PRUDENTIAL PACIFIC GROWTH FUND INC
497, 1996-05-07
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                      Prudential Pacific Growth Fund, Inc.
                        Supplement dated May 7, 1996 to
                        Prospectus dated January 2, 1996
 
How the Fund Invests--Investment Objective and Policies
 
    Under normal conditions, the Fund may also invest up to 35% of its total
assets in debt obligations, including obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or by foreign governments or
supranational organizations, obligations issued by banks and corporations and
other debt obligations. These obligations may be denominated in U.S. dollars or
in foreign currencies. The issuers of such securities may or may not be
domiciled in the Pacific Basin region. Supranational organizations include
entities such as the World Bank, which was chartered to finance development
projects in developing member countries, and the Asian Development Bank, which
is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations in the Asian and
Pacific regions.
 
    The Fund will purchase ``investment grade'' debt obligations. Investment
grade debt obligations are bonds and other obligations rated within the four
highest quality grades as determined by Moody's Investors Service (Moody's)
(currently Aaa, Aa, A and Baa for bonds, MIG 1, MIG 2, MIG 3 and MIG 4 for notes
and P-1 for commercial paper) or Standard & Poor's Ratings Group (S&P)(currently
AAA, AA, A and BBB for bonds, SP-1 and SP-2 for notes and A-1 for commercial
paper), or by another nationally recognized statistical rating organization
(NRSRO) or, if unrated securities of equivalent quality. The Fund is permitted
to invest up to 25% of its net assets in lower quality foreign convertible debt
securities (i.e., high yield or high risk securities, commonly referred to as
``junk'' bonds) provided that such securities have a minimum rating of at least
B as determined by one NRSRO or, if unrated, are deemed by the investment
adviser to be of comparable quality. Securities rated Baa by Moody's or BBB by
S&P, although considered to be investment grade, are subject to changes in
economic conditions or other circumstances which are more likely to lead to a
weakened capacity to make interest and principal payments than is the case with
higher grade bonds. Lower rated securities are subject to a greater risk of loss
of principal and interest.
 
    Convertible Securities
 
    A convertible security is a bond or preferred stock which may be converted
at a stated price within a specified period of time into a certain quantity of
the common stock of the same or a different issuer. Convertible securities are
senior to common stocks in a corporation's capital structure, but are usually
subordinated to similar nonconvertible securities. While providing a fixed
income stream (generally higher in yield than the income derivable from a common
stock but lower than that afforded by a similar nonconvertible security), a
convertible security also affords an investor the opportunity, through its
conversion feature, to participate in the capital appreciation dependent upon a
market price advance in the convertible security's underlying common stock. The
Fund may invest up to 25% of its net assets in foreign convertible securities as
described above. See ``Risk Factors Relating to Investing in Foreign Debt
Securities Rated Below Investment Grade'' below. 

    In general the market value of a convertible security is at least the 
higher of its ``investment value'' (i.e., its value as a fixed-income security)
or its ``conversion value'' (i.e., its value upon conversion into its underlying
common stock). As a fixed-income security, a convertible security tends to 
increase in market value when interest rates decline and tends to decrease in
value when interest rates rise. However, the price of a convertible security 
is also influenced by the market value of the security's underlying stock. The
price of a convertible security tends to increase as the market value of the 
underlying stock rises, whereas it tends to decrease as the market value of 
the underlying stock declines. While no securities investment is without some
risk, investments in convertible securities generally entail less risk than 
investments in the common stock of the same issuer.

    Illiquid Securities

    The Fund may hold up to 10% of its net assets in illiquid securities
including repurchase agreements which have a maturity of longer than seven days,
in securities with legal or contractual restrictions on resale (restricted
securities) and securities that are not readily marketable in securities markets
either within or outside of the United States.

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    Risk Factors Relating to Investing in Foreign Debt Securities Rated Below
    Investment Grade
 
    Fixed-income securities are subject to the risk of an issuer's inability to
meet principal and interest payments on the obligations (credit risk) and may
also be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer and general
market liquidity (market risk). Lower rated or unrated (i.e., high yield or high
risk) securities, commonly referred to as ``junk'' bonds, are more likely to
react to developments affecting market and credit risk than are more highly
rated securities, which react primarily to movements in the general level of
interest rates. The investment adviser considers both credit risk and market
risk in making investment decisions for the Fund. Investors should carefully
consider the relative risks of investing in high yield securities and understand
that such securities are not generally meant for short-term trading.
 
    Under adverse economic conditions, there is a risk that highly leveraged
issuers may be unable to service their debt obligations or to repay their
obligations upon maturity. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. Under adverse
market or economic conditions, the secondary market for high yield securities
could contract further, independent of any specific adverse changes in the
condition of a particular issuer. As a result, the investment adviser would find
it more difficult to sell these securities or may be able to sell the securities
only at prices lower than if such securities were widely traded. Prices realized
upon the sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in calculating the Fund's net
asset value.
 
    Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting in
a decline in the overall credit quality of the debt portion of the Fund's
portfolio and increasing the exposure of the Fund to the risks of high yield
securities.
 
General Information--Description of Common Stock
 
    Class Z shares are offered exclusively for sale to the PSI Cash Balance
Pension Plan and the PSI 401(k) Plan, each an employee benefit plan sponsored by
Prudential Securities, the Fund's Distributor.
 
MF157A-1

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                      Prudential Pacific Growth Fund, Inc.
                        Supplement dated May 7, 1996 to
           Statement of Additional Information dated January 2, 1996
 
INVESTMENT OBJECTIVE AND POLICIES
 
    U.S. Government Securities
 
    U.S. Treasury Securities. The Fund is permitted to invest in U.S. Treasury
securities, including bills, notes, bonds and other debt securities issued by
the U.S. Treasury. These instruments are direct obligations of the U.S.
Government and, as such, are backed by the "full faith and credit" of the United
States. They differ primarily in their interest rates, the lengths of their
maturities and the dates of their issuances.
 
    Securities Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities. The Fund may invest in securities issued by agencies of the
U.S. Government or instrumentalities of the U.S. Government. These obligations,
including those which are guaranteed by Federal Agencies or instrumentalities,
may or may not be backed by the full faith and credit of the United States.
Obligations of the Government National Mortgage Association (GNMA), the Farmers
Home Administration and the Small Business Administration are backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, the Fund must look principally
to the agency issuing or guaranteeing the obligation for ultimate repayment and
may not be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments. Securities in which the Fund may
invest which are not backed by the full faith and credit of the United States
include obligations such as those issued by the Federal Home Loan Bank, the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage
Association, the Student Loan Marketing Association, Resolution Funding
Corporation and the Tennessee Valley Authority, each of which has the right to
borrow from the U.S. Treasury to meet its obligations, and obligations of the
Farm Credit System, the obligations of which may be satisfied only by the
individual credit of the issuing agency. FHLMC investments may include
collateralized mortgage obligations.
 
    Obligations issued or guaranteed as to principal and interest by the United
States Government may be acquired by the Fund in the form of custodial receipts
that evidence ownership of future interest payments, principal payments or both
on certain United States treasury notes or bonds. Such notes and bonds are held
in custody by a bank on behalf of the owners. These custodial receipts are
commonly referred to as Treasury strips.
 
    Mortgage-Related Securities Issued by U.S. Government Agencies and
Instrumentalities. The Fund may invest in mortgage-backed securities, including
those which represent undivided ownership interest in pools of mortgages. The
U.S. Government or the issuing agency or instrumentality guarantees the payment
of interest on and principal of these securities. However, the guarantees do not
extend to the yield or value of the securities nor do the guarantees extend to
the yield or value of the Fund's shares. These securities are in most cases
pass-through instruments, through which the holders receive a share of all
interest and principal payments from the mortgagees underlying the securities,
net of certain fees. Because the prepayment characteristics of the underlying
mortgages vary, it is not possible to predict accurately the average life of a
particular issue of pass-through certificates. Mortgage-backed securities are
often subject to more rapid repayment that their maturity date would indicate as
a result of the pass-through of prepayments of principal on the underlying
mortgage obligations. During period of declining interest rate, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
The Fund's ability to invest in high-yielding mortgage-backed securities will be
adversely affected to the extent that prepayments of mortgages must be
reinvested in securities which have lower yields than the prepaid mortgages.
Moreover, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses.
 
    The Fund may invest in both Adjustable Rate Mortgage Securities (ARMs),
which are pass-through mortgage securities collateralized by adjustable rate
mortgages, and Fixed-Rate Mortgage Securities (FRMs), which are collateralized
by fixed-rate mortgages.
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    The values of U.S. Government securities (like those of other fixed-income
securities generally) will change as interest rates fluctuate. During period of
falling U.S. interest rate, the values of U.S. Government securities generally
rise and, conversely, during periods of rising interest rates, the values of
such securities generally decline. The magnitude of these fluctuations will
generally be greater for securities with longer-term maturities.
 
Foreign Debt Securities
 
    The Fund is permitted to invest in foreign corporate and government
securities. "Foreign Government securities" include debt securities issued or
guaranteed, as to payment of principal and interest, by governments,
quasi-governmental entities, governmental agencies, supranational entities and
other governmental entities (collectively, Government Entities) of foreign
countries denominated in the currency of another such country).
 
    A ``supranational entity'' is an entity constituted by the national
governments of several countries to promote economic development. Examples of
such supranational entities include, among others, the World Bank (International
Bank for Reconstruction and Development), the European Investment Bank and the
Asian Development Bank. Debt securities of quasi-government issues include,
among others, the Province of Ontario and the City of Stockholm. Foreign
governments securities shall also include debt securities of Government Entities
denominated in European Currency Units. A European Currency Unit represents
specified amounts of the currencies of certain of the member states of the
European Community. Foreign government securities shall also include
mortgage-backed securities issued by foreign Government Entities including
quasi-governmental entities.
 
MF157B-1



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