ANNUAL REPORT
OCTOBER 31, 2002
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's (the Fund)
investment objective is long-term growth of
capital. 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 10/31/02
43.4% Japan
18.2 Australia
12.8 Hong Kong
7.1 South Korea
4.9 Taiwan
2.7 Malaysia
2.5 Singapore
1.9 New Zealand
0.9 Thailand
0.3 Canada
5.3 Cash & Equivalents
Geographic concentration is subject to change.
Ten Largest Holdings
Expressed as a percentage of
net assets as of 10/31/02
3.2% Nissan Motor Co., Ltd.
Automotive
3.0 Canon, Inc.
Electronic Components
3.0 Takeda Chemical Industries, Ltd.
Drugs & Healthcare
2.8 Ricoh Co., Ltd.
Electronic Components
2.8 Hong Kong & China Gas Co., Ltd.
Gas Utilities
2.5 Hong Kong Electric Holdings, Ltd.
Electrical Utilities
2.4 Kao Corp.
Cosmetics & Toiletries
2.4 CLP Holdings, Ltd.
Electrical Utilities
2.4 Sony Corp.
Electronics
2.4 Hang Seng Bank, Ltd.
Banks
Holdings are subject to change.
www.prudential.com (800) 225-1852
Cumulative Total Returns1 As of 10/31/02
One Year Five Years Ten Years Since Inception2
Class A -3.51% -37.53% -24.10% -19.17%
Class B -4.03 -40.26 -29.93 -25.52
Class C -4.16 -39.97 N/A -55.84
Class Z -3.50 -37.22 N/A -52.45
MSCI AC Asia Pacific Free
Gross Index3 -6.83 -24.90 -11.08 ***
MSCI AC Pacific Free Index4 -8.34 -29.63 -21.61 ****
Lipper Pacific Region Funds
Avg.5 -6.58 -26.18 -3.12 *****
Average Annual Total Returns1 As of 9/30/02
One Year Five Years Ten Years Since Inception2
Class A -6.00% -12.85% -2.89% -2.60%
Class B -6.82 -12.90 -3.17 -2.90
Class C -3.85 -12.81 N/A -9.67
Class Z -1.05 -11.85 N/A -10.74
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. 1Source: Prudential Investments
LLC, Lipper Inc., and Factset. The cumulative
total returns do not take into account
applicable sales charges. The average annual
total returns do take into account applicable
sales charges. Without the distribution and
service (12b-1) fee waiver for Class A shares,
the returns would have been lower. 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%
respectively for the first 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 shares redeemed within 18 months
of purchase. 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.
2Inception dates: Class A and Class B, 7/24/92;
Class C, 8/1/94; and Class Z, 3/1/96. 3The
Morgan Stanley Capital International (MSCI) All
Country (AC) Asia Pacific Free Gross Index is
an unmanaged, weighted index comprising
approximately 950 securities listed on the
stock exchanges of Australia, China (free),
Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, Pakistan, the Philippines, Singapore,
Sri Lanka, Taiwan, and Thailand. 4The MSCI AC
Pacific Free Index is an unmanaged, free float-
adjusted market capitalization index that is
designed to measure the following international
equity countries: Australia, China, Hong Kong,
Indonesia, Japan, Malaysia, New Zealand, the
Philippines, Singapore, Taiwan, and Thailand.
5The Lipper Average is unmanaged, and is based
on the average return for all funds in each
share class for the one-year, five-year, ten-
year, and since inception periods in the Lipper
Pacific Region Funds category. Funds in the
Lipper Pacific Region Funds 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. Investors cannot
invest directly in an index. The returns for
the MSCI Indexes and Lipper Average would be
lower if they included the effect of sales
charges, operating expenses, or taxes. ***MSCI
AC Asia Pacific Free Gross Index Since
Inception returns are -4.39% for Class A and
Class B, -44.57% for Class C, and -43.78% for
Class Z. ****MSCI AC Pacific Free Index Since
Inception returns are -16.03% for Class A and
Class B, -50.12% for Class C, and -48.84% for
Class Z. *****Lipper Average Since Inception
returns are 8.11% for Class A and
Class B, -33.08% for Class C, and -36.91% for
Class Z, based on all funds in each share
class.
1
(LOGO) December 10, 2002
DEAR SHAREHOLDER,
The 12-month period ended October 31, 2002 was
disappointing for stock investors. At the
beginning of the period in the wake of the
terrorist attacks, interest-rate reductions in
the United States and Europe spurred hopes
that the global economy would recover quickly.
Signs of greater economic activity encouraged
that optimism. Soon, however, a series of
bankruptcies, indictments, earnings
disappointments, conflicting economic signs,
and a possible war with Iraq threw the stock
markets into a steep and
broadening decline.
Stocks in the Pacific region held up slightly
better than stocks in other parts of the world,
and the modest decline of the Prudential
Pacific Growth Fund represented a substantial
outperformance of the major Pacific indexes. On
the following pages, the Fund's investment
adviser describes how its strategy reduced the
impact of the market downdraft.
The past two and a half years have been
challenging for equity investors. We encourage
you to talk with your financial professional
about the impact of recent events on your
investment plan. We appreciate your continued
confidence in Prudential mutual funds through
these trying times.
Sincerely,
David R. Odenath, Jr., President
Prudential Pacific Growth Fund, Inc.
2
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2002
INVESTMENT ADVISER'S REPORT
OVERVIEW OF MARKET AND PERFORMANCE
Almost all of the world's stock markets took a
sharp turn for the worse in the spring of 2002.
Investor sentiment swung from optimistic to
pessimistic and somewhat cynical. The Fund
benefited by moving from growth-oriented stocks
into more defensive stocks--companies that have
strong balance sheets and are less dependent
upon economic growth than most. The Pacific
region markets are relatively small and easily
affected when institutional investors move at
the same time. When many other investors
followed our move into defensive stocks later
in the year, our holdings benefited. Whereas
the Fund performed only marginally better than
the Lipper Pacific Region Funds Average in the
first half of its reporting period, its
performance in the second half was more than
four percentage points above the Lipper
Average.
WE TEMPERED OUR UNDERWEIGHT IN JAPAN
Japan-based companies make up almost two-thirds
of the MSCI AC Pacific Free Index. We have
substantially underweighted Japan for quite a
while. This helped our return over this
reporting period. However, in February 2002,
the Japanese market rose sharply, a gain it did
not relinquish until June during the global
market decline. We decided it was prudent to
bring our Japan exposure closer to the Index
level. The actions of Japan's government are
unpredictable and can lead to very rapid market
movements. Although we do not yet see a
significant catalyst for Japan's economic
recovery, we want to participate should one
occur.
Our exposure to Japan is principally in well-
managed globally oriented firms such as Sony,
Toyota, Canon, Nissan, and Ricoh (see Comments
on Largest Holdings for the last three). All
but Nissan and Ricoh had large gains in share
price, and all five made positive contributions
to return.
3
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2002
The major Japanese auto manufacturers have
strong balance sheets and high margins, and
continue to gain market share in the United
States. In addition to the quality of their
products, they have benefited from the gradual
weakening of the yen over the past few years,
which makes their cars less expensive than
those in other developed countries. Two
Japanese auto companies in the Fund's portfolio
were underachievers whose alliances with non-
Japanese auto companies were expected to
improve their performance. Nissan was the
Fund's largest position at period-end and made
the second-largest contribution to the Fund's
return. Renault, which bought 37% of Nissan in
1999 (since increased to 44%), installed a non-
Japanese president at Nissan. He initiated a
restructuring--including cost cutting and
reducing the number of Japanese suppliers--which
is paying off. Sales are increasing rapidly. In
contrast, the Fund had a loss on its small
position in Mazda. Mazda is 33% owned by Ford,
which has not been as successful in introducing
changes as Renault has been with Nissan. We
think that Ford will increase its involvement
and Mazda's profits will improve.
We avoided the large Japanese banks, although
they are a significant part of our benchmark
index. We think they are poorly managed and
have resisted the changes that are necessary to
improve their performance, including writing
off a large amount of nonperforming loans. Our
underweighting helped our relative performance.
Instead, we maintained our exposure to the
financial sector in Japan through smaller
consumer-lending companies--Takefuji and
Promise--which specialize in credit card, house
renovation, and personal loans. They have been
very profitable over the long term with solid
cash flow, strong balance sheets, and high
returns on equity, but detracted from return
during this reporting period because of an
increase in personal bankruptcies. We think
they have the financial and managerial strength
to cope with the situation and are still good
long-term investments.
We also had a loss on Orix, a large financial
services company. It expanded its business
model from primarily leasing to making direct
loans to consumers and small businesses. It is
well regarded by international investors,
4
www.prudential.com (800) 225-1852
but domestic investors left the stock because
it became expensive relative to other Japanese
stocks. There was no change in its business
fundamentals. We think that its financial
stability and growth potential still make Orix
a good value.
In addition to the consumer-lending companies,
Nintendo and Secom were among the largest
detractors from the Fund's return. Nintendo is
a long-term holding of the Fund due to its key
position in the growing home-gaming industry.
This year, the intense competition with Sony
and Microsoft led to industrywide price
competition. In addition, there are signs that
holiday sales may be low this year. The share
price fell and we pared back our position.
However, with about $6 billion in cash on its
balance sheet, Nintendo should be able to
survive short-term setbacks. We continue to
believe in its growth potential.
Secom is Japan's largest security company, with
large U.S. and European sales. It is benefiting
from rising demand for home security systems.
This year, it had an unusual charge to earnings
to bolster its underfunded pension system. Its
share price fell. In our view, Secom's long-
term potential was not affected.
FINANCIAL FIRMS BENEFITED FROM CONSUMER BORROWING
Most Pacific region countries were more
aggressive than Japan in forcing their banks to
face their nonperforming loans. This led to the
consolidation of weak banks into better-
capitalized firms. The increase in consumer
spending in the Pacific created new markets for
these firms. Banks, such as Kookmin Bank
(Korea), United Overseas Bank (Singapore), Hang
Seng Bank (Hong Kong), Taipei Bank (Taiwan),
and Overseas-Chinese Banking (Singapore),
benefited from consolidation in the industry
and an increase in consumer borrowing. Credit
card issuers are doing well. This represents a
historic turn from populations primarily
concerned with saving and preventing poverty to
a more affluent and optimistic population of
consumers. Once consumers buy products, they
want to protect them. Insurers such as
5
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2002
Samsung Fire and Marine (Korea) were also among
the largest contributors to the Fund's return.
In mid-summer, we brought our exposure in Korea
down from an overweight to a market-neutral
position. We were concerned that Korean
consumers may have become overly enthusiastic
about borrowing. Moreover, foreign investors
had focused on Korean stocks and bid the share
prices to expensive levels. Our shift to more
defensive stocks was particularly effective in
Korea. When other investors made the same move,
our reduced exposure buffered the Fund from the
resulting fall in share prices. However, we
didn't sell two Korean financial companies fast
enough--Hyundai Securities and Daishin
Securities. Their shares also became expensive
and were affected by the poor global capital
markets. We sold both at a loss.
SEMICONDUCTOR STOCKS WERE VOLATILE
The entire reporting period was charged with
uncertainty about technology stocks.
Semiconductor chips are the key components for
electronic products. Early in the period, the
stocks of semiconductor companies rose from the
unrealistically low levels they reached
immediately after the terrorist attacks of
September 11, 2001. They were buoyed by fourth-
quarter optimism about economic growth. We
began paring back our positions, protecting our
gains from the subsequent decline. United
Microelectronics (Taiwan), Samsung Electronics
(Korea), and Taiwan Semiconductor made
significant contributions to the Fund's return.
We retain some exposure to these foundries
(chip factories) because they are among the
most efficient in
the world.
CONSOLIDATION EXPECTATIONS DROVE UP GOLD SHARES
Newcrest Mining (Australia) and a few smaller
Australian gold companies benefited from an
increase in share prices because investors
expected the industry to consolidate. Newcrest,
whose shares rose about 90% over the
6
www.prudential.com (800) 225-1852
period, was among the larger contributors to
return, although it was not itself involved in
an acquisition.
UTILITIES WeRE A DEFENSIVE SECTOR
When the economic recovery in the United States
and Europe appeared less robust than expected,
we moved to economic sectors that were less
dependent upon exports. Asian utility companies
tend to be purely domestic. Another advantage
of Asian utilities is their solid histories of
dividend payments. This is particularly
important in today's investment climate. As
share price gains become less certain,
dividends become a more significant component
of investors' total return (dividends plus
capital gains).
Hong Kong utilities have the additional
advantage of reducing currency risk because the
Hong Kong dollar is pegged to the U.S. dollar.
Moreover, these companies have strong balance
sheets, a sign that they will continue to be
able to pay their dividends. Hong Kong
utilities are growth companies because of their
exposure to development in Mainland China. Hong
Kong and China Gas (see Comments on Largest
Holdings), Hong Kong Electric, and Australia
Gas Light were among the utilities making
moderate positive contributions to return.
We also held utilities in Japan, but their
impact was predominantly negative. Nippon
Telephone and Telegraph (NTT) and NTT DoCoMo
(of which NTT owns 64%) were affected by the
global downturn in wireless telecommunications
stocks. Matsushita Electric shares fell because
investors were overly enthusiastic about the
company's restructuring and bid its share
price higher than was justified. As investors
became more skeptical about Japanese companies'
restructuring in general, its share price
dropped sharply in line with the overall
Japanese market. The company is making slow but
steady progress meeting its restructuring
targets. We think it is a sound long-term
investment.
7
Prudential Pacific Growth Fund, Inc.
Annual Report October 31, 2002
BEER CONSUMPTION SLOWED WHEN THE WORLD CUP ENDED
We had a small but noticeable loss on two
breweries--Hite in Korea and Asahi in Japan.
This is in contrast to the gains of U.S.
breweries over the same period. Both of our
holdings had substantial gains prior to the
2002 World Cup, which was played in Korea and
Japan. Afterward, many investors abandoned the
stocks. We continue to hold a position in Hite,
which is one of two domestic breweries serving
the large Korean market.
LOOKING AHEAD
Pacific region stocks are still bargain-priced
compared to growth stocks in the United States
and Europe. Moreover, growth in the region,
excluding Japan, has been strong--certainly much
stronger than in Europe or the United States.
Although economic growth in Hong Kong slowed to
European levels, we expect it to pick up again.
Hong Kong, as well as the other countries in
the region, is increasingly sharing in China's
economic health. China's 8.1% annualized Gross
Domestic Product (GDP) growth rate in the third
quarter of 2002 is well ahead of all other
economies of any size except Turkey's.
Although we expect the Pacific region's
economic growth to compare favorably with
growth elsewhere, its absolute level may be
low. We expect Japan, whose imports have
historically been an important factor in the
region's economy, to grow at only 1% in 2003.
We are responding to this likelihood by keeping
most of the portfolio in defensive stocks and
some in stocks that we expect to be part of the
technology sector's eventual recovery. When
we see stocks at prices we find attractive, we
will supplement that technology exposure. We
expect share-price volatility to continue
providing such opportunities.
Prudential Pacific Growth Fund Management Team
8
www.prudential.com (800) 225-1852
Holdings expressed as a percentage of the Fund's net assets
Comments on Largest Holdings As of 10/31/02
------------------------------------------------------------
3.2% Nissan Motor Co., Ltd./Automotive
Nissan Motor, a global automobile company,
had one of the more successful turnarounds
in Japan. Its focus on controlling costs,
successful product launches, and benefits from
restructuring resulted in solid cash flow. We
expect further positive earnings surprises.
Its shares are priced at about eight times its
annual earnings per share. We expect an
excellent return on equity (29%) for its 2003
fiscal year.
3.0% Canon, Inc./Electronic Components
Canon is a leading global manufacturer of
imaging products--computer peripherals, copiers,
cameras, fax machines, and camcorders. Its
digital camera sales have been very strong, and
it continues to take market share in the
printer and copier markets, especially in the
United States. A large proportion of its profit
comes from consumables such as toner
cartridges, not from hardware sales.
3.0% Takeda Chemical Industries, Ltd./Drugs & Healthcare
Takeda is Japan's leading manufacturer of
pharmaceuticals, food supplements,
agrochemicals, and environment-related chemical
products. It is pulling out of non-core
businesses and will become an outright
pharmaceutical company in three years. The
better product mix is improving its margins.
Its shares are selling at about 17 times
earnings per share (P/E), with a 17% return on
equity targeted to reach 20%. We think its
earnings growth will justify a higher P/E.
2.8% Ricoh Co., Ltd./Electronic Components
Ricoh manufactures office automation
equipment, electronic devices, and photographic
instruments, including fax machines, scanners,
printers, digital cameras, and copiers. It is
the market leader in the high-margin
multifunction printer business, where demand is
expected to stay firm. Ricoh is increasing its
sales effort in the United States to take
market share from the troubled Xerox. It is one
of the few Japanese electronics companies to
record consistent profit growth over the past
10 years.
2.8% Hong Kong & China Gas Co., Ltd./Gas Utilities
Hong Kong and China Gas is a near-monopoly
supplier of gas in the growing Hong Kong
market, and is increasing its presence in
China. China's abundant reserves give it a
strong incentive to rely on natural gas instead
of imported oil. We expect that by 2010,
natural gas will supply 8% of China's primary
energy demand, up from 2% in 2000. The firm's
sound business plan and strong cash flow should
support the required investment. It is also
reducing costs and aggressively buying back its
shares.
9
ANNUAL REPORT
OCTOBER 31, 2002
PRUDENTIAL
PACIFIC GROWTH FUND, INC.
FINANCIAL STATEMENTS
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2002
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 94.7%
Common Stocks
-------------------------------------------------------------------------------------
Australia 18.2%
69,000 Australia & New Zealand Banking Group, Ltd. $ 721,125
102,500 Australian Gas Light Co., Ltd. 580,277
54,000 BHP Billiton, Ltd. 290,421
81,000 Coca-Cola Amatil, Ltd. 237,372
55,000 Foodland Associated, Ltd. 581,526
270,000 Lihir Gold, Ltd.(a) 163,343
30,500 National Australia Bank, Ltd. 581,823
100,000 Newcrest Mining, Ltd. 325,799
187,000 Qantas Airways, Ltd. 391,286
80,000 Santos, Ltd. 277,512
82,500 Suncorp-Metway, Ltd. 555,426
251,000 TAB, Ltd. 441,615
147,500 Telstra Corp., Ltd. 389,682
12,000 Wesfarmers, Ltd. 175,498
99,000 Westpac Banking Corp., Ltd. 780,252
36,000 WMC, Ltd. 151,655
35,000 Woodside Petroleum, Ltd. 233,498
32,000 Woolworths, Ltd. 218,635
--------------
7,096,745
-------------------------------------------------------------------------------------
Canada 0.3%
11,025 Placer Dome, Inc. 98,212
-------------------------------------------------------------------------------------
Hong Kong 12.8%
35,000 Cheung Kong (Holdings), Ltd. 232,238
230,000 CLP Holdings, Ltd. 931,902
278,000 Esprit Holdings, Ltd. 466,951
85,000 Hang Seng Bank, Ltd. 918,214
825,000 Hong Kong & China Gas Co., Ltd. 1,084,259
240,000 Hong Kong Electric Holdings, Ltd. 975,497
48,000 Hutchison Whampoa, Ltd. 295,418
82,000 Li & Fung, Ltd. 80,958
--------------
4,985,437
See Notes to Financial Statements 11
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2002 Cont'd.
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
Japan 43.4%
4,850 AIFUL Corp. $ 203,888
32,000 Canon, Inc. 1,180,676
14,300 Chubu Electric Power Co., Inc. 238,710
12,000 Daito Trust Construction Co., Ltd. 235,580
35,500 Denso Corp. 565,943
4,400 Fanuc, Ltd. 174,195
18,000 Fuji Photo Film Co., Ltd. 496,628
13,000 Ito-Yokado Co., Ltd. 405,368
14,000 Kansai Electric Power Co. 198,161
41,000 Kao Corp. 937,096
2,200 Kyocera Corp. 129,659
22,800 Marui Co., Ltd. 211,797
52,000 Matsushita Electric Industrial Co., Ltd. 545,018
183,000 Mazda Motor Corp. 409,302
2,600 Murata Manufacturing Co., Ltd. 122,884
42,000 Nikon Corp.(a) 293,471
9,100 Nintendo Co., Ltd. 876,528
110 Nippon Telegraph & Telephone Corp. 403,164
162,000 Nissan Motor Co., Ltd. 1,244,362
40,000 Nomura Holdings, Inc. 460,385
5,500 ORIX Corp. 311,127
60,000 Osaka Gas Co., Ltd. 145,462
3,300 Promise Co., Ltd. 106,942
61,000 Ricoh Co., Ltd. 1,090,476
16,500 Secom Co., Ltd. 583,195
9,600 Sega Corp.(a) 115,978
4,000 Seven-Eleven Japan Co., Ltd. 112,974
12,300 Shimano, Inc. 181,228
22,000 Shionogi & Co., Ltd. 252,314
9,000 Showa Corp. 73,466
21,500 Sony Corp. 924,893
28,000 Takeda Chemical Industries, Ltd. 1,163,371
4,040 Takefuji Corp. 169,507
15,000 Tohoku Electric Power Co., Inc. 199,582
17,000 Tokyo Electric Power Co., Inc. 314,311
129,000 Tokyo Gas Co., Ltd. 376,977
12 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2002 Cont'd.
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
33,300 Toyota Motor Corp. $ 810,033
3,000 Uni-Charm Corp. 110,933
6,400 Yamada Denki Co., Ltd.(a) 155,421
3,200 Yamada Denki Co., Ltd. 78,886
37,000 Yamaha Motor Co., Ltd. 271,521
--------------
16,881,412
-------------------------------------------------------------------------------------
Malaysia 2.7%
27,000 British American Tobacco Malaysia Berhad 254,022
45,600 Genting Berhad 158,405
285,000 Magnum Corp. Berhad 179,256
83,000 Perusahaan Otomobil Nasional Berhad 174,743
250,000 Public Bank Berhad 176,322
48,000 Resorts World Berhad 113,688
--------------
1,056,436
-------------------------------------------------------------------------------------
New Zealand 1.9%
260,000 Carter Holt Harvey, Ltd. 208,587
25,000 Fisher & Paykel Healthcare Corp., Ltd. 136,141
160,000 Telecom Corp. of New Zealand, Ltd. 395,177
--------------
739,905
-------------------------------------------------------------------------------------
Singapore 2.5%
93,000 Overseas-Chinese Banking Corp., Ltd. 547,779
265,000 Singapore Telecommunications, Ltd. 216,121
25,000 United Overseas Bank, Ltd. 189,729
--------------
953,629
-------------------------------------------------------------------------------------
South Korea 7.1%
4,500 Hite Brewery Co., Ltd. 195,739
19,000 Hyundai Motor Co., Ltd. 482,617
8,000 KT Corp. (ADR) 164,320
5,250 KT Freetel(a) 130,554
510 Kumgang Korea Chemical Co., Ltd. 50,227
1,100 NCsoft Corp.(a) 97,049
2,050 Pacific Corp. 206,941
2,300 POSCO 216,133
1,430 Samsung Electronics Co., Ltd. 404,896
See Notes to Financial Statements 13
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2002 Cont'd.
Shares Description Value (Note 1)
----------------------------------------------------------------------------------------
3,150 Samsung Fire & Marine Insurance Co., Ltd. $ 191,307
1,600 Shinsegae Co., Ltd. 216,010
2,300 SK Telecom Co., Ltd. 424,716
--------------
2,780,509
-------------------------------------------------------------------------------------
Taiwan 4.9%
77,000 Benq Corp. 110,336
145,000 Chinatrust Financial Holding Co., Ltd.(a) 115,570
218,000 Chungwha Picture Tubes, Ltd.(a) 87,817
105,000 Hon Hai Precision Industry Co., Ltd. 379,166
54,000 Quanta Computer, Inc. 109,542
696,429 SinoPac Holdings Co.(a) 291,565
83,000 Synnex Technology International Corp. 133,740
79,040 Taipei Bank 68,001
310,000 Taiwan Semiconductor Manufacturing Co., Ltd.(a) 414,773
284,000 United Microelectronics Corp.(a) 205,928
--------------
1,916,438
-------------------------------------------------------------------------------------
Thailand 0.9%
420,000 PTT Public Co., Ltd. 368,816
--------------
Total long-term investments (cost $38,423,258) 36,877,539
--------------
SHORT-TERM INVESTMENT 0.3%
Principal
Amount
(000)
-------------------------------------------------------------------------------------
Repurchase Agreement
$ 120 Joint Repurchase Agreement Account,
1.93%, 11/1/02
(cost $120,000; Note 5) 120,000
--------------
Total Investments 95.0%
(cost $38,543,258; Note 6) 36,997,539
Other assets in excess of liabilities 5.0% 1,932,814
--------------
Net Assets 100% $ 38,930,353
--------------
--------------
------------------------------
(a) Non-income producing security.
ADR--American Depositary Receipt.
14 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Portfolio of Investments as of October 31, 2002 Cont'd.
The industry classification of portfolio holdings and other assets shown as a
percentage of net assets as of October 31, 2002 was as follows:
Banks............................................................. 10.5%
Automotive........................................................ 10.4
Electronic Components............................................. 10.1
Electronics....................................................... 8.3
Electrical Utilities.............................................. 7.3
Telecommunication Services........................................ 5.5
Financial Services................................................ 5.4
Retail............................................................ 5.1
Gas Utilities..................................................... 4.1
Leisure & Tourism................................................. 4.1
Drugs & Healthcare................................................ 4.0
Cosmetics & Toiletries............................................ 3.2
Mining............................................................ 3.2
Oil & Gas Exploration/Production.................................. 2.3
Energy Equipment & Services....................................... 1.5
Apparel & Textiles................................................ 1.2
Diversified Operations............................................ 1.2
Hotels, Restaurants & Leisure..................................... 1.2
Food & Beverage................................................... 1.1
Airlines.......................................................... 1.0
Tobacco........................................................... 0.7
Building & Construction........................................... 0.6
Computer Networks................................................. 0.6
Real Estate Investment Trust...................................... 0.6
Insurance......................................................... 0.5
Paper & Forest Products........................................... 0.5
Merchandising..................................................... 0.2
Software.......................................................... 0.2
Chemicals......................................................... 0.1
Other............................................................. 0.3
-----
95.0
Other assets in excess of liabilities............................. 5.0
-----
100.0%
-----
-----
See Notes to Financial Statements 15
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities
October 31, 2002
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $38,543,258) $ 36,997,539
Foreign currency, at value (cost $926,267) 911,965
Cash 711,960
Receivable for investments sold 1,086,239
Receivable for Fund shares sold 226,486
Dividends and interest receivable 102,669
Other assets 7,040
----------------
Total assets 40,043,898
----------------
LIABILITIES
Payable for investments purchased 515,337
Payable for Fund shares reacquired 341,475
Accrued expenses 200,209
Management fee payable 24,444
Withholding taxes payable 16,110
Distribution fee payable 15,970
----------------
Total liabilities 1,113,545
----------------
NET ASSETS $ 38,930,353
----------------
----------------
Net assets were comprised of:
Shares of common stock, at par $ 6,032
Paid-in capital in excess of par 83,929,237
----------------
83,935,269
Accumulated net realized loss on investments (43,436,272)
Net unrealized depreciation on investments and foreign
currencies (1,568,644)
----------------
Net assets, October 31, 2002 $ 38,930,353
----------------
----------------
16 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Assets and Liabilities Cont'd.
October 31, 2002
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share
($25,106,295 / 3,808,609 shares of common stock issued
and outstanding) $6.59
Maximum sales charge (5% of offering price) .35
----------------
Maximum offering price to public $6.94
----------------
----------------
Class B:
Net asset value, offering price and redemption price per
share ($10,840,462 / 1,752,701 shares of common stock
issued and outstanding) $6.19
----------------
----------------
Class C:
Net asset value and redemption price per share
($2,061,342 / 331,379 shares of common stock issued and
outstanding) $6.22
Sales charge (1% of offering price) .06
----------------
Offering price to public $6.28
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per
share ($922,254 / 139,545 shares of common stock issued
and outstanding) $6.61
----------------
----------------
See Notes to Financial Statements 17
Prudential Pacific Growth Fund, Inc.
Statement of Operations
Year
Ended
October 31, 2002
----------------------------------------------------------------------------------------
NET INVESTMENT LOSS
Income
Dividends (net of foreign withholding taxes of $72,347) $ 831,388
Interest 49,873
----------------
Total income 881,261
----------------
Expenses
Management fee 350,748
Distribution fee--Class A 72,693
Distribution fee--Class B 143,222
Distribution fee--Class C 22,994
Custodian's fees and expenses 259,000
Transfer agent's fees and expenses 228,000
Reports to shareholders 64,000
Audit fees 39,000
Registration fee 25,000
Legal fees and expenses 24,000
Directors' fees 7,500
Miscellaneous 1,462
----------------
Total operating expenses 1,237,619
Loan interest expense (Note 8) 1,867
----------------
Total expenses 1,239,486
----------------
Net investment loss (358,225)
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on:
Investment transactions (2,271,712)
Foreign currency transactions (332,560)
----------------
(2,604,272)
----------------
Net change in unrealized appreciation (depreciation) on:
Investments 2,594,843
Foreign currencies 223,081
----------------
2,817,924
----------------
Net gain on investments and foreign currencies 213,652
----------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (144,573)
----------------
----------------
18 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Statement of Changes in Net Assets
Year Ended October 31,
------------------------------------
2002 2001
-------------------------------------------------------------------------------------
DECREASE IN NET ASSETS
Operations
Net investment loss $ (358,225) $ (1,015,868)
Net realized loss on investments and
foreign currency transactions (2,604,272) (33,132,395)
Net change in unrealized appreciation
(depreciation) on investments and
foreign currencies 2,817,924 12,783,183
---------------- ----------------
Net decrease in net assets resulting from
operations (144,573) (21,365,080)
---------------- ----------------
Fund share transactions (net of share
conversions)
(Note 7)
Net proceeds from shares sold 69,583,170 164,362,944
Cost of shares reacquired (78,760,338) (205,697,807)
---------------- ----------------
Net decrease in net assets from Fund share
transactions (9,177,168) (41,334,863)
---------------- ----------------
Total decrease (9,321,741) (62,699,943)
NET ASSETS
Beginning of year 48,252,094 110,952,037
---------------- ----------------
End of year(a) $ 38,930,353 $ 48,252,094
---------------- ----------------
---------------- ----------------
------------------------------
(a) Includes undistributed net investment
income of: $ -- $ 70,201
---------------- ----------------
---------------- ----------------
See Notes to Financial Statements 19
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 a securities exchange or
NASDAQ National Market System are valued at the last reported sale price on such
exchange system or, if there was no sale on such day, at the mean between the
last reported bid and asked prices, or at the last bid price on such day in the
absence of an asked price. Securities traded in the over-the-counter market
(including securities listed on exchanges whose primary market is believed to be
over-the-counter) are valued by an independent pricing agent or principal market
maker. Securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed by the
manager, in consultation with subadviser to be over-the-counter, are valued by
an independent pricing agent or more than one principal market maker. Securities
for which market quotations are not readily available, other than private
placements, are valued at a price supplied by an independent pricing agent which
is, in the opinion of such pricing agent, representative of the market value of
such securities as of the time of determination of net asset value or, using a
methodology developed by an independent pricing agent, which is, in the judgment
of the manager and subadviser, able to produce prices which are representative
of market value. Securities for which reliable market quotations are not readily
available are valued by the Valuation Committee and 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, which approximates market value.
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
20
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
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.
Foreign Currency Translation: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the closing daily 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 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
21
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
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 and losses on sales
of securities 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. The Fund amortizes premiums and accretes discount on purchases of debt
securities as adjustments to interest income. Expenses are recorded on the
accrual basis which may require the use of certain estimates by management.
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.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments LLC ('PI').
Pursuant to this agreement, PI has responsibility for all investment advisory
services and supervises the subadviser's performance of such services. PI has
entered into a subadvisory agreement with Jardine Fleming International
Management, Inc. ('JF').
22
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
The subadvisory agreement provides that JF furnishes investment advisory
services in connection with the management of the Fund. In connection therewith,
JF is obligated to keep certain books and records of the Fund. PI pays for the
services of 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 PI 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, 2002.
PIMS has advised the Fund that it received approximately $8,100 and $300
in front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the year ended October 31, 2002. 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, 2002, it
received approximately $46,400 and $1,200 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIMS and PI are indirect, wholly-owned subsidiaries of Prudential
Financial, Inc. ('Prudential').
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PI and an
indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer
agent. During the year ended October 31, 2002, the Fund incurred fees of
approximately $194,500 for the services of PMFS. As of October 31, 2002
approximately $15,300 of such fees were due to PMFS.
23
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
The Fund pays networking fees to affiliated and unaffiliated
broker/dealers. These networking fees are payments made to broker/dealers that
clear mutual fund transactions through a national clearing system. The Fund
incurred approximately $29,400 in total networking fees, of which the amount
relating to the services of Prudential Securities, Inc. ('PSI'), an affiliate of
PI and an indirect, wholly-owned subsidiary of Prudential, was approximately
$27,800 for the year ended October 31, 2002. As of October 31, 2002,
approximately $2,100 of such fees were due to PSI. These amounts are included in
transfer agent's fees and expenses in the Statement of Operations.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term
investments,for the year ended October 31, 2002 were $68,086,220 and
$79,643,493, respectively.
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 October 31, 2002, the Fund had a
..06% undivided interest in the repurchase agreements in the joint account. The
undivided interest for the Fund represents $120,000 in principal amount. As of
such date, each repurchase agreements in the joint account and the collateral
therefor were as follows:
Greenwich Capital Markets, Inc., 1.93% in the principal amount of
$65,953,000, repurchase price $65,956,536, due 11/1/02. The value of the
collateral including accrued interest was $67,275,039.
JP Morgan Chase, 1.93%, in the principal amount of $65,953,000, repurchase
price $65,956,536, due 11/1/02. The value of the collateral including accrued
interest was $67,272,719.
SBC Warburg Asia Ltd., 1.93%, in the principal amount of $65,954,000,
repurchase price $65,957,536, due 11/1/02. The value of the collateral including
accrued interest was $67,276,447.
Note 6. Distributions and Tax Information
In order to present paid-in capital in excess of par and accumulated net
realized gains (losses) on the Statement of Assets and Liabilities that more
closely represent their tax character, certain adjustments have been made to
paid-in capital in excess of par, undistributed net investment loss and
accumulated net realized gains (loss) on investments. For the year ended October
31, 2002, the adjustments were to decrease
24
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
paid-in capital in excess of par by $421,477, decrease accumulated net realized
loss by $133,453 and decrease undistributed net investment loss of $288,024 for
the reclassification of a net operating loss and differences in the treatment
for book and tax purposes of certain transactions involving foreign securities,
currencies and other tax adjustments.
As of October 31, 2002, there were no distributable earnings on a tax
basis.
For federal income tax purposes, the Fund had a capital loss carryforward
as of October 31, 2002 of approximately $43,057,000 of which $6,178,000 expires
in 2006, $34,269,000 expires in 2009 and $2,610,000 expires in 2010.
Accordingly, no capital gains distributions are expected to be paid to
shareholders until net gains have been realized in excess of such carryforward.
The United States federal income tax basis of the Fund's investments and
the net unrealized appreciation as of October 31, 2002 were as follows:
Other Total Net
Cost Basis Unrealized
Tax Basis Appreciation Depreciation Adjustments Depreciation
------------- --------------- --------------- ------------ --------------
$38,922,692 $1,198,296 $3,123,449 $(22,925) $1,948,078
The difference between book basis and tax basis is primarily attributable
to deferred losses on wash sales.
Note 7. 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.
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.
25
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Transactions in shares of common stock were as follows:
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
Year ended October 31, 2002:
Shares sold 4,523,111 $ 32,181,123
Shares reacquired (5,307,798) (38,302,857)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (784,687) (6,121,734)
Shares issued upon conversion from Class B 400,877 2,914,264
----------- -------------
Net increase (decrease) in shares outstanding (383,810) $ (3,207,470)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
Class B
----------------------------------------------------------
Year ended October 31, 2002:
Shares sold 2,022,298 $ 13,450,177
Shares reacquired (2,371,964) (15,924,703)
----------- -------------
Net increase (decrease) in shares outstanding before
conversion (349,666) (2,474,526)
Shares reacquired upon conversion into Class A (425,682) (2,914,264)
----------- -------------
Net increase (decrease) in shares outstanding (775,348) $ (5,388,790)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
26
Prudential Pacific Growth Fund, Inc.
Notes to Financial Statements Cont'd.
Class C Shares Amount
---------------------------------------------------------- ----------- -------------
Year ended October 31, 2002:
Shares sold 1,098,902 $ 7,349,768
Shares reacquired (1,102,949) (7,435,970)
----------- -------------
Net increase (decrease) in shares outstanding (4,047) $ (86,202)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
Class Z
----------------------------------------------------------
Year ended October 31, 2002:
Shares sold 2,321,128 $ 16,602,102
Shares reacquired (2,349,153) (17,096,808)
----------- -------------
Net increase (decrease) in shares outstanding (28,025) $ (494,706)
----------- -------------
----------- -------------
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)
----------- -------------
----------- -------------
Note 8. Borrowings
The Fund, along with other affiliated registered investment companies (the
'Funds'), is a party to a syndicated credit agreement ('SCA') with a group of
banks. For the year ended October 31, 2002, the amounts of the commitment were
as follows: $930 million from November 1, 2001 through December 31, 2001 and
$500 million from January 1, 2002 through May 3, 2002. On May 3, 2002, the Funds
renewed and amended the SCA, which effectively increased the banks' commitment
to $800 million and allows the Funds to increase the commitment to $1 billion if
necessary. Interest on any borrowings under the SCA will be incurred at market
rates. The Funds pay a commitment fee of .08 of 1% of the unused portion of the
SCA. The commitment fee is accrued and paid quarterly on a pro rata basis by the
Funds. The purpose of the SCA is to serve as an alternative source of funding
for capital share redemptions. The expiration date of the SCA is May 2, 2003.
The Fund utilized the line of credit during the year ended October 31,
2002. The average daily balance for the 9 days the Fund had outstanding during
the year was approximately $2,740,922 at a weighted average interest rate of
approximately 2.73%.
27
Prudential Pacific Growth Fund, Inc.
Financial Highlights
Class A(a)
----------------
Year Ended
October 31, 2002
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 6.83
--------
Income/loss from investment operations
Net investment income (loss) (.03)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (.21)
--------
Total from investment operations (.24)
--------
Less distributions
Dividends from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of year $ 6.59
--------
--------
TOTAL RETURN(b) (3.51)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 25,106
Average net assets (000) $ 29,077
Ratios to average net assets:
Total expenses(c) 2.39%
Operating expenses, including distribution and service
(12b-1) fees(c) 2.39%
Operating expenses, excluding distribution and service
(12b-1) fees 2.14%
Net investment income (loss) (.48)%
For Class A, B, C and Z shares:
Portfolio turnover rate 155%
------------------------------
(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 contractually agreed to limit its distribution
and service (12b-1) fees to .25 of 1% of the average daily net assets of
the Class A shares.
28 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class A(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2001 2000 1999 1998
-------------------------------------------------------------------------------------
$ 9.70 $ 14.01 $ 9.14 $ 12.22
-------- -------- -------- --------
(.09) (.09) (.04) .06
(2.78) (4.01) 4.99 (1.88)
-------- -------- -------- --------
(2.87) (4.10) 4.95 (1.82)
-------- -------- -------- --------
-- (.16) (.08) --
-- (.05) -- (.40)
-- -- -- (.86)
-------- -------- -------- --------
-- (.21) (.08) (1.26)
-------- -------- -------- --------
$ 6.83 $ 9.70 $ 14.01 $ 9.14
-------- -------- -------- --------
-------- -------- -------- --------
(29.59)% (29.82)% 55.11% (15.53)%
$ 28,615 $ 50,141 $ 49,338 $ 22,624
$ 34,919 $ 53,389 $ 31,281 $ 26,845
2.60% 1.60% 1.72% 1.70%
2.58% 1.57% 1.72% 1.70%
2.33% 1.32% 1.47% 1.45%
(1.12)% (.70)% (.34)% .63%
158% 93% 104% 94%
See Notes to Financial Statements 29
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class B(a)
----------------
Year Ended
October 31, 2002
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 6.45
--------
Income/loss from investment operations
Net investment loss (.09)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (.17)
--------
Total from investment operations (.26)
--------
Less distributions
Dividends from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of year $ 6.19
--------
--------
TOTAL RETURN(b) (4.03)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 10,840
Average net assets (000) $ 14,322
Ratios to average net assets:
Total expenses 3.14%
Operating expenses, including distribution and service
(12b-1) fees 3.14%
Operating expenses, excluding distribution and service
(12b-1) fees 2.14%
Net investment loss (1.32)%
------------------------------
(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.
30 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class B(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2001 2000 1999 1998
-------------------------------------------------------------------------------------
$ 9.30 $ 13.50 $ 8.79 $ 11.77
-------- ---------------- ---------------- --------
(.15) (.19) (.12) (.01)
(2.70) (3.87) 4.84 (1.82)
-------- ---------------- ---------------- --------
(2.85) (4.06) 4.72 (1.83)
-------- ---------------- ---------------- --------
-- (.09) (.01) --
-- (.05) -- (.29)
-- -- -- (.86)
-------- ---------------- ---------------- --------
-- (.14) (.01) (1.15)
-------- ---------------- ---------------- --------
$ 6.45 $ 9.30 $ 13.50 $ 8.79
-------- ---------------- ---------------- --------
-------- ---------------- ---------------- --------
(30.72)% (30.40)% 54.28% (16.32)%
$ 16,314 $ 51,004 $107,769 $ 74,457
$ 28,834 $ 96,019 $ 85,193 $ 91,983
3.35% 2.35% 2.47% 2.45%
3.33% 2.32% 2.47% 2.45%
2.33% 1.32% 1.47% 1.45%
(1.90)% (1.43)% (1.09)% (.12)%
See Notes to Financial Statements 31
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class C(a)
----------------
Year Ended
October 31, 2002
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 6.49
-------
Income/loss from investment operations
Net investment loss (.08)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (.19)
-------
Total from investment operations (.27)
-------
Less distributions
Dividends from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
-------
Total distributions --
-------
Net asset value, end of year $ 6.22
-------
-------
TOTAL RETURN(b) (4.16)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $2,061
Average net assets (000) $2,299
Ratios to average net assets:
Total expenses 3.14%
Operating expenses, including distribution and service
(12b-1) fees 3.14%
Operating expenses, excluding distribution and service
(12b-1) fees 2.14%
Net investment loss (1.23)%
------------------------------
(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.
32 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class C(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2001 2000 1999 1998
-------------------------------------------------------------------------------------
$ 9.30 $13.50 $ 8.79 $11.77
------- ------- ------- -------
(.15) (.19) (.12) (.01)
(2.66) (3.87) 4.84 (1.82)
------- ------- ------- -------
(2.81) (4.06) 4.72 (1.83)
------- ------- ------- -------
-- (.09) (.01) --
-- (.05) -- (.29)
-- -- -- (.86)
------- ------- ------- -------
-- (.14) (.01) (1.15)
------- ------- ------- -------
$ 6.49 $ 9.30 $13.50 $ 8.79
------- ------- ------- -------
------- ------- ------- -------
(30.29)% (30.40)% 54.28% (16.32)%
$2,176 $6,040 $7,073 $1,654
$3,035 $7,376 $3,103 $2,276
3.35% 2.35% 2.47% 2.45%
3.33% 2.32% 2.47% 2.45%
2.33% 1.32% 1.47% 1.45%
(1.90)% (1.42)% (1.09)% (.12)%
See Notes to Financial Statements 33
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class Z(a)
----------------
Year Ended
October 31, 2002
----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 6.85
-------
Income/loss from investment operations
Net investment income (loss) (.01)
Net realized and unrealized gain (loss) on investment and
foreign currency transactions (.23)
-------
Total from investment operations (.24)
-------
Less distributions
Dividends from net investment income --
Distributions in excess of net investment income --
Distributions from net realized gains --
-------
Total distributions --
-------
Net asset value, end of year $ 6.61
-------
-------
TOTAL RETURN(b) (3.50)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 922
Average net assets (000) $1,068
Ratios to average net assets:
Total expenses 2.14%
Operating expenses 2.14%
Net investment income (loss) (.18)%
------------------------------
(a) Calculated based upon average weighted 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.
34 See Notes to Financial Statements
Prudential Pacific Growth Fund, Inc.
Financial Highlights Cont'd.
Class Z(a)
-------------------------------------------------------------------------------------
Year Ended October 31,
-------------------------------------------------------------------------------------
2001 2000 1999 1998
-------------------------------------------------------------------------------------
$ 9.75 $ 14.12 $ 9.17 $ 12.28
------- -------- -------- --------
(.07) (.06) -- .08
(2.83) (4.08) 5.06 (1.89)
------- -------- -------- --------
(2.90) (4.14) 5.06 (1.81)
------- -------- -------- --------
-- (.18) (.11) --
-- (.05) -- (.44)
-- -- -- (.86)
------- -------- -------- --------
-- (.23) (.11) (1.30)
------- -------- -------- --------
$ 6.85 $ 9.75 $ 14.12 $ 9.17
------- -------- -------- --------
------- -------- -------- --------
(29.89)% (29.75)% 56.05% (15.36)%
$1,147 $ 3,767 $ 43,311 $ 12,429
$2,107 $ 33,479 $ 22,811 $ 15,099
2.35% 1.35% 1.47% 1.45%
2.33% 1.32% 1.47% 1.45%
(.86)% (.40)% (.03)% .82%
See Notes to Financial Statements 35
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, 2002, 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, 2002 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 19, 2002
36
ANNUAL REPORT
OCTOBER 31, 2002
PRUDENTIAL
PACIFIC GROWTH FUND, INC.
-------------------------------------------------------------------------------
MANAGEMENT OF
THE FUND
Prudential Pacific Growth Fund, Inc. www.prudential.com (800) 225-1852
Management of the Fund (Unaudited)
Information pertaining to the Directors of the Fund is set forth below.
Directors who are not deemed to be 'interested persons' of the Fund, as
defined in the Investment Company Act of 1940, are referred to as
'Independent Directors.' Directors who are deemed to be 'interested
persons' of the Fund are referred to as 'Interested Directors.' 'Fund
Complex' consists of the Fund and any other investment companies managed
by PI.
Independent Directors
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
Delayne Dedrick Gold (64) Director Since 1992
Robert E. La Blanc (68) Director Since 1992
Robin B. Smith (63) Director Since 1996
Number of
Fund Complex
Principal Occupations Overseen by
Name, Address** and Age During Past 5 Years Director
-------------------------------
Delayne Dedrick Gold (64) Marketing Consultant. 89
Robert E. La Blanc (68) President (since 1981) of Robert E. 74
La Blanc Associates, Inc.
(telecommunications); formerly
General Partner at Salomon Brothers
and Vice-Chairman of Continental
Telecom; Trustee of Manhattan
College.
Robin B. Smith (63) Chairman and Chief Executive Officer 69
(since August 1996) of Publishers
Clearing House (direct marketing),
formerly President and Chief
Executive Officer (January
1988-August 1996) of Publishers
Clearing House.
Other
Directorships Held
Name, Address** and Age by the Director****
-------------------------------
Delayne Dedrick Gold (64)
Robert E. La Blanc (68) Director of Storage
Technology Corporation
(technology) (since 1979),
Chartered Semiconductor
Manufacturing, Ltd.
(Singapore) (since 1998),
Titan Corporation
(electronics) (since 1995),
Computer Associates
International, Inc.
(software company) (since
2002); Director (since 1999)
of First Financial Fund,
Inc. and Director (since
April 1999) of The High
Yield Plus Fund, Inc.
Robin B. Smith (63) Director of BellSouth
Corporation (since 1992),
and Kmart Corporation
(retail) (since 1996).
38 39
Prudential Pacific Growth Fund, Inc. www.prudential.com (800) 225-1852
Management of the Fund (Unaudited) Cont'd.
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
Stephen Stoneburn (59) Director Since 1996
Nancy H. Teeters (72) Director Since 1996
Clay T. Whitehead (64) Director Since 1992
Number of
Portfolios in
Fund Complex
Principal Occupations Overseen by
Name, Address** and Age During Past 5 Years Director
-------------------------------
Stephen Stoneburn (59) President and Chief Executive Officer 74
(since June 1996) of Quadrant Media
Corp. (a publishing company);
formerly President (June 1995-June
1996) of Argus Integrated Media,
Inc.; Senior Vice President and
Managing Director (January 1993-1995)
of Cowles Business Media and Senior
Vice President of Fairchild
Publications, Inc. (1975-1989).
Nancy H. Teeters (72) Economist; formerly Vice President 72
and Chief Economist of International
Business Machines Corporation;
formerly Director of Inland Steel
Industries (July 1984-1999), formerly
Governor of The Federal Reserve
(September 1978-June 1984).
Clay T. Whitehead (64) President (since 1983) of National 91
Exchange Inc. (new business
development firm).
Other
Directorships Held
Name, Address** and Age by the Director****
-------------------------------
Stephen Stoneburn (59)
Nancy H. Teeters (72)
Clay T. Whitehead (64) Director (since 2000) of
First Financial Fund, Inc.
and Director (since 2000) of
The High Yield Plus Fund,
Inc.
40 41
Prudential Pacific Growth Fund, Inc. www.prudential.com (800) 225-1852
Management of the Fund (Unaudited) Cont'd.
Interested Directors
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
*Robert F. Gunia (56) Director and Since 1996
Vice President
*David R. Odenath, Jr. (45) Director and Since 1999
President
Number of
Fund Complex
Principal Occupations Overseen by
Name, Address** and Age During Past 5 Years Director
-------------------------------
*Robert F. Gunia (56) Executive Vice President and Chief 112
Administrative Officer (since June
1999) of PI; Executive Vice President
and Treasurer (since January 1996) of
PI; President (since April 1999) of
Prudential Investment Management
Services LLC (PIMS); Corporate Vice
President (since September 1997) of
The Prudential Insurance Company of
America (Prudential); formerly Senior
Vice President (March 1987-May 1999)
of Prudential Securities Incorporated
(Prudential Securities); formerly
Chief Administrative Officer (July
1989-September 1996), Director
(January 1989-September 1996) and
Executive Vice President, Treasurer
and Chief Financial Officer (June
1987-December 1996) of PMF; Vice
President and Director (since May
1992) of Nicholas-Applegate Fund,
Inc.
*David R. Odenath, Jr. (45) President, Chief Executive Officer 115
and Chief Operating Officer (since
June 1999) of PI; Senior Vice
President (since June 1999) of
Prudential; formerly Senior Vice
President (August 1993-May 1999) of
PaineWebber Group, Inc.
Other
Directorships Held
Name, Address** and Age by the Director****
-------------------------------
*Robert F. Gunia (56) Vice President and Director
(since May 1989) of The Asia
Pacific Fund, Inc.
*David R. Odenath, Jr. (45)
42 43
Prudential Pacific Growth Fund, Inc. www.prudential.com (800) 225-1852
Management of the Fund (Unaudited) Cont'd.
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
*Judy A. Rice (54) Director and Since 2000
Vice President
Number of
Portfolios in
Fund Complex
Principal Occupations Overseen by
Name, Address** and Age During Past 5 Years Director
-------------------------------
*Judy A. Rice (54) Executive Vice President (since 1999) 111
of PI; formerly various positions to
Senior Vice President (1992-1999) of
Prudential Securities; and various
positions to Managing Director
(1975-1992) of Salomon Smith Barney;
Member of Board of Governors of the
Money Management Institute; Member of
the Prudential Securities Operating
Council and a Member of the Board of
Directors for the National
Association for Variable Annuities.
Other
Directorships Held
Name, Address** and Age by the Director****
-------------------------------
*Judy A. Rice (54)
Information pertaining to the officers of the Fund who are not Directors
is set forth below.
Officers
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
Grace C. Torres (43) Treasurer and Since 1997
Principal
Financial and
Accounting
Officer
Jonathan D. Shain (44) Secretary Since 2001
Principal Occupations
Name, Address** and Age During Past 5 Years
-------------------------------
Grace C. Torres (43) Senior Vice President (since January
2000) of PI; formerly First Vice
President (December 1996-January
2000) of PI and First Vice President
(March 1993-1999) of Prudential
Securities.
Jonathan D. Shain (44) Vice President and Corporate Counsel
(since August 1998) of Prudential;
formerly Attorney with Fleet Bank,
N.A. (January 1997-July 1998) and
Associate Counsel (August
1994-January 1997) of New York Life
Insurance Company.
Name, Address** and Age
-------------------------------
Grace C. Torres (43)
Jonathan D. Shain (44)
44 45
Prudential Pacific Growth Fund, Inc. www.prudential.com (800) 225-1852
Management of the Fund (Unaudited) Cont'd.
Term of Office
and Length
Position of Time
Name, Address** and Age With Fund Served***
-------------------------------------------------------------------------
Marguerite E.H. Morrison (46) Assistant Since 2002
Secretary
Maryanne Ryan (38) Anti-Money Since 2002
Laundering
Compliance
Officer
Principal Occupations
Name, Address** and Age During Past 5 Years
-------------------------------
Marguerite E.H. Morrison (46) Vice President and Chief Legal
Officer - Mutual Funds and Unit
Investment Trusts (since August 2000)
of Prudential; Senior Vice President
and Assistant Secretary (since
February 2001) of PI; Vice President
and Assistant Secretary of PIMS
(since October 2001), previously Vice
President and Associate General
Counsel (December 1996 - February
2001) of PI and Vice President and
Associate General Counsel (September
1987 - September 1996) of Prudential
Securities.
Maryanne Ryan (38) Vice President, Prudential (since
November 1998), First Vice President,
Prudential Securities (March 1997 -
May 1998).
Name, Address** and Age
-------------------------------
Marguerite E.H. Morrison (46)
Maryanne Ryan (38)
------------------
* 'Interested' Director, as defined in the 1940 Act, by reason of employment with
the Manager, the Subadviser or the Distributor.
** Unless otherwise noted, the address of the Directors and Officers is c/o:
Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark,
New Jersey 07102.
*** There is no set term of office for Directors and officers. The Independent
Directors have adopted a retirement policy, which calls for the retirement of
Directors on December 31 of the year in which they reach the age of 75. The table
shows the number of years for which they have served as Director and/or officer.
**** This column includes only directorships of companies required to register, or
file reports with the SEC under the Securities and Exchange Act of 1934 (that is,
'public companies') or other investment companies registered under the 1940 Act.
Additional information about the Fund's Directors is included in the Fund's
Statement of Additional Information which is available without charge, upon
request, by calling (800) 225-1852 or (732) 482-7555 (Calling from outside the
U.S.)
46 47
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 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.prudential.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
Strategic Partners Mid-Cap 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 Prudential mutual funds.
Prudential Pacific Growth Fund, Inc.
Class A Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/02
One Year Five Years Ten Years Since Inception
With Sales Charge -8.34% -9.91% -3.22% -2.54%
Without Sales Charge -3.51% -8.98% -2.72% -2.05%
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
annual total returns for the past ten years.
The graph compares a $10,000 investment in the
Prudential Pacific Growth Fund, Inc. (Class A
shares) with a similar investment in the Morgan
Stanley Capital International (MSCI) All
Country (AC) Asia Pacific Free Gross Index and
the MSCI AC Pacific Free Index by portraying
the initial account values at the beginning of
the ten-year period of Class A shares (October
31, 1992) and the account values at the end of
the current fiscal year (October 31, 2002), 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.
Without the distribution and service (12b-1)
fee waiver for Class A shares, the returns
would have been lower. 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 the Fund's distributions or following the
redemption of the Fund's shares. The Fund's
benchmark changed to the MSCI AC Pacific Free
Index because this index better reflects the
countries that the investment adviser seeks to
position the portfolio based on the Fund's
mandate. The MSCI AC Asia Pacific Free Gross
Index is an unmanaged, weighted index
comprising approximately 950 securities listed
on the stock exchanges of Australia, China
(free), Hong Kong, India, Indonesia, Japan,
Korea, Malaysia, Pakistan, the Philippines,
Singapore, Sri Lanka, Taiwan, and Thailand. The
MSCI AC Pacific Free Index is an unmanaged,
free float-adjusted market capitalization index
that is designed to measure the following
international equity countries: Australia,
China, Hong Kong, Indonesia, Japan, Malaysia,
New Zealand, the Philippines, Singapore,
Taiwan, and Thailand. The total returns of the
indexes include the reinvestment of all
dividends, but do not include the effect of
sales charges, operating expenses, or taxes.
These returns would be lower if they included
the effect of sales charges, operating
expenses, or taxes. The securities that
comprise these indexes may differ substantially
from the securities in the Fund. These indexes
are not the only ones that may be used to
characterize performance of global stock funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly
in an index. This graph is furnished to you in
accordance with Securities and Exchange
Commission (SEC) regulations.
www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/02
One Year Five Years Ten Years Since Inception
With Sales Charge -8.83% -9.95% -3.49% -2.83%
Without Sales Charge -4.03% -9.79% -3.49% -2.83%
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. 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
annual total returns for the past ten years.
The graph compares a $10,000 investment in the
Prudential Pacific Growth Fund, Inc. (Class B
shares) with a similar investment in the MSCI
AC Asia Pacific Free Gross Index and the MSCI
AC Pacific Free Index by portraying the initial
account values at the beginning of the ten-year
period of Class B shares (October 31, 1992) and
the account values at the end of the current
fiscal year (October 31, 2002), 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 (CDSC) was
deducted from the value of the investment in
Class B shares, assuming full redemption on
October 31, 2002; (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 the Fund's
distributions or following the redemption of
the Fund's shares. The Fund's benchmark changed
to the MSCI AC Pacific Free Index because this
index better reflects the countries that the
investment adviser seeks to position the
portfolio based on the Fund's mandate. The MSCI
AC Asia Pacific Free Gross Index is an
unmanaged, weighted index comprising
approximately 950 securities listed on the
stock exchanges of Australia, China (free),
Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, Pakistan, the Philippines, Singapore,
Sri Lanka, Taiwan, and Thailand. The MSCI AC
Pacific Free Index is an unmanaged, free float-
adjusted market capitalization index that is
designed to measure the following international
equity countries: Australia, China, Hong Kong,
Indonesia, Japan, Malaysia, New Zealand, the
Philippines, Singapore, Taiwan, and Thailand.
The total returns of the indexes include the
reinvestment of all dividends, but do not
include the effect of sales charges, operating
expenses, or taxes. These returns would be
lower if they included the effect of sales
charges, operating expenses, or taxes. The
securities that comprise these indexes may
differ substantially from the securities in the
Fund. These indexes are not the only ones that
may be used to characterize performance of
global stock funds. Other indexes may portray
different comparative performance. Investors
cannot invest directly in an index. This graph
is furnished to you in accordance with SEC
regulations.
Prudential Pacific Growth Fund, Inc.
(GRAPH)
Class C Growth of a $10,000 Investment
One Year Five Years Ten Years Since Inception
With Sales Charge -6.07% -9.88% N/A -9.54%
Without Sales Charge -4.16% -9.70% N/A -9.43%
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
annual total returns 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 MSCI AC Asia Pacific Free Gross
Index and the MSCI AC Pacific Free
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,
2002), 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 CDSC was
deducted from the value of the
investment in Class C shares, assuming
full redemption on October 31, 2002;
(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 the Fund's
distributions or following the
redemption of the Fund's shares. The
Fund's benchmark changed to the MSCI AC
Pacific Free Index because this index
better reflects the countries that the
investment adviser seeks to position
the portfolio based on the Fund's
mandate. The MSCI AC Asia Pacific Free
Gross Index is an unmanaged, weighted
index comprising approximately 950
securities listed on the stock
exchanges of Australia, China (free),
Hong Kong, India, Indonesia, Japan,
Korea, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka,
Taiwan, and Thailand. The MSCI AC
Pacific Free Index is an unmanaged,
free float-adjusted market
capitalization index that is designed
to measure the following international
equity countries: Australia, China
(free), Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka,
Taiwan, and Thailand. The total returns
of the indexes include the reinvestment
of all dividends, but do not include
the effect of sales charges, operating
expenses, or taxes. These returns would
be lower if they included the effect of
sales charges, operating expenses, or
taxes. The securities that comprise
these indexes may differ substantially
from the securities in the Fund. These
indexes are not the only ones that may
be used to characterize performance of
global stock funds. Other indexes may
portray different comparative
performance. Investors cannot invest
directly in an index. This graph is
furnished to you in accordance with SEC
regulations.
www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 10/31/02
One Year Five Years Ten Years Since Inception
-3.50% -8.89% N/A -10.55%
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
annual total returns 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 MSCI AC Asia Pacific Free
Gross Index and the MSCI AC Pacific Free 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,
2002), 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 the Fund's
distributions or following the redemption of
the Fund's shares. The Fund's benchmark changed
to the MSCI AC Pacific Free Index because this
index better reflects the countries that the
investment adviser seeks to position the
portfolio based on the Fund's mandate. The MSCI
AC Asia Pacific Free Gross Index is an
unmanaged, weighted index comprising
approximately 950 securities listed on the
stock exchanges of Australia, China (free),
Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, Pakistan, the Philippines, Singapore,
Sri Lanka, Taiwan, and Thailand. The MSCI AC
Pacific Free Index is an unmanaged, free float-
adjusted market capitalization index that is
designed to measure the following international
equity countries: Australia, China (free), Hong
Kong, India, Indonesia, Japan, Korea, Malaysia,
Pakistan, the Philippines, Singapore, Sri
Lanka, Taiwan, and Thailand. The total returns
of the indexes include the reinvestment of all
dividends, but do not include the effect of
sales charges, operating expenses, or taxes.
These returns would be lower if they included
the effect of sales charges, operating
expenses, or taxes. The securities that
comprise these indexes may differ substantially
from the securities in the Fund. These indexes
are not the only ones that may be used to
characterize performance of global stock funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly
in an index. This graph is furnished to you in
accordance with SEC regulations.
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.prudential.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
Marguerite E.H. Morrison, Assistant Secretary
Maryanne Ryan, Anti-Money Laundering
Compliance Officer
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
PO 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 10004-2498
Mutual funds are not bank guaranteed or FDIC
insured, and may lose value.
Fund Symbols Nasdaq CUSIP
Class A PRPAX 743941106
Class B PRPBX 743941205
Class C PRPCX 743941304
Class Z PPGZX 743941403
MF157E IFS-A076299