SEMIANNUAL REPORT APRIL 30, 2001
Prudential
Pacific Growth Fund, Inc.
Fund Type Global/International 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)
Prudential Financial is a service mark of Prudential, Newark,
NJ, and its affiliates.
Build on the Rock
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 4/30/01
52.4% Japan
13.2 Hong Kong
12.5 Taiwan
6.4 Singapore
5.5 Korea
4.4 India
1.6 Other Asia
0.4 Australia
3.6 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 4/30/01
3.8% NTT DoCoMo, Inc.
Telecommunications
3.2 Samsung Electronics
Electronics
2.7 Tokyo Electron, Ltd.
Electronic Components
2.6 Cheung Kong (Holdings), Ltd.
Real Estate
2.3 China Telecom, Ltd.
Telecommunications
2.3 Hutchison Whampoa, Ltd.
Diversified Industries
2.1 United Microelectronics Corp., Ltd.
Electronic Components
2.1 Sumitomo Bakelite Co., Ltd.
Chemicals
2.1 Sony Corp.
Audio/Visual
2.1 Infosys Technologies, Ltd.
Computer Software & Services
Holdings are subject to change.
www.PruFN.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 4/30/01
Six One Five Since
Months Year Years Inception2
Class A -14.02% -41.60% -42.44% 2.29%
Class B -14.93 -42.48 -44.87 -4.70
Class C -14.39 -42.12 -44.52 -43.42
Class Z -14.64 -42.08 -42.04 -40.00
Lipper Pacific
Region Fund
Avg.3 -11.68 -29.66 -23.90 ***
Average Annual Total Returns1 As of 3/31/01
One Five Since
Year Years Inception2
Class A -50.84% -11.34% -0.59%
Class B -54.08 -11.53 -0.82
Class C -50.26 -11.27 -8.64
Class Z -48.65 -10.29 -9.97
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or less
than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns do
take into account applicable sales charges. The Fund charges a
maximum front-end sales charge of 5% for Class A shares.
Class B shares are subject to a declining contingent deferred
sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and 1% for six
years. Class B shares will automatically convert to Class A
shares, on a quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end sales
charge of 1% and a CDSC of 1% for 18 months. Class Z shares
are not subject to a sales charge or distribution and service
(12b-1) fees.
2 Inception dates: Class A and B, 7/24/92; Class C, 8/1/94;
Class Z, 3/1/96.
3 Lipper average returns are unmanaged and are based on the
average return for all funds in each share class for the six-
month, one-, and five-year periods in the Pacific Region Fund
category. Pacific Region funds concentrate investments in
equity securities with primary trading markets or operations
concentrated in the Western Pacific Basin or a single country
within this region.
***Lipper Since Inception returns are 46.47% for Class A and
B, -19.49% for Class C, and -18.83% for Class Z, based on all
funds in each share class.
1
(LOGO) June 15, 2001
Dear Shareholder,
In the worst market for growth stocks in several decades, the
Prudential Pacific Growth Fund's Class A shares returned -
14.02% over the six months ended April 30, 2001, -18.32% to
those paying the maximum one-time Class A share sales charge.
This was somewhat below the Lipper Pacific Region Fund
Average, the Fund's peer-group benchmark. The poor performance
of the Fund's Japanese stocks was the primary reason for the
decline. The Japanese yen fell 12% over this period,
accounting for a significant part of the negative return. In
addition, the Fund's growth investing style, particularly its
focus on telecommunications and technology stocks, detracted
from its performance.
After a thorough investigation by its investment management
research team, Prudential has assigned day-to-day management
of the Fund to Jardine Fleming International Management, Inc.
Jardine Fleming assumed management on May 5, 2001.
Historically, market favor has swung back and forth between
investment styles, and it turned sharply after a long run of
growth-style outperformance. Since we see no reason for the
long-term historical pattern of swings in market favor to
stop, we expect the growth style to eventually have its turn
on top once again. In addition, after their steep decline over
the past 12 months, Pacific Region stocks have become quite
inexpensive. Although no one has proved able to consistently
predict when changes in a market will come, current prices
appear to have absorbed the more pessimistic scenarios.
Sincerely,
David R. Odenath, Jr., President
Prudential Pacific Growth Fund, Inc.
2
Prudential Pacific Growth Fund, Inc.
Semiannual Report April 30, 2001
Investment Adviser's Report
THE FALLING YEN MADE THINGS WORSE
We had a much smaller exposure to Japan than the Morgan
Stanley Capital International Pacific Index (MSCI Pacific
Index), but the Fund's return on that portion of its portfolio
was poor. In general, the economic situation in Japan was
stagnant for most of the six-month reporting period. Although
Japanese stocks began to rise in mid-March with the prospect
that Junichiro Koizumi--a reform-minded politician who was not
part of the ruling clique--would be selected Prime Minister,
they had fallen through most of the period. The 12% decline of
the yen against the dollar over the period exacerbated the
impact on U.S. dollar-based investors of a moderately falling
stock market.
Some of the Fund's holdings in Japan declined with the global
fall of telecommunications stocks (see below). However, in
addition to the telecommunications-related investments, we had
particularly large negative impacts from TDK and Ryohin
Keikaku.
TDK makes parts for computer hard disk drives. Its earnings
have been under pressure due to the declining global demand
for computers and because it has been losing market share in
magnetic tape and tape-reading heads. Ryohin Keikaku is a
retail clothing chain specializing in its house-brand
products, which it originally sold through other retailers as
a generic private brand. Sales have been increasing since its
1996 fiscal year, and earnings grew from 1996 until 2001 when
there was a drop. Although the firm is part of the new-
style value-oriented Japanese economy, it couldn't fight the
broader economic environment and the market's strong aversion
to bad earnings news.
United Arrows, too, is a modern-style retailer that
specializes in European/American fashions and its own
inexpensive house-brand equivalents. It has seen increasing
sales since its 1998 fiscal year. The company's shares had a
very large decline in our last reporting period, but recovered
part of the loss in this period when the shares more than
doubled, resulting in one of the largest positive
contributions to the Fund's return.
3
Prudential Pacific Growth Fund, Inc.
Semiannual Report April 30, 2001
We believe that many Japanese companies are cash-rich, and
their stocks are very inexpensive. In our view, the
probability of major change is low, but the potential pay-off,
should it happen, is very high. We added some Japanese stocks
to the Fund's holdings, including Sanyo Electric and Nintendo,
both consumer-oriented companies. We sold Nippon Telegraph &
Telephone and reduced our position in Sony.
TELECOMMUNICATIONS-RELATED STOCKS CORRECTED
Over the past few years, there were extraordinary growth
opportunities for firms in the telecommunications equipment
and service industries. Their stocks were swept up to fairly
expensive levels in a general wave of enthusiasm, and they
were punished during our reporting period as investors
indiscriminately fled technology and telecommunications
stocks.
In retrospect, we can see that the rapid growth of technology
firms' sales and profits at the end of the 1990s, together
with the ready availability of funds through new stock issues,
led to investment in too much production capacity. Moreover,
the occasional shortages of components in 1999 led some firms
to allow their inventories to build up in 2000. Then, higher
interest rates in the United States, higher energy costs
globally, and a period in which companies digested their
earlier investments in technology upgrades all worked to slow
the technology manufacturing sector of the global economy.
What followed was a drop-off in business of a suddenness that
was unprecedented in our long experience and in the experience
of the managers of many of these companies. The slowdown
caught everyone by surprise. Inventories were high and demand
was minimal. The profits of Pacific area suppliers to U.S.
companies were affected, while share prices generally followed
the U.S. pattern of a steep, telecommunications- and
technology-led decline. This followed the decline in Internet-
related stocks, which were the "bubbliest" in the "new
economy" bull market.
4
www.PruFN.com (800) 225-1852
OUR TELECOMMUNICATIONS FOCUS HURT
Telecommunications-related companies--both service providers
and equipment manufacturers--accounted for many of the stocks
that hurt the Fund's return the most. We think the shares of
some of our holdings became somewhat expensive during the wave
of enthusiasm for these stocks in 1999 and the first quarter
of 2000. As a result of declining profit expectations, share
prices of growth companies gradually declined through much of
the year 2000. At first, earnings fell faster than share
prices, and then--in the last months of 2000 and the first
quarter of 2001--growth expectations fell,
driving down the prices of technology and telecommunications
stocks.
NTT DoCoMo, the most prominent Japanese wireless
telecommunications company, was among the largest detractors
from the Fund's return. Another was Askel, which sold
equipment for small and midsize businesses from its Internet
site.
Outside of Japan, the sector decline also accounted for
notably poor performances from the Korean firm Hynix
Semiconductor and the Hong Kong telecommunications provider
China Mobile.
An exception to the downturn was Samsung Electronics, which
had a terrible return in the preceding period because of general
concerns about the restructuring of corporate ownership and
balance sheets of South Korean companies. Samsung had a
substantial recovery that placed it among the largest positive
contributors to this period's return. In a market that was
generally dominated by industry-wide global trends, Samsung
also was an exception; the local conditions in Korea, together
with the company's long-term strength, were jointly responsible
for its gain.
REGIONAL FACTORS HURT IN SINGAPORE AND INDIA
Strangely enough, Singapore stocks were hurt during this
reporting period by their comparative stability. They had
represented a safe haven when shares in the rest of the region
were falling. As a defensive move, we held primarily the
largest and most blue-chip of stocks, and they were hurt in the
5
Prudential Pacific Growth Fund, Inc.
Semiannual Report April 30, 2001
April upswing as investors cashed in some of their defensive
stocks to return to more volatile sectors. For example, DBS
Group Holdings, the dominant bank in Singapore, was among the
Fund's poorer performers.
In India, the Fund held primarily technology stocks--the
country's most promising growth industry. These stocks were
hurt by the global downturn in the sector,
and also by an insider trading scandal in the latter half of the
period that was sufficiently important to force the head of
the stock exchange to resign. We had a substantial position in
Infosys Technology, a software outsourcing and consulting
company that was caught in the general downturn of Indian stocks.
HONG KONG REAL ESTATE ROSE
Among the Fund's holdings, the only industry group that
increased in value was its Hong Kong real estate investments:
Sun Hung Kai Properties, Wharf Holdings, and Cheung Kong
(Holdings.) (Cheung Kong is discussed further
on page 8.) As with real estate in general, these stocks are
very sensitive to interest-rate changes. The Hong Kong
currency is pegged to the U.S. dollar. Real estate stocks
previously had fallen when the U.S. Federal Reserve (the Fed)
increased interest rates, and they benefited when the Fed eased.
LOOKING AHEAD
Although Pacific Region economies--except Japan--have held up
remarkably well, the slowdown in the United States and in
technology and telecommunications industries globally is our
immediate concern. Over the longer run, we expect that the
continuing trend toward outsourcing manufacturing to suppliers
in Asia will drive further growth.
The other growth engine is China, whose gross domestic product
(GDP) grew at an 8.1% annual rate in the first quarter of
2001, about the pace we think it can sustain over the next two
to three years. Accelerating domestic consumption is expected
to join exporting as a driver of growth. Investors can benefit
from these developments by buying shares of companies listed
in Hong Kong particularly, but also in Taiwan, in addition to stocks
listed in China.
6
www.PruFN.com (800) 225-1852
Australia offers a defensive refuge from short-term political
and economic uncertainties in the Pacific Region.
Consequently, shares had reached quite expensive levels. They
have become more reasonably valued recently, but higher energy
prices and the looming economic slowdown are likely to affect
Australia. Nonetheless, we expect to maintain a significant
exposure there until we are more confident that conditions in
Asia are stabilizing.
After the reporting period ended, data showed that the
Japanese economy shrank during the first quarter of 2001.
Nevertheless, more Japanese
companies are targeting increased shareholder value, so we
believe that their efforts at restructuring will continue. We
also believe that share prices in Japan may already reflect
much of the bad economic news. Therefore,
the risk/reward profile for Japanese shares is becoming more
favorable, in our opinion.
CHANGE IN ADVISER
On March 28, 2001, shareholders approved a change in
subadviser to the Fund. Jardine Fleming International
Management Inc. assumed day-to-day management on May 5, 2001.
Subsequent changes in the portfolio included the addition of
significant positions in the Japanese automobile companies
Toyota and Nissan. 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. Toyota
Motors is the world's third largest auto manufacturer, with
geographically diversified sales that are less dependent on
the weakening North American market than most of its
international competitors. In addition, it is gaining market
share in the United States. Nissan has benefited from
Renault's management team, which convincingly turned the
automaker around after buying a majority share. Nissan
increased its share of the domestic market in the first
quarter of 2001, and has a large number of new model launches
planned for the rest of the year.
7
Prudential Pacific Growth Fund, Inc.
Semiannual Report April 30, 2001
In Japan also, the Fund re-established a substantial position
in Canon, a top global manufacturer of consumer and office
electronics products, as well as optical components used in
medical equipment and semiconductor manufacturing. Canon is a
well-managed company with a relatively inexpensive share
price. Because of its overseas sales, it benefits from a weak yen.
Outside of Japan, the Fund increased its position in Cheung
Kong, the 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 also is a major owner of
Hong Kong real estate.
The Fund added Commonwealth Bank of Australia, a holding relatively
protected from the forces driving share prices in the rest of
the Pacific. The bank's main focus is the retail market, where
its e-business strategy has proven to be particularly
rewarding. It has become the 10th largest banking group in the
world in terms of the number of online customers, about half
of whom are not otherwise its customers. The online
relationships thus add a considerable amount of marketing
leverage.
Prudential Pacific Growth Fund Management Team
8
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of April 30, 2001 (Unaudited)
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 96.4%
Common Stocks
-------------------------------------------------------------------------------------
Australia 0.4%
613,755 PowerLan, Ltd. $ 291,989
-------------------------------------------------------------------------------------
Hong Kong 13.2%
158,300 Cheung Kong (Holdings), Ltd. 1,765,858
326,400 China Telecom, Ltd. 1,602,893
164,000 Citic Pacific, Ltd. 472,080
144,960 Hutchison Whampoa, Ltd. 1,565,934
2,135,900 Kingboard Chemical Holdings, Ltd. 1,006,454
140,700 Sun Hung Kai Properties, Ltd. 1,307,939
151,700 Television Broadcasts, Ltd. 766,368
214,000 The Wharf (Holdings), Ltd. 502,135
--------------
8,989,661
-------------------------------------------------------------------------------------
India 4.4%
193,300 Hindustan Lever, Ltd. 869,633
17,796 Infosys Technologies, Ltd. 1,416,158
8,100 NIIT, Ltd. 65,646
14,070 Ranbaxy Laboratories, Ltd. (GDR) 158,288
98,600 Satyam Computer Services, Ltd. 455,166
27,000 Zee Telefilms, Ltd. 57,089
--------------
3,021,980
-------------------------------------------------------------------------------------
Japan 52.4%
13,000 ASKUL Corp. 316,547
17,900 Avex, Inc. 1,368,402
3,060 Bellsystem 24, Inc. 1,186,968
50,000 C. Uyemura & Co., Ltd. 964,689
21,000 Canon, Inc. 823,929
124,000 Daifuku Co., Ltd. 682,118
39,000 Daikin Industries, Ltd. 664,118
38,000 Ebara Corp. 362,739
23,500 Fancl Corp. 1,349,755
5,400 Funai Electric Co., Ltd. 366,509
29,600 Global-Dining, Inc. 397,492
See Notes to Financial Statements 9
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of April 30, 2001 (Unaudited) Cont'd.
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
11,400 Goldcrest Co., Ltd. $ 711,952
318,000 Gunze, Ltd. 1,260,527
7,000 Hirose Electric Co., Ltd. 661,408
22,500 ITO EN, Ltd. 1,374,226
44 Japan Telecom Co., Ltd. 733,244
479,000 Kawasaki Steel Corp. 596,740
17,000 Matsushita Electric Co. 283,299
10,000 Murata Manufacturing Co., Ltd. 840,513
67,000 NEC Corp. 1,222,222
5,500 Nintendo Co., Ltd. 885,410
125 Nippon Telegraph & Telephone Corp. 793,795
61,000 Nomura Securities Co., Ltd. 1,287,951
125 NTT DoCoMo, Inc. 2,568,458
72,000 Olympus Optical Co., Ltd. 1,095,013
2,200 Oracle Corp. Japan 304,332
19,400 Ryohin Keikaku Co., Ltd. 524,176
29,000 Skylark Co., Ltd. 896,170
7,600 Softbank Corp. 288,962
19,100 Sony Corp. 1,427,691
154,000 Sumitomo Bakelite Co., Ltd. 1,445,132
10,300 TDK Corp. 598,261
33,000 Terumo Corp. 662,056
63,000 Tokio Marine & Fire Insurance Co., Ltd. 662,541
14,000 Tokyo Broadcasting Systems 313,716
25,000 Tokyo Electron, Ltd. 1,820,167
15,500 Trend Micro Inc.(a) 700,926
15,500 Trend Micro Inc-New(a)(b) 700,926
89 UFJ Holdings, Inc.(a) 641,786
23,700 Uni-Charm Corp. 927,946
84,200 United Arrows, Ltd. 1,089,835
--------------
35,802,647
-------------------------------------------------------------------------------------
Korea 5.5%
206 L.G. Home Shopping, Inc. 8,212
78,150 Samsung Corp. 370,871
18,980 Samsung Electro-Mechanics Co. 600,241
10 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of April 30, 2001 (Unaudited) Cont'd.
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
12,461 Samsung Electronics $ 2,166,719
3,540 SK Telecom Co., Ltd. 608,815
--------------
3,754,858
-------------------------------------------------------------------------------------
Singapore 6.4%
116,833 DBS Group Holdings, Ltd. 1,019,675
128,160 Elec & Eltek International Co., Ltd. 334,498
55,300 Oversea-Chinese Banking Corp., Ltd. 333,900
78,083 Overseas Union Bank, Ltd. 304,309
308,000 Sembcorp Industries, Ltd. 268,811
70,000 Sembcorp Logistics, Ltd. 268,965
29,900 Singapore Press Holdings, Ltd. 343,018
436,000 Singapore Technologies Engineering, Ltd. 653,354
387,000 Singapore Telecommunications, Ltd. 386,618
38,128 United Overseas Bank, Ltd. 253,238
35,000 Venture Manufacturing, Ltd. 243,989
--------------
4,410,375
-------------------------------------------------------------------------------------
Taiwan 12.5%
535,000 Acer, Inc. 346,842
395,785 Advanced Semiconductor Engineering, Inc. (GDR)(a) 308,388
127,458 Ambit Microsystems Corp. 772,002
195,454 Asustek Computer, Inc. 889,374
1,138,640 Chinatrust Commercial Bank 831,756
179,739 Compal Electronics, Inc. 306,358
105,400 Compeq Manufacturing Co., Ltd. 322,408
249,000 Far Eastern Textile, Ltd. 152,333
105,400 Hon Hai Precision Industry Co., Ltd. 619,151
274,350 Macronix International Co., Ltd.(a) 421,692
209,211 Phoenixtec Power Co., Ltd. 192,305
1,343,004 Taishin International Bank(a) 604,975
476,103 Taiwan Semiconductor Manufacturing Co.(a) 1,318,684
910,200 United Microelectronics Corp., Ltd.(a) 1,454,436
--------------
8,540,704
See Notes to Financial Statements 11
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of April 30, 2001 (Unaudited) Cont'd.
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Thailand 1.6%
50,600 Advanced Info Service Public Co., Ltd.(a) $ 512,096
115,900 BEC World Public Co., Ltd. 578,865
--------------
1,090,961
--------------
Total common stocks (cost $85,757,887) 65,903,175
--------------
Units
-----------------------------------------------------------------------------------
Warrants(a)
-------------------------------------------------------------------------------------
Indonesia
834,300 PT Bank Pan Indonesia Tbk
expiring July 2002 @ IDR650 (cost $0) 1,151
--------------
Total long-term investments (cost $85,757,887) 65,904,326
--------------
SHORT-TERM INVESTMENT 2.9%
Principal
Amount
(000)
-------------------------------------------------------------------------------------
Repurchase Agreement
Joint Repurchase Agreement Account,
$ 1,947 4.53%, 5/1/01 (cost $1,947,000; Note 5) 1,947,000
--------------
Total Investments 99.3%
(cost $87,704,887; Note 4) 67,851,326
Other assets in excess of liabilities 0.7% 486,356
--------------
Net Assets 100% $ 68,337,682
--------------
--------------
------------------------------
(a) Non-income producing security.
(b) When-issued security.
GDR--Global Depository Receipt.
12 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of April 30, 2001 (Unaudited) Cont'd.
The industry classification of portfolio holdings and other assets shown as a
percentage of net assets as of April 30, 2001 was as follows:
Electronic Components.................................................. 17.0%
Telecommunications..................................................... 8.7
Electronics............................................................ 8.5
Real Estate............................................................ 5.5
Computer Software & Services........................................... 5.3
Financial Services..................................................... 4.7
Diversified Industries................................................. 4.0
Chemicals.............................................................. 3.5
Commercial Services.................................................... 3.3
Commercial Banking..................................................... 3.0
Repurchase Agreement................................................... 2.9
Broadcasting & Publishing.............................................. 2.6
Computers.............................................................. 2.3
Telephones............................................................. 2.2
Food & Beverage........................................................ 2.0
Cosmetics/Toiletries................................................... 2.0
Audio/Visual........................................................... 2.0
Restaurants............................................................ 1.9
Apparel................................................................ 1.8
Utility Communications................................................. 1.6
Machinery & Equipment.................................................. 1.5
Paper.................................................................. 1.4
Engineering & Construction............................................. 1.4
Cosmetics & Soaps...................................................... 1.3
Office Equipment & Supplies............................................ 1.2
Medical Products & Services............................................ 1.2
Diversified Operations................................................. 1.2
Electrical Services.................................................... 1.1
Insurance.............................................................. 1.0
Steel - Products....................................................... 0.9
Retail................................................................. 0.8
Television & Communication Equipment................................... 0.5
Internet............................................................... 0.4
Energy Equipment & Services............................................ 0.4
Textiles............................................................... 0.2
-----
99.3%
Other assets in excess of liabilities.................................. 0.7
-----
100.0%
-----
-----
See Notes to Financial Statements 13
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
April 30, 2001
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $87,704,887) $ 67,851,326
Foreign currency, at value (cost $458,656) 422,307
Cash 1,666
Receivable for Fund shares sold 773,474
Dividends and interest receivable 146,994
Other assets 10,644
--------------
Total assets 69,206,411
--------------
LIABILITIES
Payable for investments purchased 520,389
Accrued expenses 170,771
Withholding taxes payable 100,993
Management fee payable 44,272
Distribution fee payable 32,304
--------------
Total liabilities 868,729
--------------
NET ASSETS $ 68,337,682
--------------
--------------
Net assets were comprised of:
Shares of common stock, at par $ 8,378
Paid-in capital in excess of par 104,161,775
--------------
104,170,153
Distributions in excess of net investment income (1,070,102)
Accumulated net realized loss on investments (14,789,336)
Net unrealized depreciation on investments and foreign
currencies (19,973,033)
--------------
Net assets, April 30, 2001 $ 68,337,682
--------------
--------------
14 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited) Cont'd.
April 30, 2001
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share
($36,758,662 / 4,410,226 shares of common stock issued and
outstanding) $8.33
Maximum sales charge (5% of offering price) .44
--------------
Maximum offering price to public $8.77
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($25,797,503 / 3,260,871 shares of common stock issued and
outstanding) $7.91
--------------
--------------
Class C:
Net asset value and redemption price per share
($2,603,049 / 327,059 shares of common stock issued and
outstanding) $7.96
Sales charge (1% of offering price) .08
--------------
Offering price to public $8.04
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($3,178,468 / 381,255 shares of common stock issued and
outstanding) $8.34
--------------
--------------
See Notes to Financial Statements 15
Prudential Pacific Growth Fund, Inc.
Statement of Operations (Unaudited)
Six Months
Ended
April 30, 2001
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $53,043) $ 354,244
Interest 111,087
--------------
Total income 465,331
--------------
Expenses
Management fee 293,370
Distribution fee--Class A 45,116
Distribution fee--Class B 181,603
Distribution fee--Class C 17,763
Transfer agent's fees and expenses 215,000
Custodian's fees and expenses 178,000
Reports to shareholders 93,000
Registration fees 35,000
Directors' fees and expenses 18,000
Audit fee 15,000
Legal fees and expenses 6,000
Miscellaneous 2,445
--------------
Total operating expenses 1,100,297
Loan interest expense 6,090
--------------
Total expenses 1,106,387
--------------
Net investment loss (641,056)
--------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on:
Investment transactions (6,858,150)
Foreign currency transactions (82,764)
--------------
(6,940,914)
--------------
Net change in unrealized appreciation/depreciation on:
Investments (2,778,503)
Foreign currencies (24,779)
--------------
(2,803,282)
--------------
Net loss on investments and foreign currencies (9,744,196)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (10,385,252)
--------------
--------------
16 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Changes in Net Assets (Unaudited)
Six Months Year
Ended Ended
April 30, 2001 October 31, 2000
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss $ (641,056) $ (1,986,791)
Net realized gain (loss) on investments and
foreign currency transactions (6,940,914) 21,037,797
Net change in unrealized
appreciation/depreciation on investments
and foreign currencies (2,803,282) (57,985,506)
-------------- ----------------
Net decrease in net assets resulting from
operations (10,385,252) (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 6)
Net proceeds from shares sold 114,805,975 778,873,547
Net asset value of shares issued in
reinvestment of dividends and
distributions -- 2,368,241
Cost of shares reacquired (147,035,078) (836,348,877)
-------------- ----------------
Net decrease in net assets from Fund share
transactions (32,229,103) (55,107,089)
-------------- ----------------
Total decrease (42,614,355) (96,539,555)
NET ASSETS
Beginning of period 110,952,037 207,491,592
-------------- ----------------
End of period $ 68,337,682 $ 110,952,037
-------------- ----------------
-------------- ----------------
See Notes to Financial Statements 17
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited)
Prudential Pacific Growth Fund, Inc. (the 'Fund') is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund was incorporated in Maryland on August 14, 1991 and commenced
investment operations on July 24, 1992. The investment objective of the Fund is
to seek long-term capital growth by investing primarily in common stocks, common
stock equivalents and other securities of companies doing business in or
domiciled in the Pacific Basin region.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities traded on an exchange and NASDAQ
National Market System are valued at the last sale price on such exchange system
or, if there was no sale on such day, at the mean between the last bid and asked
prices, or at the bid price in the absence of an asked price. Corporate bonds
(other than convertible) and U.S. government securities are valued on the basis
of valuations provided by an independent pricing agent or principal market
maker. Convertible debt securities are valued at the mean between the last
reported bid and asked prices provided by principal market makers. Options are
valued at the mean between the most recently quoted bid and asked prices on the
exchange on which they are traded. Futures contracts and options thereon are
valued at their last sale prices as of the close of trading on the applicable
commodities exchange or, if there was no sale on such day, at the mean between
the most recently quoted bid and asked prices. Securities for which reliable
market quotations are not readily available are valued by the Valuation
Committee or Board of Directors in consultation with the manager or subadvisor.
Short-term securities which mature in more than 60 days are valued based
upon current market quotations. Short-term securities which mature in 60 days or
less are valued at amortized cost which approximates market value.
All securities are valued as of 4:15 p.m. New York time.
Repurchase Agreements: In connection with transactions in repurchase
agreements with U.S. financial institutions, it is the Fund's policy that its
custodian or designated subcustodians, as the case may be under triparty
repurchase agreements, take possession of the underlying collateral securities,
the value of which exceeds the principal amount of the repurchase transaction
including accrued interest. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked to market on a
daily basis to ensure the adequacy of
18
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
the collateral. If the seller defaults and the value of the collateral declines
or if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the closing rates of exchange;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the 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 the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term portfolio securities sold
during the period. Accordingly, realized foreign currency gains (losses) are
included in the reported net realized gain on investment transactions.
Net realized gains or losses on foreign currency transactions represent
net foreign exchange gains or losses from forward currency contracts,
disposition of foreign currencies, currency gains or losses realized between the
trade and settlement dates on security transactions, and the difference between
the amounts of interest, dividends and foreign taxes recorded on the Fund's
books and the U.S. dollar equivalent amounts actually received or paid. Net
currency gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of
unrealized appreciation (depreciation) on investments and foreign currencies.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the possibility of political and economic
instability and the level of governmental supervision and regulation of foreign
securities markets.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains and losses from
investment and foreign currency transactions are calculated on the identified
cost basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on an
19
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Net investment income or loss, other than distribution fees, and
unrealized and realized gains or losses are allocated daily to each class of
shares of the Fund based upon the relative proportion of net assets of each
class at the beginning of the day.
Dividends and Distributions: The Fund expects to pay dividends of net
investment income and distributions of net realized capital and currency gains,
if any, annually. Dividends and distributions are recorded on the ex-dividend
date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: It is the Fund's policy to continue to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.
Withholding taxes on foreign dividends, interest and capital gains have
been provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates.
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 from October 2, 2000 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 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
20
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 six months ended April 30, 2001.
PIMS has advised the Fund that it received approximately $19,200 and
$8,700 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the six months ended April 30, 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 six months ended April 30, 2001, it
received approximately $50,600 and $21,300 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').
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 six months ended April 30, 2001, the Fund incurred fees of
approximately $138,900 for the services of PMFS. As of April 30, 2001,
approximately $23,000 of such fees were due to PMFS. Transfer agent fees and
expenses in the statement of operations include certain out-of-pocket expenses
paid to nonaffiliates.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended April 30, 2001 were $1,274,950 and $17,210,135,
respectively.
The federal income tax basis of the Fund's investments at April 30, 2001
was $87,718,422 and accordingly, net unrealized depreciation for federal income
tax purposes was $19,867,096 (gross unrealized appreciation--$6,369,386; gross
unrealized depreciation--$26,236,482).
For federal income tax purposes, the Fund has a capital loss carryforward
as of October 31, 2000 of approximately $6,178,000 which expires in 2006.
Accordingly,
21
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
no capital gains distributions are expected to be paid to shareholders until
future net gains have been realized in excess of such carryforward.
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment companies, transfers
uninvested cash 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 April 30, 2001, the Fund had a
.26% undivided interest in the repurchase agreements in the joint account. The
undivided interest for the Fund represents $1,947,000 in principal amount. As of
such date, each repurchase agreement in the joint account and the collateral
therefor were as follows:
ABN AMRO Incorporated, 4.40%, in the principal amount of $79,104,000,
repurchase price $79,113,668, due 5/1/01. The value of the collateral including
accrued interest was $80,686,324.
Bear, Stearns & Co. Inc., 4.55%, in the principal amount of $210,000,000,
repurchase price $210,026,542, due 5/1/01. The value of the collateral including
accrued interest was $215,224,348.
Credit Suisse First Boston Corp., 4.57%, in the principal amount of
$200,000,000, repurchase price $200,025,389, due 5/1/01. The value of the
collateral including accrued interest was $204,000,316.
Deutsche Bank Alex. Brown, 4.40%, in the principal amount of $65,408,000,
repurchase price $65,415,994, due 5/1/01. The value of the collateral including
accrued interest was $66,717,059.
UBS Warburg, 4.55%, in the principal amount of $210,000,000, repurchase
price $210,026,542, due 5/1/01. The value of the collateral including accrued
interest was $214,201,402.
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with an initial sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending upon
the period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to a limited group of
investors.
22
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) 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 were as follows:
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
Six months ended April 30, 2001:
Shares sold 8,109,560 $ 71,021,116
Shares reacquired (10,188,015) (92,392,014)
----------- -------------
Net increase (decrase) in shares outstanding before
conversion (2,078,455) (21,370,898)
Shares issued upon conversion from Class B 1,320,033 11,735,169
----------- -------------
Net increase (decrase) in shares outstanding (758,422) $ (9,635,729)
----------- -------------
----------- -------------
Year ended October 31, 2000:
Shares sold 32,808,321 $ 431,759,479
Shares issued in reinvestment of dividends and
distributions 43,973 661,353
Shares reacquired (32,235,077) (433,292,743)
----------- -------------
Net increase (decrase) in shares outstanding before
conversion 617,217 (871,911)
Shares issued upon conversion from Class B 1,030,547 13,967,680
----------- -------------
Net increase (decrase) in shares outstanding 1,647,764 $ 13,095,769
----------- -------------
----------- -------------
Class B
----------------------------------------------------------
Six months ended April 30, 2001:
Shares sold 2,060,391 $ 17,247,962
Shares reacquired (2,892,811) (24,639,474)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (832,420) (7,391,512)
Shares reacquired upon conversion into Class A (1,388,043) (11,735,169)
----------- -------------
Net increase (decrease) in shares outstanding (2,220,463) $ (19,126,681)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
23
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Class C Shares Amount
---------------------------------------------------------- ----------- -------------
Six months ended April 30, 2001:
Shares sold 1,519,911 $ 12,824,946
Shares reacquired (1,842,032) (15,829,605)
----------- -------------
Net increase (decrease) in shares outstanding (322,122) $ (3,004,659)
----------- -------------
----------- -------------
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
----------------------------------------------------------
Six months ended April 30, 2001:
Shares sold 1,571,833 $ 13,711,951
Shares reacquired (1,576,962) (14,173,985)
----------- -------------
Net increase (decrease) in shares outstanding (5,128) $ (462,034)
----------- -------------
----------- -------------
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 7. Borrowings
On March 7, 2001, the Fund, along with other affiliated registered investment
companies (the 'Funds'), entered into an amended syndicated credit agreement
(the 'amended SCA') with an unaffiliated lender. The maximum commitment under
the amended SCA is $500 million. Interest on any such borrowings will be at
market rates. The purpose of the agreement is to serve as an alternative source
of funding for capital share redemptions. The Funds pay a commitment fee of .080
of 1% of the unused portion of the credit facility. The commitment fee is
accrued and paid quarterly on a pro rata basis by the Funds. The expiration date
of the amended SCA is March 6, 2002. Prior to March 7, 2001, the maximum
commitment under the previous agreement was $1 billion.
The Fund utilized the line of credit during the six months ended April 30,
2001. The average daily balance the Fund had outstanding during the period was
approximately $185,749 at a weighted average annual interest rate of
approximately 6.61%.
24
Prudential Pacific Growth Fund, Inc.
Financial
Highlights
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited)
Class A(a)
----------------
Six Months Ended
April 30, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.70
--------
Income from investment operations
Net investment income (loss) (.05)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (1.32)
--------
Total from investment operations (1.37)
--------
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 period $ 8.33
--------
--------
TOTAL RETURN(b) (14.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 36,759
Average net assets (000) $ 36,392
Ratios to average net assets:
Total expenses(c) 2.45%
Operating expenses, including distribution and service
(12b-1) fees(c) 2.44%
Operating expenses, excluding distribution and service
(12b-1) fees 2.19%
Net investment income (loss) (1.22)%
For Class A, B, C and Z shares:
Portfolio turnover rate(d) 2%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) 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.
(d) Portfolio turnover for periods less than a full year are not annualized.
26 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class A(a)
----------------------------------------------------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
$ 14.01 $ 9.14 $ 12.22 $ 15.86 $ 15.75
-------- -------- -------- -------- ----------------
(.09) (.04) .06 .02 .07
(4.01) 4.99 (1.88) (3.31) .23
-------- -------- -------- -------- ----------------
(4.10) 4.95 (1.82) (3.29) .30
-------- -------- -------- -------- ----------------
(.16) (.08) -- -- --
(.05) -- (.40) -- (.19)
-- -- (.86) (.35) --
-------- -------- -------- -------- ----------------
(.21) (.08) (1.26) (.35) (.19)
-------- -------- -------- -------- ----------------
$ 9.70 $ 14.01 $ 9.14 $ 12.22 $ 15.86
-------- -------- -------- -------- ----------------
-------- -------- -------- -------- ----------------
(29.82)% 55.11% (15.53)% (21.32)% 1.97%
$ 50,141 $ 49,338 $ 22,624 $ 35,860 $113,585
$ 53,389 $ 31,281 $ 26,845 $ 73,942 $106,148
1.60% 1.72% 1.70% 1.48% 1.37%
1.57% 1.72% 1.70% 1.42% 1.37%
1.32% 1.47% 1.45% 1.17% 1.12%
(.70)% (.34)% .63% .14% .44%
93% 104% 94% 81% 91%
See Notes to Financial Statements 27
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class B(a)
----------------
Six Months Ended
April 30, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.30
--------
Income from investment operations
Net investment loss (.08)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (1.31)
--------
Total from investment operations (1.39)
--------
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 period $ 7.91
--------
--------
TOTAL RETURN(b) (14.93)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 25,798
Average net assets (000) $ 36,622
Ratios to average net assets:
Total expenses 3.20%
Operating expenses, including distribution and service
(12b-1) fees 3.19%
Operating expenses, excluding distribution and service
(12b-1) fees 2.19%
Net investment loss (2.05)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
28 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class B(a)
----------------------------------------------------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
$ 13.50 $ 8.79 $ 11.77 $ 15.40 $ 15.38
-------- ---------------- -------- ---------------- ----------------
(.19) (.12) (.01) (.09) (.04)
(3.87) 4.84 (1.82) (3.19) .25
-------- ---------------- -------- ---------------- ----------------
(4.06) 4.72 (1.83) (3.28) .21
-------- ---------------- -------- ---------------- ----------------
(.09) (.01) -- -- --
(.05) -- (.29) -- (.19)
-- -- (.86) (.35) --
-------- ---------------- -------- ---------------- ----------------
(.14) (.01) (1.15) (.35) (.19)
-------- ---------------- -------- ---------------- ----------------
$ 9.30 $ 13.50 $ 8.79 $ 11.77 $ 15.40
-------- ---------------- -------- ---------------- ----------------
-------- ---------------- -------- ---------------- ----------------
(30.40)% 54.28% (16.32)% (21.84)% 1.36%
$ 51,004 $107,769 $ 74,457 $128,694 $327,315
$ 96,019 $ 85,193 $ 91,983 $244,462 $357,548
2.35% 2.47% 2.45% 2.23% 2.12%
2.32% 2.47% 2.45% 2.17% 2.12%
1.32% 1.47% 1.45% 1.17% 1.12%
(1.43)% (1.09)% (.12)% (.61)% (.25)%
See Notes to Financial Statements 29
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class C(a)
----------------
Six Months Ended
April 30, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.30
-------
Income from investment operations
Net investment loss (.08)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (1.26)
-------
Total from investment operations (1.34)
-------
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 period $ 7.96
-------
-------
TOTAL RETURN(b) (14.39)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,603
Average net assets (000) $3,582
Ratios to average net assets:
Total expenses 3.20%
Operating expenses, including distribution and service
(12b-1) fees 3.19%
Operating expenses, excluding distribution and service
(12b-1) fees 2.19%
Net investment loss (2.04)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
30 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class C(a)
----------------------------------------------------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
$13.50 $ 8.79 $11.77 $15.40 $ 15.38
------- ------- ------- ------- --------
(.19) (.12) (.01) (.09) (.04)
(3.87) 4.84 (1.82) (3.19) .25
------- ------- ------- ------- --------
(4.06) 4.72 (1.83) (3.28) .21
------- ------- ------- ------- --------
(.09) (.01) -- -- --
(.05) -- (.29) -- (.19)
-- -- (.86) (.35) --
------- ------- ------- ------- --------
(.14) (.01) (1.15) (.35) (.19)
------- ------- ------- ------- --------
$ 9.30 $13.50 $ 8.79 $11.77 $ 15.40
------- ------- ------- ------- --------
------- ------- ------- ------- --------
(30.40)% 54.28% (16.32)% (21.84)% 1.36%
$6,040 $7,073 $1,654 $2,932 $ 12,360
$7,376 $3,103 $2,276 $6,557 $ 6,402
2.35% 2.47% 2.45% 2.23% 2.12%
2.32% 2.47% 2.45% 2.17% 2.12%
1.32% 1.47% 1.45% 1.17% 1.12%
(1.42)% (1.09)% (.12)% (.61)% (.25)%
See Notes to Financial Statements 31
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class Z(a)
----------------
Six Months Ended
April 30, 2001
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.75
-------
Income from investment operations
Net investment income (loss) (.02)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (1.39)
-------
Total from investment operations (1.41)
-------
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 period $ 8.34
-------
-------
TOTAL RETURN(b) (14.64)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $3,178
Average net assets (000) $2,285
Ratios to average net assets:
Total expenses 2.20%
Operating expenses 2.19%
Net investment income (loss) (1.14)%
------------------------------
(a) Calculated based upon weighted average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) Commencement of offering of Class Z shares.
32 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
Class Z(a)
----------------------------------------------------------------------------------------------------------
Year Ended October 31, March 1, 1996(c)
------------------------------------------------------------------------------- Through
2000 1999 1998 1997 October 31, 1996
----------------------------------------------------------------------------------------------------------
$ 14.12 $ 9.17 $ 12.28 $ 15.89 $ 16.57
---------------- ---------------- ---------------- ---------------- ----------------
(.06) -- .08 .06 .11
(4.08) 5.06 (1.89) (3.32) (.79)
---------------- ---------------- ---------------- ---------------- ----------------
(4.14) 5.06 (1.81) (3.26) (.68)
---------------- ---------------- ---------------- ---------------- ----------------
(.18) (.11) -- -- --
(.05) -- (.44) -- --
-- -- (.86) (.35) --
---------------- ---------------- ---------------- ---------------- ----------------
(.23) (.11) (1.30) (.35) --
---------------- ---------------- ---------------- ---------------- ----------------
$ 9.75 $ 14.12 $ 9.17 $ 12.28 $ 15.89
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
(29.75)% 56.05% (15.36)% (21.02)% (4.09)%
$ 3,767 $ 43,311 $ 12,429 $ 19,520 $ 37,288
$ 33,479 $ 22,811 $ 15,099 $ 31,945 $ 33,868
1.35% 1.47% 1.45% 1.23% 1.12%(c)
1.32% 1.47% 1.45% 1.17% 1.12%(c)
(.40)% (.03)% .82% .39% .68%(c)
See Notes to Financial Statements 33
Prudential Pacific Growth Fund, Inc.
Supplemental Proxy Information (Unaudited)
Meetings of the Fund's shareholders were held on March 28, 2001 and April
25, 2001, in conjunction with shareholder meetings for certain other Funds
within the Prudential Mutual Fund complex. The meetings were held for the
following purposes:
(1) To elect the following nine individuals to serve on the Fund's Board of
Directors to a term until the earlier to occur of (a) the next meeting of
shareholders at which Board Members are elected and until their successors
are elected and qualified or (b) until their terms expire in accordance with
each Fund's retirement policy. Each Fund's retirement policy generally calls
for the retirement of Directors on December 31 of the year in which they
reach the age of 75.
- Delayne D. Gold
- Robert F. Gunia
- Robert E. LeBlanc
- David R. Odenath, Jr.
- Judy A. Rice
- Robin B. Smith
- Stephen Stoneburn
- Nancy Teeters
- Clay T. Whitehead
(2) To approve a new subadvisory agreement between PIFM and Jardine Fleming
International Management Inc.
(3) To permit PIFM to enter into or make material changes to subadvisory
agreements without shareholder approval.
(4) To approve an amendment to the management agreement to permit PIFM to
allocate assets among affiliated and unaffiliated subadvisors.
(5) To approve an amendment to certain fundamental investment restrictions and
policies of the Fund.
(6) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants of the Fund for the current fiscal year.
34
Prudential Pacific Growth Fund, Inc.
Supplemental Proxy Information (Unaudited) Cont'd.
The results of the proxy solicitation on the above matters were:
Director/Manager/
Investment Votes Votes
Restrictions/Auditor for Against Abstentions
----------------------------- --------- ------- -----------
(1) Delayne D. Gold 4,357,267 -- --
Robert F. Gunia 4,359,056 -- --
Robert F. LeBlanc 4,358,523 -- --
David R. Odenath, Jr. 4,355,081 -- --
Judy A. Rice 4,356,296 -- --
Robin B. Smith 4,356,810 -- --
Stephen Stoneburn 4,360,971 -- --
Nancy H. Teeters 4,354,201 -- --
Clay T. Whitehead 4,354,463 -- --
(2) Jardine Fleming 4,177,494 187,537 242,703
(3) PIFM 3,143,581 356,102 236,616
(4) PIFM 4,084,898 271,142 251,694
(5a) Fund Diversification 3,291,457 208,361 236,481
(5b) Issuing Senior Securities,
Borrowing Money and Pledging
Assets 3,212,004 281,012 243,283
(5c) Buying and Selling Real
Estate 3,232,350 271,127 232,822
(5d) Buying and Selling
Commodities and Commodity
Contracts 3,208,753 288,375 239,171
(5e) Fund Concentration 3,248,392 234,198 253,709
(5f) Making Loans 3,171,756 322,638 241,905
(5g) Other Investment Restrictions 3,211,768 262,145 262,386
(6) PricewaterhouseCoopers LLP 4,234,051 143,269 230,414
35
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.
www.PruFN.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
Judy A. Rice, Vice President
Grace C. Torres, Treasurer
Jonathan D. Shain, 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
Three Gateway Center, 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
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 April 30, 2001, were not audited and, accordingly, no
opinion is expressed on them.
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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