ANNUAL REPORT
OCTOBER 31, 2001
PRUDENTIAL
PACIFIC GROWTH FUND, INC.
FUND TYPE
Global stock
OBJECTIVE
Long-term growth of capital
This report is not authorized for
distribution to prospective investors
unless preceded or accompanied by a
current prospectus.
The views expressed in this report and
information about the Fund's portfolio
holdings are for the period covered by
this report and are subject to change
thereafter.
Prudential Financial is a service mark of
The Prudential Insurance Company of
America, Newark, NJ, and its affiliates.
(LOGO)
Prudential Pacific Growth Fund, Inc.
Performance at a Glance
INVESTMENT GOALS AND STYLE
The Prudential Pacific Growth Fund (the
Fund) invests primarily in stocks of
companies in the Pacific Basin, selecting
a diversified portfolio aimed at long-term
growth of capital. The Fund is subject to
all of the risks associated with foreign
investing, including currency, political
and social risks, and potential
illiquidity. There can be no assurance
that the Fund will achieve its investment
objective.
Geographic Concentration
Expressed as a percentage of
net assets as of 10/31/01
47.1% Japan
20.0 Australia
15.2 Hong Kong
9.5 Taiwan
4.0 Korea
3.9 Singapore
0.3 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 10/31/01
3.7% National Australia Bank, Ltd.
Commercial Banking
3.2 Toyota Motor Corp.
Automobiles
2.9 Nintendo Co., Ltd.
Toys
2.7 Hang Seng Bank, Ltd.
Financial Services
2.7 Nissan Motor Co., Ltd.
Automobiles
2.4 HSBC Holdings PLC
Commercial Banking
2.0 Taiwan Semiconductor
Manufacturing Co., Ltd.
Electronic Components
2.0 Kookmin Bank
Commercial Banking
1.9 Ricoh Co., Ltd.
Office Equipment & Supplies
1.9 Hutchison Whampoa, Ltd.
Diversified Industries
Holdings are subject to change.
www.PruFN.com (800) 225-1852
Annual Report October 31, 2001
Cumulative Total Returns1 As of 10/31/01
One Five Since
Year Years Inception2
Class A -29.59% -49.06% -16.23%
Class B -30.72 -51.34 -22.39
Class C -30.29 -51.04 -53.92
Class Z -29.89 -48.62 -50.72
Lipper Pacific Region Fund Avg.3 -29.79 -31.87 ***
Average Annual Total Returns1 As of 9/30/01
One Five Since
Year Years Inception2
Class A -44.31% -14.30% -2.77%
Class B -45.17 -14.30 -3.00
Class C -43.07 -14.22 -10.70
Class Z -41.82 -13.27 -12.37
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 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.
Approximately seven years after purchase,
Class B shares will automatically convert
to Class A shares on a quarterly basis.
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. The cumulative and average
annual total returns in the tables above
do not reflect the deduction of taxes that
a shareholder would pay on fund
distributions or following the redemption
of fund shares.
2 Inception dates: Class A and Class B,
7/24/92; Class C, 8/1/94; Class Z, 3/1/96.
3 The Lipper Average is unmanaged, and is
based on the average return for all funds
in each share class for the one-year,
five-year, and since inception periods in
the Lipper Pacific Region Fund category.
Funds in the Lipper Pacific Region Fund
Average concentrate investments in equity
securities with primary trading markets or
operations concentrated in the Western
Pacific Basin region or a single country
within this region.
***Lipper Since Inception returns are
17.46% for Class A and Class B, -30.38%
for Class C, and -32.05% for Class Z,
based on all funds in each share class.
1
(LOGO) December 14, 2001
DEAR SHAREHOLDER,
Over the 12 months ended October 31, 2001
the overall Pacific market fell 28.37% for
dollar-based investors, as measured by the
Morgan Stanley Capital International All
Country Asia Pacific Free Gross Index
(MSCI AC Asia Pacific Free Gross Index).
("Free" means that it includes only shares
available for purchase by foreign
investors.) The Prudential Pacific Growth
Fund's Class A shares return of -29.59% (-
33.11% to those paying the maximum one-
time Class A share sales charge) was right
in line with the overall market and with
the -29.79% Lipper Pacific Region Fund
Average, the Fund's peer group benchmark.
The Fund's performance over the full
reporting period reflects underperformance
during the first six months and outperformance
during the second. Although one can never be
certain about the causes of such a change,
it coincides with when JF International
Management Limited assumed day-to-day management
of the Fund on May 5, 2001. Prudential selected
JF International Management Limited to
manage the Fund after a thorough review by
our research group. For the latter six
months, the Fund was in the top quartile
of the 74-fund Lipper Pacific Region group.
It had a more successful selection of
Japanese stocks, while continuing to underweight
the poor-performing Japanese market.
For more on the Fund's performance, please
refer to the Investment Adviser's Report
that follows.
Sincerely,
David R. Odenath, Jr., President
Prudential Pacific Growth Fund, Inc.
2
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2001
INVESTMENT ADVISER'S REPORT
A CHANGE IN ADVISERS
On March 28, 2001, shareholders approved a
change in subadviser to the Fund. JF
International Management Limited assumed
day-to-day management on May 5, 2001.
Consequently, our discussion of the Fund's
performance over the full 12-month
reporting period will reflect two
different strategies.
WE KEPT OUR EXPOSURE TO JAPAN LOW
The MSCI Japan Index, representing 66% of
the MSCI AC Asia Pacific Free Gross Index
at the end of the Fund's reporting period,
declined by 32.6% over the 12 months.
Together with the impact of reduced
exports to the slowing U.S. and European
economies, this was a heavy drag on
Pacific Region stocks over the past 12
months.
We maintained a much smaller exposure to
Japan than the MSCI AC Asia Pacific Free
Gross Index over the full reporting
period. That helped the Fund's return
substantially because Japan's economy
remained moribund. There was a brief flash
of optimism when Junichiro Koizumi--a
reform-minded politician who was not part
of the ruling clique--was selected Prime
Minister, but it decayed as the continuing
strength of the conservative forces in
Japan became apparent.
The benefits of low exposure to Japan were
somewhat offset during the first half of
the reporting period by poor returns on
the Fund's selection of stocks. Particularly
poor showings came from the telecommunications
group. Holdings that made large individual
detractions from the Fund's return included
Ryohin Keikaku, NTT DoCoMo, and Askel, all
of which have since been sold from the
portfolio. The Fund's new management restructured
its Japan holdings while keeping the aggregate
exposure low. The new portfolio outperformed the
MSCI Japan Index, led by positive contributions
from Tonen General Sekiyu (an oil and gas
refiner), Fujisawa Pharmaceutical Company,
Yamanouchi Pharmaceutical, and several
electric utilities, including Chubu
Electric Power, Tohuku Electric Power,
Tokyo
3
Prudential Pacific Growth Fund, Inc.
Holdings expressed as a percentage of the Fund's net assets
Comments on Largest Holdings As of 10/31/01
--------------------------------------------------------
3.7% National Australia Bank, Ltd./Commercial Banking
National Australia Bank (NAB), the leading
Australian bank, has well-diversified
sources of revenue, including a large fund
management subsidiary. Australian banks
generally have benefited from central bank
monetary easing and a near unprecedented
eight consecutive months of trade surplus.
NAB is established in Australia, New
Zealand, the United Kingdom, Ireland, and
the United States. In our view, this
geographical diversification has improved
the sustainability of its earnings.
3.2 Toyota Motor Corp./Automobiles
Toyota Motor, the world's third largest
auto manufacturer, was Japan's biggest
income earner in 2000. Its sales are
geographically diversified. Toyota is
gaining U.S. market share because of its
consistent quality and yen weakness. The
company's announced share buy-backs are
aimed at preserving an orderly market
while Japan's corporations unwind their
complicated cross-holdings, but they also
increase per-share profits. Toyota's total
operating profits and sales grew through
its 2000 and 2001 fiscal years.
2.9 Nintendo Co., Ltd./Toys
Nintendo is a leader in computer game
consoles and software. There is strong
demand for its new Gameboy Advance product,
especially in Japan, and there are more
products in the pipeline. Nintendo's hardware
profit margins received a big boost from declining
semiconductor and liquid crystal display prices.
Software development margins are also improving.
2.7 Hang Seng Bank, Ltd./Financial Services
Hang Seng has one of the two strongest
banking brands in Hong Kong. Low-cost
deposits make up a high proportion of its
total deposits, and it is a leader in the
mortgage market. The bank's 5.5% dividend
is particularly attractive, given the
recent performance of the equity markets.
Earnings have been above expectations.
2.7 Nissan Motor Co., Ltd./Automobiles
Renault installed Carlos Ghosn as
president of Nissan last year, and he has
convincingly turned around the previously
struggling automaker while removing much
of its old board. Ghosn intends to stay
through 2006. Nissan has gained domestic
market share, benefiting from several new
models. More are in the pipeline. It has
ambitious restructuring objectives, and
has shown its determination to stay on
track.
Holdings are subject to change.
4
www.PruFN.com (800) 225-1852
Annual Report October 31, 2001
Electric Power, and Chugoku Electric
Power. Tonen General Sekiyu was among the
largest positive contributors to the
Fund's return in the period's second half.
However, Japan holdings continued to
predominate among the largest detractors
from the Fund's return. Two of these,
Nissan Motor and Toyota Motor (see
Comments on Largest Holdings), were among
the Fund's largest holdings at period-end.
The Asian and Japanese auto markets are
reviving, and we expect them to continue
to provide at least modest volume growth
over the next one to two years. During our
reporting period, concern that the slowing
U.S. economy and a stronger yen during the
third quarter of 2001 would reduce auto
demand hurt the shares of Japanese auto
companies. However, auto sales remained
strong, and we believe the yen will be a
weak currency for some time.
Other Japan holdings included Sony, Nippon
Telegraph and Telephone, Canon, and NEC.
These are leading companies, most with
global franchises. We expect Sony to
benefit from the new generation of game
players because its Playstation is by far
the market leader. While Nippon T&T, a
Japanese wired telephone utility, should
benefit from its ownership of a large
share in NTT DoCoMo, the most prominent
Japanese wireless telecommunications
company. Canon continues to be a top
global manufacturer of consumer and office
electronics products, as well as of the
optical components used in medical
equipment and semiconductor manufacturing.
WE OVERWEIGHTED AUSTRALIA...
The MSCI Australia Index indicated a
relatively strong market--in fact, a
positive return--over the full year.
Investors found Australia a defensive
refuge from the political and economic
uncertainties in the Pacific region. The
Fund's performance was hurt in the first
six months by its underweighting of
Australia, but it benefited substantially
from its overweighting--18% on average--in
the latter half of the reporting period.
Our holdings also outperformed the MSCI
Australia Index in the latter half. In
fact, four of the five largest positive
contributors to the Fund's return were
Australian
5
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2001
stocks: Westfield Holdings, CSL, Billabong
International, and Westpac Banking. Bank
stocks benefited from monetary easing in
Australia, as elsewhere, because declining
interest rates reduced the cost of
borrowing. In addition to Westpac,
Commonwealth Bank of Asia and National
Australia Bank made positive
contributions.
...AND OVERWEIGHTED TAIWAN
An overweight in Taiwan helped in the
first half of the year when the MSCI
Taiwan Index declined less than the MSCI
AC Asia Pacific Free Gross Index. However,
it hurt in the second half when the Taiwan
Index was below the Region Index, and our
holdings underperformed the Taiwan Index.
The slowdown in the electronics industry
had a very strong impact on Taiwan,
particularly on our shares of United
Microelectronics and Via Technologies.
OUR KOREAN STOCKS WERE MIXED
The semiconductor surplus also had a
devastating impact on the Korean firm
Hynix Semiconductor. It is one of a few
global giants in the industry, but is
poorly financed. During most of the 12-
month period, attention focused on whether
the Korean government would allow Hynix to
go bankrupt. We took our loss early in the
period. Samsung Electronics, however, is a
much stronger firm--one of the dominant
semiconductor firms that is likely to
prosper when the industry revives. A sign
that we may not have to wait too long for
this was the bottoming early in October of
the Philadelphia Semiconductor Index, a
widely accepted benchmark of semiconductor
stocks. Samsung had a very substantial
gain in the first half of the period,
making it the largest positive contributor
to the Fund over that time, but it
retreated slightly in the second half.
A HONG KONG STOCK PEAKED
Cheung Kong is a Hong Kong-based
conglomerate that owns just under 50% of
Hutchison Whampoa. Hutchison is itself a
conglomerate that is an increasing global
force in wireless telecommunications, as
well as the world's largest container port
company. Cheung Kong is also a major owner
6
www.PruFN.com (800) 225-1852
of Hong Kong real estate. It had a small
gain in the first half. However, after we
increased the Fund's position, it became
the largest detractor from the Fund's
return in the latter half of the reporting
period. Investors were concerned about
Hutchison's exposure to the weak
telecommunications industry. We think
this is a short-term concern.
LOOKING AHEAD
We believe that the strong response of
central banks around the world to the
events of September 11, particularly that
of the U.S. Federal Reserve, has changed
the economic outlook substantially.
Monetary easing and bipartisan support for
fiscal stimulus initiatives have strengthened
the U.S. economic outlook, which should
result in greater exports from the Pacific region.
However, the domestic pictures remain
clouded, particularly in Japan. Japan's
financial sector continues to deteriorate
despite better stock performance in 2001.
Nonetheless, the weak yen and continuing
corporate restructuring are forces for
improvement. In addition, we seem to be
entering a period of improved relations
between the Bank of Japan and the Ministry
of Finance.
Geographical asset allocation should be
less important now than individual stock
selection, although we are still impressed
by the relative strength and stability of
the Australian economy during this time of
heightened political and economic anxiety.
Prudential Pacific Growth Fund Management Team
7
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2001
Shares Description Value (Note 1)
-----------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 99.7%
Common Stocks
-------------------------------------------------------------------------------------
Australia 20.0%
27,500 AMP, Ltd. $ 250,470
100,000 Australian Gas Light Co., Ltd. 448,083
148,958 AWB, Ltd.(a) 277,355
50,000 Baycorp Holdings, Ltd. 245,991
110,000 BHP Billiton, Ltd. 495,666
117,500 Billabong International, Ltd. 469,697
20,750 Cochlear, Ltd. 528,755
38,000 Commonwealth Bank of Australia 571,406
22,000 CSL, Ltd. 558,598
107,500 Lion Nathan, Ltd. 233,793
115,000 National Australia Bank, Ltd. 1,773,937
160,000 Newcrest Mining, Ltd. 275,308
102,500 News Corp., Ltd. 707,546
173,759 Qantas Airways, Ltd. 344,576
86,241 Qantas Airways, Ltd. Placing 2001 171,022
135,000 QBE Insurance Group, Ltd. 472,076
84,000 Santos, Ltd. 269,576
184,000 Telstra Corp., Ltd. 461,444
100,000 Westfield Holdings, Ltd. 856,453
31,500 Woodside Petroleum, Ltd. 220,064
--------------
9,631,816
-------------------------------------------------------------------------------------
Hong Kong 15.2%
69,000 Cheung Kong (Holdings), Ltd. 583,843
126,000 China Mobile, Ltd.(a) 382,036
213,000 CLP Holdings, Ltd. 802,842
130,000 Hang Seng Bank, Ltd. 1,304,160
700,000 Hong Kong & China Gas Co., Ltd. 874,995
232,000 Hong Kong Electric Holdings, Ltd. 880,406
200,000 Hong Kong Exchanges & Clearing, Ltd. 269,229
107,200 HSBC Holdings PLC 1,161,327
111,000 Hutchison Whampoa, Ltd. 896,534
202,500 Johnson Electric Holdings, Ltd. 176,538
--------------
7,331,910
-------------------------------------------------------------------------------------
Japan 47.1%
55,000 Ajinomoto Co., Inc. 595,360
8 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2001 Cont'd.
Shares Description Value (Note 1)
-----------------------------------------------------------------------------------------
55,000 Asahi Breweries, Ltd. $ 574,241
22,000 Canon, Inc. 639,843
14,000 Capcom Co., Ltd. 383,154
23,000 Chugai Pharmaceutical Co., Ltd. 336,155
3,500 Fast Retailing Co., Ltd. 407,459
11,000 Fuji Photo Film Co., Ltd. 363,057
328,000 Japan Energy Corp. 554,683
100 Japan Tobacco, Inc. 653,568
26,000 Kao Corp. 615,988
4,200 Kyocera Corp. 285,822
11,900 Matsushita Communication Industrial Co., Ltd. 334,431
24,000 Matsushita Electric Industrial Co., Ltd. 284,302
54,000 Mitsubishi Estate Co., Ltd. 528,067
199,000 Mitsubishi Heavy Industries, Ltd. 669,809
8,200 Murata Manufacturing Co., Ltd. 514,489
9,200 Nintendo Co., Ltd. 1,419,027
205 Nippon Telegraph & Telephone Corp. 844,083
295,000 Nissan Motor Co., Ltd. 1,301,417
11,000 Ono Pharmaceutical Co., Ltd. 350,476
27,000 Pioneer Corp. 518,361
9,400 Promise Co., Ltd. 608,210
55,000 Ricoh Co., Ltd. 916,629
5,000 Rohm Co., Ltd. 532,249
18,000 Sankyo Co., Ltd. 349,986
46,000 Sharp Corp. 475,765
33,000 Shionogi & Co., Ltd. 590,417
21,100 Sony Corp. 798,113
27,000 Taiyo Yuden Co., Ltd. 365,279
15,000 Takeda Chemical Industries, Ltd. 726,686
9,800 Takefuji Corp. 813,431
13,000 TDK Corp. 577,754
9,300 Tokyo Electron, Ltd. 382,166
54,000 Tonen General Sekiyu K.K. 434,100
148,000 Toshiba Corp. 547,723
64,500 Toyota Motor Corp. 1,565,009
31,000 Wacoal Corp. 312,520
3,600 Yamada Denki Co., Ltd. 235,284
11,000 Yamanouchi Pharmaceutical Co., Ltd. 326,212
--------------
22,731,325
See Notes to Financial Statements 9
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2001 Cont'd.
Shares Description Value (Note 1)
-----------------------------------------------------------------------------------------
Korea 4.0%
37,196 Kookmin Bank $ 969,884
19,000 Korea Gas Corp. 245,019
12,500 Samsung Fire & Marine Insurance Co., Ltd. 390,927
14,700 SK Telecom Co., Ltd. (ADR) 309,876
--------------
1,915,706
-------------------------------------------------------------------------------------
Singapore 3.9%
130,000 Oversea-Chinese Banking Corp., Ltd. 748,255
200,000 Singapore Telecommunications, Ltd. 189,667
105,000 United Overseas Bank, Ltd. 587,092
72,000 Venture Manufacturing, Ltd. 380,870
--------------
1,905,884
-------------------------------------------------------------------------------------
Taiwan 9.5%
119,000 Ambit Microsystems Corp. 477,379
177,000 Asustek Computer, Inc. 604,953
280,000 Au Optronics Corp.(a) 127,328
40,000 CMC Magnetics Corp. 26,879
365,000 Compal Electronics, Inc. 290,731
186,000 Hon Hai Precision Industry Co., Ltd. 689,587
238,750 Quanta Computer, Inc. 511,731
140,000 Ritek Corp. 135,438
552,000 Taiwan Semiconductor Manufacturing Co., Ltd.(a) 975,294
740,000 United Microelectronics Corp.(a) 608,718
250,000 Yageo Corp.(a) 145,547
--------------
4,593,585
--------------
Total common stocks (cost $52,250,788) 48,110,226
--------------
Total Investments 99.7%
(cost $52,250,788; Note 4) 48,110,226
Other assets in excess of liabilities 0.3% 141,868
--------------
Net Assets 100% $ 48,252,094
--------------
--------------
------------------------------
(a) Non-income producing security.
ADR--American Depository Receipt.
PLC--Public Limited Company.
10 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2001 Cont'd.
The industry classification of portfolio holdings and other assets shown as a
percentage of net assets as of October 31, 2001 was as follows:
Electronic Components.................................................. 11.5%
Commercial Banking..................................................... 11.1
Financial Services..................................................... 7.6
Automobiles............................................................ 5.9
Electrical Services.................................................... 5.9
Medical Products & Services............................................ 5.6
Real Estate............................................................ 4.1
Toys................................................................... 3.7
Telecommunications..................................................... 3.4
Computers.............................................................. 3.3
Electronics............................................................ 3.3
Gas Distribution....................................................... 3.2
Office Equipment & Supplies............................................ 3.2
Beverages & Tobacco.................................................... 3.0
Oil-Refining & Marketing............................................... 3.0
Diversified Industries................................................. 2.9
Pharmaceuticals........................................................ 2.1
Airlines............................................................... 1.8
Insurance.............................................................. 1.7
Telephones............................................................. 1.7
Apparel & Textiles..................................................... 1.6
Entertainment.......................................................... 1.5
Diversified Manufacturing.............................................. 1.4
Cosmetics/Toiletries................................................... 1.3
Retail................................................................. 1.3
Food Products & Services............................................... 1.2
Audio/Visual........................................................... 1.0
Photography............................................................ 0.7
Agricultural Sector.................................................... 0.6
Gold Mines............................................................. 0.6
Commercial Services.................................................... 0.5
-----
99.7
Other assets in excess of liabilities.................................. 0.3
-----
100.0%
-----
-----
See Notes to Financial Statements 11
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities
October 31, 2001
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $52,250,788) $ 48,110,226
Foreign currency, at value (cost $494,543) 494,518
Receivable for investments sold 833,161
Receivable for Fund shares sold 441,245
Dividends receivable 89,235
Other assets 6,966
----------------
Total assets 49,975,351
----------------
LIABILITIES
Payable for Fund shares reacquired 591,905
Payable to custodian 526,294
Accrued expenses 294,272
Unrealized depreciation on forward foreign currency contracts 242,632
Management fee payable 32,324
Distribution fee payable 22,445
Withholding taxes payable 13,385
----------------
Total liabilities 1,723,257
----------------
NET ASSETS $ 48,252,094
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 7,223
Paid-in capital in excess of par 93,526,691
----------------
93,533,914
Undistributed net investment income 70,201
Accumulated net realized loss on investments (40,965,453)
Net unrealized depreciation on investments and foreign
currencies (4,386,568)
----------------
Net assets, October 31, 2001 $ 48,252,094
----------------
----------------
12 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities Cont'd.
October 31, 2001
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share
($28,615,091 / 4,192,419 shares of common stock issued
and outstanding) $6.83
Maximum sales charge (5% of offering price) .36
----------------
Maximum offering price to public $7.19
----------------
----------------
Class B:
Net asset value, offering price and redemption price per
share ($16,313,438 / 2,528,049 shares of common stock
issued and outstanding) $6.45
----------------
----------------
Class C:
Net asset value and redemption price per share
($2,176,176 / 335,426 shares of common stock issued and
outstanding) $6.49
Sales charge (1% of offering price) .07
----------------
Offering price to public $6.56
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per
share ($1,147,389 / 167,570 shares of common stock
issued and outstanding) $6.85
----------------
----------------
See Notes to Financial Statements 13
Prudential Pacific Growth Fund, Inc.
Statement of Operations
Year
Ended
October 31, 2001
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $110,585) $ 833,709
Interest 172,524
----------------
Total income 1,006,233
----------------
Expenses
Management fee 516,710
Distribution fee--Class A 87,297
Distribution fee--Class B 288,342
Distribution fee--Class C 30,351
Custodian's fees and expenses 320,000
Transfer agent's fees and expenses 293,000
Reports to shareholders 280,000
Registration fees 84,000
Legal fees and expenses 60,000
Audit fee 36,000
Directors' fees and expenses 14,000
Miscellaneous 3,883
----------------
Total operating expenses 2,013,583
Loan interest expense 8,518
----------------
Total expenses 2,022,101
----------------
Net investment loss (1,015,868)
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on:
Investment transactions (32,496,727)
Foreign currency transactions (635,668)
----------------
(33,132,395)
----------------
Net change in unrealized appreciation/depreciation on:
Investments 12,931,224
Foreign currencies (148,041)
----------------
12,783,183
----------------
Net loss on investments and foreign currencies (20,349,212)
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(21,365,080)
----------------
----------------
14 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Changes in Net Assets
Year Ended October 31,
---------------------------------
2001 2000
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss $ (1,015,868) $ (1,986,791)
Net realized gain (loss) on investments and
foreign currency transactions (33,132,395) 21,037,797
Net change in unrealized
appreciation/depreciation on investments
and foreign currencies 12,783,183 (57,985,506)
---------------- -------------
Net decrease in net assets resulting from
operations (21,365,080) (38,934,500)
---------------- -------------
Dividends and distributions (Note 1):
Dividends from net investment income
Class A -- (553,645)
Class B -- (653,639)
Class C -- (36,696)
Class Z -- (531,713)
---------------- -------------
-- (1,775,693)
---------------- -------------
Distributions in excess of net investment
income
Class A -- (168,626)
Class B -- (396,051)
Class C -- (27,107)
Class Z -- (130,489)
---------------- -------------
-- (722,273)
---------------- -------------
Fund share transactions (net of share
conversions)
(Note 5)
Net proceeds from shares sold 164,362,944 778,873,547
Net asset value of shares issued in
reinvestment of dividends and
distributions -- 2,368,241
Cost of shares reacquired (205,697,807) (836,348,877)
---------------- -------------
Net decrease in net assets from Fund share
transactions (41,334,863) (55,107,089)
---------------- -------------
Total decrease (62,699,943) (96,539,555)
NET ASSETS
Beginning of year 110,952,037 207,491,592
---------------- -------------
End of year(a) $ 48,252,094 $ 110,952,037
---------------- -------------
---------------- -------------
------------------------------
(a) Includes undistributed net investment
income of: $ 70,201 $ --
---------------- -------------
---------------- -------------
See Notes to Financial Statements 15
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements
Prudential Pacific Growth Fund, Inc. (the 'Fund') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund was incorporated in Maryland on August 14, 1991 and commenced
investment operations on July 24, 1992. The investment objective of the Fund is
to seek long-term capital growth by investing primarily in common stocks, common
stock equivalents and other securities of companies doing business in or
domiciled in the Pacific Basin region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange and NASDAQ
National Market System are valued at the last sale price on such exchange system
or, if there was no sale on such day, at the mean between the last bid and asked
prices, or at the bid price in the absence of an asked price. Securities for
which reliable market quotations are not readily available are valued by the
Valuation Committee or Board of Directors in consultation with the manager or
subadviser.
Short-term securities which mature in more than 60 days are valued at
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost.
Repurchase Agreements: In connection with transactions in repurchase
agreements with United States financial institutions, it is the Fund's policy
that its custodian or designated subcustodians under triparty repurchase
agreements, as the case may be, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
Foreign Currency Translation: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the closing rates of exchange;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
16
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the year, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the year. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of portfolio securities sold during
the year. Accordingly, realized foreign currency gains (losses) are included in
the reported net realized gain on investment transactions.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from forward currency contracts, disposition of
foreign currencies, currency gains (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 (losses) from valuing foreign currency denominated assets and liabilities
at year-end exchange rates are reflected as a component of unrealized
appreciation (depreciation) on investments and foreign currencies.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the possibility of political and economic
instability or the level of governmental supervision and regulation of foreign
securities markets.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current forward exchange rates and
any unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments. Gain (loss) is realized on the settlement date of
the contract equal to the difference between the settlement value of the
original and renegotiated forward contracts. This gain (loss), if any, is
included in net realized gain (loss) on foreign currency transactions. Risks may
arise upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains (losses) on sales of
investments 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.
17
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Net investment income (loss) (other than distribution fees) and unrealized
and realized gains (losses) are allocated daily to each class of shares based
upon the relative proportion of net assets of each class at the beginning of the
day.
Dividends and Distributions: The Fund expects to pay dividends of net
investment income and distributions of net realized capital and currency gains,
if any, annually. Dividends and distributions are recorded on the ex-dividend
date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: It is the Fund's policy to continue to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net income and capital gains, if any, to
shareholders. Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends, interest and capital gains have
been provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease net investment loss by $1,515,115, decrease
paid-in capital in excess of par by $1,530,479 and increase accumulated net
realized losses by $15,364 for differences in the treatment for book and tax
purposes of certain transactions involving foreign securities, currencies,
withholding taxes and net operating losses. Net investment income, net realized
gains and net assets were not affected by this change.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. Jennison Associates LLC ('Jennison') provided subadvisory services in
connection with the management of the Fund through May 4, 2001. Effective May 5,
2001, PIFM terminated the subadvisory agreement with Jennison and entered into a
subadvisory agreement with Jardine Fleming International Management, Inc.
('JF'). PIFM paid for the services of Jennison and JF, the compensation of
officers of the
18
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund
bears all other costs and expenses.
The management fee paid to PIFM is computed daily and payable monthly at
an annual rate of .75 of 1% of the average daily net assets of the Fund.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
Class B, Class C and Class Z shares of the Fund. The Fund compensates PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution, (the 'Class A, Class B and Class C Plans'),
regardless of expenses actually incurred by them. The distribution fees are
accrued daily and payable monthly. No distribution or service fees are paid to
PIMS as distributor of the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Class A, Class B and Class C Plans were .25%, 1% and 1%,
respectively, of the average daily net assets of the Class A, Class B and Class
C shares for the year ended October 31, 2001.
PIMS has advised the Fund that it received approximately $25,100 and
$28,500 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended October 31, 2001. From these fees,
PIMS paid such sales charges to dealers, which in turn paid commissions to
salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the year ended October 31, 2001, it
received approximately $81,100 and $37,900 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIMS, PIFM and Jennison are indirect, wholly-owned subsidiaries of The
Prudential Insurance Company of America ('Prudential'). Effective November 1,
2001, PIFM's name changed to Prudential Investments LLC.
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PIFM and an
indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer
agent. During the year ended October 31, 2001, the Fund incurred fees of
approximately $256,400 for the services of PMFS. As of October 31, 2001,
approximately $19,700 of such fees were due to PMFS. Transfer agent fees and
expenses in the statement of operations include certain out-of-pocket expenses
paid to nonaffiliates.
19
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 2001 were $101,278,729 and $124,760,622,
respectively.
At October 31, 2001, the Fund had outstanding forward currency contracts,
both to purchase and sell foreign currencies, as follows:
Forward Currency Value at Current Appreciation
Contracts Settlement Date Value (Depreciation)
----------------------------------- --------------- ---------- --------------
Purchased:
Japanese Yen,
expiring 12/13/01 $ 7,742,632 $7,405,247 $ (337,385)
Sold:
Japanese Yen,
expiring 12/13/01 7,500,000 7,405,247 94,753
--------------
$ (242,632)
--------------
--------------
The United States federal income tax basis of the Fund's investments at
October 31, 2001 was $52,928,456 and accordingly, net unrealized depreciation
for United States federal income tax purposes was $4,818,230 (gross unrealized
appreciation--$1,238,084; gross unrealized depreciation--$6,056,314).
For federal income tax purposes, the Fund had a capital loss carryforward
as of October 31, 2001 of approximately $40,447,000 of which $6,178,000 expires
in 2006 and $34,269,000 expires in 2009. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net gains have been
realized in excess of such carryforward.
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with an initial sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending upon
the period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to a limited group of
investors.
20
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
The Fund has authorized 2 billion shares of common stock at $.001 par
value per share divided into four classes, designated Class A, Class B, Class C
and Class Z common stock each consisting of 500 million authorized shares.
Transactions in shares of common stock for the year ended October 31, 2001
and 2000 were as follows:
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
Year ended October 31, 2001:
Shares sold 11,654,875 $ 97,997,818
Shares reacquired (14,423,772) (124,923,380)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (2,768,897) (26,925,562)
Shares issued upon conversion from Class B 1,792,668 15,404,950
----------- -------------
Net increase (decrease) in shares outstanding (976,229) $ (11,520,612)
----------- -------------
----------- -------------
Year ended October 31, 2000:
Shares sold 32,808,321 $ 431,759,479
Shares issued in reinvestment of dividends and
distributions 43,973 661,353
Shares reacquired (32,235,077) (433,292,743)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion 617,217 (871,911)
Shares issued upon conversion from Class B 1,030,547 13,967,680
----------- -------------
Net increase (decrease) in shares outstanding 1,647,764 $ 13,095,769
----------- -------------
----------- -------------
Class B
----------------------------------------------------------
Year ended October 31, 2001:
Shares sold 2,543,492 $ 20,766,403
Shares reacquired (3,609,714) (29,821,278)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (1,066,222) (9,054,875)
Shares reacquired upon conversion into Class A (1,887,063) (15,404,950)
----------- -------------
Net increase (decrease) in shares outstanding (2,953,285) $ (24,459,825)
----------- -------------
----------- -------------
Year ended October 31, 2000:
Shares sold 4,933,017 $ 65,826,119
Shares issued in reinvestment of dividends and
distributions 68,317 993,335
Shares reacquired (6,432,158) (85,696,361)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (1,430,824) (18,876,907)
Shares reacquired upon conversion into Class A (1,070,390) (13,967,680)
----------- -------------
Net increase (decrease) in shares outstanding (2,501,214) $ (32,844,587)
----------- -------------
----------- -------------
21
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Class C Shares Amount
---------------------------------------------------------- ----------- -------------
Year ended October 31, 2001:
Shares sold 2,255,670 $ 18,222,589
Shares reacquired (2,569,425) (21,177,108)
----------- -------------
Net increase (decrease) in shares outstanding (313,755) $ (2,954,519)
----------- -------------
----------- -------------
Year ended October 31, 2000:
Shares sold 4,706,959 $ 60,275,256
Shares issued in reinvestment of dividends and
distributions 3,740 54,374
Shares reacquired (4,585,381) (59,671,718)
----------- -------------
Net increase (decrease) in shares outstanding 125,318 $ 657,912
----------- -------------
----------- -------------
Class Z
----------------------------------------------------------
Year ended October 31, 2001:
Shares sold 3,351,409 $ 27,376,134
Shares reacquired (3,570,222) (29,776,041)
----------- -------------
Net increase (decrease) in shares outstanding (218,813) $ (2,399,907)
----------- -------------
----------- -------------
Year ended October 31, 2000:
Shares sold 15,766,846 $ 221,012,693
Shares issued in reinvestment of dividends and
distributions 43,538 659,179
Shares reacquired (18,491,425) (257,688,055)
----------- -------------
Net increase (decrease) in shares outstanding (2,681,041) $ (36,016,183)
----------- -------------
----------- -------------
Note 6. Borrowings
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $930 million.
Interest on any such borrowings will be at market rates. The Funds pay a
commitment fee of .080 of 1% of the unused portion of the credit facility. The
commitment fee is accrued and paid quarterly on a pro rata basis by the Funds.
The expiration date of the SCA is March 4, 2002. Prior to March 9, 2001, the
maximum commitment was $1 billion and the commitment fee was .080 of 1% of the
unused portion of the credit facility. Effective September 14, 2001, the
commitment under the SCA was increased from $500 million to $930 million through
December 31, 2001. Effective January 1, 2002, the commitment will be reduced to
$500 million. All other terms and conditions are unchanged. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions.
The Fund utilized the line of credit during the year ended October 31,
2001. The average daily balance the Fund had outstanding during the year was
approximately $148,952 at a weighted average interest rate of approximately
5.72%.
22
Prudential Pacific Growth Fund, Inc.
Financial
Highlights
Prudential Pacific Growth Fund, Inc.
Financial Highlights
Class A(a)
----------------
Year Ended
October 31, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.70
--------
Income from investment operations
Net investment income (loss) (.09)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (2.78)
--------
Total from investment operations (2.87)
--------
Less distributions
Distributions from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of year $ 6.83
--------
--------
TOTAL RETURN(b) (29.59)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 28,615
Average net assets (000) $ 34,919
Ratios to average net assets:
Total expenses(c) 2.60%
Operating expenses, including distribution and service
(12b-1) fees(c) 2.58%
Operating expenses, excluding distribution and service
(12b-1) fees 2.33%
Net investment income (loss) (1.12)%
For Class A, B, C and Z shares:
Portfolio turnover rate 158%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
(c) The Distributor of the Fund agreed to limit its distribution fees to .25 of
1% of the average daily net assets of the Class A shares.
24 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class A(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2000 1999 1998 1997
-------------------------------------------------------------------------------------
$ 14.01 $ 9.14 $ 12.22 $ 15.86
-------- -------- -------- --------
(.09) (.04) .06 .02
(4.01) 4.99 (1.88) (3.31)
-------- -------- -------- --------
(4.10) 4.95 (1.82) (3.29)
-------- -------- -------- --------
(.16) (.08) -- --
(.05) -- (.40) --
-- -- (.86) (.35)
-------- -------- -------- --------
(.21) (.08) (1.26) (.35)
-------- -------- -------- --------
$ 9.70 $ 14.01 $ 9.14 $ 12.22
-------- -------- -------- --------
-------- -------- -------- --------
(29.82)% 55.11% (15.53)% (21.32)%
$ 50,141 $ 49,338 $ 22,624 $ 35,860
$ 53,389 $ 31,281 $ 26,845 $ 73,942
1.60% 1.72% 1.70% 1.48%
1.57% 1.72% 1.70% 1.42%
1.32% 1.47% 1.45% 1.17%
(.70)% (.34)% .63% .14%
93% 104% 94% 81%
See Notes to Financial Statements 25
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class B(a)
----------------
Year Ended
October 31, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.30
----------------
Income from investment operations
Net investment loss (.15)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (2.70)
----------------
Total from investment operations (2.85)
----------------
Less distributions
Distributions from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
----------------
Total distributions --
----------------
Net asset value, end of year $ 6.45
----------------
----------------
TOTAL RETURN(b) (30.72)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 16,314
Average net assets (000) $ 28,834
Ratios to average net assets:
Total expenses 3.35%
Operating expenses, including distribution and service
(12b-1) fees 3.33%
Operating expenses, excluding distribution and service
(12b-1) fees 2.33%
Net investment loss (1.90)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
26 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class B(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2000 1999 1998 1997
-------------------------------------------------------------------------------------
$ 13.50 $ 8.79 $ 11.77 $ 15.40
-------- ---------------- -------- ----------------
(.19) (.12) (.01) (.09)
(3.87) 4.84 (1.82) (3.19)
-------- ---------------- -------- ----------------
(4.06) 4.72 (1.83) (3.28)
-------- ---------------- -------- ----------------
(.09) (.01) -- --
(.05) -- (.29) --
-- -- (.86) (.35)
-------- ---------------- -------- ----------------
(.14) (.01) (1.15) (.35)
-------- ---------------- -------- ----------------
$ 9.30 $ 13.50 $ 8.79 $ 11.77
-------- ---------------- -------- ----------------
-------- ---------------- -------- ----------------
(30.40)% 54.28% (16.32)% (21.84)%
$ 51,004 $107,769 $ 74,457 $128,694
$ 96,019 $ 85,193 $ 91,983 $244,462
2.35% 2.47% 2.45% 2.23%
2.32% 2.47% 2.45% 2.17%
1.32% 1.47% 1.45% 1.17%
(1.43)% (1.09)% (.12)% (.61)%
See Notes to Financial Statements 27
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class C(a)
----------------
Year Ended
October 31, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.30
-------
Income from investment operations
Net investment loss (.15)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (2.66)
-------
Total from investment operations (2.81)
-------
Less distributions
Distributions from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
-------
Total distributions --
-------
Net asset value, end of year $ 6.49
-------
-------
TOTAL RETURN(b) (30.29)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $2,176
Average net assets (000) $3,035
Ratios to average net assets:
Total expenses 3.35%
Operating expenses, including distribution and service
(12b-1) fees 3.33%
Operating expenses, excluding distribution and service
(12b-1) fees 2.33%
Net investment loss (1.90)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the year.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
28 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class C(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2000 1999 1998 1997
-------------------------------------------------------------------------------------
$13.50 $ 8.79 $11.77 $15.40
------- ------- ------- -------
(.19) (.12) (.01) (.09)
(3.87) 4.84 (1.82) (3.19)
------- ------- ------- -------
(4.06) 4.72 (1.83) (3.28)
------- ------- ------- -------
(.09) (.01) -- --
(.05) -- (.29) --
-- -- (.86) (.35)
------- ------- ------- -------
(.14) (.01) (1.15) (.35)
------- ------- ------- -------
$ 9.30 $13.50 $ 8.79 $11.77
------- ------- ------- -------
------- ------- ------- -------
(30.40)% 54.28% (16.32)% (21.84)%
$6,040 $7,073 $1,654 $2,932
$7,376 $3,103 $2,276 $6,557
2.35% 2.47% 2.45% 2.23%
2.32% 2.47% 2.45% 2.17%
1.32% 1.47% 1.45% 1.17%
(1.42)% (1.09)% (.12)% (.61)%
See Notes to Financial Statements 29
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class Z(a)
----------------
Year Ended
October 31, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.75
--------
Income from investment operations
Net investment income (loss) (.07)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (2.83)
--------
Total from investment operations (2.90)
--------
Less distributions
Distributions from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of year $ 6.85
--------
--------
TOTAL RETURN(b) (29.89)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 1,147
Average net assets (000) $ 2,107
Ratios to average net assets:
Total expenses 2.35%
Operating expenses 2.33%
Net investment income (loss) (.86)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
30 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class Z(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------
2000 1999 1998 1997
-------------------------------------------------------------------------------------
$ 14.12 $ 9.17 $ 12.28 $ 15.89
-------- -------- -------- --------
(.06) -- .08 .06
(4.08) 5.06 (1.89) (3.32)
-------- -------- -------- --------
(4.14) 5.06 (1.81) (3.26)
-------- -------- -------- --------
(.18) (.11) -- --
(.05) -- (.44) --
-- -- (.86) (.35)
-------- -------- -------- --------
(.23) (.11) (1.30) (.35)
-------- -------- -------- --------
$ 9.75 $ 14.12 $ 9.17 $ 12.28
-------- -------- -------- --------
-------- -------- -------- --------
(29.75)% 56.05% (15.36)% (21.02)%
$ 3,767 $ 43,311 $ 12,429 $ 19,520
$ 33,479 $ 22,811 $ 15,099 $ 31,945
1.35% 1.47% 1.45% 1.23%
1.32% 1.47% 1.45% 1.17%
(.40)% (.03)% .82% .39%
See Notes to Financial Statements 31
Prudential Pacific Growth Fund, Inc.
Report of Independent Accountants
To the Shareholders and Board of Directors of
Prudential Pacific Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Pacific Growth Fund,
Inc. (the 'Fund') at October 31, 2001, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 2001 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 18, 2001
32
Prudential Pacific 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.
Prudential Pacific 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.
PRUDENTIAL MUTUAL FUNDS
-----------------------------------------------------
Stock Funds
Large Capitalization Stock Funds
Prudential 20/20 Focus Fund
Prudential Equity Fund, Inc.
Prudential Index Series Fund
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth 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.
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
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
Balanced/Allocation Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
Bond Funds
Taxable Bond Funds
Prudential Government Income Fund, Inc.
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.
Municipal Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
www.PruFN.com (800) 225-1852
Prudential Municipal Series Fund
Florida Series
New Jersey Series
New York Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global/International Bond Fund
Prudential Global Total Return 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.
Municipal Money Market Funds
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
New Jersey Money Market Series
New York Money Market Series
Tax-Free Money Market Funds
Command Tax-Free Fund
Prudential Tax-Free Money Fund, Inc.
Other Money Market Funds
Command Government Fund
Command Money Fund
Special Money Market Fund, Inc.*
Money Market Series
STRATEGIC PARTNERS
MUTUAL FUNDS**
Strategic Partners Asset Allocation Funds
Strategic Partners Conservative Growth Fund
Strategic Partners Moderate Growth Fund
Strategic Partners High Growth Fund
Strategic Partners Style Specific Funds
Strategic Partners
Large Capitalization Growth Fund
Strategic Partners
Large Capitalization Value Fund
Strategic Partners
Small Capitalization Growth Fund
Strategic Partners
Small Capitalization Value Fund
Strategic Partners
International Equity Fund
Strategic Partners
Total Return Bond Fund
Strategic Partners Opportunity Funds
Strategic Partners Focused Growth Fund
Strategic Partners New Era Growth Fund
Strategic Partners Focused Value Fund
Special Money Market Fund, Inc.*
Money Market Series
* This Fund is not a direct purchase money
fund and is only an exchangeable money
fund.
**Not exchangeable with the Prudential
mutual funds.
Prudential Pacific Growth Fund, Inc.
Getting the Most from Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read
this--they don't read annual and semiannual
reports. It's quite understandable. These annual
and semiannual reports are prepared to comply
with federal regulations, and are often
written in language that is difficult to
understand. So when most people run into
those particularly daunting sections of
these reports, they don't read them.
WE THINK THAT'S A MISTAKE
At Prudential, we've made some changes to
our mutual funds report to make it easier
to understand and more pleasant to read.
We hope you'll find it profitable to spend
a few minutes familiarizing yourself with your
investment. Here's what you'll find in the
report:
PERFORMANCE AT A GLANCE
Since an investment's performance is often
a shareholder's primary concern, we
present performance information in two
different formats. You'll find it first on
the "Performance at a Glance" page where
we compare the Fund and the comparable
average calculated by Lipper, Inc., a
nationally recognized mutual fund rating
agency. We report both the cumulative
total returns and the average annual total
returns. The cumulative total return is
the total amount of income and
appreciation the Fund has achieved in
various time periods. The average annual
total return is an annualized
representation of the Fund's performance.
It gives you an idea of how much the Fund
has earned in an average year for a given
time period. Under the performance box,
you'll see legends that explain the
performance information, whether fees and
sales charges have been included in the
returns, and the inception dates for the
Fund's share classes.
See the performance comparison charts at
the back of the report for more
performance information. Please keep in
mind that past performance is not
indicative of future results.
www.PruFN.com (800) 225-1852
INVESTMENT ADVISER'S REPORT
The portfolio manager, who invests your
money for you, reports on successful--
and not-so-successful--strategies in this
section of your report. Look for recent
purchases and sales here, as well as
information about the sectors the portfolio
manager favors, and any changes that are on
the drawing board.
PORTFOLIO OF INVESTMENTS
This is where the report begins to appear
technical, but it's really just a
listing of each security held at the end
of the reporting period, along with
valuations and other information. Please
note that sometimes we discuss a security
in the "Investment Adviser's Report"
section that doesn't appear in this
listing, because it was sold before the
close of the reporting period.
STATEMENT OF ASSETS AND LIABILITIES
The balance sheet shows the assets (the
value of the Fund's holdings), liabilities
(how much the Fund owes), and net assets
(the Fund's equity or holdings after the
Fund pays its debts) as of the end of the
reporting period. It also shows how we
calculate the net asset value per share
for each class of shares. The net asset
value is reduced by payment of your
dividend, capital gain, or other
distribution--but remember that the money
or new shares are being paid or issued to
you. The net asset value fluctuates daily,
along with the value of every security in
the portfolio.
STATEMENT OF OPERATIONS
This is the income statement, which
details income (mostly interest and
dividends earned) and expenses (including
what you pay us to manage your money).
You'll also see capital gains here--both
realized and unrealized.
Prudential Pacific Growth Fund, Inc.
Getting the Most from Your Prudential Mutual Fund
STATEMENT OF CHANGES IN NET ASSETS
This schedule shows how income and
expenses translate into changes in
net assets. The Fund is required to pay
out the bulk of its income to shareholders
every year, and this statement shows you
how we do it (through dividends and
distributions) and how that affects the
net assets. This statement also shows how
money from investors flowed into and out of the Fund.
NOTES TO FINANCIAL STATEMENTS
This is the kind of technical material
that can intimidate readers, but it does
contain useful information. The notes
provide a brief history and explanation of
your Fund's objectives. In addition, they
outline how Prudential mutual funds prices
securities. The notes also explain who
manages and distributes the Fund's shares and,
more important, how much they are paid for
doing so. Finally, the notes explain how
many shares are outstanding and the number
issued and redeemed over the period.
FINANCIAL HIGHLIGHTS
This information contains many elements
from prior pages, but on a per-share basis.
It is designed to help you understand how the
Fund performed, and to compare this year's
performance and expenses to those of prior
years.
INDEPENDENT ACCOUNTANT'S REPORT
Once a year, an independent accountant
looks over our books and certifies that
the financial statements are fairly
presented in accordance with generally
accepted accounting principles.
TAX INFORMATION
This is information that we report
annually about how much of your total
return is taxable. Should you have any
questions, you may want to consult a tax
adviser.
www.PruFN.com (800) 225-1852
PERFORMANCE COMPARISON
These charts are included in the annual
report and are required by the Securities
Exchange Commission. Performance is
presented here as the return on a
hypothetical $10,000 investment in the
Fund since its inception or for 10 years
(whichever is shorter). To help you put
that return in context, we are required to
include the performance of an unmanaged,
broad-based securities index as well. The
index does not reflect the cost of buying
the securities it contains or the cost of
managing a mutual fund. Of course, the
index holdings do not mirror those of the
Fund--the index is a broad-based reference
point commonly used by investors to
measure how well they are doing. A
definition of the selected index is also
provided. Investors cannot invest directly
in an index.
Prudential Pacific Growth Fund, Inc.
Class A Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/01
One Year Five Years Since Inception
With Sales Charge -33.11% -13.51% -2.43%
Without Sales Charge -29.59% -12.62% -1.89%
Past performance is not indicative of
future results. Principal and investment
return will fluctuate so that an
investor's shares, when redeemed, may be
worth more or less than their original
cost. The best- and worst-year information
within the graph is designed to give you
an idea of how much the Fund's returns can
fluctuate from year to year by measuring
the best and worst calendar years in terms
of total annual return since inception of
the share class. The graph compares a
$10,000 investment in the Prudential
Pacific Growth Fund, Inc. (Class A shares)
with a similar investment in the Morgan
Stanley Capital International All Country
Asia Pacific Index (MSCI AC Asia Pacific
Index) and the Morgan Stanley Capital
International All Country Asia Pacific
Free Gross Index (MSCI AC Asia Pacific
Free Gross Index) by portraying the
initial account values at the commencement
of operations of Class A shares (July 24,
1992) and the account values at the end of
the current fiscal year (October 31,
2001), as measured on a quarterly basis.
For purposes of the graph, and unless
otherwise indicated, it has been assumed
that (a) the maximum applicable front-end
sales charge was deducted from the initial
$10,000 investment in Class A shares; (b)
all recurring fees (including management
fees) were deducted; and (c) all dividends
and distributions were reinvested. The
average annual total returns in the table
and the returns on investment in the graph
do not reflect the deduction of taxes that
a shareholder would pay on fund
distributions or following the redemption
of fund shares.
Investors cannot invest directly in an index.
This graph is furnished to you in
accordance with Securities and Exchange
Commission (SEC) regulations.
See the page following these charts for an
explanation of the indexes.
www.PruFN.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/01
One Year Five Years Since Inception
With Sales Charge -34.18% -13.57% -2.70%
Without Sales Charge -30.72% -13.42% -2.70%
Past performance is not indicative of
future results. Principal and investment
return will fluctuate so that an
investor's shares, when redeemed, may be
worth more or less than their original
cost. The best- and worst-year information
within the graph is designed to give you
an idea of how much the Fund's returns can
fluctuate from year to year by measuring
the best and worst calendar years in terms
of total annual return since inception of
the share class. The graph compares a
$10,000 investment in the Prudential
Pacific Growth Fund, Inc. (Class B shares)
with a similar investment in the Morgan
Stanley Capital International All Country
Asia Pacific Index (MSCI AC Asia Pacific
Index) and the Morgan Stanley Capital
International All Country Asia Pacific
Free Gross Index (MSCI AC Asia Pacific
Free Gross Index) by portraying the
initial account values at the commencement
of operations of Class B shares (July 24,
1992) and the account values at the end of
the current fiscal year (October 31,
2001), as measured on a quarterly basis.
For purposes of the graph, and unless
otherwise indicated, it has been assumed
that (a) the maximum applicable contingent
deferred sales charge was deducted from
the value of the investment in Class B
shares, assuming full redemption on
October 31, 2001; (b) all recurring fees
(including management fees) were deducted;
and (c) all dividends and distributions
were reinvested. Approximately seven years
after purchase, Class B shares will
automatically convert to Class A shares on
a quarterly basis. The average annual
total returns in the table and the returns
on investment in the graph do not reflect
the deduction of taxes that a shareholder
would pay on fund distributions or
following the redemption of fund shares.
Investors cannot invest directly in an index.
This graph is furnished to you in
accordance with Securities and Exchange
Commission (SEC) regulations.
See the page following these charts for an
explanation of the indexes.
Prudential Pacific Growth Fund, Inc.
Class C Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/01
One Year Five Years Since Inception
With Sales Charge -31.68% -13.48% -10.26%
Without Sales Charge -30.29% -13.31% -10.13%
Past performance is not indicative of
future results. Principal and investment
return will fluctuate so that an
investor's shares, when redeemed, may be
worth more or less than their original
cost. The best- and worst-year information
within the graph is designed to give you
an idea of how much the Fund's returns can
fluctuate from year to year by measuring
the best and worst calendar years in terms
of total annual return since inception of
the share class. The graph compares a
$10,000 investment in the Prudential
Pacific Growth Fund, Inc. (Class C shares)
with a similar investment in the Morgan
Stanley Capital International All Country
Asia Pacific Index (MSCI AC Asia Pacific
Index) and the Morgan Stanley Capital
International All Country Asia Pacific
Free Gross Index (MSCI AC Asia Pacific
Free Gross Index) by portraying the
initial account values at the commencement
of operations of Class C shares (August 1,
1994) and the account values at the end of
the current fiscal year (October 31,
2001), as measured on a quarterly basis.
For purposes of the graph, and unless
otherwise indicated, it has been assumed
that (a) the applicable front-end sales
charge was deducted from the initial
$10,000 investment in Class C shares; (b)
the applicable contingent deferred sales
charge was deducted from the value of the
investment in Class C shares, assuming
full redemption on October 31, 2001; (c)
all recurring fees (including management
fees) were deducted; and (d) all dividends
and distributions were reinvested. The
average annual total returns in the table
and the returns on investment in the graph
do not reflect the deduction of taxes that
a shareholder would pay on fund
distributions or following the redemption
of fund shares.
Investors cannot invest directly in an index.
This graph is furnished to you in
accordance with Securities and Exchange
Commission (SEC) regulations.
See the page following these charts for an
explanation of the indexes.
www.PruFN.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/01
One Year Five Years Since Inception
-29.89% -12.47% -11.73%
Past performance is not indicative of
future results. Principal and investment
return will fluctuate so that an
investor's shares, when redeemed, may be
worth more or less than their original
cost. The best- and worst-year information
within the graph is designed to give you
an idea of how much the Fund's returns can
fluctuate from year to year by measuring
the best and worst calendar years in terms
of total annual return since inception of
the share class. The graph compares a
$10,000 investment in the Prudential
Pacific Growth Fund, Inc. (Class Z shares)
with a similar investment in the Morgan
Stanley Capital International All Country
Asia Pacific Index (MSCI AC Asia Pacific
Index) and the Morgan Stanley Capital
International All Country Asia Pacific
Free Gross Index (MSCI AC Asia Pacific
Free Gross Index) by portraying the
initial account values at the commencement
of operations of Class Z shares (March 1,
1996) and the account values at the end of
the current fiscal year (October 31,
2001), as measured on a quarterly basis.
For purposes of the graph, and unless
otherwise indicated, it has been assumed
that (a) all recurring fees (including
management fees) were deducted, and (b)
all dividends and distributions were
reinvested. Class Z shares are not subject
to a sales charge or distribution and
service (12b-1) fees. The average annual
total returns in the table and the returns
on investment in the graph do not reflect
the deduction of taxes that a shareholder
would pay on fund distributions or
following the redemption of fund shares.
Investors cannot invest directly in an index.
This graph is furnished to you in
accordance with Securities and Exchange
Commission (SEC) regulations.
See the page following these charts for an
explanation of the indexes.
Prudential Pacific Growth Fund, Inc.
Growth of a $10,000 Investment Additional Footnotes
Explanation of the MSCI Indexes portrayed
in the Growth of a $10,000 Investment
graphs for Classes
A, B, C, and Z.
The MSCI AC Asia Pacific Index was the
Fund's benchmark until the close of
October 31, 2001. MSCI discontinued
selected regional composite indexes that
included emerging market country indexes
constructed from the viewpoint of the
domestic investor. Our former benchmark
now has a corresponding index, the MSCI AC
Asia Pacific Free Gross Index, that will
continue to be the Fund's benchmark from
October 31, 2001 forward. Per MSCI, the
decision to discontinue the selected
regional Emerging Market and All Country
Indexes was motivated by a lack of client
interest, as well as the transition of the
MSCI Standard Equity Index Series to the
MSCI Enhanced Methodology.
The Fund's benchmark going forward, the
MSCI AC Asia Pacific Free Gross Index, is
a weighted, unmanaged index comprising
approximately 950 securities listed on the
stock exchanges of Australia, Hong Kong,
Japan, Malaysia, Singapore, Indonesia, Sri
Lanka, China (free), Pakistan, Taiwan,
India, Korea, the Philippines, and
Thailand. The MSCI AC Asia Pacific Free
Gross Index portrayed in our graphs in the
preceding pages for Classes A, B, C, and Z
includes the reinvestment of dividends, is
gross of foreign withholding taxes, and
does not include the effect of sales
charges or operating expenses of a mutual
fund. The securities that comprise the
MSCI AC Asia Pacific Free Gross Index may
differ substantially from the securities
in the Fund. The MSCI AC Asia Pacific Free
Gross Index is not the only one that may
be used to characterize performance of
international stock funds. Other indexes
may portray different comparative
performance.
FOR MORE INFORMATION
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Visit Prudential's website at:
www.PruFN.com
DIRECTORS
Delayne Dedrick Gold
Robert F. Gunia
Robert E. La Blanc
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
Judy A. Rice, Vice President
Grace C. Torres, Treasurer
Jonathan D. Shain, Secretary
William V. Healey, Assistant Secretary
MANAGER
Prudential Investments LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
INVESTMENT ADVISER
JF International Management Limited
46th Floor, Jardine House
1 Connaught Place, Central
Hong Kong
DISTRIBUTOR
Prudential Investment
Management Services LLC
Gateway Center Three, 14th Floor
Newark, NJ 07102-4077
CUSTODIAN
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
TRANSFER AGENT
Prudential Mutual Fund Services LLC
P.O. Box 8098
Philadelphia, PA 19101
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Fund Symbols Nasdaq CUSIP
Class A PRPAX 743941106
Class B PRPBX 743941205
Class C PRPCX 743941304
Class Z PPGZX 743941403
MF157E IFS-A067692