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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 12
SIGNATURE GRACE TORRES TITLE
TREASURER
<PAGE>
Board of Directors or Trustees of:
Prudential Adjustable Rate Securities Fund Prudential IncomeVertible Fund
The BlackRock Government Income Trust Prudential Intermediate Global Income
Fund
Prudential California Municipal Fund (2 Portfolios) Prudential Multi-Sector
Fund
Prudential Equity Fund
Prudential Municipal Bond Fund (3 Portfolios)
Prudential Equity Income Fund
Prudential Municipal Series Fund (12
Portfolios) Prudential FlexiFund (2
Portfolios)
Prudential National Municipals Fund
Prudential GNMA Fund
Prudential Pacific Growth Fund
Prudential Global Fund
Prudential Short-Term Global Income
Fund (2 Portfolios) Prudential Global
Genesis Fund
Prudential Structured Maturity Fund
Prudential Global Natural Resources
Fund Prudential U.S. Government Fund
Prudential Government Plus Fund
Prudential Utility Fund
Prudential Growth Fund
Global Utility Fund, Inc.
Prudential Growth Opportunity Fund
Nicholas-Applegate Fund, Inc.
Prudential High Yield Fund
We have examined the accompanying description of the
Prudential Dual Pricing
Worksheet (the "Worksheet") application of State Street
Bank and Trust Company
("State Street"), custodian and recordkeeper for the
Prudential Mutual Funds
(the "Funds"). Our examination included procedures to
obtain reasonable
assurance about whether (1) the accompanying description
presents fairly, in
all material respects, the aspects of State Street's
policies and procedures
that may be relevant to a Fund's internal control
structure relating to the
Worksheet, (2) the control structure policies and
procedures included in the
description were suitably designed to achieve the control
objectives specified
in the description, if those policies and procedures were
complied with
satisfactorily, and (3) such policies and procedures had
been placed in
operation as of June 30, 1994. The control objectives
were specified by
Prudential Mutual Fund Management. Our examination was
performed in accordance
with standards established by the American Institute of
Certified Public
Accountants and included those procedures we considered
necessary in the
circumstances to obtain a reasonable basis for rendering
our opinion.
In our opinion, the accompanying description of the
aforementioned application
presents fairly, in all material respects, the relevant
aspects of State
Street's policies and procedures that had been placed in
operation as of
June 30, 1994. Also, in our opinion, the policies and
procedures, as
described, are suitably designed to provide reasonable
assurance that the
specified control objectives would be achieved if the
described policies and
procedures were complied with satisfactorily.
In addition to the procedures we considered necessary to
render our opinion as
expressed in the previous paragraph, we applied tests to
specific policies and
procedures, listed in Section I, to obtain evidence about
their effectiveness
in meeting the control objectives, described in Section I
during the period
from July 1, 1993 to June 30, 1994. The nature, timing,
extent, and results of
the tests are listed in Section II. In our opinion the
policies and procedures
that were tested, as described in Section II, were
operating with sufficient
effectiveness to provide reasonable, but not absolute,
assurance that the
control objectives specified in Section I were achieved
during the period from
July 1, 1993 to June 30, 1994.
The relative effectiveness and significance of specific
policies and procedures
at State Street, and their effect on assessments of
control risk on the Funds
are dependent on their interaction with the policies,
procedures, and other
factors present at individual Funds. We have performed no
procedures to
evaluate the effectiveness of policies and procedures at
individual Funds in
connection with this report.
The description of policies and procedures at State Street
is as of June 30,
1994, and information about tests of the operating
effectiveness of specified
policies and procedures covers the period from July 1,
1993 to June 30, 1994.
Any projection of such information to the future is
subject to the risk that,
because of change, the description may no longer portray
the system in
existence. The potential effectiveness of specified
policies and procedures at
State Street is subject to inherent limitations and,
accordingly, errors or
irregularities may occur and not be detected.
Furthermore, the projection of
any conclusions, based on our findings, to future periods
is subject to the
risk that changes may alter the validity of such
conclusions.
This report is intended solely for use by the management
and Boards of
Directors/Trustees of the Funds, the independent auditors
of the Funds and the
Securities and Exchange Commission.
July 28, 1994
SECTION I
Policies and Procedures Placed in
Operation
Prudential Dual Pricing Worksheet
Effective January 22, 1990, the Funds, offered by
Prudential Securities
Incorporated (formerly Prudential-Bache Securities, Inc.)
and Prudential Mutual
Fund Distributors, Inc., adopted a dual pricing system.
The dual pricing
system consists of two classes of shares (Class A and
Class B for all funds
except the Florida Series of Prudential Municipal Series
Fund. This Fund
offers Class A and Class D shares.) for the Funds. The
Class A shares are
subject to a front-end sales load and the Class B and
Class D shares are
subject to a contingent deferred sales charge. Each of
the classes of shares
represent interests in the same portfolio of investments
of the respective Fund
and are identical in all respects, except that each class
is subject to
different distribution expenses and has exclusive voting
rights with respect to
the Rule 12b-1 distribution plan pursuant to which such
distribution expenses
are paid.
In order to allocate income and expenses between the two
classes of shares,
State Street Bank and Trust Company (the Funds' custodian
and recordkeeper)
utilizes the Prudential Dual Pricing Worksheet (the
"Worksheet") (see Exhibit
I). The Worksheet is a manual supplementary application
that extracts relevant
data from the Funds' primary accounting system, allocates
income and expenses
between the two classes of shares and computes the daily
net asset value and,
if applicable, the dividend/distribution for each class of
shares. Internal
accounting controls that are relevant to the Fund can be
divided into two
components - controls related to the mutual fund
accounting system resident at
State Street Bank and Trust Company (the "primary
accounting system") and
controls related to the Worksheet.
The spcific control objectives and policies and procedures
relating to the
Worksheet are described on pages 4, 5 and 6. A
description of the tests of the
policies and procedures designed to obtain evidence about
the operating
effectiveness of those policies and procedures in
achieving the specific
control objectives is included in Section II.
Control Objectives and Policies and
Procedures
Prudential Dual Pricing Worksheet
The Worksheet is a supplementary manual application to the
Funds' primary
accounting system. Certain data is extracted from the
primary accounting
system to allocate income and expenses and to calculate
the daily net asset
value and, if applicable, dividends/distributions for each
class of shares.
The primary accounting system includes the details of
transactions in
accordance with the Investment Company Act of 1940, as
amended.
The following represents the internal accounting control
objectives and
policies and procedures for the allocation of income and
expenses and the
computation of the net asset value and, if applicable, the
dividend/distribution for each class of shares utilizing
the Worksheet. It
does not cover the internal accounting control policies
and procedures
surrounding the processing of information into the Funds'
primary accounting
system.
CONTROL
POLICIES CONTROL
OBJECTIVES AND PROCEDURES
A. Capital share
activity
as reported by the
1. Daily, the transfer
agent forwards
reports of
Fund's transfer agent is recorded for each
capital share activity
for each class which
class in an accurate and timely manner by includes a
summary of
subscriptions,
the Fund. redemptions,
exchanges and other
information (the
"Supersheet"). The
opening day's
balance for shares
outstanding
and current day
activity is recorded
on the Worksheet.
2. Estimated
interim share activity
for the current
day not recorded in the
Supersheet is
received via telefax from
the transfer agent
and is recorded for
each class on the
Worksheet.
3. A report of
outstanding shares
eligible for
dividends is received from
the transfer agent
and is recorded for
each class on the
Worksheet.
B. Net Asset Value
("NAV") and, if
applicable, 1.
The prior days
ending NAV per
share the dividend/distribution for each class
(unrounded) for each class is
agreed to the
are accurately computed on a daily basis. prior
day's Worksheet.
2. The daily net
capital stock
activity for each
class for the current
day is agreed to
the Supersheet as
described in
Control Procedures A.1, 2.
and 3., above.
CONTROL
POLICIES CONTROL OBJECTIVES AND
PROCEDURES
3. Percentage
Assets by Class and
Percentage
Dividend Assets by Class are
calculated for
each class based upon
information from
the prior day
Worksheet, the
Supersheet and the
telefax from the
transfer agent.
4. Allocate
investment income between
classes based on
the appropriate asset
allocation
percentage for each class.
5. Agree composite
income accounts,
management fees,
other expenses,
realized gains and
losses, and
unrealized
appreciation/depreciation to
the primary
accounting system of the
Fund.
6. Allocate expenses
between classes as
follows:
a. Expenses
directly
attributable
to each
class (12b-1
distribution
expenses
)
are calculated and
recorded
to that class.
b. Expenses
attributable to both
classes
are
allocated in accordance
with the
appropriate asset allocation
percentage for each class.
7. Allocate realized
and unrealized
gains and losses
between the classes in
accordance with
the appropriate asset
allocation
percentage of each class.
8.Record
dividends/distributions to
shareholders of
each class in the
primary accounting
system.
9.Aggregate the net
assets for each class
and agree to the
total net assets per
the primary
accounting system.
10.For each class,
reconcile the current
day's NAV and, if
applicable, the
dividend/distribution to the previous
day's NAV and
dividend/distribution for
each class.
CONTROL
POLICIES
CONTROL OBJECTIVES AND
PROCEDURES
11.The above procedures
are reviewed by the
Fund supervisor or
manager.
SECTION II
Tests of Operating Effectiveness
Prudential Dual Pricing Worksheet
July 1, 1993 to June 30, 1994
We reviewed the methodology and procedures for calculating
the daily net asset
value and, if applicable, the dividends/distributions of
the two classes of
shares and the allocation of income and expenses between
the two classes of
shares.
The following are the detailed procedures which we
performed with respect to
the Worksheet. These procedures were performed for
selected days encompassing
all Funds subject to dual pricing during the year ended
June 30, 1994, which we
believe is a representative sample, to test compliance
with the control
policies and procedures as described in Section I.
Prudential Mutual Fund Management, Inc. is the manager of
the Funds and has
represented to us that adequate facilities are in place to
ensure
implementation of the methodology and procedures for
calculating the net asset
value and dividends/distributions of the two classes of
shares and the
allocation of income and expenses between the two classes
of shares. Based on
our review of the description of the policies and
procedures of the Worksheet,
as described in Section I, and performance of tests of
operating effectiveness
as described in Section II, we concur with such
representation.
Agreed "Prior Day NAV Per Share" to the previous
day's Worksheet.
Agreed "Shares Outstanding Beginning of the Day" to
the previous day's
Worksheet and to the transfer agency records for each
class.
Recalculated "Activity/Estimate" by adding the
estimated interim share
activity reported via fax from the transfer agent and
the current day's
"Capital Stock Activity" reported on the Supersheet
for each class.
Recalculated "Current Shares Outstanding" by adding
"Shares Outstanding
Beginning of the Day" and "Activity/Estimate" for
each class.
Recalculated for each class "Adjusted Total Assets"
by multiplying "Prior
Day NAV Per Share" by "Current Shares Outstanding".
Recalculated "Percentage Assets-Class A/Front End" by
dividing "Adjusted
Total Assets-Class A/Front End" by "Adjusted Total
Assets Composite".
Recalculated "Percentage Assets-Class B(D)/Back End"
by dividing "Adjusted
Total Assets-Class B(D)/Back End" by "Adjusted Total
Assets Composite".
Agreed "Dividend Shares" to the transfer agency
records for each class.
Recalculated "Current Dividend Shares" by adding
"Dividend Shares
Beginning of Day" and "Activity/Estimate" for each
class.
Recalculated for each class "Adjusted Dividend
Assets" by multiplying
"Prior Day NAV Per Share" by "Current Dividend
Shares".
Recalculated "Percentage Dividend Assets-Class
A/Front End" by dividing
"Adjusted Dividend Assets-Class A/Front End" by
"Adjusted Dividend Assets
Composite".
Recalculated "Percentage Dividend Assets-Class
B(D)/Back End" by dividing
"Adjusted Dividend Assets-Class B(D)/Back End" by
"Adjusted Dividend
Assets Composite".
Agreed composite total of each component of income to
the primary
accounting system.
Recalculated the allocation for each class of each
component of income for
daily dividend funds by multiplying the composite
total by "Percentage
Dividend Assets-Class A/Front End" and "Percentage
Dividend Assets-Class
B(D)/Back End," and for non-daily dividend funds by
multiplying the
composite total by "Percentage Assets-Class A/Front
End" and "Percentage
Assets-Class B(D)/Back End".
Recalculated "Daily Income," composite and for each
class, by totaling
each component of income.
Agreed composite total "Management Fee" and "Other
Fixed Expenses" to the
primary accounting system.
Recalculated the allocation for each class of
"Management Fee" and "Other
Fixed Expenses" for daily dividend funds by
multiplying the composite
total by "Percentage Dividend Assets-Class A/Front
End" and "Percentage
Dividend Assets-Class B(D)/Back End," and non-daily
dividend funds by
multiplying the composite total by "Percentage Assets
Class A/Front End"
and "Percentage Assets-Class B(D)/Back End".
Agreed the "12b-1 Fee-Class A/Front End" and "12b-1
FeeClass B(D)/Back
End" to the respective "PC Expense Worksheet".
Recalculated "Daily Expense," composite and for each
class, by totaling
"Management Fee," "12b-1 Fee" and "Other Fixed
Expenses".
Recalculated "Daily Net Income" for each class by
subtracting "Daily
Expense" from "Daily Income".
Recalculated "Dividend Rate" for each class for daily
dividend funds by
dividing "Daily Net Income" by "Dividend Shares
Beginning of Day-Class
A/Front End" and "Dividend Shares Beginning of Day-
Class B(D)/Back End".
Agreed "Daily Income" and "Income Distribution" for
each class to the
primary accounting system.
Agreed the "Capital Gain Distribution" to the amount
recorded in the
primary accounting system.
Agreed composite total "Realized Gain/Loss" and
"Unrealized
Appreciation/Depreciation" to the primary accounting
system.
Recalculated the allocation for each class of
"Realized Gain/Loss" and
"Unrealized Appreciation/Depreciation" by multiplying
the composite amount
by the "Percentage Assets-Class A/Front End" and
"Percentage Assets-Class
B(D)/Back End".
Agreed "Prior Days Net Assets" to the previous day's
Worksheet.
Recalculated "Net Assets", composite and for each
class, by totaling
"Daily Net Income", "Income Distributed", "Capital
Stock Activity",
"Capital Gain Distribution", "Realized Gain/Loss",
"Unrealized
Appreciation/Depreciation", and "Prior Days Net
Assets".
Recalculated "NAV Per Share" dividing the "Net
AssetsClass A/Front End"
and "Net Assets - Class B(D)/Back End" by "Current
Shares Outstanding -
Class A/Front End" and "Current Shares Outstanding
Class B(D)/Back End",
respectively.
Recalculated "Offering Price" for Class A shares
by applying the "Load"
percentage as stated in the fund's prospectus.
<PAGE>
The Board of Directors of
Prudential Europe Growth Fund, Inc.:
In planning and performing our audit of the financial statements of
Prudential Europe Growth Fund, Inc. ("Fund") for the year ended April 30,
1995, we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for
the purpose of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide assurance on the
internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of
the objectives of an internal control structure are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded
against loss from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization and recorded properly
to permit preparation of financial statements in conformity with generally
accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design
or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions. However, we noted
no matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as
defined above as of April 30, 1995.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
June 13, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000921073
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC. (CLASS A)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 140,420,934
<INVESTMENTS-AT-VALUE> 149,768,039
<RECEIVABLES> 1,305,642
<ASSETS-OTHER> 5,179,945
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156,253,626
<PAYABLE-FOR-SECURITIES> 371,746
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 577,374
<TOTAL-LIABILITIES> 949,120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 150,446,957
<SHARES-COMMON-STOCK> 13,263,490
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,515,118)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,372,667
<NET-ASSETS> 155,304,506
<DIVIDEND-INCOME> 1,109,339
<INTEREST-INCOME> 709,258
<OTHER-INCOME> 0
<EXPENSES-NET> 2,325,795
<NET-INVESTMENT-INCOME> (507,198)
<REALIZED-GAINS-CURRENT> (4,674,403)
<APPREC-INCREASE-CURRENT> 9,372,667
<NET-CHANGE-FROM-OPS> 4,191,066
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 189,831,561
<NUMBER-OF-SHARES-REDEEMED> (38,818,121)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,204,506
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 725,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,325,795
<AVERAGE-NET-ASSETS> 29,598,000
<PER-SHARE-NAV-BEGIN> 11.40
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.36
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.77
<EXPENSE-RATIO> 1.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000921073
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC. (CLASS B)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 140,420,934
<INVESTMENTS-AT-VALUE> 149,768,039
<RECEIVABLES> 1,305,642
<ASSETS-OTHER> 5,179,945
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156,253,626
<PAYABLE-FOR-SECURITIES> 371,746
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 577,374
<TOTAL-LIABILITIES> 949,120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 150,446,957
<SHARES-COMMON-STOCK> 13,263,490
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,515,118)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,372,667
<NET-ASSETS> 155,304,506
<DIVIDEND-INCOME> 1,109,339
<INTEREST-INCOME> 709,258
<OTHER-INCOME> 0
<EXPENSES-NET> 2,325,795
<NET-INVESTMENT-INCOME> (507,198)
<REALIZED-GAINS-CURRENT> (4,674,403)
<APPREC-INCREASE-CURRENT> 9,372,667
<NET-CHANGE-FROM-OPS> 4,191,066
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 189,831,561
<NUMBER-OF-SHARES-REDEEMED> (38,818,121)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,204,506
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 725,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,325,795
<AVERAGE-NET-ASSETS> 85,623,000
<PER-SHARE-NAV-BEGIN> 11.40
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 0.35
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.69
<EXPENSE-RATIO> 2.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
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<PAGE>
<ARTICLE> 6
<CIK> 0000921073
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> PRUDENTIAL EUROPE GROWTH FUND, INC. (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 140,420,934
<INVESTMENTS-AT-VALUE> 149,768,039
<RECEIVABLES> 1,305,642
<ASSETS-OTHER> 5,179,945
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 156,253,626
<PAYABLE-FOR-SECURITIES> 371,746
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 577,374
<TOTAL-LIABILITIES> 949,120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 150,446,957
<SHARES-COMMON-STOCK> 13,263,490
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,515,118)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,372,667
<NET-ASSETS> 155,304,506
<DIVIDEND-INCOME> 1,109,339
<INTEREST-INCOME> 709,258
<OTHER-INCOME> 0
<EXPENSES-NET> 2,325,795
<NET-INVESTMENT-INCOME> (507,198)
<REALIZED-GAINS-CURRENT> (4,674,403)
<APPREC-INCREASE-CURRENT> 9,372,667
<NET-CHANGE-FROM-OPS> 4,191,066
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 189,831,561
<NUMBER-OF-SHARES-REDEEMED> (38,818,121)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 155,204,506
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 725,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,325,795
<AVERAGE-NET-ASSETS> 6,094,000
<PER-SHARE-NAV-BEGIN> 11.40
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 0.35
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.69
<EXPENSE-RATIO> 2.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<PAGE>
Board of Directors
Prudential Europe Growth Fund, Inc.:
We have examined the accompanying description of the Prudential Multiple
Class Allocation System (the "System") application of Brown Brothers Harriman
& Co.("Brown Brothers"), custodian and recordkeeper for Prudential Europe
Growth Fund, Inc. (the "Fund"). Our examination included procedures to
obtain reasonable assurance about whether (1) the accompanying description
presents fairly, in all material respects, the aspects of Brown Brothers'
policies and procedures that may be relevant to the Fund's internal control
structure relating to the System, (2) the control structure policies and
procedures included in the description were suitably designed to achieve
the control objectives specified in the description, if those policies and
procedures were complied with satisfactorily, and (3) such policies and
procedures had been placed in operation as of April 30, 1995. The control
objectives were specified by Prudential Mutual Fund Management. Our
examination was performed in accordance with standards established by
the American Institute of Certified Public Accountants and included
those procedures we considered necessary in the circumstances to obtain
a reasonable basis for rendering our opinion.
In our opinion, the accompanying description of the aforementioned application
presents fairly, in all material respects, the relevant aspects of Brown
Brothers' policies and procedures that had been placed in operation as of
April 30, 1995. Also, in our opinion, the policies and procedures, as
described, are suitably designed to provide reasonable assurance that the
specified control objectives would be achieved if the described policies
and procedures were complied with satisfactorily.
In addition to the procedures we considered necessary to render our opinion
as expressed in the previous paragraph, we applied tests to specific policies
and procedures, listed in Section I, to obtain evidence about their
effectiveness in meeting the control objectives, described in Section
I during the period from July 13, 1994 to April 30, 1995. The nature,
timing, extent, and results of the tests are listed in Section II. In our
opinion, the policies and procedures that were tested, as described in Section
II, were operating with sufficient effectiveness to provide reasonable, but
not absolute, assurance that the control objectives specified in Section I
were achieved during the period from July 13, 1994 to April 30, 1995.
The description of policies and procedures at Brown Brothers is as of April
30, 1995, and information about tests of the operating effectiveness of
specified policies and procedures covers the period from July 13, 1994 to
April 30, 1995. Any projection of such information to the future is subject
to the risk that, because of change, the description may no longer portray
the system in existence. The potential effectiveness of specified policies
and procedures at Brown Brothers is subject to inherent limitations and,
accordingly, errors or irregularities may occur and not be detected.
Furthermore, the projection of any conclusions, based on our findings,
to future periods is subject to the risk that changes may alter the
validity of such conclusions.
This report is intended solely for use by the management and Boards of
Directors of the Fund and the Securities and Exchange Commission.
June 13, 1995
SECTION I
Policies and Procedures Placed in Operation
Prudential Multiple Class Allocation System
Prudential Europe Growth Fund, Inc. (the "Fund") is an open-end diversified
management investment company. The Fund offers three classes of shares.
Each of the classes of shares represent interests in the same portfolio of
investments of the Fund and are identical in all respects, except that each
class is subject to different distribution expenses and has exclusive voting
rights with respect to the Rule 12b-1 distribution plan pursuant to which
such distribution expenses are paid. Additionally, each class is subject
to the following sales charge arrangements:
Class A Shares:Sold with an initial sales charge of up to 5% of the offering
price.Class B Shares:Sold without an initial sales charge but are subject to
a contingent deferred sales charge ("CDSC") declining from 5% to zero of the
lower of the amount invested or the redemption proceeds which will be imposed
on certain redemptions made within six years of purchase. Class B shares will
automatically convert to Class A shares approximately seven years after
purchase. Class C Shares:Sold without an initial sales charge but, for one
year after purchase, are subject to a CDSC of 1% on redemptions. Class C
shares do not convert to another class.In order to allocate income, expenses,
realized and unrealized gains and losses among the classes of shares, Brown
Brothers Harriman & Co. ("Brown Brothers"), the Fund's custodian and
recordkeeper, utilizes the Prudential Multiple Class Allocation System
(the "System"). The System allocates income, expenses, realized
and unrealized gains and losses among the classes of shares and computes
the daily net asset value and, if applicable, the dividend/distribution
for each class of shares.
The specific control objectives and policies and procedures relating to
the System are described on pages 3 and 4. A description of the tests
of the policies and procedures designed to obtain evidence about the operating
effectiveness of those policies and procedures in achieving the specific
control objectives is included in Section II.
Control Objectives and Policies and Procedures
Prudential Multiple Class Allocation System
The following represents the internal accounting control objectives and
policies and procedures for the allocation of income, expenses, realized
and unrealized gains and losses and the computation of the net asset value
and, if applicable, the dividend/distribution for each class of shares
utilizing the System. It does not cover other internal accounting control
policies and procedures surrounding the processing of information into the
Fund's accounting system.
Control Objectives
The following are the control objectives of the Fund's system of internal
accounting control relating to the allocation of income, expenses, realized
and unrealized gains and losses among the three classes of shares within the
Fund:
Income, expenses, realized and unrealized gains and losses properly
allocated among the three classes of shares within the Fund.
Distribution expenses are properly calculated.
Dividends and distributions are recorded correctly as to account,
amount, period and class of shares of the Fund.
Net asset value per share ("NAV") of each class of shares of the Fund
includes the appropriate amount of income, expenses, realized and
unrealized gains and losses.
Control Policies and Procedures
The following procedures are designed to account for the three classes of
shares in the Fund:
On a daily basis, a fund accountant calculates the distribution fees to be
charged to each class by applying the appropriate class annual fee rate to
the prior day's average net assets of the class of shares. Using the System,
the fund accountant then allocates the total daily income, non-class expenses,
realized and unrealized gains and losses among the Class A, Class B and Class
C shares based on their respective adjusted net assets at the end of the
prior day. The number of shares outstanding in each class is provided to the
accountant by the Fund's transfer agent, who maintains each class of shares
in a separate account. The System performs a calculation that accumulates net
investment income by class. The NAV by class is determined by dividing the
ending total net assets applicable to a specific class by the number of shares
outstanding relating to that class.
On a daily basis, a second fund accountant reviews the distribution fee
calculations, income, expense, realized and unrealized gains and loss
allocations, the net asset value per share for Class A, Class B and Class
C shares and the dividends per share calculations, if applicable. The
reviewer initials the worksheets to evidence this review.
Before the NAVs are released, the fund supervisor reviews the reasonableness
of the NAVs. Special attention is paid to the differences between the NAVs
of the three classes of shares.
Once the fund supervisor is satisfied that all of the above steps have been
completed and that the NAVs appear reasonable, the NAVs are made available
to the transfer agent for processing purposes.
If the fund supervisor notes any unusual fluctuations among NAVs of the
three classes in the Fund, they will research the matter and document the
findings. The fund manager reviews and initials this documentation evidencing
final approval of the NAVs.
On a monthly basis, the fund manager reviews a monthly checklist including
the calculations of all income and expense items. In doing so, they review
a separate record of the average daily net assets of each class of shares in
the Fund. All fees calculated by the fund accountant are then reconciled to
the general ledger of the Fund. The fund manager reviews and initials this
reconciliation evidencing their approval.
SECTION II
Tests of Operating Effectiveness
Prudential Multiple Class Allocation System
June 13, 1994 to April 30, 1995
We reviewed the methodology and procedures for calculating the daily net
asset value of each of the classes of shares and the allocation of income,
expenses, realized and unrealized gains and losses among the classes of
shares. No dividends or distributions were declared during the period.
Our tests of the effectiveness of control structure policies and procedures
included such tests as we considered necessary in the circumstances to
evaluate whether those policies and procedures, and the extent of compliance
with them, was sufficient to provide reasonable, but not absolute, assurance
that the specified control objectives were achieved during the period from
July 13, 1994 to April 30, 1995. Our tests of the operational effectiveness
of control structure policies and procedures were designed to cover a
representative number of calculations throughout the period July 13, 1994
to June 30, 1995 for each of the functions listed in Section I which satisfy
the control objectives listed in Section I of this report.
Tests of effectiveness of control structure policies and procedures included:
Tests of source documentation to ensure validity of information.
Tests of input and supervisory control procedures in place to ensure
accuracy, completeness, validity and integrity of processing.
Tests of recalculation of output to verify accuracy.
Tests of output control procedures and resultant documents and reports
relative to specific calculations to ensure accurate and timely updates
of account records were achieved.
Testing procedures were designed and performed to enable us to conclude
that the control objectives listed in Section I of this report were achieved
during the period July 13, 1994 to April 30, 1995.
Prudential Mutual Fund Management, Inc. is the manager of the Fund and has
represented to us that adequate facilities are in place to ensure
implementation of the methodology and procedures for calculating the net
asset value and dividends/distributions of each of the classes of shares
and the allocation of income and expenses among the classes of shares.
Based on our review of the description of the policies and procedures of
the System, as described in Section I, and
performance of tests of operating effectiveness as described above, we
concur with such representation.
