -------------
--------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
7
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
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 Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange (whether domestic or
foreign) are valued at the last reported sales price on the primary exchange on
which they are traded. Securities traded in the over-the-counter market
(including securities listed on exchanges for which a last sales price is not
available) are valued at the average of the last reported bid and asked prices.
Any securities or other assets for which current market quotations are not
readily available are valued at fair value as determined in good faith under
procedures established by and under the general supervision and responsibility
of the Fund's Board of Directors.
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 losses on investment
transactions.
Net realized losses on foreign currency transactions of $1,512,294 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: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain or loss is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain or loss, if any, is
included in net realized gain (loss) on foreign
- --------------------------------------------------------------------------------
8
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
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. The effect caused by applying this statement was to decrease paid-in
capital by $1,904,622, increase accumulated net realized losses by $5,529,282
and to increase undistributed foreign exchange gains by $7,433,904 for foreign
currency gains recognized for tax purposes during the fiscal year ended October
31, 1995. 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 with 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.
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, Class B and Class C Plans were
25%, 1% and 1%, respectively of the average daily net assets of the Class A,
Class B and Class C shares for the fiscal year ended October 31, 1995.
PMFD has advised the Fund that it has received approximately $359,000 in
front-end sales charges resulting from sales of Class A shares during the year
ended October 31, 1995. 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 year ended October 31, 1995, it received
approximately $1,816,400 and $2,400 in contingent deferred
- --------------------------------------------------------------------------------
9
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
sales charges imposed upon certain redemptions by Class B and Class C
shareholders, respectively.
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 Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly owned subsidiary of
PMF, serves as the Fund's transfer agent. During the year ended October 31,
1995, the Fund incurred fees of approximately $771,000 for the services of PMFS.
As of October 31, 1995, approximately $61,500 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 Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 1995 were $247,132,949 and $317,927,609,
respectively.
The United States federal income tax basis of the Fund's investments at October
31, 1995 was $405,316,224 and accordingly, net unrealized appreciation for
federal income tax purposes was $39,401,928 (gross unrealized
appreciation--$59,625,599; gross unrealized depreciation--$20,223,671).
For federal income tax purposes, the Fund has a capital loss carryforward as of
October 31, 1995 of approximately $17,227,000 which expires in 2003.
At October 31, 1995, the Fund had outstanding forward currency contracts, both
to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Purchase Contract Payable Value Depreciation
- -------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Japanese Yen,
expiring 5/15/96-
5/30/96........... $38,497,129 $36,621,094 $ (1,876,035)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Date Current
Sale Contract Receivable Value Appreciation
- ------------------- --------------- ----------- --------------
<S> <C> <C> <C>
Japanese Yen,
expiring 5/15/96
5/30/96.......... $46,374,092 $36,621,094 $9,752,998
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment 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, 1995, the Fund
had a 1.22% undivided interest in the repurchase agreements in the joint
account. The undivided interest for the Fund represented $11,403,000 in
principal amount. As of such date, each repurchase agreement in the joint
account and the value of the collateral therefor were as follows:
Bear, Stearns & Co. 5.875%, in the principal amount of $273,000,000, repurchase
price $273,044,552, due 11/1/95. The value of the collateral including accrued
interest was $278,800,077.
CS First Boston Corp., 5.90%, in the principal amount of $273,000,000,
repurchase price $273,044,742, due 11/1/95. The value of the collateral
including accrued interest was $278,529,780.
Goldman, Sachs & Co., 5.88%, in the principal amount of $273,000,000, repurchase
price $273,044,590, due 11/1/95. The value of the collateral including accrued
interest was $278,460,050.
Smith Barney & Co., 5.93%, in the principal amount of $114,753,000, repurchase
price $114,771,902, due 11/1/95. The value of the collateral including accrued
interest was $117,048,982.
- ------------------------------------------------------------
Note 6. Capital
The Fund currently 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
automatically convert to Class A shares on a quarterly basis approximately seven
years after purchase. A special
- --------------------------------------------------------------------------------
10
<PAGE>
<PAGE>
Notes to Financial Statements PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
exchange privilege is also available for shareholders who qualified to purchase
Class A shares at net asset value.
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 stock. Of the 28,832,643 shares of common stock issued and outstanding
at October 31, 1995, PMF owned 5,000 Class A shares and 5,000 Class B shares and
Prudential owned 211,960 Class A shares.
Transactions in shares of common stock for the years ended October 31, 1995 and
1994 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------------- ----------- -------------
<S> <C> <C>
Year ended October 31, 1995:
Shares sold....................... 38,906,170 $ 589,161,551
Shares issued in reinvestment of
distributions................... 36,104 541,915
Shares reacquired................. (39,986,485) (609,434,118)
----------- -------------
Net decrease in shares outstanding
before conversion............... (1,044,211) (19,730,652)
Shares issued upon conversion from
Class B......................... 1,476,233 20,877,944
----------- -------------
Net increase in shares
outstanding..................... 432,022 $ 1,147,292
----------- -------------
----------- -------------
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
----------- -------------
----------- -------------
<CAPTION>
Class B
- ----------------------------------
<S> <C> <C>
Year ended October 31, 1995:
Shares sold....................... 29,316,819 $ 437,515,082
Shares issued in reinvestment of
distributions................... 177,755 2,621,884
Shares reacquired................. (33,274,969) (498,258,260)
----------- -------------
Net decrease in shares outstanding
before conversion............... (3,780,395) (58,121,294)
Shares reacquired upon conversion
into Class A.................... (1,504,465) (20,877,944)
----------- -------------
Net decrease in shares
outstanding..................... (5,284,860) $ (78,999,238)
----------- -------------
----------- -------------
<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
----------- -------------
----------- -------------
<CAPTION>
Class C
- ----------------------------------
<S> <C> <C>
Year ended October 31, 1995:
Shares sold....................... 4,052,224 $ 60,378,415
Shares issued in reinvestment of
distributions................... 373 5,511
Shares reacquired................. (3,936,941) (58,946,761)
----------- -------------
Net increase in shares
outstanding..................... 115,656 $ 1,437,165
----------- -------------
----------- -------------
August 1, 1994(a) 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>
- ---------------
(a) Commencement of offering of Class C shares.
- ------------------------------------------------------------
Note 7. Distributions
On December 7, 1995 the Board of Directors of the Fund declared dividends from
foreign currency gains to Class A, B and C shareholders of $.189 per share,
payable on December 15, 1995 to shareholders of record on December 12, 1995.
- --------------------------------------------------------------------------------
11
<PAGE>
Financial Highlights PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
Class B
- -----------------------------------------------------
- ------------------------
July 24,
1992(a)
Year Ended October 31,
Through Year Ended October 31,
- ------------------------------------- October 31,
- ------------------------
1995(e) 1994(e)
1993(e) 1992 1995(e) 1994(e)
---------- -------
- ---------- ----------- ---------- ---------
<S> <C> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 16.90 $ 16.10 $
10.65 $ 10.00 $ 16.62 $ 15.94
---------- -------
- ---------- ----------- ---------- ---------
Income from investment operations
Net investment income (loss).............. .04 (.08)
(.01) (.02) (.08) (.21)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................ (1.09) 1.15
5.48 .67 (1.06) 1.13
---------- -------
- ---------- ----------- ---------- ---------
Total from investment operations........ (1.05) 1.07
5.47 .65 (1.14) .92
---------- -------
- ---------- ----------- ---------- ---------
Less distributions
Distributions in excess of net investment
income.................................. -- (.06)
(.02) -- -- (.03)
Distributions from net realized gains..... (.10) (.21)
-- -- (.10) (.21)
---------- -------
- ---------- ----------- ---------- ---------
Total distributions..................... (.10) (.27)
(.02) -- (.10) (.24)
---------- -------
- ---------- ----------- ---------- ---------
Net asset value, end of period............ $ 15.75 $ 16.90 $
16.10 $ 10.65 $ 15.38 $ 16.62
---------- -------
- ---------- ----------- ---------- ---------
---------- -------
- ---------- ----------- ---------- ---------
TOTAL RETURN(d)........................... (6.23)% 6.67%
51.39% 6.50% (6.82)% 5.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $ 98,998 $98,921 $
64,353 $13,918 $344,313 $459,949
Average net assets (000).................. $101,920 $92,233 $
26,264 $12,884 $368,771 $404,506
Ratios to average net assets:
Expenses, including distribution fees... 1.46% 1.57%
1.63% 2.72%(b) 2.21% 2.33%
Expenses, excluding distribution fees... 1.21% 1.33%
1.43% 2.52%(b) 1.21% 1.33%
Net investment income (loss)............ .26% (.50)%
(.04)% (.75)%(b) (.55)% (1.27)%
Portfolio turnover........................ 54% 56%
44% 0% 54% 56%
<CAPTION>
Class C
- --------------------------
July 24,
Year August 1,
1992(a)
Ended 1994(c)
Through
October Through
October 31,
31, October 31,
1993(e) 1992
1995(e) 1994(e)
---------- -----------
- ---------- -----------
<S> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 10.63 $ 10.00
$16.62 $ 16.68
- ----- -----
---------- -----------
Income from investment operations
Net investment income (loss).............. (.10) (.04)
(.08) (.06)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................ 5.43 .67
(1.06) --
- ----- -----
---------- -----------
Total from investment operations........ 5.33 .63
(1.14) (.06)
- ----- -----
---------- -----------
Less distributions
Distributions in excess of net investment
income.................................. (.02) --
-- --
Distributions from net realized gains..... -- --
(.10) --
- ----- -----
---------- -----------
Total distributions..................... (.02) --
(.10) --
- ----- -----
---------- -----------
Net asset value, end of period............ $ 15.94 $ 10.63
$15.38 $ 16.62
- ----- -----
- ----- -----
---------- -----------
---------- -----------
TOTAL RETURN(d)........................... 50.17% 6.30%
(6.82)% (.36)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $250,997 $20,050
$2,443 $ 718
Average net assets (000).................. $ 74,590 $16,025
$1,624 $ 458
Ratios to average net assets:
Expenses, including distribution fees... 2.37% 3.52%(b)
2.21% 3.00%(b)
Expenses, excluding distribution fees... 1.37% 2.52%(b)
1.21% 2.00%(b)
Net investment income (loss)............ (.83)% (1.55)%(b)
(.43)% (1.64)%(b)
Portfolio turnover........................ 44% 0%
54% 56%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Commencement of offering of Class C shares.
(d) 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.
(e) Calculated based upon weighted average shares outstanding during the
period.
- --------------------------------------------------------------------------------
12 See Notes to Financial Statements.
<PAGE>
<PAGE>
Independent Auditors' Report PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors
Prudential Pacific Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Prudential Pacific Growth Fund, Inc., as of
October 31, 1995, the related statements of operations for the year then ended
and of changes in net assets for each of the three years in the period then
ended, and the financial highlights for each of the three 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, 1995 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, 1995, 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 13, 1995
Federal Income Tax Information PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (October 31, 1995) 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, 1995, the Fund paid a long-term
capital gain distribution of $.1025 per share (Class A, Class B and Class C)
which is taxable as such.
In January 1996, 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 1995.
- --------------------------------------------------------------------------------
13
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund
Some mutual fund shareholders won't ever read this -- they don't read
annual and semi-annual reports. It's quite understandable. These annual
and semi-annual reports are prepared to comply with Federal regulations.
They are often written in language that is difficult to understand. So
when most people run into those particularly daunting sections of
these reports, they don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our report to
make it easier to understand and more pleasant to read, in hopes you'll
find it profitable to spend a few minutes familiarizing yourself with
your investment. Here's what you'll find in the report:
At A Glance
Since an investment's performance is often a shareholder's primary concern,
we present performance information in two different formats. You'll find it
first on the "At A Glance" page where we compare the Fund and the comparable
average calculated by Lipper Analytical Services, Inc., a nationally
recognized mutual fund rating agency. We report both the cumulative
total returns and the average annual total returns. The cumulative
total return is the total amount of income and appreciation the Fund
has achieved in various time periods. The average annual total return
is an annualized representation of the Fund's performance -- it generally
smoothes out returns and gives you an idea how much the Fund has earned
in an average year, for a given time period. Under the performance box,
you'll see legends that explain the performance information, whether fees
and sales charges have been included in returns, and the inception dates
for the Fund's share classes.
See the performance comparison charts at the back of the report for more
performance information. And keep in mind that past performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports on
successful -- and not-so-successful -- strategies in this section of
your report. Look for recent purchases and sales here, as well as
information about the sectors the portfolio manager favors and any
changes that are on the drawing board.
Portfolio Of Investments
This is where the report begins to look technical, but it's really just
a listing of each security held at the end of the reporting period, along
with valuations and other information. Please note that sometimes we
discuss a security in the Portfolio Manager's Report that doesn't appear
in this listing because it was sold before the close of the reporting period.
<PAGE>
Statement Of Assets And Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes) and net assets (the Fund's equity,
or holdings after the Fund pays its debts) as of the end of the reporting
period. It also shows how we calculate the net asset value per share for
each class of shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but remember that the
money or new shares are being paid or issued to you and thus is not a
realized loss. The net asset value fluctuates daily along with the
value of every security in the portfolio.
Statement Of Operations
This is the income statement, which details income (mostly interest
and dividends earned) and expenses (including what you pay us to
manage your money). You'll also see capital gains here -- both
realized and unrealized.
Statement Of Changes In Net Assets
This schedule shows how income and expenses translate into changes
in net assets, compared to last year's performance. The Fund is required
to pay out the bulk of its income to shareholders every year, and this
statement shows you how we do it -- through dividends and
distributions -- and how that affects the net assets. This statement
also shows how money from investors flowed into and out of the Fund.
Notes To Financial Statements
This is the kind of technical material that can intimidate readers, but
it does contain useful information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they also outline how
Prudential Mutual Funds prices securities. The Notes also explain who
manages and distributes the Fund's shares, and more importantly, how much
they are paid for doing so. Finally, the Notes explain how many shares are
outstanding and the number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages, but on a per
share basis. It is designed to help you understand how the Fund performed
and to compare this year's performance and expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and certifies that
the information we've presented is fair and complies with generally
accepted accounting principles.
Tax Information
This is information which we report annually about how much of your
total return is taxable. Should you have any questions, you may want
to consult a tax advisor.
Performance Comparison
These charts are included in the annual report and are required by the
Securities Exchange Commission. Performance is presented here as a
hypothetical $10,000 investment in the Fund since its inception or for
10 years (whichever is shorter). To help you put that return in context,
we are required to include the performance of an unmanaged, broad based
securities index, as well. The index does not reflect the cost of buying
the securities it contains or the cost of managing a mutual fund. Of
course, the index holdings do not mirror those of the fund -- the index
is a broadly based reference point commonly used by investors to measure
how well they are doing. A definition of the selected index is also
provided. Investors generally cannot invest directly in an index.
<PAGE>
Getting
The Most
From Your
Prudential
Mutual
Fund
When you invest through Prudential Mutual Funds, you receive financial
advice through a Prudential Securities financial advisor or
Prudential/Pruco Securities registered representative. Your
advisor or representative can provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help you match
the reward you seek with the risk you can tolerate. And risk can be
difficult to gauge --sometimes even the simplest investments bear
surprising risks. The educated investor knows that markets seldom
move in just one direction -- there are times when a market sector
or asset class will lose value or provide little in the way of total
return. Managing your own expectations is easier with help from someone
who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help you wade through
the numerous mutual funds available to find the ones that fit your own
individual investment profile and risk tolerance. While the newspapers
and popular magazines are full of advice about investing, they are aimed
at generic groups of people or representative individuals, not at you
personally. Your financial advisor or registered representative will
review your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in your current
portfolio and your risk tolerance -- not just based on the current
investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the bottom are among
the most common investor mistakes. But sometimes it's difficult to hold
on to an investment when it's losing value every month. Your financial
advisor or registered representative can answer questions when you're
confused or worried about your investment, and remind you that you're
investing for the long haul.
<PAGE>
-- Prudential Pacific Growth Fund, Inc. - MSCI Pacific Index
The Prudential Pacific Growth Fund Fund, Inc. and the
MSCI Pacific Index: Comparing a $10,000 Investment.
Class A
(GRAPH)
Class B
(GRAPH)
Class C
(GRAPH)
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so an investor's shares, when redeemed,
will be worth more or less than their original cost. The charts on the
right are designed to give you an idea how much the Fund's returns can
fluctuate from year to year by measuring the best and worst calendar
years in terms of total annual return since inception of each share class.
These graphs are furnished to you in accordance with SEC regulations.
They compare a $10,000 investment in the Prudential Pacific Growth Fund
(Class A, Class B and Class C) with a similar investment in the Morgan
Stanley Capital International Pacific Index by portraying the initial
account values at the commencement of operations of each class, and
subsequent account values at the end of this reporting period (October
31), as measured on a quarterly basis, beginning in 1992 for Class A
shares and Class B shares and in 1994 for Class C shares. For purposes
of the graphs, and unless otherwise indicated, in the accompanying tables
it has been assumed (a) that the maximum applicable front-end 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 and Class C shares, assuming full
redemption on October 31, 1995; (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, beginning approximately seven years after purchase.
This conversion feature is not reflected in the graph.
The Morgan Stanley Capital International 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
in the Pacific Index may differ substantially from the securities in the
Fund. The Pacific Index is not the only index that may be used to
characterize performance of stock funds and other indexes may portray
different comparative performance.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
Internet Address:
http:\\www.prudential.com
(LOGO)
Directors
Stephen C. Eyre
Delayne D. Gold
Don G. Hoff
Harry A. Jacobs, Jr.
Sidney R. Knafel
Robert E. LaBlanc
Thomas A. Owens, Jr.
Richard A. Redeker
Clay T. Whitehead
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Eugene S. Stark, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Ellyn C. Acker, 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 LLP
919 Third Avenue
New York, NY 10022
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
743941106 MF157E
743941205 Cat. #444566S
743941304
