SEMI ANNUAL REPORT March 31, 1995
<PAGE>
LETTER TO
SHAREHOLDERS
May 15, 1995
Dear Shareholder:
Small company stock prices have been uneven over the last six months,
performance was anemic during the fourth quarter of 1994, but then improved
during the first three months of 1995. The primary factor driving stock
performance throughout this period was rising U.S. interest rates. Small stocks
are typically more interest rate sensitive than larger stocks so they did not
perform as well as the general stock market.
We are pleased to report that the Prudential Growth Opportunity Fund posted
gains over the last six months, which were on a par with those reported by the
average small company growth fund as monitored by Lipper Analytical Services,
Inc. For the 12 months ended March 31, 1995, the Fund performed better than the
Lipper Small Company Growth Fund Average. The Fund also fared better than the
S&P 500 for the last five years, and performed in line with that index for the
last three years.
The Fund's Objective.
The Prudential Growth Opportunity Fund seeks capital appreciation. It invests
primarily in small company stocks selling at attractive valuations with
prospects of improving return on equity and increasing earnings. Many of the
stocks in which the Fund invests have smaller market capitalizations than those
included in the Standard & Poor's 500 Composite Stock Index. As a result,
companies in which the Fund is likely to invest may have limited product lines,
markets or financial resources, and may lack management depth. The securities
of these companies may be subject to more abrupt or erratic market movements
than securities of larger, more established companies or the market averages in
general. While the Fund can purchase and sell derivatives (put and call
options), depending upon market conditions, it has not done so during this
reporting period.
- ----------------
1 Note: Total return figures assume reinvestment of dividends and distributions.
All bond returns are market value weighted inclusive of accrued interest. This
chart is for comparison purposes only. There are different risks associated
with each investment sector which should be considered carefully before
investing. Past performance is not indicative of future results.
Source: Prudential Mutual Fund Management, Inc. Bonds: Lehman Brothers
government/corporate aggregate; Stocks: S&P 500 Index; Small Caps:
Russell 2000 Index; and Money Markets: IBC/Donoghue taxable funds
average.1
-1-
<PAGE>
<TABLE>
CUMULATIVE TOTAL RETURNS1
As of March 31, 1995
<CAPTION>
Since
6 mos 1Year 5 Years 10 Years Inception2
<S> <C> <C> <C> <C> <C>
Class A 5.0% 9.4% 90.1% N/A 93.6%
Class B 4.6% 8.5% 82.4% 212.1% 368.6%
Class C 4.6% N/A N/A N/A 7.9%
Lipper Small Co 5.4% 7.8% 91.3% 247.0 N/A
Growth Avg.3
</TABLE>
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS1
As of March 31, 1995
<CAPTION>
1 Year 5Years 10Years Since Inception2
<S> <C> <C> <C> <C>
Class A 3.9% 12.6% N/A 12.5%
Class B 3.5% 12.7% 12.1% 11.3%
Class C N/A N/A N/A 6.9%
</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 Mutual Fund Management, Inc. and Lipper Analytical
Services, Inc. The cumulative total returns do not take into account sales
charges. The average annual returns do take into account applicable sales
charges. The Fund charges a maximum front-end sales load of 5% for Class A
shares. Class B shares are subject to a contingent deferred sales charge of 5%,
4%, 3%, 2%, 1% and 1% for six years. Class C shares have a 1% CDSC for one
year. Class B shares will automatically convert to Class A shares after
approximately seven years. Class C shares average annual returns are not yet
available since they have been in existence for less than one year.
2. Inception dates: 1/22/90 Class A; 11/13/80 Class B; 8/1/94 Class C.
3. Lipper average returns are 278 funds for six months; 250 funds for one year;
74 funds for five years and 32 funds for 10 years
Senate Considers "Dream
Account"
The U.S. Senate will soon be considering a new,
tax-deferred savings vehicle called the "American
Dream Savings Account," which was approved by the
House of Representatives earlier in the year as
part of the "Contract with America" legislative
agenda.
While similar to a traditional individual
retirement account or IRA, the American Dream
Savings Account goes further by raising the
contribution ceiling for non-working spouses
and permitting tax-free and penalty-free
withdrawals prior to age 59 1/2 for certain
major expenses. Prudential Mutual Funds
supports the American Dream Savings Account
and we urge you to share your opinion with
your legislators.
The Market.
U.S. stock market performance was mixed over the last six months -- weak during
the fourth quarter of 1994, but then gaining strength during the first three
months of 1995. The primary factor driving stock market movement was U.S.
interest rates, which have been increased on seven occasions since February
1994. The U.S. Federal Reserve last raised short-term interest rates on
February 1, 1995. Just prior to that much anticipated move, and thereafter,
the market became increasingly positive. The U.S. economy had finally begun to
show signs that the Federal Reserve's monetary policy was working -- as
evidenced by the decrease in housing starts, auto and retail sales, and the
increase in unemployment. As a result, stocks saw positive, albeit modest
returns for the last six months.
The S&P 500, a weighted index comprised of 500 stocks that provides a broad
indicator of stock price movements, returned 9.7% for the six months
-2-
<PAGE>
ended March 31, 1995. Small stocks, as measured by the Russell 2000, gained
2.6% during that period. The Russell 2000 tracks the overall performance of
the smallest 2,000 stocks in the United States.
Particularly noteworthy during the month of February was the Dow Jones
Industrial Average (DJIA), which broke the 4000 barrier for the first time on
February 23, 1995. The DJIA continued to reach new highs throughout the month.
While the DJIA measures the performance of 30 stocks and is a less broad-based
measure of stock performance than the S&P 500, it is a widely followed measure
of general stock market health.
Fund Update
Starting in February 1995, Class B shareholders
may have begun to notice a change in their Fund
holdings. That's when Class B shares began to
automatically convert to Class A shares, on a
quarterly basis, approximately seven years after
purchase. As you may know, Class A shares
generally carry lower annual distribution charges
than Class B shares. Accordingly, after
conversion you will generally earn higher
total returns on your investment than you
would have as a Class B shareholder.
Following the May cycle, conversions of
eligible Class B shares and special exchanges
of Class B and C shares will take place each
calendar quarter (March, June, September and
December) starting in September 1995.
What Went Well...
The Fund seeks stocks that we believe are selling at a considerable discount to
their underlying worth. This is typically referred to as a value-oriented
investment approach or, put more simply, "value investing." As to how well
this philosophy played out relative to funds in its peer group, growth-oriented
companies -- companies that have the strong potential to increase earnings --
did somewhat better than value companies during the reporting period.
Nevertheless, a number of factors came into play over the last six months,
which brought a wide range of benefits to the Fund's portfolio.
- - The dynamics of the small company stocks are changing -- for the
better. In 1994, small stocks lagged large stocks due to the flurry of interest
rate activity by the Federal Reserve. Looking ahead, however, small company
stocks may be poised to perform better than their large stock brethren, mainly
because they continue to have a great deal of room to grow. As a group, small
stocks are still inexpensive relative to their historical prices. As economic
growth continues, so too, should small company earnings.
- - Many holdings are just now poised to move. While a large percentage of
our holdings have produced exceedingly positive results during the last six
months, a number of our holdings have yet to reach their full growth
potential. We view this as a positive for the portfolio. For example, some of
our aerospace/defense and steel holdings (Precision Castparts and Trinity
Industries) have already begun to benefit from increased economic growth.
Others have yet to benefit fully. And these are companies with strong balance
sheets and earnings growth. Good examples of stocks in this category are
Marshall Industries and Methode Electronics.
- - Merger/acquisition activity continues to benefit the Fund. During the
past six months, the Fund's value approach to stock investing has helped it
benefit from increased merger activity across many industries. As economic
growth continues, many companies seek takeover candidates
-3-
<PAGE>
with business lines that can complement their own, that are selling at
low prices. Holdings that benefitted from this kind of activity included
Chicago Northwestern, which was purchased by Union Pacific and Salick Health
Care, which received a bid from Zeneca. Freight forwarding company
Intertrans was purchased by Fritz, and Perry Drug Stores was purchased
by Revco. We sold these positions as their prices rose.
- - Emphasizing the right sectors. The Fund's sector allocation also proved
beneficial for the reporting period. The Fund has been focusing on more
cyclically sensitive issues, where strong market conditions and improving
earnings have helped us uncover attractively priced, "undiscovered" stocks. As
of March 31, the Fund maintained its three largest sector weightings in
industrials, technology and consumer growth stocks, all of which benefitted
from increased economic growth. As a group, these stocks performed particularly
well during the reporting period. Top holdings (as a percentage of net assets)
in the various sectors included Cirrus Logic (technology, 1.3%), Kemet Corp.
(technology, 0.9%), Carlisle Companies (industrial, 0.9%), Cabot Corp.
(industrial, 1.8%) and Regis Corp. (consumer growth, 0.8%).
Where We Could Have Done Better...
- - We reduced our exposure to finance. From 1992 to 1993, the Fund had
significant exposure to finance stocks. However, we began to reduce our
exposure in mid-1993 as economic growth began to take off, believing that this
sector had reached its full growth potential. In most cases, we sold on
appreciation, shifting assets into sectors that we felt would benefit most
from increased economic growth. While these sectors have performed well,
particularly during this first quarter, finance issues have also rebounded well
after a weak fourth quarter 1994.
- - A few of our holdings performed poorly. A few stock-specific factors
negatively impacted the Fund during this reporting period. One such situation
involved the investment management firm of Piper Jaffray. While we had held the
stock for a number of years (during which time it performed well), the stock was
hurt by the company's use of derivatives in its mutual fund business. Another
stock which did not do as well during the last six months was retailer
Tiffany's. A decent performer throughout much of the last year, Tiffany's
subsequently declined during the first quarter on weakness in the Japanese
market where Tiffany's does roughly 30% of its business. Long term, we
continue to believe Tiffany's prospects for growth remain compelling.
-4-
<PAGE>
The Outlook.
Looking ahead, our outlook for the Fund and small company stocks remains
positive. Economic growth has begun to slow to more manageable levels,
which could eliminate the need for interest rate intervention in the
future -- a positive for stocks. Also, we've begun to see a pick up in the
earnings of smaller companies relative to larger companies. These factors,
combined with the fact that small stocks are still undervalued relative to
large stocks, makes the prospects for small stock growth compelling over the
next few years.
As always, it's a pleasure to have you as a shareholder of the Prudential
Growth Opportunity Fund and report our activity to you. Thank you for your
confidence.
Sincerely,
Robert P. Fetch
Portfolio Manager
Richard A. Redeker
President
-5-
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC. Portfolio of Investments
March 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS
Common Stocks--90.4%
Aerospace/Defense--3.7%
740,000 Precision Castparts
Corp..................... $ 19,332,500
------------
Automobiles--1.1%
250,000(D) Jason, Inc.*
(cost $2,200,000;
purchase
date--1/21/94)........... 1,996,875
190,000 Standard Products Co....... 3,728,750
------------
5,725,625
------------
Banking--1.4%
190,000 Community First Bankshares,
Inc...................... 2,945,000
200,000 Riggs National Corp.*...... 1,850,000
140,000 Rochester Community Savings
Bank..................... 2,397,500
------------
7,192,500
------------
Cable & Pay Television Systems--1.1%
217,000 TCA Cable TV, Inc.......... 5,669,125
------------
Commercial Services--1.0%
193,700 Aviall, Inc................ 1,283,263
28,400 Banner Aerospace, Inc.*.... 113,600
190,000 SafeCard Services, Inc..... 3,633,750
------------
5,030,613
------------
Communications Equipment--0.9%
298,600 Black Box Corp.*........... 4,404,350
------------
Computer Hardware--3.5%
310,000 Stratus Computer, Inc.*.... 9,687,500
390,000 Telxon Corp................ 5,801,250
119,800 VeriFone, Inc.*............ 2,935,100
------------
18,423,850
------------
Computer Software & Services--5.0%
220,000 American Management
Systems, Inc.*........... 4,262,500
49,800 Analysts International
Corp..................... 1,157,850
241,800 Continuum Co., Inc.*....... 7,193,550
25,000 McAffee Associates,
Inc.*.................... $ 725,000
200,050 National Data Corp......... 3,475,869
275,000 Primark Corp.*............. 3,953,125
95,000 Sterling Software, Inc.*... 3,313,125
124,200 Westcott Communications,
Inc.*.................... 1,723,275
------------
25,804,294
------------
Consumer Products--2.5%
35,300 Block Drug Co., Inc........ 1,235,500
275,000 Fedders Corp.*............. 1,478,125
550,000 Fedders USA, Inc.*......... 4,056,250
265,400 Libbey, Inc................ 4,943,075
75,000 Russ Berrie & Co., Inc..... 1,078,125
------------
12,791,075
------------
Consumer Services--.8%
235,000 Regis Corp.*............... 4,347,500
------------
Containers & Packaging--0.6%
24,200 AptarGroup Inc............. 692,725
127,800 Interpool, Inc.*........... 1,853,100
32,200 U.S. Can Corp.*............ 684,250
------------
3,230,075
------------
Drugs & Medical Supplies--2.8%
70,000 Abbey Healthcare Group*.... 2,563,750
248,400 Endosonics Corp.*.......... 1,987,200
27,700 Healthdyne, Inc.*.......... 283,925
14,800 Healthdyne Technologies,
Inc.*.................... 175,750
38,400 Heart Technology, Inc.*.... 720,000
50,000 Marsam Pharmaceuticals,
Inc.*.................... 718,750
105,100 Sofamor/Danek Group,
Inc.*.................... 2,574,950
150,000 Sybron International
Corp.*................... 5,400,000
------------
14,424,325
------------
Electrical Equipment--0.8%
187,000 Belden, Inc................ 4,114,000
13,500 Cable Design Technologies
Corp.*................... 202,500
------------
4,316,500
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Electronics--7.9%
43,100 Actel Corp.*............... $ 549,525
10,300 Advance Circuits, Inc.*.... 142,913
108,100 Burr-Brown Corp............ 1,959,312
200,000 Cirrus Logic, Inc.*........ 6,800,000
130,600 Kemet Corp.*............... 4,913,825
425,000 Marshall Industries,
Inc.*.................... 11,050,000
505,000 Methode Electronics,
Inc...................... 7,953,750
170,000 Woodhead Industries,
Inc...................... 3,400,000
111,500 Zilog Inc.*................ 3,986,125
------------
40,755,450
------------
Engineering & Construction--0.3%
126,200 Baker (Michael) Corp.*..... 496,125
48,500 Valmont Industries, Inc.... 994,250
------------
1,490,375
------------
Environmental Services--1.1%
216,000 BHA Group, Inc............. 2,484,000
286,300 USA Waste Services,
Inc.*.................... 3,399,812
------------
5,883,812
------------
Financial Services--1.1%
104,200 Finova Group Inc........... 3,438,600
165,000 McDonald & Co. Investments,
Inc...................... 2,351,250
------------
5,789,850
------------
Food & Beverages--3.6%
25,000 Dole Food Inc.............. 725,000
288,000 JP Foodservice Inc.*....... 3,312,000
394,300 Michaels Foods, Inc........ 4,337,300
490,000 Rykoff-Sexton, Inc......... 7,717,500
207,000 Sanderson Farms, Inc....... 2,432,250
------------
18,524,050
------------
Forest Products--2.7%
308,500 Mercer International,
Inc.*.................... 4,473,250
150,200 Mosinee Paper Corp......... 4,092,950
107,500 Pentair, Inc............... $ 4,541,875
47,900 Wausau Paper Mills Co...... 1,065,775
------------
14,173,850
------------
Health Care Services--0.8%
139,500 National Health Labs
Hldgs.*.................. 2,092,500
450,000 Unilab Corp.*.............. 2,306,250
------------
4,398,750
------------
Hospital Management--2.5%
180,000 Coastal Healthcare Group,
Inc.*.................... 4,905,000
233,700 Physician Corp. of
America*................. 5,258,250
11,300 Right CHOICE Managed
Care*.................... 203,400
112,200 Universal Health Services,
Inc.*.................... 2,833,050
------------
13,199,700
------------
Industrials--5.9%
70,700 Amcast Industrial Corp..... 1,414,000
130,500 Carlisle Companies, Inc.... 4,795,875
90,800 Figgie International,
Inc...................... 817,200
21,900 Insituform Mid-America,
Inc...................... 229,950
205,000 Johnstown America
Industries Inc.*......... 2,767,500
250,000 Mark IV Industries, Inc.... 5,125,000
142,600 Medalist Industries,
Inc.*.................... 819,950
108,900 Rogers Corp.*.............. 5,853,375
204,500 Schulman (A.), Inc......... 6,237,250
104,050 Varlen Corp................ 2,367,137
------------
30,427,237
------------
Information Services--0.9%
210,000 American Business
Information, Inc.*....... 4,567,500
------------
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Insurance--1.3%
166,000 AmVestors Financial
Corp.*................... $ 1,743,000
120,000 Life Re Corp............... 2,325,000
221,400 Philadelphia Consolidated
Holding Corp.*........... 2,767,500
------------
6,835,500
------------
Leisure--0.9%
348,800 Topps Co., Inc............. 2,223,600
120,000 WMS Industries Inc.*....... 2,490,000
------------
4,713,600
------------
Machinery & Equipment--7.3%
162,900 Bearings, Inc.............. 4,948,087
360,000 Brenco, Inc................ 4,545,000
126,100 GATX Corp.................. 5,642,975
160,000 Gerber Scientific, Inc..... 2,300,000
111,600 Maverick Tube Corp.*....... 990,450
325,000 Measurex Corp.............. 8,084,375
440,000 Regal Beloit Corp.......... 6,875,000
161,400 Roper Industries........... 4,337,625
------------
37,723,512
------------
Media--0.5%
150,000 Valassis Communications,
Inc.*.................... 2,737,500
------------
Non-Ferrous Metals--0.1%
18,200 Cleveland-Cliffs Inc....... 700,700
------------
Oil & Gas Exploration/Production--4.4%
30,800 Cabot Oil & Gas Corp....... 487,256
120,000 Diamond Shamrock, Inc...... 3,165,000
45,100 Dreyfus Natural Gas
Corp.*................... 648,313
360,000 International Colin Energy
Co.*..................... 2,025,000
270,814 KN Energy, Inc............. 6,499,536
135,700 Lomak Petroleum, Inc.*..... 949,900
300,100 Mesa, Inc.*................ 1,838,112
103,400 Mitchell Energy & Dev.
Corp., Class A........... $ 1,861,200
145,050 Mitchell Energy & Dev.
Corp., Class B........... 2,556,506
120,000 Western Gas Resources,
Inc...................... 2,655,000
------------
22,685,823
------------
Oil Services--0.8%
200,000 Dreco Energy Services
Ltd.*.................... 2,550,000
225,000 Pride Petroleum Services,
Inc.*.................... 1,546,875
------------
4,096,875
------------
Publishing--0.3%
63,600 Central Newspapers, Inc.... 1,661,550
------------
Realty--1.1%
100,000 Duke Reality Investments,
Inc...................... 2,650,000
120,000 Equity Residential Property
Trust.................... 3,120,000
------------
5,770,000
------------
Restaurants--0.2%
124,600 Buffets, Inc.*............. 1,183,700
------------
Retail--3.3%
726,480 Neostar Retail Group
Inc.*.................... 8,899,380
388,000 Stride Rite Corp........... 4,898,500
110,000 Tiffany & Co............... 3,410,000
------------
17,207,880
------------
Specialty Chemicals--6.0%
300,800 Brush Wellman, Inc......... 5,301,600
250,000 Cabot Corp................. 9,218,750
75,000 Potash Corp................ 3,337,500
180,000 Raychem Corp............... 7,312,500
155,000 Vigoro Corp................ 5,735,000
------------
30,905,350
------------
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Steel--5.4%
100,000 Huntco, Inc................ $ 2,025,000
10,200 Lukens, Inc................ 310,466
200,000 Quanex Corp................ 4,550,000
570,000 Trinity Industries, Inc.... 21,303,750
------------
28,189,216
------------
Transportation--6.2%
246,250 Air Express International
Corp..................... 6,279,375
347,800 Expeditors International of
Washington, Inc.......... 7,303,800
263,600 Harper Group, Inc.......... 4,613,000
335,000 Kansas City Southern
Industries, Inc.*........ 13,609,375
66,700 WorldCorp, Inc.*........... 641,988
------------
32,447,538
------------
Trucking & Shipping--0.5%
123,800 American President Cos.,
Ltd...................... 2,708,125
------------
Utility--0.1%
35,900 AES China Generating*...... $ 309,638
------------
Total common stocks
(cost $415,251,201)...... 469,779,413
------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT
(000) Repurchase Agreement--11.4%
---------
<C> <S> <C>
$ 58,914 Joint Repurchase Agreement Account,
6.29%, 4/3/95, (Note 5)
(cost $58,914,000)......... 58,914,000
------------
Total Investments--101.8%
(cost $474,165,201; Note
4)....................... 528,693,413
Liabilities in excess of
other
assets--(1.8%)........... (9,258,343)
------------
Net Assets--100%........... $519,435,070
------------
------------
</TABLE>
- ------------
* Non-income producing security.
(D) Private placement restricted as to resale; includes registration rights
under which the Fund may demand registration by the issuer.
-9- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets
March 31, 1995
--------------
<S>
<C>
Investments, at value (cost
$474,165,201)................................................ $528,693,413
Cash.........................................................................
............ 29,317
Receivable for investments
sold.......................................................... 9,477,369
Receivable for Fund shares
sold.......................................................... 990,646
Dividends and interest
receivable........................................................
577,341
Other
assets.......................................................................
...... 16,332
--------------
Total
assets.......................................................................
.... 539,784,418
--------------
Liabilities
Payable for investments
purchased........................................................
15,684,800
Payable for Fund shares
reacquired.......................................................
3,827,789
Distribution fee
payable.................................................................
302,772
Management fee
payable...................................................................
299,911
Accrued
expenses.....................................................................
.... 234,076
--------------
Total
liabilities..................................................................
.... 20,349,348
--------------
Net
Assets.......................................................................
........ $519,435,070
--------------
--------------
Net assets were comprised of:
Common stock, at
par................................................................... $
440,983
Paid-in capital in excess of
par....................................................... 456,076,824
--------------
456,517,807
Undistributed net investment
income.................................................... 1,902,134
Accumulated net realized gain on
investments........................................... 6,486,917
Net unrealized appreciation on
investments............................................. 54,528,212
--------------
Net assets, March 31,
1995...............................................................
$519,435,070
--------------
--------------
Class A:
Net asset value and redemption price per share
($203,556,729 / 16,854,425 shares of common stock issued and
outstanding)............ $12.08
Maximum sales charge (5.0% of offering
price).......................................... .64
--------------
Maximum offering price to
public....................................................... $12.72
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($315,089,405 / 27,175,839 shares of common stock issued and
outstanding)............ $11.59
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($788,936 / 68,045 shares of common stock issued and
outstanding).................... $11.59
--------------
--------------
</TABLE>
See Notes to Financial Statements.
-10-
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31,
Net Investment Loss 1995
------------
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $6,227)................... $ 2,951,888
Interest............................. 839,628
------------
Total income......................... 3,791,516
------------
Expenses
Distribution fee--Class A............ 155,743
Distribution fee--Class B............ 1,812,531
Distribution fee--Class C............ 2,463
Management fee....................... 1,706,577
Transfer agent's fees and expenses... 516,000
Reports to shareholders.............. 185,000
Custodian's fees and expenses........ 124,000
Registration fees.................... 117,000
Audit fee............................ 25,000
Franchise taxes...................... 22,000
Directors' fees...................... 15,000
Legal fees........................... 15,000
Miscellaneous........................ 10,401
------------
Total expenses....................... 4,706,715
------------
Net investment loss.................... (915,199)
------------
Realized and Unrealized Gain
on Investments
Net realized gain on investment
transactions......................... 7,882,944
Net change in unrealized appreciation
of investments....................... 15,467,183
------------
Net gain on investments................ 23,350,127
------------
Net Increase in Net Assets
Resulting from Operations.............. $ 22,434,928
------------
------------
</TABLE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Year
Six Months Ended
Ended September
Increase (Decrease) March 31, 30,
in Net Assets 1995 1994
------------ ------------
<S> <C> <C>
Operations
Net investment loss.... $ (915,199) $ (3,041,729)
Net realized gain on
investments.......... 7,882,944 44,673,230
Net change in
unrealized
appreciation of
investments.......... 15,467,183 (38,737,408)
------------ ------------
Net increase in net
assets
resulting from
operations........... 22,434,928 2,894,093
------------ ------------
Net equalization
credits................ 1,457,753 70,234
------------ ------------
Distributions from net
capital
gains (Note 1)
Class A.............. (6,672,537) (5,775,787)
Class B.............. (28,252,159) (24,227,795)
Class C.............. (23,735) --
------------ ------------
(34,948,431) (30,003,582)
------------ ------------
Fund share transactions (net of
conversion) (Note 6)
Net proceeds from
shares
subscribed........... 161,924,864 433,710,426
Net asset value of
shares
issued in
reinvestment of
distributions........ 33,299,692 28,758,329
Cost of shares
reacquired............. (193,582,909) (377,490,019)
------------ ------------
Net increase in net
assets
from Fund share
transactions......... 1,641,647 84,978,736
------------ ------------
Total increase
(decrease)............. (9,414,103) 57,939,481
Net Assets
Beginning of period...... 528,849,173 470,909,692
------------ ------------
End of period............ $519,435,070 $528,849,173
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-11-
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Notes to Financial Statements
(Unaudited)
Prudential Growth Opportunity Fund, Inc. (the ``Fund'') is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objective of the Fund is to achieve capital
growth, consistent with reasonable risk, by investing in a carefully selected
portfolio of common stocks having prospects of a high return on equity,
increasing earnings, increasing dividends and price-earnings ratios which are
not excessive.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Fund in
the preparation of its financial statements.
Securities Valuations: Investments traded on a national securities exchange are
valued at the last reported sales price on the primary exchange on which they
are traded. Securities traded in the over-the-counter market (including
securities listed on exchanges whose primary market is believed to be
over-the-counter) and listed securities for which no sale was reported on that
date are valued at the mean between the last reported bid and asked prices. Any
security for which a reliable market quotation is unavailable is valued at fair
value as determined in good faith by or under the direction of the Fund's Board
of Directors.
Short-term securities which mature in more than 60 days are valued based upon
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying collateral securities, the value of which exceeds
the principal amount of the repurchase transaction, including accrued interest.
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 Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date; interest income is recorded on the accrual basis.
Net investment income (loss), other than distribution fees, and unrealized
and realized gains or losses are allocated daily to each class of shares of the
Fund based upon the relative proportion of net assets of each class at the
beginning of the day.
Federal Income 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 to its shareholders.
Therefore, no federal income tax provision is required.
Equalization: The Fund follows the accounting practice known as equalization,
by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
Dividends and Distributions: The Fund expects to pay dividends of net investment
income, if any, semi-annually and make distributions at least annually of any
net capital gains. 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 AICPA Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
During the six months ended March 31, 1995, the Fund reclassified $915,199 of
net operating losses by increasing undistributed net investment income and
decreasing accumulated net realized gains. Net investment income, net realized
gains, and net assets were not affected by this change.
Note 2. Agreements The Fund has a management
agreement with Prudential
Mutual Fund Management, Inc. (``PMF''). Pursuant to this agreement, PMF has
responsibility for all investment advisory services and supervises the
subadviser's performance of
-12-
<PAGE>
<PAGE>
such services. PMF 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. PMF 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 PMF is computed daily and payable monthly, at an
annual rate of .70 of 1% of the Fund's average daily net assets.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and with Prudential Securities Incorporated (``PSI''), which
acts as distributor of the Class B and Class C shares of the Fund (collectively
the ``Distributors''). The Fund compensates the Distributors 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''). The distribution fees are
accrued daily and payable monthly.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
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 .25 of 1% of the average daily
net assets of Class A shares and 1% of the average daily net assets of both the
Class B and C shares for the period ended March 31, 1995.
PMFD has advised the Fund that it has received approximately $143,900 in
front-end sales charges resulting from sales of Class A shares during the six
months ended March 31, 1995. From these fees, PMFD paid such sales charges to
PSI and Pruco Securities Corporation, affiliated broker-dealers, which in turn
paid commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the six months ended March 31, 1995, it
received approximately $476,700 in contingent deferred sales charges imposed
upon certain redemptions by Class B shareholders.
PMFD is a wholly-owned sudsidiary of PMF; PSI, PMF and PIC are indirect
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's
transfer agent. During the six months ended March 31, 1995, the Fund incurred
fees of approximately $402,000 for the services of PMFS. As of March 31, 1995,
approximately $72,000 of such fees were due to PMFS.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the six months ended
March 31, 1995 were $140,095,199 and $196,788,467, respectively.
The federal income tax basis of the Fund's investments at March 31, 1995 was
$474,361,144 and, accordingly, net unrealized appreciation for federal income
tax purposes was $54,528,212 (gross unrealized appreciation--$69,730,954 gross
unrealized depreciation--$15,202,742).
Note 5. Joint The Fund, along with other
Repurchase affiliated registered invest-
Agreement ment companies, transfers
Account 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 March 31, 1995, the Fund
had a 7.6% undivided interest in the repurchase agreements in the joint account.
The undivided interest for the Fund represented $58,914,000 in principal amount.
As of such date, each repurchase agreement in the joint account and the
collateral therefor were as follows:
Bear, Stearns & Co., Inc., 6.15%, in the principal amount of $30,000,000,
repurchase price $30,015,375, due 4/3/95. The value of the collateral including
accrued interest is $30,655,525.
First Boston Corp., 6.30%, in the principal amount of $250,000,000,
repurchase price $250,131,250, due 4/3/95. The value of the collateral including
accrued interest is $255,156,250.
Goldman Sachs & Co., 6.30%, in the principal amount of $250,000,000,
repurchase price $250,131,250, due 4/3/95. The value of the collateral including
accrued interest is $255,156,250.
Smith Barney, Inc., 6.30%, in the principal amount of $250,000,000,
repurchase price $250,131,250, due 4/3/95. The value of the collateral including
accrued interest is $255,156,250.
Note 6. Capital The Fund currently offers
Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 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 contingent deferred sales charge of 1%
-13-
<PAGE>
<PAGE>
during the first year. Commencing in February 1995, Class B shares automatically
convert to Class A shares on a quarterly basis approximately seven years after
purchase.
There are 750 million shares of common stock, $.01 par value per share,
divided into three classes, designated Class A, Class B and Class C common
stock, each of which consists of 250 million authorized shares.
Transactions in shares of common stock for the six months ended March 31,
1995 and the fiscal year ended September 30, 1994 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ---------------------------- ----------- -------------
<S> <C> <C>
Six months ended March 31,
1995:
Shares sold................. 5,905,857 $ 69,345,203
Shares issued in
reinvestment of
distributions............. 614,029 6,502,568
Shares reacquired........... (6,382,008) (72,762,585)
----------- -------------
Net increase in shares
outstanding
before conversion......... 137,878 3,085,186
Shares issued upon
conversion from Class B... 8,405,246 90,525,645
----------- -------------
Net increase in shares
outstanding............... 8,543,124 $ 93,610,831
----------- -------------
----------- -------------
Year ended September 30,
1994:
Shares sold................. 9,370,171 $ 115,130,689
Shares issued in
reinvestment of
distributions............. 467,222 5,644,046
Shares reacquired........... (8,789,620) (108,081,971)
----------- -------------
Net increase in shares
outstanding............... 1,047,773 $ 12,692,764
----------- -------------
----------- -------------
<CAPTION>
Class B Shares Amount
- ---------------------------- ----------- -------------
<S> <C> <C>
Six months ended March 31,
1995:
Shares sold................. 8,252,743 $ 91,754,915
Shares issued in
reinvestment of
distributions............. 2,601,937 26,773,935
Shares reacquired........... (11,103,699) (120,472,557)
----------- -------------
Net decrease in shares
outstanding
before conversion......... (249,019) (1,943,707)
Shares reacquired upon
conversion into Class A... (8,075,336) (90,525,645)
----------- -------------
Net decrease in shares
outstanding............... (8,324,355) $ (92,469,352)
----------- -------------
----------- -------------
Year ended September 30,
1994:
Shares sold................. 26,537,335 $ 318,270,570
Shares issued in
reinvestment of
distributions............. 1,960,499 23,114,283
Shares reacquired........... (22,525,818) (269,363,510)
----------- -------------
Net increase in shares
outstanding............... 5,972,016 $ 72,021,343
----------- -------------
----------- -------------
<CAPTION>
Class C
- ----------------------------
<S> <C> <C>
Six months ended March 31,
1995:
Shares sold................. 74,170 $ 824,746
Shares issued in
reinvestment of
distributions............. 2,254 23,189
Shares reacquired........... (30,791) (347,767)
----------- -------------
Net increase in shares
outstanding............... 45,633 $ 500,168
----------- -------------
----------- -------------
August 1, 1994* through
September 30, 1994:
Shares sold................. 26,125 $ 309,167
Shares reacquired........... (3,713) (44,538)
----------- -------------
Net increase in shares
outstanding............... 22,412 $ 264,629
----------- -------------
----------- -------------
- ---------------
* Commencement of offering of Class C shares.
</TABLE>
-14-
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class
A
- -----------------------------------------------------------------
<S> <C> <C> <C>
<C>
Six Months
Ended Year
Ended September 30,
March 31,
- --------------------------------------------------
1995** 1994**
1993** 1992**
---------- --------
- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 12.40 $ 13.06 $
11.25 $ 10.16
---------- --------
- -------- --------
Income from investment operations
Net investment income................... .02 --
.03 .02
Net realized and unrealized gain (loss)
on investment transactions............ .50 .13
3.14 1.47
---------- --------
- -------- --------
Total from investment operations...... .52 .13
3.17 1.49
---------- --------
- -------- --------
Less distributions
Dividends from net investment income.... -- --
-- --
Distributions from net realized capital
gains................................. (.84) (.79)
(1.36) (.40)
---------- --------
- -------- --------
Total distributions................... (.84) (.79)
(1.36) (.40)
---------- --------
- -------- --------
Net asset value, end of period.......... $ 12.08 $ 12.40 $
13.06 $ 11.25
---------- --------
- -------- --------
---------- --------
- -------- --------
TOTAL RETURN#:.......................... 5.03% 1.13%
30.42% 15.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 203,557 $103,078 $
94,842 $ 44,845
Average net assets (000)................ $ 124,937 $ 97,877 $
69,801 $ 36,011
Ratios to average net assets:
Expenses, including distribution
fees................................ 1.37%* 1.33%
1.17% 1.33%
Expenses, excluding distribution
fees................................ 1.12%* 1.09%
.97% 1.13%
Net investment income................. .15%* .00%
.26% .19%
Portfolio turnover...................... 30% 82%
68% 99%
<CAPTION>
Class A
----------------------------------
January 22,
1990(D)
Year Ended Through
September 30, September 30,
1991 1990
-------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 7.36 $ 8.55
-------- -------------
Income from investment operations
Net investment income................... .05 .09
Net realized and unrealized gain (loss)
on investment transactions............ 2.82 (1.20)
-------- -------------
Total from investment operations...... 2.87 (1.11)
-------- -------------
Less distributions
Dividends from net investment income.... (.07) (.08)
Distributions from net realized capital
gains................................. -- --
-------- -------------
Total distributions................... (.07) (.08)
-------- -------------
Net asset value, end of period.......... $ 10.16 $ 7.36
-------- -------------
-------- -------------
TOTAL RETURN#:.......................... 39.39% (13.19)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $25,165 $ 17,222
Average net assets (000)................ $20,650 $ 132,627
Ratios to average net assets:
Expenses, including distribution
fees................................ 1.50% 1.61%*
Expenses, excluding distribution
fees................................ 1.30% 1.42%*
Net investment income................. .59% 1.54%*
Portfolio turnover...................... 111% 79%
</TABLE>
- ---------------
* Annualized.
** Calculated based upon weighted average shares outstanding during
the period.
(D) Commencement of offering of Class A shares.
# 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.
See Notes to Financial Statements.
-15-
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Class
B Class C
- ----------------------------------------------------------------- ----------
<S> <C> <C> <C>
<C> <C> <C> <C>
Six Months
Six Months
Ended Year
Ended September 30, Ended
March 31,
- ---------------------------------------------------- March 31,
1995** 1994** 1993**
1992** 1991 1990 1995**
---------- -------- --------
- -------- -------- -------- ----------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 11.99 $ 12.74 $ 11.08
$ 10.11 $ 7.34 $ 9.11 $11.99
---------- -------- --------
- -------- -------- -------- ----------
Income from investment operations
Net investment income (loss)............ (.03) (.09) (.06)
(.07) (.02) .07 (.03)
Net realized and unrealized gain (loss)
on investment transactions............ .47 .13 3.08
1.44 2.82 (1.75) .47
---------- -------- --------
- -------- -------- -------- ----------
Total from investment operations...... .44 .04 3.02
1.37 2.80 (1.68) .44
---------- -------- --------
- -------- -------- -------- ----------
Less distributions
Dividends from net investment income.... -- -- --
-- (.03) (.09) --
Distributions from net realized capital
gains................................. (.84) (.79) (1.36)
(.40) -- -- (.84)
---------- -------- --------
- -------- -------- -------- ----------
Total distributions................... (.84) (.79) (1.36)
(.40) (.03) (.09) (.84)
---------- -------- --------
- -------- -------- -------- ----------
Net asset value, end of period.......... $ 11.59 $ 11.99 $ 12.74
$ 11.08 $ 10.11 $ 7.34 $11.59
---------- -------- --------
- -------- -------- -------- ----------
---------- -------- --------
- -------- -------- -------- ----------
TOTAL RETURN#:.......................... 4.60% .34% 29.40%
14.27% 38.33% (18.63)% 4.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 315,089 $425,502 $376,068
$172,018 $118,660 $ 86,440 $ 789
Average net assets (000)................ $ 363,502 $399,920 $278,659
$154,601 $104,508 $132,622 $ 494
Ratios to average net assets:
Expenses, including distribution
fees................................ 2.12%* 2.09% 1.97%
2.13% 2.30% 2.18% 2.12%*
Expenses, excluding distribution
fees................................ 1.12%* 1.09% .97%
1.13% 1.30% 1.28% 1.12%*
Net investment income (loss).......... (.60)%* (.76)% (.54)%
(.61)% (.21)% .91% (.60)%*
Portfolio turnover...................... 30% 82% 68%
99% 111% 79% 30%
<CAPTION>
Class C
----------
August 1,
1994@
Through
September 30,
1994**
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 11.61
------
Income from investment operations
Net investment income (loss)............ (.01)
Net realized and unrealized gain (loss)
on investment transactions............ .39
------
Total from investment operations...... .38
------
Less distributions
Dividends from net investment income.... --
Distributions from net realized capital
gains................................. --
------
Total distributions................... --
------
Net asset value, end of period.......... $ 11.99
------
------
TOTAL RETURN#:.......................... 3.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 269
Average net assets (000)................ $ 179
Ratios to average net assets:
Expenses, including distribution
fees................................ 2.22%*
Expenses, excluding distribution
fees................................ 1.22%*
Net investment income (loss).......... (.31)%*
Portfolio turnover...................... 82%
</TABLE>
- ---------------
* Annualized.
** Calculated based upon weighted average shares outstanding during the
period.
@ Commencement of offering of Class C shares.
# 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.
See Notes to Financial Statements.
-16-
