<PAGE>
SEMIANNUAL REPORT OCTOBER 31, 2000
Prudential
Europe Growth Fund, Inc.
Fund Type Global stock
Objective Long-term growth of capital
(GRAPHIC)
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.
This report is not authorized for distribution to
prospective investors unless preceded or
accompanied by a current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
The Prudential Europe Growth Fund invests primarily
in stocks of companies in Europe, 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
23.9% United Kingdom
16.9 France
11.2 Italy
10.5 Federal Republic of Germany
6.8 Other Continental Europe
5.8 United States
5.7 Switzerland
5.6 Spain
5.4 Sweden
4.1 Netherlands
4.1 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 10/31/00
3.4% Barclays PLC
Banking
2.9 Banco Santander Central Hispano SA
Banking
2.7 Telefonica SA
Telecommunications
2.6 Vodafone Group PLC
Telecommunications
2.6 Julius Baer Holdings AG
Banking
2.6 Telecom Italia Mobile SpA
Telecommunications
2.6 Wella AG
Cosmetics/Toiletries
2.5 Heineken N.V.
Beverages
2.4 Ares-Serono SA
Medical/Drugs
2.4 Misys PLC
Computer 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
Six One Five Since
Months Year Years Inception2
Class A -12.85% 3.77% 89.99% 118.15%
Class B -13.26 2.93 82.51 107.32
Class C -13.26 2.93 82.48 107.29
Class Z -12.83 3.97 N/A 87.44
Lipper European
Region Fund Avg.3 -8.22 12.53 102.14 ***
Average Annual Total Returns1 As of 10/31/00
One Five Since
Year Years Inception2
Class A -1.42% 12.54% 12.26%
Class B -2.07 12.66 12.26
Class C 0.91 12.56 12.08
Class Z 3.97 N/A 14.83
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, B, and C, 7/13/94;
Class Z, 4/15/96.
3 Lipper average returns are for all funds in each
share class for the six-month, one-, and five-year
periods in the European Region Fund category. The
Lipper average is unmanaged. European Region funds
concentrate their investment in equity securities
whose primary trading markets or operations are
concentrated in the European region or a single
country within this region.
*** Lipper Since Inception returns are 141.75% for
Class A, B, and C, and 82.57% for Class Z, based on
all funds in each share class.
1
<PAGE>
(LOGO) December 15, 2000
Dear Shareholder,
For the six months ended October 31, 2000, the
Prudential Europe Growth Fund's Class A shares fell
12.85%, -17.21% to those paying the one-time Class
A share sales charge. This return underperformed
the returns of the Morgan Stanley Capital
International (MSCI) Europe Region Average and the
Lipper European Region Fund Average, which returned
-6.81% and -8.22%, respectively.
In general, funds that invested in the European
region were hurt by the twin setbacks of (1) a
steadily declining euro that made European equities
worth less in U.S. dollars, and (2) intermittent
weakness in the key growth sectors of
telecommunications, media, and technology (TMT).
TMT stocks, which, after a May decline, had
recovered to some extent during the summer, were
beaten down again in September and October over
worries about slowing U.S. growth and its possible
effects on demand for European exports. Much like
the buying that occurred at the end of 1999 and at
the beginning of 2000, selling was indiscriminate,
derailing good stocks along with bad stocks. While
the Fund's performance certainly was hurt by its
TMT holdings, the Fund's holdings in the retail and
business services sectors also inflicted
considerable damage.
Despite a difficult reporting period, the outlook
for the Fund's holdings remains positive overall.
In addition, as described in the Investment
Adviser's Report, changes are under way to refocus
the Fund on what we believe are the market's most dynamic growth
opportunities.
We encourage you to look beyond recent short-term
performance and consider the Fund's place in your
long-term investment strategy.
Sincerely,
David R. Odenath, Jr., President
Prudential Europe Growth Fund, Inc.
2
<PAGE>
Prudential Europe Growth Fund, Inc.
Semiannual Report October 31, 2000
Investment Adviser's Report
Weakness in TMT sectors drag down broader market
The volatility that marked the previous six-month
period spilled over into this period, as the stiff
correction in telecommunications, media, and
technology (TMT) stocks that began in March and
April extended into May. Higher U.S. interest rates
were one factor undermining share prices, as the
Federal Reserve Board (the Fed) added a 0.50% hike
in May to bring the total number of rate increases
since June 1999 to six. TMT stocks in Europe
generally followed the pattern traced out by the
Nasdaq Composite Index
(a U.S. composite index that is heavily weighted in
TMT issues), which lost 37.3% from peak to trough.
However, the negative effects on European stocks
were somewhat muted because, as a group, they had
not reached the extreme valuations of their U.S.
counterparts.
After the May rate hike, there was a rally fueled
by investors who sensed that the Fed had completed
its series of tightening moves. Investors
alternated between relief that the upward pressure
on rates was easing and concern that higher rates
would slow growth. During this time, many TMT
stocks made significant recoveries from their
spring lows. We also saw considerable amounts of
money flowing into defensive and interest-rate-
sensitive sectors such as healthcare, consumer
nondurables, and financial services.
September and October, however, brought renewed
weakness in TMT stocks. Projected fourth-quarter
demand for DRAM (dynamic random access memory)
looked much weaker than had been expected, and
semiconductor demand also declined. Meanwhile,
telecommunications investors worried about the huge
amounts paid by wireless service providers for
third-generation cellular licenses in Europe. In
addition, there were numerous earnings
disappointments and warnings issued by U.S.
companies during October's earnings reporting
season. As these events transpired, the U.S.
influence on European stocks was magnified because
of the significant amount of investment capital
supplied to Europe from this country.
3
<PAGE>
Prudential Europe Growth Fund, Inc.
Holdings expressed as a percentage of the Fund's net assets
Comments on Largest Holdings As of 10/31/00
3.4% Barclays PLC (United Kingdom)/Banking
Offers commercial and investment banking,
insurance, and financial and related services. The
company's subsidiary, Barclays Bank PLC, operates
over 1,900 branches in the United Kingdom. In all,
Barclays Bank operates branches in over 60
countries.
2.9% Banco Santander Central Hispano SA
(Spain)/Banking
Attracts deposits and offers retail, wholesale, and
private banking and asset management services. The
bank offers consumer credit, mortgage loans, lease
financing, factoring, mutual funds, pension funds,
insurance, commercial credit, investment banking
services, structured finance, and advice on mergers
and acquisitions.
2.7% Telefonica SA (Spain)/Telecommunications
Spanish-based telecommunications service provider
with large Latin American holdings,
for which it has substantially improved service.
Usage of its fixed lines is increasing in Spain, as
are value-added services, such as mobile
(cellular), Internet, and data transmission.
Telefonica has a rapidly expanding World Wide Web
business, exploiting its Spanish-language advantage
in Spain and Latin America.
2.6% Vodafone Group PLC (United
Kingdom)/Telecommunications
The acquisition of Mannesmann--the largest mobile
phone operator in Germany, with interests in
providers in Austria, France, and Italy--cemented
Vodafone's position as the largest provider of
cellular telephone services in the world. It is
also No. 1 in the United Kingdom and, with Verizon
Wireless (its joint venture with Bell Atlantic), in
the United States.
2.6% Julius Baer Holdings AG
(Switzerland)/Banking
The Julius Baer Group is one of Switzerland's
leading banking institutions and manages
substantial assets for private and institutional
clients all over the world. The Group's services
consist mainly of asset management and counseling,
investment funds for private and institutional
investors, institutional brokerage and securities,
and foreign exchange trading.
Holdings are subject to change.
4
<PAGE>
www.prudential.com (800) 225-1852
Semiannual Report October 31, 2000
Weak Euro is a negative influence
Since its introduction at the beginning of 1999,
the euro has declined virtually without pausing,
losing about 30% of its value against the U.S.
dollar in less than two years. Not even a rare,
coordinated intervention to support the currency in
September had any lasting results. As the euro
declined, so did the value of European assets
expressed in dollars.
A declining euro helps export-driven European
companies, which can sell their goods more cheaply
overseas. However, the disadvantages of a weak
currency were painfully evident to Europeans
affected by surging crude oil prices. OPEC quotas
limited the supply of oil and, together with
improving worldwide demand, caused prices to rise
substantially during the period, flirting with the
$35-per-barrel level in September. The depreciating
euro created even sharper price increases for euro-
zone countries, which must pay for oil with
dollars. Euro-zone inhabitants therefore saw larger
increases at the gas pump than Americans did, and
companies for whom energy is a significant cost of
doing business felt the pinch.
Positioning and performance
The volatility in TMT stocks, combined with
prospects for a slowing U.S. economy, sent many
investors running for the protection of sectors
such as healthcare and consumer nondurables, which
are perceived to offer more steady earnings streams
during periods of slower economic growth.
Furthermore, the prospect of stable or even falling
interest rates piqued interest in financial
services stocks. With approximately 15% of its
holdings in financial services, the Fund was well
positioned to benefit from this trend. Accordingly,
the Fund's best-performing stocks included such
holdings as Julius Baer (Switzerland), an asset
gatherer and manager. Barclays (United Kingdom) and
Bank of Ireland (Ireland) were two other positive
contributors in the financial services sector. In
healthcare, Serono, a Swiss pharmaceutical firm
with biotechnology exposure, and the United
Kingdom's Shire Pharmaceutical Group helped the
Fund's performance.
5
<PAGE>
Prudential Europe Growth Fund, Inc.
Semiannual Report October 31, 2000
On the negative side, Swedish retailer Hennes &
Mauritz, which reported disappointing sales
results, hurt the Fund's returns. Havas
Advertising, the largest independent ad agency in
France, fell because of lower expected revenues
from Internet firms following last spring's sharp
correction in dot-com share prices. British Sky
Broadcasting (United Kingdom), a provider of
satellite television, declined after reaching
excessive valuations earlier in the year. However,
the company continued to experience strong revenue
and subscriber growth. Also detracting from
performance were wireless telecom operators Sonera
(Finland), and Vodafone Group PLC (United Kingdom),
as well as equipment manufacturers Ericsson
(Sweden) and Nokia (Finland).
Changes in stock selection criteria
The Fund's management team recently made some
changes in its stock selection criteria. Although
these changes are incremental rather than
wholesale, it might be helpful to summarize how we
plan to make decisions going forward. First, we
favor a 100% bottom-up approach to selecting
stocks, meaning that we build the portfolio one
stock at a time based
strictly on fundamental prospects over a two- to
three-year horizon. We
do not employ top-down analysis to decide, for
example, which countries or industries offer the
most promise, and then derive decisions about
individual holdings from those judgments.
Second, we look for companies offering above-
average growth, which we define as growth that is
well in excess of both underlying gross domestic
product (GDP) and average industry growth rates.
Moreover, we're interested in growth that is driven
by powerful demand for a company's products or
services--not simply due to where we happen to be in
the economic cycle.
We expect to do some modest restructuring based on
this strategy. For example, although financial
services stocks were some of the better performers
during the period, most of them have high
valuations relative to their earnings growth rates,
at least compared with many TMT companies.
6
<PAGE>
www.prudential.com (800) 225-1852
We therefore plan to shift some assets out of
financial services and into TMT stocks. A similar
strategy applies to a number of the Fund's retail
holdings. Finally, we expect the Fund to be
slightly more concentrated from now on, with the
number of holdings averaging in the 40 to 60 range
under normal circumstances.
Looking ahead
We believe that investors have become overly
defensive. Europe appears poised for moderately
good growth next year, and we believe many of the
telecommunications and technology companies we
follow should see strong earnings growth.
Meanwhile, share prices in the TMT sectors have
come way down. Typically, strong earnings growth
and reasonable valuations lead to advancing share
prices. While a decelerating U.S. economy does give
us some reason for caution, we view it merely as a
transition to a more sustainable rate of growth
from the breakneck pace of earlier in the year. A
soft landing for the U.S. economy--slowing growth
without recession--still looks to be the most likely
scenario.
Prudential Europe Growth Fund Management Team
7
<PAGE>
Prudential Europe Growth Fund, Inc.
Semiannual Report October 31, 2000
Financial
Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
----------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 90.1%
Common Stocks 84.5%
-------------------------------------------------------------------------------------
Belgium 1.1%
70,162 KBC Bancassurance Holding $ 2,906,724
-------------------------------------------------------------------------------------
Federal Republic of Germany 4.9%
2,600 Fresenius AG 470,148
76,360 Intershop Communications AG(a) 3,306,116
25,200 MLP AG 3,444,359
37,186 SAP AG 6,089,669
--------------
13,310,292
-------------------------------------------------------------------------------------
Finland 2.7%
153,105 Nokia Oy 6,302,655
48,532 Sonera Oy 1,069,584
--------------
7,372,239
-------------------------------------------------------------------------------------
France 16.9%
20,910 Altran Technologies SA 4,276,346
76,120 Carrefour SA 5,111,604
341,700 Havas Advertising SA(b) 5,508,736
31,568 Legrand SA 5,091,933
62,686 Rexel SA 4,363,816
48,383 Sidel SA 2,544,580
107,600 STMicroelectronics N.V.(a)(b) 5,588,475
85,760 Societe Television Francaise1 4,681,421
34,161 Total Fina Elf SA 4,889,564
49,218 Vivendi SA 3,539,072
--------------
45,595,547
-------------------------------------------------------------------------------------
Ireland 1.9%
687,460 Bank of Ireland 5,197,127
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Europe Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
<C> <S> <C> <C>
Italy 11.2%
535,099 Autogrill SpA $ 5,910,081
566,000 Bipop-Carire SpA 4,478,312
263,400 Bulgari SpA 3,101,517
411,800 Class Editori SpA 5,803,319
1,487,290 Seat Pagine Gialle SpA(b) 4,053,057
817,327 Telecom Italia Mobile SpA 6,952,573
--------------
30,298,859
-------------------------------------------------------------------------------------
Netherlands 4.1%
124,170 Heineken N.V. 6,746,502
75,122 Royal Dutch Petroleum Co. 4,457,221
--------------
11,203,723
-------------------------------------------------------------------------------------
Norway 1.1%
114,300 Tandberg ASA(a) 3,026,381
-------------------------------------------------------------------------------------
Spain 5.6%
808,877 Banco Santander Central Hispano SA 7,842,068
386,465 Telefonica SA(a) 7,372,168
--------------
15,214,236
-------------------------------------------------------------------------------------
Sweden 5.4%
175,000 Framtidsfabriken AB(a) 460,250
249,960 Hennes & Mauritz AB (Class 'B' Share) 4,674,252
46,260 Metro International SA (Class 'A' Share) 467,226
107,940 Metro International SA (Class 'B' Share) 1,306,074
154,200 Modern Times Group MTG AB (Class 'B' Share)(a) 3,932,100
272,500 Telefonektiebolaget LM Ericcson AB 3,624,250
--------------
14,464,152
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
<C> <S> <C> <C>
Switzerland 5.7%
1,410 Julius Baer Holding AG $ 6,981,557
7,168 Serono Group 6,448,389
1,481 Swatch Group AG 1,960,989
--------------
15,390,935
-------------------------------------------------------------------------------------
United Kingdom 23.9%
320,330 ARM Holdings PLC(a) 3,159,760
317,355 Barclays PLC 9,078,203
235,948 British Sky Broadcasting Group PLC(a) 3,405,548
461,520 Capita Group PLC 3,514,774
98,272 COLT Telecom Group PLC(a) 3,136,174
970,500 Dixons Group PLC 2,886,005
605,854 Electrocomponents PLC 6,046,500
488,825 GKN PLC 5,601,807
651,368 Hays PLC 3,555,089
488,271 Invensys PLC 1,165,130
616,442 Misys PLC 6,420,432
254,835 Serco Group PLC 2,347,364
102,439 Shire Pharmaceuticals Group PLC(a) 2,080,372
401,636 SmithKline Beecham PLC 5,185,257
1,699,508 Vodafone Group PLC 7,069,265
--------------
64,651,680
--------------
Total common stocks (cost $193,506,573) 228,631,895
--------------
PREFERRED STOCKS 5.6%
-------------------------------------------------------------------------------------
Federal Republic of Germany 5.6%
8,950 Fresenius AG 2,211,047
1,785 Porsche AG 6,016,040
172,126 Wella AG 6,904,469
--------------
Total preferred stocks (cost $10,917,305) 15,131,556
--------------
Total long-term investments (cost $204,423,878) 243,763,451
--------------
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Europe Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 5.8%
United States
-------------------------------------------------------------------------------------
Repurchase Agreements 5.8%
$ 15,636 Joint Repurchase Agreement Account,
6.55%, 11/1/00 (cost $15,636,000; Note 5) $ 15,636,000
--------------
Total Investments 95.9% (cost $220,059,878) 259,399,451
Other assets in excess of liabilities 4.1% 11,088,458
--------------
Net Assets 100% $ 270,487,909
--------------
--------------
</TABLE>
------------------------------
The following abbreviations are used in portfolio descriptions:
AB--Aktiebolag (Swedish Stock Company)
AG--Aktiengesellschaft (German Stock Company)
N.V.--Naamloze Vennootschap (Dutch Corporation)
Oy--Osakehio (Finnish Corporation)
PLC--Public Limited Company (British Corporation)
SA--Sociedad Anomia (Spanish Corporation) or Societe Anonyme (French
Corporation)
SpA--Societa per Azioni (Italian Corporation)
(a) Non-income producing security.
(b) Portion of the security on loan; see Note 4.
12 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Portfolio of Investments as of October 31, 2000 (Unaudited) Cont'd.
The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of October 31, 2000 was as
follows:
<TABLE>
<S> <C> <C>
Banking................................................................ 11.8%
Retail................................................................. 11.3
Telecommunications Services............................................ 9.5
Computer Products...................................................... 5.8
Telecommunications Equipment........................................... 4.8
Automobiles & Auto Parts............................................... 4.3
Publishing............................................................. 4.3
Financial Services..................................................... 2.9
Cosmetics/Toiletries................................................... 2.5
Beverages.............................................................. 2.5
Drugs & Health Care.................................................... 2.4
Telecommunications..................................................... 2.3
Restaurants............................................................ 2.2
Advertising............................................................ 2.0
Medical Products & Services............................................ 1.9
Oil & Gas - Production/Pipeline........................................ 1.8
Entertainment.......................................................... 1.7
Oil & Natural Gas Production........................................... 1.6
Engineering & Equipment................................................ 1.5
Human Resources........................................................ 1.3
Media.................................................................. 1.3
Commercial Services.................................................... 1.3
Business & Public Services............................................. 1.3
Electronic Components & Instruments.................................... 1.2
Retailing.............................................................. 1.1
Medical Devices........................................................ 1.0
Professional Services.................................................. 0.9
Machinery & Engineering................................................ 0.9
Pharmaceuticals........................................................ 0.8
Diversified Operations................................................. 0.4
Computer Services...................................................... 0.2
-----
95.9
Other assets in excess of liabilities.................................. 4.1
-----
100.0%
-----
-----
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Europe Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $220,059,878) $259,399,451
Foreign currency, at value (cost $8,930,595) 8,631,789
Cash 80,626
Receivable for Fund shares sold 3,146,427
Prepaid and other assets 218,442
Receivable for securities lending, net 186,391
Dividends and interest receivable 75,781
----------------
Total assets 271,738,907
----------------
LIABILITIES
Payable for Fund shares reacquired 688,854
Accrued expenses 215,941
Management fee payable 169,522
Distribution fee payable 160,376
Foreign withholding taxes payable 16,305
----------------
Total liabilities 1,250,998
----------------
NET ASSETS $270,487,909
----------------
----------------
Net assets were comprised of:
Common stock, at par $ 14,735
Paid-in capital in excess of par 182,472,463
----------------
182,487,198
Net operating loss (1,533,713)
Accumulated net realized gains on investments and foreign
currency transactions 50,521,973
Net unrealized appreciation on investments and foreign
currencies 39,012,451
----------------
Net assets, October 31, 2000 $270,487,909
----------------
----------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($88,972,505
/ 4,719,384 shares of common stock issued and
outstanding) $18.85
Maximum sales charge (5.00% of offering price) .99
Maximum offering price to public $19.84
----------------
----------------
Class B:
Net asset value, offering price and redemption price per
share ($152,508,825 / 8,444,490 shares of common stock
issued and outstanding) $18.06
----------------
----------------
Class C:
Net asset value and redemption price per share ($15,569,669
/ 862,323 shares of common stock issued and outstanding) $18.06
Sales charge (1.00% of offering price) .18
Offering price to public $18.24
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per
share ($13,436,910 / 709,182 shares of common stock
issued and outstanding) $18.95
----------------
----------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Europe Growth Fund, Inc.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT LOSS
Income
Dividends (net of foreign withholding taxes of $251,728) $ 1,597,063
Interest 343,339
Income from securities loaned, net 323,235
----------------
Total income 2,263,637
----------------
Expenses
Management fee 1,152,274
Distribution fee--Class A 121,446
Distribution fee--Class B 893,777
Distribution fee--Class C 83,086
Transfer agent's fees and expenses 264,000
Custodian's fees and expenses 182,000
Reports to shareholders 50,000
Registration fees 24,000
Audit fees and expenses 18,000
Legal fees and expenses 10,000
Directors' fees and expenses 6,000
Miscellaneous 5,954
----------------
Total expenses 2,810,537
----------------
Net investment loss (546,900)
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions 26,178,696
Foreign currency transactions (2,973,978)
----------------
23,204,718
----------------
Net change in unrealized appreciation (depreciation) on:
Investments (64,274,486)
Foreign currencies 734,923
----------------
(63,539,563)
----------------
Net gain (loss) on investments and foreign currencies (40,334,845)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(40,881,745)
----------------
----------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
October 31, 2000 April 30, 2000
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss $ (546,900) $ (2,075,814)
Net realized gain (loss) on investment and
foreign currency transactions 23,204,718 46,626,097
Net change in unrealized appreciation
(depreciation) of investments and foreign
currencies (63,539,563) 12,163,336
---------------- ---------------
Net increase (decrease) in net assets
resulting from operations (40,881,745) 56,713,619
---------------- ---------------
Dividends and distributions (Note 1)
Distributions from net realized gains
Class A -- (3,885,829)
Class B -- (8,828,651)
Class C -- (754,954)
Class Z -- (550,707)
---------------- ---------------
-- (14,020,141)
---------------- ---------------
Fund share transactions (net of share
conversions)
(Note 6)
Net proceeds from shares sold 382,524,172 491,227,290
Net asset value of shares issued in
reinvestment of distributions -- 13,082,385
Cost of shares reacquired (406,462,540) (512,060,641)
---------------- ---------------
Net increase (decrease) in net assets from Fund
share transactions (23,938,368) (7,750,966)
---------------- ---------------
Total increase (decrease) (64,820,113) 34,942,512
NET ASSETS
Beginning of period 335,308,022 300,365,510
---------------- ---------------
End of period $ 270,487,909 $ 335,308,022
---------------- ---------------
---------------- ---------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited)
Prudential Europe Growth Fund, Inc. (the 'Fund') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The investment objective of the Fund is to seek long-term capital
growth by investing primarily in equity securities of companies domiciled in
Europe. The Fund was incorporated in Maryland on March 18, 1994 and commenced
investment operations on July 13, 1994.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange (whether
domestic or foreign) are valued at the last reported sales price on the primary
exchange on which they are traded. Securities traded in the over-the-counter
market (including securities listed on exchanges for which a last sales price is
not available) are valued at the average of the last reported bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors of the Fund.
Short-term securities which mature in more than 60 days are valued based
upon 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. 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 pm, 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 daily rate 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.
18
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, 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 period end. 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 portfolio securities sold during the
period. Accordingly, such realized foreign currency gains and losses are
included in the reported net realized gains/losses on investment transactions.
Net realized gains or losses on foreign currency transactions represent
net foreign exchange gains or losses from foreign 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 period end exchange rates are reflected as a component of net
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 U.S. companies
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.
Securities Transactions and Investment Income: Securities transactions
are recorded on the trade date. Realized gains and losses from investment and
currency transactions are calculated on the identified cost basis. Dividend
income is recorded on the ex-dividend date, and interest income is recorded on
the accrual basis. Expenses are recorded on the accrual basis which may require
the use of certain estimates by management.
Net investment income (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 out 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.
19
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Income distributions and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions.
Federal Income 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 have been provided for in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
Securities Lending: The Fund may lend securities to broker-dealers. The
loans are secured by collateral at least equal at all times to the market value
of the securities loaned. Loans are subject to termination at the option of the
borrower or the Fund. Upon termination of the loan, the borrower will return to
the lender securities identical to the loaned securities. The Fund may bear the
risk of delay in recovery of, or even loss of rights in, the securities loaned
should the borrower of the securities fail financially. The Fund receives
compensation, net of any rebate, for lending its securities in the form of fees
or it retains a portion of interest on the investment of any cash received as
collateral. The Fund also continues to receive interest and dividends on the
securities loaned and any gain or loss in the market price of the securities
loaned that may occur during the term of the loan. Prudential Securities
Incorporated ('PSI'), a wholly owned subsidiary of The Prudential Insurance
Company of America ('The Prudential'), is the securities lending agent for the
Fund. For the six months ended October 31, 2000, PSI has been compensated
approximately $93,000 for these services.
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 through an agreement with PRICOA
Asset Management Ltd. ('PRICOA') 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
20
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 Fund's average daily net assets.
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 Investments
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
Class B, Class C and Class Z shares. 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, B and C Plans'), regardless of expenses actually
incurred. The 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 Plans were .25 of 1%, 1% and 1% of the average daily net
assets of the Class A, B and C shares, respectively, for the six months ended
October 31, 2000.
PIMS has advised the Fund that it has received approximately $54,300 and
$14,900 in front-end sales charges resulting from sales of Class A shares and
Class C shares, respectively, during the six months 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 also advised the Fund that for the six months ended October 31,
2000, it has received approximately $149,900 and $6,900 in contingent deferred
sales charges imposed upon certain redemptions by Class B and Class C
shareholders, respectively.
PIFM, PIC, PIMS, PRICOA and Jennison are wholly owned subsidiaries of The
Prudential Insurance Company of America ('The Prudential').
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated
21
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 at an annual rate 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 did not borrow any amounts pursuant to the SCA during
the six months ended October 31, 2000.
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 six months ended October 31,
2000, the Fund incurred fees of approximately $204,500 for the services of PMFS.
As of October 31, 2000, approximately $42,900 of such fees were due to PMFS.
Transfer agent's 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 six months ended October 31, 2000 were $54,858,433 and $70,589,881,
respectively.
The cost basis of investments for federal income tax purposes at October
31, 2000 was $220,363,121 and, accordingly, net unrealized appreciation for
federal income tax purposes was $39,036,330 (gross unrealized
appreciation--$54,241,501; gross unrealized depreciation--$15,205,171).
As of October 31, 2000, the Fund had securities on loan with an aggregate
market value of $10,305,544. As of this date, the collateral held for securities
on loan was comprised of U.S. government securities with an aggregate market
value of $11,866,775.
The Fund will elect, for United States Federal income tax purposes, to
treat net currency losses of $986,813 incurred in the six-month period ended
April 30, 2000 as having been incurred in the following fiscal year.
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 2.4%
22
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
undivided interest in repurchase agreements in the joint account. The undivided
interest for the Fund represents $15,636,000 in principal amount. As of such
date, each repurchase agreement in the joint account and the value of the
collateral therefor were as follows:
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 $153,000,176.
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 a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a 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 not subject to any sales or
redemption charge and are offered exclusively for sale to the participants of
employee benefit plans qualified under Section 401, 457 and 403(b)(7) of the
Internal Revenue Code, and nonqualified plans for which the Fund is an available
option. All classes of shares have equal rights as to earnings, assets and
voting privileges except that each class bears different distribution expenses
and has exclusive voting rights with respect to its distribution plan. There are
2 billion shares of $.001 par value common stock authorized and divided into
four classes, designated Class A, Class B, Class C and Class Z Shares, each
consisting of 500 million authorized shares.
23
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Transactions in shares of common shares were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
<S> <C> <C>
Six months ended October 31, 2000:
Shares sold 16,432,109 $ 334,611,267
Shares reacquired (16,939,138) (346,336,978)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (507,029) (11,725,711)
Shares issued upon conversion from Class B 418,202 8,699,032
----------- -------------
Net increase (decrease) in shares outstanding (88,827) $ (3,026,679)
----------- -------------
----------- -------------
Year ended April 30, 2000:
Shares sold 18,244,254 $ 389,178,000
Shares issued in reinvestment of dividends and
distributions 166,846 3,530,465
Shares reacquired (18,030,736) (387,291,291)
----------- -------------
Net increase in shares outstanding before conversion 380,364 5,417,174
Shares issued upon conversion from Class B 274,634 6,022,135
----------- -------------
Net increase (decrease) in shares outstanding 654,998 $ 11,439,309
----------- -------------
----------- -------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Six months ended October 31, 2000:
Shares sold 1,080,307 $ 21,301,301
Shares reacquired (1,719,735) (33,666,696)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (639,428) (12,365,395)
Shares reacquired upon conversion into Class A (435,349) (8,699,032)
----------- -------------
Net increase (decrease) in shares outstanding (1,074,777) $ (21,064,427)
----------- -------------
----------- -------------
Year ended April 30, 2000:
Shares sold 2,560,041 $ 52,229,734
Shares issued in reinvestment of dividends and
distributions 405,762 8,285,665
Shares reacquired (3,908,980) (77,038,098)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (943,177) (16,522,699)
Shares reacquired upon conversion into Class A (284,075) (6,022,135)
----------- -------------
Net increase (decrease) in shares outstanding (1,227,252) $ (22,544,834)
----------- -------------
----------- -------------
</TABLE>
24
<PAGE>
Prudential Europe Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
---------------------------------------------------------- ----------- -------------
Six months ended October 31, 2000:
<S> <C> <C>
Shares sold 1,021,734 $ 19,666,770
Shares reacquired (999,680) (19,369,608)
----------- -------------
Net increase (decrease) in shares outstanding 22,054 $ 297,162
----------- -------------
----------- -------------
Year ended April 30, 2000:
Shares sold 1,758,466 $ 33,865,643
Shares issued in reinvestment of dividends and
distributions 35,858 732,232
Shares reacquired (1,779,870) (34,304,719)
----------- -------------
Net increase (decrease) in shares outstanding 14,454 $ 293,156
----------- -------------
----------- -------------
<CAPTION>
Class Z
----------------------------------------------------------
<S> <C> <C>
Six Months ended October 31, 2000:
Shares sold 338,784 $ 6,944,834
Shares reacquired (343,124) (7,089,258)
----------- -------------
Net increase (decrease) in shares outstanding (4,340) $ (144,424)
----------- -------------
----------- -------------
Year ended April 30, 2000:
Shares sold 772,839 $ 15,953,913
Shares issued in reinvestment of dividends and
distributions 25,142 534,023
Shares reacquired (667,178) (13,426,533)
----------- -------------
Net increase (decrease) in shares outstanding 130,803 $ 3,061,403
----------- -------------
----------- -------------
</TABLE>
Note 7. Change In Subadvisor
On November 15, 2000, the Board of Directors approved a change in the subadvisor
of the Fund from Jennison to Gartmore Global Partners effective in early January
2001.
25
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
-------------------
Six Months Ended
October 31, 2000(a)
-----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 21.63
----------
Income from investment operations
Net investment income (loss) .01
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (2.79)
----------
Total from investment operations (2.78)
----------
Less distributions
Distributions in excess of net investment income --
Distributions from net realized gains on investments and
foreign currency transactions --
----------
Total distributions --
----------
Net asset value, end of period $ 18.85
----------
----------
TOTAL RETURN(b) (12.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 88,972
Average net assets (000) $ 96,364
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees (d) 1.37%(c)
Expenses, excluding distribution and service (12b-1)
fees 1.12%(c)
Net investment income (loss) .10%(c)
For Class A, B, C and Z shares:
Portfolio turnover rate 20%
</TABLE>
------------------------------
(a) Based on weighted average shares outstanding, by class.
(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. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
(d) The distributor of the Fund has agreed to limit its distribution and service
(12b-1) fees to .25% of the average daily net assets of the Class A shares.
26 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------------------------------
Year Ended April 30,
---------------------------------------------------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996(a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 18.80 $ 19.91 $ 15.46 $ 13.69 $ 11.77
---------------- ---------------- ---------------- ---------------- ----------------
(.04) .03 .01 .09 .06
3.83 .28 6.38 2.24 1.86
---------------- ---------------- ---------------- ---------------- ----------------
3.79 .31 6.39 2.33 1.92
---------------- ---------------- ---------------- ---------------- ----------------
-- (.24) (.14) -- --
(.96) (1.18) (1.80) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
(.96) (1.42) (1.94) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
$ 21.63 $ 18.80 $ 19.91 $ 15.46 $ 13.69
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
20.27% 2.03% 44.93% 17.20% 16.31%
$104,031 $ 78,074 $ 55,507 $ 38,807 $ 47,789
$ 85,317 $ 67,286 $ 42,885 $ 37,834 $ 47,183
1.37% 1.43% 1.39% 1.36% 1.53%
1.12% 1.18% 1.14% 1.11% 1.28%
(.18) .15% .08% .57% .44%
79% 62% 50% 31% 65%
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
-------------------
Six Months Ended
October 31, 2000(a)
-----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 20.82
----------
Income from investment operations
Net investment loss (0.06)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (2.70)
----------
Total from investment operations (2.76)
----------
Less distributions
Distributions in excess of net investment income --
Distributions from net realized gains on investments and
foreign currency transactions --
----------
Total distributions --
----------
Net asset value, end of period $ 18.06
----------
----------
TOTAL RETURN(b) (13.26)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 152,509
Average net assets (000) $ 177,298
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 2.12%(c)
Expenses, excluding distribution and service (12b-1)
fees 1.12%(c)
Net investment (loss) (.63)%(c)
</TABLE>
------------------------------
(a) Based on weighted average shares outstanding, by class.
(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. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
28 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------------------------------------------------
Year Ended April 30,
---------------------------------------------------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996(a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 18.26 $ 19.35 $ 15.12 $ 13.49 $ 11.69
---------------- ---------------- ---------------- ---------------- ----------------
(.18) (.11) (.11) (.04) (.04)
3.70 .30 6.15 2.23 1.84
---------------- ---------------- ---------------- ---------------- ----------------
3.52 .19 6.04 2.19 1.80
---------------- ---------------- ---------------- ---------------- ----------------
-- (.10) (.01) -- --
(.96) (1.18) (1.80) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
(.96) (1.28) (1.81) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
$ 20.82 $ 18.26 $ 19.35 $ 15.12 $ 13.49
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
19.38% 1.39% 43.35% 16.41% 15.40%
$198,260 $196,247 $175,857 $139,277 $125,868
$193,811 $191,220 $147,492 $133,135 $122,255
2.12% 2.18% 2.14% 2.11% 2.28%
1.12% 1.18% 1.14% 1.11% 1.28%
(.92)% (.57)% (.69)% (.27)% (.33)%
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
--------------------
Six Months Ended
October 31, 2000(a)
-----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 20.83
--------
Income from investment operations
Net investment loss (.06)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (2.71)
--------
Total from investment operations (2.77)
--------
Less distributions
Distributions in excess of net investment income --
Distributions from net realized gains on investments and
foreign currency transactions --
--------
Total distributions --
--------
Net asset value, end of period $ 18.06
--------
--------
TOTAL RETURN(b) (13.26)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 15,570
Average net assets (000) $ 16,482
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 2.12%(c)
Expenses, excluding distribution and service (12b-1)
fees 1.12%(c)
Net investment loss (.66)%(c)
</TABLE>
------------------------------
(a) Based on weighted average shares outstanding, by class.
(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. Total returns for periods of less than a full year are not
annualized.
(c) Annualized.
30 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------------------------------------
Year Ended April 30,
---------------------------------------------------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996(a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 18.25 $ 19.38 $ 15.12 $ 13.49 $ 11.69
---------------- ---------------- ---------------- ---------------- ----------------
(.18) (.11) (.11) (.04) (.04)
3.72 .26 6.18 2.23 1.84
---------------- ---------------- ---------------- ---------------- ----------------
3.54 .15 6.07 2.19 1.80
---------------- ---------------- ---------------- ---------------- ----------------
-- (.10) (.01) -- --
(.96) (1.18) (1.80) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
(.96) (1.28) (1.81) (.56) --
---------------- ---------------- ---------------- ---------------- ----------------
$ 20.83 $ 18.25 $ 19.38 $ 15.12 $ 13.49
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
19.45% 1.18% 43.55% 16.41% 15.40%
$ 17,501 $ 15,073 $ 11,122 $ 8,010 $ 7,741
$ 15,974 $ 13,465 $ 8,526 $ 8,002 $ 7,768
2.12% 2.18% 2.14% 2.11% 2.28%
1.12% 1.18% 1.14% 1.11% 1.28%
(.93)% (.61)% (.66)% (.25)% (.30)%
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
-------------------
Six Months Ended
October 31, 2000(a)
-----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 21.74
--------
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (2.83)
--------
Total from investment operations (2.79)
--------
Less distributions
Distributions in excess of net investment income --
Distributions from net realized gains on investments and
foreign currency transactions --
--------
Total distributions --
--------
Net asset value, end of period $ 18.95
--------
--------
TOTAL RETURN(d) (12.83)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $13,437
Average net assets (000) $14,624
Ratios to average net assets:
Expenses, including distribution and service (12b-1)
fees 1.12%(c)
Expenses, excluding distribution and service (12b-1)
fees 1.12%(c)
Net investment income .35%(c)
</TABLE>
------------------------------
(a) Based on weighted average shares outstanding, by class.
(b) Commencement of class operations.
(c) Annualized.
(d) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for periods of less than a
full year are not annualized.
(e) Figures are actual and not rounded to the nearest thousand.
32 See Notes to Financial Statements
<PAGE>
Prudential Europe Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------------------------------------------------------------
Year Ended April 30, April 15,1996(b)
----------------------------------------------------------------------------- Through
2000(c) 1999(c) 1998(c) 1997 April 30, 1996(c)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 18.83 $ 19.93 $ 15.51 $ 13.68 $ 13.40
-------- -------- -------- -------- -------
.01 .05 .04 .02 .28
3.86 .31 6.37 2.37 --
-------- -------- -------- -------- -------
3.87 .36 6.41 2.39 .28
-------- -------- -------- -------- -------
-- (.28) (.19) -- --
(.96) (1.18) (1.80) (.56) --
-------- -------- -------- -------- -------
(.96) (1.46) (1.99) (.56) --
-------- -------- -------- -------- -------
$ 21.74 $ 18.83 $ 19.93 $ 15.51 $ 13.68
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
20.67% 2.35% 44.95% 17.66% 2.09%
$ 15,516 $ 10,972 $ 3,090 $ 11,949 $ 204(e)
$ 12,455 $ 8,572 $ 12,148 $ 7,958 $ 203(e)
1.12% 1.18% 1.14% 1.11% 1.28%(a)
1.12% 1.18% 1.14% 1.11% 1.28%(a)
.08% .25% .26% .22% .54%(a)
</TABLE>
See Notes to Financial Statements 33
<PAGE>
<PAGE>
Prudential Europe Growth Fund, Inc.
Prudential Mutual Funds
Prudential offers a broad range of mutual funds
designed to meet your
individual needs. For information about these
funds, contact your financial professional or call
us at (800) 225-1852. Read the prospectus carefully
before you invest or send money.
STOCK FUNDS
Large Capitalization Stock Funds
Prudential 20/20 Focus Fund
Prudential Equity Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Strategic Partners Focused Growth Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Value Fund
Small- to Mid-Capitalization Stock Funds
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Small Company Fund, Inc.
Prudential Tax-Managed Small-Cap Fund, Inc.
Prudential U.S. Emerging Growth Fund, Inc.
Target Funds
Small Capitalization Growth Fund
Small Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Equity Opportunity Fund
Sector Stock Funds
Prudential Natural Resources Fund, Inc.
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Global/International Stock Funds
Global Utility Fund, Inc.
Prudential Europe Growth Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Target Funds
International Equity Fund
BALANCED/ALLOCATION FUNDS
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Short-Term Corporate Bond Fund, Inc.
Income Portfolio
Prudential Total Return Bond Fund, Inc.
Target Funds
Total Return Bond Fund
Tax-Free Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
New Jersey Series
New York Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global/International Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
Prudential MoneyMart Assets, Inc.
Prudential Special Money Market Fund, Inc.
Money Market Series
Tax-Free Money Market Funds
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Prudential Tax-Free Money Fund, Inc.
Other Money Market Funds
Command Government Fund
Command Money Fund
Command Tax-Free Fund
<PAGE>
Prudential Europe Growth Fund, Inc.
Getting the Most from Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds,
you receive financial advice from a Prudential
Securities Financial Advisor or Pruco Securities
registered representative. Your financial
professional can provide you with the following
services:
There's No Reward Without Risk; but Is This Risk
Worth It?
Your financial professional can help you match the
reward you seek with the risk you can tolerate.
Risk can be difficult to gauge--sometimes even the
simplest investments bear surprising risks. The
educated investor knows that markets seldom move in
just one direction. There are times when a
market sector or asset class will lose value or
provide little in the way of total return. Managing
your own expectations is easier with help from
someone who understands the markets, and who knows
you!
Keeping Up With the Joneses
A financial professional can help you wade through
the numerous available mutual funds to find the
ones that fit your individual investment profile
and risk tolerance. While the newspapers and
popular magazines are full of advice about
investing, they are aimed at generic groups of
people or representative individuals--not at you
personally. Your financial professional will review
your investment objectives with you. This means you
can make financial decisions based on the assets
and liabilities in your current portfolio and your
risk tolerance--not just based on the current
investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at
the bottom are among the most common investor
mistakes. But sometimes it's difficult to hold on
to an investment when it's losing value every
month. Your financial professional can answer
questions when you're confused or worried about
your investment, and should remind you that you're
investing for the long haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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 PRAEX 74431N103
Class B PRBEX 74431N202
Class C PEUCX 74431N301
Class Z PIEUX 74431N400
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.
The accompanying financial statements as
of October 31, 2000, were not audited and,
accordingly, no opinion is expressed on them.
<PAGE>
(LOGO) BULK RATE
Prudential Mutual Funds U.S. POSTAGE
Gateway Center Three PAID
100 Mulberry Street Permit 6807
Newark, NJ 07102-4077 New York, NY
(800) 225-1852
MF160E2 74431N103 74431N202 74431N301 74431N400
(ICON) Printed on Recycled Paper
