(ICON)
Prudential
Growth
Opportunity
Fund, Inc.
ANNUAL
REPORT
Sept. 30, 1995
(LOGO)
<PAGE>
Prudential Growth Opportunity Fund, Inc.
Performance At A Glance.
In the past 12 months, small company stocks have produced solid gains,
buoyed largely by powerful performance in the technology sector, a major
component of the small company stock universe. The prospects for moderate
growth and low inflation in the U.S. economy, as well as optimism about
the efficiency moves of the early 1990s, have led investors to one conclusion
in the past year: buy U.S. stocks. In that time, the Prudential Growth
Opportunity Fund gained more than 22%, although it trailed the Russell
2000 Index, a small company stock benchmark.
<TABLE>
Cumulative Total Returns1 As of 9/30/95
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 23.3% 161.5% N/A 127.2%
Class B 22.4 151.2 273.4% 448.2
Class C 22.4 N/A N/A 26.3
Lipper Small Co. Growth Avg3 28.9 182.0 322.8 146.9
<CAPTION>
Average Annual Total Returns1 As of 9/30/95
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 17.1% 20.0% N/A 14.5%
Class B 17.4 20.1 14.1% 12.1
Class C 21.4 N/A N/A 22.3
</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.
1Source: Prudential Mutual Fund Management and Lipper Analytical Services.
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 and
a contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1% and 1% for
six years, for Class B shares. Class C shares have a 1% CDSC for one year.
Class B shares will automatically convert to Class A shares on a quarterly
basis, approximately seven years after purchase.
2Inception dates: 1/22/90 Class A; 11/13/80 Class B; 8/1/94 Class C.
3Lipper average returns are for 288 funds for one year, 79 funds for five
years, 36 funds for 10 years and 73 funds since inception of the Class B
shares on 11/13/80.
How Investments Compared.
(As of 9/30/95)
(GRAPH)
Source: Lipper Analytical Services.
Financial markets change, so a mutual fund's past performance should never
be used to predict future results. The risks to each of the investments
listed above are different -- we provide 12-month total returns for several
Lipper mutual fund categories to show you that reaching for higher yields
means tolerating more risk. The greater the risk, the larger the potential
reward or loss. In addition, we've added historical 20-year average annual
returns to show that some of 1995's returns (so far) are higher than normal.
These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors receive higher
historical total returns from stocks than from most other investments.
Small Company Funds offer greater potential for long term growth but may
be more volatile than larger capitalization stocks. They are designed for
sophisticated investors who can tolerate additional risk in exchange for
higher potential rewards or losses.
General Bond Funds provide more income than stock funds, which can help
smooth out their total returns year by year. But their prices still
fluctuate (sometimes a good deal) and their returns are historically
lower than those of stock funds.
Money Market Funds attempt to preserve a constant share value; they don't
fluctuate much in price but the returns are generally among the lowest of
the major investment categories.
<PAGE>
Roger Ford, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Prudential Growth Opportunity Fund looks for capital growth by investing
in stocks of small and mid-sized companies (generally less than $1 billion
in market capitalization), primarily in the U.S. We employ a strict value
investment style, looking for small company stocks selling at attractive
valuations with prospects of improving return on equity and increasing
earnings.
New Manager.
Roger Ford became portfolio manager of the Prudential Growth Opportunity
Fund in June 1995. Roger has been managing assets at Prudential since 1972,
including more than $2 billion in several institutional portfolios. Roger
continues the Fund's disciplined value investment style in selecting small
company stocks by focusing on those selling at or near their historical
lows in absolute valuation.
Strategy Session.
During the past year, we concentrated on industrial and technology stocks
that we believed could be the primary beneficiaries of economic expansion
in the U.S. and--to a lesser extent--around the world. As of September
30, 1995, these two sectors comprised almost 60% of the portfolio's
total net assets.
- - Technology. While we are paring some technology holdings, in the wake of
the substantial rise in prices that has occurred this year, we still think
some technology stocks will advance much further in years to come. We're
looking for those companies that will help U.S. companies use technology
to cut their costs and increase efficiency. In addition, we expect computers
will continue to proliferate in the personal and professional lives of most
people around the world.
- - Industry. Once again, we're looking for industrial companies that will
thrive if the economy continues to expand -- not so much basic materials
producers, but manufacturing companies that are raising revenues and growing
earnings by working smarter and cutting costs.
By the end of the reporting period, however, we had begun to cash in some
of these holdings to diversify across a broader array of sectors that look
inexpensive (like insurance and retailers).
Portfolio Breakdown.
Prudential Growth Opportunity Fund
as of 9/30/95
(CHART)
<PAGE>
What Went Well.
Industry Pays Off.
Our emphasis on the machinery, steel, conglomerates and aerospace
industries -- at more than one-third of net assets as of September 30,
1995 -- was a good move. For the past year, these stocks followed
technology's lead in the strong stock market. Precision Castparts,
a manufacturer of castings for aircraft engines, and chemical firm
Cabot Corp., turned in excellent performances during the period. And
we took advantage of price appreciation in Trinity Industries, a maker
of railroad cars, to reduce our position. In the past year or two, the
rail car construction industry has seen revival after many years of decline
caused by inventory oversupply. However, on a short-term basis, we think
this stock has appreciated about as much as it's going to, so we sold some
of our holdings to lock in gains.
The Technology Wave.
Investing approximately one fifth of the portfolio in technology stocks
proved to be a winning strategy during the year, as they fueled one of
the strongest stock market surges in history. Technology stocks, as commonly
measured by the NASDAQ Composite, gained an impressive 36% during the 12
months ended September 30, 1995. We held a larger position in technology
stocks than the Russell 2000, a small company stock benchmark. Some of our
largest holdings in this sector include microcomputer firm Telxon, software
retailer Neostar, and electronic components maker Methode Electronics.
While the technology boom helped us, dramatically rising stock prices
have made us cautious. We have begun to trim some of our technology holdings
and invest the cash elsewhere.
And Not So Well.
Finishing Out of the Money. One market sector performed quite well without
us: Our strong value investment style led us to pass up many opportunities
in financial stocks, which showed strong gains in the wake of stabilizing
U.S. interest rates and banking industry consolidation. Many banking stocks,
thought of as potential takeover candidates, carried prices and valuations
significantly above the levels we like. Some insurance stocks are attractively
priced, however, and we have begun to look for opportunities there.
Five Largest Holdings.*
4.6% Precision Castparts Corp.
Aerospace/Defense
2.9% Cabot Corp.
Specialty Chemicals
2.7% Marshall Industries
Electronics
2.2% Methode Electronics
Electronics
2.1% Expeditors International
of Washington
Transportation
* Expressed as a percentage of total net
assets as of 9/30/95.
Looking Ahead.
Our outlook for small company stocks remains positive although it is important
to remember that we have just enjoyed one of the best years in U.S. stock
market history. The performance you've seen in the last year is not likely
to be repeated anytime soon. Still, in times of economic uncertainly like
we've seen recently, large company stocks usually do better than small
company stocks--if concerns about an economic slowdown subside, we expect
small company stocks may produce gains in the coming months. Also, a
strengthening U.S. dollar won't hurt small company stocks the way it might
with large company stocks. Small caps derive most of their revenue
domestically and aren't as susceptible to a fall in U.S. exports.
1
<PAGE>
President's Letter November 20, 1995
(PICTURE)
Dear Shareholder:
We hope you like the fresh look and information we've given your
shareholder letter. We've also introduced another feature, called
Getting the Most Out of Your Prudential Mutual Fund, which will appear
from time to time at the back of your report. Look for topics
like "Understanding Risk & Reward" as well as easy-to-understand explanations
of financial terms. Why are we providing such information? Because at
Prudential Mutual Funds, we believe an informed investor makes smart
investment decisions.
New Investments for '96
One investment opportunity that investors should watch for in 1996 concerns
retirement savings. Congress and President Clinton have both put forth plans
to reform the way contributions are made to Individual Retirement Accounts
including raising the contribution ceiling and allowing married couples to
make contributions individually rather than jointly. Our favorite has been
the American Dream Savings Account, a new form of IRA that allows investors
access to their funds after five years (without penalty) in order to pay
certain expenses. We believe this plan offers a common-sense approach to
long-term savings.
As I write this letter, the debate over the federal budget is in full swing
and the outcome for any of these plans is uncertain. What is clear is that
investors should keep alert to developments and have the financial flexibility
to respond accordingly.
In Closing
One final note: if you're a Class B shareholder of Prudential Mutual Funds,
you'll begin noticing a change on your statements once you've held your
shares for seven years. At that time, they will automatically begin to
convert to Class A shares on a quarterly basis. Since Class A shares carry
lower annual distribution charges than Class B shares, your total returns
will be higher after the conversion than they would have been without it.
Conversions started earlier this year and beginning in December they will
take place during each calendar quarter -- December, March, June and
September. It's our way of thanking you for your loyalty -- and rewarding
you for maintaining a long-term investment program by helping you earn more
total investment return on your Prudential Mutual Fund. I hope you'll find
this information useful as you work with your financial advisor or registered
representative to develop your personal investment plan.
Thank you for choosing Prudential Mutual Funds for your mutual fund investment.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
LONG-TERM INVESTMENTS--89.7%
COMMON STOCKS--89.7%
------------------------------------------------------------
Aerospace/Defense--4.6%
758,000 Precision Castparts Corp. $ 27,667,000
- ------------------------------------------------------------
Automobiles--0.6%
250,000(b) Jason, Inc.(a)
(cost $2,200,000; purchase
date--1/21/94) 1,968,750
94,300 Walbro Corp. 1,886,000
------------
3,854,750
- ------------------------------------------------------------
Banking--0.6%
190,000 Community First Bankshares, Inc. 3,657,500
- ------------------------------------------------------------
Cable & Pay Television Systems--0.3%
68,000 TCA Cable TV, Inc. 1,955,000
- ------------------------------------------------------------
Computer Hardware--4.3%
529,700 Black Box Corp.(a) 9,799,450
30,100 Opti, Inc.(a) 395,063
456,400 Telxon Corp. 10,896,550
327,700 Western Digital Corp.(a) 5,202,237
------------
26,293,300
- ------------------------------------------------------------
Computer Software & Services--4.8%
92,000 Analysts International Corp. 2,944,000
281,300 Continuum Co., Inc.(a) 10,794,887
20,300 Software Spectrum, Inc.(a) 499,888
232,700 Sterling Software, Inc.(a) 10,587,850
287,800 Westcott Communications, Inc.(a) 4,352,975
------------
29,179,600
- ------------------------------------------------------------
Consumer Products--5.1%
404,600 Big B, Inc. 6,018,425
95,500 Block Drug Co., Inc. Cl. A 3,700,625
82,000 Eckerd, Jack Corp.(a) $ 3,280,000
297,800 Fays, Inc. 2,456,850
560,050 Fedders Corp. Cl. A non-voting 2,730,244
591,900 Fedders Corp. 3,921,337
240,000 Libbey, Inc. 5,730,000
180,400 Russ Berrie & Co., Inc. 2,751,100
------------
30,588,581
- ------------------------------------------------------------
Consumer Services--1.6%
264,900 Regis Corp. 5,695,350
136,700 Pittston Services Group 3,707,987
------------
9,403,337
- ------------------------------------------------------------
Containers & Packaging--0.7%
234,000 Applied Extrusion Technologies(a) 4,299,750
- ------------------------------------------------------------
Drugs & Medical Supplies--1.9%
310,300 Endosonics Corp.(a) 4,111,475
278,081 Healthdyne, Inc.(a) 3,788,854
122,300 Sofamor/Danek Group, Inc.(a) 3,393,825
------------
11,294,154
- ------------------------------------------------------------
Electrical Equipment--1.5%
221,100 Belden, Inc. 5,803,875
157,200 GTI Corp.(a) 3,144,000
------------
8,947,875
- ------------------------------------------------------------
Electronics--6.6%
36,100 Burr-Brown Corp.(a) 1,371,800
91,400 Kemet Corp.(a) 3,130,450
440,000 Marshall Industries(a) 16,610,000
589,200 Methode Electronics, Inc. Cl. A 13,551,600
245,000 Woodhead Industries, Inc. 3,506,562
48,200 Zilog, Inc.(a) 2,006,325
------------
40,176,737
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Environmental Services--1.4%
216,000 BHA Group, Inc. Cl. A $ 2,916,000
287,300 USA Waste Services, Inc.(a) 5,602,350
------------
8,518,350
- ------------------------------------------------------------
Engineering--0.5%
150,000 Baker (Michael) Corp.(a) 834,375
88,000 Valmont Industries, Inc. 2,134,000
------------
2,968,375
- ------------------------------------------------------------
Financial Services--5.2%
261,800 Finova Group, Inc. 11,650,100
146,700 GATX Capital Corp. 7,591,725
350,200 Interpool, Inc.(a) 6,040,950
165,000 McDonald & Co. Investments, Inc. 2,805,000
140,000 RCSB Financial, Inc. 3,377,500
------------
31,465,275
- ------------------------------------------------------------
Food & Beverage--5.1%
531,100 JP Foodservice, Inc.(a) 9,427,025
478,300 Michaels Foods, Inc. 6,397,263
522,500 Rykoff-Sexton, Inc. 12,344,062
240,900 Sanderson Farms, Inc. 2,920,913
------------
31,089,263
- ------------------------------------------------------------
Forest Products--1.7%
130,000 Mercer International, Inc.(a) 3,250,000
185,420 Mosinee Paper Corp. 4,635,500
90,700 Wausau Paper Mills Co. 2,199,475
------------
10,084,975
- ------------------------------------------------------------
Health Care Services--1.0%
177,900 Grancare, Inc.(a) 3,091,013
22,200 Multicare Cos, Inc.(a) 516,150
523,600 Unilab Corp.(a) 2,225,300
------------
5,832,463
Hospital Management--1.3%
18,400 Coastal Physician Group, Inc.(a) $ 322,000
215,700 Physician Corp. of America(a) 3,397,275
128,800 Universal Health Services, Inc. Cl.
B(a) 4,411,400
------------
8,130,675
- ------------------------------------------------------------
Industrials--6.0%
100,000 Carlisle Companies, Inc. 4,162,500
232,700 Figgie International, Inc. Cl. A(a) 3,083,275
23,700 Insituform Mid-America, Inc. 379,200
303,300 ITI Technologies, Inc.(a) 8,227,012
138,700 Mark IV Industries, Inc. 3,086,075
125,100 Pentair, Inc. 5,629,500
247,500 Rogers Corp.(a) 5,940,000
238,000 Schulman (A.), Inc. 5,950,000
------------
36,457,562
- ------------------------------------------------------------
Information Services--0.9%
277,500 American Business Information,
Inc.(a) 5,619,375
- ------------------------------------------------------------
Insurance--2.2%
179,500 AmVestors Financial Corp. 2,064,250
245,700 Philadelphia Consolidated Holding
Corp.(a) 5,221,125
246,300 Poe & Brown, Inc. 6,034,350
------------
13,319,725
- ------------------------------------------------------------
Leisure--1.0%
348,800 Topps Company, Inc. 2,267,200
165,300 WMS Industries, Inc.(a) 3,491,963
------------
5,759,163
- ------------------------------------------------------------
Machinery & Equipment--8.0%
186,200 Albany International Corp. Cl. A 4,352,425
225,150 Bearings, Inc. 7,626,956
412,600 Brenco, Inc. 4,641,750
160,000 Gerber Scientific, Inc. 2,860,000
321,100 Measurex Corp. 10,997,675
</TABLE>
- --------------------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Portfolio of Investments as of September 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
------------------------------------------------------------
Machinery & Equipment (cont'd.)
393,400 Regal Beloit Corp. $ 7,327,075
271,300 Roper Industries 10,512,875
------------
48,318,756
- ------------------------------------------------------------
Oil & Gas Exploration/Production--3.0%
139,600 Diamond Shamrock, Inc. 3,437,650
228,614 KN Energy, Inc. 6,229,732
157,100 Mitchell Energy & Development
Corp. Cl. A 2,827,800
285,650 Mitchell Energy & Development
Corp. Cl. B 5,034,581
51,000 Western Gas Resources, Inc. 854,250
------------
18,384,013
- ------------------------------------------------------------
Oil Services--0.4%
156,700 Dreco Energy Services Ltd.(a) 2,350,500
- ------------------------------------------------------------
Realty Investment Trust--0.6%
116,300 Duke Realty Investments, Inc. 3,619,838
- ------------------------------------------------------------
Retail--1.8%
394,780 Neostar Retail Group, Inc.(a) 6,760,607
102,300 Tiffany & Co. 4,283,813
------------
11,044,420
- ------------------------------------------------------------
Specialty Chemicals--7.4%
93,600 Agrium, Inc. (Canada) 3,416,400
16,300 Arcadian Corp.(a) 332,113
628,500 Brush Wellman, Inc. 11,627,250
327,100 Cabot Corp. 17,377,187
100,800 Potash Corp. of Saskatchewan, Inc.
(Canada) 6,274,800
140,900 Vigoro Corp. 5,953,025
------------
44,980,775
- ------------------------------------------------------------
Steel--1.9%
231,200 Huntco, Inc. 3,496,900
112,500 Lukens, Inc. 3,276,563
232,700 Quanex Corp. 5,032,137
------------
11,805,600
Transportation--7.6%
280,950 Air Express International Corp. $ 7,093,987
462,900 Expeditors International of
Washington, Inc. 12,498,300
409,900 Harper Group, Inc. 7,788,100
204,200 Kansas City Southern Industries,
Inc. 9,291,100
295,600 Trinity Industries, Inc. 9,163,600
------------
45,835,087
- ------------------------------------------------------------
Utilities--0.1%
38,800 AES China Generating Cl. A(a) 349,200
------------
Total Long-Term Investments
(cost $420,680,613) 543,250,974
------------
Principal
Amount
(000)
SHORT-TERM INVESTMENT
- ------------------------------------------------------------
Repurchase Agreement--10.8%
Joint Repurchase Agreement Account,
$ 65,691 6.3936%, 10/2/95, (cost
$65,691,000; Note 5) 65,691,000
- ------------------------------------------------------------
Total Investments--100.5%
(cost $486,371,613; Note 4) 608,941,974
Liabilities in excess of other
assets--(0.5%) (3,292,539)
------------
Net Assets--100% $605,649,435
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Private placement restricted as to resale; includes registration rights
under which the Fund may demand registration by the issuer.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
September 30, 1995
<S>
<C>
Investments, at value (cost
$486,371,613)................................................................
.... $608,941,974
Cash.........................................................................
................................ 58,119
Receivable for investments
sold.........................................................................
..... 4,948,831
Receivable for Fund shares
sold.........................................................................
..... 1,098,709
Dividends and interest
receivable...................................................................
......... 591,480
Other
assets.......................................................................
.......................... 8,561
------------
Total
assets.......................................................................
....................... 615,647,674
------------
Liabilities
Payable for Fund shares
reacquired...................................................................
........ 5,092,181
Payable for investments
purchased....................................................................
........ 3,904,870
Distribution fee
payable......................................................................
............... 355,147>
Management fee
payable......................................................................
................. 348,807
Accrued
expenses.....................................................................
........................ 297,234
------------
Total
liabilities..................................................................
....................... 9,998,239
------------
Net
Assets.......................................................................
............................ $605,649,435
------------
------------
Net assets were comprised of:
Common stock, at
par..........................................................................
............ $ 438,813
Paid-in capital in excess of
par..........................................................................
454,127,152
------------
454,565,965
Undistributed net investment
income.......................................................................
1,954,545
Accumulated net realized gain on
investments..............................................................
26,558,564
Net unrealized appreciation on
investments................................................................
122,570,361
------------
Net assets, September 30,
1995.........................................................................
...... $605,649,435
------------
------------
Class A:
Net asset value and redemption price per share
($242,230,640 / 17,083,836 shares of common stock issued and
outstanding).............................. $14.18
Maximum sales charge (5.0% of offering
price).............................................................
.75
------------
Maximum offering price to
public..........................................................................
$14.93
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($361,873,443 / 26,683,556 shares of common stock issued and
outstanding).............................. $13.56
------------
------------
Class C:
Net asset value, offering price and redemption price per share
($1,545,352 / 113,948 shares of common stock issued and
outstanding)................................... $13.56
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
6 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY
FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
September 30,
Net Investment Income 1995
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $12,641)..................... $ 5,667,728
Interest................................. 2,657,849
---------------
Total income.......................... 8,325,577
---------------
Expenses
Distribution fee--Class A................ 436,121
Distribution fee--Class B................ 3,499,288
Distribution fee--Class C................ 7,835
Management fee........................... 3,676,126
Transfer agent's fees and expenses....... 1,021,000
Reports to shareholders.................. 366,000
Custodian's fees and expenses............ 180,000
Registration fees........................ 167,000
Franchise taxes.......................... 105,000
Audit fee................................ 46,000
Legal fees............................... 35,000
Directors' fees.......................... 30,200
Miscellaneous............................ 35,835
---------------
Total expenses........................ 9,605,405
---------------
Net investment loss......................... (1,279,828)
---------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on investment
transactions............................. 29,417,664
Net change in unrealized appreciation
of investments........................... 83,509,332
---------------
Net gain on investments..................... 112,926,996
---------------
Net Increase in Net Assets Resulting from
Operations.................................. $ 111,647,168
---------------
---------------
</TABLE>
<TABLE>
PRUDENTIAL GROWTH OPPORTUNITY
FUND, INC.
Statement of Changes in Net Assets
<CAPTION>
Increase (Decrease) Year Ended September 30,
in Net Assets 1995 1994
<S> <C> <C>
Operations
Net investment loss............ $ (1,279,828) $ (3,041,729)
Net realized gain on
investments................. 29,417,664 44,673,230
Net change in unrealized
appreciation (depreciation)
of investments.............. 83,509,332 (38,737,408)
------------ ------------
Net increase in net assets
resulting from operations... 111,647,168 2,894,093
------------ ------------
Net equalization credits.......... 1,510,164 70,234
------------ ------------
Distributions from net realized
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
sold........................ 369,521,600 433,710,426
Net asset value of shares
issued in reinvestment of
distributions............... 33,299,692 28,758,329
Cost of shares reacquired...... (404,229,931) (377,490,019)
------------ ------------
Net increase (decrease) in net
assets from Fund share
transactions................ (1,408,639) 84,978,736
------------ ------------
Total increase.................... 76,800,262 57,939,481
Net Assets
Beginning of year................. 528,849,173 470,909,692
------------ ------------
End of year....................... $605,649,435 $528,849,173
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 Policies
The following is a summary of significant accounting policies 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.
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.
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 year ended September 30, 1995, the Fund reclassified current and
prior net operating losses by increasing undistributed net investment income by
$1,279,828 and decreasing accumulated net realized gains by $2,378,272 and
increasing paid in capital by $1,098,444. Net investment income, net realized
gains, and net assets were not affected by this change.
- --------------------------------------------------------------------------------
8
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 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 year ended September 30, 1995.
PMFD has advised the Fund that it has received approximately $295,000 in
front-end sales charges resulting from sales of Class A shares during the year
ended September 30, 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 year ended September 30, 1995, it received
approximately $931,000 in contingent deferred sales charges imposed upon certain
redemptions by Class B and C 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 Transactions with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During the year ended September 30,
1995, the Fund incurred fees of approximately $850,500 for the services of PMFS.
As of September 30, 1995, approximately $76,000 of such fees were due to PMFS.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended September 30, 1995 were $309,191,999 and $381,993,783,
respectively.
The federal income tax basis of the Fund's investments at September 30, 1995 was
$486,611,307 and, accordingly, net unrealized appreciation for federal income
tax purposes was $122,330,667 (gross unrealized appreciation--$129,690,928 gross
unrealized depreciation--$7,360,261).
- ------------------------------------------------------------
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 September 30, 1995, the
Fund had a 9.0% undivided interest in the repurchase agreements in the joint
account. The undivided interest for the Fund represented $65,691,000 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., 6.375%, in the principal amount of $225,000,000,
repurchase price $225,119,531, due 10/2/95. The value of the collateral
including accrued interest was $229,660,959.
BT Securities Corp., 6.10%, in the principal amount of $56,863,000, repurchase
price $56,891,905, due 10/2/95. The value of the collateral including accrued
interest was $58,082,904.
Goldman Sachs & Co., 6.45%, in the principal amount of $225,000,000, repurchase
price $225,120,938, due 10/2/95. The value of the collateral including accrued
interest was $229,500,013.
- --------------------------------------------------------------------------------
9 -----
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
Smith Barney, Inc., 6.43%, in the principal amount of $225,000,000, repurchase
price $225,120,563, due 10/2/95. The value of the collateral including accrued
interest was $229,500,366.
- ------------------------------------------------------------
Note 6. Capital
The Fund issues 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% 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. A special exchange privilege is also
available for shareholders who qualified to purchase Class A shares at net asset
value.
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 years ended September 30, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ----------- -------------
<S> <C> <C>
Year ended September 30, 1995:
Shares sold........................ 16,264,230 $ 199,059,220
Shares issued in reinvestment of
distributions.................... 614,029 6,502,568
Shares reacquired.................. (16,750,855) (207,402,318)
----------- -------------
Net increase in shares outstanding
before conversion................ 127,404 (1,840,530)
Shares issued upon conversion from
Class B.......................... 8,645,131 97,904,973
----------- -------------
Net increase in shares
outstanding...................... 8,772,535 $ 96,064,443
----------- -------------
----------- -------------
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>
Year ended September 30, 1995:
Shares sold........................ 14,302,262 $ 168,922,003
Shares issued in reinvestment of
distributions.................... 2,601,937 26,773,935
Shares reacquired.................. (16,720,969) (196,352,189)
----------- -------------
Net increase in shares outstanding
before conversion................ 183,230 (656,251)
Shares reacquired upon conversion
into Class A..................... (8,999,868) (97,904,973)
----------- -------------
Net decrease in shares
outstanding...................... (8,816,638) $ (98,561,224)
----------- -------------
----------- -------------
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>
Year ended September 30, 1995:
Shares sold........................ 129,738 $ 1,540,377
Shares issued in reinvestment of
distributions.................... 2,254 23,189
Shares reacquired.................. (40,456) (475,424)
----------- -------------
Net increase in shares
outstanding...................... 91,536 $ 1,088,142
----------- -------------
----------- -------------
August 1, 1994(a) 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
----------- -------------
----------- -------------
- ---------------
(a) Commencement of offering of Class C shares.
</TABLE>
- ------------------------------------------------------------
Note 7. Dividends and Distributions
On November 20, 1995 the Board of Directors of the Fund declared dividends from
net capital gains to Class A, B and C shareholders of $.668 per share, payable
on November 29, 1995 to shareholders of record on November 24, 1995.
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
A
- ---------------------------------------------------------
Year Ended
September 30,
- ---------------------------------------------------------
1995(a) 1994(a)
1993(a) 1992(a) 1991
-------- --------
- ------- ------- -------
<S> <C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 12.40 $ 13.06 $
11.25 $ 10.16 $ 7.36
-------- --------
- ------- ------- -------
Income from investment operations
Net investment income......................... .05 --
.03 .02 .05
Net realized and unrealized gain on investment
transactions............................... 2.57 .13
3.14 1.47 2.82
-------- --------
- ------- ------- -------
Total from investment operations........... 2.62 .13
3.17 1.49 2.87
-------- --------
- ------- ------- -------
Less distributions
Dividends from net investment income.......... -- --
-- -- (.07)
Distributions from net realized capital
gains...................................... (.84) (.79)
(1.36) (.40) --
-------- --------
- ------- ------- -------
Total distributions........................ (.84) (.79)
(1.36) (.40) (.07)
-------- --------
- ------- ------- -------
Net asset value, end of year.................. $ 14.18 $ 12.40 $
13.06 $ 11.25 $ 10.16
-------- --------
- ------- ------- -------
-------- --------
- ------- ------- -------
TOTAL RETURN(b):.............................. 23.29% 1.13%
30.42% 15.39% 39.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)................. $242,231 $103,078
$94,842 $44,845 $25,165
Average net assets (000)...................... $174,449 $ 97,877
$69,801 $36,011 $20,650
Ratios to average net assets:
Expenses, including distribution fees...... 1.33% 1.33%
1.17% 1.33% 1.50%
Expenses, excluding distribution fees...... 1.08% 1.09%
.97% 1.13% 1.30%
Net investment income...................... .30% .00%
.26% .19% .59%
Portfolio turnover............................ 64% 82%
68% 99% 111%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Total return does not consider the effects of sales loads. Total return
is calculated assuming a purchase of shares on the first day and a sale
on the last day of each period reported and includes reinvestment of
dividends and distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11 -----
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
- ------------------------------------------------------------ -------------
<S> <C> <C> <C>
<C> <C> <C>
Year
Year Ended
September 30, Ended
- ------------------------------------------------------------ September 30,
1995(a) 1994(a)
1993(a) 1992(a) 1991 1995(a)
-------- --------
- -------- -------- -------- -------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 11.99 $ 12.74 $
11.08 $ 10.11 $ 7.34 $ 11.99
-------- --------
- -------- -------- -------- -------------
Income from investment operations
Net investment loss........................... (.06) (.09)
(.06) (.07) (.02) (.06)
Net realized and unrealized gain on investment
transactions............................... 2.47 .13
3.08 1.44 2.82 2.47
-------- --------
- -------- -------- -------- -------------
Total from investment operations........... 2.41 .04
3.02 1.37 2.80 2.41
-------- --------
- -------- -------- -------- -------------
Less distributions
Dividends from net investment income.......... -- --
-- -- (.03) --
Distributions from net realized capital
gains...................................... (.84) (.79)
(1.36) (.40) -- (.84)
-------- --------
- -------- -------- -------- -------------
Total distributions........................ (.84) (.79)
(1.36) (.40) (.03) (.84)
-------- --------
- -------- -------- -------- -------------
Net asset value, end of period................ $ 13.56 $ 11.99 $
12.74 $ 11.08 $ 10.11 $ 13.56
-------- --------
- -------- -------- -------- -------------
-------- --------
- -------- -------- -------- -------------
TOTAL RETURN(b):.............................. 22.37% .34%
29.40% 14.27% 38.33% 22.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $361,873 $425,502
$376,068 $172,018 $118,660 $ 1,545
Average net assets (000)...................... $349,929 $399,920
$278,659 $154,601 $104,508 $ 784
Ratios to average net assets:
Expenses, including distribution fees...... 2.08% 2.09%
1.97% 2.13% 2.30% 2.08%
Expenses, excluding distribution fees...... 1.08% 1.09%
.97% 1.13% 1.30% 1.08%
Net investment loss........................ (.51)% (.76)%
(.54)% (.61)% (.21)% (.46)%
Portfolio turnover............................ 64% 82%
68% 99% 111% 64%
<CAPTION>
August 1,
1994(d)
Through
September 30,
1994(a)
-----
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 11.61
-----
Income from investment operations
Net investment loss........................... (.01)
Net realized and unrealized gain 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(b):.............................. 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%(c)
Expenses, excluding distribution fees...... 1.22%(c)
Net investment loss........................ (.31)%(c)
Portfolio turnover............................ 82%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Total return does not consider the effects of sales loads. Total return
is calculated assuming a purchase of shares on the first day and a sale
on the last day of each period reported and includes reinvestment of
dividends and distributions. Total returns for periods of less than
a full year are not annualized.
(c) Annualized.
(d) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
12 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Report of Independent Accountants
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Prudential Growth Opportunity Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Growth Opportunity Fund,
Inc. (the ``Fund'') at September 30, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
``financial statements'') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1995 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
November 20, 1995
PRUDENTIAL GROWTH OPPORTUNITY FUND, INC.
Federal Income Tax Information
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (September 30, 1995) as to the federal tax status of
distributions paid by the Fund during such fiscal year. Accordingly, during its
fiscal year ended September 30, 1995, the Fund paid distributions from net
realized short-term capital gains of $.090 per Class A, Class B and Class C
shares, which are fully taxable as ordinary income, and $.745 per Class A, Class
B and Class C shares from net realized long-term capital gains, which are
taxable as such. Further, we wish to advise you that 78.25% of the ordinary
income dividends paid in the fiscal year ended September 30, 1995 qualified for
the corporate dividends received deduction available to corporate taxpayers.
In January 1996, you will be advised on Internal Revenue Service Form 1099 DIV
or substitute 1099 as to the federal tax status of the dividends received by you
in calendar year 1995. The amounts that will be reported on such Form 1099 DIV
or substitute will be the amounts to use on your 1995 federal income tax return
and probably will differ from the amounts which we must report for the Fund's
fiscal year ended September 30, 1995.
- --------------------------------------------------------------------------------
13 -----
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this -- they don't read annual
and semi-annual reports. It's quite understandable. These annual and
semi-annual reports are prepared to comply with Federal regulations.
They are often written in language that is difficult to understand. So
when most people run into those particularly daunting sections of these
reports, they don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our report to make
it easier to understand and more pleasant to read, in hopes you'll find
it profitable to spend a few minutes familiarizing yourself with your
investment. Here's what you'll find in the report:
At A Glance
Since an investment's performance is often a shareholder's primary concern,
we present performance information in two different formats. You'll find
it first on the "At A Glance" page where we compare the Fund and the
comparable average calculated by Lipper Analytical Services, Inc., a
nationally recognized mutual fund rating agency. We report both the
cumulative total returns and the average annual total returns. The
cumulative total return is the total amount of income and appreciation
the Fund has achieved in various time periods. The average annual total
return is an annualized representation of the Fund's performance -- it
generally smoothes out returns and gives you an idea how much the Fund
has earned in an average year, for a given time period. Under the performance
box, you'll see legends that explain the performance information, whether
fees and sales charges have been included in returns, and the inception
dates for the Fund's share classes.
See the performance comparison charts at the back of the report for more
performance information. And keep in mind that past performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports on successful --
and not-so-successful -- strategies in this section of your report. Look for
recent purchases and sales here, as well as information about the sectors the
portfolio manager favors and any changes that are on the drawing board.
Portfolio Of Investments
This is where the report begins to look technical, but it's really just a
listing of each security held at the end of the reporting period, along
with valuations and other information. Please note that sometimes we discuss
a security in the Portfolio Manager's Report that doesn't appear in this
listing because it was sold before the close of the reporting period.
<PAGE>
Statement Of Assets And Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes) and net assets (the Fund's equity,
or holdings after the Fund pays its debts) as of the end of the reporting
period. It also shows how we calculate the net asset value per share for
each class of shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but remember that the money
or new shares are being paid or issued to you and thus is not a realized
loss. The net asset value fluctuates daily along with the value of every
security in the portfolio.
Statement Of Operations
This is the income statement, which details income (mostly interest and
dividends earned) and expenses (including what you pay us to manage your
money). You'll also see capital gains here -- both realized and unrealized.
Statement Of Changes In Net Assets
This schedule shows how income and expenses translate into changes in net
assets, compared to last year's performance. The Fund is required to pay
out the bulk of its income to shareholders every year, and this statement
shows you how we do it -- through dividends and distributions -- and how
that affects the net assets. This statement also shows how money from
investors flowed into and out of the Fund.
Notes To Financial Statements
This is the kind of technical material that can intimidate readers, but it
does contain useful information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they also outline
how Prudential Mutual Funds prices securities. The Notes also explain
who manages and distributes the Fund's shares, and more importantly, how
much they are paid for doing so. Finally, the Notes explain how many shares
are outstanding and the number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages, but on a per
share basis. It is designed to help you understand how the Fund performed
and to compare this year's performance and expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and certifies that the
information we've presented is fair and complies with generally accepted
accounting principles.
Tax Information
This is information which we report annually about how much of your total
return is taxable. Should you have any questions, you may want to consult
a tax advisor.
Performance Comparison
These charts are included in the annual report and are required by the
Securities Exchange Commission. Performance is presented here as a
hypothetical $10,000 investment in the Fund since its inception or for
10 years (whichever is shorter). To help you put that return in context,
we are required to include the performance of an unmanaged, broad based
securities index, as well. The index does not reflect the cost of buying
the securities it contains or the cost of managing a mutual fund. Of course,
the index holdings do not mirror those of the fund -- the index is a broadly
based reference point commonly used by investors to measure how well they
are doing. A definition of the selected index is also provided. Investors
generally cannot invest directly in an index.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive financial advice
through a Prudential Securities financial advisor or Prudential/Pruco
Securities registered representative. Your advisor or representative can
provide you with the following services.
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial adviser or registered representative can help you match
the reward you seek with the risk you can tolerate. And risk can be
difficult to gauge --sometimes even the simplest investments bear
surprising risks. The educated investor knows that markets seldom move
in just one direction -- there are times when a market sector or asset
class will lose value or provide little in the way of total return. Managing
your own expectations is easier with help from someone who understands
the markets and who knows you!
Keeping Up With The Joneses.
A financial adviser or registered representative can help you wade through
the numerous mutual funds available to find the ones that fit your own
individual investment profile and risk tolerance. While the newspapers
and popular magazines are full of advice about investing, they are aimed
at generic groups of people or representative individuals, not at you
personally. Your financial advisor or registered representative will
review your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in your current
portfolio and your risk tolerance -- not just based on the current
investment fad.
Buy Low, Sell High.Buying at the top of a market cycle
and selling at the bottom are among the most common investor mistakes.
But sometimes it's difficult to hold on to an investment when it's losing
value every month. Your financial adviser or registered representative
can answer questions when you're confused or worried about your investment,
and remind you that you're investing for the long haul.
<PAGE>
- --Prudential Growth Opportunity Fund, Inc ...Russell 2000 Index
The Prudential Growth Opportunity Fund, Inc. and the
Russell 2000 Index: Comparing a $10,000 Investment.
Class A
(GRAPH)
Class B
(GRAPH)
Class C
(GRAPH)
Past performance is not a guarantee of future results. Investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The charts
on the right are designed to give you an idea how much the Fund's returns
can fluctuate from year to year by measuring the best and worst calendar
years in terms of total annual return exclusive of sales charges since the
inception of Class A and B shares.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in the Prudential Growth Opportunity Fund, Inc.,
(Class A, Class B and Class C) with a similar investment in the Russell 2000
Index by portraying the initial account values at the commencement of
operations of Class A and Class C shares and for 10 years for Class B
shares, and subsequent account values at the end of this most recent
reporting period (September 30), as measured on a quarterly basis,
beginning in 1990 for Class A shares, in 1985 for Class B shares and
in 1994 for Class C shares. For purposes of the graphs, and unless
otherwise indicated, in the accompanying tables it has been assumed
(a) that the maximum applicable front-end sales charge was deducted from
the initial $10,000 investment in Class A shares; (b) the maximum applicable
contingent deferred sales charge was deducted from the value of the investment
in Class B and Class C shares, assuming full redemption on September 30,
1995; (c) all recurring fees (including management fees) were deducted; and
(d) all dividends and distributions were reinvested. Class B shares
automatically convert to Class A shares, on a quarterly basis, beginning
approximately seven years after purchase. This conversion feature is not
reflected in the graph. The graph and accompanying tables reflect the past
subsidy and/or waiver of expenses or management fees.
The Russell 2000 is a weighted index, representing the smallest 2,000
stocks among the largest 3,000 equity-capitalized U.S. corporations and
represents approximately 10% of their aggregate market value. The Index
is unmanaged and includes the reinvestment of all dividends, but does not
reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund. The securities in the Index may differ
substantially from the securities in the Fund. The Index is not the
only one that may be used to characterize performance of this fund and
other indexes may portray different comparative performance.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
(LOGO)
Directors
Delayne Dedrick Gold
Arthur Hauspurg
Harry A. Jacobs, Jr.
Stephen P. Munn
Richard A. Redeker
Louis A. Weill III
Officers
Richard A. Redeker, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Eugene S. Stark, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
