<PAGE>
ANNUAL REPORT OCTOBER 31, 2000
Prudential
Pacific Growth Fund, Inc.
Fund Type Global stock
Objective Long-term growth of capital
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or
accompanied by a current prospectus.
The views expressed in this report and information about the
Fund's portfolio holdings are for the period
covered by this report and are subject to change
thereafter.
(LOGO)
<PAGE>
Investment Goals and Style
The Prudential Pacific Growth Fund invests
primarily in stocks of companies in the Pacific
Basin, selecting a diversified portfolio aimed at
long-term growth of capital. The Fund is subject to
all of the risks associated with foreign investing,
including currency, political and social risks, and
potential illiquidity. There can be no assurance
that the Fund will achieve its investment
objective.
Geographic Concentration
Expressed as a percentage of
net assets as of 10/31/00
46.4% Japan
10.2 Hong Kong
8.0 Taiwan
5.5 Korea
5.1 Singapore
4.5 India
1.6 Australia
1.1 Other Asia
17.6 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 10/31/00
2.8% NTT DoCoMo, Inc.
Telecommunications
2.5 Infosys Technologies, Ltd.
Computer Software & Services
2.2 ITO EN, Ltd.
Food & Beverage
2.2 Sumitomo Bakelite Co., Ltd.
Chemicals
2.0 Tokyo Electron, Ltd.
Electronic Components
2.0 Hutchison Whampoa, Ltd.
Diversified Industries
1.9 Avex, Inc.
Audiovisual
1.9 China Telecom, Ltd.
Telecommunications
1.9 Samsung Electronics
Electronics
1.8 Trend Micro, Inc.
Computer Software & Services
Holdings are subject to change.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 10/31/00
One Five Since
Year Years Inception2
Class A -29.82% -26.23% 18.97%
Class B -30.40 -28.81 12.02
Class C -30.40 -28.81 -33.90
Class Z -29.75 N/A -29.72
Lipper Pacific
Region Fund Avg.3 -11.67 -4.56 ***
Average Annual Total Returns1 As of 10/31/00
One Five Since
Year Years Inception2
Class A -33.33% -6.86% 1.49%
Class B -35.40 -6.83 1.38
Class C -32.09 -6.76 -6.56
Class Z -29.75 N/A -7.28
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost.
1 Source: Prudential Investments Fund Management
LLC and Lipper Inc. The cumulative total returns do
not take into account sales charges. The average
annual total returns do take into account
applicable sales charges. The Fund charges a
maximum front-end sales charge of 5% for Class A
shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%,
3%, 2%, 1%, and 1% for six years. Class B shares
will automatically convert to Class A shares, on a
quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months.
Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees.
2 Inception dates: Class A and Class B, 7/24/92;
Class C, 8/1/94; Class Z, 3/1/96.
3 Lipper average returns are for all funds in each
share class for the one- and five-year periods in
the Pacific Region Fund category. The Lipper
average is unmanaged. Pacific Region funds
concentrate investments in equity securities with
primary trading markets or operations concentrated
in the Western Pacific Basin region or a single
country within this region.
***Lipper Since Inception returns are 59.49% for
Class A and Class B, -13.45% for Class C, and
-11.20% for Class Z, based on all funds in each
share class.
1
<PAGE>
(LOGO) December 15, 2000
Dear Shareholder,
During the one-year reporting period ended October
31, 2000, the Prudential Pacific Growth Fund's
Class A shares fell 29.82%, -33.33% for those
paying the one-time Class A share sales charge.
This compares to the 11.67% decline in the Lipper
Pacific Region Fund Average.
As these returns indicate, it has been an extremely
challenging period for investing in Pacific Region
equities. Initially, strong demand for technology
stocks and positive economic news helped propel
these markets upward. However, a combination of
political uncertainty and a global stock market
correction took its toll on stock prices for the
majority of the year.
During the period under review, the Fund also
underperformed its benchmark. This was largely due
to heavy exposure to natural resources and basic
industrial materials stocks. In recent months, the
Fund's management team has moved to pare back its
exposure to these areas, and has redeployed
proceeds into other areas in the market.
The performance of Pacific Region equities this
year has demonstrated the importance of portfolio
diversification. As we've seen in the past, Pacific
Region stocks can be highly volatile, often producing either
significant outperformance or underperformance. As
such, we continue to believe that investors should
hold only a portion of their portfolio in these
stocks. In addition, it's critical to maintain a
longer-term perspective in order to help ride out
some of the volatility inherent in the Pacific
Region markets. As always, we appreciate your
confidence, and look forward to serving your investment needs in the
future.
Sincerely,
David R. Odenath, Jr., President
Prudential Pacific Growth Fund, Inc.
2
<PAGE>
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2000
Investment Adviser's Report
A Dramatic Increase in Volatility
During the initial months of the Fund's reporting
period, Pacific Region stocks performed well. The
region appeared to be on the road to recovery after
the 1997-1998 recession, and economic news was
generally positive. In addition, global stock markets in general were
rising--in particular, large-capitalization growth
stocks and technology and telecommunications
issues. In this narrow rising market, the Fund's
holdings in these areas enhanced performance.
However, in mid-March, the global stock markets
experienced swift and, in some cases, dramatic
corrections. To a great extent, the catalyst for
these corrections was a sell-off in the U.S. market,
where inflationary pressures and rising interest
rates dragged the market downward. Events in the
U.S. market triggered stock market corrections in
other parts of the world, and the Pacific Region
was certainly not spared. The emerging markets were
particularly hard hit, as their fortunes are often
closely tied to that of the United States. This is
due in large part to their dependency on exports to
the United States. In Japan, the stock market's
poor performance was exacerbated by uncertainty
surrounding its long-awaited economic recovery. It
was also felt that prospects for slower global
growth could further hinder Japan's chances for a
rebound, as rapid export growth had been a key
element in helping the Japanese economy move
forward.
Basic Materials Disappoint
There were several specific areas that detracted
from the Fund's results
during the period. Perhaps none were more damaging
than an early overweighting in basic materials stocks. We
believed that strong global
economic growth would lead to increased demand for
materials needed to supply consumer and business
needs. In addition, many stocks in this
sector were relatively inexpensive, especially
compared to technology issues. However, while
demand for basic materials did indeed rise, it did not
3
<PAGE>
Prudential Pacific Growth Fund, Inc.
Holdings expressed as a percentage of the Fund's net assets
Comments on Largest Holdings As of 10/31/00
2.8% NTT DoCoMo, Inc. (Japan)/Telecommunications
The wireless subsidiary of Nippon Telegraph &
Telephone Corp. (NTT), Japan's communications
giant. NTT DoCoMo has experienced strong earnings
growth, as the penetration and usage of wireless
communication has increased at a steady rate.
2.5% Infosys Technologies, Ltd./Computer Software & Services
An India-based information technology service
company. Infosys provides managed software
solutions that include custom software development,
maintenance and reengineering services, as well as
dedicated offshore software development centers.
2.2% ITO EN, Ltd. (Japan)/Food & Beverage
A manufacturer of noncarbonated beverages in Japan.
The company has a solid product line of teas and
other items, and boasts an outstanding distribution
network.
2.2% Sumitomo Bakelite Co., Ltd. (Japan)/Chemicals
A firm that manufactures resins that are used for
building purposes and for holding semiconductor
packages together. The company continues to
experience strong growing demand for its products.
2.0% Tokyo Electron, Ltd./Electronic Components
Tokyo Electron, Ltd. sells and services
semiconductor equipment worldwide. Originally
established as an importer of semiconductor
manufacturing equipment in Japan in 1963, the firm
now has nearly 30 subsidiaries that engineer,
manufacture, sell, and service semiconductor
manufacturing equipment.
Holdings are subject to change.
4
<PAGE>
www.prudential.com (800) 225-1852
Annual Report October 31, 2000
propel stock prices upward, as suppliers had enough
spare capacity to meet increased needs. As a
result, modest price improvements did not lead to
higher profitability. Given the prospect for slower
economic growth, we have dramatically reduced the
Fund's exposure to basic materials stocks.
Sector and Country Selection--A Mixed Bag
As the reporting period progressed, we initiated
several actions that aided the Fund's performance.
In addition to the previously mentioned portfolio
changes, we significantly cut back our exposure to
stocks in Indonesia and the Philippines. While it
was initially thought that these countries were
making strides in terms of restructuring their
economies, they have since appeared to be
backsliding. Maintaining our exposure in Hong Kong
also proved to be beneficial, as the market held up
fairly well. However, not moving away from the
Taiwan and Korean markets was harmful. Both markets
fell sharply because of their heavy weighting in
technology issues. In addition, they are also mired
in political instability. The heads of both
governments are attempting to institute major
political and economic reforms. However, they are
meeting with sharp resistance from a well-
established incumbent opposition. This has resulted
in additional downward pressures on stock prices.
Several Bright Spots
Despite the market's volatility, we held several
stocks that generated relatively solid results. One
example was our holdings in Hong Kong property
companies. Strong economic growth in Hong Kong has
led to a recovery in its property market. The Fund
was well represented in this area through its
holdings in Sung Hung Kai Properties, Ltd., Swire
Pacific Ltd., and Hutchison Whampoa, Ltd.
A number of our holdings in Japan also aided Fund
returns. Sumitomo Bakelite Co. Ltd. (see Comments
on Largest Holdings), a resin producer, and Daifuku
Co. Ltd., an automated warehouse firm, both rose
sharply.
5
<PAGE>
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2000
Looking Ahead
Despite the turbulence we've experienced this year,
we believe the Fund is well positioned for when the
Pacific Region market rebounds. In Japan, the
economic stagnation of the last decade has resulted
in relatively inexpensive stock prices. When
corporate restructuring takes hold in earnest and
economic growth finally resumes, we expect to see
strong performance from our Japanese stocks.
Elsewhere, the economies of many emerging market
countries are highly dependent on global economic
growth rates. When a resumption of sustainable
growth occurs, it should help emerging markets as a
whole. We're also enthusiastic about our stocks
related to mainland China, as this country's
inclusion in the World Trade Organization should
yield very positive long-term investment opportunities.
Prudential Pacific Growth Fund Management Team
6
<PAGE>
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 82.4%
Common Stocks
-------------------------------------------------------------------------------------
Australia 1.6%
70,050 Broken Hill Proprietary Co., Ltd. $ 683,197
156,200 Computershare, Ltd. 680,242
17,513 Onesteel, Ltd. 8,403
613,755 PowerLan, Ltd. 432,140
--------------
1,803,982
-------------------------------------------------------------------------------------
Hong Kong 10.2%
158,300 Cheung Kong (Holdings), Ltd. 1,750,702
326,400 China Telecom, Ltd. 2,103,092
164,000 Citic Pacific, Ltd. 658,204
181,560 Hutchison Whampoa, Ltd. 2,252,389
2,135,900 Kingboard Chemical Holdings, Ltd. 917,483
512,437 Pacific Century Insurance Holdings 394,243
850,800 QPL International Holdings, Ltd.(a) 480,012
178,600 Sun Hung Kai Properties, Ltd. 1,477,112
151,700 Television Broadcasts, Ltd. 830,588
214,000 The Wharf (Holdings), Ltd. 436,298
--------------
11,300,123
-------------------------------------------------------------------------------------
India 4.5%
193,300 Hindustan Lever, Ltd. 733,463
17,796 Infosys Technologies, Ltd. 2,723,591
8,100 NIIT, Ltd. 272,646
14,070 Ranbaxy Laboratories, Ltd. (GDR) 244,466
98,600 Satyam Computer Services, Ltd. 646,704
24,851 Videsh Sanchar Nigam, Ltd. (GDR) 205,021
27,000 Zee Telefilms, Ltd. 166,398
--------------
4,992,289
-------------------------------------------------------------------------------------
Japan 46.4%
21,000 Avex, Inc. 2,116,548
3,740 Bellsystem 24, Inc. 1,343,302
57,000 C. Uyemura & Co., Ltd. 979,769
29,000 Canon, Inc. 1,150,541
124,000 Daifuku Co., Ltd. 1,022,540
56,000 Daikin Industries, Ltd. 1,082,646
70,000 Ebara Corp. 1,087,136
23,500 Fancl Corp. 1,485,706
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
6,400 Funai Electric Co., Ltd. $ 483,196
32,100 Global-Dining, Inc. 767,647
11,400 Goldcrest Co., Ltd. 1,068,554
523,000 Gunze, Ltd. 1,739,500
9,400 Hirose Electric Co., Ltd. 1,085,212
34,700 ITO EN, Ltd. 2,495,831
44 Japan Telecom Co., Ltd. 886,934
6,400 Kadokawa Shoten Publishing Co., Ltd.-New(a) 209,932
300 Kadokawa Shoten Publishing Co., Ltd. 9,841
717,000 Kawasaki Steel Corp. 702,941
20,000 Matsushita Electric Co. 580,905
14,500 Murata Manufacturing Co., Ltd. 1,735,111
93,000 NEC Corp. 1,772,402
6,800 Nintendo Co., Ltd. 1,124,611
125 Nippon Telegraph & Telephone Corp. 1,137,301
84,000 Nomura Securities Co., Ltd. 1,781,748
125 NTT DoCoMo, Inc. 3,080,905
129,000 Olympus Optical Co., Ltd. 1,782,408
3,000 Oracle Corp. Japan 557,999
23,700 Ryohin Keikaku Co., Ltd. 1,203,024
33,000 Skylark Co., Ltd. 1,164,101
9,600 Softbank Corp. 576,141
19,100 Sony Corp. 1,526,040
222,000 Sumitomo Bakelite Co., Ltd. 2,483,617
10,300 TDK Corp. 1,038,116
38,000 Terumo Corp. 1,075,866
110,000 Tokio Marine & Fire Insurance Co., Ltd. 1,215,503
11,000 Tokyo Broadcasting Systems 430,365
29,000 Tokyo Electron, Ltd. 2,269,196
194,000 Toyo Trust & Banking Co., Ltd. 766,117
21,500 Trend Micro, Inc. 2,029,045
23,700 Uni-Charm Corp. 1,014,101
84,200 United Arrows, Ltd. 508,409
23,800 World Co., Ltd. 885,358
--------------
51,456,165
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Korea 5.5%
121,050 Hyundai Electronics Industries Co. $ 743,859
50,310 L.G. Chemical, Ltd. 495,360
4,120 L.G. Home Shopping, Inc. 247,743
78,150 Samsung Corp. 432,831
18,980 Samsung Electro-Mechanics Co. 607,360
16,461 Samsung Electronics 2,062,147
81,390 Shinhan Bank 815,689
3,540 SK Telecom Co., Ltd. 754,681
--------------
6,159,670
-------------------------------------------------------------------------------------
Singapore 5.1%
116,833 DBS Group Holdings, Ltd. 1,377,952
106,800 Elec & Eltek International Co., Ltd. 297,972
81,000 Natsteel Electronics, Ltd. 210,450
55,300 Oversea-Chinese Banking Corp., Ltd. 352,892
78,083 Overseas Union Bank, Ltd. 378,158
308,000 Sembcorp Industries, Ltd. 296,576
70,000 Sembcorp Logistics, Ltd. 378,896
29,900 Singapore Press Holdings, Ltd. 427,605
436,000 Singapore Technologies Engineering, Ltd. 703,025
387,000 Singapore Telecommunications, Ltd. 641,656
38,128 United Overseas Bank, Ltd. 282,413
35,000 Venture Manufacturing, Ltd. 339,012
--------------
5,686,607
-------------------------------------------------------------------------------------
Taiwan 8.0%
535,000 Acer, Inc. 443,901
395,785 Advanced Semiconductor Engineering, Inc. (GDR)(a) 454,601
127,458 Ambit Microsystems Corp. 591,910
195,454 Asustek Computer, Inc. 974,245
1,138,640 Chinatrust Commercial Bank 722,666
179,739 Compal Electronics, Inc. 274,339
105,400 Compeq Manufacturing Co., Ltd. 398,105
249,000 Far Eastern Textile, Ltd. 205,059
105,400 Hon Hai Precision Industry Co., Ltd. 551,474
274,350 Macronix International Co., Ltd.(a) 390,715
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
209,211 Phoenixtec Power Co., Ltd. $ 175,530
1,343,004 Taishin International Bank(a) 627,844
476,103 Taiwan Semiconductor Manufacturing Co.(a) 1,444,523
910,200 United Microelectronics Corp., Ltd.(a) 1,606,235
--------------
8,861,147
-------------------------------------------------------------------------------------
Thailand 1.1%
50,600 Advanced Info Service Public Co., Ltd.(a) 417,201
115,900 BEC World Public Co., Ltd. 543,797
27,050 Siam Cement Public Co., Ltd.(a) 255,066
--------------
1,216,064
--------------
Total common stocks (cost $108,551,222) 91,476,047
--------------
<CAPTION>
Units
<C> <S> <C> <C>
-----------------------------------------------------------------------------------
Warrants(a)
-------------------------------------------------------------------------------------
Indonesia
834,300 PT Bank Pan Indonesia Tbk
expiring July 2002 @ IDR650 (cost $0) 3,389
--------------
Total long-term investments (cost $108,551,222) 91,479,436
--------------
SHORT-TERM INVESTMENT 2.5%
<CAPTION>
Principal
Amount
(000)
<C> <S> <C> <C>
-------------------------------------------------------------------------------------
Repurchase Agreement 2.5%
Joint Repurchase Agreement Account,
$ 2,747,000 6.55%, 11/1/00 (cost $2,747,000; Note 5) 2,747,000
--------------
Total Investments 84.9%
(cost $111,298,222; Note 4) 94,226,436
Other assets in excess of liabilities 15.1% 16,725,601
--------------
Net Assets 100% $ 110,952,037
--------------
--------------
</TABLE>
------------------------------
(a) Non-income producing security.
GDR--Global Depository Receipt.
10 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 Cont'd.
The industry classification of portfolio holdings and other assets shown as a
percentage of net assets as of October 31, 2000 was as follows:
<TABLE>
<S> <C> <C>
Electronic Components.................................................. 14.6%
Telecommunications..................................................... 6.9
Computer Software & Services........................................... 6.2
Electronics............................................................ 5.9
Real Estate............................................................ 3.9
Chemicals.............................................................. 3.6
Diversified Industries................................................. 3.4
Commercial Banking..................................................... 3.3
Financial Services..................................................... 3.1
Commercial Services.................................................... 2.8
Repurchase Agreement................................................... 2.5
Apparel................................................................ 2.4
Food & Beverage........................................................ 2.3
Audio/Visual........................................................... 1.9
Machinery & Equipment.................................................. 1.9
Broadcasting & Publishing.............................................. 1.8
Telephones............................................................. 1.8
Restaurants............................................................ 1.7
Computers.............................................................. 1.5
Insurance.............................................................. 1.5
Cosmetics/Toiletries................................................... 1.3
Retail................................................................. 1.3
Diversified Operations................................................. 1.2
Medical Products & Services............................................ 1.2
Office Equipment & Supplies............................................ 1.0
Engineering & Construction............................................. 0.9
Paper.................................................................. 0.9
Cosmetics & Soaps...................................................... 0.7
Steel - Producers...................................................... 0.6
Electrical Services.................................................... 0.5
Internet............................................................... 0.5
Utility Communications................................................. 0.5
Television & Communication Equipment................................... 0.4
Energy Equipment & Services............................................ 0.3
Building Materials & Components........................................ 0.2
Publishing............................................................. 0.2
Textiles............................................................... 0.2
-----
Other assets in excess of liabilities.................................. 15.1
-----
100.0%
-----
-----
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $111,298,222) $ 94,226,436
Foreign currency, at value (cost $1,156,975) 1,145,405
Cash 947,239
Receivable for Fund shares sold 15,024,523
Receivable for investments sold 631,839
Dividends and interest receivable 106,299
Other assets 7,771
Due from manager 3,744
----------------
Total assets 112,093,256
----------------
LIABILITIES
Payable for investments purchased 394,502
Payable for Fund shares reacquired 386,798
Accrued expenses 131,125
Withholding taxes payable 100,412
Management fee payable 68,267
Distribution fee payable 60,115
----------------
Total liabilities 1,141,219
----------------
NET ASSETS $110,952,037
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 11,686
Paid-in capital in excess of par 136,387,570
----------------
136,399,256
Distributions in excess of net investment income (429,046)
Accumulated net realized loss on investments (7,848,422)
Net unrealized depreciation on investments and foreign
currencies (17,169,751)
----------------
Net assets, October 31, 2000 $110,952,037
----------------
----------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities Cont'd.
<TABLE>
<CAPTION>
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share
($50,141,103 / 5,168,648 shares of common stock issued
and outstanding) $9.70
Maximum sales charge (5% of offering price) .51
----------------
Maximum offering price to public $10.21
----------------
----------------
Class B:
Net asset value, offering price and redemption price per
share
($51,003,662 / 5,481,334 shares of common stock issued
and outstanding) $9.30
----------------
----------------
Class C:
Net asset value and redemption price per share
($6,040,613 / 649,181 shares of common stock issued and
outstanding) $9.30
Sales charge (1% of offering price) .09
----------------
Offering price to public $9.39
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per
share
($3,766,659 / 386,383 shares of common stock issued and
outstanding) $9.75
----------------
----------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Pacific Growth Fund, Inc.
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $180,825) $ 1,431,660
Interest 309,680
----------------
Total income 1,741,340
----------------
Expenses
Management fee 1,426,965
Distribution fee--Class A 133,472
Distribution fee--Class B 960,186
Distribution fee--Class C 73,759
Transfer agent's fees and expenses 426,000
Custodian's fees and expenses 362,000
Reports to shareholders 112,000
Registration fees 92,000
Audit fee 36,000
Legal fees and expenses 36,000
Trustees' fees and expenses 14,000
Miscellaneous 7,152
----------------
Total operating expenses 3,679,534
Loan interest expense 48,597
----------------
Total expenses 3,728,131
----------------
Net investment loss (1,986,791)
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions 20,772,579
Foreign currency transactions 22,663
Financial futures transactions 242,555
----------------
21,037,797
----------------
Net change in unrealized appreciation/depreciation on:
Investments (57,495,392)
Foreign currencies (456,489)
Financial futures (33,625)
----------------
(57,985,506)
----------------
Net loss on investments and foreign currencies (36,947,709)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(38,934,500)
----------------
----------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------
2000 1999
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss $ (1,986,791) $ (1,077,809)
Net realized gain on investments and foreign
currency transactions 21,037,797 18,139,435
Net change in unrealized
appreciation/depreciation on investments
and foreign currencies (57,985,506) 47,723,236
---------------- -------------
Net increase (decrease) in net assets
resulting from operations (38,934,500) 64,784,862
---------------- -------------
Dividends and distributions (Note 1):
Dividends from net investment income
Class A (553,645) (200,274)
Class B (653,639) (82,000)
Class C (36,696) (1,966)
Class Z (531,713) (143,977)
---------------- -------------
(1,775,693) (428,217)
---------------- -------------
Distributions in excess of net investment
income
Class A (168,626) --
Class B (396,051) --
Class C (27,107) --
Class Z (130,489) --
---------------- -------------
(722,273) --
---------------- -------------
Fund share transactions (net of share
conversions)
(Note 6)
Net proceeds from shares sold 778,873,547 413,445,094
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,368,241 412,010
Cost of shares reacquired (836,348,877) (381,886,447)
---------------- -------------
Net increase (decrease) in net assets from
Fund share transactions (55,107,089) 31,970,657
---------------- -------------
Total increase (decrease) (96,539,555) 96,327,302
NET ASSETS
Beginning of year 207,491,592 111,164,290
---------------- -------------
End of year(a) $ 110,952,037 $ 207,491,592
---------------- -------------
---------------- -------------
(a) Includes undistributed net investment
income of $ -- $ 1,775,693
---------------- -------------
---------------- -------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements
Prudential Pacific Growth Fund, Inc. (the 'Fund') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund was incorporated in Maryland on August 14, 1991 and 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 and NASDAQ
National Market System are valued at the last sale price on such exchange system
or, if there was no sale on such day, at the mean between the last bid and asked
prices, or at the bid price in the absence of an asked price. Corporate bonds
(other than convertible) and U.S. government securities are valued on the basis
of valuations provided by an independent pricing agent or principal market
maker. Convertible debt securities are valued at the mean between the last
reported bid and asked prices provided by principal market makers. Options are
valued at the mean between the most recently quoted bid and asked prices on the
exchange on which they are traded. Futures contracts and options thereon are
valued at their last sale prices as of the close of trading on the applicable
commodities exchange or, if there was no sale on such day, at the mean between
the most recently quoted bid and asked prices. Securities for which reliable
market quotations are not readily available are valued by the Valuation
Committee or Board of Directors in consultation with the manager or subadvisor.
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.
Repurchase Agreements: 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. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked to market on a
daily basis to ensure the adequacy of
16
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
the collateral.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.
All securities are valued as of 4:15 p.m., New York time.
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 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 portfolio
securities sold during the year. Accordingly, realized foreign currency gains
(losses) are included in the reported net realized gain 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 year end exchange rates are reflected as a component of
unrealized appreciation (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.
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
17
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
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.
Taxes: It is the Fund's policy to continue 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
18
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
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 decrease distributions in excess of net investment income by $2,280,018,
decrease paid-in capital in excess of par by $2,095,538 and increase accumulated
net realized losses by $184,480 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 Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. Pursuant to a subadvisory agreement between PIFM and The Prudential
Investment Corporation ('PIC'), PIC furnished investment advisory services in
connection with the management of the Fund from November 1, 1999 through October
1, 2000. Effective October 2, 2000, the Board of Directors terminated the
subadvisory agreement with PIC, and PIFM entered into a subadvisory agreement
with Jennison Associates LLC ('Jennison'), pursuant to which Jennison is paid
under the same terms as PIC was paid by PIFM. PIFM paid for the services of PIC
and Jennison, 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 to PIFM is computed daily and payable monthly at
an annual rate of .75 of 1% of the average daily net assets of the Fund.
Prior to January 1, 2000, PIC was reimbursed by PIFM for reasonable costs
and expenses incurred in furnishing investment advisory services. From January
1, through October 1, 2000, the subadvisory fee paid to PIC, and from October 2
through October 31, 2000, the subadvisory fee paid to Jennison by PIFM, was
computed daily and payable monthly at an annual rate of .375 of 1% of the Fund's
average daily net assets. The change in subadvisory fee structure has no impact
on the management fee charged to the Fund or its shareholders.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
Class B, Class C and Class Z shares of the Fund. The Fund compensates 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
19
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
distribution fees are accrued daily and payable 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 compensates 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, 2000.
PIMS has advised the Fund that it received approximately $56,000 and
$29,100 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended October 31, 2000. From these fees,
PIMS paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the year ended October 31, 2000, it
received approximately $207,000 and $19,600 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIMS, PIFM, Jennison and PIC are 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, 2000, the
Fund incurred fees of approximately $369,400 for the services of PMFS. As of
October 31, 2000, approximately $23,300 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, 2000 were $163,118,939 and $213,674,140,
respectively.
The federal income tax basis of the Fund's investments at October 31, 2000
was $113,297,287 and accordingly, net unrealized depreciation for federal income
tax purposes was $19,070,851 (gross unrealized appreciation--$10,543,331; gross
unrealized depreciation--$29,614,182).
For federal income tax purposes, the Fund utilized approximately
$22,354,000 of its capital loss carryforward to offset net taxable gains
realized in the fiscal year ended October 31, 2000. The Fund had a remaining
capital loss carryforward as of
20
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
October 31, 2000 of approximately $6,178,000 which expires in 2006. Accordingly,
no capital gains distributions are expected to be paid to shareholders until
future net gains have been realized in excess of such carryforward.
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, 2000, the Fund
had a .42% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Fund represented $2,747,000 in principal amount.
As of such date, each repurchase agreement in the joint account and the value of
the collateral therefore was as follows:
ABN AMRO Incorporated, 6.56%, in the principal amount of $150,000,000,
repurchase price $150,027,333, due 11/1/00. The value of the collateral
including accrued interest was $153,000,573.
Bear, Stearns & Co. Inc., 6.56%, in the principal amount of $175,000,000,
repurchase price $175,031,889, due 11/1/00. The value of the collateral
including accrued interest was $184,628,570.
Chase Securities Inc., 6.56%, in the principal amount of $115,000,000,
repurchase price $115,020,956, due 11/1/00. The value of the collateral
including accrued interest was $117,304,831.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.375%, in the principal
amount of $43,782,000, repurchase price $43,789,753, due 11/1/00. The value of
the collateral including accrued interest was $44,659,885.
UBS Warburg, 6.56%, in the principal amount of $175,000,000, repurchase
price $175,031,889, due 11/1/00. The value of the collateral including accrued
interest was $178,501,724.
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%. 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. Class C shares are sold with a front-end
sales charge of 1% and a contingent 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
21
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
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, 2000
and 1999 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
<S> <C> <C>
Year ended October 31, 2000:
Shares sold 32,808,321 $ 431,759,479
Shares issued in reinvestment of dividends and
distributions 43,973 661,353
Shares reacquired (32,235,077) (433,292,743)
----------- -------------
Net increase (decrase) in shares outstanding before
conversion 617,217 (871,911)
Shares issued upon conversion from Class B 1,030,547 13,967,680
----------- -------------
Net increase (decrase) in shares outstanding 1,647,764 $ 13,095,769
----------- -------------
----------- -------------
Year ended October 31, 1999:
Shares sold 11,346,118 $ 134,170,719
Shares issued in reinvestment of dividends and
distributions 20,322 188,589
Shares reacquired (10,664,886) (126,529,666)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion 701,554 7,829,642
Shares issued upon conversion from Class B 343,160 4,472,184
----------- -------------
Net increase (decrease) in shares outstanding 1,044,714 $ 12,301,826
----------- -------------
----------- -------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Year ended October 31, 2000:
Shares sold 4,933,017 $ 65,826,119
Shares issued in reinvestment of dividends and
distributions 68,317 993,335
Shares reacquired (6,432,158) (85,696,361)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (1,430,824) (18,876,907)
Shares reacquired upon conversion into Class A (1,070,390) (13,967,680)
----------- -------------
Net increase (decrease) in shares outstanding (2,501,214) $ (32,844,587)
----------- -------------
----------- -------------
Year ended October 31, 1999:
Shares Sold 5,245,557 $ 59,201,089
Shares issued in reinvestment of dividends and
distributions 8,624 77,617
Shares reacquired (5,390,404) (58,251,940)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (136,223) 1,026,766
Shares reacquired upon conversion into Class A (355,605) (4,472,184)
----------- -------------
Net increase (decrease) in shares outstanding (491,828) $ (3,445,418)
----------- -------------
----------- -------------
</TABLE>
22
<PAGE>
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
---------------------------------------------------------- ----------- -------------
Year ended October 31, 2000:
<S> <C> <C>
Shares sold 4,706,959 $ 60,275,256
Shares issued in reinvestment of dividends and
distributions 3,740 54,374
Shares reacquired (4,585,381) (59,671,718)
----------- -------------
Net increase (decrease) in shares outstanding 125,318 $ 657,912
----------- -------------
----------- -------------
Year ended October 31, 1999:
Shares sold 3,334,684 $ 37,227,569
Shares issued in reinvestment of dividends and
distributions 215 1,933
Shares reacquired (2,999,313) (33,491,014)
----------- -------------
Net increase (decrease) in shares outstanding 335,586 $ 3,738,488
----------- -------------
----------- -------------
<CAPTION>
Class Z
----------------------------------------------------------
<S> <C> <C>
Year ended October 31, 2000:
Shares sold 15,766,846 $ 221,012,693
Shares issued in reinvestment of dividends and
distributions 43,538 659,179
Shares reacquired (18,491,425) (257,688,055)
----------- -------------
Net increase (decrease) in shares outstanding (2,681,041) $ (36,016,183)
----------- -------------
----------- -------------
Year ended October 31, 1999:
Shares sold 15,314,574 $ 182,845,717
Shares issued in reinvestment of dividends and
distributions 15,420 143,871
Shares reacquired (13,617,992) (163,613,827)
----------- -------------
Net increase (decrease) in shares outstanding 1,712,002 $ 19,375,761
----------- -------------
----------- -------------
</TABLE>
Note 7. Borrowings
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility.
The Fund utilized the line of credit during the year ended October 31,
2000. The average daily balance the Fund had outstanding during the year was
approximately $4,731,925 at a weighted average interest rate of approximately
7.10%.
23
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights
<TABLE>
<CAPTION>
Class A(a)
----------------
Year Ended
October 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 14.01
--------
Income from investment operations
Net investment income (loss) (.09)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (4.01)
--------
Total from investment operations (4.10)
--------
Less distributions
Distributions from net investment income (.16)
Distributions in excess of net investment income (.05)
Distributions from net realized gains --
--------
Total distributions (.21)
--------
Net asset value, end of year $ 9.70
--------
--------
TOTAL RETURN(b) (29.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 50,141
Average net assets (000) $ 53,389
Ratios to average net assets:
Total expenses(c) 1.60%
Operating expenses, including distribution and service
(12b-1) fees(c) 1.57%
Operating expenses, excluding distribution and service
(12b-1) fees 1.32%
Net investment income (loss) (.70)%
For Class A, B, C and Z shares:
Portfolio turnover rate 93%
</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.
(c) The Distributor of the Fund agreed to limit its distribution fees to .25 of
1% of the average daily net assets of the Class A shares.
24 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class A(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 9.14 $ 12.22 $ 15.86 $ 15.75
-------- -------- -------- ----------------
(.04) .06 .02 .07
4.99 (1.88) (3.31) .23
-------- -------- -------- ----------------
4.95 (1.82) (3.29) .30
-------- -------- -------- ----------------
(.08) -- -- --
-- (.40) -- (.19)
-- (.86) (.35) --
-------- -------- -------- ----------------
(.08) (1.26) (.35) (.19)
-------- -------- -------- ----------------
$ 14.01 $ 9.14 $ 12.22 $ 15.86
-------- -------- -------- ----------------
-------- -------- -------- ----------------
55.11% (15.53)% (21.32)% 1.97%
$ 49,338 $ 22,624 $ 35,860 $113,585
$ 31,281 $ 26,845 $ 73,942 $106,148
1.72% 1.70% 1.48% 1.37%
1.72% 1.70% 1.42% 1.37%
1.47% 1.45% 1.17% 1.12%
(.34)% .63% .14% .44%
104% 94% 81% 91%
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B(a)
----------------
Year Ended
October 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 13.50
----------------
Income from investment operations
Net investment loss (.19)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (3.87)
----------------
Total from investment operations (4.06)
----------------
Less distributions
Distributions from net investment income (.09)
Distributions in excess of net investment income (.05)
Distributions from net realized gains --
----------------
Total distributions (.14)
----------------
Net asset value, end of year $ 9.30
----------------
----------------
TOTAL RETURN(b) (30.40)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 51,004
Average net assets (000) $ 96,019
Ratios to average net assets:
Total expenses 2.35%
Operating expenses, including distribution and service
(12b-1) fees 2.32%
Operating expenses, excluding distribution and service
(12b-1) fees 1.32%
Net investment loss (1.43)%
</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.
26 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8.79 $ 11.77 $ 15.40 $ 15.38
---------------- -------- ---------------- ----------------
(.12) (.01) (.09) (.04)
4.84 (1.82) (3.19) .25
---------------- -------- ---------------- ----------------
4.72 (1.83) (3.28) .21
---------------- -------- ---------------- ----------------
(.01) -- -- --
-- (.29) -- (.19)
-- (.86) (.35) --
---------------- -------- ---------------- ----------------
(.01) (1.15) (.35) (.19)
---------------- -------- ---------------- ----------------
$ 13.50 $ 8.79 $ 11.77 $ 15.40
---------------- -------- ---------------- ----------------
---------------- -------- ---------------- ----------------
54.28% (16.32)% (21.84)% 1.36%
$107,769 $ 74,457 $128,694 $327,315
$ 85,193 $ 91,983 $244,462 $357,548
2.47% 2.45% 2.23% 2.12%
2.47% 2.45% 2.17% 2.12%
1.47% 1.45% 1.17% 1.12%
(1.09)% (.12)% (.61)% (.25)%
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C(a)
----------------
Year Ended
October 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $13.50
-------
Income from investment operations
Net investment loss (.19)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (3.87)
-------
Total from investment operations (4.06)
-------
Less distributions
Distributions from net investment income (.09)
Distributions in excess of net investment income (.05)
Distributions from net realized gains --
-------
Total distributions (.14)
-------
Net asset value, end of year $ 9.30
-------
-------
TOTAL RETURN(b) (30.40)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $6,040
Average net assets (000) $7,376
Ratios to average net assets:
Total expenses 2.35%
Operating expenses, including distribution and service
(12b-1) fees 2.32%
Operating expenses, excluding distribution and service
(12b-1) fees 1.32%
Net investment loss (1.42)%
</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.
28 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8.79 $11.77 $15.40 $ 15.38
------- ------- ------- --------
(.12) (.01) (.09) (.04)
4.84 (1.82) (3.19) .25
------- ------- ------- --------
4.72 (1.83) (3.28) .21
------- ------- ------- --------
(.01) -- -- --
-- (.29) -- (.19)
-- (.86) (.35) --
------- ------- ------- --------
(.01) (1.15) (.35) (.19)
------- ------- ------- --------
$13.50 $ 8.79 $11.77 $ 15.40
------- ------- ------- --------
------- ------- ------- --------
54.28% (16.32)% (21.84)% 1.36%
$7,073 $1,654 $2,932 $ 12,360
$3,103 $2,276 $6,557 $ 6,402
2.47% 2.45% 2.23% 2.12%
2.47% 2.45% 2.17% 2.12%
1.47% 1.45% 1.17% 1.12%
(1.09)% (.12)% (.61)% (.25)%
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
<S> <C> <C>
Class Z(a)
----------------
Year Ended
October 31, 2000
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.12
--------
Income from investment operations
Net investment income (loss) (.06)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (4.08)
--------
Total from investment operations (4.14)
--------
Less distributions
Distributions from net investment income (.18)
Distributions in excess of net investment income (.05)
Distributions from net realized gains --
--------
Total distributions (.23)
--------
Net asset value, end of period $ 9.75
--------
--------
TOTAL RETURN(b) (29.75)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 3,767
Average net assets (000) $ 33,479
Ratios to average net assets:
Total expenses 1.35%
Operating expenses 1.32%
Net investment income (loss) (.40)%
</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) Commencement of offering of Class Z shares.
30 See Notes to Financial Statements
<PAGE>
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z(a)
-------------------------------------------------------------------------------------
Year Ended October 31, March 1, 1996(c)
---------------------------------------------------------- Through
1999 1998 1997 October 31, 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 9.17 $ 12.28 $ 15.89 $ 16.57
---------------- ---------------- ---------------- ----------------
-- .08 .06 .11
5.06 (1.89) (3.32) (.79)
---------------- ---------------- ---------------- ----------------
5.06 (1.81) (3.26) (.68)
---------------- ---------------- ---------------- ----------------
(.11) -- -- --
-- (.44) -- --
-- (.86) (.35) --
---------------- ---------------- ---------------- ----------------
(.11) (1.30) (.35) --
---------------- ---------------- ---------------- ----------------
$ 14.12 $ 9.17 $ 12.28 $ 15.89
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
56.05% (15.36)% (21.02)% (4.09)%
$ 43,311 $ 12,429 $ 19,520 $ 37,288
$ 22,811 $ 15,099 $ 31,945 $ 33,868
1.47% 1.45% 1.23% 1.12%(c)
1.47% 1.45% 1.17% 1.12%(c)
(.03)% .82% .39% .68%(c)
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Prudential Pacific Growth Fund, Inc.
Report of Independent Accountants
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, 2000, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. 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 auditing standards
generally accepted in the United States of America, 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, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion. The accompanying financial highlights for 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 20, 2000
32
<PAGE>
Prudential Pacific Growth Fund, Inc.
Federal Income Tax Information (Unaudited)
We are required by the Internal Revenue Code to advise you within 60 days
of the Fund's fiscal year end (October 31, 2000) 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, 2000, the Fund paid ordinary
dividends of $.21 per Class A share, $.14 per Class B share, $.14 per Class C
share and $.23 per Class Z share.
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 2001, 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 2000.
33
<PAGE>
Prudential Pacific Growth Fund, Inc.
Class A Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/00
One Year Five Years Since Inception
With Sales Charge -33.33% -6.86% 1.49%
Without Sales Charge -29.82% -5.90% 2.12%
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Fund's returns can fluctuate from year
to year by measuring the best and worst calendar
years in terms of total
annual return since inception of the share class.
The graph compares a $10,000 investment in the
Prudential Pacific Growth Fund, Inc. (Class A
shares) with a similar investment in the Morgan
Stanley Capital International (MSCI) All Country
(AC) Asia Pacific Index (the Index) by portraying
the initial account value at the commencement of
operations of Class A shares, and the account value
at the end of the
current fiscal year (October 31, 2000), as measured
on a quarterly basis. For purposes of the graph,
and unless otherwise indicated, it has been assumed
that (a) the maximum applicable front-end sales
charge was deducted from the initial $10,000
investment in Class A shares; (b) all recurring
fees (including management fees) were deducted; and (c) all
dividends and distributions were reinvested.
The Index is a weighted, unmanaged index comprising
approximately 950 securities listed on the stock
exchanges of Australia, Hong Kong, Japan, Malaysia,
Singapore, Indonesia, Sri Lanka, China (free),
Pakistan, Taiwan, India, Korea, the Philippines,
and Thailand. The Index's total returns include the
reinvestment of all dividends, but do not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Fund. The Index is not the only one that may
be used to characterize performance of Pacific
Region stock funds. Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index. This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/00
One Year Five Years Since Inception
With Sales Charge -35.40% -6.83% 1.38%
Without Sales Charge -30.40% -6.57% 1.38%
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Fund's returns can fluctuate from year
to year by measuring the best and worst calendar
years in terms of total
annual return since inception of the share class.
The graph compares a $10,000 investment in the
Prudential Pacific Growth Fund, Inc. (Class B
shares) with a similar investment in the Morgan
Stanley Capital International (MSCI) All Country
(AC) Asia Pacific Index (the Index) by portraying
the initial account value at the commencement of
operations of Class B shares, and the account value
at the end of the
current fiscal year (October 31, 2000), as measured
on a quarterly basis. For purposes of the graph,
and unless otherwise indicated, it has been assumed
that (a) the maximum applicable contingent deferred
sales charge was deducted from the value of the
investment in Class B shares, assuming full
redemption on October 31, 2000; (b) all recurring
fees (including management fees) were deducted; and
(c) all dividends and distributions were reinvested. Class
B shares will automatically convert to Class A
shares, on a quarterly basis, beginning
approximately seven years after purchase. This
conversion feature is not reflected in the graph.
The Index is a weighted, unmanaged index comprising
approximately 950 securities listed on the stock
exchanges of Australia, Hong Kong, Japan, Malaysia,
Singapore, Indonesia, Sri Lanka, China (free),
Pakistan, Taiwan, India, Korea, the Philippines,
and Thailand. The Index's total returns include the
reinvestment of all dividends, but do not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Fund. The Index is not the only one that may
be used to characterize performance of Pacific
Region stock funds. Other
indexes may portray different comparative
performance. Investors cannot invest directly in an index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
Prudential Pacific Growth Fund, Inc.
Class C Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/00
One Year Five Years Since Inception
With Sales Charge -32.09% -6.76% -6.56%
Without Sales Charge -30.40% -6.57% -6.41%
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Fund's returns can fluctuate from year
to year by measuring the best and worst calendar
years in terms of total
annual return since inception of the share
class.The graph compares a $10,000 investment in
the Prudential Pacific Growth Fund, Inc. (Class C
shares) with a similar investment in the Morgan
Stanley Capital International (MSCI) All Country
(AC) Asia Pacific Index (the Index) by portraying
the initial account value at the commencement of
operations of Class C shares, and the account value
at the end of the
current fiscal year (October 31, 2000), as measured
on a quarterly basis. For purposes of the graph,
and unless otherwise indicated, it has been assumed
that (a) the maximum applicable front-end sales
charge was deducted from the initial $10,000
investment in Class C shares; (b) the maximum
applicable contingent deferred sales charge was
deducted from the value of the investment in Class
C shares, assuming full redemption on October 31,
2000; (c) all recurring fees (including management
fees) were deducted; and (d) all dividends and
distributions were reinvested.
The Index is a weighted, unmanaged index comprising
approximately 950 securities listed on the stock
exchanges of Australia, Hong Kong, Japan, Malaysia,
Singapore, Indonesia, Sri Lanka, China (free),
Pakistan, Taiwan, India, Korea, the Philippines,
and Thailand. The Index's total returns include the
reinvestment of all dividends, but do not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Fund. The Index is not the only one that may
be used to characterize performance of Pacific
Region stock funds. Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index. This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/00
One Year Five Years Since Inception
With Sales Charge -29.75% N/A -7.28%
Without Sales Charge -29.75% N/A -7.28%
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Fund's returns can fluctuate from year
to year by measuring the best and worst calendar
years in terms of total
annual return since inception of the share class.
The graph compares a $10,000 investment in the
Prudential Pacific Growth Fund, Inc. (Class Z
shares) with a similar investment in the Morgan
Stanley Capital International (MSCI) All Country
(AC) Asia Pacific Index (the Index) by portraying
the initial account value at the commencement of
operations of Class Z shares, and the account value
at the end of the
current fiscal year (October 31, 2000), as measured
on a quarterly basis. For purposes of the graph,
and unless otherwise indicated, it has been assumed
that (a) all recurring fees (including management
fees) were deducted, and (b) all dividends and
distributions were reinvested. Class Z shares are
not subject to a sales charge or distribution and
service (12b-1) fees.
The Index is a weighted, unmanaged index comprising
approximately 950 securities listed on the stock
exchanges of Australia, Hong Kong, Japan, Malaysia,
Singapore, Indonesia, Sri Lanka, China (free),
Pakistan, Taiwan, India, Korea, the Philippines,
and Thailand. The Index's total returns include the
reinvestment of all dividends, but do not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Fund. The Index is not the only one that may
be used to characterize performance of Pacific
Region stock funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Visit Prudential's website at:
http://www.prudential.com
Directors
Delayne Dedrick Gold
Robert F. Gunia
Robert E. LaBlanc
David R. Odenath, Jr.
Judy A. Rice
Robin B. Smith
Stephen Stoneburn
Nancy H. Teeters
Clay T. Whitehead
Officers
David R. Odenath, Jr., President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Robert C. Rosselot, Secretary
William V. Healey, Assistant Secretary
Manager
Prudential Investments
Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
Distributor
Prudential Investment
Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 8098
Philadelphia, PA 19101
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Fund Symbols NASDAQ CUSIP
Class A PRPAX 743941106
Class B PRPBX 743941205
Class C PRPCX 743941304
Class Z PPGZX 743941403
MF157E
(ICON) Printed on Recycled Paper
