PRUDENTIAL EMERGING GROWTH FUND INC, N-30D, 2000-01-06

PRUDENTIAL EMERGING GROWTH FUND INC
N-30D, 2000-01-06

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<PAGE>

(ICON)

Prudential
Emerging
Growth
Fund, Inc.

ANNUAL
REPORT
Oct. 31, 1999

(LOGO)

<PAGE>

A Message from the Fund's President December 15, 1999
(PHOTO)

Dear Shareholder,
Prudential Emerging Growth Fund had an excellent fiscal year
ended October 31, 1999, with its A shares returning 63.65%.
As the period began, stock markets were recovering from the
1998 financial crisis. Although concerns about rising interest
rates held stock prices down during much of 1999, investors,
nonetheless, strongly favored technology growth stocks.

The bar was raised for Prudential Emerging Growth Fund by
Lipper Inc.'s revision of its categories for mutual funds
in September 1999. Funds now are compared with competitors
that hold similar stocks--instead of classifying funds by
their objectives, they are grouped by their actual holdings
in terms of company size (small, mid-, or large cap) and
investment style (value, growth, or core). In our reporting
period, the Lipper Mid-Cap Growth Fund Average (Emerging
Growth's classification) reached 58.10%, outperforming
all other categories by about 15 percentage points or more.
But Emerging Growth Fund's A shares were five-and-a-half
percentage points above even that extraordinary benchmark.

This excellent performance was primarily the result of the
Fund's strong focus on technology--45% of its net assets at
period end--and of its stock selection within the sector.
Safeguard Scientifics (a venture capital firm) and RealNetworks
(the leader in delivering media over the Internet) made
substantial contributions to the Fund's return. The average
return on the Fund's Electronics and Internet-related holdings
was high. Its media firms also have been benefiting from the
surge in Internet-related advertising.

Both the Fund's strong performance relative to its benchmark
and the high average return on mid-cap growth stocks helped
this period's return. In any time period, one market sector
or investment style may outperform the others substantially,
only to return later to average returns by historical standards
or to trail another sector that had underperformed previously.
Given this, we advise shareholders to hold a diversified
portfolio of funds to dilute such swings, providing a
steadier performance over time.

Yours sincerely,

John R. Strangfeld
President
Prudential Emerging Growth Fund, Inc.

<PAGE>

Performance Review

(PHOTO)

Susan Hirsch
Fund Manager

Investment Goals and Style
Prudential Emerging Growth Fund provides an opportunity
for long-term capital appreciation by investing in stocks
of small and medium-sized U.S. companies with the potential
for above-average growth. Stocks of small and medium-sized
companies--those with market capitalization (the price of
all outstanding stock) between $500 million and an upper
limit of 300% of the dollar-weighted median market
capitalization of the S&P Mid-Cap 400 Index--currently
$8 billion--may offer greater growth potential than
those of larger companies, but may also fluctuate more
in price from day to day. There can be no assurance that
the Fund will achieve its investment objective.

High sector averages can conceal huge disparities
In the 12 months ended October 31, 1999 (and even after
our reporting period ended), investors strongly preferred
mid-cap technology, Internet, and media stocks. We were
well positioned to benefit from the gains in these sectors.
That meant not only emphasizing them, but diversifying the
risk within them and selecting the right stocks.

Even in the market-leading sectors, there were many stocks
with negative returns. Competition among young businesses
is tough, and investors are as quick to sell as to buy. We
spread our commitments to reduce our vulnerability to any
one company. Typically, we own about 90 different stocks
at any one time (although we had 130 at period end), but
we trade many of them aggressively. We keep an eye on our
stocks; a fall in price can be a signal to sell or an
opportunity to buy. Similarly, a rapid gain can mean a
stock is "getting ahead of itself" (rising too much faster
than potential earnings). We rarely let our enthusiasm
carry us into a large single commitment. On October 31,
1999, our largest holding was less than 2% of net assets.
Overall, we had a very strong return.

Electronics
Electronics companies that make semiconductors and other computer
components made the largest sector contribution to our return by
far. We were early to recognize the efficiencies of outsourced
computer chip manufacturing. Some companies specialize in
expensive production capacity, while others focus on
technical designs. If a chip design wins market share,
the production can be outsourced without the huge up-front
investment. During the reporting period, we took some of
our profits on Jabil Circuit, while Solectron is still
among our larger holdings. Both considerably more than
doubled over the 12-month period.

Venture capital
We took our profits on CMGI, the Internet venture
capital firm. We added Internet Capital Group, a less
well-known company whose stock had risen 870% by period end.
It made a substantial contribution to our return.

Sector Composition
Expressed as a percentage of net assets
as of 10/31/99

Technology 45.0%
Consumer Growth 30.2
Utility 8.5
Industrial 3.9
Consumer Cyclical 3.2
Finance 3.1
Energy 2.0
Cash & Equivalents 4.1

<PAGE>

Internet Capital focuses on business-to-business electronic
commerce, an area we believe has great potential. It tries to
achieve synergies among the companies in which it invests. We
had a larger position and a very substantial gain in Safeguard
Scientifics, our fourth largest holding at period end (see
table of largest holdings).

Media
The Fund's holdings in AT&T- Liberty Media (its largest holding
at period end), TV Guide, and USA Networks all more than doubled
in value. Media companies are benefiting from a surge in advertising
for Internet-related businesses. It appears paradoxical, but the
companies showing the first large profits from the Internet are
other media. However, the largest single contribution to our
return came from RealNetworks, the leader in delivering media
content on the Internet. Unlike most Internet companies, it
expects to report positive earnings in 1999.

<TABLE>
Performance at a Glance
<CAPTION>
Cumulative Total Returns1 As of 10/31/99
One Since
Year Inception2
<S> <C> <C>
Class A 63.65% 100.21%
Class B 62.39 95.71
Class C 62.39 95.71
Class Z 63.97 101.44
Lipper Mid-Cap Growth Fund Avg.3 58.10 70.41
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 9/30/99
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class A 55.53% 22.78%
Class B 57.52 23.36
Class C 59.90 23.66
Class Z 64.13 25.38
</TABLE>

Past performance is not indicative of future results. Principal
and investment return will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.

1 Source: Prudential Investments Fund Management LLC and Lipper Inc.
The cumulative total returns do not take into account sales charges.
The average annual total returns do take into account applicable
sales charges. The Fund charges a maximum front-end sales charge
of 5% for Class A shares. Class B shares are subject to a
declining contingent deferred sales charge (CDSC) of 5%, 4%,
3%, 2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a
quarterly basis, approximately seven years after purchase.
Class C shares are subject to a front-end sales charge of 1%
and a CDSC of 1% for 18 months. Class C shares bought before
November 2, 1998, have a 1% CDSC if sold within one year. Class Z
shares are not subject to a sales charge or distribution and
service (12b-1) fees.

2 Inception date: Class A, B, C, and Z, 12/31/96.

3 Lipper average returns are for all funds in each share class
for the one-year and since inception periods in the Mid-Cap
Growth Fund category. The Lipper average is unmanaged. Mid-Cap
Growth funds invest at least 75% of their equity assets in
companies with market capitalizations (on a three-year weighted
basis) of less than 300% of the dollar-weighted median market
capitalization of the S&P(R) Mid-Cap 400 Index. Mid-Cap Growth
funds normally invest in companies with long-term earnings
expected to grow significantly faster than the earnings of
the stocks represented in a major unmanaged stock index.
These funds will normally have an above-average price/earnings
ratio, price-to-book ratio, and three-year earnings growth figure
compared to the U.S. diversified mid-cap funds universe average.

"Standard & Poor's(R)" and "S&P(R)" are registered
trademarks of The McGraw-Hill Companies, Inc.

1
<PAGE>

Review Cont'd.

Looking Ahead
New products, expanding markets, and improved global demand
can drive even more earnings growth in technology. Businesses
have begun to focus on how they can use the Internet to improve
their own operations. Logistics, sales, and payment practices
are migrating to the Internet. The productivity improvements
help the global economy, and new business opportunities are
constantly cropping up. We think this is an exciting time for
growth companies.

That said, investors showed relatively little interest in
anything else over the past 12 months. The huge performance
gap between technology stocks and others has shifted the
relative values considerably. While we will maintain a strong
representation of technology companies, we are selectively
adding consumer cyclical and financial firms such as the
mortgage insurers PMI Group and Radian Group. They were
hurt by consumer refinancing last year, but remain sound.

Five Largest Holdings Expressed as a percentage of
net assets as of 10/31/99

Security/Industry Comments
% of Net Assets

AT&T Corp.-Liberty Media
Telecommunications
1.9% Global entertainment brands, such as
Discovery Channel and QVC, and other
Internet and telecommunications services.
A long-term holding because of its
strong franchise, it doubled in our
reporting period.

Checkfree Holdings Corp.
Computer Software & Svcs.
1.9% Services that enable electronic and
Internet-based transactions, a
business-to-business Internet service.
In November, announced agreement to
provide payment infrastructure for
Intuit's new services. Rose 138% over
our reporting period.

Network Solutions, Inc.
Computer Software & Svcs.
1.7% Internet domain name registration and
network consulting. Stock dropped 60%
after it lost its monopoly on name
registration in April. We bought near
bottom. Subsequently regained partial
monopoly and is introducing
premium-priced services, such as
name changes in two days. Sharp
gains after period end.

Safeguard Scientifics, Inc.
Computer Software & Svcs.
1.7% A publicly owned venture capital firm
specializing in electronic commerce.
Gives shareholders rights to buy stock
of companies it takes public. Excellent
track record. Stock tripled over our
fiscal year.

Powertel, Inc.
Telecommunications Svcs.
1.6% Cellular telephone service in the
southeastern United States. Expected to
benefit from industry consolidation
and from new personal communications
services (PCS), such as wireless e-mail
reception.

2
<PAGE>
Portfolio of Investments as
of October 31, 1999 PRUDENTIAL EMERGING GROWTH FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--95.7%
COMMON STOCKS
- ------------------------------------------------------------
Advertising--2.3%
55,000 TMP Worldwide, Inc.(a) $ 3,434,062
80,700 Young & Rubicam, Inc. 3,692,025
------------
7,126,087
- ------------------------------------------------------------
Apparel--0.2%
26,500 Tommy Hilfiger Corp.(a) 748,625
- ------------------------------------------------------------
Broadcasting--5.7%
37,100 Gemstar International Group Ltd.(a) 3,223,062
33,700 Pegasus Communications Corp.(a) 1,491,225
57,700 Sinclair Broadcast Group, Inc.(a) 577,000
51,100 Spanish Broadcasting Systems,
Inc.(a) 1,360,538
70,600 TV Guide, Inc.(a) 3,715,325
39,900 Univision Communications, Inc.(a) 3,393,994
92,200 USA Networks, Inc.(a) 4,154,762
------------
17,915,906
- ------------------------------------------------------------
Cable & Pay Television Systems--4.9%
59,800 Adelphia Communications Corp.(a) 3,266,575
64,300 Cablevision Systems Corp.(a) 4,344,269
54,800 EchoStar Communications Corp.
(Class A)(a) 3,390,750
50,200 UnitedGlobalCom, Inc. (Class A)(a) 4,367,400
------------
15,368,994
- ------------------------------------------------------------
Commercial Services--1.2%
15,700 Lason Holdings, Inc.(a) 583,353
76,900 Profit Recovery Group Int'l.,
Inc.(a) 3,167,319
------------
3,750,672
- ------------------------------------------------------------
Computer Software & Services--24.5%
6,100 Akamai Technologies, Inc.(a) 885,644
17,600 Apple Computer, Inc.(a) 1,410,200
16,800 AppNet, Inc.(a) 731,850
68,800 At Home Corp.(a) $ 2,571,400
6,500 Breakaway Solutions, Inc.(a) 345,719
26,300 C-NET, Inc.(a) 1,241,031
153,300 CBT Group PLC (Ireland) (ADR)(a) 3,161,812
156,900 Checkfree Holdings Corp.(a) 5,864,137
23,400 Citrix Systems, Inc.(a) 1,500,525
4,000 Data Return Corp.(a) 60,250
65,000 Digital River, Inc.(a) 1,474,688
46,126 DST Systems, Inc.(a) 2,937,650
33,300 Electronic Arts, Inc.(a) 2,691,056
13,400 Inktomi Corp.(a) 1,359,263
39,910 Internet Capital Group, Inc.(a) 4,644,526
21,100 Intertrust Technologies Corp.(a) 1,149,950
119,300 Intuit, Inc.(a) 3,474,612
4,100 JNI Corp.(a) 219,094
39,700 Media Metrix, Inc.(a) 1,860,938
20,000 MicroStrategy, Inc.(a) 1,932,500
45,000 Network Solutions, Inc.(a) 5,332,500
141,000 Novell, Inc.(a) 2,828,812
81,600 Parametric Technology Corp.(a) 1,555,500
9,700 Phone.com, Inc.(a) 1,993,350
9,300 Proxicom, Inc.(a) 713,775
68,300 Rational Software Corp.(a) 2,919,825
20,500 RealNetworks, Inc.(a) 2,248,594
86,800 RSA Security, Inc.(a) 3,081,400
62,700 Safeguard Scientifics, Inc.(a) 5,274,637
40,100 SanDisk Corp.(a) 2,431,063
166,100 SunGard Data Systems, Inc.(a) 4,059,069
88,900 Technology Solutions Co.(a) 1,822,450
76,600 Whittman-Hart, Inc.(a) 2,944,312
------------
76,722,132
- ------------------------------------------------------------
Data Processing & Reproduction--1.5%
98,500 CSG Systems International, Inc.(a) 3,379,781
169,000 Informix Corp.(a) 1,288,625
------------
4,668,406
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
Portfolio of Investments as
of October 31, 1999 PRUDENTIAL EMERGING GROWTH FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Diversified Industries--1.3%
35,000 Kulicke & Soffa Industries, Inc.(a) $ 1,030,313
51,100 Waters Corp.(a) 2,714,687
29,700 WESCO International, Inc.(a) 233,888
------------
3,978,888
- ------------------------------------------------------------
Electronics--18.5%
50,100 Altera Corp.(a) 2,436,113
62,200 Analog Devices, Inc.(a) 3,304,375
4,800 Chartered Semiconductor
Manufacturing, Ltd. (Singapore)
(ADR)(a) 159,300
118,700 Cognex Corp.(a) 3,553,581
47,700 Conexant Systems, Inc.(a) 4,453,987
39,000 Dallas Semiconductor Corp. 2,296,125
62,800 Electroglas, Inc.(a) 1,732,888
20,000 Etec Systems, Inc.(a) 763,750
17,300 Jabil Circuit, Inc.(a) 903,925
43,600 KLA Tencor Corp.(a) 3,452,575
92,200 Lattice Semiconductor Corp.(a) 3,261,575
45,000 Lexmark International Group,
Inc.(a) 3,512,813
51,900 LSI Logic Corp.(a) 2,760,431
51,400 Maxim Integrated Products, Inc.(a) 4,057,387
63,900 Micrel, Inc.(a) 3,474,563
25,500 National Semiconductor Corp.(a) 763,406
24,900 SDL, Inc.(a) 3,070,481
60,500 Solectron Corp.(a) 4,552,625
57,700 Symbol Technologies, Inc. 2,293,575
91,000 Teradyne, Inc.(a) 3,503,500
39,531 Texas Instruments, Inc. 3,547,908
------------
57,854,883
- ------------------------------------------------------------
Entertainment--2.2%
65,400 Imax Corp.(a) 1,357,050
71,800 Preview Travel, Inc.(a) 2,189,900
61,100 Royal Caribbean Cruises Ltd. 3,242,119
------------
6,789,069
- ------------------------------------------------------------
Financial Services--3.3%
21,300 Hooper Holmes, Inc. 572,438
89,800 Knight/Trimark Group, Inc. (Class
A)(a) 2,340,413
38,400 Metris Companies, Inc. 1,322,400
62,500 Radian Group, Inc. $ 3,300,781
54,500 The PMI Group, Inc. 2,827,187
------------
10,363,219
- ------------------------------------------------------------
Manufacturing--0.9%
79,200 Hasbro, Inc. 1,633,500
65,100 WestPoint Stevens, Inc.(a) 1,232,831
------------
2,866,331
- ------------------------------------------------------------
Medical Products & Services--4.0%
36,500 Forest Laboratories, Inc.(a) 1,674,437
41,000 Human Genome Sciences, Inc.(a) 3,582,375
27,193 Johnson & Johnson 2,848,467
23,362 Medical Manager Corp.(a) 1,171,020
13,000 MedImmune, Inc.(a) 1,456,000
40,000 QLT PhotoTherapeutics, Inc.(a) 1,695,000
------------
12,427,299
- ------------------------------------------------------------
Medical Technology--1.0%
48,300 PE Corp.-PE Biosystems Group 3,133,463
- ------------------------------------------------------------
Oil & Gas Equipment--0.9%
39,400 Cooper Cameron Corp.(a) 1,524,287
93,000 R & B Falcon Corp.(a) 1,156,688
------------
2,680,975
- ------------------------------------------------------------
Oil & Gas Services--1.8%
36,500 Apache Corp. 1,423,500
38,000 Devon Energy Corp. 1,477,250
68,100 Montana Power Co. 1,936,594
18,900 Smith International, Inc.(a) 653,231
------------
5,490,575
- ------------------------------------------------------------
Pharmaceuticals--2.1%
9,600 Express Scripts, Inc. (Class A)(a) 471,600
105,200 Schein Pharmaceuticals, Inc.(a) 894,200
44,800 Teva Pharmaceutical Industries Ltd.
(Israel) (ADR) 2,167,200
93,800 Watson Pharmaceuticals, Inc.(a) 2,978,150
------------
6,511,150
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
Portfolio of Investments as
of October 31, 1999 PRUDENTIAL EMERGING GROWTH FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Radio & Television--1.7%
48,300 Emmis Communications Corp.
(Class A)(a) $ 3,483,638
79,300 Hearst-Argyle Television, Inc.(a) 1,610,781
8,400 Young Broadcasting, Inc. (Class
A)(a) 389,550
------------
5,483,969
- ------------------------------------------------------------
Retail--3.6%
97,000 BJ's Wholesale Club, Inc.(a) 2,988,812
195,000 Blockbuster, Inc. (Class A) 2,364,375
65,000 Dollar Tree Stores, Inc.(a) 2,831,563
27,300 Fastenal Co. 989,625
33,300 Great Atlantic & Pacific Tea Co.,
Inc. 951,131
63,500 Luxottica Group S.p.A. (Italy)(ADR) 1,218,406
------------
11,343,912
- ------------------------------------------------------------
Telecommunications--13.6%
67,600 ADC Telecommunications, Inc.(a) 3,223,675
15,500 AirGate PCS, Inc.(a) 775,000
152,500 AT&T Corp. - Liberty Media(a) 6,052,344
45,900 CIENA Corp.(a) 1,617,975
81,900 CommScope, Inc.(a) 3,265,762
121,900 Global TeleSystems Group, Inc.(a) 2,917,981
66,000 Microcell Telecommunications,
Inc.(a) 1,254,000
20,600 Millicom International Cellular
S.A.(a) 695,250
84,200 Powertel, Inc.(a) 4,957,275
84,700 RCN Corp.(a) 4,055,012
3,400 Sycamore Networks, Inc.(a) 731,000
69,900 Teleglobe, Inc. 1,655,756
41,800 Telephone and Data System, Inc. 4,817,450
8,000 Triton PCS Holdings, Inc. (Class
A)(a) 282,000
61,700 Tut Systems, Inc.(a) 2,059,238
40,300 Viatel, Inc.(a) 1,345,013
56,900 Western Wireless Corp. (Class A)(a) 3,008,588
------------
42,713,319
Transportation/Shipping--0.5%
36,200 Kansas City Southern Industries,
Inc. $ 1,717,238
------------
Total common stocks
(cost $221,445,995) 299,655,112
------------
- ------------------------------------------------------------
Units
- --------
RIGHTS(a)
6,240 Safeguard Pacific West Telecomm,
Inc. 0
------------
Total long-term investments
(cost $221,445,995) 299,655,112
------------
SHORT-TERM INVESTMENTS--7.1%
- ------------------------------------------------------------
Principal Amount
(000)
REPURCHASE AGREEMENT--7.1%
$ 22,202 Joint Repurchase Agreement Account,
5.21%, 11/1/99
(cost $22,202,000; Note 5) 22,202,000
------------
- ------------------------------------------------------------
Total Investments--102.8%
(cost $243,647,995; Note 4) 321,857,112
Liabilities in excess of other
assets--(2.8%) (8,700,371)
------------
Net Assets--100% $313,156,741
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
Statement of Assets and Liabilities PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets October 31, 1999
<S> <C>
Investments, at value (cost $243,647,995)................................................................. $ 321,857,112
Receivable for investments sold........................................................................... 4,966,576
Receivable for Fund shares sold........................................................................... 2,209,088
Deferred expenses and other assets........................................................................ 56,209
Dividends and interest receivable......................................................................... 40,171
----------------
Total assets........................................................................................... 329,129,156
----------------
Liabilities
Bank overdraft............................................................................................ 669,696
Payable for investments purchased......................................................................... 13,960,197
Payable for Fund shares reacquired........................................................................ 893,319
Distribution fee payable.................................................................................. 179,940
Management fee payable.................................................................................... 146,303
Accrued expenses.......................................................................................... 122,960
----------------
Total liabilities...................................................................................... 15,972,415
----------------
Net Assets................................................................................................ $ 313,156,741
----------------
----------------
Net assets were comprised of:
Common stock, at par................................................................................... $ 16,588
Paid-in capital in excess of par....................................................................... 208,474,304
----------------
208,490,892
Accumulated net realized gain on investments........................................................... 26,456,732
Net unrealized appreciation on investments............................................................. 78,209,117
----------------
Net assets, October 31, 1999.............................................................................. $ 313,156,741
----------------
----------------
Class A:
Net asset value and redemption price per share
($85,594,675 / 4,466,613 shares of common stock issued and outstanding)............................. $19.16
Maximum sales charge (5% of offering price)............................................................ 1.01
----------------
Maximum offering price to public....................................................................... $20.17
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($184,955,168 / 9,877,955 shares of common stock issued and outstanding)............................ $18.72
----------------
----------------
Class C:
Net asset value and redemption price per share
($23,577,708 / 1,259,228 shares of common stock issued and outstanding)............................. $18.72
Sales charge (1% of offering price).................................................................... .19
----------------
Offering price to public............................................................................... $18.91
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per share
($19,029,190 / 986,959 shares of common stock issued and outstanding)............................... $19.28
----------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
PRUDENTIAL EMERGING GROWTH FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Loss October 31, 1999
<S> <C>
Income
Interest................................ $ 566,262
Dividends (net of foreign withholding
taxes of $8,751)..................... 278,100
----------------
Total income......................... 844,362
----------------
Expenses
Management fee.......................... 1,202,452
Distribution fee--Class A............... 132,460
Distribution fee--Class B............... 1,272,492
Distribution fee--Class C............... 123,798
Transfer agent's fees and expenses...... 325,000
Reports to shareholders................. 125,000
Custodian's fees and expenses........... 120,000
Registration fees....................... 80,000
Legal fees and expenses................. 30,000
Amortization of deferred organizational
costs................................ 24,393
Audit fees and expenses................. 20,000
Directors' fees and expenses............ 18,000
Miscellaneous........................... 6,911
----------------
Total expenses....................... 3,480,506
----------------
Net investment loss........................ (2,636,144)
----------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on investment
transactions............................ 30,331,339
Net change in unrealized appreciation on
investments............................. 62,358,936
----------------
Net gain on investments.................... 92,690,275
----------------
Net Increase in Net Assets
Resulting from Operations.................. $ 90,054,131
----------------
----------------
</TABLE>

PRUDENTIAL EMERGING GROWTH FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended October 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment loss....... $ (2,636,144) $ (1,826,309)
Net realized gain on
investments............ 30,331,339 3,541,253
Net change in unrealized
appreciation
(depreciation)
on investments......... 62,358,936 (446,047)
---------------- --------------------
Net increase in net assets
resulting from
operations............. 90,054,131 1,268,897
---------------- --------------------
Distributions from net
realized gains (Note 1)
Class A................ (871,485) (590,230)
Class B................ (2,298,027) (1,495,124)
Class C................ (187,922) (125,163)
Class Z................ (67,704) (11,569)
---------------- --------------------
(3,425,138) (2,222,086)
---------------- --------------------
Fund share transactions (net
of share conversion) (Note
5)
Net proceeds from shares
sold................... 182,256,028 47,455,553
Net asset value of shares
issued in reinvestment
of distributions....... 3,294,708 2,134,825
Cost of shares
reacquired............. (83,825,537) (46,065,529)
---------------- --------------------
Net increase in net assets
from Fund share
transactions........... 101,725,199 3,524,849
---------------- --------------------
Total increase............... 188,354,192 2,571,660
Net Assets
Beginning of year............ 124,802,549 122,230,889
---------------- --------------------
End of year.................. $313,156,741 $124,802,549
---------------- --------------------
---------------- --------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
Notes to Financial Statements PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
Prudential Emerging 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 23, 1996. The Fund
issued 2,500 shares each of Class A, Class B, Class C and Class Z common stock
for $100,000 on October 21, 1996 to Prudential Investments Fund Management LLC
('PIFM'). Investment operations commenced on December 31, 1996.

The Fund's investment objective is to achieve long-term capital appreciation. It
invests primarily in equity securities of small and medium-sized U.S. companies,
ranging from $500 million to $4.5 billion in market capitalization, with the
potential for above-average growth.

- ------------------------------------------------------------
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 listed on a securities exchange (other than
options on stock and stock indices) are valued at the last sales price on the
day of valuation, or, if there was no sale on such day, at the mean between the
closing bid and asked prices on such day, or at the bid price in the absence of
an asked price. Securities that are actively traded in the over-the-counter
market, including listed securities for which the primary market is believed to
be over-the-counter, are valued by a principal market maker or independent
pricing agent. Securities for which reliable market quotations are not available
or for which the pricing agent or principal market maker does not provide a
valuation or methodology or provides a valuation or methodology that does not
represent fair value are valued in accordance with procedures adopted by the
Board of Directors of the Fund.

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.

In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian or designated subcustodians under triparty repurchase
agreements, as the case may be, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults, and the value of the collateral declines, or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.

All securities are valued as of 4:15 p.m., New York time.

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; interest income is recorded on the accrual basis. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.

Net investment income (loss), other than distribution fees, and realized and
unrealized gains or 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: Dividends from net investment income are declared
and paid annually. The Fund will distribute at least annually net capital gains
in excess of loss carryforwards, if any. 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.

Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to increase undistributed net investment income by
$2,636,144, decrease accumulated net realized gain on investments by $3,294,085
and increase paid-in capital by $657,941 due to the Fund experiencing net
operating losses and redemptions utilized as distributions for federal income
tax purposes during the fiscal year ended October 31, 1999. Net investment
income, net realized gains and net assets were not affected by this change.

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 net capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.

Withholding taxes on foreign dividends have been provided for in accordance with
the Fund's understanding of the applicable country's tax rules and rates.

Deferred Organization Expenses: Approximately $122,000 of expenses were incurred
in connection with the organization of the Fund. These costs have been deferred
and are being amortized ratably over a period of sixty months from the date the
Fund commenced investment operations.
- --------------------------------------------------------------------------------
8

<PAGE>
Notes to Financial Statements PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
Note 2. Agreements

The Fund has a management agreement with PIFM. Pursuant to this agreement, PIFM
has responsibility for all investment advisory services and supervises the
subadviser's performance of such services. Pursuant to a subadvisory agreement
between PIFM and The Prudential Investment Corporation ('PIC'), PIC furnishes
investment advisory services in connection with the management of the Fund. PIFM
pays for the cost of the subadviser's services, the compensation of officers of
the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The
Fund bears all other costs and expenses.

The management fee paid to PIFM is computed daily and payable monthly, at an
annual rate of .60 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, B and 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
for the Class Z shares of the Fund.

Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were charged at an annual rate of .25 of 1%, 1%
and 1% of the average daily net assets of the Class A, B and C shares,
respectively, for the year ended October 31, 1999.

PIMS has advised the Fund that it received approximately $296,200 and $98,000 in
front-end sales charges resulting from sales of Class A shares and Class C
shares, respectively, during the year ended October 31, 1999. From these fees,
PIMS paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.

PIMS has advised the Fund that for the year ended October 31, 1999, it received
approximately $268,600 and $4,800 in contingent deferred sales charges imposed
upon certain redemptions by Class B and Class C shareholders, respectively.

PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential Insurance
Company of America ('Prudential').

As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. Interest on any borrowings will be at market rates. The Funds pay a
commitment fee at an annual rate of .065 of 1% on the unused portion of the
credit facility, which is accrued and paid quarterly on a pro rata basis by the
Funds. The SCA expires on March 9, 2000. Prior to March 11, 1999, the Funds had
a credit agreement with a maximum commitment of $200,000,000. The commitment fee
was .055 of 1% on the unused portion of the credit facility. The Fund did not
borrow any amounts pursuant to either agreement during the year ended October
31, 1999. The purpose of the agreements is to serve as an alternative source of
funding for capital share redemptions.

- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates

Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended October 31, 1999, the
Fund incurred fees of approximately $280,000 for the services of PMFS. As of
October 31, 1999, approximately $33,000 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations also include certain
out-of-pocket expenses paid to nonaffiliates.

For the year ended October 31, 1999, Prudential Securities Incorporated, which
is an indirect, wholly owned subsidiary of Prudential, earned approximately
$35,000 in brokerage commissions from portfolio transactions executed on behalf
of the Fund.

- ------------------------------------------------------------
Note 4. Portfolio Securities

Purchases and sales of investment securities, other than short-term investments,
for the year ended October 31, 1999 were $380,240,384 and $293,370,694,
respectively.

The cost basis of investments for federal income tax purposes at October 31,
1999 was $245,386,673 and, accordingly, net unrealized appreciation of
investments for federal income tax purposes was $76,470,439 (gross unrealized
appreciation--$83,888,816; gross unrealized depreciation--$7,418,377).

- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account

The Fund, along with other affiliated registered investment companies, transfers
uninvested cash balances into a single joint account, the daily aggregate
balance of which is invested in one or more repurchase agreements collateralized
by U.S. Treasury or Federal agency obligations. As of
- --------------------------------------------------------------------------------
9

<PAGE>
Notes to Financial Statements PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
October 31, 1999, the Fund had a 2.35% undivided interest in the repurchase
agreements in the joint account. The undivided interest for the Fund represented
$22,202,000 in principal amount. As of such date, each repurchase agreement in
the joint account and the value of the collateral therefore were as follows:
Bear, Stearns & Co., Inc., 5.23%, in the principal amount of $250,000,000,
repurchase price $250,108,958, due 11/1/99. The value of the collateral
including accrued interest was $255,352,721.

Goldman, Sachs & Co., 5.18%, in the principal amount of $194,830,000, repurchase
price $194,914,102, due 11/1/99. The value of the collateral including accrued
interest was $198,727,175.

Morgan (J.P.) Securities, Inc., 5.22%, in the principal amount of $250,000,000,
repurchase price $250,108,750, due 11/1/99. The value of the collateral
including accrued interest was $255,000,115.

Salomon Smith Barney, Inc., 5.22%, in the principal amount of $250,000,000,
repurchase price $250,108,750, due 11/1/99. The value of the collateral
including accrued interest was $255,452,608.

- ------------------------------------------------------------
Note 6. Capital

The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Prior to November 2, 1998, Class C shares
were sold with a contingent deferred sales charge of 1% during the first year.
Effective November 2, 1998, 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.

There are 2 billion shares of $.001 par value common stock authorized divided
into four classes, designated Class A, Class B, Class C and Class Z, each of
which consists of 1 billion, 500 million, 300 million and 200 million authorized
shares, respectively.

Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------------- ---------- ------------
<S> <C> <C>
Year ended October 31, 1999:
Shares sold.......................... 4,765,399 $ 81,090,986
Shares issued in reinvestment of
distributions...................... 67,007 844,294
Shares reacquired.................... (3,244,391) (55,188,028)
---------- ------------
Net increase in shares outstanding
before conversion.................. 1,588,015 26,747,252
Shares issued upon conversion from
Class B............................ 198,946 3,220,362
---------- ------------
Net increase in shares outstanding... 1,786,961 $ 29,967,614
---------- ------------
---------- ------------
Year ended October 31, 1998:
Shares sold.......................... 1,456,524 $ 18,249,777
Shares issued in reinvestment of
distributions...................... 50,213 576,443
Shares reacquired.................... (1,662,596) (20,468,264)
---------- ------------
Net decrease in shares outstanding
before conversion.................. (155,859) (1,642,044)
Shares issued upon conversion from
Class B............................ 56,954 708,635
---------- ------------
Net decrease in shares outstanding... (98,905) $ (933,409)
---------- ------------
---------- ------------
<CAPTION>
Class B
- -------------------------------------
<S> <C> <C>
Year ended October 31, 1999:
Shares sold.......................... 4,299,581 $ 70,231,079
Shares issued in reinvestment of
distributions...................... 177,561 2,201,763
Shares reacquired.................... (1,444,215) (22,492,386)
---------- ------------
Net increase in shares outstanding
before conversion.................. 3,032,927 49,940,456
Shares reacquired upon conversion
into
Class A............................ (202,843) (3,220,362)
---------- ------------
Net increase in shares outstanding... 2,830,084 $ 46,720,094
---------- ------------
---------- ------------
Year ended through October 31, 1998:
Shares sold.......................... 1,908,638 $ 23,615,032
Shares issued in reinvestment of
distributions...................... 125,018 1,425,202
Shares reacquired.................... (1,855,918) (22,284,596)
---------- ------------
Net increase in shares outstanding
before conversion.................. 177,738 2,755,638
Shares reacquired upon conversion
into
Class A............................ (57,537) (708,635)
---------- ------------
Net increase in shares outstanding... 120,201 $ 2,047,003
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
10

<PAGE>
Notes to Financial Statements PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Shares Amount
- ------------------------------------- ---------- ------------
<S> <C> <C>
Year ended October 31, 1999:
Shares sold.......................... 861,899 $ 14,471,091
Shares issued in reinvestment of
distributions...................... 14,915 184,941
Shares reacquired.................... (189,985) (3,042,506)
---------- ------------
Net increase in shares outstanding... 686,829 $ 11,613,526
---------- ------------
---------- ------------
Year ended October 31, 1998:
Shares sold.......................... 254,644 $ 3,157,537
Shares issued in reinvestment of
distributions...................... 10,741 122,442
Shares reacquired.................... (239,687) (2,875,061)
---------- ------------
Net increase in shares outstanding... 25,698 $ 404,918
---------- ------------
---------- ------------
<CAPTION>
Class Z
- -------------------------------------
<S> <C> <C>
Year ended October 31, 1999:
Shares sold.......................... 967,643 $ 16,462,871
Shares issued in reinvestment of
distributions...................... 5,036 63,710
Shares reacquired.................... (188,018) (3,102,616)
---------- ------------
Net increase in shares outstanding... 784,661 $ 13,423,965
---------- ------------
---------- ------------
Year ended October 31, 1998:
Shares sold.......................... 190,511 $ 2,433,207
Shares issued in reinvestment of
distributions...................... 935 10,738
Shares reacquired.................... (36,134) (437,608)
---------- ------------
Net increase in shares outstanding... 155,312 $ 2,006,337
---------- ------------
---------- ------------
</TABLE>

- ------------------------------------------------------------
Note 7. Distributions

On November 17, 1999 the Board of Directors of the Fund declared the following
distributions per share, payable on November 23, 1999 to shareholders of record
on November 18, 1999.

<TABLE>
<CAPTION>
Class Class B Class
A and C Z
----- ------- -----
<S> <C> <C> <C>
Short-Term Capital Gains............... $1.07 $1.07 $1.07
Long-Term Capital Gains................ .56 .56 .56
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
Financial Highlights PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------- -----------
December 31,
1996(a) Year Ended
Year Ended October 31, Through October 31,
--------------------------- October 31, -----------
1999(d) 1998 1997 1999(d)
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 12.01 $ 11.92 $ 10.00 $ 11.83
----------- ----------- ------ -----------
Income from investment operations
Net investment loss.................................... (.13) (.11) (.08) (.24)
Net realized and unrealized gain on investment
transactions........................................ 7.61 .41 2.00 7.46
----------- ----------- ------ -----------
Total from investment operations.................... 7.48 .30 1.92 7.22
----------- ----------- ------ -----------
Less distributions
Distributions from net realized gains.................. (.33) (.21) -- (.33)
----------- ----------- ------ -----------
Net asset value, end of period......................... $ 19.16 $ 12.01 $ 11.92 $ 18.72
----------- ----------- ------ -----------
----------- ----------- ------ -----------
TOTAL RETURN(c):....................................... 63.65% 2.63% 19.20% 62.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $85,595 $32,183 $ 33,124 $ 184,955
Average net assets (000)............................... $52,984 $33,831 $ 28,141 $ 127,249
Ratios to average net assets:
Expenses, including distribution fees............... 1.22% 1.25% 1.46%(b) 1.97%
Expenses, excluding distribution fees............... .97% 1.00% 1.21%(b) .97%
Net investment loss................................. (.80)% (.88)% (.92)%(b) (1.55)%
Portfolio turnover rate................................ 153% 177% 107% 153%

- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Based on weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>
Financial Highlights PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
-------------------------------------------- -----------
December 31,
1996(a) Year Ended
Year Ended October 31, Through October 31,
--------------------------- October 31, -----------
1999(d) 1998 1997 1999(d)
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.83 $ 11.85 $10.00 $ 12.06
----------- ----- ----- -----------
Income from investment operations
Net investment loss.................................... (.24) (.20) (.14) (.09)
Net realized and unrealized gain on investment
transactions........................................ 7.46 .39 1.99 7.64
----------- ----- ----- -----------
Total from investment operations.................... 7.22 .19 1.85 7.55
----------- ----- ----- -----------
Less distributions
Distributions from net realized gains on investment
transactions........................................ (.33) (.21) -- (.33)
----------- ----- ----- -----------
Net asset value, end of period......................... $ 18.72 $ 11.83 $11.85 $ 19.28
----------- ----- ----- -----------
----------- ----- ----- -----------
TOTAL RETURN(c):....................................... 62.39% 1.71% 18.50% 63.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $23,578 $ 6,774 $6,477 $19,029
Average net assets (000)............................... $12,380 $ 6,949 $5,526 $ 7,796
Ratios to average net assets:
Expenses, including distribution fees............... 1.97% 2.00% 2.21%(b) .97%
Expenses, excluding distribution fees............... .97% 1.00% 1.21%(b) .97%
Net investment loss................................. (1.56)% (1.63)% (1.69)%(b) (.56)%
Portfolio turnover rate................................ 153% 177% 107% 153%

<CAPTION>
December 31,
1996(a)
Through
October 31,
1998 1997
----------- ------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.93 $10.00
----- -----
Income from investment operations
Net investment loss.................................... (.04) (.03)
Net realized and unrealized gain on investment
transactions........................................ .38 1.96
----- -----
Total from investment operations.................... .34 1.93
----- -----
Less distributions
Distributions from net realized gains on investment
transactions........................................ (.21) --
----- -----
Net asset value, end of period......................... $ 12.06 $11.93
----- -----
----- -----
TOTAL RETURN(c):....................................... 2.97% 19.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 2,439 $ 561
Average net assets (000)............................... $ 1,283 $ 261
Ratios to average net assets:
Expenses, including distribution fees............... 1.00% 1.21%(b)
Expenses, excluding distribution fees............... 1.00% 1.21%(b)
Net investment loss................................. (.63)% (.73)%(b)
Portfolio turnover rate................................ 177% 107%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Based on weighted average shares outstanding during the year.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13

<PAGE>
Report of Independent Accountants PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Prudential Emerging 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 Emerging Growth Fund,
Inc. (the 'Fund') at October 31, 1999, 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 two years in the
period then ended and for the period December 31, 1996 (commencement of
operations) through October 31, 1997, in conformity with generally accepted
accounting principles. 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 generally accepted auditing standards
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, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
December 20, 1999
- --------------------------------------------------------------------------------
14

<PAGE>
Federal Income Tax Information
(Unaudited) PRUDENTIAL EMERGING GROWTH FUND, INC.
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (October 31, 1999) as to the federal tax status of
distributions paid by the Fund during such fiscal year. Accordingly, during its
fiscal year ended October 31, 1999, the Fund paid distributions of $0.33 per
Class A, Class B, Class C and Class Z shares from net realized long-term capital
gains, which are taxable as such. The Fund utilized redemptions as distributions
in the amount of $.02 per Class A, Class B, Class C and Class Z shares of
long-term capital gains. We wish to advise you that the corporate dividends
received deduction for the Fund is zero.

In January 2000, you will be advised on IRS Form 1099 DIV or substitute 1099 as
to the federal tax status of the dividends and distributions received by you in
calendar year 1999. The amounts that will be reported on such Form 1099 DIV or
substitute will be the amounts to use on your 1999 federal income tax return and
probably will differ from the amounts which we must report for the Fund's fiscal
year ended October 31, 1999.
- --------------------------------------------------------------------------------
15

<PAGE>
Comparing a $10,000 Investment
- -----------------------------------------------------------------
Prudential Emerging Growth Fund, Inc. vs. S&P Mid-Cap 400 Index

Class A Average Annual Total Returns
(GRAPH) As of 10/31/99
With Sales Load
Since Inception 25.49%
One Year 55.47%

Without Sales Load
Since Inception 27.79%
One Year 63.65%

Class B Average Annual Total Returns
(GRAPH) As of 10/31/99

With Sales Load
Since Inception 26.08%
One Year 57.39%

Without Sales Load
Since Inception 26.77%
One Year 62.39%

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.

These graphs compare a $10,000 investment in Prudential Emerging
Growth Fund, Inc. (Class A, B, C, and Z shares) with a similar
investment in the Standard & Poor's Mid-Cap 400 Stock Index
(S&P Mid-Cap 400 Index) by portraying the initial account
values of Class A, B, C, and Z shares at the commencement
of operations (12/31/96), and at the end of the fiscal year
(October 31), as measured on a quarterly basis. For purposes
of the graphs, 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 and
Class C shares; (b) the maximum applicable contingent
deferred sales charges were deducted from the value of
the investment in Class B and Class C shares, assuming
full redemption on October 31, 1999; (c) all recurring
fees (including management fees) were deducted; and (d)
all dividends and

<PAGE>

Class C Average Annual Total Returns
(GRAPH) As of 10/31/99

With Sales Load
Since Inception 26.32%
One Year 59.77%

Without Sales Load
Since Inception 26.77%
One Year 62.39%

Class Z Average Annual Total Returns
(GRAPH) As of 10/31/99

Since Inception 28.07%
One Year 63.97%

distributions were reinvested. Class B shares will automatically
convert to Class A shares, on a quarterly basis, approximately
seven years after purchase. Class Z shares are not subject to a
sales charge or distribution and service (12b-1) fees.

The S&P Mid-Cap 400 Index is an unmanaged index of 400
domestic stocks chosen for market size, liquidity, and
industry group representation, giving a broad look at how
mid-cap stock prices have performed. The Index returns
include the reinvestment of all dividends, but do not
include the effect of sales charges or operating expenses
of a mutual fund. The securities in the Index may differ
substantially from the securities in the Fund. The S&P
Mid-Cap 400 Index is not the only one that may be
used to characterize performance of equity funds, and
other indexes may portray different comparative performance.
Investors cannot invest directly in an index.

These graphs are furnished to you in accordance with SEC regulations.

<PAGE>

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Class NASDAQ Cusip
A PEEAX 74431L107
B PEEBX 74431L206
C -- 74431L305
Z -- 74431L404

Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
Stephen M. Ungerman, Assistant Treasurer

Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza, Newark, NJ 07102-3777

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive, North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005, New Brunswick, NJ 08906

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas, New York, NY 10036

Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street, Chicago, IL 60610-4795

Prudential Investments is a unit of The Prudential Insurance
Company of America, 751 Broad Street, Newark, NJ 07102.

The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.

This report is not authorized for distribution to
prospective investors unless preceded or accompanied
by a current prospectus.

MF173E