PRUDENTIAL PACIFIC GROWTH FUND INC, 485BPOS, 1999-02-25

PRUDENTIAL PACIFIC GROWTH FUND INC
485BPOS, 1999-02-25

Previous: STEWART ENTERPRISES INC, DEF 14A, 1999-02-25

Next: NATIONWIDE VA SEPARATE ACCOUNT-B, NSAR-U, 1999-02-25

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1999

REGISTRATION NOS. 33-42391
811-6391
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 /X/

PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 12 /X/

AND/OR

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 14 /X/

(Check appropriate box or boxes)
------------------------------

PRUDENTIAL PACIFIC GROWTH FUND, INC.
(Exact name of registrant as specified in charter)

GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Address of Principal Executive Offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 367-3028

ROBERT C. ROSSELOT, ESQ.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Name and Address of Agent for Service)

Approximate date of proposed public offering:
As soon as practicable after the effective
date of the Registration Statement.

<TABLE>
<S> <C> <C>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new effective date for a previously filed
post-effective amendment
</TABLE>

TITLE OF SECURITIES BEING REGISTERED.....SHARES OF COMMON STOCK, $.001 PAR VALUE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FUND TYPE:
- -------------------------------------

Global stock

INVESTMENT OBJECTIVE:
- -------------------------------------

Long-term growth of capital

PRUDENTIAL
PACIFIC
GROWTH
FUND, INC.

[LOGO]

- ---------------------------------------------------------------

PROSPECTUS: FEBRUARY 25, 1999

As with all mutual funds, the
Securities and Exchange
Commission has not approved or
disapproved the Fund's shares,
nor has the SEC determined that
this prospectus is complete or
accurate. It is a criminal offense
to state otherwise. [LOGO]

<PAGE>
TABLE OF CONTENTS
- -------------------------------------

<TABLE>
<S> <C>
1 RISK/RETURN SUMMARY
1 Investment Objective and Principal Strategies
1 Principal Risks
2 Evaluating Performance
4 Fees and Expenses

6 HOW THE FUND INVESTS
6 Investment Objective and Policies
7 Other Investments
8 Derivative Strategies
9 Additional Strategies
10 Investment Risks

13 HOW THE FUND IS MANAGED
13 Manager
13 Investment Adviser
13 Portfolio Managers
14 Distributor
14 Year 2000 Readiness Disclosure

15 FUND DISTRIBUTIONS AND TAX ISSUES
15 Distributions
16 Tax Issues
17 If You Sell or Exchange Your Shares

19 HOW TO BUY, SELL AND EXCHANGE SHARES OF THE FUND
19 How to Buy Shares
27 How to Sell Your Shares
31 How to Exchange Your Shares

33 FINANCIAL HIGHLIGHTS
33 Class A Shares
34 Class B Shares
35 Class C Shares
36 Class Z Shares

37 THE PRUDENTIAL MUTUAL FUND FAMILY

FOR MORE INFORMATION (Back Cover)
</TABLE>

- -------------------------------------------------------------------
PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- -------------------------------------

This section highlights key information about the PRUDENTIAL PACIFIC GROWTH
FUND, INC., which we refer to as "the Fund." Additional information follows this
summary.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

Our investment objective is LONG-TERM GROWTH OF CAPITAL, which means we look for
investments that we think will increase in value over a period of years. We
normally invest at least 65% of the Fund's total assets in equity-related
securities of companies doing business in or domiciled in the Pacific Basin
region, including Japan, Australia, Hong Kong, Singapore, South Korea, Malaysia,
Thailand, Indonesia, the Philippines and New Zealand. There is no limit on the
percentage of the Fund's assets that may be invested in any single country.

To achieve our objective of long-term growth of capital, we look for
securities that are undervalued. While we make every effort to achieve our
objective, we can't guarantee success.

PRINCIPAL RISKS

Although we try to invest wisely, all investments involve risk. Since the Fund
invests primarily in equity-related securities, such as common stock, there is
the risk that the value of a particular security we own could go down. Also,
because the Fund invests primarily in a single region of the world, its
investments are geographically concentrated. This can result in more pronounced
risks based upon economic conditions that impact the Pacific Basin region more
or less than other global regions.

In addition to an individual security losing value, the value of the equity
markets as a whole could go down. Investing in foreign securities presents
additional risks, since foreign political, economic and legal systems may be
less stable than in the U.S. and foreign stock markets could decline. The
changing value of foreign currencies could also affect both the value of the
assets we hold and our performance.

- -------------------------------------------------------------------
WE'RE GROWTH INVESTORS
We look primarily for stock that we believe is undervalued and/or will grow
faster--and earn better profits--than other companies. We also look for
companies with strong competitive advantages, effective research, product
development, strong management or financial strength.
- -------------------------------------------------------------------

- --------------------------------------------------------------------------------
1
<PAGE>
RISK/RETURN SUMMARY

- ------------------------------------------------

During the last two years, economic conditions in East and Southeast Asia
have weakened dramatically and several countries are experiencing recessions.
These conditions have resulted in declines in share prices and market averages,
as well as lower values of foreign currencies compared to the U.S. dollar. Thus,
the Fund's net asset value has been adversely affected by declines of both share
price and currency values. Although experience suggests that countries and
markets will emerge from these conditions at different times and different
rates, we cannot guarantee that we will successfully identify those countries
and markets that will lead the economic recovery in the region.

There is also risk involved in the investment strategies we may use. Some of
our strategies require us to try to predict whether the price or value of an
underlying investment will go up or down over a certain period of time. There is
always the risk that investments will not perform as we thought they would. Like
any mutual fund, an investment in the Fund could lose value, and you could lose
money. The Fund does not represent a complete investment program.

An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

EVALUATING PERFORMANCE

A number of factors--including risk--affect how the Fund performs. The following
bar chart and table show the Fund's performance for each calendar year of
operation. They demonstrate the risk of investing in the Fund and how returns
can change. The table also compares the Fund's performance to the performance of
two Pacific region securities market indices. Past performance does not mean
that the Fund will achieve similar results in the future.

- -------------------------------------------------------------------
2 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY

- ------------------------------------------------

ANNUAL RETURNS(1) (CLASS A SHARES)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1993 66.55%
1994 -8.79%
1995 5.36%
1996 2.40%
1997 -32.53%
1998 -0.89%
BEST QUARTER: 14.85% (1st quarter of 1993)
WORST QUARTER: -23.97% (4th quarter of 1997)
</TABLE>

1 THESE ANNUAL RETURNS DO NOT INCLUDE SALES CHARGES. IF THE SALES CHARGES WERE
INCLUDED, THE ANNUAL RETURNS WOULD BE LOWER THAN THOSE SHOWN.

AVERAGE ANNUAL RETURNS(1) AS OF 12-31-98

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1 YR 5 YR SINCE INCEPTION
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares (.89)% (34.19)% 2.15% (since 7-24-92)
Class B shares (1.47)% (36.35)% 1.43% (since 7-24-92)
Class C shares (1.47)% N/A (9.41)% (since 8-1-94)
Class Z shares (.21)% N/A (12.95)% (since 3-1-96)
MSCI Asia Pacific(2) 2.03 % (4.89)% N/A
Lipper Average(3) (5.97)% (6.96)% N/A
</TABLE>

1 THE FUND'S RETURNS ARE AFTER DEDUCTION OF SALES CHARGES AND EXPENSES.
2 THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) AC ASIA PACIFIC INDEX IS A
WEIGHTED, UNMANAGED INDEX COMPRISED OF APPROXIMATELY 950 SECURITIES LISTED
ON THE STOCK EXCHANGES OF AUSTRALASIA, HONG KONG, JAPAN, MALAYSIA,
SINGAPORE, INDONESIA, SRI LANKA, CHINA (FREE), PAKISTAN, TAIWAN, INDIA,
KOREA, THE PHILIPPINES AND THAILAND. THESE RETURNS DO NOT INCLUDE THE
EFFECT OF ANY SALES CHARGES OR OPERATING EXPENSES OF A MUTUAL FUND. THESE
RETURNS WOULD BE LOWER IF THEY INCLUDED THE EFFECT OF SALES CHARGES AND
OPERATING EXPENSES. MSCI PACIFIC INDEX RETURNS SINCE THE INCEPTION OF EACH
CLASS ARE 2.44% FOR CLASS A, 2.44% FOR CLASS B, (8.52)% FOR CLASS C AND
(12.07)% FOR CLASS Z SHARES.
3 THE LIPPER AVERAGE IS BASED ON THE AVERAGE RETURN OF ALL MUTUAL FUNDS IN
THE LIPPER PACIFIC REGION FUNDS CATEGORY AND DOES NOT INCLUDE THE EFFECT OF
ANY SALES CHARGES. THESE RETURNS WOULD BE LOWER IF THEY INCLUDED THE EFFECT
OF SALES CHARGES. LIPPER RETURNS SINCE THE INCEPTION OF EACH CLASS ARE
3.14% FOR CLASS A, 3.14% FOR CLASS B, (8.71)% FOR CLASS C AND (12.74)% FOR
CLASS Z SHARES. SOURCE: LIPPER, INC.

- --------------------------------------------------------------------------------

3
<PAGE>
RISK/RETURN SUMMARY

- ------------------------------------------------

FEES AND EXPENSES

These tables show the sales charges, fees and expenses for each share Class of
the Fund--Class A, B, C and Z. Each share class has different sales
charges--known as loads--and expenses, but represents an investment in the same
fund. Class Z shares are available only to a limited group of investors. For
more information about which share class may be right for you, see "How to Buy,
Sell and Exchange Shares of the Fund."

SHAREHOLDER FEES(1) (PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a
percentage of offering
price) 5% None 1% None
Maximum deferred sales
charge (load) (as a
percentage of the lower of
original purchase price or
sale proceeds) None 5%(2) 1%(3) None
Maximum sales charge (load)
imposed on reinvested
dividends and other
distributions None None None None
Redemption fees None None None None
Exchange fee None None None None
</TABLE>

ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees .75% .75% .75% .75%
+ Distribution and service
(12b-1) fees .30% 1.00% 1.00% None
+ Other expenses .70% .70% .70% .70%
= TOTAL ANNUAL FUND
OPERATING EXPENSES 1.75% 2.45% 2.45% 1.45%
- Waivers and/or
reimbursements(4) .05% -- -- --
= NET ANNUAL FUND OPERATING
EXPENSES 1.70% 2.45% 2.45% 1.45%
</TABLE>

1 YOUR BROKER MAY CHARGE YOU A SEPARATE OR ADDITIONAL FEE FOR PURCHASES AND
SALES OF SHARES.
2 THE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B SHARES DECREASES BY
1% ANNUALLY TO 1% IN THE FIFTH AND SIXTH YEARS AND 0% IN THE SEVENTH YEAR.
CLASS B SHARES CONVERT TO CLASS A SHARES APPROXIMATELY SEVEN YEARS AFTER
PURCHASE.
3 THE CDSC FOR CLASS C SHARES IS 1% FOR SHARES REDEEMED WITHIN 18 MONTHS OF
PURCHASE.
4 FOR THE FISCAL YEAR ENDING OCTOBER 31, 1999, THE DISTRIBUTOR HAS
CONTRACTUALLY AGREED TO REDUCE ITS DISTRIBUTION AND SERVICE FEES FOR CLASS
A SHARES TO .25 OF 1% OF THE AVERAGE DAILY NET ASSETS OF THE CLASS A
SHARES.

- -------------------------------------------------------------------

4 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
RISK/RETURN SUMMARY
- ------------------------------------------------

EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:

<TABLE>
<CAPTION>
- ------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares(1) $664 $1,019 $1,397 $2,455
Class B shares $748 $1,064 $1,406 $2,533
Class C shares $446 $856 $1,392 $2,858
Class Z shares $148 $459 $792 $1,735
</TABLE>

You would pay the following expenses on the same investment if you did not sell
your shares:

<TABLE>
<CAPTION>
- ------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares(1) $664 $1,019 $1,397 $2,455
Class B shares $248 $764 $1,306 $2,533
Class C shares $346 $856 $1,392 $2,858
Class Z shares $148 $459 $792 $1,735
</TABLE>

1 THE EXAMPLE REFLECTS THE DISTRIBUTOR'S AGREEMENT TO REDUCE ITS DISTRIBUTION
AND SERVICE FEES FOR CLASS A SHARES FOR THE FISCAL YEAR ENDING OCTOBER 31,
1999. THE DISTRIBUTOR HAS NOT YET DETERMINED WHETHER TO REDUCE ITS FEES FOR
SUBSEQUENT FISCAL YEARS.

- --------------------------------------------------------------------------------

5
<PAGE>
HOW THE FUND INVESTS
- -------------------------------------

INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is LONG-TERM GROWTH OF CAPITAL. This means we
look to build an investment portfolio which, though potentially volatile in the
short term, has the potential for significant capital appreciation over the
longer term. While we make every effort to achieve our objective, we can't
guarantee success.

In pursuing our objective, we normally invest primarily (at least 65% of the
Fund's total assets) in EQUITY-RELATED SECURITIES OF COMPANIES DOING BUSINESS
IN, OR DOMICILED IN, THE PACIFIC BASIN. Companies doing business in the Pacific
Basin region include companies that derive a significant portion of their
revenues from sales made in the Pacific Basin region or have principal executive
offices or significant properties located in that region. The Pacific Basin
region includes, but is not limited to, Japan, Australia, Hong Kong, Singapore,
South Korea, Malaysia, Thailand, Indonesia, the Philippines and New Zealand. In
addition to these countries, the Fund may invest directly in Taiwan, India,
Pakistan, Vietnam and the People's Republic of China if and when each of their
stock markets becomes open to direct foreign investment.

In addition to common stock, equity-related securities include, but are not
limited to, preferred stock, rights that can be exercised to obtain stock,
warrants and debt securities or preferred stock convertible or exchangeable for
common or preferred stock and interests in master limited partnerships. The Fund
may also invest in American Depositary Receipts (ADRs). ADRs represent an equity
investment in a foreign company or some other foreign issuer that are usually
issued by a U.S. bank or trust company and are valued in U.S. dollars. We
consider ADRs to be equity-related securities. The Fund may invest up to 35% of
its total assets in equity-related securities of non-Pacific Basin companies and
fixed-income obligations.

In selecting securities for the Fund, we use a bottom-up approach based on a
company's growth potential, and we focus the Fund's portfolio on those areas
within the Pacific Basin with the most attractive near-term

- -------------------------------------------------------------------

OUR GROWTH STRATEGY
We look for companies that are likely to produce strong growth in earnings and/
or sales, and whose stock prices do not reflect this future growth. These
companies usually have a unique market niche, a strong new product profile or
superior management. We analyze companies using both fundamental and
quantitative techniques.
- -------------------------------------------------------------------

- -------------------------------------------------------------------
6 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW THE FUND INVESTS

- ------------------------------------------------

prospects. Generally, we consider selling a security when the security no longer
displays the conditions for growth, is no longer undervalued, or falls short of
expectations.

For more information, see "Investment Risks" and the Statement of Additional
Information, "Description of the Fund, its Investments and Risks." The Statement
of Additional Information--which we refer to as the SAI--contains additional
information about the Fund. To obtain a copy, see the back cover page of this
prospectus.

The Fund's investment objective is a fundamental policy that cannot be
changed without shareholder approval. The Fund's Board of Directors can change
investment policies that are not fundamental.

OTHER INVESTMENTS

In addition to the principal strategies discussed above, we may also use the
following strategies to increase the Fund's returns or protect its assets if
market conditions warrant.

MONEY MARKET INSTRUMENTS, BONDS AND OTHER FIXED-INCOME OBLIGATIONS

Under normal conditions, the Fund may invest up to 35% of total assets in MONEY
MARKET INSTRUMENTS, BONDS and other fixed-income obligations. Money market
instruments and bonds are known as fixed-income securities because issuers of
these securities are obligated to pay interest and principal. Typically,
fixed-income securities don't increase or decrease in value in relation to an
issuer's financial condition or business prospects as stock may, although their
value does fluctuate inversely to changes in interest rates generally.
Corporations and governments issue money market instruments and bonds to raise
money. The Fund may buy obligations of companies, foreign countries or the U.S.
government. Money market instruments include the commercial paper and short-term
obligations of foreign and domestic corporations, banks and governments and
their agencies.

The Fund will purchase only money market instruments that have received one
of the two highest short-term debt ratings from Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Rating Group ("S&P"), or another nationally
recognized statistical rating organization (NRSRO). For bonds and other
long-term fixed-income obligations, we may invest in "investment-grade"
obligations. An obligation is investment-grade,

- --------------------------------------------------------------------------------
7
<PAGE>
HOW THE FUND INVESTS

- ------------------------------------------------

if it has received one of the top four long-term debt ratings from a NRSRO.
Obligations rated in the fourth category (Baa for Moody's or BBB for S&P) have
speculative characteristics and are subject to a greater risk of loss of
principal and interest. We may also invest in obligations that are not rated,
but which we believe to be of comparable quality.

After a security has been purchased by the Fund, it may be assigned a lower
rating or cease to be rated. This does not mean that the Fund must sell the
security, but the investment adviser will consider such an event in deciding
whether the Fund should continue to hold the security in its portfolio.

The Fund may also invest up to 25% of its net assets in foreign convertible
debt obligations having a minimum rating of at least "B" by a NRSRO. These
lower-rated obligations are referred to as high-yield or "junk" bonds, and their
value is more likely to react to developments affecting market or credit risk
than higher-rated debt obligations, which react primarily to movements in the
general level of interest rates. In particular, "junk" bond investments may
increase or decrease in value due to an issuer's financial condition.

For more information about bonds and bond ratings, see the SAI, "Appendix
I--Description of Security Ratings."

TEMPORARY DEFENSIVE INVESTMENTS

In response to adverse market, economic or political conditions, we may
temporarily invest up to 100% of the Fund's assets in money market instruments.
Investing heavily in these securities limits our ability to achieve capital
appreciation, but can help to preserve the Fund's assets when the equity markets
are unstable.

REPURCHASE AGREEMENTS

The Fund may also use REPURCHASE AGREEMENTS, where a party agrees to sell a
security to the Fund and then repurchase it at an agreed-upon price at a stated
time. This creates a fixed return for the Fund.

DERIVATIVE STRATEGIES

We may use alternative investment strategies--including DERIVATIVES--to try to
improve the Fund's returns or protect its assets, although we cannot guarantee
that these strategies will work, that the instruments necessary to

- -------------------------------------------------------------------
8 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW THE FUND INVESTS

- ------------------------------------------------

implement these strategies will be available or that the Fund will not lose
money. Derivatives--such as futures, options, forward foreign currency exchange
contracts and options on futures--involve costs and can be volatile. With
derivatives, the investment adviser tries to predict whether the underlying
investment--a security, market index, currency, interest rate or some other
benchmark--will go up or down at some future date. We may use derivatives to try
to reduce risk or to increase return consistent with the Fund's overall
investment objective. The investment adviser will consider other factors (such
as cost) in deciding whether to employ any particular strategy or use any
particular instrument. Any derivatives we may use may not match the Fund's
underlying holdings. For more information about these strategies, see the SAI,
"Description of the Fund, its Investments and Risks--Hedging and Return
Enhancement Strategies."

ADDITIONAL STRATEGIES

The Fund follows certain policies when it BORROWS MONEY (the Fund can borrow up
to 20% of the value of its total assets); LENDS ITS SECURITIES to others (the
Fund can lend up to 30% of the value of its total assets, including collateral
received in the transaction); and HOLDS ILLIQUID SECURITIES (the Fund may hold
up to 15% of its net assets in illiquid securities, including securities with
legal or contractual restrictions, those without a readily available market and
repurchase agreements with maturities longer than seven days). The Fund is
subject to certain investment restrictions that are fundamental policies, which
means they cannot be changed without shareholder approval. For more information
about these restrictions, see the SAI.

- --------------------------------------------------------------------------------
9
<PAGE>
HOW THE FUND INVESTS
- ------------------------------------------------

INVESTMENT RISKS

As noted, all investments involve risk, and investing in the Fund is no
exception. This chart outlines the key risks and potential rewards of the
principal strategies of the Fund and certain other investments the Fund may
make. See, too, "Description of the Fund, its Investments and Risks" in the SAI.

INVESTMENT TYPE

- -------------------------------------------------------------------
10 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW THE FUND INVESTS
- ------------------------------------------------

INVESTMENT TYPE (CONT'D)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
COMMON STOCK AND OTHER EQUITY-RELATED -- Individual stocks could lose value -- Historically, stocks have
SECURITIES -- The equity markets could go down, outperformed other investments over
resulting in a decline in value of the long term
FOR U.S. COMPANIES, UP TO 35%, USUALLY the Fund's investments -- Generally, economic growth means
LESS -- Companies that pay dividends may not higher corporate profits, which
do so if they don't have profits or leads to an increase in stock
FOR FOREIGN COMPANIES, AT LEAST 65%; adequate cash flow prices, known as capital
UP TO 100% -- Changes in economic or political appreciation
conditions, both domestic and -- May be a source of dividend income
international, resulting in a
decline in value of the Fund's
investments
- ----------------------------------------------------------------------------------------------------------------------------
FIXED-INCOME OBLIGATIONS -- The Fund's holdings, share price, -- Bonds have generally outperformed
yield and total return may fluctuate money market instruments over the
UP TO 35% in response to bond market movements long term with less risk than stocks
-- Credit risk--the default of an issuer -- Most bonds will rise in value when
would leave the Fund with unpaid interest rates fall
interest or principal. The lower a -- Regular interest income
bond's quality, the higher its -- Investment grade bonds have a lower
potential volatility risk of default
-- Market risk--the risk that the market -- Generally more secure than stock
value of an investment may move up since companies must pay their debts
or down, sometimes rapidly or before paying stockholders
unpredictably. Market risk may
affect an industry, a sector or the
market as a whole
-- Interest rate risk--the value of most
bonds will fall when interest rates
rise; the longer a bond's maturity
and the lower its credit quality,
the more its value typically falls.
It can lead to price volatility
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
11
<PAGE>
HOW THE FUND INVESTS
- ------------------------------------------------

INVESTMENT TYPE (CONT'D)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
% OF FUND'S TOTAL ASSETS RISKS POTENTIAL REWARDS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
DERIVATIVES -- Derivatives such as futures, options -- The Fund could make money and protect
and foreign currency forward against losses if the investment
PERCENTAGE VARIES contracts may not fully offset the analysis proves correct
underlying positions and this could -- Derivatives that involve leverage
result in losses to the Fund that could generate substantial gains at
would not have otherwise occurred* low cost
-- Derivatives used for risk management -- One way to manage the Fund's
may not have the intended effects risk/return balance is by locking in
and may result in losses or missed the value of an investment ahead of
opportunities time
-- The counterparty to a derivatives
contract could default
-- Derivatives that involve leverage
could magnify losses
-- Certain types of derivatives involve
costs that can reduce returns
- ----------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES -- May be difficult to value precisely -- May offer a more attractive yield or
-- May be difficult to sell at the time potential for growth than more
UP TO 15% OF NET ASSETS or price desired widely traded securities
- ----------------------------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS -- Limits potential for capital -- May preserve the Fund's assets
appreciation
UP TO 100% ON A TEMPORARY BASIS -- See Credit risk and Market risk
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* AN OPTION IS THE RIGHT TO BUY OR SELL SECURITIES IN EXCHANGE FOR A PREMIUM.
A FUTURES CONTRACT IS AN AGREEMENT TO BUY OR SELL A SET QUANTITY OF AN
UNDERLYING PRODUCT AT A FUTURE DATE, OR TO MAKE OR RECEIVE A CASH PAYMENT
BASED ON THE VALUE OF A SECURITIES INDEX. A FOREIGN CURRENCY FORWARD
CONTRACT IS AN OBLIGATION TO BUY OR SELL A GIVEN CURRENCY ON A FUTURE DATE
AND AT A SET PRICE.

- -------------------------------------------------------------------

12 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW THE FUND IS MANAGED
- -------------------------------------

MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NJ 07102-4077

Under a management agreement with the Fund, PIFM manages the Fund's
investment operations and administers its business affairs. For the fiscal year
ended October 31, 1998, the Fund paid PIFM management fees of .75% of the Fund's
average net assets.

As of December 31, 1998, PIFM served as the Manager to all 46 of the
Prudential mutual funds, and as Manager or administrator to 22 closed-end
investment companies, with aggregate assets of approximately $70.5 billion.

INVESTMENT ADVISER

The Prudential Investment Corporation, called Prudential Investments, is the
Fund's investment adviser. Its address is Prudential Plaza, 751 Broad Street,
Newark, NJ 07102. PIFM has responsibility for all investment advisory services,
supervises Prudential Investments and reimburses Prudential Investments for its
reasonable costs and expenses.

PORTFOLIO MANAGERS

The Fund is co-managed by STEPHEN F. AUTH, CFA; DAVID C. DESCALZI and TORU
KOMATSU, CMA.

STEVE AUTH is a Senior Managing Director of Prudential Investments and has
managed the Fund since October 1997. Steve has been employed by Prudential
Investments as a portfolio manager since 1985. He earned a B.A. from Princeton
University and an M.B.A. from Harvard University. He was awarded the Chartered
Financial Analyst (CFA) designation.

DAVID DESCALZI is a Managing Director of Prudential Investments and joined
Prudential Investments' global equity investment team in 1994. David has held a
number of positions with Prudential since 1978. He has co-managed the Fund since
October 1997. David earned an undergraduate degree from St. Peter's College and
an M.B.A. in Finance from New York University.

TORU KOMATSU is also a Managing Director of Prudential Investments and has
co-managed the Fund since October 1997. He has been with Prudential since 1991.
Toru earned a B.A. from Tokyo University of Foreign Studies. He was awarded the
Chartered Member of Analyst (CMA) designation.

- --------------------------------------------------------------------------------
13
<PAGE>
HOW THE FUND IS MANAGED
- ------------------------------------------------

DISTRIBUTOR

Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. The Fund has Distribution
and Service Plans under Rule 12b-1 of the Investment Company Act. Under the
Plans and the Distribution Agreement, PIMS pays the expenses of distributing the
Fund's Class A, B, C and Z shares and provides certain shareholder support
services. The Fund pays distribution and other fees to PIMS as compensation for
its services for each class of shares other than Class Z. These fees--known as
12b-1 fees--are shown in the "Fees and Expenses" table.

YEAR 2000 READINESS DISCLOSURE

The services provided to the Fund and the shareholders by the Manager, the
Distributor, the Transfer Agent and the Custodian depend on the smooth
functioning of their computer systems and those of outside service providers.
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because of the way dates are encoded and calculated. Such
event could have a negative impact on handling securities trades, payments of
interest and dividends, pricing and account services. The Manager, the
Distributor, the Transfer Agent and the Custodian have advised the Fund that
they have been actively working on necessary changes to their computer systems
to prepare for the year 2000. The Fund and its Board receive and have received
since early 1998 satisfactory quarterly reports from the principal service
providers as to their preparations for year 2000 readiness, although there can
be no assurance that the service providers (or other securities market
participants) will successfully complete the necessary changes in a timely
manner or that there will be no adverse impact on the Fund. Moreover, the Fund
at this time has not considered retaining alternative service providers or
directly undertaken efforts to achieve year 2000 readiness, the latter of which
would involve substantial expenses without any assurance of success.

Additionally, issuers of securities generally, as well as those purchased by
the Fund, may confront Year 2000 compliance issues which, if material and not
resolved, could have an adverse impact on securities markets and/or a specific
issuer's performance and result in a decline in the value of the securities held
by the Fund.

- -------------------------------------------------------------------
14 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
FUND DISTRIBUTIONS
AND TAX ISSUES
- -------------------------------------

Investors who buy shares of the Fund should be aware of some important tax
issues. For example, the Fund distributes DIVIDENDS of ordinary income and any
realized net CAPITAL GAINS to shareholders. These distributions are subject to
taxes, unless you hold your shares in a 401(k) plan, an Individual Retirement
Account (IRA) or some other qualified tax-deferred plan or account.

Also, if you sell shares of the Fund for a profit, you may have to pay
capital gains taxes on the amount of your profit, again unless you hold your
shares in a qualified tax-deferred plan or account.

The following briefly discusses some of the important federal tax issues you
should be aware of, but is not meant to be tax advice. For tax advice, please
speak with your tax adviser.

DISTRIBUTIONS

The Fund distributes DIVIDENDS of any net investment income to shareholders,
typically once a year. For example, if the Fund owns ACME Corp. stock and the
stock pays a dividend, the Fund will pay out a portion of this dividend to its
shareholders, assuming the Fund's income is more than its costs and expenses.
The dividends you receive from the Fund will be taxed as ordinary income,
whether or not they are reinvested in the Fund.

The Fund also distributes realized net CAPITAL GAINS to shareholders--
typically once a year. Capital gains are generated when the Fund sells its
assets for a profit. For example, if the Fund bought 100 shares of ACME Corp.
stock for a total of $1,000 and sold the shares more than one year later for a
total of $1,500, the Fund has net long-term capital gains of $500, which it will
pass on to shareholders (assuming the Fund's total gains are greater than any
losses it may have). Capital gains are taxed differently depending on how long
the Fund holds the security--if a security is held more than one year before it
is sold, LONG-TERM capital gains are taxed at a maximum rate of up to 20%, but
if the security is held one year or less, SHORT-TERM capital gains are taxed at
rates of up to 39.6%. Different rates apply to corporate shareholders.

For your convenience, Fund distributions of dividends and capital gains are
AUTOMATICALLY REINVESTED in the Fund without any sales charge. If you ask us to
pay the distributions in cash, we will send you a check if your account is with
the Transfer Agent. Otherwise, if your account is with a broker, you will
receive a credit to your account. Either way, the distributions

- --------------------------------------------------------------------------------
15
<PAGE>

FUND DISTRIBUTIONS
AND TAX ISSUES
- ------------------------------------------------
may be subject to taxes, unless your shares are held in a qualified tax-deferred
plan or account. For more information about automatic reinvestment and other
shareholder services, see "Step 4: Additional Shareholder Services" in the next
section.

TAX ISSUES
FORM 1099

Every year, you will receive a Form 1099, which reports the amount of dividends
and capital gains we distributed to you during the prior year. If you own shares
of the Fund as part of a qualified tax-deferred plan or account, your taxes are
deferred, so you will not receive a Form 1099. However, you will receive a Form
1099 when you take any distributions from your qualified tax-deferred plan or
account.

Fund distributions are generally taxable to you in the year they are
received, except when we declare certain dividends in the fourth quarter and
actually pay them in January of the following year. In such cases, the dividends
are treated as if they were paid on December 31 of the prior year. Corporate
shareholders are eligible for the 70% dividends-received deduction for certain
dividends.

WITHHOLDING TAXES

If federal tax law requires you to provide the Fund with your tax identification
number and certifications as to your tax status, and you fail to do this, or if
you are otherwise subject to backup withholding, we will withhold and pay to the
U.S. Treasury 31% of your distributions and sale proceeds. Dividends of net
investment income and short-term capital gains paid to a nonresident foreign
shareholder generally will be subject to a U.S. withholding tax of 30%. This
rate may be lower, depending on any tax treaty the U.S. may have with the
shareholder's country.

IF YOU PURCHASE JUST BEFORE RECORD DATE

If you buy shares of the Fund just before the record date (the date that
determines who receives the distribution), that distribution will be paid to
you. As explained above, the distribution may be subject to income or capital
gains taxes. You may think you've done well, since you bought shares one day and
soon thereafter received a distribution. That is not so because when dividends
are paid out, the value of each share of the Fund

- -------------------------------------------------------------------
16 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
FUND DISTRIBUTIONS
AND TAX ISSUES
- ------------------------------------------------
decreases by the amount of the dividend to reflect the payout (although this may
not be apparent because the value of each share of the Fund will also be
affected by market changes, if any). The distribution you receive makes up for
the decrease in share value. However, the timing of your purchase does mean that
part of your investment came back to you as taxable income.

QUALIFIED RETIREMENT PLANS

Retirement plans and accounts allow you to defer paying taxes on investment
income and capital gains. Contributions to these plans may also be tax
deductible, although distributions from these plans generally are taxable. In
the case of Roth IRA accounts, contributions are not tax deductible, but
distributions from the plan may be tax free. Please contact your financial
adviser for information on a variety of Prudential mutual funds that are
suitable for retirement plans offered by Prudential.

IF YOU SELL OR EXCHANGE YOUR SHARES

If you sell any shares of the Fund for a profit, you have REALIZED A CAPITAL
GAIN, which is subject to tax unless you hold shares in a qualified tax-deferred
plan or account. The amount of tax you pay depends on how long you owned your
shares. If you sell shares of the Fund for a loss, you may have a capital loss,
which you may use to offset certain capital gains you have. If you sell shares
and realize a loss, you will not be permitted to use the loss to the extent you
replace the shares (including pursuant to the reinvestment of a dividend) within
a 61-day period (beginning 30 days before the sale of the shares). If you
acquire shares of the Fund and sell your shares within 90 days, you may not be
allowed to include certain sales charges incurred in acquiring the shares for
purposes of calculating gain or loss realized upon the sale of the shares.

RECEIPTS FROM SALE $ --> +5 CAPITAL GAIN
(taxes owed)

RECEIPTS FROM SALE $ --> -5 CAPITAL LOSS
(offset against gain)

Exchanging your shares of the Fund for the shares of another Prudential
Mutual Fund is considered a sale for tax purposes. In other

- --------------------------------------------------------------------------------
17
<PAGE>
FUND DISTRIBUTIONS
AND TAX ISSUES
- ------------------------------------------------

words, it's a "taxable event." Therefore, if the shares you exchanged have
increased in value since you purchased them, you have capital gains, which are
subject to the taxes described above.

Any gain or loss you may have from selling or exchanging Fund shares will
not be reported on the Form 1099; however, proceeds from the sale or exchange
will be reported on Form 1099-B. Therefore, unless you hold your shares in a
qualified tax-deferred plan or account, you or your financial adviser should
keep track of the dates on which you buy and sell--or exchange--Fund shares, as
well as the amount of any gain or loss on each transaction. For tax advice,
please see your tax adviser.

AUTOMATIC CONVERSION OF CLASS B SHARES
We have obtained a legal opinion that the conversion of Class B shares into
Class A shares--which happens automatically approximately seven years after
purchase--is not a "taxable event" because it does not involve an actual sale of
your Class B shares. This opinion, however, is not binding on the IRS. For more
information about the automatic conversion of Class B shares, see "Class B
Shares Convert to Class A Shares After Approximately Seven Years" in the next
section.

- -------------------------------------------------------------------
18 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- -------------------------------------

HOW TO BUY SHARES
STEP 1: OPEN AN ACCOUNT
If you don't have an account with us or a securities firm that is permitted to
buy or sell shares of the Fund for you, call Prudential Mutual Fund Services LLC
(PMFS) at (800) 225-1852 or contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: INVESTMENT SERVICES
P.O. BOX 15020
NEW BRUNSWICK, NJ 08906-5020

To purchase by wire, call the number above to obtain an application. After
PMFS receives your completed application, you will receive an account number.
For additional information about purchasing shares of the Fund, see the back
cover page of this prospectus. We have the right to reject any purchase order
(including an exchange into the Fund) or suspend or modify the Fund's sale of
its shares.

STEP 2: CHOOSE A SHARE CLASS
Individual investors can choose among Class A, Class B, Class C and Class Z
shares of the Fund, although Class Z shares are available only to a limited
group of investors.

Multiple share classes let you choose a cost structure that better meets
your needs. With Class A shares, you pay the sales charge at the time of
purchase, but the operating expenses each year are lower than the expenses of
Class B and Class C shares. With Class B shares, you only pay a sales charge if
you sell your shares within six years (that is why it is called a Contingent
Deferred Sales Charge, or CDSC), but the operating expenses each year are higher
than the Class A share expenses. With Class C shares, you pay a 1% front-end
sales charge and a 1% CDSC if you sell within 18 months of purchase, but the
operating expenses are also higher than the expenses for Class A shares.

When choosing a share class, you should consider the following:

-- The amount of your investment

-- The length of time you expect to hold the shares and the impact of
the varying distribution fees

-- The different sales charges that apply to each share class--Class A's
front-end sales charge vs. Class B's CDSC vs. Class C's low front-end
sales charge and low CDSC

- --------------------------------------------------------------------------------
19
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

-- Whether you qualify for any reduction or waiver of sales charges

-- The fact that Class B shares automatically convert to Class A shares
approximately seven years after purchase

-- Whether you qualify to purchase Class Z shares

See "How to Sell Your Shares" for a description of the impact of CDSCs.

SHARE CLASS COMPARISON. Use this chart to help you compare the Fund's different
share classes. The discussion following this chart will tell you whether you are
entitled to a reduction or waiver of any sales charges.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minimum purchase $1,000 $1,000 $2,500 None
amount(1)
Minimum amount for $100 $100 $100 None
subsequent
purchases(1)
Maximum initial sales 5% of the None 1% of the None
charge public offering public offering
price price
Contingent Deferred None If sold 1% on sales None
Sales Charge (CDSC)(2) during: made within 18
Year 1 5% months of
Year 2 4% purchase(2)
Year 3 3%
Year 4 2%
Years 5/6 1%
Year 7 0%
Annual distribution and .30 of 1% 1% 1% None
service (12b-1) fees (.25 of 1%
(shown as a percentage currently)
of average net
assets)(3)
</TABLE>

1 THE MINIMUM INVESTMENT REQUIREMENTS DO NOT APPLY TO CERTAIN RETIREMENT AND
EMPLOYEE SAVINGS PLANS AND CUSTODIAL ACCOUNTS FOR MINORS. THE MINIMUM
INITIAL AND SUBSEQUENT INVESTMENT FOR PURCHASES MADE THROUGH THE AUTOMATIC
INVESTMENT PLAN IS $50. FOR MORE INFORMATION, SEE "ADDITIONAL SHAREHOLDER
SERVICES--AUTOMATIC INVESTMENT PLAN."
2 FOR MORE INFORMATION ABOUT THE CDSC AND HOW IT IS CALCULATED, SEE
"CONTINGENT DEFERRED SALES CHARGES (CDSC)." CLASS C SHARES BOUGHT BEFORE
NOVEMBER 2, 1998 HAVE A 1% CDSC IF SOLD WITHIN ONE YEAR.
3 THESE DISTRIBUTION FEES ARE PAID FROM THE FUND'S ASSETS ON A CONTINUOUS
BASIS. OVER TIME, THE FEES WILL INCREASE THE COST OF YOUR INVESTMENT AND
MAY COST YOU MORE THAN PAYING OTHER TYPES OF SALES CHARGES. THE SERVICE FEE
FOR CLASS A, CLASS B AND CLASS C SHARES IS .25 OF 1%. THE DISTRIBUTION FEE
FOR CLASS A SHARES IS LIMITED TO .30 OF 1% (INCLUDING THE .25 OF 1% SERVICE
FEE). CLASS B AND CLASS C SHARES PAY A DISTRIBUTION FEE (IN ADDITION TO THE
SERVICE FEE) OF .75 OF 1%.

- -------------------------------------------------------------------

20 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

REDUCING OR WAIVING CLASS A'S INITIAL SALES CHARGE
The following describes the different ways investors can reduce or avoid
paying Class A's initial sales charge.

INCREASE THE AMOUNT OF YOUR INVESTMENT. You can reduce Class A's sales
charge by increasing the amount of your investment. This table shows you
how the sales charge decreases as the amount of your investment
increases.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
SALES CHARGE AS % OF SALES CHARGE AS % OF DEALER
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED REALLOWANCE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.00% 5.26% 4.75%
$25,000 to $49,999 4.50% 4.71% 4.25%
$50,000 to $99,999 4.00% 4.17% 3.75%
$100,000 to $249,999 3.25% 3.36% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.40%
$500,000 to $999,999 2.00% 2.04% 1.90%
$1 million and above* None None None
</TABLE>

* IF YOU INVEST $1 MILLION OR MORE, YOU CAN BUY ONLY CLASS A SHARES, UNLESS
YOU QUALIFY TO BUY CLASS Z SHARES.

To satisfy the purchase amounts above, you can:
-- invest with a group of investors who are related to you;

-- buy the Class A shares of two or more Prudential mutual funds at the
same time;

-- use your RIGHTS OF ACCUMULATION, which allow you to combine the value
of Prudential mutual fund shares you already own with the value of
the shares you are purchasing for purposes of determining the
applicable sales charge (note: you must notify the Transfer Agent if
you qualify for Rights of Accumulation); or

-- sign a LETTER OF INTENT, stating in writing that you or an eligible
group of related investors will purchase a certain amount of shares
in the Fund and other Prudential mutual funds within 13 months.

BENEFIT PLANS. Benefit Plans can avoid Class A's initial sales charge if the
Benefit Plan has existing assets of at least $1 million invested in shares of
Prudential Mutual Funds (excluding money market funds other than those acquired
under the exchange privilege) or 250 eligible employees or

- --------------------------------------------------------------------------------
21
<PAGE>

HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

participants. For these purposes, a Benefit Plan is a pension, profit-sharing or
other employee benefit plan qualified under Section 401 of the Internal Revenue
Code, a deferred compensation or annuity plan under Sections 403(b) and 457 of
the Internal Revenue Code, a "rabbi trust" or a non-qualified deferred
compensation plan sponsored by an employer that has a tax-qualified benefit plan
with Prudential. Class A shares may also be purchased without a sales charge by
participants who are repaying loans from Benefit Plans where Prudential (or its
affiliates) provides administrative or recordkeeping services, sponsors the
product or provides account services.

Certain Prudential retirement programs--such as PruArray Association Benefit
Plans and PruArray Savings Programs--may also be exempt from Class A's sales
charges. For more information, see the SAI or contact your financial adviser. In
addition, waivers are available to investors in certain programs sponsored by
brokers, investment advisers and financial planners who have agreements with
Prudential Investments Advisory Group relating to:

-- Mutual fund "wrap" or asset allocation programs where the sponsor
places Fund trades and charges its clients a management, consulting
or other fee for its services; and

-- Mutual fund "supermarket" programs where the sponsor links its
customers' accounts to a master account in the sponsor's name and the
sponsor charges a fee for its services.

OTHER TYPES OF INVESTORS. Other investors may pay no sales charges, including
certain officers, employees or agents of Prudential and its affiliates,
Prudential Mutual Funds, the subadvisers of the Prudential Mutual Funds and
clients of brokers that have entered into a selected dealer agreement with the
Distributor. To qualify for a reduction or waiver of the sales charge, you must
notify the Transfer Agent or your broker at the time of purchase. For more
information about reducing or eliminating Class A's sales charge, see the SAI,
"Purchase, Redemption and Pricing of Fund Shares--Reduction and Waiver of
Initial Sales Charges--Class A Shares."

WAIVING CLASS C'S INITIAL SALES CHARGE

BENEFIT PLANS Benefit Plans (as defined above) may purchase Class C shares
without paying an initial sales charge. Class C shares may also be

- -------------------------------------------------------------------
22 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>

HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

purchased without an initial sales charge by participants who are repaying loans
from Benefit Plans where Prudential (or its affiliates) provides administrative
or recordkeeping services, sponsors the product or provides account services.

PRUDENTIAL RETIREMENT PLANS The initial sales charge will be waived for
purchases of Class C shares by both qualified and nonqualified retirement and
deferred compensation plans participating in the PruArray Plan and other plans
if Prudential also provides administrative or recordkeeping services.

INVESTMENT OF REDEMPTION PROCEEDS FROM OTHER INVESTMENT COMPANIES The initial
sales charge will be waived for purchases of Class C shares if the purchase is
made with money from the redemption of shares of any unaffiliated investment
company, as long as the shares were not held in an account at Prudential
Securities or one of its affiliates. These purchases must be made within 60 days
of the redemption. To qualify for this waiver, you must

-- purchase your shares through an account at Prudential Securities

-- purchase your shares through an ADVANTAGE Account or an Investor
Account with Pruco Securities Corporation or

-- purchase your shares through another broker.

This waiver is not available to investors who purchase shares directly from
the Transfer Agent. If you are entitled to the waiver, you must notify either
the Transfer Agent or your broker. The Transfer Agent may require any supporting
documents it considers appropriate.

QUALIFYING FOR CLASS Z SHARES
Class Z shares of the Fund can be purchased by any of the following:

-- Any Benefit Plan, as defined above, and certain nonqualified plans,
provided the Benefit Plan--in combination with other plans sponsored
by the same employer or group of related employers--has at least $50
million in defined contribution assets

-- Participants in any fee-based program or trust program sponsored by
Prudential or an affiliate which includes mutual funds as investment
options and the Fund as an available option

- --------------------------------------------------------------------------------
23
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

-- Certain participants in the MEDLEY Program (group variable annuity
contracts) sponsored by Prudential for whom Class Z shares of the
Prudential Mutual Funds are an available option

-- Benefit Plans for which an affiliate of the Distributor provides
administrative or recordkeeping services and, as of September 20,
1996, were either Class Z shareholders of the Prudential Mutual Funds
or executed a letter of intent to purchase Class Z shares of the
Prudential Mutual Funds

-- The Prudential Securities Cash Balance Pension Plan, an
employee-defined benefit plan sponsored by Prudential Securities

-- Current and former directors/trustees of the Prudential Mutual Funds
(including the Fund)

-- Employees of Prudential and/or Prudential Securities who participate
in a Prudential-sponsored employee savings plan

-- Prudential with an investment of $10 million or more

In connection with the sale of shares, the Manager, the Distributor or one
of their affiliates may pay brokers, financial advisers and other persons a
commission of up to 4% of the purchase price for Class B shares, up to 2% of the
purchase price for Class C shares and a finder's fee for Class Z shares from
their own resources based on a percentage of the net asset value of shares sold
or otherwise.

CLASS B SHARES CONVERT TO CLASS A SHARES AFTER APPROXIMATELY SEVEN YEARS

If you buy Class B shares and hold them for approximately seven years, we will
automatically convert them into Class A shares without charge. At that time, we
will also convert any Class B shares that you purchased with reinvested
dividends and other distributions. Since the 12b-1 fees for Class A shares are
lower than for Class B shares, converting to Class A shares lowers your Fund
expenses.

When we do the conversion, you will get fewer Class A shares than the number
of converted Class B shares if the price of the Class A shares is higher than
the price of Class B shares. The total dollar value will be the same, so you
will not have lost any money by getting fewer Class A shares. We do the
conversions quarterly, not on the anniversary date of your purchase. For more
information, see the SAI, "Purchase, Redemption and Pricing of Fund
Shares--Conversion Feature--Class B Shares."

- -------------------------------------------------------------------
24 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

STEP 3: UNDERSTANDING THE PRICE YOU'LL PAY

The price you pay for each share of the Fund is based on the share value. The
share value of a mutual fund--known as the NET ASSET VALUE or NAV-- is
determined by a simple calculation: it's the total value of the Fund (assets
minus liabilities) divided by the total number of shares outstanding. For
example, if the value of the investments held by Fund XYZ (minus its
liabilities) is $1,000 and there are 100 shares of Fund XYZ owned by
shareholders, the price of one share of the fund--or the NAV--is $10 ($1,000
divided by 100). Portfolio securities are valued based upon market quotations
or, if not readily available, at fair value as determined in good faith under
procedures established by the Fund's Board. Most national newspapers report the
NAVs of most mutual funds, which allows investors to check the price of mutual
funds daily.

We determine the NAV of our shares once each business day at 4:15 p.m. New
York Time on days that the New York Stock Exchange is open for trading. We do
not determine NAV on days when we have not received any orders to purchase, sell
or exchange Fund shares, or when changes in the value of the Fund's portfolio do
not materially affect the NAV.

WHAT PRICE WILL YOU PAY FOR SHARES OF THE FUND?

For Class A and Class C shares, you'll pay the public offering price, which is
NAV next determined after we receive your order to purchase, plus an initial
sales charge (unless you're entitled to a waiver). For Class B and Class Z
shares, you will pay the NAV next determined after we receive your order to
purchase (remember, there are no up-front sales charges for these share
classes). Your broker may charge you a separate or additional fee for purchases
of shares.

- -------------------------------------------------------------------
MUTUAL FUND SHARES
The NAV of mutual fund shares changes every day because the value of a fund's
portfolio changes constantly. For example, if Fund XYZ holds ACME Corp. stock in
its portfolio and the price of ACME stock goes up, while the value of the fund's
other holdings remains the same and expenses don't change, the NAV of Fund XYZ
will increase.
- -------------------------------------------------------------------

- --------------------------------------------------------------------------------
25
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

STEP 4: ADDITIONAL SHAREHOLDER SERVICES
As a Fund shareholder, you can take advantage of the following services and
privileges:

AUTOMATIC REINVESTMENT. As we explained in the "Fund Distributions and Tax
Issues" section, the Fund pays out--or distributes--its net investment income
and capital gains to all shareholders. For your convenience, we will
automatically reinvest your distributions in the Fund at NAV without any sales
charge. If you want your distributions paid in cash, you can indicate this
preference on your application, notify your broker or notify the Transfer Agent
in writing (at the address below) at least five business days before the date we
determine who receives dividends.

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTENTION: ACCOUNT MAINTENANCE
P.O. BOX 15015
NEW BRUNSWICK, NJ 08906-5015

AUTOMATIC INVESTMENT PLAN. You can make regular purchases of the Fund for as
little as $50 by having the funds automatically withdrawn from your bank or
brokerage account at specified intervals.

RETIREMENT PLAN SERVICES. Prudential offers a wide variety of retirement plans
for individuals and institutions, including large and small businesses. For
information on IRAs, including Roth IRAs, or SEP-IRAs for a one-person business,
please contact your financial adviser. If you are interested in opening a 401(k)
or other company-sponsored retirement plan (SIMPLES, SEP plans, Keoghs, 403(b)
plans, pension and profit-sharing plans), your financial adviser will help you
determine which retirement plan best meets your needs. Complete instructions
about how to establish and maintain your plan and how to open accounts for you
and your employees will be included in the retirement plan kit you receive in
the mail.

THE PRUTECTOR PROGRAM. Optional group term life insurance--which protects the
value of your Prudential mutual fund investment for your beneficiaries against
market declines--is available to investors who purchase their shares through
Prudential. This insurance is subject to various restrictions and charges and is
not available in all states.

- -------------------------------------------------------------------
26 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan is available that will
provide you with monthly or quarterly checks. Remember, the sale of Class B and
Class C shares may be subject to a CDSC.

REPORTS TO SHAREHOLDERS. Every year we will send you an annual report (along
with an updated prospectus) and a semi-annual report, which contain important
financial information about the Fund. To reduce Fund expenses, we will send one
annual shareholder report, one semi-annual shareholder report and one annual
prospectus per household, unless you instruct us or your broker otherwise.

HOW TO SELL YOUR SHARES
You can sell your shares of the Fund for cash (in the form of a check) at any
time, subject to certain restrictions.
When you sell shares of the Fund--also known as redeeming your shares--the
price you will receive will be the NAV next determined after the Transfer Agent,
the Distributor or your broker receives your order to sell. If your broker holds
your shares, he must receive your order to sell by 4:15 p.m. New York time to
process the sale on that day. Otherwise, contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTENTION: REDEMPTION SERVICES
P.O. BOX 15010
NEW BRUNSWICK, NJ 08906-5010

Generally, we will pay you for the shares that you sell within seven days
after the Transfer Agent, the Distributor or your broker receives your sell
order. If you hold shares through a broker, payment will be credited to your
account. If you are selling shares you recently purchased with a check, we may
delay sending you the proceeds until your check clears, which can take up to 10
days from the purchase date. You can avoid delay if you purchase shares by wire,
certified check or cashier's check. Your broker may charge a separate or
additional fee for sales of shares.

- --------------------------------------------------------------------------------
27
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

RESTRICTIONS ON SALES

There are certain times when you may not be able to sell shares of the Fund, or
when we may delay paying you the proceeds from a sale. This may happen during
unusual market conditions or emergencies when the Fund can't determine the value
of its assets or sell its holdings. For more information, see the SAI,
"Purchase, Redemption and Pricing of Fund Shares--Sale of Shares."

If you are selling more than $50,000 of shares, you want the check sent to
someone or some place that is not in our records, or you are a business or a
trust, and if you hold your shares directly with the Transfer Agent, you may
have to to have the signature on your sell order guaranteed by a financial
institution. For more information, see the SAI, "Purchase, Redemption and
Pricing of Fund Shares--Sale of Shares."

CONTINGENT DEFERRED SALES CHARGES (CDSC)

If you sell Class B shares within six years of purchase or Class C shares within
18 months of purchase (one year for Class C shares purchased before November 2,
1998), you will have to pay a CDSC. To keep the CDSC as low as possible, we will
sell amounts representing shares in the following order:
-- Amounts representing shares you purchased with reinvested dividends
and distributions

-- Amounts representing the increase in NAV above the total amount of
payments for such shares made during the past six years for Class B
shares (five years for Class B shares purchased before January 22,
1990) and 18 months for Class C shares (one year for Class C shares
purchased before November 2, 1998)

-- Amounts representing the cost of shares held beyond the CDSC period
(six years for Class B shares and 18 months for Class C shares)

Since shares that fall into any of the categories listed above are not
subject to the CDSC, selling them first helps you to avoid--or at least
minimize--the CDSC.

Having sold the exempt shares first, if there are any remaining shares that
are subject to the CDSC, we will apply the CDSC to amounts

- -------------------------------------------------------------------
28 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>

HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

representing the cost of shares held for the longest period of time within the
applicable CDSC period.

As we noted in the "Share Class Comparison" chart, the CDSC for Class B
shares is 5% in the first year, 4% in the second, 3% in the third, 2% in the
fourth and 1% in the fifth and sixth years. The rate decreases on the first day
of the month following the anniversary date of your purchase, not on the
anniversary date itself. The CDSC is 1% for Class C shares-- which is applied to
shares sold within 18 months of purchase (or one year for Class C shares
purchased before November 2, 1998). For both Class B and Class C shares, the
CDSC is calculated using the lesser of the original purchase price or the
redemption proceeds. For purposes of determining how long you've held your
shares, all purchases during the month are grouped together and considered to
have been made on the last day of the month.

The holding period for purposes of determining the applicable CDSC will be
calculated from the first day of the month after initial purchase, excluding any
time shares were held in a money market fund.

WAIVER OF THE CDSC--CLASS B SHARES

The CDSC will be waived if the Class B shares are sold

-- after a shareholder is deceased or disabled (or, in the case of a
trust account, the death or disability of the grantor). This waiver
applies to individual shareholders as well as shares owned in joint
tenancy (with rights of survivorship) provided the shares were
purchased before the death or disability;

-- to provide for certain distributions--made without IRS penalty-- from
a tax-deferred retirement plan, IRA or Section 403(b) custodial
account; and

-- on certain sales from a Systematic Withdrawal Plan.

For more information on the above and other waivers, see the SAI, "Purchase,
Redemption and Pricing of Fund Shares--Waiver of Contingent Deferred Sales
Charges--Class B Shares."

WAIVER OF THE CDSC--CLASS C SHARES

PRUDENTIAL RETIREMENT PLANS. The CDSC will be waived for purchases of Class C
shares by both qualified and nonqualified retirement and deferred

- --------------------------------------------------------------------------------
29
<PAGE>

HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

compensation plans participating in a PruArray Plan and other plans if
Prudential also provides administrative or recordkeeping services. The CDSC will
also be waived on redemptions from Benefit Plans sponsored by Prudential and its
affiliates to the extent that the redemption proceeds are invested in The
Guaranteed Investment Account (a group annuity insurance product sponsored by
Prudential), The Guaranteed Insulated Separate Account (a separate account
offered by Prudential), and shares of The Stable Value Fund (an unaffiliated
bank collective fund).

OTHER BENEFIT PLANS The CDSC will be waived on redemptions from Benefit Plans
holding shares through a broker not affiliated with Prudential and for which the
broker provides administrative or recordkeeping services.

REDEMPTION IN KIND
If the sales of Fund shares you make during any 90-day period reach the lesser
of $250,000 or 1% of the value of the Fund's net assets, we can then give you
securities from the Fund's portfolio instead of cash. If you want to sell the
securities for cash, you would have to pay the costs charged by a broker.
SMALL ACCOUNTS
If you make a sale that reduces your account value to less than $500, we may
sell the rest of your shares (without charging any CDSC) and close your account.
We would do this to minimize the Fund's expenses paid by other shareholders. We
will give you 60 days' notice, during which time you can purchase additional
shares to avoid this action. This involuntary sale does not apply to
shareholders who own their shares as part of a 401(k) plan, an IRA or some other
tax-deferred plan or account.
90-DAY REPURCHASE PRIVILEGE

After you redeem your shares, you have a 90-day period during which you may
reinvest any of the redemption proceeds in shares of the same Fund without
paying an initial sales charge. Also, if you paid a CDSC when you redeemed your
shares, we will credit your new account with the appropriate numbers of shares
to reflect the amount of the CDSC you paid. In order to take advantage of this
one-time privilege, you must notify the Transfer Agent or your broker at the
time of the repurchase. See the SAI, "Purchase,

- -------------------------------------------------------------------
30 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

Redemption and Pricing of Fund Shares--Sale of Shares."
RETIREMENT PLANS
To sell shares and receive a distribution from a retirement account, call your
broker or the Transfer Agent for a distribution request form. There are special
distribution and income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer or
plan trustee, you must arrange for the distribution request to be signed and
sent by the plan administrator or trustee. For additional information, see the
SAI.
HOW TO EXCHANGE YOUR SHARES

You can exchange your shares of the Fund for shares of the same class in certain
other Prudential mutual funds--including certain money market funds--if you
satisfy the minimum investment requirements. For example, you can exchange Class
A shares of the Fund for Class A shares of another Prudential mutual fund, but
you can't exchange Class A shares for Class B, Class C or Class Z shares. Class
B and Class C shares may not be exchanged into money market funds other than
Prudential Special Money Market Fund, Inc. After an exchange, the CDSC at
redemption will be calculated from the first day of the month after the initial
purchase, excluding any time shares were held in a money market fund. We may
change the terms of the exchange privilege after giving you 60 days' notice.

If you hold shares through a broker, you must exchange shares through your
broker. Otherwise contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: EXCHANGE PROCESSING
P.O. BOX: 15010
NEW BRUNSWICK, NJ 08906-5010
There is no sales charge for such exchanges. However, if you exchange--and
then sell--Class B shares within approximately six years of your original
purchase or Class C shares within 18 months of your original purchase, you must
still pay the applicable CDSC. If you have exchanged Class B shares into a money
market fund, the time you hold the shares in

- --------------------------------------------------------------------------------
31
<PAGE>

HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE FUND
- ------------------------------------------------

the money market account will not be counted in calculating the required holding
periods for CDSC liability.

Remember, as we explained in the section entitled "Fund Distributions and
Tax Issues--If You Sell or Exchange Your Shares," exchanging shares is
considered a sale for tax purposes. Therefore, if the shares you exchange are
worth more than you paid for them, you may have to pay capital gains tax. For
additional information about exchanging shares, see the SAI, "Shareholder
Investment Account--Exchange Privilege."

If you own Class B or Class C shares and qualify to purchase either Class A
shares without paying an initial sales charge, we will automatically exchange
your Class B or Class C shares which are not subject to a CDSC for Class A
shares. We make such exchanges on a quarterly basis if you qualify for this
exchange privilege. We have obtained a legal opinion that this exchange is not a
"taxable event" for federal income tax purposes. This opinion is not binding on
the IRS.

FREQUENT TRADING

Frequent trading of Fund shares in response to short-term fluctuations in the
market--also known as "market timing"--may make it very difficult to manage the
Fund's investments. When market timing occurs, the Fund may have to sell
portfolio securities to have the cash necessary to redeem the market timer's
shares. This can happen at a time when it is not advantageous to sell any
securities, so the Fund's performance may be hurt. When large dollar amounts are
involved, market timing can also make it difficult to use long-term investment
strategies because we cannot predict how much cash the fund will have to invest.
When, in our opinion, such activity would have a disruptive effect on portfolio
management, the Fund reserves the right to refuse purchase orders and exchanges
into the Fund by any person, group or commonly controlled accounts. The Fund may
notify a market timer of rejection of an exchange or purchase order after the
day the order is placed. If the Fund allows a market timer to trade Fund shares,
it may require the market timer to enter into a written agreement to follow
certain procedures and limitations.

- -------------------------------------------------------------------
32 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------

The financial highlights will help you evaluate the Fund's financial
performance. The TOTAL RETURN in each chart represents the rate that a
shareholder earned on an investment in that share class of the Fund, assuming
reinvestment of all dividends and other distributions. The information is for
each share class for the periods indicated.

Review each chart with the financial statements and report of independent
accountants which appear in the SAI and are available upon request. Additional
performance information for each share class is contained in the annual report,
which you can receive at no charge.

CLASS A SHARES

The financial highlights for the two years ended October 31, 1998 were audited
by PricewaterhouseCoopers LLP, independent accountants, and the financial
highlights for the three years ended October 31, 1996 were audited by other
independent auditors, whose reports were unqualified.

CLASS A SHARES (FISCAL YEARS ENDED 10-31)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $12.22 $15.86 $15.75 $16.90 $16.10
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) .06 .02 .07 .04 (.08)
Net realized and
unrealized gain (loss)
on investment
transactions (1.88) (3.31) .23 (1.09) 1.15
TOTAL FROM INVESTMENT
OPERATIONS (1.82) (3.29) .30 (1.05) 1.07
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.40) -- (.19) -- (.06)
Distributions from net
realized gains (.86) (.35) -- (.10) (.21)
TOTAL DISTRIBUTIONS (1.26) (.35) (.19) (.10) (.27)
NET ASSET VALUE, END OF
YEAR $9.14 $12.22 $15.86 $15.75 $16.90
TOTAL RETURN(1) (15.53)% (21.32)% 1.97% (6.23)% 6.67%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(000) $22,624 $35,860 $113,585 $98,998 $98,921
Average net assets (000) $26,845 $73,942 $106,148 $101,920 $92,233
RATIOS TO AVERAGE NET
ASSETS:
Expenses, including
distribution fees 1.70% 1.48% 1.37% 1.46% 1.57%
Expenses, excluding
distribution fees 1.45% 1.17% 1.12% 1.21% 1.33%
Net investment income
(loss) .63% .14% .44% .26% (.50)%
Portfolio turnover 94% 81% 91% 54% 56%
</TABLE>

1 TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND ANY OTHER DISTRIBUTIONS,
BUT DOES NOT INCLUDE THE EFFECT OF SALES CHARGES. IT IS CALCULATED ASSUMING
SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE LAST DAY OF EACH
PERIOD REPORTED.

- --------------------------------------------------------------------------------
33
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------

CLASS B SHARES

CLASS B SHARES (FISCAL YEARS ENDED 10-31)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $11.77 $15.40 $15.38 $16.62 $15.94
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (.01) (.09) (.04) (.08) (.21)
Net realized and
unrealized gain (loss)
on investment
transactions (1.82) (3.19) .25 (1.06) 1.13
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (1.83) (3.28) .21 (1.14) .92
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.29) -- (.19) -- (.03)
Distributions from net
realized gains (.86) (.35) -- (.10) (.21)
--------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.15) (.35) (.19) (.10) (.24)
NET ASSET VALUE, END OF
YEAR $8.79 $11.77 $15.40 $15.38 $16.62
TOTAL RETURN(1) (16.32)% (21.84)% 1.36% (6.82)% 5.79%
- ------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(000) $74,457 $128,694 $327,315 $344,313 $459,949
Average net assets (000) $91,983 $244,462 $357,548 $368,771 $404,506
RATIOS TO AVERAGE NET
ASSETS:
Expenses, including
distribution fees 2.45% 2.23% 2.12% 2.21% 2.33%
Expenses, excluding
distribution fees 1.45% 1.17% 1.12% 1.21% 1.33%
Net investment income
(loss) (.12)% (.61)% (.25)% (.55)% (1.27)%
Portfolio turnover 94% 81% 91% 54% 56%
</TABLE>

- -------------------------------------------------------------------
34 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------

CLASS C SHARES

The financial highlights for the two years ended October 31, 1998 were audited
by PricewaterhouseCoopers LLP, independent accountants, and the financial
highlights for the two years ended October 31, 1996 and the period from August
1, 1994 through October 31, 1994 were audited by other independent auditors,
whose reports were unqualified.

CLASS C SHARES (FISCAL YEARS ENDED 10-31)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE 1998 1997 1996 1995 1994(1)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $11.77 $15.40 $15.38 $16.62 $16.68
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (.01) (.09) (.04) (.08) (.06)
Net realized and
unrealized gain (loss)
on investment
transactions (1.82) (3.19) .25 (1.06) --
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (1.83) (3.28) .21 (1.14) (.06)
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (.29) -- (.19) -- --
Distributions from net
realized gains (.86) (.35) -- (.10) --
--------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.15) (.35) (.19) (.10) --
NET ASSET VALUE, END OF
PERIOD $8.79 $11.77 $15.40 $15.38 $16.62
TOTAL RETURN(2) (16.32)% (21.84)% 1.36% (6.82)% (.36)%
- ------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1998 1997 1996 1995 1994(1)
- ------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (000) $1,654 $2,932 $12,360 $2,443 $718
Average net assets (000) $2,276 $6,557 $6,402 $1,624 $458
RATIOS TO AVERAGE NET
ASSETS:
Expenses, including
distribution fees 2.45% 2.23% 2.12% 2.21% 3.00%(3)
Expenses, excluding
distribution fees 1.45% 1.17% 1.12% 1.21% 2.00%(3)
Net investment income
(loss) (.12)% (.61)% (.25)% (.43)% (1.64)%(3)
Portfolio turnover 94% 81% 91% 54% 56%
</TABLE>

1 INFORMATION SHOWN IS FOR THE PERIOD 8-1-94 (WHEN SHARES WERE FIRST OFFERED)
THROUGH 10-31-94.
2 TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND ANY OTHER DISTRIBUTIONS,
BUT DOES NOT INCLUDE THE EFFECT OF SALES CHARGES. IT IS CALCULATED ASSUMING
SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE LAST DAY OF EACH
PERIOD REPORTED. TOTAL RETURN FOR A PERIOD OF LESS THAN A FULL YEAR IS NOT
ANNUALIZED.
3 ANNUALIZED.

- --------------------------------------------------------------------------------

35
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------

CLASS Z SHARES

The financial highlights for the two years ended October 31, 1998 were audited
by PricewaterhouseCoopers LLP, independent accountants, and the financial
highlights for the period from March 1, 1996 through October 31, 1996 were
audited by other independent auditors, whose reports were unqualified.

CLASS Z SHARES (FISCAL YEARS ENDED 10-31)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 1998 1997 1996(1)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $12.28 $15.89 $16.57
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08 .06 .11
Net realized and unrealized gain
(loss) on investment transactions (1.89) (3.32) (.79)
----------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS (1.81) (3.26) (.68)
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.44) -- --
Distributions from net realized
gains (.86) (.35) --
----------- ----------- -----------
TOTAL DISTRIBUTIONS (1.30) (.35) --
NET ASSET VALUE, END OF PERIOD $9.17 $12.28 $15.89
TOTAL RETURN(2) (15.36)% (21.02)% (4.09)%
- ----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA 1998 1997 1996
- ----------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000) $12,429 $19,520 $37,288
Average net assets (000) $15,099 $31,945 $33,868
RATIOS TO AVERAGE NET ASSETS:
Expenses, including distribution
fees 1.45% 1.23% 1.12%(3)
Expenses, excluding distribution
fees 1.45% 1.23% 1.12%(3)
Net investment income (loss) .82% .39% .68%(3)
Portfolio turnover 94% 81% 91%
</TABLE>

1 INFORMATION SHOWN IS FOR THE PERIOD 3-1-96 (WHEN CLASS Z SHARES WERE FIRST
OFFERED), THROUGH 10-31-96.
2 TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS AND ANY OTHER DISTRIBUTIONS,
BUT DOES NOT INCLUDE THE EFFECT OF SALES CHARGES. IT IS CALCULATED ASSUMING
SHARES ARE PURCHASED ON THE FIRST DAY AND SOLD ON THE LAST DAY OF EACH
PERIOD REPORTED. TOTAL RETURN FOR A PERIOD OF LESS THAN A FULL YEAR IS NOT
ANNUALIZED.
3 ANNUALIZED.

- -------------------------------------------------------------------

36 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
[This page has been left blank intentionally.]

- --------------------------------------------------------------------------------
39
<PAGE>
[This page has been left blank intentionally.]

- -------------------------------------------------------------------
40 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
[This page has been left blank intentionally.]

- --------------------------------------------------------------------------------
41
<PAGE>
[This page has been left blank intentionally.]

- -------------------------------------------------------------------
42 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
[This page has been left blank intentionally.]

- --------------------------------------------------------------------------------
43
<PAGE>
[This page has been left blank intentionally.]

- -------------------------------------------------------------------
44 PRUDENTIAL PACIFIC GROWTH FUND, INC. [ICON] (800) 225-1852
<PAGE>
[This page has been left blank intentionally.]

- --------------------------------------------------------------------------------
45
<PAGE>
FOR MORE INFORMATION:
- ---------------------------------------------------------------------------

Please read this prospectus before you invest in the Fund and keep it for future
reference. For information or shareholder questions contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
P.O. BOX 15005
NEW BRUNSWICK, NJ 08906-5005
(800) 225-1852
(732) 417-7555
(if calling from outside the U.S.)

- --------------------------------

Outside Brokers should contact:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC

P.O. BOX 15035
NEW BRUNSWICK, NJ 08906-5035
(800) 778-8769

- ------------------------------------
Visit Prudential's web site at
http://www.prudential.com

- --------------------------------
Additional information about the Fund can be obtained without charge and can be
found in the following documents:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
(incorporated by reference into this prospectus)

ANNUAL REPORT
(contains a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance)

SEMI-ANNUAL REPORT

You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows:

By Mail:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
(The SEC charges a fee to copy documents.)

In Person:
Public Reference Room in
Washington, DC
(For hours of operation, call 1(800) SEC-0330.)

Via the Internet:
http://www.sec.gov

- --------------------------------
CUSIP Numbers:

Class A: 743941-10-6
Class B: 743941-20-5
Class C: 743941-30-4
Class Z: 743941-40-3

Investment Company Act File No:

811-6391

MF 157A [LOGO] Printed on Recycled Paper
<PAGE>

PRUDENTIAL PACIFIC GROWTH FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 25, 1999

Prudential Pacific Growth Fund, Inc. (the Fund) is an open-end, diversified
management investment company whose investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
equity-related securities (common stock, preferred stock, rights, warrants and
debt securities or preferred stock which are convertible or exchangeable for
common stock or preferred stock and interests in master limited partnerships,
among others) of companies doing business in or domiciled in the Pacific Basin
region. Under normal circumstances, the Fund intends to invest at least 65% of
its total assets in such securities. The Fund may invest in equity-related
securities of other companies and fixed income obligations. The Fund may also
engage in various transactions involving derivatives, such as those involving
options on stock, stock indices, foreign currencies and futures contracts on
foreign currencies and groups of currencies so as to hedge its portfolio and to
attempt to enhance return. There can be no assurance that the Fund's investment
objective will be achieved. See "Description of the Fund, its Investments and
Risks."

The Fund's address is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077, and its telephone number is (800) 225-1852.

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Fund's Prospectus dated February 25, 1999, a copy
of which may be obtained from the Fund upon request.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Fund History................................................ B-2
Description of the Fund, its Investments and Risks.......... B-2
Investment Restrictions..................................... B-14
Management of the Fund...................................... B-16
Control Persons and Principal Holders of Securities......... B-19
Investment Advisory and Other Services...................... B-20
Brokerage Allocation and Other Practices.................... B-23
Capital Stock and Organization.............................. B-25
Purchase, Redemption and Pricing of Fund Shares............. B-25
Shareholder Investment Account.............................. B-36
Net Asset Value............................................. B-40
Taxes, Dividends and Distributions.......................... B-41
Performance Information..................................... B-44
Financial Statements........................................ B-
Report of Independent Accountants........................... B-
Appendix I--Description of Security Ratings................. I-1
Appendix II--General Investment Information................. II-1
Appendix III--Historical Performance Data................... III-1
Appendix IV--Information Relating to Prudential............. IV-1
</TABLE>

- --------------------------------------------------------------------------------

MF157B
<PAGE>
FUND HISTORY

The Fund was organized under the laws of Maryland on August 14, 1991 as a
corporation.

DESCRIPTION OF THE FUND, ITS INVESTMENTS AND RISKS

(a) CLASSIFICATION

The Fund is a diversified open-end management investment company.

(b) INVESTMENT STRATEGIES AND RISKS

The Fund's investment objective is long-term growth of capital. It seeks to
achieve this objective by investing primarily in equity-related securities
(common stock, preferred stock, rights, warrants and debt securities or
preferred stock which are convertible or exchangeable for common stock or
preferred stock and master limited partnerships, among others) of companies
doing business in or domiciled in the Pacific Basin region, including, but not
limited to, Japan, Australia, Hong Kong, Singapore, South Korea, Malaysia,
Thailand, Indonesia, The Philippines and New Zealand. There can be no assurance
that the Fund's investment objective will be achieved. For a further description
of the Fund's investment objective and policies, see "How the Fund
Invests--Investment Objective and Policies" in the Prospectus.

EQUITY-RELATED SECURITIES

The Fund may invest in equity-related securities. Equity-related securities
include common stock, preferred stock, rights, warrants and debt securities or
preferred stock which are convertible into or exchangeable for common stock or
preferred stock and interests in master limited partnerships, among others.

With respect to equity-related securities, the Fund may purchase American
Depositary Receipts ("ADRs"). ADRs are U.S. dollar-denominated certificates
issued by a United States bank or trust company and represent the right to
receive securities of a foreign issuer deposited in a domestic bank or foreign
branch of a United States bank and traded on a United States exchange or in an
over-the-counter market. Generally, ADRs are in registered form. There are no
fees imposed on the purchase or sale of ADRs when purchased from the issuing
bank or trust company in the initial underwriting, although the issuing bank or
trust company may impose charges for the collection of dividends and the
conversion of ADRs into the underlying securities. Investment in ADRs has
certain advantages over direct investment in the underlying foreign securities
since: (i) ADRs are U.S. dollar-denominated investments that are registered
domestically, easily transferable, and for which market quotations are readily
available; and (ii) issuers whose securities are represented by ADRs are usually
subject to auditing, accounting, and financial reporting standards comparable to
those of domestic issuers.

The Fund may purchase sponsored or unsponsored ADRs. In a sponsored program,
the foreign issuer arranges for the bank or trust company to hold the underlying
foreign securities and issue the dollar-denominated certificates. An unsponsored
program is not initiated or "sponsored" by the foreign issuer. As such, there
may be less information available about a foreign issuer for which an
unsponsored program was initiated than a foreign issuer that participates in a
sponsored program.

RISK FACTORS AND SPECIAL CONSIDERATION OF INVESTING IN EURO-DENOMINATED
SECURITIES

The Fund may invest in companies that are doing business in the Pacific
Basin region but are domiciled elsewhere, such as Europe. Effective January 1,
1999, 11 of the 15 member states of the European Union introduced the "euro" as
a common currency. During a three year transitional period, the euro will
coexist with each member state's currency. Beginning July 1, 2002, the euro is
expected to become the sole currency of the member states. During the transition
period, the Fund will treat the euro as a separate currency from that of any
member state.

The conversion may impact the trading in securities of issuers located in,
or denominated in the currencies of, the member states, as well as foreign
exchanges, payments, the settlement process, custody of assets and accounting.
In addition, the transition of member states currency into the euro will
eliminate the risk among member states and will likely affect the investment
process and considerations of the Fund's investment adviser. To the extent the
Fund holds non-U.S. dollar-denominated securities, including those denominated
in the euro, the Fund will still be subject to currency risk due to fluctuations
in those currencies as compared to the U.S. dollar.

B-2
<PAGE>

The introduction of the euro is expected to affect derivative and other
financial contracts in which the Fund may invest insofar as price sources based
upon current currencies of the member states will be replaced, and market
conventions, such as day-count fractions or settlement dates applicable to
underlying instruments may be changed to conform to the conventions applicable
to the euro currency.

The overall impact of the transition of the member states' currencies to the
euro cannot be determined with certainty at this time. In addition to the
effects described above, it is likely that more general short- and long-term
ramifications can be expected, such as changes in economic environment and
change in behavior of investors, all of which will impact the Fund's
investments.

The Fund's Manager is taking steps (a) that it believes will reasonably
address euro-related changes to enable the Fund to process transactions
accurately and completely with minimal disruption to business activities and (b)
to obtain reasonable assurances that appropriate steps are being taken by each
of the Fund's other service providers.

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 stock 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
having a minimum rating of at least "B" by a nationally recognized statistical
rating organization.

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.

WARRANTS

The Fund may invest up to 5% of its net assets in warrants. A warrant gives
the holder thereof the right to subscribe by a specified date to a stated number
of shares of stock of the issuer at a fixed price. Warrants tend to be more
volatile than the underlying stock, and if at a warrant's expiration date the
stock is trading at a price below the price set in the warrant, the warrant will
expire worthless. Conversely, if at the expiration date the underlying stock is
trading at a price higher than the price set in the warrant, the Fund can
acquire the stock at a price below its market value.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

From time to time, in the ordinary course of business, the Fund may purchase
or sell securities on a when-issued or delayed delivery basis, that is, delivery
and payment can take place a month or more after the date of the transaction.
The Fund will make commitments for such when-issued transactions only with the
intention of actually acquiring the securities. The Fund's Custodian will
maintain, in a separate account of the Fund, cash or other liquid unencumbered
assets marked-to-market daily, having a value equal to or greater than such
commitments. The securities so purchased are subject to market fluctuation and
no interest accrues to the purchaser during the period between purchase and
settlement. At the time of delivery of the securities the value may be more or
less than the purchase price and an increase in the percentage of the Fund's
assets committed to the purchase of securities on a when-issued or delayed
delivery basis may increase the volatility of the Fund's net asset value. If the
Fund chooses to dispose of the right to acquire a when-issued security prior to
its acquisition, it could, as with the disposition of any other portfolio
security, incur a gain or loss due to market fluctuations. The Fund does not
intend to have more than 5% of its net assets (determined at the time of
entering into the transaction) involved in transactions on a when-issued or
delayed delivery basis during the coming year.

B-3
<PAGE>
SHORT SALES AGAINST-THE-BOX

The Fund may make short sales of securities or maintain a short position,
provided that at all times when a short position is open the Fund owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for an equal amount of the
securities of the same issuer as the securities sold short (a short sale
against-the-box), and that not more than 25% of the Fund's net assets
(determined at the time of the short sale) may be subject to such sales. As a
matter of current operating policy, the Fund will not engage in short-sales
other than short sales against-the-box. The Fund does not intend to have more
than 5% of its net assets (determined at the time of the short sale) subject to
short sales against-the-box during the coming year.

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 meets 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 mortgages 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 than their maturity date would indicate as
a result of the pass-through of prepayments of principal on the underlying
mortgage obligations. During periods of declining interest rates, 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. During periods of rising interest rates,
the rate of prepayment of mortgages underlying mortgage-backed securities can be
expected to decline, extending the projected average maturity of the
mortgage-backed securities. This maturity extension risk may effectively change
a security which was considered short- or intermediate-term at the time of
purchase into a long-term security. Long-term securities generally fluctuate
more widely in response to changes in interest rates than short- or
intermediate-term securities.

B-4
<PAGE>
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.

The values of U.S. Government securities (like those of other fixed-income
securities generally) will change as interest rates fluctuate. During periods of
falling U.S. interest rates, 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.

SECURITIES OF FOREIGN ISSUERS

The value of the Fund's foreign investments may be significantly affected by
changes in currency exchange rates. The dollar value of a foreign security
generally decreases when the value of the dollar rises against the foreign
currency in which the security is denominated and tends to increase when the
value of the dollar falls against such currency. In addition, the value of the
Fund's assets may be affected by losses and other expenses incurred in
converting between various currencies in order to purchase and sell foreign
securities and by currency restrictions and exchange control regulation.

The economies of many of the countries in which the Fund may invest are not
as developed as the economy of the U.S. and may be subject to significantly
different forces. Political or social instability, expropriation or confiscatory
taxation, and limitations on the removal of funds or other assets, could also
adversely affect the value of investments.

Foreign companies are generally not subject to the regulatory controls
imposed on U.S. issuers and, in general, there is less publicly available
information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the Fund may be reduced by a withholding tax at the source
which would reduce dividend income payable to shareholders.

Brokerage commission rates in foreign countries, which are generally fixed
rather than subject to negotiation as in the U.S. are likely to be higher. The
securities markets in many of the countries in which the Fund may invest will
have substantially less trading volume than the principal U.S. markets. As a
result, the securities of some companies in these countries may be less liquid
and more volatile than comparable U.S. securities. There is generally less
government regulation and supervision of foreign stock exchanges, brokers and
issuers which may make it difficult to enforce contractual obligations.

FOREIGN DEBT SECURITIES

The Fund is permitted to invest in foreign corporate and government debt
securities. "Foreign government debt 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-governmental issuers include,
among others, the Province of Ontario and the City of Stockholm. Foreign
government debt 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 debt securities shall also include
mortgage-backed securities issued by foreign Government Entities including
quasi-governmental entities.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements, whereby the seller of the
security agrees to repurchase that security from the Fund at a mutually
agreed-upon time and price. The repurchase date is usually within a day or two
of the original purchase, although it may extend over a number of months. The
resale price is in excess of the purchase price, reflecting an agreed-upon rate
of return effective for the period of time the Fund's money is invested in the
repurchase agreement. The Fund's repurchase agreements will be collateralized by
U.S. Government obligations. The Fund will enter into repurchase transactions
only with parties meeting creditworthiness standards approved by the Fund's
Board of Directors. The Fund's investment adviser will

B-5
<PAGE>
monitor the creditworthiness of such parties, under the general supervision of
the Board of Directors. In the event of a default or bankruptcy by a seller, the
Fund will promptly seek to liquidate the collateral. To the extent that the
proceeds from any sale of such collateral upon a default in the obligation to
repurchase are less than the repurchase price, the Fund will suffer a loss.

The Fund participates in a joint repurchase agreement account with other
investment companies managed by Prudential Investments Fund Management LLC
(PIFM) pursuant to an order of the Securities and Exchange Commission (SEC). On
a daily basis, any uninvested cash balances of the Fund may be aggregated with
those of such investment companies and invested in one or more repurchase
agreements. Each fund participates in the income earned or accrued in the joint
account based on the percentage of its investment.

LENDING OF SECURITIES

Consistent with applicable regulatory requirements, the Fund may lend its
portfolio securities to brokers, dealers and financial institutions, provided
that outstanding loans do not exceed in the aggregate 30% of the value of the
Fund's total assets and provided that such loans are callable at any time by the
Fund and are at all times secured by cash or equivalent collateral (or obtain a
letter of credit) that is equal to at least the market value, determined daily,
of the loaned securities. The advantage of such loans is that the Fund continues
to receive payments in lieu of the interest and dividends of the loaned
securities, while at the same time earning interest either directly from the
borrower or on the collateral which will be invested in short-term obligations.

A loan may be terminated by the borrower on one business day's notice or by
the Fund at any time. If the borrower fails to maintain the requisite amount of
collateral, the loan automatically terminates, and the Fund could use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. As with any extensions of credit,
there are risks of delay in recovery and in some cases loss of rights in the
collateral should the borrower of the securities fail financially. However,
these loans of portfolio securities will only be made to firms determined to be
creditworthy pursuant to procedures approved by the Board of Directors of the
Fund. On termination of the loan, the borrower is required to return the
securities to the Fund, and any gain or loss in the market price during the loan
would inure to the Fund.

Since voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loan, in whole or in
part as may be appropriate, to permit the exercise of such rights if the matters
involved would have a material effect on the Fund's investment in the securities
which are the subject of the loan. The Fund will pay reasonable finders',
administrative and custodial fees in connection with a loan of its securities or
may share the interest earned on collateral with the borrower.

BORROWING

The Fund may borrow up to 20% of the value of its total assets (calculated
when the loan is made) from banks for temporary, extraordinary or emergency
purposes or for the clearance of transactions. The Fund may pledge up to 20% of
its total assets to secure these borrowings. If the Fund borrows to invest in
securities, any investment gains made on the securities in excess of interest
paid on the borrowing will cause the net asset value of the shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the money borrowed) to the Fund, the net asset
value of the Fund's shares will decrease faster than would otherwise be the
case. This is the speculative factor known as "leverage." The Fund does not
intend to borrow more than 5% of its total assets for investment purposes.

SEGREGATED ACCOUNTS

When the Fund is required to segregate assets in connection with certain
hedging transactions, it will maintain cash or liquid securities in a segregated
account with the Fund's Custodian. "Liquid assets" mean cash, U.S. Government
securities, equity securities (including foreign securities), debt obligations
or other liquid unencumbered assets, marked-to-market daily.

ILLIQUID SECURITIES

The Fund may hold up to 15% of its net assets in repurchase agreements which
have a maturity of longer than seven days or in other illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market (either within or outside of the United States) or legal or
contractual restrictions on resale. Historically, illiquid securities have
included securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of 1933, as
amended (Securities Act), securities which are otherwise not readily marketable
and repurchase agreements having a

B-6
<PAGE>
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placements or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying redemptions
within seven days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional expense and
delay. Adverse market conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.

Rule 144A of the Securities Act allows for a broader institutional trading
market for securities otherwise subject to restriction on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the Securities Act for resales of certain securities to qualified
institutional buyers. The investment adviser anticipates that the market for
certain restricted securities such as institutional commercial paper and foreign
securities will expand further as a result of this regulation and the
development of automated systems for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. (NASD).

Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act and commercial paper and municipal lease obligations for which
there is a readily available market are not considered illiquid for purposes of
this limitation under procedures established by the Board of Directors. The
investment adviser will monitor the liquidity of such restricted securities
subject to the supervision of the Board of Directors. In reaching liquidity
decisions, the investment adviser will consider, INTER ALIA, the following
factors: (1) the frequency of trades and quotes for the security; (2) the number
of dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer). In addition, in order for commercial
paper that is issued in reliance on Section 4(2) of the Securities Act to be
considered liquid, (i) it must be rated in one of the two highest rating
categories by at least two nationally recognized statistical rating
organizations (NRSRO), or if only one NRSRO rates the securities, by that NRSRO,
or, if unrated, be of comparable quality in the view of the investment adviser;
and (ii) it must not be "traded flat" (I.E., without accrued interest) or in
default as to principal or interest. With respect to municipal lease
obligations, the investment adviser also considers: (1) the willingness of the
municipality to continue, annually or biannually, to appropriate funds for
payment of the lease; (2) the general credit quality of the municipality and the
essentiality to the municipality of the property covered by the lease; (3) in
the case of unrated municipal lease obligations, an analysis of factors similar
to that performed by nationally recognized statistical rating organizations in
evaluating the credit quality of a municipal lease obligation, including (i)
whether the lease can be cancelled; (ii) if applicable, what assurance there is
that the assets represented by the lease can be sold; (iii) the strength of the
lessee's general credit (E.G., its debt, administrative, economic and financial
characteristics); (iv) the likelihood that the municipality will discontinue
appropriating funding for the leased property because the property is no longer
deemed essential to the operations of the municipality (E.G., the potential for
an event of nonappropriation); and (v) the legal recourse in the event of
failure to appropriate; and (4) any other factors unique to municipal lease
obligations as determined by the investment adviser. Repurchase agreements
subject to demand are deemed to have a maturity equal to the notice period.

The staff of the SEC has taken the position that purchased over-the-counter
options and the assets used as "cover" for written over-the-counter options are
illiquid securities unless the Fund and the counterparty have provided for the
Fund, at the Fund's election, to unwind the over-the-counter option. The
exercise of such an option ordinarily would involve the payment by the Fund of
an amount designed to reflect the counterparty's economic loss from an early
termination, but does allow the Fund to treat the assets used as "cover" as
"liquid."

B-7
<PAGE>
SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest up to 10% of its total assets in securities of other
investment companies. The Fund does not intend to invest in such securities
during the coming fiscal year. If the Fund does invest in securities of other
investment companies, shareholders of the Fund may be subject to duplicate
management and advisory fees.

HEDGING AND RETURN ENHANCEMENT STRATEGIES

OPTIONS ON SECURITIES

The Fund may purchase and write (I.E., sell) put and call options on
securities that are traded on U.S. or foreign securities exchanges or that are
traded in the over-the-counter markets. A call option is a short-term contract
pursuant to which the purchaser, in return for a premium paid, has the right to
buy the security underlying the option at a specified exercise price at any time
during the term of the option. The writer of the call option, who receives the
premium, has the obligation, upon exercise of the option, to deliver the
underlying security against payment of the exercise price. A put option is a
similar contract which gives the purchaser, in return for a premium, the right
to sell the underlying security at a specified price during the term of the
option. The writer of the put, who receives the premium, has the obligation to
buy the underlying security upon exercise at the exercise price. The Fund will
write put options only when the investment adviser desires to invest in the
underlying security. The premium paid by the purchaser of an option will
reflect, among other things, the relationship of the exercise price to the
market price and volatility of the underlying security, the remaining term of
the option, supply and demand and interest rates.

The Fund will write only "covered" options. A call option written by the
Fund is "covered" if the Fund owns the security underlying the option or has an
absolute and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated account
by its Custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Fund holds on a share-for-share
basis a call on the same security as the call written where the exercise price
of the call held is equal to or less than the exercise price of the call written
or greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or liquid assets in a segregated account with its
Custodian. A put option written by the Fund is "covered" if the Fund maintains
cash or liquid assets with a value equal to the exercise price in a segregated
account with its Custodian, or else holds on a share-for-share basis a put of
the same security as the put written where the exercise price of the put held is
equal to or greater than the exercise price of the put written.

If the writer of an option wishes to terminate the obligation, he or she may
effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be cancelled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she had been notified of the exercise of an option. Similarly, an
investor who is the holder of an option may liquidate his or her position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. To secure the obligation to deliver the underlying security in the
case of a call option, the writer of the option is generally required to pledge
for the benefit of the broker the underlying security or other assets in
accordance with the rules of the relevant exchange or clearinghouse, such as The
Options Clearing Corporation (OCC), an institution created to interpose itself
between buyers and sellers of options in the United States. Technically, the
clearinghouse assumes the other side of every purchase and sale transaction on
an exchange and, by doing so, guarantees the transaction.

The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option may be offset in whole or in
part by any appreciation of the underlying security if the Fund holds the
underlying security in its portfolio.

The Fund may also purchase a "protective put," I.E. , a put option acquired
for the purpose of protecting a portfolio security from a decline in market
value. In exchange for the premium paid for the put option, the Fund acquires
the right to sell the underlying security at the exercise price of the put
regardless of the extent to which the underlying security declines in value. The
loss to the Fund is limited to the premium paid for, and transaction costs in
connection with, the put plus the initial excess, if any, of the market price of
the underlying security over the exercise price. However, if the market price of
the security underlying the

B-8
<PAGE>
put rises, the profit the Fund realizes on the sale of the security will be
reduced by the premium paid for the put option less any amount (net of
transaction costs) for which the put may be sold. Similar principles apply to
the purchase of puts on stock indices, as described below.

OPTIONS ON SECURITIES INDICES. In addition to options on securities, the
Fund may also purchase and sell put and call options on securities indices
traded on U.S. or foreign securities exchanges or traded in the over-the-counter
markets. Options on securities indices are similar to options on securities
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
This amount of cash is equal to such difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple (the multiplier). The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. Unlike for
equity securities options, all settlements are in cash, and gain or loss depends
on price movements in the securities market generally (or in a particular
industry or segment of the market) rather than price movements in individual
securities.

The multiplier for an index option performs a function similar to the unit
of trading for a stock option. It determines the total dollar value per contract
of each point in the difference between the exercise price of an option and the
current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers. Because exercises of index options are settled in cash, a
call writer cannot determine the amount of its settlement obligations in advance
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. In addition, unless the Fund has other liquid assets
which are sufficient to satisfy the exercise of a call, the Fund would be
required to liquidate portfolio securities or borrow in order to satisfy the
exercise.

Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular security, whether the Fund will
realize a gain or loss on the purchase or sale of an option on an index depends
upon movements in the level of security prices in the market generally or in an
industry or market segment rather than movements in the price of a particular
security. Accordingly, successful use by the Fund of options on indices would be
subject to the investment adviser's ability to predict correctly movements in
the direction of the securities market generally or of a particular industry.
This requires different skills and techniques than predicting changes in the
price of individual stocks. The investment adviser currently uses such
techniques in conjunction with the management of other mutual funds.

RISKS OF TRANSACTIONS IN OPTIONS

An option position may be closed out only on an exchange, board of trade or
other trading facility which provides a secondary market for an option of the
same series. Although the Fund will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options no secondary
market on an exchange or otherwise may exist. In such event it might not be
possible to effect closing transactions in particular options, with the result
that the Fund would have to exercise its options in order to realize any profit
and would incur brokerage commissions upon the exercise of call options and upon
the subsequent disposition of underlying securities acquired through the
exercise of call options or upon the purchase of underlying securities for the
exercise of put options. If the Fund as a covered call option writer is unable
to effect a closing purchase transaction in a secondary market, it will not be
able to sell the underlying security until the option expires or it delivers the
underlying security upon exercise.

Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at times, render

B-9
<PAGE>
certain of the facilities of any of the clearing corporations inadequate, and
thereby result in the institution by an exchange of special procedures which may
interfere with the timely execution of customers' orders. The Fund intends to
purchase and sell only those options which are cleared by clearinghouses whose
facilities are considered to be adequate to handle the volume of options
transactions.

RISKS OF OPTIONS ON INDICES

The Fund's purchase and sale of options on indices will be subject to risks
described above under "Risks of Transactions in Options." In addition, the
distinctive characteristics of options on indices create certain risks that are
not present with stock options.

Index prices may be distorted if trading of certain stocks included in the
index is interrupted. Trading in the index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this occurred, the Fund would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, may be unable to exercise an option it holds, which could
result in substantial losses to the Fund. It is the Fund's policy to purchase or
write options only on indices which include a number of stocks sufficient to
minimize the likelihood of a trading halt in the index.

The ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop in all index option contracts. The
Fund will not purchase or sell any index option contract unless and until, in
the investment adviser's opinion, the market for such options has developed
sufficiently that the risk in connection with such transactions is not
substantially greater than the risk in connection with options on securities in
the index.

SPECIAL RISKS OF WRITING CALLS ON INDICES

Because exercises of index options are settled in cash, a call writer such
as the Fund cannot determine the amount of its settlement obligations in advance
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential settlement obligations by acquiring and holding the
underlying securities. However, the Fund will write call options on indices only
under the circumstances described below under "Limitations on Purchase and Sale
of Stock Options and Options on Stock Indices, Foreign Currencies and Futures
Contracts on Foreign Currencies."

Price movements in the Fund's portfolio probably will not correlate
precisely with movements in the level of the index and, therefore, the Fund
bears the risk that the price of the securities held by the Fund may not
increase as much as the index. In such event, the Fund would bear a loss on the
call which is not completely offset by movements in the price of the Fund's
portfolio. It is also possible that the index may rise when the Fund's portfolio
of stocks does not rise. If this occurred, the Fund would experience a loss on
the call which is not offset by an increase in the value of its portfolio and
might also experience a loss in its portfolio. However, because the value of a
diversified portfolio will, over time, tend to move in the same direction as the
market, movements in the value of the Fund in the opposite direction as the
market would be likely to occur for only a short period or to a small degree.

Unless the Fund has other liquid assets which are sufficient to satisfy the
exercise of a call, the Fund would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Fund fails to anticipate an
exercise, it may have to borrow from a bank (in amounts not exceeding 20% of the
Fund's total assets) pending settlement of the sale of securities in its
portfolio and would incur interest charges thereon.

When the Fund has written a call on an index, there is also a risk that the
market may decline between the time the Fund has a call exercised against it, at
a price which is fixed as of the closing level of the index on the date of
exercise, and the time the Fund is able to sell stocks in its portfolio to
generate cash to settle the exercise. As with stock options, the Fund will not
learn that an index option has been exercised until the day following the
exercise date but, unlike a call on stock where the Fund would be able to
deliver the underlying securities in settlement, the Fund may have to sell part
of its investment portfolio in order to make settlement in cash, and the price
of such investments might decline before they can be sold. This timing risk
makes certain strategies involving more than one option substantially more risky
with index options than with stock options. For example, even if an index call
which the Fund has written is "covered" by an index call held by the Fund with
the same strike price, the Fund will

B-10
<PAGE>
bear the risk that the level of the index may decline between the close of
trading on the date the exercise notice is filed with the clearing corporation
and the close of trading on the date the Fund exercises the call it holds or the
time the Fund sells the call which, in either case, would occur no earlier than
the day following the day the exercise notice was filed.

If the Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall out-of-the-money, the Fund will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although the
Fund may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than exercising an
option when the index level is close to the exercise price, it may not be
possible to eliminate this risk entirely because the cutoff times for index
options may be earlier than those fixed for other types of options and may occur
before definitive closing index values are announced.

RISKS OF OPTIONS ON FOREIGN CURRENCIES

Options on foreign currencies involve the currencies of two nations and
therefore, developments in either or both countries affect the values of such
options. These risks include government actions affecting currency valuation and
the movements of currencies from one country to another. The quantity of
currency underlying option contracts represent odd lots in a market dominated by
transactions between banks; this can mean extra transaction costs upon exercise.
Option markets may be closed while round-the-clock interbank currency markets
are open, and this can create price and rate discrepancies.

RISKS RELATED TO FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. The Fund may enter into forward foreign
currency exchange contracts in several circumstances. When the Fund enters into
a contract for the purchase or sale of a security denominated in a foreign
currency, or when the Fund anticipates the receipt in a foreign currency of
dividends or interest payments on a security which it holds, the Fund may desire
to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent
of such dividend or interest payment, as the case may be. By entering into a
forward contract for a fixed amount of dollars, for the purchase or sale of the
amount of foreign currency involved in the underlying transactions, the Fund may
be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the foreign currency
during the period between the date on which the security is purchased or sold,
or on which the dividend or interest payment is declared, and the date on which
such payments are made or received.

Additionally, when the investment adviser believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, the Fund may enter into a forward contract for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of some
or all of the Fund's portfolio securities denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
securities denominated in foreign currencies will also change as a consequence
of market movements in the value of those securities between the date on which
the forward contract is entered into and the date it matures. The projection of
short-term currency market movement is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain. The Fund does
not intend to enter into such forward contracts to protect the value of its
portfolio securities on a regular or continuous basis. The Fund does not intend
to enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would obligate the Fund to
deliver an amount of foreign currency in excess of the value of the Fund's
portfolio securities or other assets denominated in that currency. However, the
Manager and Subadviser believe that it is important to have the flexibility to
enter into such forward contracts when they determine that the best interests of
the Fund will thereby be served. The Fund's Custodian will place cash or other
liquid assets into a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of forward
foreign currency exchange contracts. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts.

B-11
<PAGE>
The Fund generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, the Fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the forward contract.
Accordingly, if a decision is made to sell the security and make delivery of the
foreign currency and if the market value of the security is less than the amount
of foreign currency that the Fund is obligated to deliver, then it would be
necessary for the Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase).

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Should forward contract prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent that the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward contract prices increase,
the Fund will suffer a loss to the extent that the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.

The Fund's dealing in forward foreign currency exchange contracts will
generally be limited to the transactions described above. Of course, the Fund is
not required to enter into such transactions with regard to its foreign
currency-dominated securities. It also should be recognized that this method of
protecting the value of the Fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities which are unrelated to exchange rates. Additionally, although
such contracts tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
which might result should the value of such currency increase.

Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend physically to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will do so from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference (the spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

The Fund may purchase and sell financial futures contracts which are traded
on a commodities exchange or board of trade. A futures contract is an agreement
to purchase or sell an agreed amount of securities or currencies at a set price
for delivery in the future. There are several risks in connection with the use
of futures contracts as a hedging device. Due to the imperfect correlation
between the price of futures contracts and movements in the currency or group of
currencies, the price of a futures contract may move more or less than the price
of the currencies being hedged. In the case of futures contracts on securities
indices, one party agrees to deliver to another an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
securities index at the close of the last trading day of the contract and the
price at which the agreement is made. The correlation between the price of the
futures contract and the movements in the index may not be perfect. Therefore, a
correct forecast of currency rates, market trends or international political
trends by the investment adviser may still not result in a successful hedging
transaction.

Although the Fund will purchase or sell futures contracts only on exchanges
where there appears to be an adequate secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
contract or at any particular time. Accordingly, there can be no assurance that
it will be possible, at any particular time, to close a futures position. In the
event the Fund could not close a futures position and the value of such position
declined, the Fund would be required to continue to make daily cash payments of
variation margin. There is no guarantee that the price movements of the
portfolio securities denominated in foreign currencies will, in fact, correlate
with the price movements in the futures contract and thus provide an offset to
losses on a futures contract. Currently, currency futures contracts are
available on various foreign currencies including the Australian Dollar, British
Pound, Canadian Dollar, Japanese Yen, Swiss Franc, West German Mark and
Eurodollars. Index futures contracts are available on various U.S. and foreign
securities indices.

B-12
<PAGE>
Successful use of futures contracts by the Fund is also subject to the
ability of the Fund's investment adviser to predict correctly movements in the
direction of markets and other factors affecting currencies or the securities
market generally. For example, if the Fund had hedged against the possibility of
an increase in currency rates which would adversely affect the price of
securities in its portfolio and the price of such securities increases instead,
the Fund will lose part or all of the benefit of the increased value of its
securities because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash to meet daily
variation margin requirements, it may need to sell securities to meet such
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The Fund may have to sell
securities at a time when it is disadvantageous to do so.

The hours of trading of futures contracts may not conform to the hours
during which the Fund may trade the underlying securities. To the extent that
the futures markets close before the securities markets, significant price and
rate movements can take place in the securities markets that cannot be reflected
in the futures markets.

OPTIONS ON FUTURES CONTRACTS

An option on a futures contract gives the purchaser the right, but not the
obligation, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume an offsetting futures position (a
short position if the option is a call and a long position if the option is a
put). Upon exercise of the option, the assumption of offsetting futures
positions by the writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. Currently options can
be purchased or written with respect to futures contracts on various foreign
currencies, including the Australian Dollar, British Pound, Canadian Dollar,
Japanese Yen, Swiss Franc, West German Mark and Eurodollars. With respect to
stock indices, options are traded on futures contracts for various U.S. and
foreign stock indicies including the S&P 500 Stock Index and the NYSE Composite
Index.

The holder or writer of an option may terminate its position by selling or
purchasing an option of the same series. There is no guarantee that such closing
transactions can be effected.

LIMITATIONS ON PURCHASE AND SALE OF STOCK OPTIONS AND OPTIONS ON STOCK INDICES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS ON FOREIGN CURRENCIES

The Fund may write put and call options on stocks only if they are covered,
and such options must remain covered so long as the Fund is obligated as a
writer. The Fund will write put options on stock indices and foreign currencies
and futures contracts on foreign currencies only if they are covered by
segregating with the Fund's Custodian an amount of cash, U.S. Government
securities, or other liquid assets equal to the aggregate exercise price of the
puts. The Fund will not enter into futures contracts or related options if the
aggregate initial margin and premiums exceed 5% of the liquidation value of the
Fund's total assets, taking into account unrealized profits and losses on such
contracts, provided, however, that in the case of an option that is in-the-
money, the in-the-money amount may be excluded in computing such 5%. The above
restriction does not apply to the purchase or sale of futures contracts and
related options for BONA FIDE hedging purposes within the meaning of regulations
of the Commodities Futures Trading Commission. The Fund does not intend to
purchase options on equity securities or securities indices if the aggregate
premiums paid for such outstanding options would exceed 10% of the Fund's total
assets.

Except as described below, the Fund will write call options on indices only
if on such date it holds a portfolio of stocks at least equal to the value of
the index times the multiplier times the number of contracts. When the Fund
writes a call option on a broadly-based stock market index, the Fund will
segregate or put into escrow with its Custodian, or pledge to a broker as
collateral for the option, cash, U.S. Government securities, or other liquid
assets with a market value at the time the option is written of not less than
100% of the current index value times the multiplier times the number of
contracts.

If the Fund has written an option on an industry or market segment index, it
will segregate or put into escrow with its Custodian, or pledge to a broker as
collateral for the option, at least ten "qualified securities," all of which are
stocks of issuers in such industry or market segment, with a market value at the
time the option is written of not less than 100% of the current index value
times the multiplier times the number of contracts. Such stocks will include
stocks which represent at least 50% of the weighting of the industry or market
segment index and will represent at least 50% of the Fund's holdings in that
industry or market segment. No individual security will represent more than 15%
of the amount so segregated, pledged or escrowed in the

B-13
<PAGE>
case of broadly-based stock market index options or 25% of such amount in the
case of industry or market segment index options. If at the close of business on
any day the market value of such qualified securities so segregated, escrowed or
pledged falls below 100% of the current index value times the multiplier times
the number of contracts, the Fund will so segregate, escrow or pledge an amount
in cash or other liquid assets equal in value to the difference. In addition,
when the Fund writes a call on an index which is in-the-money at the time the
call is written, the Fund will segregate with its Custodian or pledge to the
broker as collateral cash or other liquid assets equal in value to the amount by
which the call is in-the-money times the multiplier times the number of
contracts. Any amount segregated pursuant to the foregoing sentence may be
applied to the Fund's obligation to segregate additional amounts in the event
that the market value of the qualified securities falls below 100% of the
current index value times the multiplier times the number of contracts. A
"qualified security" is an equity security which is listed on a national
securities exchange or listed on NASDAQ against which the Fund has not written a
stock call option and which has not been hedged by the Fund by the sale of stock
index futures. However, if the Fund holds a call on the same index as the call
written where the exercise price of the call held is equal to or less than the
exercise price of the call written or greater than the exercise price of the
call written if the difference is maintained by the Fund in cash or other liquid
assets in a segregated account with its Custodian, it will not be subject to the
requirements described in this paragraph.

The Fund may engage in futures contracts and options on futures transactions
as a hedge against changes, resulting from market or political conditions, in
the value of the currencies to which the Fund is subject or to which the Fund
expects to be subject in connection with future purchases. The Fund may engage
in such transactions when they are economically appropriate for the reduction of
risks inherent in the ongoing management of the Fund. The Fund may write options
on futures contracts to realize through the receipt of premium income a greater
return than would be realized in the Fund's portfolio securities alone.

POSITION LIMITS. Transactions by the Fund in futures contracts and options
will be subject to limitations, if any, established by each of the exchanges,
boards of trade or other trading facilities (including NASDAQ) governing the
maximum number of options in each class which may be written or purchased by a
single investor or group of investors acting in concert, regardless of whether
the options are written on the same or different exchanges, boards of trade or
other trading facilities or are held or written in one or more accounts or
through one or more brokers. Thus, the number of futures contracts and options
which the Fund may write or purchase may be affected by the futures contracts
and options written or purchased by other investment advisory clients of the
investment adviser. An exchange, board of trade or other trading facility may
order the liquidations of positions found to be in excess of these limits, and
it may impose certain other sanctions.

When conditions dictate a defensive strategy, the Fund may invest without
limit in money market instruments, including commercial paper of corporations,
certificates of deposit, bankers' acceptances and other obligations of domestic
and foreign banks, obligations issued or guaranteed by the U.S. Government or
foreign governments and their agencies or instrumentalities and repurchase
agreements maturing in seven days or less. In addition to the risks typically
associated with money market instruments, such as credit risk and market risk,
money market instruments issued by foreign issuers may be subject to additional
risks, including future political and economic developments, the possible
imposition of withholding taxes on interest income, the seizure or
nationalization of foreign deposits and foreign exchange controls or other
restrictions.

(d) PORTFOLIO TURNOVER

As a result of the investment policies described above, the Fund may engage
in a substantial number of portfolio transactions. The portfolio turnover rate
is generally the percentage computed by dividing the lesser of portfolio
purchases or sales (excluding all securities, including options, whose
maturities or expiration date at acquisition were one year or less) by the
monthly average value of the portfolio. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs, which are borne directly by the Fund. In addition, high portfolio
turnover may also mean that a proportionately greater amount of distributions to
shareholders will be taxed as ordinary income rather than long-term capital
gains compared to investment companies with lower portfolio turnover. See
"Taxes, Dividends and Distributions."

INVESTMENT RESTRICTIONS

The following restrictions are fundamental policies. Fundamental policies
are those which cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. A "majority of the Fund's
outstanding voting

B-14
<PAGE>
securities," when used in this Statement of Additional Information, means the
lesser of (i) 67% of the voting shares represented at a meeting at which more
than 50% of the outstanding voting shares are present in person or represented
by proxy or (ii) more than 50% of the outstanding voting shares.

The Fund may not:

1. Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of transactions);
provided that the deposit or payment by the Fund of initial or maintenance
margin in connection with futures or options is not considered the purchase
of a security on margin.

2. Make short sales of securities or maintain a short position if,
when added together, more than 25% of the value of the Fund's net assets
would be (i) deposited as collateral for the obligation to replace
securities borrowed to effect short sales and (ii) allocated to segregated
accounts in connection with short sales. Short sales "against-the-box" are
not subject to this limitation.

3. Issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from banks up to 20% of the value of its total
assets (calculated when the loan is made) for temporary, extraordinary or
emergency purposes or for the clearance of transactions. The Fund may pledge
up to 20% of the value of its total assets to secure such borrowings. For
purposes of this restriction, the purchase or sale of securities on a
when-issued or delayed delivery basis, forward foreign currency exchange
contracts and collateral and collateral arrangements relating thereto, and
collateral arrangements with respect to futures contracts and options
thereon and with respect to the writing of options and obligations of the
Fund to Directors pursuant to deferred compensation arrangements are not
deemed to be a pledge of assets or the issuance of a senior security.

4. Purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result: (i) with
respect to 75% of the Fund's total assets, more than 5% of the Fund's total
assets (determined at the time of investment) would then be invested in
securities of a single issuer, or (ii) 25% or more of the Fund's total
assets (determined at the time of the investment) would be invested in a
single industry.

5. Buy or sell real estate or interests in real estate, except that
the Fund may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly
traded securities of real estate investment trusts. The Fund may not
purchase interests in real estate limited partnerships which are not readily
marketable.

6. Buy or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial futures contracts and options thereon.
(For purposes of this restriction, futures contracts on currencies and on
securities indices and forward foreign currency exchange contracts are not
deemed to be commodities or commodity contracts.)

7. Act as underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws. The Fund has not adopted
a fundamental investment policy with respect to investments in restricted
securities. See "Illiquid Securities."

8. Make investments for the purpose of exercising control or
management.

9. Invest in securities of other investment companies, except by
purchases in the open market involving only customary brokerage commissions
and as a result of which the Fund will not hold more than 3% of the
outstanding voting securities of any one investment company, will not have
invested more than 5% of its total assets in any one investment company and
will not have invested more than 10% of its total assets (determined at the
time of investment) in such securities of one or more investment companies,
or except as part of a merger, consolidation or other acquisition.

10. Invest in interests in oil, gas or other mineral exploration or
development programs, except that the Fund may invest in the securities of
companies which invest in or sponsor such programs.

11. Make loans, except through (i) repurchase agreements and (ii) loans
of portfolio securities limited to 30% of the Fund's total assets.

12. Purchase more than 10% of all outstanding voting securities of any
one issuer.

Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Fund's assets or net assets, it is intended that if
the percentage limitation is met at the time the investment is made, then a
later change in

B-15
<PAGE>

percentage resulting from changing total or net asset values will not be
considered a violation of such policy. However, in the event that the Fund's
asset coverage for borrowings falls below 300%, the Fund will take action within
three days to reduce its borrowings, as required by applicable law.

MANAGEMENT OF THE FUND

(a) DIRECTORS

The Fund has Directors who, in addition to overseeing the actions of the
Fund's Manager, Subadvisers and Distributor, decide upon matters of general
policy.

The Directors also review the actions of the Fund officers who conduct and
supervise the daily business operations of the Fund.

(b) MANAGEMENT INFORMATION--DIRECTORS AND OFFICERS

B-16
<PAGE>

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) THE FUND DURING PAST 5 YEARS
- ------------------------------ ------------------------------ -----------------------------------------------------------------
<S> <C> <C>
*Mendel A. Melzer (37) Director Chief Investment Officer (since October 1996) of Prudential
Mutual Funds; formerly Chief Financial Officer (November
1995-October 1996) of Prudential Investments; Senior Vice
President and Chief Financial Officer (April 1993-November 1995)
of Prudential Preferred Financial Services; Managing Director
(April 1991-April 1993) of Prudential Investment Advisors and
Senior Vice President (July 1989-April 1991) of Prudential
Capital Corporation; Chairman and Director of Prudential Series
Fund, Inc.; and Director of The High Yield Income Fund, Inc.
Robin B. Smith (58) Director Chairman and Chief Executive Officer (since August 1996), of
Publishers Clearing House; formerly President and Chief
Executive Officer (January 1989-August 1996) and President and
Chief Operating Officer (September 1981-December 1988) of
Publishers Clearing House; Director of BellSouth Corporation,
Texaco Inc., Springs Industries Inc. and Kmart Corporation.
Stephen Stoneburn (54) Director President and Chief Executive Officer (since June 1996) of
Quadrant Media Corp. (a publishing company); formerly President
(June 1995-June 1996) of Argus Integrated Media, Inc.; Senior
Vice President and Managing Director (January 1993-1995), Cowles
Business Media; Senior Vice President (January 1991-1992) of
Gralla Publications (a division of United Newspapers, U.K.); and
Senior Vice President of Fairchild Publications, Inc.
*Brian M. Storms (44) President and Director President, Prudential Investments. (October 1998-Present).
President, Prudential Mutual Funds, Annuities, and Investment
Management Services. (September 1996-October 1998). Managing
Director, Fidelity Investments Institutional Services Company,
Inc. (July 1991-September 1996) President, J.K. Schofield
(October 1989-September 1991) Senior Vice President, INVEST
Financial Corporation. (September 1982-October 1989).
Nancy H. Teeters (67) Director Economist; formerly Vice President and Chief Economist (March
1986-June 1990) of International Business Machines Corporation;
Director (since July 1991) of Inland Steel Corporation, and
Director of The High Yield Income Fund, Inc.
Grace C. Torres (39) Treasurer and Principal First Vice President (since December 1996) of PIFM; First Vice
Financial and Accounting President (since March 1994) of Prudential Securities; formerly
Officer First Vice President (March 1994-September 1996), Prudential
Mutual Fund Management, Inc. and Vice President (July 1989-March
1994) of Bankers Trust Corporation.
Robert C. Rosselot (38) Secretary Assistant General Counsel (since September 1997) of PIFM.
Formerly, partner with the firm of Howard & Howard, Bloomfield
Hills, Michigan (December 1995-September 1997) and, prior
thereto, Corporate Counsel, Federated Investors (1990-1995).
</TABLE>

B-17
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE (1) THE FUND DURING PAST 5 YEARS
- ------------------------------ ------------------------------ -----------------------------------------------------------------
<S> <C> <C>
Stephen M. Ungerman (44) Assistant Treasurer Vice President and Tax Director, (since March 1996) Prudential
Investments; formerly First Vice President of Prudential Mutual
Fund Management, Inc. (February 1993-September 1996).
</TABLE>

- ------------
(1) Unless otherwise noted the address for each of the above persons is c/o
Prudential Investments Fund Management LLC, Gateway Center Three, 100
Mulberry Street, 9th Floor, Newark, New Jersey 07102-4077.

* "Interested" director, as defined in the Investment Company Act, by reason of
his affiliation with Prudential Securities or PIFM.

Directors and officers of the Fund are also trustees, directors and officers
of some or all of the other investment companies distributed by Prudential
Securities.

Pursuant to the terms of the Management Agreement with the Fund, the Manager
pays all compensation of officers and employees of the Fund as well as the fees
and expenses of all Directors of the Fund who are affiliated persons of the
Manager.

The Fund pays each of its Directors who is not an affiliated person of PIFM
annual compensation of $4,500, in addition to certain out-of-pocket expenses.
The amount of annual compensation paid to each director may change as a result
of the introduction of additional funds upon which the Director will be asked to
serve.

Directors may receive their Directors' fees pursuant to a deferred fee
agreement with the Fund. Under the terms of the agreement, the Fund accrues
daily the amount of Directors' fees which accrue interest at a rate equivalent
to the prevailing rate applicable to 90-day U.S. Treasury bills at the beginning
of each calendar quarter or, pursuant to an SEC exemptive order, at the daily
rate of return of the Fund (the Fund rate). Payment of the interest so accrued
is also deferred and accruals become payable at the option of the Director. The
Fund's obligation to make payments of deferred Directors' fees, together with
interest thereon, is a general obligation of the Fund.

The Directors have adopted a retirement policy which calls for the
retirement of Directors on December 31 of the year in which they reach the age
of 72, except that retirement is being phased in for Directors who were age 68
or older as of December 31, 1993. Under this phase-in provision, Mr. Beach is
scheduled to retire on December 31, 1999.

B-18
<PAGE>

The following table sets forth the aggregate compensation paid by the Fund
to the Directors who are not affiliated with the Manager for the fiscal year
ended October 31, 1998 and the aggregate compensation paid to such Directors for
service on the Fund's Board and that of all other investment companies managed
by PIFM (Fund Complex) for the calendar year ended December 31, 1998. Below are
listed the Directors who have served the Fund during its most recent fiscal
year.

COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR TOTAL 1998
RETIREMENT COMPENSATION
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL FROM FUND AND FUND
COMPENSATION AS PART OF FUND BENEFITS UPON COMPLEX PAID
NAME AND POSITION FROM FUND EXPENSES RETIREMENT TO DIRECTORS(2)
- ---------------------------------------------------- ------------- ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Edward D. Beach--Director $ 4,500 None N/A $ 135,000(44/71)*
Stephen C. Eyre--Former Director $ 4,500 None N/A $ 45,000(14/17)*
Delayne D. Gold--Director $ 4,500 None N/A $ 135,000(44/71)*
Robert F. Gunia (1)--Director -- None N/A --
Don G. Hoff--Director $ 4,500 None N/A $ 45,000(14/17)*
Robert F. LaBlanc--Director $ 4,500 None N/A $ 45,000(14/17)*
Mendel A. Melzer (1)--Director -- None N/A --
Richard A. Redeker (1)--Former Director -- None N/A --
Robin B. Smith--Director $ 4,500 None N/A $ 90,000(32/41)*
Stephen Stoneburn--Director $ 4,500 None N/A $ 45,000(14/17)*
Brian M. Storms (1)--Director -- None N/A --
Nancy H. Teeters--Director $ 4,500 None N/A $ 90,000(26/47)*
</TABLE>

- ------------------------

* Indicates number of funds/portfolios in Fund Complex (including the Fund) to
which aggregate compensation relates.

(1) Directors who are "interested" do not receive compensation from Fund Complex
(including the Fund).

(2) Total compensation from all the funds in the Fund Complex for the calendar
year ended December 31, 1998, including amounts deferred at the election of
Directors under the funds' deferred compensation plans. Including accrued
interest, total deferred compensation amounted to $116,225 for Robin B.
Smith. Currently, Ms. Smith has agreed to defer some of her fees at the
T-Bill rate and other fees at the Fund rate.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

Directors of the Fund are eligible to purchase Class Z shares of each
Series, which are sold without either an initial sales charge or CDSC to a
limited group of investors.

As of February 5, 1999, the Directors and officers of the Fund, as a group,
owned less than 1% of the outstanding common stock of the Fund.

As of February 5, 1999, the beneficial owners, directly or indirectly, of
more than 5% of the outstanding common stock of the Prudential Pacific Growth
Fund, Inc. were: Marcelo Stenger, Lilia Gomez De Stenger and Diana Stenger De
Urruchua JT TEN, held 9,143 Class C shares (or approximately 5% of the
outstanding Class C shares).

As of February 5 1999, Prudential Securities was the record holder for other
beneficial owners of 1,584,689 Class A shares (or approximately 65.28% of the
outstanding Class A shares), 5,605,544 Class B shares (or approximately 71.82%
of the outstanding Class B shares); 139,987 Class C shares (or approximately
76.61% of the outstanding Class C shares) and 16,581 Class Z shares (or
approximately 1.21% of the outstanding Class Z shares) of the Fund. In the event
of any meetings of shareholders, Prudential Securities will forward, or cause
the forwarding of, proxy materials to the beneficial owners for which it is the
record holder.

INVESTMENT ADVISORY AND OTHER SERVICES

(a) INVESTMENT ADVISERS

The manager of the Fund is Prudential Investments Fund Management LLC (PIFM
or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102-4077. PIFM serves as manager to all of the other investment companies
that, together with the Fund, comprise the Prudential Mutual Funds. See "How the
Fund is Managed--Manager" in the Prospectus. As

B-19
<PAGE>

of December 31, 1998, PIFM managed and/or administered open-end and closed-end
management investment companies with assets of approximately $70.5 billion.
According to the Investment Company Institute, as of November 30, 1998, the
Prudential Mutual Funds were the 18th largest family of mutual funds in the
United States.

PIFM is a subsidiary of Prudential Securities. Prudential Mutual Fund
Services LLC (PMFS or the Transfer Agent), a wholly-owned subsidiary of PIFM
serves as the transfer agent for the Prudential Mutual Funds and, in addition,
provides customer service, recordkeeping and management and administration
services to qualified plans.

Pursuant to the Management Agreement with the Fund (the Management
Agreement), PIFM, subject to the supervision of the Fund's Board of Directors
and in conformity with the stated policies of the Fund, manages both the
investment operations of the Fund and the composition of the Fund's portfolio,
including the purchase, retention, disposition and loan of securities. In
connection therewith, PIFM is obligated to keep certain books and records of the
Fund. PIFM also administers the Fund's corporate affairs and, in connection
therewith, furnishes the Fund with office facilities, together with those
ordinary clerical and bookkeeping services which are not being furnished by
State Street Bank and Trust Company, the Fund's custodian, and (PMFS), the
Fund's transfer and dividend disbursing agent. The management services of PIFM
for the Fund are not exclusive under the terms of the Management Agreement and
PIFM is free to, and does, render management services to others.

For its services, PIFM receives, pursuant to the Management Agreement, a fee
at an annual rate of .75 of 1% of the Fund's average daily net assets. The fee
is computed daily and payable monthly. The Management Agreement also provides
that, in the event the expenses of the Fund (including the fees of PIFM, but
excluding interest, taxes, brokerage commissions, distribution fees and
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business) for any fiscal year
exceed the lowest applicable annual expense limitation established and enforced
pursuant to the statutes or regulations of any jurisdiction in which the Fund's
shares are qualified for offer and sale, the compensation due to PIFM will be
reduced by the amount of such excess. Reductions in excess of the total
compensation payable to PIFM will be paid by PIFM to the Fund. Currently, the
Fund believes that there are no such expense limitations.

In connection with its management of the corporate affairs of the Fund, PIFM
bears the following expenses:

(a) the salaries and expenses of all of its and the Fund's personnel
except the fees and expenses of Directors who are not affiliated persons of
PIFM or the Fund's investment adviser;

(b) all expenses incurred, by PIFM or by the Fund in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund as described below; and

(c) the costs and expenses payable to The Prudential Investment
Corporation, doing business as Prudential Investments (PI or the Subadviser)
pursuant to the Subadvisory Agreement between PIFM and PI (the Subadvisory
Agreement).

Under the terms of the Management Agreement, the Fund is responsible for the
payment of the following expenses: (a) the fees payable to the Manager, (b) the
fees and expenses of Directors who are not affiliated persons of the Manager or
the Fund's investment adviser, (c) the fees and certain expenses of the
Custodian and Transfer and Dividend Disbursing Agent, including the cost of
providing records to the Manager in connection with its obligation of
maintaining required records of the Fund and of pricing the Fund's shares, (d)
the charges and expenses of legal counsel and independent accountants for the
Fund, (e) brokerage commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities transactions, (f) all taxes and
corporate fees payable by the Fund to governmental agencies, (g) the fees of any
trade associations of which the Fund may be a member, (h) the cost of stock
certificates representing shares of the Fund, (i) the cost of fidelity and
liability insurance, (j) certain organization expenses of the Fund and the fees
and expenses involved in registering and maintaining registration of the Fund
and of its shares with the SEC, registering the Fund and qualifying its shares
under state securities laws, including the preparation and printing of the
Fund's registration statements and prospectuses for such purposes, and paying
the fees and expenses of notice filings made in accordance with State securities
law, (k) allocable communications expenses with respect to investor services and
all expenses of shareholders' and Directors' meetings and of preparing, printing
and mailing reports, proxy statements and prospectuses to shareholders in the
amount necessary for distribution to the shareholders, (l) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business and (m) distribution fees.

The Management Agreement provides that PIFM will not be liable for any error
of judgment or for any loss suffered by the Fund in connection with the matters
to which the Management Agreement relates, except a loss resulting from willful

B-20
<PAGE>
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Management Agreement provides that it will terminate automatically if assigned,
and that it may be terminated without penalty by either party upon not more than
60 days' nor less than 30 days' written notice. The Management Agreement will
continue in effect for a period of more than two years from the date of
execution only so long as such continuance is specifically approved at least
annually in conformity with the Investment Company Act.

For the fiscal years ended October 31, 1998, 1997 and 1996, PIFM received
management fees of $1,021,518, $2,676,801 and $3,682,994, respectively.

PIFM has entered into the Subadvisory Agreement with PI. The Subadvisory
Agreement provides that PI will furnish investment advisory services in
connection with the management of the Fund. In connection therewith, PI is
obligated to keep certain books and records of the Fund. PIFM continues to have
responsibility for all investment advisory services pursuant to the Management
Agreement and supervises PI's performance of such services. PI is reimbursed by
PIFM for the reasonable costs and expenses incurred by PI in furnishing those
services.

The Subadvisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Investment Company Act) or upon the
termination of the Management Agreement. The Subadvisory Agreement may be
terminated by the Fund, PIFM or PI upon not more than 60 days', nor less than 30
days', written notice. The Subadvisory Agreement provides that it will continue
in effect for a period of more than two years from its execution only so long as
such continuance is specifically approved at least annually in accordance with
the requirements of the Investment Company Act.

(b) PRINCIPAL UNDERWRITER, DISTRIBUTOR AND RULE 12b-1 PLANS

Prudential Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts
as the distributor of the shares of the Fund. Prior to June 1, 1998, Prudential
Securities Incorporated (Prudential Securities) was the Fund's distributor.

Pursuant to separate Distribution and Service Plans (the Class A Plan, the
Class B Plan and the Class C Plan, collectively, the Plans) adopted by the Fund
under Rule 12b-1 under the Investment Company Act and a distribution agreement
(the Distribution Agreement), the Distributor incurs the expenses of
distributing the Fund's Class A, Class B and Class C shares. PIMS serves as the
Distributor of the Class Z shares and incurs the expenses of distributing the
Fund's Class Z shares under a Distribution Agreement with the Fund, none of
which are reimbursed or paid for by the Fund. See "How the Fund is Managed--
Distributor" in the Prospectus.

The Class A Plan provides that (i) up to .25 of 1% of the daily net assets
of the Class A shares may be used to pay for personal service and/or the
maintenance of shareholder accounts (service fee) and (ii) total distribution
fees (including the service fee of .25 of 1%) may not exceed .30 of 1% of the
average daily net assets of the Class A shares. The Class B and Class C Plans
provide for the payment to the Distributor of (i) an asset-based sales charge of
.75 of 1% of the average daily net assets of each of the Class B and Class C
shares and (ii) a service fee of .25 of 1% of the average daily net assets of
each of the Class B and Class C shares.

The distribution and/or service fees may also be used by the Distributor to
compensate Dealers on a continuing basis in consideration for the distribution,
marketing, administrative and other services and activities provided by dealers
with respect to the promotion of the sale of the Fund's shares and the
maintenance of related shareholder accounts.

CLASS A PLAN. For the fiscal year ended October 31, 1998, Prudential
Securities received payments of $ and PIMS received payments of $ from
the Fund, under the Class A Plan. These amounts were expended on commission
credits to Prudential Securities and Pruco Securities Corporation, an affiliated
broker-dealer (Prusec), for payments of commissions and account servicing fees
to financial advisers and other persons who sell Class A shares. For the fiscal
year ended October 31, 1998, Prudential Securities and PIMS also received
approximately $ and $ in initial sales charges, respectively.

CLASS B PLAN. For the fiscal year ended October 31, 1998, Prudential
Securities and PIMS received $ and $ , respectively, from the Fund
under the Class B Plan and spent approximately $ and $ ,
respectively, in distributing the Class B shares of the Fund. It is estimated
that of the latter amounts $ ( %) and $ ( %), respectively, was
spent on printing and mailing of prospectuses to other than current
shareholders; $ ( %) and $ ( %), respectively, on compensation to
Prusec for commissions to its representatives and other expenses, including an
allocation on account of overhead and other branch office distribution-related
expenses

B-21
<PAGE>
incurred by it for distribution of Class B shares; and $ ( %) and
$ ( %), respectively, on the aggregate of (i) payments of commissions and
account servicing fees to its financial advisers $ ( %) and $
( %), respectively, and (ii) an allocation on account of overhead and other
branch office distribution-related expenses $ ( %) and $ ( %),
respectively. The term "overhead and other branch office distribution-related
expenses" as used herein represents (a) the expenses of operating Prusec's and
Prudential Securities' branch offices in connection with the sale of Fund
shares, including lease costs, the salaries and employee benefits of operations
and sales support personnel, utility costs, communications costs and the costs
of stationery and supplies, (b) the costs of client sales seminars, (c) expenses
of mutual fund sales coordinators to promote the sale of Fund shares, and (d)
other incidental expenses relating to branch promotion of Fund sales.

The Distributor also receives the proceeds of contingent deferred sales
charges paid by holders of Class B shares upon certain redemptions of Class B
shares. For the fiscal year ended October 31, 1998, Prudential Securities and
PIMS received approximately $ and $ , respectively, in contingent
deferred sales charges.

CLASS C PLAN. For the fiscal year ended October 31, 1998, Prudential
Securities and PIMS received $ and $ , respectively, from the Fund
under the Class C Plan and spent approximately $ and $ ,
respectively, in distributing the Class C shares of the Fund. It is estimated
that of the latter amounts approximately $ ( %) and $ ( %),
respectively, was spent on printing and mailing of prospectuses to other than
current shareholders; $ ( %) and $ ( %), respectively, on
compensation to Prusec for commissions to its representatives and other
expenses, including an allocation on account of overhead and other branch office
distribution-related expenses incurred by it for distribution of Class C shares;
and $ ( %) and $ ( %), respectively, on the aggregate of (i)
payments of commissions and account servicing fees to its financial advisers
$ ( %) and $ ( %), respectively, and (ii) an allocation on account
of overhead and other branch office distribution-related expenses $ ( %)
and $ ( %), respectively.

The Distributor also receives the proceeds of contingent deferred sales
charges paid by investors upon certain redemptions of Class C shares. For the
fiscal year ended October 31, 1998, Prudential Securities received contingent
deferred sales charges of approximately $ and PIMS received contingent
deferred sales charges of approximately $ .

The Class A, Class B and Class C Plans will continue in effect from year to
year, provided that each such continuance is approved at least annually by a
vote of the Board of Directors, including a majority vote of the Rule 12b-1
Directors, cast in person at a meeting called for the purpose of voting on such
continuance. The Plans may each be terminated at any time, without penalty, by
the vote of a majority of the Rule 12b-1 Directors or by the vote of the holders
of a majority of the outstanding shares of the applicable class on not more than
30 days' written notice to any other party to the Plans. The Plans may not be
amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the applicable class
(by both Class A and Class B shareholders, voting separately, in the case of
material amendments to the Class A Plan), and all material amendments are
required to be approved by the Board of Directors in the manner described above.
Each Plan will automatically terminate in the event of its assignment. The Fund
will not be contractually obligated to pay expenses incurred under any Plan if
it is terminated or not continued.

Pursuant to each Plan, the Board of Directors will review at least quarterly
a written report of the distribution expenses incurred on behalf of each class
of shares of the Fund by the Distributor. The report includes an itemization of
the distribution expenses and the purposes of such expenditures. In addition, as
long as the Plans remain in effect, the selection and nomination of Rule 12b-1
Directors shall be committed to the Rule 12b-1 Directors.

In addition to distribution and service fees paid by the Fund under the
Class A, Class B and Class C Plans, the Manager (or one of its affiliates) may
make payments out of its own resources to Dealers and other persons which
distribute shares of the Fund (including Class Z shares). Such payments may be
calculated by reference to the net asset value of shares sold by such persons or
otherwise.

NASD MAXIMUM SALES CHARGE RULE. Pursuant to rules of the NASD, the
Distributor is required to limit aggregate initial sales charges, deferred sales
charges and asset-based sales charges to 6.25% of total gross sales of each
class of shares. Interest charges on unreimbursed distribution expenses equal to
the prime rate plus one percent per annum may be added to the 6.25% limitation.
Sales from the reinvestment of dividends and distributions are not required to
be included in the calculation of

B-22
<PAGE>
the 6.25% limitation. The annual asset-based sales charge on shares of the Fund
may not exceed .75 of 1% per class. The 6.25% limitation applies to the Fund
rather than on a per shareholder basis. If aggregate sales charges were to
exceed 6.25% of total gross sales of any class, all sales charges on shares of
that class would be suspended.

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund. Subcustodians provide custodial
services for the Fund's foreign assets held outside the United States.

Prudential Mutual Fund Services LLC (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as the transfer and dividend disbursing agent of the Fund.
PMFS is a wholly-owned subsidiary of PIFM. PMFS provides customary transfer
agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, the payment of dividends and distributions and
related functions. For these services, PMFS receives an annual fee per
shareholder account, a new account set-up fee for each manually established
account and a monthly inactive zero balance account fee per shareholder account.
PMFS is also reimbursed for its out-of-pocket expenses, including but not
limited to postage, stationery, printing, allocable communication expenses and
other costs. For the fiscal year ended October 31, 1998, the Fund incurred fees
of approximately $466,000 for the services of PMFS.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the Fund's independent accountants and in that capacity audits
the Fund's annual financial statements.

BROKERAGE ALLOCATION AND OTHER PRACTICES

The Manager is responsible for decisions to buy and sell securities, futures
and options on securities and futures for the Fund, the selection of brokers,
dealers and futures commission merchants to effect the transactions and the
negotiation of brokerage commissions, if any. The term "Manager" as used in this
section includes the Subadviser. On a national securities exchange,
broker-dealers may receive negotiated brokerage commissions on Fund portfolio
transactions, including options and the purchase and sale of underlying
securities upon the exercise of options. On foreign securities exchanges,
commissions may be fixed. Orders may be directed to any broker or futures
commission merchant including, to the extent and in the manner permitted by
applicable law, Prudential Securities and its affiliates.

Equity securities traded in the over-the-counter market and bonds, including
convertible bonds, are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments and U.S.
Government agency securities may be purchased directly from the issuer, in which
case no commissions or discounts are paid. The Fund will not deal with
Prudential Securities or any affiliate in any transaction in which Prudential
Securities or any affiliate acts as principal. Thus, it will not deal with
Prudential Securities acting as market maker, and it will not execute a
negotiated trade with Prudential Securities if execution involves Prudential
Securities' acting as principal with respect to any part of the Fund's order.

In placing orders for portfolio securities of the Fund, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. Within the framework of this policy, the Manager will
consider the research and investment services provided by brokers, dealers or
futures commission merchants who effect or are parties to portfolio transactions
of the Fund, the Manager or the Manager's other clients. Such research and
investment services are those which brokerage houses customarily provide to
institutional investors and include statistical and economic data and research
reports on particular companies and industries. Such services are used by the
Manager in connection with all of its investment activities, and some of such
services obtained in connection with the execution of transactions for the Fund
may be used in managing other investment accounts. Conversely, brokers, dealers
or futures commission merchants furnishing such services may be selected for the
execution of transactions of such other accounts, whose aggregate assets are far
larger than the Fund's, and the services furnished by such brokers, dealers or
futures commission merchants may be used by the Manager in providing investment
management for the Fund. Commission rates are established pursuant to
negotiations with the broker, dealer or futures commission merchant based on the
quality and quantity of execution services provided by the broker in the light
of generally prevailing rates. The Manager's policy is to pay higher commissions
to brokers, other than Prudential Securities, for

B-23
<PAGE>
particular transactions than might be charged if a different broker had been
selected, on occasions when, in the Manager's opinion, this policy furthers the
objective of obtaining best price and execution. In addition, the Manager is
authorized to pay higher commissions on brokerage transactions for the Fund to
brokers other than Prudential Securities in order to secure research and
investment services described above, subject to review by the Fund's Board of
Directors from time to time as to the extent and continuation of this practice.
The allocation or orders among brokers and the commission rates paid are
reviewed periodically by the Fund's Board of Directors. The Fund will not pay up
for research in principal transactions.

Portfolio securities may not be purchased from any underwriting or selling
syndicate of which Prudential Securities, or any affiliate, during the existence
of the syndicate, is a principal underwriter (as defined in the Investment
Company Act), except in accordance with rules of the Commission. This
limitation, in the opinion of the Fund, will not significantly affect the Fund's
ability to pursue its present investment objective. However, in the future in
other circumstances, the Fund may be at a disadvantage because of this
limitation in comparison to other funds with similar objectives but not subject
to such limitations.

Subject to the above considerations, Prudential Securities may act as a
securities broker or futures commission merchant for the Fund. In order for
Prudential Securities (or any affiliate) to effect any portfolio transactions
for the Fund, the commissions, fees or other remuneration received by Prudential
Securities (or any affiliate) must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers or futures
commission merchants in connection with comparable transactions involving
similar securities or futures being purchased or sold on an exchange during a
comparable period of time. This standard would allow Prudential Securities (or
any affiliate) to receive no more than the remuneration which would be expected
to be received by an unaffiliated broker or futures commission merchant in a
commensurate arm's-length transaction. Furthermore, the Board of Directors of
the Fund, including a majority of the noninterested Directors, has adopted
procedures which are reasonably designed to provide that any commissions, fees
or other remuneration paid to Prudential Securities (or any affiliate) are
consistent with the foregoing standard. In accordance with Section 11(a) of the
Securities Exchange Act of 1934, Prudential Securities may not retain
compensation for effecting transactions on a national securities exchange for
the Fund unless the Fund has expressly authorized the retention of such
compensation. Prudential Securities must furnish to the Fund at least annually a
statement setting forth the total amount of all compensation retained by
Prudential Securities from transactions effected for the Fund during the
applicable period. Brokerage and futures transactions with Prudential Securities
(or any affiliate) are also subject to such fiduciary standards as may be
imposed upon Prudential Securities (or such affiliate) by applicable law.

The table presented below shows certain information regarding the payment of
commissions by Prudential Pacific Growth Fund, Inc., including the amount of
such commissions paid to Prudential Securities, for the three year period ended
October 31, 1998.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED OCTOBER 31,
----------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Total brokerage commissions paid by the Fund............... $ 676,675 $ 3,049,345 $ 3,489,060
Total brokerage commissions paid to Prudential Securities.. $ -0- $ 4,475 $ 85,679
Percentage of total brokerage commissions paid to
Prudential Securites...................................... -0-% .1% 2.5%
Percentage of total dollar amount of transactions involving
commissions that were effected through Prudential
Securities................................................ -0-% .2% 2.1%
</TABLE>

Of the total brokerage commissions, $391,087 or 57.80% were paid to firms
which provided research, statistical or other services to PIFM during the fiscal
year ended October 31, 1998. PIFM has not separately identified a portion of
such brokerage commissions as allocable to the provision of such research,
statistical or other services.

B-24
<PAGE>
CAPITAL STOCK AND ORGANIZATION

THE FUND IS AUTHORIZED TO ISSUE AN UNLIMITED NUMBER OF SHARES OF COMMON
STOCK, $.001 PER SHARE DIVIDED INTO FOUR CLASSES, DESIGNATED CLASS A, CLASS B,
CLASS C AND CLASS Z SHARES. Each class of shares represents an interest in the
same assets of the Fund and is identical in all respects except that (i) each
class is subject to different sales charges and distribution and/or service fees
(except for Class Z shares, which are not subject to any sales charges and
distribution and/or service fees), which may affect performance, (ii) each class
has exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangement and has separate voting rights on any matter submitted
to shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature and (v) Class Z shares are offered
exclusively for sale to a limited group of investors. In accordance with the
Fund's Articles of Incorporation, the Directors may authorize the creation of
additional series and classes within such series, with such preferences,
privileges, limitations and voting and dividend rights as the Trustees may
determine. Currently, the Fund is offering four classes, designated Class A,
Class B, Class C and Class Z shares.

The Articles of Incorporation further provide that no Director, officer,
employee or agent of the Fund is liable to the Fund or to a shareholder, nor is
any Director, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise from
his or her own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or her duties. It also provides that all third parties shall
look solely to the Fund property for satisfaction of claims arising in
connection with the affairs of the Fund. With the exceptions stated, the
Articles of Incorporation permit the Directors to provide for the
indemnification of Directors, officers, employees or agents of the Fund against
all liability in connection with the affairs of the Fund.

The Fund shall continue without limitation of time subject to the provisions
in the Articles of Incorporation concerning termination by action of the
shareholders or by the Directors by written notice to the shareholders.

Pursuant to the Articles of Incorporation, the Directors may authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios with distinct investment
objectives and policies and share purchase, redemption and net asset value
procedures) with such preferences, privileges, limitations and voting and
dividend rights as the Directors may determine. All consideration received by
the Fund for shares of any additional series, and all assets in which such
consideration is invested, would belong to that series (subject only to the
rights of creditors of that series) and would be subject to the liabilities
related thereto. Pursuant to the Investment Company Act, shareholders of any
additional series of shares would normally have to approve the adoption of any
advisory contract relating to such series and of any changes in the investment
policies related thereto. The Directors have no intention of authorizing
additional series at the present time.

The Directors have the power to alter the number and the terms of office of
the Directors and they may at any time lengthen their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Directors have been elected by the
shareholders of the Fund. The voting rights of shareholders are not cumulative,
so that holders of more than 50 percent of the shares voting can, if they
choose, elect all Directors being selected, while the holders of the remaining
shares would be unable to elect any Directors.

PURCHASE, REDEMPTION AND PRICING OF FUND SHARES

Shares of the Fund may be purchased at a price equal to the next determined
net asset value (NAV) per share plus a sales charge which, at the election of
the investor, may be imposed either (i) at the time of purchase (Class A shares)
or (ii) on a deferred basis (Class B or Class C shares). Class Z shares of the
Fund are offered to a limited group of investors at NAV without any sales
charge.

Each class of shares represents an interest in the same assets of the Fund
and is identical in all respects except that (i) each class is subject to
different sales charges and distribution and/or service fees (except for Class Z
shares, which are not subject to any sales charge or distribution and/or service
fee), which may affect performance, (ii) each class has exclusive voting rights
on any matter submitted to shareholders that relates solely to its arrangement
and has separate voting rights on any matter submitted to shareholders in which
the interests of one class differ from the interests of any other class, (iii)
each class has a different exchange privilege, (iv) only class B shares have a
conversion feature and (v) Class Z shares are offered exclusively for sale to a
limited group of investors.

B-25
<PAGE>
PURCHASE BY WIRE. For an initial purchase of shares of the Fund by wire, you
must complete an application and telephone PMFS at (800) 225-1852 (toll-free) to
receive an account number. The following information will be requested: your
name, address, tax identification number, class election, dividend distribution
election, amount being wired and wiring bank. Instructions should then be given
by you to your bank to transfer funds by wire to State Street Bank and Trust
Company (State Street), Boston, Massachusetts, Custody and Shareholder Services
Division, Attention: Prudential Pacific Growth Fund, Inc., specifying on the
wire the account number assigned by PMFS and your name and identifying the class
in which you are eligible to invest (Class A, Class B, Class C or Class Z
shares).

If you arrange for receipt by State Street of Federal Funds prior to the
calculation of NAV (4:15 P.M., New York time), on a business day, you may
purchase shares of the Fund as of that day. See "Net Asset Value."

In making a subsequent purchase order by wire, you should wire State Street
directly and should be sure that the wire specifies Pacific Growth Fund, Inc.,
Class A ,Class B, Class C or Class Z shares and your name and individual account
number. It is not necessary to call PMFS to make subsequent purchase orders
utilizing Federal Funds. The minimum amount which may be invested by wire is
$1,000.

ISSUANCE OF FUND SHARES FOR SECURITIES

Transactions involving the issuance of Fund shares for securities (rather
than cash) will be limited to (i) reorganizations, (ii) statutory mergers, or
(iii) other acquisitions of portfolio securities that: (a) meet the investment
objective and policies of the Fund, (b) are liquid and not subject to
restrictions on resale, and (c) have a value that is readily ascertainable via
listing on or trading in a recognized United States or international exchange or
market, and (d) is approved by the funds' investment adviser.

SPECIMEN PRICE MAKE-UP

Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 5%, Class C*
shares are sold at a maximum sales charge of 1% and Class B* and Class Z shares
are sold at net asset value. Using the Fund's net asset value at October 31,
1998, the maximum offering price of the Fund's shares is as follows:

<TABLE>
<S> <C>
CLASS A
Net asset value and redemption price per Class A share...... $ 9.14
Maximum sales charge (5% of offering price)................. .48
------
Offering price to public.................................... $ 9.62
------
------
CLASS B
Net asset value, offering price and redemption price per
Class B share*............................................. $ 8.79
------
------
CLASS C
Net asset value and redemption price per Class C share*..... $ 8.79
Maximum sales charge (1% of offering price)................. .09
------
Offering price to public.................................... $ 8.88
------
------
CLASS Z
Net asset value, offering price and redemption price per
Class Z share.............................................. $ 9.17
------
------
</TABLE>

-------------------
* Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "How to Buy, Sell and Exchange
Shares of the Fund--How to Sell Your Shares--Contingent Deferred Sales
Charges" in the Prospectus.

SELECTING A PURCHASE ALTERNATIVE

The following is provided to assist you in determining which method of
purchase best suits your individual circumstances and is based on current fees
and expenses being charged to the Fund:

If you intend to hold your investment in a Fund for less than 4 years and do
not qualify for a reduced sales charge on Class A shares, since Class A shares
are subject to an initial sales charge of 5% and Class B shares are subject to a
CDSC of 5% which declines to zero over a 6-year period, you should consider
purchasing Class C shares over either Class A or Class B shares.

B-26
<PAGE>
If you intend to hold your investment for longer than 4 years, but less than
5 years, and do not qualify for a reduced sales charge on Class A shares, you
should consider purchasing Class B or Class C shares over Class A shares. This
is because the sales charge plus the cumulative annual distribution-related fee
on Class A shares would exceed those of the Class B and Class C shares if you
redeem your investment during this time period. In addition, more of your money
would be invested initially in the case of Class C shares, because of the
relatively low initial sales charge, and all of your money would be invested
initially in the case of Class B shares, which are sold at NAV.

If you intend to hold your investment for longer than 5 years, you should
consider purchasing Class A shares over either Class B or Class C shares. This
is because the maximum sales charge plus the cumulative annual
distribution-related fee on Class A shares would be less than those of the Class
B and Class C shares.

If you qualify for a reduced sales charge on Class A shares, it may be more
advantageous for you to purchase Class A shares over either Class B or Class C
shares regardless of how long you intend to hold your investment. However,
unlike Class B shares, you would not have all of your money invested initially
because the sales charge on Class A shares is deducted at the time of purchase.

If you do not qualify for a reduced sales charge on Class A shares and you
purchase Class B or Class C shares, you would have to hold your investment for
more than 6 years in the case of Class B shares and for more than 5 years in the
case of Class C shares for the higher cumulative annual distribution-related fee
on those shares plus, in the case of Class C shares, the 1% initial sales charge
to exceed the initial sales charge plus the cumulative annual
distribution-related fees on Class A shares. This does not take into account the
time value of money, which further reduces the impact of the higher Class B or
Class C distribution-related fee on the investment, fluctuations in NAV, the
effect of the return on the investment over this period of time or redemptions
when the CDSC is applicable.

REDUCTION AND WAIVER OF INITIAL SALES CHARGES--CLASS A SHARES

BENEFIT PLANS. Class A shares may be purchased at NAV, without payment of an
initial sales charge, by pension, profit-sharing or other employee benefit plans
qualified under Section 401 of the Internal Revenue Code and deferred
compensation or annuity plans under Sections 403(b) and 457 of the Internal
Revenue Code, "rabbi" trusts and non-qualified deferred compensation plans that
are sponsored by any employer that has a tax qualified plan with Prudential
(collectively, Benefit Plans), provided that the Benefit Plan has existing
assets of at least $1 million invested in shares of Prudential Mutual Funds
(excluding money market funds other than those acquired pursuant to the exchange
privilege) or 250 eligible employees or participants. In the case of Benefit
Plans whose accounts are held directly with the Transfer Agent or Prudential
Securities and for which the Transfer Agent or Prudential Securities does
individual account recordkeeping (Direct Account Benefit Plans) and Benefit
Plans sponsored by Prudential Securities or its subsidiaries (Prudential
Securities or Subsidiary Prototype Benefit Plans), Class A shares may be
purchased at NAV by participants who are repaying loans made from such plans to
the participant.

PRUDENTIAL RETIREMENT PROGRAMS. Class A shares may be purchased at NAV by
certain savings, retirement and deferred compensation plans, qualified or
non-qualified under the Internal Revenue Code, for which Prudential provides
administrative or recordkeeping services, provided that (1) the plan has at
least $1 million in existing assets or 250 eligible employees and (2) the Fund
is an available investment option. These plans include pension, profit-sharing,
stock-bonus or other employee benefit plans under Section 401 of the Internal
Revenue Code, deferred compensation and annuity plans under Sections 457 and
403(b)(7) of the Internal Revenue Code and plans that participate in the
PruArray Program (benefit plan recordkeeping service) (hereafter referred to as
a PruArray Plan). All Benefit Plans of a company (or affiliated companies under
common control) for which Prudential serves as plan administrator or
recordkeeper are aggregated in meeting the $1 million threshold, provided that
Prudential has been notified in advance of the entitlement to the waiver of the
sales charge based on the aggregate assets. The term "existing assets" as used
herein includes stock issued by a plan sponsor, shares of Prudential Mutual
Funds and shares of certain unaffiliated mutual funds that participate in the
PruArray Plan (Participating Fund). "Existing assets" also include monies
invested in The Guaranteed Investment Account (GIA), a group annuity insurance
product issued by Prudential, the Guaranteed Insulated Separate Account, a
separate account offered by Prudential and units of The Stable Value Fund (SVF),
an unaffiliated bank collective fund. Class A shares may also be purchased at
NAV by plans that have monies invested in GIA and SVF, provided (1) the purchase
is made with the proceeds of a redemption from either GIA or SVF and (2) Class A
shares are an investment option of the plan.

B-27
<PAGE>

PRUARRAY ASSOCIATION BENEFIT PLANS. Class A shares are also offered at NAV
to Benefit Plans or non-qualified plans sponsored by employers which are members
of a common trade, professional or membership association (Association) that
participate in the PruArray Plan provided that the Association enters into a
written agreement with Prudential. Such Benefit Plans or non-qualified plans may
purchase Class A shares at NAV without regard to the assets or number of
participants in the individual employer's qualified Plan(s) or non-qualified
plans so long as the employers in the Association (1) have retirement plan
assets in the aggregate of at least $1 million or 250 participants in the
aggregate and (2) maintain their account with the Transfer Agent.

PRUARRAY SAVINGS PROGRAM. Class A shares are also offered at NAV to
employees of companies that enter into a written agreement with Prudential
Retirement Services to participate in the PruArray Savings Program. Under this
Program, a limited number of Prudential Mutual Funds are available for purchase
at NAV by Individual Retirement Accounts and Savings Accumulation Plans of the
company's employees. The Program is available only to (1) employees who open an
IRA or Savings Accumulation Plan account with the Transfer Agent and (2) spouses
of employees who open an IRA account with the Transfer Agent. The program is
offered to companies that have at least 250 eligible employees.

SPECIAL RULES APPLICABLE TO RETIREMENT PLANS. After a Benefit Plan or
PruArray Plan qualifies to purchase Class A shares at NAV, all subsequent
purchases will be made at NAV.

OTHER WAIVERS. In addition, Class A shares may be purchased at NAV, through
the Distributor or the Transfer Agent, by:

- officers of the Prudential Mutual Funds (including the Fund),

- employees of the Distributor, Prudential Securities, PIFM and their
subsidiaries and members of the families of such person who maintain an
"employee related" account at Prudential Securities or the Transfer Agent,

- employees of subadvisers of the Prudential Mutual Funds provided that
purchases at NAV are permitted by such person's employer,

- Prudential, employees and special agents of Prudential and its
subsidiaries and all persons who have retired directly from active service
with Prudential or one of its subsidiaries,

- registered representatives and employees of brokers who have entered into
a selected dealer agreement with the Distributor provided that purchases
at NAV are permitted by such person's employer,

- investors who have a business relationship with a financial adviser who
joined Prudential Securities from another investment firm, provided that
(1) the purchase is made within 180 days of the commencement of the
financial adviser's employment at Prudential Securities, or within one
year in the case of Benefit Plans, (2) the purchase is made with proceeds
of a redemption of shares of any open-end non-money market fund sponsored
by the financial adviser's previous employer (other than a fund which
imposes a distribution or service fee of .25 of 1% or less) and (3) the
financial adviser served as the client's broker on the previous purchase,

- investor in Individual Retirement Accounts, provided the purchase is made
with the proceeds of a tax-free rollover of assets from a Benefit Plan for
which Prudential provides administrative or recordkeeping services and
further provided that such purchase is made within 60 days of receipt of
the Benefit Plan distribution,

- orders placed by broker-dealers, investment advisers or financial planners
who have entered into an agreement with the Distributor, who place trades
for their own accounts or the accounts of their clients and who charge a
management consulting or other fee for their services (e.g., mutual fund
"wrap" or asset allocation programs), and

- orders placed by clients of broker-dealers, investment advisers or
financial planners who place trades for customer accounts if the accounts
are linked to the master account of such broker-dealer, investment adviser
or financial planner and the broker-dealer, investment adviser or
financial planner charges its clients a separate fee for its services
(e.g. mutual fund "supermarket programs").

For an investor to obtain any reduction or waiver of the initial sales
charges, at the time of the sale either the Transfer Agent must be notified
directly by the investor or the Distributor must be notified by the Dealer
facilitating the transaction that the sale qualifies for the reduced or waived
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
acquired upon the reinvestment of dividends and distributions.

B-28
<PAGE>
COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other Prudential Mutual Funds, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "How to Buy, Sell and
Exchange Shares of the Fund--Reducing or Waiving Class A's Initial Sales Charge"
in the Prospectus.

An eligible group of related Fund investors includes any combination of the
following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

(d) any company controlled by the individual (a person, entity or group
that holds 25% or more of the outstanding voting securities of a company
will be deemed to control the company, and a partnership will be deemed to
be controlled by each of its general partners);

(e) a trust created by the individual, the beneficiaries of which are
the individual, his or her spouse, parents or children;

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act
account created by the individual or the individual's spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

In addition, an eligible group of related Fund investors may include an
employer (or group of related employers) and one or more qualified retirement
plans of such employer or employers (an employer controlling, controlled by or
under common control with another employer is deemed related to that employer).

The Transfer Agent, the Distributor or your Dealer must be notified at the
time of purchase that the investor is entitled to a reduced sales charge. The
reduced sales charge will be granted subject to confirmation of the investor's
holdings. The Combined Purchase and Cumulative Purchase Privilege does not apply
to individual participants in any retirement or group plans.

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of shares of the
Fund and shares of other Prudential Mutual Funds (excluding money market funds
other than those acquired pursuant to the exchange privilege) to determine the
reduced sales charge. However, the value of shares held directly with the
Transfer Agent and through your Dealer will not be aggregated to determine the
reduced sales charge. All shares must be held either directly with the Transfer
Agent or through Prudential Securities. The value of existing holdings for
purposes of determining the reduced sales charge is calculated using the maximum
offering price (NAV plus maximum sales charge) as of the previous business day.
The Distributor or the Transfer Agent must be notified at the time of purchase
that the investor is entitled to a reduced sales charge. The reduced sales
charges will be granted subject to confirmation of the investor's holdings.
Rights of Accumulation are not available to individual participants in any
retirement or group plans.

LETTERS OF INTENT. Reduced sales charges are available to investors (or an
eligible group of related investors), including retirement and group plans, who
enter into a written Letter of Intent providing for the purchase, within a
thirteen-month period, of shares of the Fund and shares of other Prudential
Mutual Funds (Investment Letter of Intent). Retirement and group plans may also
qualify to purchase Class A shares at NAV by entering into a Letter of Intent
whereby they agree to enroll, within a thirteen month period, a specified number
of eligible employees or participants (Participant Letter of Intent).

For purposes of the Investment Letter of Intent, all shares of a Fund and
shares of other Prudential Mutual Funds (excluding money market funds other than
those acquired pursuant to the exchange privilege) which were previously
purchased and are still owned are also included in determining the applicable
reduction. However, the value of shares held directly with the Transfer Agent
and through your Dealer will not be aggregated to determine the reduced sales
charge.

A Letter of Intent permits a purchaser, in the case of an Investment Letter
of Intent, to establish a total investment goal to be achieved by any number of
investments over a thirteen-month period, and in the case of a Participant
Letter of Intent, to establish a minimum eligible employee or participant
enrollment goal over a thirteen-month period. Each investment made during the

B-29
<PAGE>
period, in the case of an Investment Letter of Intent, will receive the reduced
sales charge applicable to the amount represented by the goal, as if it were a
single investment. In the case of a Participant Letter of Intent, each
investment made during the period will be made at net asset value. Escrowed
Class A shares totaling 5% of the dollar amount of the Letter of Intent will be
held by the Transfer Agent in the name of the purchaser, except in the case of
retirement and group plans where the employer or plan sponsor will be
responsible for paying any applicable sales charge. The effective date of an
Investment Letter of Intent (except in the case of retirement and group plans)
may be back-dated up to 90 days, in order that any investments made during this
90-day period, valued at the purchaser's cost, can be applied to the fulfillment
of the Letter of Intent goal.

The Investment Letter of Intent does not obligate the investor to purchase,
nor the Fund to sell, the indicated amount. Similarly, the Participant Letter of
Intent does not obligate the retirement or group plan to enroll the indicated
number of eligible employees or participants. In the event the Letter of Intent
goal is not achieved within the thirteen-month period, the purchaser (or the
employer or plan sponsor in the case of any retirement or group plan) is
required to pay the difference between the sales charge otherwise applicable to
the purchases made during this period and sales charges actually paid. Such
payment may be made directly to the Distributor or, if not paid, the Distributor
will liquidate sufficient escrowed shares to obtain such difference. Investors
electing to purchase Class A shares of a Fund pursuant to a Letter of Intent
should carefully read such Letter of Intent.

The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charge will, in the
case of an Investment Letter of Intent, be granted subject to confirmation of
the investor's holdings or, in the case of a Participant Letter of Intent,
subject to confirmation of the number of eligible employees or participants in
the retirement or group plan. Letters of Intent are not available to individual
participants in any retirement or group plans.

CLASS B AND CLASS C SHARES

The offering price of Class B shares is the NAV next determined following
receipt of an order in proper form by the Transfer Agent, your Dealer or the
Distributor. Class C shares are sold at a maximum sales charge of 1%.
Redemptions of Class B and Class C shares may be subject to a CDSC. See
"Contingent Deferred Sales Charges."

The Distributor will pay, from its own resources, sales commissions of up to
4% of the purchase price of Class B shares to Dealers, financial advisers and
other persons who sell Class B shares at the time of sale. This facilitates the
ability of the Fund to sell the Class B shares without an initial sales charge
being deducted at the time of purchase. The Distributor anticipates that it will
recoup its advancement of sales commissions from the combination of the CDSC and
the distribution fee. See "How the Fund is Managed--Distributor." In connection
with the sale of Class C shares, the Distributor will pay, from its own
resources, dealers, financial advisers and other persons which distribute Class
C shares, a sales commission of up to 1% of the purchase price at the time of
the sale.

WAIVER OF INITIAL SALES CHARGE--CLASS C SHARES

BENEFIT PLANS. Class C shares may be purchased at NAV, without payment of an
initial sales charge, by Benefit Plans (as defined above). In the case of
Benefit Plans whose accounts are held directly with the Transfer Agent or
Prudential Securities and for which the Transfer Agent or Prudential Securities
does individual account recordkeeping (Direct Account Benefit Plans) and
Benefits Plans sponsored by Prudential. Prudential Securities or its
subsidiaries (Prudential Securities or Subsidiaries Prototype Benefit Plans),
Class C shares may be purchased at NAV by participants who are repaying the
loans made from such plans to the participant.

PRUDENTIAL RETIREMENT PLANS. The initial sales charge will be waived with
respect to purchases of Class C shares by qualified and non-qualified retirement
and deferred compensation plans participating in the PruArray Plan and other
plans for which Prudential provides administrative or recordkeeping services.

INVESTMENT OF REDEMPTION PROCEEDS FROM OTHER INVESTMENT COMPANIES. Investors
may purchase Class C shares at NAV, without the initial sales charge, with the
proceeds from the redemption of shares of any unaffiliated registered investment
company which were not held through an account with any Prudential affiliate.
Such purchases must be made within 60 days of the redemption. Investors eligible
for this waiver include (1) investors purchasing shares through an account at
Prudential Securities, (2) investors purchasing shares through an ADVANTAGE
Account or an Investor Account with Prusec, and (3) investors purchasing shares
through other brokers. This waiver is not available to investors who purchase
shares directly from the Transfer Agent. You must notify the Transfer Agent
directly or through your broker if you are entitled to this waiver and provide
the Transfer Agent with such supporting documents as it may deem appropriate.

B-30
<PAGE>
CLASS Z SHARES

Class Z shares of the Fund currently are available for purchase by the
following categories of investors:

- pension, profit-sharing or other employee benefit plans qualified under
Section 401 of the Internal Revenue Code, deferred compensation and
annuity plans under Sections 457 and 403(b)(7) of the Internal Revenue
Code and non-qualified plans for which the Fund is an available option
(collectively, Benefit Plans), provided such Benefit Plans (in combination
with other plans sponsored by the same employer or group of related
employers) have at least $50 million in defined contribution assets,

- participants in any fee-based program sponsored by an affiliate of the
Distributor which includes mutual funds as investment options and for
which the Fund is an available option,

- certain participants in the MEDLEY Program (group variable annuity
contracts) sponsored by Prudential for whom Class Z shares of the
Prudential Mutual Funds are an available investment option,

- Benefit Plans for which an affiliate of the Distributor provides
administrative or recordkeeping services and as of September 20, 1996, (a)
were Class Z shareholders of the Prudential Mutual Funds or (b) executed a
letter of intent to purchase Class Z shares of the Prudential Mutual
Funds,

- the Prudential Securities Cash Balance Pension Plan, an employee defined
benefit plan sponsored by Prudential Securities,

- current and former Directors/Trustees of the Prudential Mutual Funds
(including the Fund),

- employees of Prudential and/or Prudential Securities who participate in a
Prudential-sponsored employee saving plan and,

- Prudential with an investment of $10 million or more.

In connection with the sale of Class Z shares, the Manager, the Distributor
or one of their affiliates may pay dealers, financial advisers and other persons
which distribute shares a finder's fee, from its own resources, based on a
percentage of the net asset value of shares sold by such persons.

Class Z shares of the Fund may also be purchased by certain savings,
retirement and deferred compensation plans, qualified or non-qualified under the
Internal Revenue Code of 1986, as amended (the Internal Revenue Code), provided
that (i) the plan purchases shares of the Fund pursuant to an investment
management agreement with The Prudential Insurance Company of America or its
affiliates, (ii) the Fund is an available investment option under the agreement
and (iii) the plan will participate in the PruArray and SmartPath Programs
(benefit plan recordkeeping services) sponsored by Prudential Mutual Fund
Services LLC. These plans include pension, profit-sharing, stock-bonus or other
employee benefit plans under Section 401 of the Internal Revenue Code and
deferred compensation and annuity plans under Sections 457 or 403(b)(7) of the
Internal Revenue Code.

SALE OF SHARES

You can redeem your shares at any time for cash at the NAV next determined
after the redemption request is received in proper form (in accordance with
procedures established by the Transfer Agent in connection with investors'
accounts) by the Transfer Agent, the Distributor or your broker. In certain
cases, however, redemption proceeds will be reduced by the amount of any
applicable CDSC, as described below. See "Contingent Deferred Sales Charges"
below. If you are redeeming your shares through a Dealer, your Dealer must
receive your sell order before the Fund computes its NAV for that day (I.E.,
4:15 P.M., New York time) in order to receive that day's NAV. Your Dealer will
be responsible for furnishing all necessary documentation to the Distributor and
may charge you for its services in connection with redeeming shares of the Fund.

If you hold shares of the Fund through Prudential Securities, you must
redeem your shares through Prudential Securities. Please contact your Prudential
Securities financial adviser.

If you hold shares in non-certificate form, a written request for redemption
signed by you exactly as the account is registered is required. If you hold
certificates, the certificates, signed in the name(s) shown on the face of the
certificates, must be received by the Transfer Agent, the Distributor or your
Dealer in order for the redemption request to be processed. If redemption is
requested by a corporation, partnership, trust or fiduciary, written evidence of
authority acceptable to the Transfer

B-31
<PAGE>
Agent must be submitted before such request will be accepted. All correspondence
and documents concerning redemptions should be sent to the Fund in care of its
Transfer Agent, Prudential Mutual Fund Services LLC, Attention: Redemption
Services, P.O. Box 15010, New Brunswick, New Jersey 08906-5010, the Distributor
or to your Dealer.

If the proceeds of the redemption (a) exceed $50,000, (b) are to be paid to
a person other than the record owner, (c) are to be sent to an address other
than the address on the Transfer Agent's records, or (d) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed by an
"eligible guarantor institution." An "eligible guarantor institution" includes
any bank, broker, dealer or credit union. The Transfer Agent reserves the right
to request additional information from, and make reasonable inquiries of, any
eligible guarantor institution. For clients of Prusec, a signature guarantee may
be obtained from the agency or office manager of most Prudential Insurance and
Financial Services or Preferred Services offices. In the case of redemptions
from a PruArray or SmartPath Plan, if the proceeds of the redemption are
invested in another investment option of the plan in the name of the record
holder and at the same address as reflected in the Transfer Agent's records, a
signature guarantee is not required.

Payment for shares presented for redemption will be made by check within
seven days after receipt by the Transfer Agent, the Distributor or your Dealer
of the certificate and/or written request, except as indicated below. If you
hold shares through Prudential Securities, payment for shares presented for
redemption will be credited to your account at your Dealer, unless you indicate
otherwise. Such payment may be postponed or the right of redemption suspended at
times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on such Exchange is restricted, (c) when
an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or (d) during any
other period when the SEC, by order, so permits; provided that applicable rules
and regulations of the Commission shall govern as to whether the conditions
prescribed in (b), (c) or (d) exist.

Payment for redemption of recently purchased shares will be delayed until
the Fund or its Transfer Agent has been advised that the purchase check has been
honored, which may take up to 10 calendar days from the time of receipt of the
purchase check by the Transfer Agent. Such delay may be avoided by purchasing
shares by wire or by certified or cashier's check.

REDEMPTION IN KIND. If the Trustees determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make payment
wholly or partly in cash, the Fund may pay the redemption price in whole or in
part by a distribution in kind of securities from the investment portfolio of
the Fund, in lieu of cash, in conformity with applicable rules of the
Commission. Securities will be readily marketable and will be valued in the same
manner as in a regular redemption. See "How the Fund Values its Shares." If your
shares are redeemed in kind, you would incur transaction costs in converting the
assets into cash. The Fund, however, has elected to be governed by Rule 18f-1
under the Investment Company Act, under which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the NAV of the Fund
during any 90-day period for any one shareholder.

INVOLUNTARY REDEMPTION. In order to reduce expenses of the Fund, the
Trustees may redeem all of the shares of any shareholder, other than a
shareholder which is an IRA or other tax-deferred retirement plan, whose account
has a net asset value of less than $500 due to a redemption. The Fund will give
such shareholders 60 days' prior written notice in which to purchase sufficient
additional shares to avoid such redemption. No CDSC will be imposed on any such
involuntary redemption.

90-DAY REPURCHASE PRIVILEGE. If you redeem your shares and have not
previously exercised the repurchase privilege, you may reinvest any portion or
all of the proceeds of such redemption in shares of the Fund at the NAV next
determined after the order is received, which must be within 90 days after the
date of the redemption. Any CDSC paid in connection with such redemption will be
credited (in shares) to your account. (If less than a full repurchase is made,
the credit will be on a PRO RATA basis.) You must notify the Transfer Agent,
either directly or through the Distributor or your Dealer, at the time the
repurchase privilege is exercised to adjust your account for the CDSC you
previously paid. Thereafter, any redemptions will be subject to the CDSC
applicable at the time of the redemption. See "Contingent Deferred Sales
Charges" below. Exercise of the repurchase privilege will generally not affect
federal tax treatment of any gain realized upon redemption. However, if the
redemption was made within a 30 day period of the repurchase and if the
redemption resulted in a loss, some or all of the loss, depending on the amount
reinvested, may not be allowed for federal income tax purposes.

B-32
<PAGE>
CONTINGENT DEFERRED SALES CHARGES

Redemptions of Class B shares will be subject to a contingent deferred sales
charge or CDSC declining from 5% to zero over a six-year period. Class C shares
redeemed within eighteen months of purchase (or one year for Class C shares
purchased before November 2, 1998) will be subject to a 1% CDSC. The CDSC will
be deducted from the redemption proceeds and reduce the amount paid to you. The
CDSC will be imposed on any redemption by you which reduces the current value of
your Class B or Class C shares to an amount which is lower than the amount of
all payments by you for shares during the preceding six years, in the case of
Class B shares, and eighteen months (or one year for Class C shares purchased
before November 2, 1998), in the case of Class C shares. A CDSC will be applied
on the lesser of the original purchase price or the current value of the shares
being redeemed. Increases in the value of your shares or shares acquired through
reinvestment of dividends or distributions are not subject to a CDSC. The amount
of any CDSC will be paid to and retained by the Distributor.

The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchase of shares, all payments during a month will
be aggregated and deemed to have been made on the last day of the month. The
CDSC will be calculated from the first day of the month after the initial
purchase, excluding the time shares were held in a money market fund.

The following table sets forth the rates of the CDSC applicable to
redemptions of Class B shares:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLARS INVESTED OR
PAYMENT MADE REDEMPTION PROCEEDS
- ---------------------------------------------------------------------------- --------------------------
<S> <C>
First....................................................................... 5.0%
Second...................................................................... 4.0%
Third....................................................................... 3.0%
Fourth...................................................................... 2.0%
Fifth....................................................................... 1.0%
Sixth....................................................................... 1.0%
Seventh..................................................................... None
</TABLE>

In determining whether a CDSC is applicable to a redemption, the calculation
will be made in a manner that results in the lowest possible rate. It will be
assumed that the redemption is made first of amounts representing shares
acquired pursuant to the reinvestment of dividends and distributions; then of
amounts representing the increase in NAV above the total amount of payments for
the purchase of Fund shares made during the preceding six years (five years for
Class B shares purchased prior to January 22, 1990); then of amounts
representing the cost of shares held beyond the applicable CDSC period; and
finally, of amounts representing the cost of shares held for the longest period
of time within the applicable CDSC period.

For example, assume you purchased 100 Class B shares at $10 per share for a
cost of $1,000. Subsequently, you acquired 5 additional Class B shares through
dividend reinvestment. During the second year after the purchase you decided to
redeem $500 of your investment. Assuming at the time of the redemption the NAV
had appreciated to $12 per share, the value of your Class B shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be applied to the value
of the reinvested dividend shares and the amount which represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4% (the applicable rate in the second year after
purchase) for a total CDSC of $9.60.

For federal income tax purposes, the amount of the CDSC will reduce the gain
or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.

WAIVER OF THE CONTINGENT DEFERRED SALES CHARGES--CLASS B SHARES. The CDSC
will be waived in the case of a redemption following the death or disability of
a shareholder or, in the case of a trust account, following the death or
disability of the grantor. The waiver is available for total or partial
redemptions of shares owned by a person, either individually or in joint tenancy
(with rights of survivorship), at the time of death or initial determination of
disability, provided that the shares were purchased prior to death or
disability.

The CDSC will also be waived in the case of a total or partial redemption in
connection with certain distributions made without penalty under the Internal
Revenue Code from a tax-deferred retirement plan, an IRA or Section 403(b)
custodial account. These distributions are: (i) in the case of a tax-deferred
retirement plan, a lump-sum or other distribution after

B-33
<PAGE>
retirement; (ii) in the case of an IRA (including a Roth IRA), a lump-sum or
other distribution after attaining age 59 1/2; or a periodic distribution based
on life expectancy; (iii) in the case of a Section 403(b) custodial account, a
lump sum or other distribution after attaining age 59 1/2 and (iv) a tax-free
return of an excess contribution or plan distributions following the death or
disability of the shareholder, provided that the shares were purchased prior to
death or disability. The waiver does not apply in the case of a tax-free
rollover or transfer of assets, other than one following a separation from
service (I.E., following voluntary or involuntary termination of employment or
following retirement). Under no circumstances will the CDSC be waived on
redemptions resulting from the termination of a tax-deferred retirement plan,
unless such redemptions otherwise qualify for a waiver as described above. In
the case of Direct Account and Prudential Securities or Subsidiary Prototype
Benefit Plans, the CDSC will be waived on redemptions which represent borrowings
from such plans. Shares purchased with amounts used to repay a loan from such
plans on which a CDSC was not previously deducted will thereafter be subject to
a CDSC without regard to the time such amounts were previously invested. In the
case of a 401(k) plan, the CDSC will also be waived upon the redemption of
shares purchased with amounts used to repay loans made from the account to the
participant and from which a CDSC was previously deducted.

SYSTEMATIC WITHDRAWAL PLAN. The CDSC will be waived (or reduced) on certain
redemptions from a Systematic Withdrawal Plan. On an annual basis, up to 12% of
the total dollar amount subject to the CDSC may be redeemed without charge. The
Transfer Agent will calculate the total amount available for this waiver
annually on the anniversary date of your purchase or, for shares purchased prior
to March 1, 1997, on March 1 of the current year. The CDSC will be waived (or
reduced) on redemptions until this threshold 12% is reached.

In addition, the CDSC will be waived on redemptions of shares held by
Directors of the Fund.

You must notify the Transfer Agent either directly or through your Dealer,
at the time of redemption, that you are entitled to a waiver of the CDSC. In
connection with these waivers, the Transfer Agent will require you to submit the
supporting documentation set forth below.

<TABLE>
<CAPTION>
CATEGORY OF WAIVER REQUIRED DOCUMENTATION

<S> <C>
Death A copy of the shareholder's death certificate or,
in the case of a trust, a copy of the grantor's
death certificate, plus a copy of the trust
agreement identifying the grantor.

Disability--An individual will be A copy of the Social Security Administration award
considered disabled if he or she is letter or a letter from a physician on the
unable to engage in any substantial physician's letterhead stating that the shareholder
gainful activity by reason of any (or, in the case of a trust, the grantor) is
medically determinable physical or permanently disabled. The letter must also indicate
mental impairment which can be expected the date of disability.
to result in death or to be of
long-continued and indefinite duration.

Distribution from an IRA or 403(b) A copy of the distribution form from the custodial
Custodial Account firm indicating (i) the date of birth of the
shareholder and (ii) that the shareholder is over
age 59 1/2 and is taking a normal
distribution--signed by the shareholder.

Distribution from Retirement Plan A letter signed by the plan administrator/trustee
indicating the reason for the distribution.

Excess Contributions A letter from the shareholder (for an IRA) or the
plan administrator/trustee on company letterhead
indicating the amount of the excess and whether or
not taxes have been paid.
</TABLE>

The Transfer Agent reserves the right to request such additional documents
as it may deem appropriate.

QUANTITY DISCOUNT--CLASS B SHARES PURCHASED PRIOR TO AUGUST 1, 1994. The
CDSC is reduced on redemptions of Class B shares of the Fund purchased prior to
August 1, 1994 if immediately after a purchase of such shares, the aggregate
cost of all Class B shares of the Fund owned by you in a single account exceeded
$500,000. For example, if you purchased $100,000 of Class B shares of the Fund
in one year and an additional $450,000 of Class B shares in the following year,
with the result that

B-34
<PAGE>
the aggregate cost of your Class B shares of the Fund following the second
purchase was $550,000, the quantity discount would be available for the second
purchase of $450,000 but not for the first purchase of $100,000. The quantity
discount will be imposed at the following rates depending on whether the
aggregate value exceeded $500,000 or $1 million:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF DOLLARS INVESTED
OR REDEMPTION PROCEEDS
YEAR SINCE PURCHASE ------------------------------------------
PAYMENT MADE $500,001 TO $1 MILLION OVER $1 MILLION
-------------------- ----------------------- -----------------
<S> <C> <C>
First........................................................... 3.0% 2.0%
Second.......................................................... 2.0% 1.0%
Third........................................................... 1.0% 0%
Fourth and thereafter........................................... 0% 0%
</TABLE>

You must notify the Fund's Transfer Agent either directly or through
Prudential Securities or Prusec, at the time of redemption, that you are
entitled to the reduced CDSC. The reduced CDSC will be granted subject to
confirmation of your holdings.

WAIVER OF CONTINGENT DEFERRED SALES CHARGES--CLASS C SHARES

PRUDENTIAL RETIREMENT PLANS. The CDSC will be waived on redemptions from
qualified and non-qualified retirement and deferred compensation plans that
participate in the PruArray Plan and other plans for which Prudential provides
administrative or recordkeeping services. The CDSC will also be waived on
redemptions from Benefit Plans sponsored by Prudential and its affiliates to the
extent that the redemption proceeds are invested in The Guaranteed Investment
Account, the Guaranteed Insulated Separate Account and units of The Stable Value
Fund.

OTHER BENEFIT PLANS. The CDSC will be waived on redemptions from Benefit
Plans holding shares through a Dealer not affiliated with Prudential and for
whom the Dealer provides administrative or recordkeeping services.

CONVERSION FEATURE--CLASS B SHARES

Class B shares will automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. Conversions will be effected at
relative net asset value without the imposition of any additional sales charge.

Since the Fund tracks amounts paid rather than the number of shares bought
on each purchase of Class B shares, the number of Class B shares eligible to
convert to Class A shares (excluding shares acquired through the automatic
reinvestment of dividends and other distributions) (the Eligible Shares) will be
determined on each conversion date in accordance with the following formula: (i)
the ratio of (a) the amounts paid for Class B shares purchased at least seven
years prior to the conversion date to (b) the total amount paid for all Class B
shares purchased and then held in your account (ii) multiplied by the total
number of Class B shares purchased and then held in your account. Each time any
Eligible Shares in your account convert to Class A shares, all shares or amounts
representing Class B shares then in your account that were acquired through the
automatic reinvestment of dividends and other distributions will convert to
Class A shares.

For purposes of determining the number of Eligible Shares, if the Class B
shares in your account on any conversion date are the result of multiple
purchases at different net asset values per share, the number of Eligible Shares
calculated as described above will generally be either more or less than the
number of shares actually purchased approximately seven years before such
conversion date. For example, if 100 shares were initially purchased at $10 per
share (for a total of $1,000) and a second purchase of 100 shares was
subsequently made at $11 per share (for a total of $1,100), 95.24 shares would
convert approximately seven years from the initial purchase (I.E., $1,000
divided by $2,100 (47.62%), multiplied by 200 shares equals 95.24 shares). The
Manager reserves the right to modify the formula for determining the number of
Eligible Shares in the future as it deems appropriate on notice to shareholders.

Since annual distribution-related fees are lower for Class A than Class B
shares, the per share NAV of the Class A shares may be higher than that of the
Class B shares at the time of conversion. Thus, although the aggregate dollar
value will be the same, you may receive fewer Class A shares than Class B shares
converted.

B-35
<PAGE>
For purposes of calculating the applicable holding period for conversions,
all payments for Class B shares during a month will be deemed to have been made
on the last day of the month, or for Class B shares acquired through exchange,
or a series of exchanges, on the last day of the month in which the original
payment for purchases of such Class B shares was made. For Class B shares
previously exchanged for shares of a money market fund, the time period during
which such shares were held in the money market fund will be excluded. For
example, Class B shares held in a money market fund for one year would not
convert to Class A shares until approximately eight years from purchase. For
purposes of measuring the time period during which shares are held in a money
market fund, exchanges will be deemed to have been made on the last day of the
month. Class B shares acquired through exchange will convert to Class A shares
after expiration of the conversion period applicable to the original purchase of
such shares.

The conversion feature may be subject to the continuing availability of
opinions of counsel or rulings of the Internal Revenue Service (i) that the
dividends and other distributions paid on Class A, Class B, Class C and Class Z
shares will not constitute "preferential dividends" under the Internal Revenue
Code and (ii) that the conversion of shares does not constitute a taxable event.
The conversion of Class B shares into Class A shares may be suspended if such
opinions or rulings are no longer available. If conversions are suspended, Class
B shares of the Fund will continue to be subject, possibly indefinitely, to
their higher annual distribution and service fee.

SHAREHOLDER INVESTMENT ACCOUNT

Upon the initial purchase of Fund shares, a Shareholder Investment Account
is established for each investor under which a record of the shares held is
maintained by the Transfer Agent. If a stock certificate is desired, it must be
requested in writing for each transaction. Certificates are issued only for full
shares and may be redeposited in the Account at any time. There is no charge to
the investor for the issuance of a certificate. The Fund makes available to its
shareholders the following privileges and plans.

AUTOMATIC REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. For the convenience
of investors, all dividends and distributions are automatically reinvested in
full and fractional shares of the Fund. An investor may direct the Transfer
Agent in writing not less than five full business days prior to the record date
to have subsequent dividends or distributions sent in cash rather than
reinvested. In the case of recently purchased shares for which registration
instructions have not been received on the record date, cash payment will be
made directly to the dealer. Any shareholder who receives a cash payment
representing a dividend or distribution may reinvest such dividend or
distribution at NAV by returning the check or the proceeds to the Transfer Agent
within 30 days after the payment date. Such investment will be made at the NAV
per share next determined after receipt of the check or proceeds by the Transfer
Agent. Such shareholder will receive credit for any CDSC paid in connection with
the amount of proceeds being reinvested.

EXCHANGE PRIVILEGE. The Fund makes available to its shareholders the
privilege of exchanging their shares of the Fund for shares of certain other
Prudential Mutual Funds, including one or more specified money market funds,
subject in each case to the minimum investment requirements of such funds.
Shares of such other Prudential Mutual Funds may also be exchanged for shares of
the Fund. All exchanges are made on the basis of the relative NAV next
determined after receipt of an order in proper form. An exchange will be treated
as a redemption and purchase for tax purposes. Shares may be exchanged for
shares of another fund only if shares of such fund may legally be sold under
applicable state laws. For retirement and group plans having a limited menu of
Prudential Mutual Funds, the Exchange Privilege is available for those funds
eligible for investment in the particular program.

It is contemplated that the Exchange Privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.

CLASS A. Shareholders of the Fund may exchange their Class A shares for
Class A shares of certain other Prudential Mutual Funds, shares of Prudential
Structured Maturity Fund and Prudential Government Securities Trust
(Short-Intermediate Term Series) and shares of the money market funds specified
below. No fee or sales load will be imposed upon the exchange. Shareholders of
money market funds who acquired such shares upon exchange of Class A shares may
use the Exchange Privilege only to acquire Class A shares of the Prudential
Mutual Funds participating in the Exchange Privilege.

B-36
<PAGE>
The following money market funds participate in the Class A Exchange
Privilege:

Prudential California Municipal Fund
(California Money Market Series)
Prudential Government Securities Trust
(Money Market Series)
(U.S. Treasury Money Market Series)
Prudential Municipal Series Fund
(Connecticut Money Market Series)
(Massachusetts Money Market Series)
(New Jersey Money Market Series)
(New York Money Market Series)
Prudential MoneyMart Assets, Inc. (Class A shares)
Prudential Tax-Free Money Fund, Inc.

CLASS B AND CLASS C. Shareholders of the Fund may exchange their Class B and
Class C shares for Class B and Class C shares, respectively, of certain other
Prudential Mutual Funds and shares of Prudential Special Money Market Fund,
Inc., a money market fund. No CDSC will be payable upon such exchange, but a
CDSC may be payable upon the redemption of Class B and Class C shares acquired
as a result of the exchange. The applicable sales charge will be that imposed by
the fund in which shares were initially purchased and the purchase date will be
deemed to be the date of the initial purchase, rather than the date of the
exchange.

Class B and Class C shares of the Fund may also be exchanged for shares of
an eligible money market fund without imposition of any CDSC at the time of
exchange. Upon subsequent redemption from such money market fund or after re-
exchange into the Fund, such shares will be subject to the CDSC calculated
without regard to the time such shares were held in the money market fund. In
order to minimize the period of time in which shares are subject to a CDSC,
shares exchanged out of the money market fund will be exchanged on the basis of
their remaining holding periods, with the longest remaining holding periods
being transferred first. In measuring the time period shares are held in a money
market fund and "tolled" for purposes of calculating the CDSC holding period,
exchanges are deemed to have been made on the last day of the month. Thus, if
shares are exchanged into the Fund from a money market fund during the month
(and are held in the Fund at the end of the month), the entire month will be
included in the CDSC holding period. Conversely, if shares are exchanged into a
money market fund prior to the last day of the month (and are held in the money
market fund on the last day of the month), the entire month will be excluded
from the CDSC holding period. For purposes of calculating the seven year holding
period applicable to the Class B conversion feature, the time period during
which Class B shares were held in a money market fund will be excluded.

At any time after acquiring shares of other funds participating in the Class
B or Class C exchange privilege, a shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class B or Class C shares
of the Fund, respectively, without subjecting such shares to any CDSC. Shares of
any fund participating in the Class B or Class C exchange privilege that were
acquired through reinvestment of dividends or distributions may be exchanged for
Class B or Class C shares of other funds, respectively, without being subject to
any CDSC.

CLASS Z. Class Z shares may be exchanged for Class Z shares of other
Prudential Mutual Funds.

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the Transfer
Agent and hold shares in non-certificate form. Thereafter, you may call the Fund
at (800) 225-1852 to execute a telephone exchange of shares, on weekdays, except
holidays, between the hours of 8:00 A.M. and 6:00 P.M., New York time. For your
protection and to prevent fraudulent exchanges, your telephone call will be
recorded and you will be asked to provide your personal identification number. A
written confirmation of the exchange transaction will be sent to you. Neither
the Fund nor its agents will be liable for any loss, liability or cost which
results from acting upon instructions reasonably believed to be genuine under
the foregoing procedures. All exchanges will be made on the basis of the
relative NAV of the two funds next determined after the request is received in
good order. The Exchange Privilege is available only in states where the
exchange may legally be made.

B-37
<PAGE>
If you hold shares through Prudential Securities, you must exchange your
shares by contacting your Prudential Securities financial adviser.

If you hold certificates, the certificates, signed in the name(s) shown on
the face of the certificates, must be returned in order for the shares to be
exchanged. See "Sale of Shares" above.

You may also exchange shares by mail by writing to Prudential Mutual Fund
Services LLC, Attention: Exchange Processing, P.O. Box 15010, New Brunswick, New
Jersey 08906-5010.

In periods of severe market or economic conditions the telephone exchange of
shares may be difficult to implement and you should make exchanges by mail by
writing to Prudential Mutual Fund Services LLC, at the address noted above.

SPECIAL EXCHANGE PRIVILEGES. A special exchange privilege is available for
shareholders who qualify to purchase Class A shares at NAV (see "Purchase,
Redemption and Pricing of Fund Shares--Reduction and Waiver of Initial Sales
Charges-- Class A Shares" above) and for shareholders who qualify to purchase
Class Z shares (see "Purchase, Redemption and Pricing of Fund Shares--Class Z
Shares" above). Under this exchange privilege, amounts representing any Class B
and Class C shares (which are not subject to a CDSC) held in the account of a
shareholder who qualifies to purchase Class A shares at NAV will be
automatically exchanged for Class A shares on a quarterly basis, unless the
shareholder elects otherwise. Similarly, shareholders who qualify to purchase
Class Z shares will have their Class B and Class C shares which are not subject
to a CDSC and their Class A shares exchanged for Class Z shares on a quarterly
basis. Eligibility for this exchange privilege will be calculated on the
business day prior to the date of the exchange. Amounts representing Class B or
Class C shares which are not subject to a CDSC include the following: (1)
amounts representing Class B or Class C shares acquired pursuant to the
automatic reinvestment of dividends and distributions, (2) amounts representing
the increase in the net asset value above the total amount of payments for the
purchase of Class B or Class C shares and (3) amounts representing Class B or
Class C shares held beyond the applicable CDSC period. Class B and Class C
shareholders must notify the Transfer Agent either directly or through
Prudential Securities, Prusec or another Dealer that they are eligible for this
special exchange privilege.

Participants in any fee-based program for which the Fund is an available
option will have their Class A shares, if any, exchanged for Class Z shares when
they elect to have those assets become a part of the fee-based program. Upon
leaving the program (whether voluntarily or not), such Class Z shares (and, to
the extent provided for in the program, Class Z shares acquired through
participation in the program) will be exchanged for Class A shares at net asset
value. Similarly, participants in PSI's 401(k) Plan for which the Fund's Class Z
shares is an available option and who wish to transfer their Class Z shares out
of the PSI 401(k) Plan following separation from service (I.E., voluntary or
involuntary termination of employment or retirement) will have their Class Z
shares exchanged for Class A shares at NAV.

Additional details about the exchange privilege and prospectuses for each of
the Prudential Mutual Funds are available from the Fund's Transfer Agent, the
Distributor or your Dealer. The exchange privilege may be modified, terminated
or suspended on 60 days' notice, and any fund, including the Fund, or the
Distributor, has the right to reject any exchange application relating to such
fund's shares.

DOLLAR COST AVERAGING

Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more shares
when the price is low and fewer shares when the price is high. The average cost
per share is lower than it would be if a constant number of shares were bought
at set intervals.

Dollar cost averaging may be used, for example, to plan for retirement, to
save for a major expenditure, such as the purchase of a home, or to finance a
college education. The cost of a year's education at a four-year college today
averages around $14,000 at a private college and around $6,000 at a public
university. Assuming these costs increase at a rate of 7% a year, as has been
projected, for the freshman class beginning in 2011, the cost of four years at a
private college could reach $210,000 and over $90,000 at a public university.(1)

B-38
<PAGE>
The following chart shows how much you would need in monthly investments to
achieve specified lump sums to finance your investment goals.(2)

<TABLE>
<CAPTION>
PERIOD OF
MONTHLY INVESTMENTS: $100,000 $150,000 $200,000 $250,000
- ---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
25 Years................................ $ 110 $ 165 $ 220 $ 275
20 Years................................ 176 264 352 440
15 Years................................ 296 444 592 740
10 Years................................ 555 833 1,110 1,388
5 Years................................ 1,371 2,057 2,742 3,428
</TABLE>

See "Automatic Savings Accumulation Plan."
- ------------

(1)Source information concerning the costs of education at public and
private universities is available from The College Board Annual Survey of
Colleges, 1993. Average costs for private institutions include tuition, fees,
room and board for the 1993-1994 academic year.

(2)The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not intended
to reflect the performance of an investment in shares of the Fund. The
investment return and principal value of an investment will fluctuate so that an
investor's shares when redeemed may be worth more or less than their original
cost.

AUTOMATIC SAVINGS ACCUMULATION PLAN (ASAP). Under ASAP, an investor may
arrange to have a fixed amount automatically invested in shares of the Fund
monthly by authorizing his or her bank account or Prudential Securities Account
(including a Command Account) to be debited to invest specified dollar amounts
in shares of the Fund. The investor's bank must be a member of the Automatic
Clearing House System. Stock certificates are not issued to ASAP participants.

Further information about this program and an application form can be
obtained from the Transfer Agent, Prudential Securities or Prusec.

SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan is available to
shareholders through Prudential Securities or the Transfer Agent. Such
withdrawal plan provides for monthly or quarterly checks in any amount, except
as provided below, up to the value of the shares in the shareholder's account.
Withdrawals of Class B or Class C shares may be subject to a CDSC.

In the case of shares held through the Transfer Agent (i) a $10,000 minimum
account value applies, (ii) withdrawals may not be for less than $100 and (iii)
the shareholder must elect to have all dividends and/or distributions
automatically reinvested in additional full and fractional shares at NAV on
shares held under this plan. See "Automatic Reinvestment of Dividends and/or
Distributions" above.

Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment. The systematic withdrawal plan may be
terminated at any time, and the Distributor reserves the right to initiate a fee
of up to $5 per withdrawal, upon 30 days' written notice to the shareholder.

Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.

Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the sales charges applicable to (i) the purchase of Class
A shares and (ii) the withdrawal of Class B and Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences of
the plan, particularly if used in connection with a retirement plan.

TAX-DEFERRED RETIREMENT PLANS. Various qualified retirement plans, including
a 401(k) plan, self-directed individual retirement accounts and "tax-deferred
accounts" under Section 403(b)(7) of the Internal Revenue Code are available
through the Distributor. These plans are for use by both self-employed
individuals and corporate employers. These plans permit either self-direction of
accounts by participants, or a pooled account arrangement. Information regarding
the establishment of these plans, and the administration, custodial fees and
other details are available from Prudential Securities or the Transfer Agent.

Investors who are considering the adoption of such a plan should consult
with their own legal counsel or tax adviser with respect to the establishment
and maintenance of any such plan.

B-39
<PAGE>
TAX-DEFERRED RETIREMENT ACCOUNTS

INDIVIDUAL RETIREMENT ACCOUNTS. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn. The following chart represents a comparison of the
earnings in a personal savings account with those in an IRA, assuming a $2,000
annual contribution, an 8% rate of return and a 39.6% federal income tax bracket
and shows how much more retirement income can accumulate within an IRA as
opposed to a taxable individual savings account.

TAX-DEFERRED COMPOUNDING(1)

<TABLE>
<CAPTION>
CONTRIBUTIONS PERSONAL
MADE OVER: SAVINGS IRA
------------------ --------- ---------
<S> <C> <C>
10 years $ 26,165 $ 31,291
15 years 44,676 58,649
20 years 68,109 98,846
25 years 97,780 157,909
30 years 135,346 244,692
</TABLE>

- ------------
(1)The chart is for illustrative purposes only and does not represent the
performance of the Fund or any specific investment. It shows taxable versus
tax-deferred compounding for the periods and on the terms indicated. Earnings in
a traditional IRA account will be subject to tax when withdrawn from the
account. Distributions from a Roth IRA which meet the conditions required under
the Internal Revenue Code will not be subject to tax upon withdrawal from the
account.

MUTUAL FUND PROGRAMS

From time to time, the Fund may be included in a mutual fund program with
other Prudential Mutual Funds. Under such a program, a group of portfolios will
be selected and thereafter marketed collectively. Typically, these programs are
created with an investment theme, E.G., to seek greater diversification,
protection from interest rate movements or access to different management
styles. In the event such a program is instituted, there may be a minimum
investment requirement for the program as a whole. The Fund may waive or reduce
its minimum initial investment requirements in connection with such a program.

The mutual funds in the program may be purchased individually or as a part
of the program. Since the allocation of portfolios included in the program may
not be appropriate for all investors, investors should consult their Prudential
Securities Financial Adviser or Prudential/Pruco Securities Representative
concerning the appropriate blend of portfolios for them. If investors elect to
purchase the individual mutual funds that constitute the program in an
investment ratio different from that offered by the program, the standard
minimum investment requirements for the individual mutual funds will apply.

NET ASSET VALUE

The Fund's net asset value per share or NAV is determined by subtracting its
liabilities from the value of its assets and dividing the remainder by the
number of outstanding shares. NAV is calculated separately for each class. The
Directors have fixed the specific time of day for the computation of net asset
value to be as of 4:15 P.M., New York time.

Under the Investment Company Act, the Directors are responsible for
determining in good faith the fair value of securities of the Fund. In
accordance with procedures adopted by the Directors, the value of investments
listed on a securities exchange and NASDAQ National Market System securities
(other than options on stock and stock indices) are valued at the last sale
price of such exchange system on the day of valuation or, if there was no sale
on such day, the mean between the last bid and asked prices on such day, or at
the bid price on such day in the absence of an asked price. Corporate bonds
(other than convertible debt securities) and U.S. Government securities that are
actively traded in the over-the-counter market, including listed securities for
which the primary market is believed by the Manager in consultation with the
Subadviser to be over-the-counter, are valued on the basis of valuations
provided by an independent pricing agent or principal market maker which uses
information with respect to transactions in bonds, quotations from bond dealers,
agency ratings, market transactions in comparable securities and various
relationships between securities in determining value. Convertible debt
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed by the Manager in
consultation with the Subadviser to be over-the-counter, are valued at the mean
between the last reported bid and asked prices provided by principal market
makers. Options on stock and stock indices traded on an exchange are valued at
the mean between the most recently

B-40
<PAGE>
quoted bid and asked prices on the respective exchange and futures contracts and
options thereon are valued at their last sale prices as of the close of trading
on the applicable commodities exchange or board of trade or, if there was no
sale on the applicable commodities exchange or board of trade on such day, at
the mean between the most recently quoted bid and asked prices on such exchange
or board of trade. Quotations of foreign securities in a foreign currency are
converted to U.S. dollar equivalents at the current rate obtained from a
recognized bank or dealer, and forward currency exchange contracts are valued at
the current cost of covering or offsetting such contracts. Should an
extraordinary event, which is likely to affect the value of the security, occur
after the close of an exchange on which a portfolio security is traded, such
security will be valued at fair value considering factors determined in good
faith by the investment adviser under procedures established by and under the
general supervision of the Fund's Board of Directors.

Securities or other assets for which reliable market quotations are not
readily available or for which the pricing agent or principal market maker does
not provide a valuation or methodology or provides a valuation or methodology
that, in the judgment of the Manager or Subadviser (or Valuation Committee or
Board of Trustees) does not represent fair value, are valued by the Valuation
Committee or Board of Directors in consultation with the Manager or Subadviser,
including its portfolio manager, traders, and its research and credit analysts,
on the basis of the following factors: cost of the security, transactions in
comparable securities, relationships among various securities and such other
factors as may be determined by the Manager, Subadviser, Board of Directors or
Valuation Committee to materially affect the value of the security. Short-term
debt securities are valued at cost, with interest accrued or discount amortized
to the date of maturity, if their original maturity was 60 days or less, unless
this is determined by the Directors not to represent fair value. Short-term
securities with remaining maturities of more than 60 days, for which market
quotations are readily available, are valued at their current market quotations
as supplied by an independent pricing agent or principal market maker. The Fund
will compute its NAV at 4:15 P.M., New York time, on each day the New York Stock
Exchange is open for trading except on days on which no orders to purchase, sell
or redeem Fund shares have been received or days on which changes in the value
of the Fund's portfolio securities do not affect NAV. In the event the New York
Stock Exchange closes early on any business day, the NAV of the Fund's shares
shall be determined at the time between such closing and 4:15 P.M., New York
time. The New York Stock Exchange is closed on the following holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Although the legal rights of each class of shares are substantially
identical, the different expenses borne by each class will result in different
NAVs and dividends. The NAV of Class B and Class C shares will generally be
lower than the NAV of Class A shares as a result of the larger
distribution-related fee to which Class B and Class C shares are subject. The
NAV of Class Z shares will generally be higher than the NAV of Class A, Class B
or Class C shares as a result of the fact that the Class Z shares are not
subject to any distribution or service fee. It is expected, however, that the
NAV of the four classes will tend to converge immediately after the recording of
dividends, if any, which will differ by approximately the amount of the
distribution and/or service fee expense accrual differential among the classes.

TAXES, DIVIDENDS AND DISTRIBUTIONS

The Fund has elected to qualify and intends to remain qualified as a
regulated investment company under the Internal Revenue Code for each taxable
year. Accordingly, the Fund must, among other things, (a) derive at least 90% of
its gross income from dividends, interest, proceeds from loans of securities and
gains from the sale or other disposition of securities or foreign currencies, or
other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in such
securities or currencies; and (b) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the value of its assets is represented
by cash, U.S. Government securities, securities of other regulated investment
companies and other securities, with such other securities limited in respect of
any one issuer to an amount not greater than 5% of such Funds' assets, and not
greater than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than U.S. Government securities or the securities of other
regulated investment companies). These requirements may limit a Funds' ability
to invest in other types of assets.

As a regulated investment company, the Fund will not be subject to federal
income tax on its net investment income and capital gains, if any, that it
distributes to its shareholders, provided (among other things) that at least 90%
of the Funds' net investment income (including net short-term capital gains)
other than long-term capital gains earned in the taxable year is distributed.
The Fund intends to distribute annually to its shareholders all of its taxable
net investment income, which includes dividends, interest and any net short-term
capital gains in excess of net long-term capital losses. The Board of Directors
of the

B-41
<PAGE>
Fund will determine once a year whether to distribute any net long-term capital
gains in excess of any net short-term capital losses. In determining the amount
of capital gains to be distributed, any capital loss carryovers from prior years
will be offset against capital gains. A 4% nondeductible excise tax will be
imposed on the Fund to the extent such Fund does not meet certain distribution
requirements by the end of each calendar year.

Gains or losses attributable to foreign currency contracts, or to
fluctuations in exchange rates between the time the Fund accrues income,
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such income or pays such liabilities, are treated as
ordinary income or ordinary loss for federal income tax purposes. Similarly,
gains or losses on the disposition of debt securities held by the Fund, if any,
denominated in a foreign currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and its disposition dates are also
treated as ordinary income or loss.

Gains or losses on sales or securities by the Fund will generally be treated
as long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where the Fund acquires a put or
writes a call thereon or otherwise holds an offsetting position with respect to
the securities. Other gains or losses on the sale of securities will be
short-term capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities will generally be treated as gains and
losses from the sale of securities. If an option written by the Fund on
securities lapses or is terminated through a closing transaction, such as a
purchase by the Fund of the option from its holder, the Fund will generally
realize short-term capital gain or loss, depending on whether the premium income
is greater or less than the amount paid by the Fund in the closing transaction.
If securities are sold by the Fund pursuant to the exercise of a call option
written by it, the Fund will include the premium received in the sale proceeds
of the securities delivered in determining the amount of gain or loss on the
sale. Certain of the Fund's transactions may be subject to wash sale straddle,
constructive sale and short sale provisions of the Internal Revenue Code which
may, among other things, require the Fund to defer losses, recognize gain or
cause gain to be treated as ordinary income rather than as capital gain. In
addition, debt securities acquired by the Fund may be subject to original issue
discount rules which may, among other things, cause the Fund to accrue income in
advance of the receipt of cash with respect to interest and, market discount
rules which may, among other things, cause gains to be treated as ordinary
income.

Special rules apply to most options on stock indices, futures contracts and
options thereon, and forward foreign currency exchange contracts in which the
Fund may invest. See "Description of the Fund, its Investments and
Risks--Hedging and Return Enhancement Strategies." These investments generally
will constitute Section 1256 contracts and will be required to be "marked to
market" for federal income tax purposes at the end of the Funds' taxable year,
I.E., treated as having been sold at market value. Sixty percent of any capital
gain or loss recognized on such deemed sales and on actual dispositions will be
treated as long-term capital gain or loss, and the remainder will be treated as
short-term capital gain or loss.

Forward currency contracts, options and futures contracts entered into by
the Fund may create "straddles" for federal income tax purposes, which may
result in the deferral of losses in positions held by the Fund to the extent of
any unrecognized gain on offsetting positions held the Fund and the
deductibility of interest or other charges incurred to purchase or carry such
positions may be limited.

A "passive foreign investment company" (PFIC) is a foreign corporation that,
in general, meets either of the following tests: (a) at least 75% of its gross
income is passive or (b) an average of at least 50% of its assets produce, or
are held for the production of, passive income. If the Fund acquires and holds
stock in a PFIC beyond the end of the year of its acquisition, the Fund will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock or of any gain from disposition of the stock (collectively, PFIC
income), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. If the Fund elects to treat any PFIC in
which it invests as a "qualified electing fund" then in lieu of the foregoing
tax and interest obligation, the Fund will be required to include in income each
year its pro rata share of the qualified electing funds' annual ordinary
earnings and net capital gain, even if they are not distributed to such Fund;
those amounts would be subject to the distribution requirements applicable to
the Fund described above. Because the election to treat a PFIC as a qualifying
fund cannot be made without the provision of certain information by the PFIC,
the Fund may not be able to make such an election. If the Fund does not or
cannot elect to treat such a PFIC as a "qualified electing fund," the Fund can
make a "mark-to-market" election, I.E., treat the shares of the PFIC as sold on
the last day of such Funds' taxable year, and thus avoid the special tax and
interest charge. The gains the Fund recognizes from the mark-to-market election
would be included as ordinary income in the net investment income the Fund must
distribute to shareholders, notwithstanding that the Fund would receive no cash
in respect of such gains. Any loss from the mark-to-market election may be
recognized to the extent of previously reported mark-to-market gains.

B-42
<PAGE>
Dividends of net investment income will be taxable to a U.S. shareholder as
ordinary income regardless of whether such shareholder receives such dividends
in additional shares or in cash. Dividends received from the Fund will be
eligible for the dividends-received deduction for corporate shareholders only to
the extent that the Fund's income is derived from certain dividends received
from domestic corporations. Since the Fund is not likely to have a substantial
portion of its assets invested in stock of domestic corporations, the amount of
the Fund's dividends eligible for the corporate dividends-received deduction
will be minimal. The amount of dividends qualifying for the dividends-received
deduction will be designated as such in a written notice to shareholders mailed
not later than 60 days after the end of the Fund's taxable year. Distributions
of net long-term capital gains, if any, will be taxable as long-term capital
gains regardless of whether the shareholder receives such distribution in
additional shares or in cash and regardless of how long the shareholder has held
the Fund's shares, and will not be eligible for the dividends-received deduction
for corporations.

Any dividends or capital gains distributions received by a shareholder will
have the effect of reducing the net asset value of the Funds' shares by the
exact amount of the dividend or capital gains distribution. If the net asset
value of the shares should be reduced below a shareholder's cost as a result of
a dividend or capital gains distribution, such dividend or capital gains
distribution, although constituting a return of capital, will be taxable as
described above. Prior to purchasing shares of the Fund, therefore, the investor
should carefully consider the impact of dividends or capital gains distributions
which are expected to be or have been announced.

Shareholders electing to receive dividends and distributions in the form of
additional shares will have a cost basis for future income purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date.

Distributions of net investment income made to a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, foreign
corporation or foreign partnership (foreign shareholder) will be subject to U.S.
withholding tax at a rate of 30% (or lower treaty rate), unless the dividends
are effectively connected with the U.S. trade or business of the shareholder and
the shareholder complies with certain filing requirements. Gains realized upon
the sale or redemption of shares of the Fund by a foreign shareholder and
distributions of net long-term capital gains to a foreign shareholder will
generally not be subject to U.S. income tax unless the gain is effectively
connected with a trade or business carried on by the shareholder within the
United States or, in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for more than 182
days during the taxable year and certain other conditions are met. If
distributions are effectively connected with a U.S. trade or business carried on
by a foreign shareholder, distributions of net investment income and net
long-term capital gains will be subject to U.S. income tax at the graduated
rates applicable to U.S. citizens or domestic corporations. Transfers by gift of
shares of the Fund by a foreign shareholder who is a nonresident alien
individual will not be subject to U.S. federal gift tax, but the value of the
shares of the Fund held by such a shareholder at his death will be includable in
his gross estate for U.S. federal estate tax purposes. The tax consequences to a
foreign shareholder entitled to claim the benefits of an applicable tax treaty
may be different from those described herein. Foreign shareholders are advised
to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.

Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Funds' assets to be invested in
various countries is not known.

If the Fund is liable for foreign taxes, the Fund expects to meet the
requirements of the Internal Revenue Code for "passing-through" to its
shareholders foreign income taxes paid, but there can be no assurance that the
Fund will be able to do so. Under the Internal Revenue Code, if more than 50% of
the value of the Funds' total assets at the close of its taxable year consists
of stocks or securities of foreign corporations, the Fund will be eligible and
may file an election with the Internal Revenue Service to "pass-through" to the
Funds' shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to this election shareholders will be required to: (i) include in gross
income (in addition to taxable dividends actually received) their pro rata share
of the foreign income taxes paid by the Fund; (ii) treat their pro rata share of
foreign income taxes as paid by them; and (iii) either deduct their pro rata
share of foreign income taxes in computing their taxable income or, subject to
certain limitations, use it as a foreign tax credit against U.S. income taxes
imposed on foreign source income. For this purpose, the portion of dividends
paid by the Fund from its foreign source income will be treated as such. No
deduction for foreign taxes may be claimed by a shareholder who does not itemize
deductions. A shareholder that is a nonresident alien individual or foreign
corporation may be subject to U.S. withholding tax on the income resulting from
the election described in this paragraph, but may not be able to claim a credit
or deduction against such tax for the foreign taxes treated as having been paid
by such shareholder. A tax-exempt

B-43
<PAGE>
shareholder will not ordinarily benefit from this election. The amount of
foreign taxes for which a shareholder may claim a credit in any year will
generally be subject to various limitations including a separate limitation for
"passive income," which includes, among other things, dividends, interest and
certain foreign currency gains.

Each shareholder will be notified within 60 days after the close of the
Funds' taxable year whether the foreign income taxes paid by the Fund will
"pass-through" for that year and , if so, such notification will designate (a)
the shareholder's portion of the foreign income taxes paid to each such country
and (b) the portion of the dividend which represents income derived from sources
within each such country.

The per share dividends on Class B and Class C shares will be lower than the
per share dividends on Class A or Class Z shares as a result of the higher
distribution-related fee applicable to the Class B and Class C shares and lower
on Class A shares in relation to Class Z shares. The per share distributions of
net capital gains, if any, will be paid in the same amount for Class A, Class B,
Class C and Class Z shares.

Distributions may be subject to additional state and local taxes.

PERFORMANCE INFORMATION

AVERAGE ANNUAL TOTAL RETURN. The Fund may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B, Class C and Class Z shares.

Average annual total return is computed according to the following formula:

P(1+T)to the power of n = ERV

Where: P = a hypothetical initial payment of $1000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the 1, 5 or 10 year periods
(or fractional portion thereof) of a hypothetical $1000 payment
made at the beginning of the 1, 5 or 10 year periods.

Average annual total return takes into account any applicable initial or
deferred sales charges but does not take into account any federal or state
income taxes that may be payable upon redemption.

The average annual total return of the Class A shares for the one year, five
year and since inception (July 24, 1992) periods ended October 31, 1998 was
( )%, ( )% and %, respectively, and for the Class B shares, was ( )%,
( )% and %, respectively, for the same periods. The average annual total
return for Class C shares for the one year and since inception (August 1, 1994)
periods ended October 31, 1998 was % and ( )%, respectively. The average
annual total return for Class Z shares for the one year and since inception
(March 1, 1996) periods ended October 31, 1998 was ( )% and ( )%,
respectively.

YIELD. The Fund may from time to time advertise its yield as calculated over
a 30-day period. Yield is calculated separately for Class A, Class B, Class C
and Class Z shares. This yield will be computed by dividing the Fund's net
investment income per share earned during this 30-day period by the maximum
offering price per share on the last day of this period. Yield is calculated
according to the following formula:

YIELD = 2[( a - b +1)to the power of 6 - 1]
-----
cd

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.

Yield fluctuates and an annualized yield quotation is not a representation
by the Fund as to what an investment in the Fund will actually yield for any
given period. Yields for the Fund will vary based on a number of factors
including changes in net asset value, market conditions, the level of interest
rates and the level of Fund income and expenses.

B-44
<PAGE>
AGGREGATE TOTAL RETURN. The Fund may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A, Class B,
Class C and Class Z shares.

Aggregate total return represents the cumulative change in the value of an
investment in the Fund and is computed according to the following formula:

ERV - P
-------

Where: P = a hypothetical initial payment of $1000.
ERV = ending redeemable value at the end of the 1, 5 or 10 year periods
(or fractional portion thereof) of a hypothetical $1000 payment
made at the beginning of the 1, 5 or 10 year periods.

Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption or any applicable initial or
contingent deferred sales charges.

The aggregate total return for Class A shares for the one year, five year
and since inception (July 24, 1992) periods ended October 31, 1998 was ( )%,
% and %, respectively, and for Class B shares was ( ) %, % and
%, respectively, for the same periods. The aggregate total return for Class
C shares for the one year and since inception (August 1, 1994) periods ended
October 31, 1998 was ( )% and ( )%, respectively. The aggregate total
return for Class Z shares for the one year and since inception (March 1, 1996)
periods ended October 31, 1998 was ( )% and ( )%, respectively.

From time to time, the performance of the Fund may be measured against
various indices. Set forth below is a chart which compares the performance of
different types of investments over the long-term and the rate of inflation.(1)

- ------------

(1)Source: Ibbotson Associates STOCKS, BONDS, BILLS AND INFLATION--1997
YEARBOOK (annually updates the work of Roger G. Ibbotson and Rex A.
Sinquefield). All rights reserved. Common stock returns are based on the
Standard & Poor's 500 Stock Index, a market-weighted, unmanaged index of 500
common stocks in a variety of industry sectors. It is a commonly used indicator
of broad stock price movements. This chart is for illustrative purposes only and
is not intended to represent the performance of any particular investment or
fund. Investors cannot invest directly in an index. Past performance is not a
guarantee of future results.

B-45
<PAGE>
PORTFOLIO OF INVESTMENTS AS OF OCTOBER 31, 1998
PRUDENTIAL PACIFIC GROWTH FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (NOTE 1)
<C> <S> <C>
- -----------------------------------------------------------------
EQUITIES & EQUIVALENTS--67.0%
COMMON STOCKS--67.0%
- -----------------------------------------------------------------
AUSTRALIA--16.5%
68,150 Australia & New Zealand Banking
Group, Ltd. (Commercial Banking) $ 389,421
94,491 Brambles Industries, Ltd.
(Business & Public Services) 2,070,648
1,716,600 FXF Trust(a) (Financial Services) 203,683
2,274,359 Goodman Fielder, Ltd. (Foods) 3,001,173
264,310 Leighton Holdings, Ltd.
(Building & Construction) 980,466
506,285 Publishing & Broadcasting, Ltd.
(Broadcasting & Publishing) 2,007,711
288,413 Sea World Property Trust, Ltd.
(Leisure & Tourism) 149,495
334,642 Smith (Howard), Ltd.
(Diversified Operations) 2,006,246
447,700 Southcorp, Ltd.
(Diversfied Consumer Products) 1,424,504
53,500 St. George Bank, Ltd.
(Commercial Banking) 356,559
1,247,498 Star City Holdings, Ltd.(a) (Gaming) 849,178
154,600 Westpac Banking Corp.
(Commercial Banking) 939,409
1,136,265 Woolworths, Ltd. (Retail) 3,995,034
-------------
18,373,527
- ----------------------------------------------------------------
HONG KONG--11.4%
80,000 ASM Pacific Technology, Ltd.
(Electronic Components) 21,176
203,000 Cheung Kong Holdings, Ltd.
(Real Estate) 1,389,244
110,000 CLP Holdings, Ltd. (Utilities -
Electric) 617,858
423,000 Hong Kong and China Gas (Utilities) 600,813
10,000 Hong Kong Electric Holdings, Ltd.(a)
(Utilities - Electric) 36,671
291,400 Hong Kong Telecommunications, Ltd.
(Telecommunications) 583,214
48,804 HSBC Holdings, Plc. (Banking) 1,118,563
2,600,700 Hung Hing Printing Group, Ltd.
(Forest Products & Paper) 1,007,437

<CAPTION>
SHARES DESCRIPTION VALUE (NOTE 1)
<C> <S> <C>
- -----------------------------------------------------------------
260,600 Hutchison Whampoa, Ltd.
(Multi-Industry) $ 1,867,558
1,696,000 Innovative International Holdings,
Ltd. (Automotive Parts) 236,514
1,257,000 Kingboard Chemical Holdings, Ltd.
(Electronic Components) 141,209
52,000 Lung Kee (Bermuda) Holdings, Ltd.
(Miscellaneous) 5,707
1,366,000 QPL International Holdings, Ltd.
(Electronic Components) 135,815
199,000 Sun Hung Kai Properties, Ltd.
(Real Estate) 1,387,565
249,400 Swire-Pacific, Ltd. "A"
(Diversified Consumer Products) 1,323,564
396,300 Television Broadcasts, Ltd.
(Broadcasting & Publishing) 1,054,139
582,000 Varitronix International, Ltd.
(Miscellaneous) 1,104,707
363,000 Wong's International Holdings, Ltd.
(Electronic Components) 38,904
-------------
12,670,658
- ----------------------------------------------------------------
INDIA--2.6%
22,000 Bajaj Auto Ltd. (GDR)
(Automobiles & Auto Parts) 366,850
29,000 Industrial Credit & Investment Corp.
of India, Ltd. (Financial
Services) 159,500
24,500 ITC Ltd. (GDR) (Multi-Industry) 484,487
143,000 Mahanagar Telephone Nigam, Ltd.(a)
(Telecommunications) 1,537,250
44,450 State Bank of India (GDR)
(Commercial Banking) 355,600
-------------
2,903,687
- ----------------------------------------------------------------
JAPAN--24.2%
8,100 Bellsystem 24, Inc. (Commercial
Services) 1,560,372
32,300 Benesse Corp. (Commercial Services) 1,486,111
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-46

<PAGE>
PORTFOLIO OF INVESTMENTS AS OF OCTOBER 31, 1998
PRUDENTIAL PACIFIC GROWTH FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (NOTE 1)
<C> <S> <C>
- -----------------------------------------------------------------
JAPAN (CONT'D.)
247,000 Daibiru Corp. (Property Investment) $ 1,731,209
29,700 FP Corp. (Containers) 812,229
42,800 Matsumotokiyoshi (Retail) 1,619,539
74,300 Meitec Corp.
(Computer Software & Services) 1,437,694
43,400 Nichii Gakkan Co.
(Health Care Services) 1,604,919
16,000 Nintendo Co., Ltd.
(Electronic Components &
Instruments) 1,356,725
25 NTT Mobile Communications
(Telecommunications) 905,143
58,100 Oiles Corp. (Miscellaneous) 1,261,631
133,000 Olympus Optical Co., Ltd
(Business & Public Services) 1,372,549
25,600 Riso Kagaku Corp.
(Office Equipment & Supplies) 1,442,036
15,900 Ryohin Keikaku Co., Ltd. (Retail) 1,722,910
32,900 Shimamura Co. (Retail) 1,307,172
45,900 Square Co., Ltd.
(EDP Software & Services) 868,421
68,000 Terumo Corp. (Medical Products) 1,432,749
116,000 Tokio Marine & Fire Insurance Co.,
Ltd. (Insurance) 1,321,809
100,000 Tostem Corp. (Building &
Construction) 1,557,448
38,300 Union Tool Co.
(Machinery & Equipment) 1,413,029
34,200 Zenrin Co., Ltd. (Electrical Goods) 664,706
-------------
26,878,401
- ----------------------------------------------------------------
KOREA--1.6%
5,010 Dae Duck Electronics Co.
(Electrical Equipment) 355,769
8,420 Dong Yang Power Systems Co.
(Electrical Equipment) 239,295
22,219 Medison Co., Ltd. (Medical Products) 245,849
11,070 Pusan City Gas Co., Ltd.
(Gas Distribution) 209,739
23,170 Sindo Ricoh
(Office Equipment & Supplies) 700,631
-------------
1,751,283
<CAPTION>
SHARES DESCRIPTION VALUE (NOTE 1)
<C> <S> <C>
- -----------------------------------------------------------------
MALAYSIA--0.7%
194,000 Berjaya Sports Toto Berhad (Gaming) $ 109,326
92,000 Magnum Corp. Berhad (Gaming) 18,129
441,000 Malayan Banking Berhad
(Commercial Banking) 373,591
170,000 Malaysian Pacific Industries Berhad
(Electronic Components) 123,978
137,000 Telekom Malaysia Berhad
(Telecommunications) 170,304
-------------
795,328
- ----------------------------------------------------------------
THE PHILIPPINES--1.4%
158,000 Manila Electric Co. "B" (Utilities) 465,973
45,600 Philippine Long Distance Telephone
Co. (ADR) (Telephones) 1,111,500
-------------
1,577,473
- ----------------------------------------------------------------
SINGAPORE--4.1%
196,000 City Developments, Ltd.
(Property Development) 712,288
34,000 Cycle & Carriage, Ltd.
(Automobiles & Auto Parts) 85,864
105,000 DBS Land, Ltd. (Real Estate) 119,002
210,800 Elec & Eltek International Co., Ltd.
(Electronics) 1,054,000
158,000 Natsteel Electronics, Ltd.
(Electronic Components &
Instruments) 325,051
58,000 Oversea-Chinese Banking Corp., Ltd.
(Banking) 253,649
27,000 Overseas Union Bank (Banking) 73,508
15,000 Singapore Airlines, Ltd. (Airlines) 92,393
45,900 Singapore Press Co.
(Broadcasting & Publishing) 398,639
466,000 Singapore Technologies Engineering,
Ltd.(a) (Engineering & Equipment) 459,255
437,000 Singapore Telecommunications, Ltd.
(Telecommunications) 756,372
38,000 United Overseas Bank, Ltd.
(Commercial Banking) 179,058
-------------
4,509,079
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-47

<CAPTION>
SHARES DESCRIPTION VALUE (NOTE 1)
<C> <S> <C>
- -----------------------------------------------------------------
WARRANTS(a)--0.0%
- ----------------------------------------------------------------
HONG KONG--0.0%
533,666 Hong Kong & Shanghai Hotels, Ltd.
expiring Dec. '98 @ HKD13.79
(Leisure & Tourism) $ 689
16,830 Wharf Holdings, Ltd.
expiring Dec. '99 @ HKD17.50
(Multi-Industry) 1,978
-------------
Total warrants
(cost $0) 2,667
-------------
Total long-term investments
(cost $79,816,596) 74,492,238
-------------
- ----------------------------------------------------------------
SHORT-TERM INVESTMENTS--9.1%

<CAPTION>
PRINCIPAL
AMOUNT
(000)

<C> <S> <C>
- -----------------------------------------------------------------
REPURCHASE AGREEMENTS--9.1%
$10,074 Joint Repurchase Agreement Account,
5.40%,11/2/98
(cost $10,074,000; Note 5) 10,074,000
-------------
- ----------------------------------------------------------------
TOTAL INVESTMENTS--76.1%
(cost $89,890,596; Note 4) 84,566,238
Other assets in excess of
liabilities--23.9% 26,598,052
-------------
Net Assets--100% $ 111,164,290
-------------
-------------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-48

<PAGE>
PORTFOLIO OF INVESTMENTS AS OF OCTOBER 31, 1998
PRUDENTIAL PACIFIC GROWTH FUND, INC.
- ------------------------------------------------------------
The industry classification of portfolio holdings and other
net assets in excess of liabilities shown as a percentage of
net assets as of October 31, 1998 was as follows:

<TABLE>
<S> <C>
- ------------------------------------------------------
Retail................................................ 7.8%
Telecommunications.................................... 3.6
Computers............................................. 3.3
Broadcasting & Publishing............................. 3.1
Business & Public Services............................ 3.1
Commercial Services................................... 2.7
Foods................................................. 2.7
Real Estate........................................... 2.6
Diversified Consumer Products......................... 2.5
Commercial Banking.................................... 2.3
Building & Construction............................... 2.3
Property Development.................................. 2.2
Miscellaneous......................................... 2.1
Multi-Industry........................................ 2.1
Office Equipment & Supplies........................... 1.9
Diversified Operations................................ 1.8
Utilities-Electric and Gas............................ 1.7
Electronic Components................................. 1.6
Electronic Components & Instruments................... 1.6
Insurance............................................. 1.5
Electrical Goods & Equipment.......................... 1.5
Medical Products...................................... 1.5%
Health Care Services.................................. 1.4
Banking............................................... 1.3
Machinery & Equipment................................. 1.3
Telephones............................................ 1.0
Electronics........................................... 1.0
Forest Products & Paper............................... 0.9
Gaming................................................ 0.9
EDP Software & Services............................... 0.8
Containers............................................ 0.7
Engineering & Equipment............................... 0.4
Automobile Parts...................................... 0.4
Financial Services.................................... 0.3
Network............................................... 0.3
Automotive Parts...................................... 0.2
Leisure & Tourism..................................... 0.2
Oil & Gas Exploration................................. 0.1
Airlines.............................................. 0.1
Building Materials & Components....................... 0.1
Mining................................................ 0.1
Other assets in excess of liabilities (including Joint
Repurchase Agreement)............................... 33.0
-----
100.0%
-----
-----
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-49

<PAGE>
STATEMENT OF ASSETS AND LIABILITIES PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
ASSETS OCTOBER 31, 1998
----------------
<S> <C>
Investments, at value (cost $89,890,596).................................................................. $ 84,566,238
Foreign currency, at value (cost $27,787,591)............................................................. 31,313,070
Cash...................................................................................................... 182,789
Forward currency contracts - amount receivable from counterparties........................................ 2,408,993
Receivable for investments sold........................................................................... 355,314
Receivable for Fund shares sold........................................................................... 297,690
Dividends and interest receivable......................................................................... 255,329
Other assets.............................................................................................. 7,832
--------------
Total assets........................................................................................... 119,387,255
--------------
LIABILITIES
Forward currency contracts - amount payable to counterparties............................................. 7,417,143
Payable for Fund shares reacquired........................................................................ 441,427
Accrued expenses and other liabilities.................................................................... 149,889
Management fee payable.................................................................................... 69,016
Distribution fee payable.................................................................................. 67,739
Due to broker - variation margin.......................................................................... 52,739
Withholding taxes payable................................................................................. 25,012
--------------
Total liabilities...................................................................................... 8,222,965
--------------
NET ASSETS................................................................................................ $111,164,290
--------------
--------------
Net assets were comprised of:
Common stock, at par................................................................................... $ 12,494
Paid-in capital in excess of par....................................................................... 161,618,732
--------------
161,631,226
Undistributed net investment income.................................................................... 5,082,914
Accumulated net realized loss on investments, foreign currency transactions and futures................ (48,642,369)
Net unrealized depreciation on investments, foreign currencies and futures............................. (6,907,481)
--------------
Net assets, October 31, 1998.............................................................................. $111,164,290
--------------
--------------
Class A:
Net asset value and redemption price per share
($22,624,012 DIVIDED BY 2,476,170 shares of common stock issued and outstanding).................... $9.14
Maximum sales charge (5.00% of offering price)......................................................... .48
--------------
Maximum offering price to public....................................................................... $9.62
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($74,456,920 DIVIDED BY 8,474,376 shares of common stock issued and outstanding).................... $8.79
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($1,654,014 DIVIDED BY 188,277 shares of common stock issued and outstanding)....................... $8.79
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($12,429,344 DIVIDED BY 1,355,422 shares of common stock issued and outstanding).................... $9.17
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-50

<PAGE>
PRUDENTIAL PACIFIC GROWTH FUND, INC.
STATEMENT OF OPERATIONS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NET INVESTMENT INCOME OCTOBER 31, 1998
----------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $127,986)................... $ 2,502,541
Interest................................ 667,412
--------------
Total income......................... 3,169,953
--------------
Expenses
Management fee.......................... 1,021,518
Distribution fee--Class A............... 67,112
Distribution fee--Class B............... 919,826
Distribution fee--Class C............... 22,757
Transfer agent's fees and expenses...... 530,000
Custodian's fees and expenses........... 247,000
Reports to shareholders................. 45,000
Registration fees....................... 40,000
Audit fees and expenses................. 38,000
Directors' fees......................... 27,000
Legal fees and expenses................. 13,000
Miscellaneous........................... 14,829
--------------
Total expenses....................... 2,986,042
--------------
Net investment income...................... 183,911
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FOREIGN CURRENCY AND
FUTURES TRANSACTIONS
Net realized gain (loss) on:
Investment transactions................. (49,026,779)
Foreign currency transactions........... 4,906,494
Futures transactions.................... 384,410
--------------
(43,735,875)
--------------
Net change in unrealized appreciation/(depreciation) on:
Investments............................. 19,055,644
Foreign currencies...................... (1,196,320)
Futures................................. (110,653)
--------------
17,748,671
--------------
Net loss on investments, foreign currencies
and futures............................. (25,987,204)
--------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................. $(25,803,293)
--------------
--------------
</TABLE>

PRUDENTIAL PACIFIC GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------
INCREASE (DECREASE) 1998 1997
IN NET ASSETS -------------- ----------------
<S> <C> <C>
Operations
Net investment income
(loss)................... $ 183,911 $ (1,316,909)
Net realized gains (loss) on
investments and foreign
currency transactions.... (43,735,875) 19,797,626
Net change in unrealized
appreciation
(depreciation) on
investments, futures and
foreign currencies....... 17,748,671 (56,009,460)
------------- ---------------
Net decrease in net assets
resulting from
operations............... (25,803,293) (37,528,743)
------------- ---------------
Distributions in excess of
net investment income
Class A.................. (1,079,173) --
Class B.................. (2,945,918) --
Class C.................. (50,643) --
Class Z.................. (685,936) --
------------- ---------------
(4,761,670) --
------------- ---------------
Distributions from net
realized gains
Class A.................. (2,309,696) (2,078,862)
Class B.................. (8,685,264) (7,004,628)
Class C.................. (149,828) (268,013)
Class Z.................. (1,332,334) (775,335)
------------- ---------------
(12,477,122) (10,126,838)
------------- ---------------
Fund share transactions (net of
share conversions) (Note 6)
Net proceeds from shares
sold..................... 141,655,986 2,461,825,495
Net asset value of shares
issued in reinvestment of
distributions............ 16,174,424 9,110,015
Cost of shares reacquired... (190,629,423) (2,726,822,208)
------------- ---------------
Net decrease in net assets
from Fund share
transactions............. (32,799,013) (255,886,698)
------------- ---------------
Total decrease................. (75,841,098) (303,542,279)
NET ASSETS
Beginning of year.............. 187,005,388 490,547,667
------------- ---------------
End of year(a)................. $ 111,164,290 $ 187,005,388
------------- ---------------
------------- ---------------
(a) Includes undistributed net
investment income of....... $ 5,082,914 $ 4,756,316
------------- ---------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-51

<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 Investments Fund
Management LLC ("PIFM"). 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, take
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 currency
gains (losses) are included in the reported net realized gains on investment
transactions.

Net realized gains or losses on foreign currency transactions represent net
foreign exchange gains or 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 depreciation 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 currency transactions. Risks may
arise upon entering into these contracts
- --------------------------------------------------------------------------------
B-52

<PAGE>
NOTES TO FINANCIAL STATEMENTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
from the potential inability of the counterparties to meet the terms of their
contracts.

FINANCIAL FUTURES CONTRACTS: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the Fund is required to pledge to the broker an amount of cash and/or other
assets equal to a certain percentage of the contract amount. This amount is
known as the "initial margin." Subsequent payments, known as "variation margin,"
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on financial futures
contracts.

The Fund invests in financial futures contracts in order to hedge existing
portfolio securities, or securities the Fund intends to purchase, against
fluctuations in value. Under a variety of circumstances, the Fund may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and the underlying
assets.

SECURITIES TRANSACTIONS AND NET 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. Expenses are recorded on the accrual basis which
may require the use of certain estimates by management.

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.

RECLASSIFICATION OF CAPITAL ACCOUNTS: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' 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 of applying
this statement was to increase undistributed net investment income by
$4,904,357, decrease paid-in capital in excess of par by $4,593 and decrease
accumulated net realized gains by $4,899,764 for differences in the treatment
for book and tax purposes of certain transactions involving foreign securities,
currencies and withholding taxes. 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 PIFM. Pursuant to this agreement, PIFM
has responsibility for all investment advisory services and supervises the
subadviser's performance of such services. PIFM 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. PIFM
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 PIFM 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 had a distribution agreement with Prudential Securities Incorporated
("PSI"), which acted as the distributor of the Class A, Class B, Class C and
Class Z shares of the Fund through May 31, 1998. Prudential Investment
Management Services LLC ("PIMS") became the distributor of the Fund effective
June 1, 1998 and is serving the Fund under the same terms and conditions as
under the arrangement with PSI. The Fund compensated PSI and PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution, (the "Class A, Class B and Class C Plans"),
regardless of expenses actually incurred by them. The distribution fees are
accrued daily and payable
- --------------------------------------------------------------------------------
B-53

<PAGE>
NOTES TO FINANCIAL STATEMENTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
monthly. No distribution or service fees are paid to PIMS as distributor of the
Class Z shares of the Fund.

Pursuant to the Class A, B and C Plans, the Fund compensated PSI and PIMS 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 year ended October 31, 1998.

PSI and PIMS have advised the Fund that they received approximately $48,700 in
front-end sales charges resulting from sales of Class A shares during the year
ended October 31, 1998. From these fees, PSI and PIMS paid such sales charges to
affiliated broker-dealers, which in turn paid commissions to salespersons and
incurred other distribution costs.

PSI and PIMS has advised the Fund that for the year ended October 31, 1998, they
received approximately $413,700 and $10,200 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

PSI, PIMS, PIFM 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 LLC ("PMFS"), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended October 31, 1998, the
Fund incurred fees of approximately $466,000 for the services of PMFS. As of
October 31, 1998, approximately $33,200 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 nonaffiliates.
- ------------------------------------------------------------
NOTE 4. PORTFOLIO SECURITIES

Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 1998 were $100,112,663 and $146,344,992,
respectively.

At October 31, 1998, the Fund had outstanding forward currency contracts, both
to purchase and sell foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Forward Currency Settlement Date Current Appreciation
Purchase Contracts Receivable Value (Depreciation)
<S> <C> <C> <C>
- -------------------- --------------- ----------- --------------
Australian Dollars,
expiring
12/15/98.......... $ 2,140,653 $ 2,124,788 $ (15,865)
Japanese Yen,
expiring 12/21/98-
3/15/99........... 14,298,659 16,707,652 2,408,993
--------------- ----------- --------------
$16,439,312 $18,832,440 $ 2,393,128
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>

<TABLE>
<CAPTION>
Value at
Forward Currency Settlement Date Current Appreciation
Sale Contracts Receivable Value (Depreciation)
<S> <C> <C> <C>
- -------------------- --------------- ----------- --------------
Australian Dollars,
expiring 12/15/98-
12/21/98.......... $ 4,950,000 $ 5,163,060 $ (213,060)
Hong Kong Dollars,
expiring
4/27/99........... 11,900,000 12,025,725 (125,725)
Japanese Yen,
expiring 11/2/98-
5/3/99............ 51,574,754 58,698,655 (7,123,901)
--------------- ----------- --------------
$68,424,754 $75,887,440 $ (7,462,686)
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>

At October 31, 1998, the Fund held with its custodian and their global custody
network approximately 28% of its net assets in foreign cash as follows:
<TABLE>
<S> <C>
Australian Dollar................................ $ 507,462
Hong Kong Dollar................................. 2,572,235
Japanese Yen..................................... 25,407,580
Malaysian Ringgit................................ 560,595
New Zealand Dollar............................... 399
Philippine Peso.................................. 18,084
Singapore Dollar................................. 109,766
Thai Baht........................................ 162,291
New Taiwan Dollar................................ 1,974,658
-----------
Total.......................................... $31,313,070
-----------
-----------
</TABLE>

The United States federal income tax basis of the Fund's investments is
substantially the same as for financial reporting purposes and accordingly, as
of October 31, 1998, net unrealized depreciation for federal income tax purposes
was $5,662,163 (gross unrealized appreciation--$5,109,696; gross unrealized
depreciation--$10,771,859).
- --------------------------------------------------------------------------------
B-54

<PAGE>
NOTES TO FINANCIAL STATEMENTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
During the year ended October 31, 1998, the Fund entered into financial futures
contracts. Details of open contracts at October 31, 1998 are as follows:
<TABLE>
<CAPTION>
VALUE AT VALUE AT
NUMBER OF EXPIRATION OCTOBER 31, TRADE UNREALIZED
CONTRACTS TYPE DATE 1998 DATE DEPRECIATION
- ----------- ---------------- ------------ ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Short Position:
3 Hang Seng Nov. 98 $ 197,947 $191,594 $ 6,353
3 Hang Seng Nov. 98 197,947 187,972 9,975
4 Hang Seng Nov. 98 263,929 255,665 8,264
5 Hang Seng Nov. 98 329,912 313,449 16,463
9 Hang Seng Nov. 98 593,841 557,815 36,026
10 Hang Seng Nov. 98 659,823 626,251 33,572
------------
$110,653
------------
------------
</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. As of October 31, 1998, the Fund
had a 1.0% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Fund represented $10,074,000 in principal amount.
As of such date, each repurchase agreement in the joint account and the value of
the collateral therefore was as follows:

Bear, Stearns & Co., Inc., 5.40%, in the principal amount of $260,000,000,
repurchase price $260,117,000, due 11/2/98. The value of the collateral
including accrued interest is $265,935,719.

Salomon Smith Barney Inc., 5.40%, in the principal amount of $260,000,000,
repurchase price $260,117,000, due 11/2/98. The value of the collateral
including accrued interest is $265,365,298.

Deutsche Morgan Grenfell Inc., 5.41%, in the principal amount of $260,000,000,
repurchase price $260,117,217, due 11/2/98. The value of the collateral
including accrued interest is $265,200,735.

SBC Warburg Dillon Read, Inc., 5.38%, in the principal amount of $160,825,000,
repurchase price $160,897,103, due 11/2/98. The value of the collateral
including accrued interest is $164,045,205.
- ------------------------------------------------------------
NOTE 6. CAPITAL

The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with an initial sales charge of up to 5.00%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending upon
the period of time the shares are held. Prior to November 2, 1998 Class C shares
were sold with a contingent deferred sales charge of 1% during the first year.
Effective November 2, 1998, Class C shares are sold with a front-end sales
charge of 1% and a contigent deferred sales charge of 1% during the first 18
months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to a limited group of
investors.

The Fund has authorized 2 billion shares of common stock at $.001 par value per
share divided into four classes, designated Class A, Class B, Class C and Class
Z common stock each consisting of 500 million authorized shares.

Transactions in shares of common stock for the year ended October 31, 1998 and
1997 were as follows:
<TABLE>
<CAPTION>
Class A SHARES AMOUNT
- --------------------------------- ----------- ---------------
<S> <C> <C>
Year ended October 31, 1998:
Shares sold...................... 4,437,257 $ 42,845,381
Shares issued in reinvestment of
distributions.................. 329,658 3,143,003
Shares reacquired................ (5,369,479) (52,502,540)
----------- ---------------
Net increase in shares
outstanding before
conversion..................... (602,564) (6,514,156)
Shares issued upon conversion
from Class B................... 143,203 1,354,722
----------- ---------------
Net decrease in shares
outstanding.................... (459,361) $ (5,159,434)
----------- ---------------
----------- ---------------
Year ended October 31, 1997:
Shares sold...................... 81,011,975 $ 1,296,933,660
Shares issued in reinvestment of
distributions.................. 110,855 1,771,786
Shares reacquired................ (85,608,895) (1,376,512,897)
----------- ---------------
Net decrease in shares
outstanding before
conversion..................... (4,486,065) (77,807,451)
Shares issued upon conversion
from Class B................... 261,162 4,152,328
----------- ---------------
Net decrease in shares
outstanding.................... (4,224,903) $ (73,655,123)
----------- ---------------
----------- ---------------
</TABLE>
- --------------------------------------------------------------------------------
B-55

<PAGE>
NOTES TO FINANCIAL STATEMENTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B SHARES AMOUNT
- --------------------------------- ----------- ---------------
<S> <C> <C>
Year ended October 31, 1998:
Shares sold...................... 3,108,133 $ 29,692,991
Shares issued in reinvestment of
distributions.................. 1,170,551 10,820,405
Shares reacquired................ (6,591,555) (63,034,383)
----------- ---------------
Net decrease in shares
outstanding before
conversion..................... (2,312,871) (22,520,987)
Shares reacquired upon conversion
into Class A................... (148,409) (1,354,722)
----------- ---------------
Net decrease in shares
outstanding.................... (2,461,280) $ (23,875,709)
----------- ---------------
----------- ---------------
Year ended October 31, 1997:
Shares sold...................... 40,987,211 $ 633,115,767
Shares issued in reinvestment of
distributions.................. 415,124 6,363,693
Shares reacquired................ (51,456,334) (794,472,870)
----------- ---------------
Net decrease in shares
outstanding before
conversion..................... (10,053,999) (154,993,410)
Shares reacquired upon conversion
into Class A................... (270,285) (4,152,328)
----------- ---------------
Net decrease in shares
outstanding.................... (10,324,284) $ (159,145,738)
----------- ---------------
----------- ---------------
Class C
- ---------------------------------
Year ended October 31, 1998:
Shares sold...................... 1,915,959 $ 17,541,510
Shares issued in reinvestment of
distributions.................. 21,081 194,900
Shares reacquired................ (1,997,866) (18,435,258)
----------- ---------------
Net decrease in shares
outstanding.................... (60,826) $ (698,848)
----------- ---------------
----------- ---------------
Year ended October 31, 1997:
Shares sold...................... 26,331,596 $ 408,638,884
Shares issued in reinvestment of
distributions.................. 12,995 199,203
Shares reacquired................ (26,898,046) (419,221,061)
----------- ---------------
Net decrease in shares
outstanding.................... (553,455) $ (10,382,974)
----------- ---------------
----------- ---------------
<CAPTION>
Class Z SHARES AMOUNT
- --------------------------------- ----------- ---------------
<S> <C> <C>
Year ended October 31, 1998:
Shares sold...................... 5,371,303 $ 51,576,104
Shares issued in reinvestment of
distributions.................. 211,034 2,016,116
Shares reacquired................ (5,816,918) (56,657,242)
----------- ---------------
Net decrease in shares
outstanding.................... (234,581) $ (3,065,022)
----------- ---------------
----------- ---------------
Year ended October 31, 1997:
Shares sold...................... 7,750,167 $ 123,137,184
Shares issued in reinvestment of
distributions.................. 48,879 775,333
Shares reacquired................ (8,555,074) (136,615,380)
----------- ---------------
Net decrease in shares
outstanding.................... (756,028) $ (12,702,863)
----------- ---------------
----------- ---------------
</TABLE>
- ------------------------------------------------------------
NOTE 7. DISTRIBUTIONS

On December 11, 1998 the Board of Directors of the Fund declared a dividend from
ordinary income of $.08 from Class A, $.01 from Class B and C and $.105 from
Class Z payable on December 15, 1998 to shareholders of record on December 14,
1998.
- --------------------------------------------------------------------------------
B-56

<PAGE>
FINANCIAL HIGHLIGHTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A(a)
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 12.22 $ 15.86 $ 15.75 $ 16.90 $ 16.10
------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................. .06 .02 .07 .04 (.08)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... (1.88) (3.31) .23 (1.09) 1.15
------- ------- -------- -------- -------
Total from investment operations........... (1.82) (3.29) .30 (1.05) 1.07
------- ------- -------- -------- -------
LESS DISTRIBUTIONS
Distributions in excess of net investment
income..................................... (.40) -- (.19) -- (.06)
Distributions from net realized gains......... (.86) (.35) -- (.10) (.21)
------- ------- -------- -------- -------
Total distributions........................ (1.26) (.35) (.19) (.10) (.27)
------- ------- -------- -------- -------
Net asset value, end of year.................. $ 9.14 $ 12.22 $ 15.86 $ 15.75 $ 16.90
------- ------- -------- -------- -------
------- ------- -------- -------- -------
TOTAL RETURN(b)............................... (15.53)% (21.32)% 1.97% (6.23)% 6.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $22,624 $35,860 $113,585 $ 98,998 $98,921
Average net assets (000)...................... $26,845 $73,942 $106,148 $101,920 $92,233
Ratios to average net assets:
Total expenses............................. 1.70% 1.48% 1.37% 1.46% 1.57%
Operating expenses, including distribution
fees.................................... 1.70% 1.42% 1.37% 1.46% 1.57%
Operating expenses, excluding distribution
fees.................................... 1.45% 1.17% 1.12% 1.21% 1.33%
Net investment income (loss)............... .63% .14% .44% .26% (.50)%
For Class A, B, C and Z shares:
Portfolio turnover rate.................... 94% 81% 91% 54% 56%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares outstanding during the year.
(b) 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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-57

<PAGE>
FINANCIAL HIGHLIGHTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B(a)
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 11.77 $ 15.40 $ 15.38 $ 16.62 $ 15.94
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss........................... (.01) (.09) (.04) (.08) (.21)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... (1.82) (3.19) .25 (1.06) 1.13
-------- -------- -------- -------- --------
Total from investment operations........... (1.83) (3.28) .21 (1.14) .92
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Distributions in excess of net investment
income..................................... (.29) -- (.19) -- (.03)
Distributions from net realized gains......... (.86) (.35) -- (.10) (.21)
-------- -------- -------- -------- --------
Total distributions........................ (1.15) (.35) (.19) (.10) (.24)
-------- -------- -------- -------- --------
Net asset value, end of year.................. $ 8.79 $ 11.77 $ 15.40 $ 15.38 $ 16.62
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN(b)............................... (16.32)% (21.84)% 1.36% (6.82)% 5.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $ 74,457 $128,694 $327,315 $344,313 $459,949
Average net assets (000)...................... $ 91,983 $244,462 $357,548 $368,771 $404,506
Ratios to average net assets:
Total expenses............................. 2.45% 2.23% 2.12% 2.21% 2.33%
Operating expenses, including distribution
fees.................................... 2.45% 2.17% 2.12% 2.21% 2.33%
Operating expenses, excluding distribution
fees.................................... 1.45% 1.17% 1.12% 1.21% 1.33%
Net investment loss........................ (.12)% (.61)% (.25)% (.55)% (1.27)%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares outstanding during the year.
(b) 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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-58

<PAGE>
FINANCIAL HIGHLIGHTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C(a)
--------------------------------------------------------
AUGUST 1,
1994(d)
YEAR ENDED OCTOBER 31, THROUGH
---------------------------------------- OCTOBER 31,
1998 1997 1996 1995 1994
------ ------ ------- ------ -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $11.77 $15.40 $ 15.38 $16.62 $ 16.68
------ ------ ------- ------ -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................. (.01) (.09) (.04) (.08) (.06)
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... (1.82) (3.19) .25 (1.06) --
------ ------ ------- ------ -----
Total from investment operations........... (1.83) (3.28) .21 (1.14) (.06)
------ ------ ------- ------ -----
LESS DISTRIBUTIONS
Distributions in excess of net investment
income..................................... (.29) -- (.19) -- --
Distributions from net realized gains......... (.86) (.35) -- (.10) --
------ ------ ------- ------ -----
Total distributions........................ (1.15) (.35) (.19) (.10) --
------ ------ ------- ------ -----
Net asset value, end of period................ $ 8.79 $11.77 $ 15.40 $15.38 $ 16.62
------ ------ ------- ------ -----
------ ------ ------- ------ -----
TOTAL RETURN(b)............................... (16.32)% (21.84)% 1.36% (6.82)% (.36)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $1,654 $2,932 $12,360 $2,443 $ 718
Average net assets (000)...................... $2,276 $6,557 $ 6,402 $1,624 $ 458
Ratios to average net assets:
Total expenses............................. 2.45% 2.23% 2.12% 2.21% 3.00%(c)
Operating expenses, including distribution
fees.................................... 2.45% 2.17% 2.12% 2.21% 3.00%(c)
Operating expenses, excluding distribution
fees.................................... 1.45% 1.17% 1.12% 1.21% 2.00%(c)
Net investment income (loss)............... (.12)% (.61)% (.25)% (.43)% (1.64)%(c)

<CAPTION>
CLASS Z(a)
--------------------------------
MARCH 1,
YEAR ENDED 1996(e)
OCTOBER 31, THROUGH
----------------- OCTOBER 31,
1998 1997 1996
<S> ------- ------- -----------
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 12.28 $ 15.89 $ 16.57
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................. .08 .06 .11
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions............................... (1.89) (3.32) (.79)
------- ------- -------
Total from investment operations........... (1.81) (3.26) (.68)
------- ------- -------
LESS DISTRIBUTIONS
Distributions in excess of net investment
income..................................... (.44) -- --
Distributions from net realized gains......... (.86) (.35) --
------- ------- -------
Total distributions........................ (1.30) (.35) --
------- ------- -------
Net asset value, end of period................ $ 9.17 $ 12.28 $ 15.89
------- ------- -------
------- ------- -------
TOTAL RETURN(b)............................... (15.36)% (21.02)% (4.09)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $12,429 $19,520 $37,288
Average net assets (000)...................... $15,099 $31,945 $33,868
Ratios to average net assets:
Total expenses............................. 1.45% 1.23% 1.12%(c)
Operating expenses, including distribution
fees.................................... 1.45% 1.17% 1.12%(c)
Operating expenses, excluding distribution
fees.................................... 1.45% 1.17% 1.12%(c)
Net investment income (loss)............... .82% .39% .68%(c)
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) 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.
(c) Annualized.
(d) Commencement of offering of Class C shares.
(e) Commencement of offering of Class Z shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. B-59

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS PRUDENTIAL PACIFIC GROWTH FUND, INC.
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Prudential Pacific Growth Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Pacific Growth Fund,
Inc. (the "Fund") at October 31, 1998, the results of its operations for the
year then ended, and the changes in its net assets and the financial highlights
for each of the two years in the period then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The accompanying financial highlights for each of
the three periods in the period ended October 31, 1996 were audited by other
independent accountants, whose opinion dated December 12, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
December 18, 1998
- --------------------------------------------------------------------------------
B-60
<PAGE>

FEDERAL INCOME TAX INFORMATION (UNAUDITED) 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, 1998) as to the federal 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, 1998, the Fund paid
long-term capital gain distributions of $.857 per share which are taxable as
such.

The Fund has elected to give the benefit of foreign tax credits to its
shareholders. Accordingly, shareholders who must report their gross income
dividends and distributions in a federal income tax return will be entitled
to a foreign tax credit, or an itemized deduction, in computing their U.S.
income tax liability. It is generally more advantageous to claim a credit
rather than to take a deduction. For the fiscal year ended October 31, 1998,
the Fund intends on passing through 30.23% of ordinary income distributions
as a foreign tax credit.

We wish to advise you that the corporate dividends received deduction for the
Fund is zero. Only funds that invest in U.S. equity securities are entitled
to pass-through a corporate dividends received deduction.

In January 1999, 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 year 1998.

B-61
<PAGE>
APPENDIX I--DESCRIPTION OF SECURITY RATINGS

DESCRIPTION OF S&P CORPORATE BOND RATINGS:

AAA: Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A: Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions that bonds in higher rated categories.

BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.

BB,B,CCC,CC,C: Bonds rated BB,B,CCC,CC, or C are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents the
lowest degree of speculation and C the highest degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

Aaa: Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of these issues.

Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa: Bonds rated Baa are considered as medium grade obligations, I.E., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba: Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well-safeguarded during
both good and bad times over the future. Uncertainty of position characterize
bonds in this class.

B: Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa: Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

Ca: Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C: Bonds rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies the numerical modifiers 1,2, and 3 in the Aa and A rating
categories. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.

I-1
<PAGE>
DESCRIPTION OF DUFF & PHELPS BOND RATINGS:

AAA: Bonds rated AAA by Duff & Phelps are considered to be of the highest
credit quality. The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt.

AA+, AA, AA-: Bonds rated AA+, AA, or AA- are considered to be of high
credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.

A+, A, A-: Bonds rated A+, A, or A- have protection factors which are
average but adequate; however, risk factors are more variable and greater in
periods of economic stress.

BBB+, BBB, BBB-: Bonds rated BBB+, BBB, or BBB- have below average
protection factors but are still considered sufficient for prudent investment.
These bonds demonstrate considerable variability in risk during economic cycles.

BB+, BB, BB-: Bonds rated BB+, BB, or BB- are below investment grade but are
still deemed likely to meet obligations when due. Present or prospective
financial protection factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down frequently within this
category.

B+, B, B-: Bonds rated B+, B, or B- are below investment grade and possess
the risk that obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.

CCC: Bonds rated CCC are well below investment grade securities.
Considerable uncertainty exists as to timely payment of principal, interest, or
preferred dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/ industry conditions, and/or with unfavorable company
developments.

DD: Bonds rated DD are defaulted debt obligations. The issuer failed to meet
scheduled principal and/or interest payments.

DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
Capacity for timely payment on commercial paper rated A-2 is strong, but the
relative degree of safety is not as high as for issues designated A-1.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.

DESCRIPTION OF DUFF & PHELPS COMMERCIAL PAPER RATING:

Duff & Phelps commercial paper ratings are divided into three categories,
ranging from "1" for the highest quality obligations to "3" for the lowest. No
ratings are issued for companies whose paper is not deemed investment grade.
Issues assigned the Duff 1 rating are considered top grade. This category is
further divided into three gradations as follows: Duff 1 plus--highest certainty
of timely payment, short-term liquidity, including internal operating factors
and/or ready access to alternative sources of funds, is clearly outstanding and
safety is just below risk-free U.S. Treasury short-term obligations; Duff
1--very high certainty of timely payment, liquidity factors are excellent and
supported by strong fundamental protection factors, risk factors are minor; Duff
1 minus-high certainty of timely payment, liquidity factors are strong and
supported by good fundamental protection factors, risk factors are very small.
Issues rated Duff 2 represent a good certainty of timely payment; liquidity
factors and company fundamentals are sound; although ongoing internal funds
needs may enlarge total financing requirements, access to capital markets is
good; risk factors are small. Duff 3 represents a satisfactory grade;
satisfactory liquidity and other protection factors qualify issue as to
investment grade; risk factors are larger and subject to more variation;
nevertheless timely payment is expected.

I-2
<PAGE>
APPENDIX II--GENERAL INVESTMENT INFORMATION

The following terms are used in mutual fund investing.

ASSET ALLOCATION

Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.

DIVERSIFICATION

Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks (and general returns) of any one type of security.

DURATION

Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.

Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, I.E., principal and interest
rate payments. Duration is expressed as a measure of time in years--the longer
the duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).

MARKET TIMING

Market timing--buying securities when prices are low and selling them when
prices are relatively higher--may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.

POWER OF COMPOUNDING

Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.

STANDARD DEVIATION

Standard deviation is an absolute (non-relative) measure of volatility
which, for a mutual fund, depicts how widely the returns varied over a certain
period of time. When a fund has a high standard deviation, its range of
performance has been very wide, implying greater volatility potential. Standard
deviation is only one of several measures of a fund's volatility.

II-1
<PAGE>
APPENDIX III--HISTORICAL PERFORMANCE DATA

The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.

This chart shows the long-term performance of various asset classes and the
rate of inflation.

EACH INVESTMENT PROVIDES A DIFFERENT OPPORTUNITY

Source: Stocks, Bonds, Bills and Inflation 1997 Yearbook, Ibbotson Associates,
Chicago, Illinois (annually updates work by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. This chart is for illustrative purposes only
and is not indicative of the past, present, or future performance of any asset
class or any Prudential Mutual Fund.

Generally, stock returns are due to capital appreciation and the reinvestment of
distributions. Bond returns are attributable mainly to the reinvestment of
interest. Also, stock prices are usually more volatile than bond prices over the
long-term.

Small stock returns for 1926-1980 are those of stocks comprising the 5th
quintile of the New York Stock Exchange. Thereafter, returns are those of the
Dimensional Fund Advisors (DFA) Small Company Fund. Common stock returns are
based on the S&P 500 Composite index, a market-weighted, unmanaged index of 500
stocks (currently) in a variety of industries. It is often used as a broad
measure of stock market performance.

Long-term government bond returns are measured using a constant one-bond
portfolio with a maturity of roughly 20 years. Treasury bill returns are for a
one-month bill. Treasuries are guaranteed by the U.S. government as to the
timely payment of principal and interest; equities are not. Inflation is
measured by the consumer price index (CPI).

IMPACT OF INFLATION. The "real" rate of investment return is that which exceeds
the rate of inflation, the percentage change in the value of consumer goods and
the general cost of living. A common goal of long-term investors is to outpace
the erosive impact of inflation on investment returns.

III-1
<PAGE>
Set forth below is historical performance data relating to various sectors
of the fixed-income securities markets. The chart shows the historical total
returns of U.S. Treasury bonds, U.S. mortgage securities, U.S. corporate bonds,
U.S. high yield bonds and world government bonds on an annual basis from 1987
through 1996. The total returns of the indices include accrued interest, plus
the price changes (gains or losses) of the underlying securities during the
period mentioned. The data is provided to illustrate the varying historical
total returns and investors should not consider this performance data as an
indication of the future performance of the Fund or of any sector in which the
Fund invests.

All information relies on data obtained from statistical services, reports
and other services believed by the Manager to be reliable. Such information has
not been verified. The figures do not reflect the operating expenses and fees of
a mutual fund. The net effect of the deduction of the operating expenses of a
mutual fund on these historical total returns, including the compounded effect
over time, could be substantial.

HISTORICAL TOTAL RETURNS OF DIFFERENT BOND MARKET SECTORS

1 LEHMAN BROTHERS TREASURY BOND INDEX is an unmanaged index made up of over
150 public issues of the U.S. Treasury having maturities of at least one
year.

2 LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index that
includes over 600 15- and 30-year fixed-rate mortgage-backed securities of
the Government National Mortgage Association (GNMA), Federal National
Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation
(FHLMC).

3 LEHMAN BROTHERS CORPORATE BOND INDEX includes over 3,000 public fixed-rate,
nonconvertible investment-grade bonds. All bonds are U.S. dollar-denominated
issues and include debt issued or guaranteed by foreign sovereign
governments, municipalities, governmental agencies or international agencies.
All bonds in the index have maturities of at least one year.

4 LEHMAN BROTHERS HIGH YIELD BOND INDEX is an unmanaged index comprising over
750 public, fixed-rate, nonconvertible bonds that are rated Ba1 or lower by
Moody's Investors Service (or rated BB+ or lower by Standard & Poor's or
Fitch Investors Service). All bonds in the Index have maturities of at least
one year.

5 SALOMON BROTHERS WORLD GOVERNMENT INDEX (NON U.S.) includes over 800 bonds
issued by various foreign governments or agencies, excluding those in the
U.S., but including those in Japan, Germany, France, the U.K., Canada, Italy,
Australia, Belgium, Denmark, the Netherlands, Spain, Sweden, and Austria. All
bonds in the index have maturities of at least one year.

III-2
<PAGE>
This chart illustrates the performance of major world stock markets for the
period from December 31, 1986 through September 30, 1997. It does not represent
the performance of any Prudential Mutual Fund.

AVERAGE ANNUAL TOTAL RETURNS OF MAJOR WORLD STOCK MARKETS (12/31/86-9/30/97)(IN
U.S. DOLLARS)

Source: Morgan Stanley Capital International (MSCI) based on data retrieved from
Lipper Analytical New Application (LANA) as of
September 30, 1997. Used with permission. Morgan Stanley Country indices are
unmanaged indices which include those stocks making up the largest two-thirds of
each country's total stock market capitalization. Returns reflect the
reinvestment of all distributions. This chart is for illustrative purposes only
and is not indicative of the past, present or future performance of any specific
investment. Investors cannot invest directly in stock indices.

This chart shows the growth of a hypothetical $10,000 investment made in the
stocks representing the S&P 500 Stock Index with and without reinvested
dividends.

Source: Stocks, Bonds, Bills, and Inflation 1997 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. This chart is used for illustrative
purposes only and is not intended to represent the past, present or future
performance of any Prudential Mutual Fund. Common stock total return is based on
the Standard & Poor's 500 Stock Index, a market-value-weighted index made up of
500 of the largest stocks in the U.S. based upon their stock market value.
Investors cannot invest directly in indices.

III-3
<PAGE>
WORLD STOCK MARKET CAPITALIZATION BY REGION
WORLD TOTAL: $12.7 TRILLION

Source: Morgan Stanley Capital International, September 30, 1997. Used with
permission. This chart represents the capitalization of major world stock
markets as measured by the Morgan Stanley Capital International (MSCI) World
Index. The total market capitalization is based on the value of 1579 companies
in 22 countries (representing approximately 60% of the aggregate market value of
the stock exchanges). This chart is for illustrative purposes only and does not
represent the allocation of any Prudential Mutual Fund.

This chart below shows the historical volatility of general interest rates
as measured by the long U.S. Treasury Bond.

Source: Stocks, Bonds, Bills, and Inflation 1997 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. The chart illustrates the historical
yield of the long-term U.S. Treasury Bond from 1926-1996. Yields represent that
of an annually renewed one-bond portfolio with a remaining maturity of
approximately 20 years. This chart is for illustrative purposes and should not
be construed to represent the yields of any Prudential Mutual Fund.

III-4
<PAGE>
APPENDIX IV--INFORMATION RELATING TO PRUDENTIAL

Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. The data will be used in sales materials relating
to the Prudential Mutual Funds. Unless otherwise indicated, the information is
as of December 31, 1996 and is subject to change thereafter. All information
relies on data provided by The Prudential Investment Corporation (PIC) or from
other sources believed by the Manager to be reliable. Such information has not
been verified by the Fund.

INFORMATION ABOUT PRUDENTIAL

The Manager and PIC(1) are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1997. Principal products and services include life and health insurance, other
healthcare products, property and casualty insurance, securities brokerage,
asset management, investment advisory services and real estate brokerage.
Prudential (together with its subsidiaries) employs almost 79,000 persons
worldwide, and maintains a sales force of approximately 10,100 agents and nearly
6,500 financial advisors. Prudential is a major issuer of annuities, including
variable annuities. Prudential seeks to develop innovative products and services
to meet consumer needs in each of its business areas. Prudential uses the Rock
of Gibraltar as its symbol. The Prudential rock is a recognized brand name
throughout the world.

INSURANCE. Prudential has been engaged in the insurance business since 1875.
It insures or provides financial services to nearly 40 million people worldwide.
Long one of the largest issuers of individual life insurance, the Prudential has
25 million life insurance policies and group certificates in force today with a
face value of almost $1 trillion. Prudential has the largest capital base ($12.1
billion) of any life insurance company in the United States. Prudential provides
auto insurance for more than 1.5 million cars and insures more than 1.2 million
homes.

MONEY MANAGEMENT. Prudential is one of the largest pension fund managers in
the country, providing pension services to 1 in 3 Fortune 500 firms. It manages
$36 billion of individual retirement plan assets, such as 401(k) plans. As of
December 31, 1997, Prudential had more than $370 billion in assets under
management. Prudential's Investments, a business group of Prudential (of which
Prudential Mutual Funds is a key part) manages over $211 billion in assets of
institutions and individuals. In Pensions & Investments, May 12, 1997,
Prudential was ranked third in terms of total assets under management.

REAL ESTATE. The Prudential Real Estate Affiliates, the fourth largest real
estate brokerage network in the United States, has more than 37,000 brokers and
agents and more than 1,100 offices in the United States.(2)

HEALTHCARE. Over two decades ago, Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, approximately 4.9
million Americans receive healthcare from a Prudential managed care membership.

FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of
Prudential, has over $1 billion in assets and serves nearly 1.5 million
customers across 50 states.

INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS

As of August 31, 1998 Prudential Investments Fund Management LLC is the
eighteenth largest mutual fund company in the country, with over 2.5 million
shareholders invested in more than 50 mutual fund portfolios and variable
annuities with more than 3.7 million shareholder accounts.

The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.

From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
THE WALL STREET JOURNAL, THE NEW YORK TIMES, BARRON'S and USA TODAY.

- ---------------
(1)Prudential Investments, a business group of PIC, serves as the Subadviser to
substantially all of the Prudential Mutual Funds. Wellington Management Company
serves as the subadviser to Global Utility Fund, Inc., Nicholas-Applegate
Capital Management as subadviser to Nicholas-Applegate Fund, Inc., Jennison
Associates Capital Corp. LLC as one of the subadvisers to The Prudential
Investment Portfolio, Inc. and Mercator Asset Management, L.P. as subadviser to
International Stock Series is a portfolio of Prudential World Fund, Inc. There
are multiple subadvisers for The Target Portfolio Trust.
(2)As of December 31, 1996.

IV-1
<PAGE>
EQUITY FUNDS. FORBES magazine listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. FORBES considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential Securities introduced Prudential Jennison Growth Fund, a growth-style
equity fund managed by Jennison Associates Capital Corp., a premier
institutional equity manager and a subsidiary of Prudential.

HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor
approximately 200 issues held in the Prudential High Yield Fund (currently the
largest fund of its kind in the country) along with 100 or so other high yield
bonds, which may be considered for purchase.(3) Non-investment grade bonds, also
known as junk bonds or high yield bonds, are subject to a greater risk of loss
of principal and interest including default risk than higher-rated bonds.
Prudential high yield portfolio managers and analysts meet face-to-face with
almost every bond issuer in the High Yield Fund's portfolio annually, and have
additional telephone contact throughout the year.

Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets--from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.

Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers--from Pulp and Paper Forecaster to Women's
Wear Daily--to keep them informed of the industries they follow.

Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential mutual
fund.

Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.

Prudential Mutual Funds' portfolio managers and analysts met with over 1,200
companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.

Prudential Mutual Fund global equity managers conducted many of their visits
overseas, often holding private meetings with a company in a foreign language
(our global equity managers speak 7 different languages, including Mandarin
Chinese).

TRADING DATA.(4) On an average day, Prudential Mutual Funds' U.S. and
foreign equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond funds tracked
by Lipper even have in assets.(5) Prudential Mutual Funds' money market desk
traded $3.2 billion in money market securities on an average day, or over $800
billion a year. They made a trade every 3 minutes of every trading day. In 1994,
the Prudential Mutual Funds effected more than 40,000 trades in money market
securities and held on average $20 billion of money market securities.(6)

Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.

- ---------------
(3)As of December 31, 1995. The number of bonds and the size of the Fund are
subject to change.
(4)Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios of
the Prudential Series Fund and institutional and non-U.S. accounts managed by
Prudential Mutual Fund Investment Management LLC, a division of PIC, for the
year ended December 31, 1995.
(5)Based on 669 funds in Lipper Analytical Services categories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate U.S.
Government, Short Investment Grade Debt, Intermediate Investment Grade Debt,
General U.S. Treasury, General U.S. Government and Mortgage funds.
(6)As of December 31, 1994.

IV-2
<PAGE>
INFORMATION ABOUT PRUDENTIAL SECURITIES

Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 6,000 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1997, assets held by Prudential Securities for its
clients approximated $235 billion.

During 1997, approximately 29,000 new customer accounts were opened each
month at Prudential Securities.(7)

Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment areas. Prudential
Securities is the only Wall Street firm to have its own in-house Certified
Financial Planner (CFP) program. In the December 1995 issue of Registered Rep,
an industry publication, Prudential Securities Financial Advisor training
programs received a grade of A-(compared to an industry average of B+).

In 1995, Prudential Securities' equity research team ranked 8th in
INSTITUTIONAL INVESTOR magazine's 1995 "All America Research Team" survey. Five
Prudential Securities analysts were ranked as first-team finishers.(8)

In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial ArchitectSM, a state-of-the-art asset allocation software program
which helps Financial Advisors to evaluate a client's objectives and overall
financial plan, and a comprehensive mutual fund information and analysis system
that compares different mutual funds.

Standard & Poor's rates Prudential Securities Incorporated BBB+, with a
"Stable Outlook."

For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
adviser or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.

- ---------------
(7)As of December 31, 1997.
(8)On an annual basis, Institutional Investor magazine surveys more than 700
institutional money managers, chief investment officers and research directors,
asking them to evaluate analysts in 76 industry sectors. Scores are produced by
taking the number of votes awarded to an individual analyst and weighting them
based on the size of the voting institution. In total, the magazine sends its
survey to approximately 2,000 institutions and a group of European and Asian
institutions.

IV-3
<PAGE>
PART C
OTHER INFORMATION

ITEM 23. EXHIBITS

(a)(i) Amended and Restated Articles of Incorporation, incorporated by
reference to Exhibit 1 to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on January 3, 1995.

(ii) Articles Supplementary, incorporated by reference to Exhibit 1(b) to
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on December 9, 1995.

(b)By-Laws of the Registrant, incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR.

(c)(i) Specimen stock certificate (Class A Shares), incorporated by
reference to Exhibit 4(a) to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 31, 1997.

(ii) Specimen stock certificate (Class B Shares), incorporated by
reference to Exhibit 4(b) to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 31, 1997.

(iii) Specimen stock certificate (Class C Shares), incorporated by
reference to Exhibit 4(c) to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 31, 1997.

(iv) Specimen stock certificate (Class Z Shares), incorporated by
reference to Exhibit 4(d) to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 31, 1997.

(v) Instruments defining rights of shareholders, incorporated by
reference to Exhibit 4(c) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 30, 1993 (File No. 33-42391).

(d)(i) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc., incorporated by reference to Exhibit 5(a) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on December 31, 1997.

(ii) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, incorporated by reference
to Exhibit 5(b) to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on December
31, 1997.

(e)(i) Distribution Agreement between the Registrant and Prudential
Securities Incorporated, incorporated by reference to Exhibit 6 to
Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on December 27, 1996.

(ii) Distribution Agreement between the Registrant and Prudential
Investment Management Services LLC, incorporated by reference to Exhibit
(e)(ii) to Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(iii) Form of Dealer Agreement, incorporated by reference to Exhibit
(e)(iii) to Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(f)Not Applicable.

(g)(i) Custodian Contract between the Registrant and State Street Bank and
Trust Company, incorporated by reference to Exhibit 8(a) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on December 31, 1997.

(ii) Form of Amendment to Custodian Contract, incorporated by reference
to Exhibit 8(b) to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 2,
1995.

C-1
<PAGE>

(h)Transfer Agency and Service Agreement between Registrant and Prudential
Mutual Fund Services, Inc, incorporated by reference to Exhibit 9 to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on December 31, 1997.

(i)Opinion of Shereff, Friedman, Hoffman & Goodman, incorporated by
reference to Exhibit 10 to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 31, 1997.

(j)Consent of Independent Accountants.*

(k)Not Applicable.

(l)Not Applicable.

(m)(i) Distribution and Service Plan for Class A shares dated July 1, 1993,
incorporated by reference to Exhibit 15(a)(ii) to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A filed via
EDGAR on December 30, 1993 (File No. 33-42391).

(ii) Distribution and Service Plan for Class B shares dated July 1, 1993,
incorporated by reference to Exhibit 15(b)(ii) to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A (File No.
33-42391) filed via EDGAR on December 30, 1993 (File No. 33-42391).

(iii) Distribution and Service Plan for Class A shares, incorporated by
reference to Exhibit 15(c) to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on January 3, 1995.

(iv) Distribution and Service Plan for Class B shares, incorporated by
reference to Exhibit 15(d) to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on January 3, 1995.

(v) Distribution and Service Plan for Class C shares, incorporated by
reference to Exhibit 15(e) to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on January 3, 1995.

(vi) Amended Distribution and Service Plan for Class A shares of the
Registrant, incorporated by reference to Exhibit (m)(vi) to
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(vii) Amended Distribution and Service Plan for Class B shares of the
Registrant, incorporated by reference to Exhibit (m)(vii) to
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(viii) Amended Distribution and Service Plan for Class C shares of the
Registrant, incorporated by reference to Exhibit (m)(viii) to
Post-Effective Amendment No. 10 to the Registration Statement on Form
N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(n)Financial Data Schedules for the fiscal year ended October 31, 1998 filed
for electronic purposes as Exhibit 27.*

(o)(i) Rule 18f-3 Plan, incorporated by reference to Exhibit 18 to
Post-Effective Amendment No. 6 to the Registration Statement on Form N-1A
(File No. 33-42391) filed via EDGAR on November 2, 1995.

(ii) Amended Rule 18f-3 Plan, incorporated by reference to Exhibit
(o)(ii) to Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.
- ------------------------

* Filed herewith.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None

C-2
<PAGE>
ITEM 25. INDEMNIFICATION

As permitted by Section 17(h) and (i) of the Investment Company Act of 1940,
as amended (the 1940 Act), and pursuant to Article VII of the Fund's By-Laws
(Exhibit (b) to the Registration Statement), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any stockholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of the Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interest of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of the Distribution Agreement (Exhibit (e)(ii)
to the Registration Statement), the Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (Securities Act), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 1940 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1940 Act and will be governed by the final
adjudication of such issue.

The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 9 of the Management Agreement (Exhibit (d)(i) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit (d)(ii) to the
Registration Statement) limit the liability of Prudential Investments Fund
Management LLC (PIFM) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and the Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Section 17(h) and 17(i) of such Act remains
in effect and is consistently applied.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

(a)Prudential Investments Fund Management LLC (PIFM)

See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Post-Effective Amendment to the Registration Statement and "Investment
Advisory and Other Services--Investment Advisers" in the Statement of Additional
Information constituting Part B of this Post-Effective Amendment to the
Registration Statement.

The business and other connections of the officers of PIFM are listed in
Schedules A and D of Form ADV of PIFM as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104).

The business and other connections of PIFM's directors and principal executive
officers are set forth below. Except as otherwise indicated, the address of each
person is Gateway Center Three, Newark, New Jersey 07102.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- ----------------------- ----------------------------- --------------------------------------------------------------
<S> <C> <C>
Frank W. Giordano Executive Vice President, Senior Vice President, Prudential Securities Incorporated;
Secretary and General Counsel Executive Vice President, Secretary and General Counsel, PIFM
</TABLE>

C-3
<PAGE>

<TABLE>
<S> <C> <C>
Robert F. Gunia Executive Vice President and Vice President, Prudential Investments, a division of The
Treasurer Prudential Insurance Company of America; Executive Vice
President and Treasurer, PIFM; Senior Vice President,
Prudential Securities
Neil A. McGuinness Executive Vice President Executive Vice President and Director of Marketing, Prudential
Mutual Funds and Annuities (PMF&A); Executive Vice President,
PIFM
Brian M. Storms Officer-in-Charge, President, President, PMF&A; Officer-in-Charge, President, Chief
Chief Executive Officer and Executive Officer and Chief Operating Officer, PIFM
Chief Operating Officer
Robert J. Sullivan Executive Vice President Executive Vice President, PMF&A; Executive Vice President,
PIFM
</TABLE>

(b)The Prudential Investment Corporation (PIC)

See "How the Fund is Managed--Investment Adviser" in the Prospectus
constituting Part A of this Post-Effective Amendment to the Registration
Statement and "Investment Advisory and Other Services--Investment Advisers" in
the Statement of Additional Information constituting Part B of this
Post-Effective Amendment to the Registration Statement.

The business and other connections of PIC's directors and executive officers
are as set forth below. Except as otherwise indicated, the address of each
person is Prudential Plaza, Newark, NJ 07102-4077.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ----------------------- ----------------------------------- -------------------------------------------
<S> <C> <C>
E. Michael Caulfield Chairman of the Board, President Chief Executive Officer of Prudential
and Chief Executive Officer and Investments
Director
Jonathan M. Greene Senior Vice President and Director President--Investment Management of
Prudential Investments; Senior Vice
President and Director, PIC
John R. Strangfeld Vice President and Director President of Private Assets Management
Group of Prudential; Senior Vice President,
Prudential; Vice President and Director,
PIC
</TABLE>

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Prudential Investment Management Services LLC is distributor for
Prudential Government Securities Trust, The Target Portfolio Trust, Cash
Accumulation Trust, Command Government Fund, Command Money Fund, Command
Tax-Free Fund, Global Utility Fund, Inc., Nicholas Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential Developing Markets Fund, Prudential
Distressed Securities Fund, Inc., Prudential Diversified Bond Fund, Inc.,
Prudential Diversified Funds, Prudential Emerging Growth Fund, Inc., Prudential
Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe Growth Fund,
Inc., Prudential Global Genesis Fund, Inc., Prudential Global Limited Maturity
Fund, Inc., The Global Total Return Fund, Inc., Prudential High Yield Fund,
Inc., Prudential Index Series Fund, Prudential MoneyMart Assets, Inc.,
Prudential Natural Resources Fund, Inc., Prudential Government Income Fund,
Inc., Prudential High Yield Total Return Fund, Inc., Prudential International
Bond Fund, Inc., Prudential Institutional Liquidity Portfolio, Inc., Prudential
Intermediate Global Income Fund, Inc., The Prudential Investment Portfolios,
Inc., Prudential Mid-Cap Value Fund, Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential
Pacific Growth Fund, Inc., Prudential Real Estate Securities Fund, Prudential
Small-Cap Quantum Fund, Inc., Prudential Small Company Value Fund, Inc.,
Prudential Special Money Market Fund, Inc., Prudential Structured Maturity Fund,
Inc., Prudential Tax-Free Money Fund, Inc., Prudential 20/20 Focus Fund,
Prudential Utility Fund, Inc. and Prudential World Fund, Inc.

C-4
<PAGE>
(b)Information concerning the directors and officers of Prudential
Investment Management Services LLC is set forth below.

<TABLE>
<CAPTION>
POSITIONS
POSITIONS AND AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
- --------------------------- --------------------------------------------- ------------
<S> <C> <C>
E. Michael Caulfield....... President None
Mark R. Fetting............ Executive Vice President None
Jean D. Hamilton........... Executive Vice President None
Ronald P. Joelson.......... Executive Vice President None
Brian M. Storms............ Executive Vice President None
John R. Stangfeld.......... Executive Vice President None
Mario A. Mosse............. Senior Vice President and Chief Operating None
Officer
Scott S. Wallner........... Vice President, Secretary and Chief Legal None
Officer
Michael G. Williamson...... Vice President, Comptroller and Chief None
Financial Officer
C. Edward Chaplin.......... Treasurer None
</TABLE>

(c)Registrant has no principal underwriter who is not an affiliated person
of the Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices of
State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171. The Prudential Investment Corporation, Prudential Plaza,
751 Broad Street, Newark, New Jersey 07102, the Registrant, Gateway Center
Three, 100 Mulberry Street, Newark, New Jersey 07102, and Prudential Mutual Fund
Services LLC, Raritan Plaza One, Edison, New Jersey 08837. Documents required by
Rules 31a-1(b)(4), (5), (6), (7), (9), (10) and (11) and 31a-1(d) and (f) will
be kept at Gateway Center Three, Newark, New Jersey 07102-4077, and the
remaining accounts, books and other documents required by such other pertinent
provisions of Section 31(a) and the Rules promulgated thereunder will be kept by
State Street Bank and Trust Company and Prudential Mutual Fund Services LLC.

ITEM 29. MANAGEMENT SERVICES

Other than as set forth under the captions "How the Fund is
Managed--Manager" and "How the Fund is Managed-- Distributor" in the Prospectus
and the captions "Investment Advisory and Other Services--Investment Advisers"
and "Investment Advisory and Other Services--Principal Underwriter, Distributor
and Rule 12b-1 Plans" in the Statement of Additional Information, constituting
Parts A and B, respectively, of this Post-Effective Amendment to the
Registration Statement, Registrant is not a party to any management-related
service contract.

ITEM 30. UNDERTAKINGS

None

C-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement under Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Newark, and State of New Jersey, on the 24th day of February, 1999.

PRUDENTIAL PACIFIC GROWTH FUND, INC.

By /s/ BRIAN M. STORMS
------------------------------------------
(Brian M. Storms, PRESIDENT)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ EDWARD D. BEACH
- ------------------------------ Director February 24, 1999
Edward D. Beach

/s/ DELAYNE D. GOLD
- ------------------------------ Director February 24, 1999
Delayne D. Gold

/s/ ROBERT F. GUNIA
- ------------------------------ Vice President and February 24, 1999
Robert F. Gunia Director

/s/ DON G. HOFF
- ------------------------------ Director February 24, 1999
Don G. Hoff

/s/ ROBERT E. LABLANC
- ------------------------------ Director February 24, 1999
Robert E. LaBlanc

/s/ MENDEL A. MELZER
- ------------------------------ Director February 24, 1999
Mendel A. Melzer

/s/ ROBIN B. SMITH
- ------------------------------ Director February 24, 1999
Robin B. Smith

/s/ STEPHEN STONEBURN
- ------------------------------ Director February 24, 1999
Stephen Stoneburn

/s/ BRIAN M. STORMS
- ------------------------------ President and Director February 24, 1999
Brian M. Storms

/s/ NANCY H. TEETERS
- ------------------------------ Director February 24, 1999
Nancy H. Teeters

/s/ GRACE C. TORRES Treasurer and Principal
- ------------------------------ Financial and Accounting February 24, 1999
Grace C. Torres Officer

<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
- ----------- ----------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
(a) (i) Amended and Restated Articles of Incorporation incorporated by reference to Exhibit No. 1
to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A (File No.
33-42391) filed via EDGAR on January 3, 1995.

(ii) Articles Supplementary, incorporated by reference to Exhibit 1(b) to Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on December 29, 1995.

(b) By-Laws of the Registrant, incorporated by reference to Exhibit 2 to Post-Effective Amendment
No. 3 to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR.

(c) (i) Specimen stock certificate (Class A Shares), incorporated by reference to Exhibit 4(a) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 31, 1997.

(ii) Specimen stock certificate (Class B Shares), incorporated by reference to Exhibit 4(b) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 31, 1997.

(iii) Specimen stock certificate (Class C Shares), incorporated by reference to Exhibit 4(c) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 31, 1997.

(iv) Specimen stock certificate (Class Z Shares), incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 31, 1997.

(v) Instruments defining rights of shareholders, incorporated by reference to Exhibit 4(c) to
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 30, 1993 (File No. 33-42391).

(d) (i) Management Agreement between the Registrant and Prudential Mutual Fund Management, Inc,
incorporated by reference to Exhibit 5(a) to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on December 31, 1997.

(ii) Subadvisory Agreement between Prudential Mutual Fund Management, Inc. and The Prudential
Investment Corporation, incorporated by reference to Exhibit 5(b) to Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR on
December 31, 1997.

(e) (i) Distribution Agreement between the Registrant and Prudential Securities Incorporated,
incorporated by reference to Exhibit 6 to Post-Effective Amendment No. 8 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on December 27, 1996.

(ii) Distribution Agreement between the Registrant and Prudential Investment Management
Services LLC, incorporated by reference to Exhibit (e)(ii) to Post-Effective Amendment No. 10
to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 24,
1998.

(iii) Form of Dealer Agreement, incorporated by reference to Exhibit (e)(iii) to Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on November 24, 1998.

(f) Not Applicable.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
- ----------- ----------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
(g) (i) Custodian Contract between the Registrant and State Street Bank and Trust Company,
incorporated by reference to Exhibit 8(a) to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on December 31, 1997.

(ii) Form of Amendment to Custodian Contract, incorporated by reference to Exhibit 8(b) to
Post-Effective Amendment No. 6 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on November 2, 1995.

(h) Transfer Agency and Service Agreement between Registrant and Prudential Mutual Fund Services,
Inc, incorporated by reference to Exhibit 9 to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR on December 31, 1997.

(i) Opinion of Shereff, Friedman, Hoffman & Goodman, incorporated by reference to Exhibit 10 to
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A (File No. 33-42391)
filed via EDGAR on December 31, 1997.

(j) Consent of Independent Accountants.*

(k) Not Applicable.

(l) Not Applicable.

(m) (i) Distribution and Service Plan for Class A shares dated July 1, 1993, incorporated by
reference to Exhibit 15(a)(ii) to Post-Effective Amendment No. 2 to the Registration Statement
on Form N-1A filed via EDGAR on December 30, 1993 (File No. 33-42391).

(ii) Amended and Restated Distribution and Service Plan for Class B shares dated July 1, 1993,
incorporated by reference to Exhibit 15(b)(ii) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A filed via EDGAR on December 30, 1993 (File No. 33-42391).

(iii) Distribution and Service Plan for Class A shares, incorporated by reference to Exhibit
15(c) to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A (File No.
33-42391) filed via EDGAR on January 3, 1995.

(iv) Distribution and Service Plan for Class B shares, incorporated by reference to Exhibit
15(d) to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A (File No.
33-42391) filed via EDGAR on January 3, 1995.

(v) Distribution and Service Plan for Class C shares, incorporated by reference to Exhibit
15(e) to Post-Effective Amendment No. 5 to the Registration Statement on Form N-1A (File No.
33-42391) filed via EDGAR on January 3, 1995.

(vi) Amended Distribution and Service Plan for Class A shares of the Registrant, incorporated
by reference to Exhibit (m)(vi) to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(vii) Amended Distribution and Service Plan for Class B shares of the Registrant, incorporated
by reference to Exhibit (m)(vii) to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.

(viii) Amended Distribution and Service Plan for Class C shares of the Registrant, incorporated
by reference to Exhibit (m)(viii) to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 24, 1998.
</TABLE>

<PAGE>

(o) (i) Rule 18f-3 Plan, incorporated by reference to Exhibit 18 to Post-Effective Amendment No. 6
to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR on November 2,
1995.

(ii) Amended Rule 18f-3 Plan, incorporated by reference to Exhibit (o)(ii) to Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A (File No. 33-42391) filed via EDGAR
on November 24, 1998.
</TABLE>

- ------------
* Filed herewith.

<PAGE>
<ARTICLE>6
<CIK> 0000878535
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC. (CLASS A)

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 117,678,187
<INVESTMENTS-AT-VALUE> 115,879,308
<RECEIVABLES> 3,317,326
<ASSETS-OTHER> 190,621
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119,387,255
<PAYABLE-FOR-SECURITIES> 8,020,337
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202,628
<TOTAL-LIABILITIES> 8,222,965
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,635,819
<SHARES-COMMON-STOCK> 12,494,245
<SHARES-COMMON-PRIOR> 15,710,293
<ACCUMULATED-NII-CURRENT> 178,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,742,605)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,907,481)
<NET-ASSETS> 111,164,290
<DIVIDEND-INCOME> 2,502,541
<INTEREST-INCOME> 687,412
<OTHER-INCOME> 0
<EXPENSES-NET> 2,986,042
<NET-INVESTMENT-INCOME> 183,911
<REALIZED-GAINS-CURRENT> (43,735,875)
<APPREC-INCREASE-CURRENT> 17,748,671
<NET-CHANGE-FROM-OPS> (25,803,293)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12,477,122)
<DISTRIBUTIONS-OTHER> (4,761,670)
<NUMBER-OF-SHARES-SOLD> 141,655,986
<NUMBER-OF-SHARES-REDEEMED> (190,629,423)
<SHARES-REINVESTED> 16,174,424
<NET-CHANGE-IN-ASSETS> (75,841,098)
<ACCUMULATED-NII-PRIOR> 4,756,316
<ACCUMULATED-GAINS-PRIOR> 12,470,392
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,021,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,986,042
<AVERAGE-NET-ASSETS> 26,845,000
<PER-SHARE-NAV-BEGIN> 12.22
<PER-SHARE-NII> (1.82)
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.25)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.14
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000878535
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC (CLASS B)

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 117,678,187
<INVESTMENTS-AT-VALUE> 115,879,308
<RECEIVABLES> 3,317,326
<ASSETS-OTHER> 190,621
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119,387,255
<PAYABLE-FOR-SECURITIES> 8,020,337
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202,628
<TOTAL-LIABILITIES> 8,222,965
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,635,819
<SHARES-COMMON-STOCK> 12,494,245
<SHARES-COMMON-PRIOR> 15,710,293
<ACCUMULATED-NII-CURRENT> 178,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,742,605)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,907,481)
<NET-ASSETS> 111,164,290
<DIVIDEND-INCOME> 2,502,541
<INTEREST-INCOME> 667,412
<OTHER-INCOME> 0
<EXPENSES-NET> 2,986,042
<NET-INVESTMENT-INCOME> 183,911
<REALIZED-GAINS-CURRENT> (43,735,875)
<APPREC-INCREASE-CURRENT> 17,748,671
<NET-CHANGE-FROM-OPS> (25,803,293)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12,477,122)
<DISTRIBUTIONS-OTHER> (4,761,670)
<NUMBER-OF-SHARES-SOLD> 141,655,986
<NUMBER-OF-SHARES-REDEEMED> (190,629,423)
<SHARES-REINVESTED> 16,174,424
<NET-CHANGE-IN-ASSETS> (75,841,098)
<ACCUMULATED-NII-PRIOR> 4,756,316
<ACCUMULATED-GAINS-PRIOR> 12,470,392
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,021,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,986,042
<AVERAGE-NET-ASSETS> 91,983,000
<PER-SHARE-NAV-BEGIN> 11.77
<PER-SHARE-NII> (1.83)
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.79
<EXPENSE-RATIO> 2.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000878535
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC (CLASSC)

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 117,678,187
<INVESTMENTS-AT-VALUE> 115,879,308
<RECEIVABLES> 3,317,326
<ASSETS-OTHER> 190,621
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119,387,255
<PAYABLE-FOR-SECURITIES> 8,020,337
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202,628
<TOTAL-LIABILITIES> 8,222,965
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,635,819
<SHARES-COMMON-STOCK> 12,494,245
<SHARES-COMMON-PRIOR> 15,710,293
<ACCUMULATED-NII-CURRENT> 178,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,742,605)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,907,481)
<NET-ASSETS> 111,164,290
<DIVIDEND-INCOME> 2,502,541
<INTEREST-INCOME> 667,412
<OTHER-INCOME> 0
<EXPENSES-NET> 2,986,042
<NET-INVESTMENT-INCOME> 183,911
<REALIZED-GAINS-CURRENT> (43,735,875)
<APPREC-INCREASE-CURRENT> 17,748,671
<NET-CHANGE-FROM-OPS> (25,803,293)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12,477,122)
<DISTRIBUTIONS-OTHER> (4,761,670)
<NUMBER-OF-SHARES-SOLD> 141,655,986
<NUMBER-OF-SHARES-REDEEMED> (190,629,423)
<SHARES-REINVESTED> 16,174,424
<NET-CHANGE-IN-ASSETS> (75,841,098)
<ACCUMULATED-NII-PRIOR> 4,756,316
<ACCUMULATED-GAINS-PRIOR> 12,470,392
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,021,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,986,042
<AVERAGE-NET-ASSETS> 2,276,000
<PER-SHARE-NAV-BEGIN> 11.77
<PER-SHARE-NII> (1.83)
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.79
<EXPENSE-RATIO> 2.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000878535
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> PRUDENTIAL PACIFIC GROWTH FUND, INC (CLASSZ)

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 117,678,187
<INVESTMENTS-AT-VALUE> 115,879,308
<RECEIVABLES> 3,317,326
<ASSETS-OTHER> 190,621
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119,387,255
<PAYABLE-FOR-SECURITIES> 8,020,337
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202,628
<TOTAL-LIABILITIES> 8,222,965
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161,635,819
<SHARES-COMMON-STOCK> 12,494,245
<SHARES-COMMON-PRIOR> 15,710,293
<ACCUMULATED-NII-CURRENT> 178,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,742,605)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,907,481)
<NET-ASSETS> 111,164,290
<DIVIDEND-INCOME> 2,502,541
<INTEREST-INCOME> 667,412
<OTHER-INCOME> 0
<EXPENSES-NET> 2,986,042
<NET-INVESTMENT-INCOME> 183,911
<REALIZED-GAINS-CURRENT> (43,735,875)
<APPREC-INCREASE-CURRENT> 17,748,671
<NET-CHANGE-FROM-OPS> (25,803,293)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (12,477,122)
<DISTRIBUTIONS-OTHER> (4,761,670)
<NUMBER-OF-SHARES-SOLD> 141,655,986
<NUMBER-OF-SHARES-REDEEMED> (190,629,423)
<SHARES-REINVESTED> 16,174,424
<NET-CHANGE-IN-ASSETS> (75,841,098)
<ACCUMULATED-NII-PRIOR> 4,756,316
<ACCUMULATED-GAINS-PRIOR> 12,470,392
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,021,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,986,042
<AVERAGE-NET-ASSETS> 15,099,000
<PER-SHARE-NAV-BEGIN> 12.28
<PER-SHARE-NII> (1.81)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.17
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>