<PAGE>
SEMIANNUAL REPORT APRIL 30, 2000
Prudential
Emerging Growth Fund, Inc.
(GRAPHIC)
Fund Type Stock
Objective Long-term capital appreciation
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
The Prudential Emerging Growth Fund provides an
opportunity for long-term capital appreciation by
investing primarily 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 capitalizations (the price of all outstanding
stock) between $500 million and $8.0
billion-may offer greater growth potential than those of
larger companies, but also may fluctuate more in price
from day to day. There can be no assurance that the Fund
will achieve its investment objective.
On May 2, 2000, the Board of Trustees for the Fund
approved a change in the Fund's name from Prudential
Emerging Growth Fund to Prudential U.S. Emerging Growth
Fund. The new name, which will be effective June 29,
2000, more accurately reflects the region in which the
Fund invests.
Portfolio Composition
Sectors expressed as a percentage of
net assets as of 4/30/00
56.6% Technology
25.6 Consumer Growth & Stable
6.9 Utility
3.2 Consumer Cyclical
2.7 Energy
2.2 Industrial
1.1 Finance
1.7 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 4/30/00
2.0% Epcos AG (Germany) (ADR)
Electronic Components
2.0 ADC Telecommunications, Inc.
Telecommunications Equipment
1.8 USA Networks, Inc.
Broadcasting
1.8 Sabre Holdings Corp.
Travel Service
1.7 CIENA Corp.
Telecommunications Equipment
1.6 Jabil Circuit, Inc.
Electronic Components
1.5 Cablevision Systems Corp.
Cable & Pay Television Systems
1.4 Watson Pharmaceuticals, Inc.
Pharmaceuticals
1.4 Linear Technology Corp.
Electronic Components
1.4 Analog Devices, Inc.
Semiconductors
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 4/30/00
Six One Since
Months Year Inception2
Class A 45.78% 64.40% 191.87%
Class B 45.22 63.08 184.21
Class C 45.22 63.08 184.21
Class Z 45.92 64.82 193.95
Lipper Mid-Cap
Growth Fd. Avg.3 39.55 68.47 138.43
Average Annual Total Returns1 As of 4/30/00
One Since
Year Inception2
Class A 56.18% 35.84%
Class B 58.08 36.57
Class C 60.45 36.44
Class Z 64.82 38.25
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or
less than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class
A shares.
Class B shares are subject to a declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and
1% for six years. Class B shares will automatically
convert to Class A shares, on a quarterly basis,
approximately seven years after purchase. Class C shares
are subject to a front-end sales charge of 1% and a CDSC
of 1% for 18 months. Class Z shares are not subject to a
sales charge or distribution and service (12b-1) fees.
2 Inception date: Class A, B, C, and Z, 12/31/96.
3 Lipper average returns are for all funds in each share
class for the six-month, 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.
S&P(r) is a registered trademark of The McGraw-Hill
Companies, Inc.
1
<PAGE>
(LOGO) June 15, 2000
Dear Shareholder,
The six months ended April 30, 2000, were an
extraordinarily volatile period for the high-growth
stocks in which the Prudential
Emerging Growth Fund invests. Not only did share prices
fluctuate from hour to hour, but there were dramatic
changes from month to month. For example, in February,
the Fund gained 29%-which would be a respectable full-
year return-and then in March and April it gave back all
but 6% of that. The net result over the six months was a
45.78% return for Class A shares, or 38.49% to those
paying the one-time Class A share sales charge. This
performance was well ahead of the 39.55% Lipper Mid-Cap
Growth Fund Average, and an exceptionally good return for
six months. The Fund was in the top half of its Lipper
category over the preceding 12 months as well, and has
generated a 35.84% average annual return since its
inception.
This period's strong performance was due to the Fund's
focuses on technology, telecommunications, media, and biotechnology,
and to the exceptional performance of these groups over
this period. However, the character of the market clearly
changed in March. The following report details our
investment team's response to the changing conditions.
As always, it is important to think about this Fund's
return in the context of an asset allocation plan.
Because of the volatility of high-growth stocks, a
multiyear time horizon is particularly important.
Diversification across asset classes and investment
styles is likely to constrain the
overall volatility of your portfolio.
Sincerely,
John R. Strangfeld, President
Prudential Emerging Growth Fund, Inc.
2
<PAGE>
www.prudential.com (800) 225-1852
Semiannual Report April 30, 2000
Investment Adviser's Report
Although our 46% gain over this six-month reporting
period shows that we were beneficiaries of the run-up in
technology stocks, we suggested in our previous reports
that prices were not likely to continue to climb at the
pace they had been climbing. In February, they spurted to
unsustainable multiples of earnings. The subsequent
correction is likely to bring share prices and earnings
prospects back into a more normal relation. That is good
for careful stock pickers.
We are heavily focused in the broad technology and
telecommunications sectors, where the share price changes
were greatest, but the Fund is diversified at the
industry and company levels. We are diversified among
semiconductor companies, data equipment manufacturers,
wireless service providers, wired telecom service
providers, etc. At period end, no single holding exceeded
2% of net assets, and only two were that large. We have
normally been conservative in our risk exposure, given
that the emerging company stocks in which we invest are
inherently volatile.
Our performance
Our return this period was helped by very large gains on
certain stocks: We bought Network Solutions, which
registers Internet domain names and does network
consulting, after it lost its monopoly on name
registration and the share price dropped. It was among
our largest positions as the period began. Subsequently,
Network Solutions regained a partial monopoly, and its
shares ultimately rose 150% over the period. We have
taken some profits. We added to our holdings of CIENA,
which makes telecommunications switches; shares
appreciated by 251% over the period. (See Comments on
Largest Holdings.)
Analog Devices makes digital signal processors for
wireless communications devices. This is cutting-edge
technology. Another large holding for us, Analog's shares
rose 189%. Teradyne makes test and measuring systems for
electronic components such as circuit boards and
networks. Its shares rose 186%. ADC Telecommunications
rose 155% to become our second largest
3
<PAGE>
Prudential Emerging Growth Fund, Inc.
Holdings expressed as a percentage of the Fund's net
assets
Comments on Largest Holdings As of 4/30/00
2.0% Epcos AG (Germany) (ADR)/Electronic Components
Epcos has about a 40% global market share in
capacitors, integrated circuits, and other
electronic components (more than 37,000 products)
used in the telecommunications and other
industries. There is now a shortage of these components,
and no incremental capacity will be available for
a while, so Epcos has strong pricing leverage.
2.0% ADC Telecommunications, Inc./Telecommunications
Equipment
ADC has a portfolio of telecommunications-related
products, including software and hardware to
increase the speed of fiberoptic, wireless, and wired
devices. It makes devices such as repeaters,
multiplexers, and signal amplifiers for industries such
as cable TV, the Internet, and telephone
communication. Shares rose 155% in our reporting period.
1.8% USA Networks, Inc./Broadcasting
USA Networks is a resilient, diversified media
conglomerate with consistent growth. In
addition to several cable TV networks, it owns
Ticketmaster, 60% of Ticketmaster Online-City
Search, and two PolyGram film divisions. Its sales grew
157% over the past two years.
1.8% Sabre Holdings Corp./Travel Service
This year, AMR spun off its remaining 83% stake in
this market-leading computerized travel
reservation system. The additional supply of shares
depressed prices, and we thought it was a great
opportunity. Sabre also provides information technology
consulting and owns 70% of the Travelocity Website.
Sabre profits grew 43% in 1999.
1.7% CIENA Corp./Telecommunications Equipment
CIENA makes multiplexing systems which increase the
carrying capacity of communications channels for
fiberoptic systems. Its major customers are the long-
distance telecommunications providers.
Holdings are subject to change.
4
<PAGE>
www.prudential.com (800) 225-1852
Semiannual Report April 30, 2000
holding (see Comments on Largest Holdings). TMP Worldwide
is a personnel recruiting and yellow pages advertising
company that is well known to recent college graduates.
Its "Monsterboard" is an Internet site where people can
post resumes, connecting them to hiring companies without
an intermediary. Monster.com is one of the few profitable
Internet businesses. TMP's stock rose 242% from the
beginning of November to its March 10 peak before
dropping sharply. We sold it and bought it again, at a
somewhat lower price.
Aside from small holdings in mortgage insurers, which we
sold, the negative impact on our holdings was broadly
distributed among our stocks, but very concentrated in
time. Our holdings suffered from the correction that
began in March.
The Climate CHange
Over this reporting period, investors' attitudes toward
high-valuation securities changed. They are scrutinizing
both the pace of earnings growth and their dependability-
what financial professionals call the "quality" of
earnings-much more closely. Although there are terrific
earnings-growth opportunities in technology, stocks
generally are still expensive, even after two months of
falling prices. Investors' expectations remain high.
High-multiple companies often are priced with the
expectation of very long runs of rising earnings. Rising
interest rates reduce the value to investors today of
earnings that are far in the future, so their valuations
are threatened by rising rates. Since
it is likely that the Federal Reserve
will keep raising interest rates until the economy is
seen to slow, we reduced the average earnings multiple of
our portfolio. We sold Royal Caribbean, a long-time
holding, because increased capacity in the cruise
industry means its growth is likely to taper off, and
Royal Caribbean may no longer deserve a high growth-stock
multiple.
We also reduced our technology exposure, adding more
companies in nontechnology sectors. We looked for firms
that have strong balance sheets and that are positioned
to take advantage of the opportunities offered by
Internet technology. These include old economy firms
whose costs are likely to be lowered and whose access to customers is
improved by the tech-
5
<PAGE>
Prudential Emerging Growth Fund, Inc.
Semiannual Report April 30, 2000
nology revolution. One example is the office supply
company Office Depot. We bought Sabre, which is known as
the premier computerized travel reservation system, but
which also owns 70% of Travelocity, an online service.
(See Comments on Largest Holdings.)
Looking Ahead: A transitional period
Our stocks are hurt by rising interest rates, which are
being driven in part by the Federal Reserve. It sees a
tight labor market, higher oil prices, and shortages of
some components, and it fears that inflation will take
off. We think these factors are real, but will be offset
by improving productivity. The benefits of much of the
recent high spending on information technology have not
yet become apparent. Old economy businesses are just now
discovering how to use the Internet to reduce procurement
and back-office costs. Consequently, this is a
transitional period to the real information-age economy.
We think the Federal Reserve is reacting to short-term
signs, and the stock market is reacting to recent
information technology expenditures that have not yet
paid for themselves in better profits.
We are adjusting our portfolio to benefit from the
transition, buying stocks in companies that are using the
new technology to accelerate their earnings growth, and
tapering off on the expensive stocks of the technology
providers themselves.
How to price a growth stock
The return on a share of stock consists of any dividends
it pays, plus any change in its market price-the capital
appreciation. Ultimately, both of these contributions
depend upon the issuing company's earnings. The price of
a share can be viewed as its price/earnings ratio times
its earnings. Investors are willing to pay more per
dollar of earnings (a higher price/earnings multiple) for
companies whose future earnings they expect to be higher
or more dependable than average. Expectations of greater
earnings growth will justify a higher price/earnings
multiple-a high valuation.
Prudential Emerging Growth Fund Management Team
6
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 98.3%
Common Stocks 98.3%
-------------------------------------------------------------------------------------
Advertising 1.5%
38,800 TMP Worldwide, Inc.(a) $ 2,536,550
162,200 Young & Rubicam, Inc. 9,032,512
--------------
11,569,062
-------------------------------------------------------------------------------------
Apparel 0.2%
58,800 Jones Apparel Group, Inc.(a) 1,745,625
-------------------------------------------------------------------------------------
Biotechnology 2.3%
71,400 Genentech, Inc.(a) 8,353,800
73,100 Protein Design Labs, Inc.(a) 7,419,650
69,000 Sequenom Inc.(a) 1,673,250
--------------
17,446,700
-------------------------------------------------------------------------------------
Broadcasting 4.1%
177,500 Gemstar International Group Ltd.(a) 8,697,500
293,200 TV Guide, Inc.(a) 8,741,025
618,700 USA Networks, Inc.(a) 14,230,100
--------------
31,668,625
-------------------------------------------------------------------------------------
Cable & Pay Television Systems 3.6%
168,900 Cablevision Systems Corp.(a) 11,432,419
149,400 EchoStar Communications Corp. (Class A)(a) 9,514,912
122,600 UnitedGlobalCom, Inc. (Class A)(a) 6,513,125
--------------
27,460,456
-------------------------------------------------------------------------------------
Cellular Communications 3.6%
64,300 Millicom International Cellular S.A.(a) 3,440,050
111,800 Powertel, Inc.(a) 7,518,550
82,500 VoiceStream Wireless Corp.(a) 8,167,500
166,200 Western Wireless Corp. (Class A)(a) 8,258,062
--------------
27,384,162
-------------------------------------------------------------------------------------
Commercial Services 0.4%
59,900 Paychex, Inc. 3,152,238
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Computer Hardware 0.2%
128,200 Micron Electronics, Inc.(a) $ 1,370,138
-------------------------------------------------------------------------------------
Computer Software & Services 9.9%
143,200 CheckFree Holdings Corp.(a) 7,276,350
46,800 Citrix Systems, Inc.(a) 2,857,725
102,600 Electronic Arts, Inc.(a) 6,207,300
128,800 HNC Software Inc.(a) 6,375,600
86,900 Hyperion Solutions Corp.(a) 2,635,514
186,500 Intuit, Inc.(a) 6,702,344
241,100 J.D. Edwards & Co.(a) 4,400,075
99,100 MetaCreations Corp.(a) 1,108,681
137,100 Novell, Inc.(a) 2,690,588
49,500 Rational Software Corp.(a) 4,213,687
152,500 RSA Security, Inc.(a) 8,949,844
158,900 Safeguard Scientifics, Inc.(a) 6,634,075
179,600 SmartForce PLC (Ireland) (ADR)(a) 8,575,900
211,400 SunGard Data Systems, Inc.(a) 7,306,512
--------------
75,934,195
-------------------------------------------------------------------------------------
Consulting 0.6%
317,400 Gartner Group, Inc. (Class A)(a) 4,284,900
-------------------------------------------------------------------------------------
Data Processing/Reproduction 2.0%
46,400 American Management Systems, Inc.(a) 1,716,800
109,700 CSG Systems International, Inc.(a) 5,059,912
56,800 Fiserv, Inc.(a) 2,609,250
541,300 Informix Corp.(a) 5,954,300
--------------
15,340,262
-------------------------------------------------------------------------------------
Diversified Industries 0.8%
50,100 Kulicke & Soffa Industries, Inc.(a) 3,923,456
22,900 Waters Corp.(a) 2,169,775
--------------
6,093,231
-------------------------------------------------------------------------------------
E-commerce 0.8%
81,000 Priceline.com Inc.(a) 5,123,250
67,700 Travelocity.com Inc.(a) 1,193,212
--------------
6,316,462
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Electronic Components 13.8%
90,600 AVX Corp. $ 8,827,838
63,200 C-COR.net Corp.(a) 2,472,700
132,000 Electronics for Imaging, Inc.(a) 6,897,000
111,800 Epcos AG (Germany) (ADR)(a) 15,686,937
308,200 Jabil Circuit, Inc.(a) 12,616,937
112,600 KEMET Corp.(a) 8,388,700
51,600 Lernout & Hauspie Speech Products N.V.(a) 4,992,300
186,600 Linear Technology Corp. 10,659,525
58,000 Maxim Integrated Products, Inc.(a) 3,759,125
33,800 Micrel, Inc.(a) 2,923,700
152,100 SCI Systems, Inc.(a) 8,099,325
123,800 Solectron Corp.(a) 5,795,388
63,450 Symbol Technologies, Inc. 3,537,338
43,600 Vishay Intertechnology, Inc.(a) 3,656,950
110,800 Vitesse Semiconductor Corp.(a) 7,541,325
--------------
105,855,088
-------------------------------------------------------------------------------------
Financial Services 1.1%
172,900 Capital One Financial Corp. 7,564,375
45,800 London Pacific Group Ltd. (United Kingdom) (ADR) 578,225
--------------
8,142,600
-------------------------------------------------------------------------------------
Human Resources 1.2%
92,200 Robert Half International Inc.(a) 5,635,725
340,900 Romac International, Inc.(a) 3,515,531
--------------
9,151,256
-------------------------------------------------------------------------------------
Industrial Machinery 1.1%
141,400 Asyst Technologies, Inc.(a) 7,564,900
14,900 PRI Automation, Inc.(a) 1,190,138
--------------
8,755,038
-------------------------------------------------------------------------------------
Internet Content 3.5%
64,000 CMGI Inc.(a) 4,560,000
165,400 Go2Net, Inc.(a) 9,841,300
88,120 Internet Capital Group, Inc.(a) 3,734,085
84,900 Multex.com Inc.(a) 1,724,531
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
47,100 Network Solutions, Inc.(a) $ 6,970,800
--------------
26,830,716
-------------------------------------------------------------------------------------
Internet Software 3.5%
93,300 BroadVision, Inc.(a) 4,099,369
100,900 Exodus Communications, Inc.(a) 8,923,344
70,700 Harbinger Corp.(a) 1,334,462
120,900 Portal Software, Inc.(a) 5,546,287
2,500 Software Technologies Corp.(a) 44,688
102,700 Spyglass, Inc.(a) 5,443,100
29,200 USinternetworking, Inc.(a) 726,350
25,900 Viador Inc.(a) 522,856
--------------
26,640,456
-------------------------------------------------------------------------------------
Measuring & Control Instrument 1.2%
149,300 Tektronix, Inc.(a) 8,640,738
12,700 Therma-Wave Inc.(a) 349,250
--------------
8,989,988
-------------------------------------------------------------------------------------
Medical Products & Services 3.6%
103,500 Forest Laboratories, Inc.(a) 8,700,469
109,600 Gilead Sciences, Inc.(a) 5,938,950
91,600 Human Genome Sciences, Inc.(a) 7,013,125
36,800 MedImmune, Inc.(a) 5,885,700
--------------
27,538,244
-------------------------------------------------------------------------------------
Medical Technology 0.4%
58,400 PE Corp.-PE Biosystems Group 3,504,000
-------------------------------------------------------------------------------------
Networking 2.0%
12,200 Ancor Communications, Inc.(a) 368,288
341,500 Cabletron Systems, Inc.(a) 7,811,812
34,600 Foundry Networks, Inc.(a) 3,148,600
166,900 Networks Associates, Inc.(a) 4,245,519
--------------
15,574,219
-------------------------------------------------------------------------------------
Oil & Gas Equipment 0.5%
194,100 R & B Falcon Corp.(a) 4,027,575
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Oil & Gas Exploration/Production 0.8%
168,500 Noble Affiliates, Inc. $ 6,076,531
-------------------------------------------------------------------------------------
Oil & Gas Services 1.4%
19,600 Apache Corp. 949,375
125,300 Smith International, Inc.(a) 9,522,800
--------------
10,472,175
-------------------------------------------------------------------------------------
Pharmaceuticals 4.4%
163,300 Cephalon, Inc.(a) 9,185,625
44,600 Cubist Pharmaceuticals, Inc.(a) 1,432,775
163,200 IVAX Corp.(a) 4,467,600
46,400 Sepracor Inc.(a) 4,268,800
89,600 Teva Pharmaceutical Industries Ltd. (Israel) (ADR) 3,942,400
239,700 Watson Pharmaceuticals, Inc.(a) 10,771,519
--------------
34,068,719
-------------------------------------------------------------------------------------
Publishing 0.2%
59,700 Information Holdings Inc.(a) 1,529,813
-------------------------------------------------------------------------------------
Retail 2.9%
142,600 BJ's Wholesale Club, Inc.(a) 5,053,387
159,200 Dollar General Corp. 3,641,700
84,300 Fastenal Co. 4,926,281
126,800 Linens 'n Things, Inc.(a) 3,914,950
471,400 Office Depot, Inc.(a) 4,979,163
--------------
22,515,481
-------------------------------------------------------------------------------------
Semiconductors 12.5%
59,900 Altera Corp.(a) 6,124,775
104,800 Amkor Technology, Inc.(a) 6,412,450
135,800 Analog Devices, Inc.(a) 10,431,137
144,100 Conexant Systems, Inc.(a) 8,627,987
89,700 Electroglas, Inc. (a) 3,475,875
216,300 Fairchild Semiconductor Corp. (ClassA)(a) 10,274,250
39,400 Intersil Holding Corp.(a) 1,379,000
108,700 Lattice Semiconductor Corp.(a) 7,323,662
110,000 LSI Logic Corp.(a) 6,875,000
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
108,100 Novellus Systems, Inc.(a) $ 7,208,919
75,400 Photronics, Inc.(a) 2,511,763
169,400 Silicon Valley Group, Inc.(a) 4,827,900
58,000 Teradyne, Inc.(a) 6,380,000
39,531 Texas Instruments, Inc. 6,438,612
49,200 TranSwitch Corp.(a) 4,332,675
52,600 Xilinx, Inc.(a) 3,852,950
--------------
96,476,955
-------------------------------------------------------------------------------------
Telecommunication Services 4.3%
116,300 Allegiance Telecom, Inc.(a) 8,228,225
152,500 AT&T Corp. - Liberty Media Group (Class A)(a) 7,615,469
234,800 ICG Communications, Inc.(a) 6,985,300
32,800 Intermedia Communications Inc.(a) 1,336,600
38,300 PanAmSat Corp.(a) 1,651,687
53,300 Time Warner Telecom Inc. (ClassA)(a) 2,918,175
122,900 Viatel, Inc.(a) 4,700,925
--------------
33,436,381
-------------------------------------------------------------------------------------
Telecommunications Equipment 7.4%
257,200 ADC Telecommunications, Inc.(a) 15,624,900
129,200 Advanced Fibre Communications, Inc.(a) 5,902,825
104,300 CIENA Corp.(a) 12,894,088
69,900 CommScope, Inc.(a) 3,320,250
150,800 Digital Microwave Corp.(a) 5,570,175
228,400 Glenayre Technologies, Inc.(a) 3,012,025
119,300 Scientific-Atlanta, Inc. 7,761,956
63,500 Tut Systems, Inc.(a) 3,048,000
--------------
57,134,219
-------------------------------------------------------------------------------------
Transportation/Shipping 0.7%
78,500 Kansas City Southern Industries, Inc. 5,642,188
-------------------------------------------------------------------------------------
Travel Service 1.8%
391,200 Sabre Holdings Corp.(a) 13,667,550
--------------
Total long-term investments
(cost $650,464,709) 755,795,248
--------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Portfolio of Investments as of April 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
-----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 4.4%
Repurchase Agreement
<CAPTION>
-------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 34,005 Joint Repurchase Agreement Account,
5.71%, 5/1/00
(cost $34,005,000; Note 5) $ 34,005,000
--------------
Total Investments 102.7%
(cost $684,469,709; Note 4) 789,800,248
Liabilities in excess of other assets (2.7%) (20,600,951)
--------------
Net Assets 100% $ 769,199,297
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements 13
<PAGE>
Prudential Emerging Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $684,469,709) $ 789,800,248
Receivable for investments sold 25,556,905
Receivable for Fund shares sold 3,374,518
Deferred expenses and other assets 153,023
Dividends and interest receivable 28,856
--------------
Total assets 818,913,550
--------------
LIABILITIES
Bank overdraft 2,260
Payable for investments purchased 46,431,702
Payable for Fund shares reacquired 2,482,103
Distribution fee payable 431,133
Management fee payable 367,055
--------------
Total liabilities 49,714,253
--------------
NET ASSETS $ 769,199,297
--------------
--------------
Net assets were comprised of:
Common stock, at par $ 30,210
Paid-in capital in excess of par 563,108,251
--------------
563,138,461
Net investment loss (3,439,326)
Accumulated net realized gain on investments 104,169,623
Net unrealized appreciation on investments 105,330,539
--------------
Net assets, April 30, 2000 $ 769,199,297
--------------
--------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share
($228,107,616 / 8,801,865 shares of common stock issued and
outstanding) $25.92
Maximum sales charge (5% of offering price) 1.36
--------------
Maximum offering price to public $27.28
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($413,636,235 / 16,430,123 shares of common stock issued
and outstanding) $25.18
--------------
--------------
Class C:
Net asset value and redemption price per share
($71,591,928 / 2,843,501 shares of common stock issued and
outstanding) $25.18
Sales charge (1% of offering price) .25
--------------
Offering price to public $25.43
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($55,863,518 / 2,138,804 shares of common stock issued and
outstanding) $26.12
--------------
--------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Emerging Growth Fund, Inc.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT LOSS
Income
Interest $ 801,174
Dividends (net of foreign withholding taxes of $1,650) 113,602
--------------
Total income 914,776
--------------
Expenses
Management fee 1,809,341
Distribution fee--Class A 215,265
Distribution fee--Class B 1,690,506
Distribution fee--Class C 262,214
Transfer agent's fees and expenses 171,000
Reports to shareholders 67,000
Custodian's fees and expenses 52,000
Registration fees 26,000
Legal fees and expenses 25,000
Amortization of deferred organizational costs 12,163
Audit fees and expenses 10,000
Directors' fees and expenses 9,000
Miscellaneous 4,613
--------------
Total expenses 4,354,102
--------------
Net investment loss (3,439,326)
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 105,802,099
Net change in unrealized appreciation on investments 27,121,422
--------------
Net gain on investments 132,923,521
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 129,484,195
--------------
--------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 2000 October 31, 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss $ (3,439,326) $ (2,636,144)
Net realized gain on investments 105,802,099 30,331,339
Net change in unrealized appreciation on
investments 27,121,422 62,358,936
-------------- ----------------
Net increase in net assets resulting from
operations 129,484,195 90,054,131
-------------- ----------------
Distributions from net realized gains (Note
1)
Class A (7,397,809) (871,485)
Class B (16,742,730) (2,298,027)
Class C (2,214,374) (187,922)
Class Z (1,734,295) (67,704)
-------------- ----------------
(28,089,208) (3,425,138)
-------------- ----------------
Fund share transactions (net of share
conversion)
(Note 5)
Net proceeds from shares sold 503,187,351 182,256,028
Net asset value of shares issued in
reinvestment of distributions 26,869,973 3,294,708
Cost of shares reacquired (175,409,755) (83,825,537)
-------------- ----------------
Net increase in net assets from Fund share
transactions 354,647,569 101,725,199
-------------- ----------------
Total increase 456,042,556 188,354,192
NET ASSETS
Beginning of period 313,156,741 124,802,549
-------------- ----------------
End of period $ 769,199,297 $313,156,741
-------------- ----------------
-------------- ----------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited)
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.
18
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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.
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.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the services of PIC,
the cost of compensation
19
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 PIFM is computed daily and payable monthly at an
annual rate of .60 of 1% of the Fund's average daily net assets.
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 six months ended April 30, 2000.
PIMS has advised the Fund that it received approximately $704,100 and
$331,500 in front-end sales charges resulting from sales of Class A shares and
Class C shares, respectively, during the six months ended April 30, 2000. From
these fees, PIMS paid such sales charges to affiliated broker-dealers, which in
turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended April 30, 2000, it
received approximately $210,900 and $10,300 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').
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 such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was
20
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
.065 of 1% of the unused portion of the credit facility. The Fund did not borrow
any amounts pursuant to the SCA during the six months ended April 30, 2000.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended April 30, 2000,
the Fund incurred fees of approximately $332,800 for the services of PMFS. As of
April 30, 2000, approximately $79,800 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 six months ended April 30, 2000, Prudential Securities
Incorporated, which is an indirect, wholly owned subsidiary of Prudential,
earned approximately $130,000 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 six months ended April 30, 2000 were $1,120,508,523 and $797,291,907,
respectively.
The cost basis of investments for federal income tax purposes at April 30,
2000 was $698,157,382 and, accordingly, net unrealized appreciation of
investments for federal income tax purposes was $91,642,866 (gross unrealized
appreciation--$138,745,430; gross unrealized depreciation--$47,102,564).
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 April 30, 2000, the Fund
had a 4.0% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Fund represented $34,005,000 in principal amount.
As of such date,
21
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
each repurchase agreement in the joint account and the value of the collateral
therefore were as follows:
ABN AMRO, Inc., 5.72%, in the principal amount of $160,000,000, repurchase
price $160,076,267, due 5/1/00. The value of the collateral including accrued
interest was $163,200,995.
Bear, Stearns & Co. Inc., 5.72%, in the principal amount of $160,000,000,
repurchase price $160,076,267, due 5/1/00. The value of the collateral including
accrued interest was $166,727,544.
Credit Suisse First Boston Corp., 5.75%, in the principal amount of
$160,000,000, repurchase price $160,076,667, due 5/1/00. The value of the
collateral including accrued interest was $165,506,481.
Morgan (J.P.) Securities, Inc., 5.72%, in the principal amount of
$210,000,000, repurchase price $210,100,100, due 5/1/00. The value of the
collateral including accrued interest was $214,200,036.
Salomon Smith Barney, Inc., 5.65%, in the principal amount of
$162,577,000, repurchase price $162,653,547, due 5/1/00. The value of the
collateral including accrued interest was $165,893,849.
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to 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.
22
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ---------- -------------
<S> <C> <C>
Six months ended April 30, 2000:
Shares sold 8,432,352 $ 223,526,551
Shares issued in reinvestment of distributions 335,261 7,077,351
Shares reacquired (4,802,390) (124,799,247)
---------- -------------
Net increase in shares outstanding before conversion 3,965,223 105,804,655
Shares issued upon conversion from Class B 370,029 11,256,409
---------- -------------
Net increase in shares outstanding 4,335,252 $ 117,061,064
---------- -------------
---------- -------------
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
---------- -------------
---------- -------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Six months ended April 30, 2000:
Shares sold 7,575,229 $ 197,625,017
Shares issued in reinvestment of distributions 778,847 16,028,660
Shares reacquired (1,421,656) (36,521,033)
---------- -------------
Net increase in shares outstanding before conversion 6,932,420 177,132,644
Shares reacquired upon conversion into Class A (380,252) (11,256,409)
---------- -------------
Net increase in shares outstanding 6,552,168 $ 165,876,235
---------- -------------
---------- -------------
Year ended through 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
---------- -------------
---------- -------------
</TABLE>
23
<PAGE>
Prudential Emerging Growth Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
---------------------------------------------------------- ---------- -------------
Six months ended April 30, 2000:
<S> <C> <C>
Shares sold 1,744,653 $ 45,493,014
Shares issued in reinvestment of distributions 105,557 2,172,360
Shares reacquired (265,937) (6,736,478)
---------- -------------
Net increase in shares outstanding 1,584,273 $ 40,928,896
---------- -------------
---------- -------------
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
---------- -------------
---------- -------------
<CAPTION>
Class Z
----------------------------------------------------------
<S> <C> <C>
Six months ended April 30, 2000:
Shares sold 1,355,320 $ 36,542,769
Shares issued in reinvestment of distributions 74,899 1,591,602
Shares reacquired (278,374) (7,352,997)
---------- -------------
Net increase in shares outstanding 1,151,845 $ 30,781,374
---------- -------------
---------- -------------
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
---------- -------------
---------- -------------
</TABLE>
24
<PAGE>
Prudential Emerging Growth Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------
December 31,
Six Months Year Ended 1996(a)
Ended October 31, Through
April 30, ------------------- October 31,
2000(d) 1999(d) 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 19.16 $ 12.01 $ 11.92 $ 10.00
---------- ------- ------- ------------
Income from investment
operations
Net investment loss (.09) (.13) (.11) (.08)
Net realized and unrealized gain
on investment transactions 8.48 7.61 .41 2.00
---------- ------- ------- ------------
Total from investment
operations 8.39 7.48 .30 1.92
---------- ------- ------- ------------
Less distributions
Distributions from net realized
gains........................... (1.63) (.33) (.21) --
---------- ------- ------- ------------
Net asset value, end of period $ 25.92 $ 19.16 $ 12.01 $ 11.92
---------- ------- ------- ------------
---------- ------- ------- ------------
TOTAL RETURN(c): 45.78% 63.65% 2.63% 19.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $228,108 $85,595 $32,183 $ 33,124
Average net assets (000) $173,158 $52,984 $33,831 $ 28,141
Ratios to average net assets:
Expenses, including
distribution fees .97%(b) 1.22% 1.25% 1.46%(b)
Expenses, excluding
distribution fees .72%(b) .97% 1.00% 1.21%(b)
Net investment loss (.67)%(b) (.80)% (.88)% (.92)%(b)
Portfolio turnover rate 138% 153% 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 period.
See Notes to Financial Statements 25
<PAGE>
Prudential Emerging Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------------------------------------------
December 31,
Six Months Year Ended 1996(a)
Ended October 31, Through
April 30, -------------------- October 31,
2000(d) 1999(d) 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 18.72 $ 11.83 $ 11.85 $ 10.00
---------- -------- ------- ------------
Income from investment
operations
Net investment loss (.18) (.24) (.20) (.14)
Net realized and unrealized gain
on investment transactions 8.27 7.46 .39 1.99
---------- -------- ------- ------------
Total from investment
operations 8.09 7.22 .19 1.85
---------- -------- ------- ------------
Less distributions
Distributions from net realized
gains (1.63) (.33) (.21) --
---------- -------- ------- ------------
Net asset value, end of period $ 25.18 $ 18.72 $ 11.83 $ 11.85
---------- -------- ------- ------------
---------- -------- ------- ------------
TOTAL RETURN(c): 45.22% 62.39% 1.71% 18.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $413,636 $184,955 $83,407 $ 82,070
Average net assets (000) $339,959 $127,249 $86,713 $ 67,420
Ratios to average net assets:
Expenses, including
distribution fees 1.72%(b) 1.97% 2.00% 2.21%(b)
Expenses, excluding
distribution fees .72%(b) .97% 1.00% 1.21%(b)
Net investment loss (1.42)%(b) (1.55)% (1.63)% (1.67)%(b)
Portfolio turnover rate 138% 153% 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 period.
26 See Notes to Financial Statements
<PAGE>
Prudential Emerging Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
---------------------------------------------------
December 31,
Six Months Year Ended 1996(a)
Ended October 31, Through
April 30, ------------------- October 31,
2000(d) 1999(d) 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 18.72 $ 11.83 $11.85 $10.00
---------- ------- ------- ------------
Income from investment
operations
Net investment loss (.18) (.24) (.20 ) (.14)
Net realized and unrealized gain
on investment transactions 8.27 7.46 .39 1.99
---------- ------- ------- ------------
Total from investment
operations 8.09 7.22 .19 1.85
---------- ------- ------- ------------
Less distributions
Distributions from net realized
gains on investment transactions (1.63) (.33) (.21 ) --
---------- ------- ------- ------------
Net asset value, end of period $ 25.18 $ 18.72 $11.83 $11.85
---------- ------- ------- ------------
---------- ------- ------- ------------
TOTAL RETURN(c): 45.22% 62.39% 1.71 % 18.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 71,592 $23,578 $6,774 $6,477
Average net assets (000) $ 52,731 $12,380 $6,949 $5,526
Ratios to average net assets:
Expenses, including
distribution fees 1.72%(b) 1.97% 2.00 % 2.21%(b)
Expenses, excluding
distribution fees .72%(b) .97% 1.00 % 1.21%(b)
Net investment loss (1.42)%(b) (1.56)% (1.63 )% (1.69)%(b)
Portfolio turnover rate 138% 153% 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 period.
See Notes to Financial Statements 27
<PAGE>
Prudential Emerging Growth Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------
December 31,
Six Months Year Ended 1996(a)
Ended October 31, Through
April 30, ------------------- October 31,
2000(d) 1999(d) 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 19.28 $ 12.06 $11.93 $10.00
---------- ------- ------- ------------
Income from investment
operations
Net investment loss (.06) (.09) (.04 ) (.03)
Net realized and unrealized gain
on investment transactions 8.53 7.64 .38 1.96
---------- ------- ------- ------------
Total from investment
operations 8.47 7.55 .34 1.93
---------- ------- ------- ------------
Less distributions
Distributions from net realized
gains on investment
transactions (1.63) (.33) (.21 ) --
---------- ------- ------- ------------
Net asset value, end of period $ 26.12 $ 19.28 $12.06 $11.93
---------- ------- ------- ------------
---------- ------- ------- ------------
TOTAL RETURN(c): 45.92% 63.97% 2.97 % 19.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 55,863 $19,029 $2,439 $ 561
Average net assets (000) $ 40,580 $ 7,796 $1,283 $ 261
Ratios to average net assets:
Expenses, including
distribution fees .72%(b) .97% 1.00 % 1.21%(b)
Expenses, excluding
distribution fees .72%(b) .97% 1.00 % 1.21%(b)
Net investment loss (.42)%(b) (.56)% (.63 )% (.73)%(b)
Portfolio turnover rate 138% 153% 177 % 107%
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Annualized.
(c) 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 period.
28 See Notes to Financial Statements
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Directors
Delayne Dedrick Gold
Robert F. Gunia
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
David R. Odenath, Jr., Vice President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
William V. Healey, Assistant Secretary
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
194 Wood Avenue South
Iselin, NJ 08830
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
Fund Symbols NASDAQ CUSIP
Class A PEEAX 74438N106
Class B PEEBX 74438N205
Class C PEGCX 74438N304
Class Z PEGZX 74438N403
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
The accompanying financial statements as
of April 30, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF173E2 74438N106 74438N205 74438N304 74438N403
(LOGO) Printed on Recycled Paper
