(ICON)
Prudential
Small
Company
Value
Fund, Inc.
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Small Company Value Fund, Inc.
Performance At A Glance
After last summer's panic that we might face a global
recession, investors are
slowly regaining confidence. Small-company stocks are
recovering more slowly
than those of large companies, and inexpensive value stocks
more slowly than
those of established growth companies. Although the
Prudential Small Company
Value Fund trailed the Lipper average by a large margin, it
performed in line
with the Russell 2000 Value Index of small-company value
stocks. Moreover,
toward the end of our reporting period, as investors became
convinced of
economic growth ahead, we gained ground in March and--after
the end of our
reporting period--in April.
Cumulative Total Returns1 As of 3/31/99
<TABLE>
<CAPTION>
Six One Five
Ten Since
Months Year Years
Years Inception2
<S> <C> <C> <C>
<C> <C>
Class A -1.84% -27.14% 69.06%
N/A 199.25%
Class B -2.20 -27.68 62.96
202.75% 603.84
Class C -2.20 -27.68 N/A
N/A 62.11
Class Z -1.74 -26.93 N/A
N/A 31.05
Lipper Small-Cap
Fund Avg.3 12.53 -15.48 80.00
267.66 ***
Russell 2000 Value Index4 -1.50 -22.03 70.08
209.63 ****
</TABLE>
Average Annual Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
One Five Ten
Since
Year Years Years
Inception2
<S> <C> <C> <C> <C>
Class A -30.79% 9.94% N/A
12.05%
Class B -32.68 10.12 11.71%
11.20
Class C -29.41 N/A N/A
10.68
Class Z -26.93 N/A N/A
9.18
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be
worth more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. The
cumulative total returns do not take into account sales
charges. The average
annual total returns do take into account applicable sales
charges. The Fund
charges a maximum front-end sales load of 5% for Class A
shares. Class B
shares are subject to a declining contingent deferred
sales charge (CDSC) of
5%, 4%, 3%, 2%, 1% and 1% for six years. Class B shares
will automatically
convert to Class A shares, on a quarterly basis,
approximately seven years
after purchase. Class C shares are subject to a front-end
sales charge of 1%,
and a CDSC of 1% for 18 months. Class C shares bought
before November 2,
1998, have a 1% CDSC if sold within one year. Class Z
shares are not subject
to a sales charge or distribution fee.
2 Inception dates: Class A, 1/22/90; Class B, 11/13/80;
Class C, 8/1/94; Class
Z, 3/1/96.
3 Lipper average returns are for all funds in each share
class for the
six-month, one-, five-, and ten-year periods in the Small-
Cap Fund category.
4 The Russell 2000 Value Index is an unmanaged weighted
index that comprises
securities in the Russell 2000 Index with a less than
average growth
orientation. Investors cannot invest directly in an index.
*** Lipper Since Inception returns are 253.13% for Class A,
763.36% for Class
B, 86.43% for Class C, and 30.42% for Class Z, based on
all funds in each
share class.
**** The Russell 2000 Value Index Since Inception returns
are 220.08% for Class
A, 1090.70% for Class B, 69.53% for Class C, and 32.16%
for Class Z.
How Investments Compared.
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. 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 returns means tolerating more risk. The greater the
risk, the larger the
potential reward or loss. In addition, we've included
historical 20-year
average annual returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth, but may be
more volatile than larger capitalization stocks.
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 significantly), and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that is
usually exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they
don't fluctuate much in price but, historically, their
returns have been
generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Manager's Report
- ------------------------------------------------------------
- -------------------
(PHOTO)
Jay S. Kaplan
Fund Manager
Investment Goals and Style
The Prudential Small Company Value Fund invests primarily in
stocks of small
companies (those with a total market value of $1.5 billion
or less), mostly
located in the United States. The gap between the return on
small companies
and that on large companies can be substantial in either
direction in any
year. That is why investors are often advised to own both
for diversification.
We follow a traditional value investment style: we look for
good businesses
with sound management that are selling for substantially
less than a fair
price. Historically, stocks of small companies have
fluctuated a great deal,
so we try to buy when they are bargains, and sell when they
are expensive. We
are aiming at good risk-adjusted returns consistently year
after year. There
can be no assurance that the Fund will achieve its
investment objective.
My co-manager, Roger Ford, retired on January 29, 1999.
Performance Review
The investing environment was poor
In October 1998, investors were just regaining their
confidence after crises
in Asia, Russia, and Brazil had threatened global economic
growth and financial
stability. In August, investors had been very reluctant to
buy anything except
U.S. Treasury bonds, and stock prices plummeted. If the
Federal Reserve Board
had not acted in September and October, investors might well
have feared buying
anything for some time.
When they returned to the market, buyers favored stocks of
the very largest
growth companies over all others. Not only did small-company
stocks (measured
by the Russell 2000 Index) underperform large-company stocks
(measured by the
Standard & Poor's 500 Composite Stock Price Index (S&P 500
Index) by 17
percentage points over our six-month period, but the small-
company value style
of investing trailed small-company growth by 23 percentage
points (as measured
by the Russell 2000 Value and Growth Indexes). As the chart
on the next page
shows, recent investor preferences have been so strong as to
pull the long-term
averages askew: Whereas small-company value investing had
been outperforming
the S&P 500 through mid-1998, the recent flight to perceived
safety sharply
reversed its advantage. These two factors--small companies
being strongly out
of favor and our value-style disadvantage--substantially
affected our return:
it was in line with the 1.50% decline of the Russell 2000
Value Index.
Part of the growth-style advantage reflected enthusiasm for
Internet-related
stocks that bid these companies' total market valuations to
enormous levels,
regardless of their earnings. In the first quarter of 1999,
the Russell 2000
Index fell by 5.4 percentage points, but a Prudential
Securities study showed
that Internet-related stocks on the Index gained 2.9 points
(so other stocks
fell 8.3 points, on average). We did not own overpriced
Internet companies,
and that hurt our comparative performance. We focus on
companies we believe to
be undervalued; we don't try to ride a popularity wave.
Private buyers for undervalued companies
We try to buy attractive companies that are selling at much
lower prices than
we consider to be fair. We expect that, in most cases, stock
investors will
eventually come to recognize the value that we saw and will
bid the share
prices up. When that doesn't happen, other knowledgeable
investors--such as
competitors of a company, its customers, suppliers, or its
own managers--
<PAGE>
often will see the opportunity and make a private offer. In
the past six
months--a period in which investors were very slow to
appreciate the earnings
potential of small companies--eight of our holdings were
involved in merger or
acquisition activity that increased our return: Excel
Industries (up 98%),
Dominick's Supermarkets (up 13%), Century Communications (up
63%), Banctec (up
14%), PLATINUM Technologies (up 90%), Blount International
(up 22%),
Centennial Cellular (up 25%), and Vanguard Cellular (up
13%).
In addition, some of our companies have hired investment
bankers to accelerate
the process of realizing unrecognized value: Sierra
Healthcare Services (down
34%), World Fuel Services (down 6%), and Big Flower Holdings
(up 33%). Two
others, Sante Fe Energy and Snyder Oil, announced a plan in
April to merge in
order to stabilize their earnings with their complementary
businesses and cut
costs. Sante Fe and Snyder are energy exploration and
production companies--a
sector that hurt our return over our reporting period, but
which came roaring
back in April.
Our retailers and media companies performed well
In addition to our gains from the sale of Dominick's, some
other retailers made
substantial positive contributions to our return over the
six-month period.
BJ's Wholesale Club rose 30%, and we took our profits.
Richfood Holdings--among
our larger holdings and up 41%--made a particularly notable
contribution.
Portfolio Composition
Expressed as a percentage of net assets as of 3/31/99
Industrials 28%
Consumer Growth & Stable 22
Consumer Cyclical 16
Finance 16
Technology 7
Energy 6
Utility 3
Cash & Equivalents 2
We have been in unusual times
(GRAPH)
The Russell 2000 Growth Index comprises securities in the
Russell 2000 Index
with a greater than average growth orientation. Companies in
this index tend
to exhibit higher price to book and price-earnings ratios.
The Russell 2000 Value Index comprises securities in the
Russell 2000 Index
with a less than average growth orientation. Companies in
this index generally
have low price to book and price-earnings ratios.
The S&P 500 Index, composed of stocks representing
approximately 80% of the
total market value of all publicly traded U.S. common
stocks, is widely
regarded as representative of the performance of the U.S.
stock market as a
whole.
The performance cited does not represent the performance of
the Prudential
Small Company Value Fund. The total return values include
reinvestment of all
dividends. Past performance is not indicative of future
results. Investors
cannot invest directly in an index.
Source: Prudential Investments, Standard & Poor's, and Frank
Russell Company.
1
<PAGE>
Review Cont'd.
- ------------------------------------------------------------
- -------------------
Among media companies, in addition to the sale of Century
Communications, we
benefited from Young Broadcasting's 34% return for the six
months.
But healthcare and energy hurt
HMOs and nursing homes were hit by the medicare budget
reform. We believe that
demographics ensure that these are growth industries and
that both providers
and the government will learn how to make them work. Two of
our poorest
positions were Sun Healthcare Group and Sierra. Sun (down
68%) operates
nursing homes, but couldn't adjust to the new payment rules.
We sold our
shares. Sierra (down 34%) is an HMO that dominates the Las
Vegas market.
Selling at only 10 times its earnings, Sierra has hired
investment bankers to
explore strategic alternatives, and is closing unprofitable
operations. Its
shares bounced up in April. Our energy holdings were hurt by
the exceptionally
low price of oil in 1998, but those prices were
unsustainable and rose by
about 50% by April 1999.
Looking Ahead
Trends are reversing
The two trends that hurt us over the past six months
reversed in April:
small-company stocks performed much better than those of
large companies, while
value stocks in the Russell 2000 slightly outperformed
growth stocks.
Industrials are our largest sector commitment because
investors tend to
undervalue stocks in that sector when they expect an
economic drop-off. We
believe that continued growth in 1999 will keep market favor
moving in their
direction.
Five Largest Holdings
Expressed as a percentage of net assets as of 3/31/99
Financial Security Assurance 2.90%
Insurance
Astoria Financial Corp. 2.64
Savings and Loan
Universal Health 2.47
Hospital Management
Big Flower Holdings 2.34
Printing & Publishing
Blount International, Inc. 2.31
Miscellaneous Industrial
2
<PAGE>
A Message to Our Shareholders
May 19, 1999
- ------------------------------------------------------------
- -------------------
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a handful
of very large companies. These stocks were getting more and
more expensive--out
of proportion to their earnings expectations. As a result,
there was a
substantial disparity in value between large and small
companies, and between
growth and value stocks. In recent months, however, that gap
has started to
narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold up
better during market downturns. That's a thought to keep in
mind going forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep to
it. It is also a good practice to rebalance your holdings,
when necessary, to
keep your asset allocation consistent with your long-term
objectives and risk
tolerance. A properly diversified portfolio of value- and
growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds to
allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
<PAGE>
Portfolio of Investments as of
PRUDENTIAL SMALL COMPANY
March 31, 1999 (Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--96.7%
COMMON STOCKS--96.4%
- ------------------------------------------------------------
Aerospace/Defense--0.8%
443,600 Doncasters PLC (ADR)
(United Kingdom)(a) $
6,820,350
- ------------------------------------------------------------
Apparel--3.5%
244,300 Cole National Corp.(a)
4,458,475
192,600 Kellwood Co.
4,249,237
382,700 Nautica Enterprises, Inc.(a)
4,329,294
1,050,700 Phillips-Van Heusen Corp.
7,289,231
659,200 Reebok International, Ltd.
10,464,800
---------
- ---
30,791,037
- ------------------------------------------------------------
Automotive--2.4%
95,000 Borg-Warner Automotive, Inc.
4,542,187
130,800 Midas, Inc.
4,365,450
242,300 Simpson Industries, Inc.
2,332,138
355,800 Strattec Security Corp.(a)
10,006,875
---------
- ---
21,246,650
- ------------------------------------------------------------
Banks--0.8%
306,200 Commercial Federal Corp.
7,100,013
- ------------------------------------------------------------
Building & Construction--3.6%
365,300 Crossmann Communities, Inc.(a)
7,283,168
240,500 Giant Cement Holding Inc.(a)
4,133,594
235,400 Nortek Inc.
5,826,150
346,800 NVR, Inc.(a)
14,608,950
---------
- ---
31,851,862
- ------------------------------------------------------------
Building & Products--0.7%
661,700 Cameron Ashley Building Products
Inc.(a)
6,038,013
Business Services--0.8%
584,200 World Fuel Services Corp. $
6,791,325
- ------------------------------------------------------------
Chemicals--1.9%
1,297,300 Agrium, Inc. (Canada)
11,918,944
267,100 Arch Chemicals Inc.(a)
4,473,925
---------
- ---
16,392,869
- ------------------------------------------------------------
Coal--0.5%
329,300 Arch Coal Inc.
4,363,225
- ------------------------------------------------------------
Computer Software & Services--2.5%
478,000 Banctec, Inc.(a)
5,885,375
448,200 Platinum Technology, Inc.(a)
11,429,100
230,700 Wang Laboratories, Inc.(a)
4,527,488
---------
- ---
21,841,963
- ------------------------------------------------------------
Containers & Packaging--1.5%
363,700 ACX Technologies, Inc.(a)
4,773,563
274,200 Shorewood Packaging Corp.(a)
5,381,175
217,800 U.S. Can Corp.(a)
3,212,550
---------
- ---
13,367,288
- ------------------------------------------------------------
Diversified Resources--0.1%
62,600 Amcol International Corp.
626,000
- ------------------------------------------------------------
Electrical Utilities--1.3%
129,100 Sierra Pacific Resources Inc. Co.
4,542,706
247,200 TNP Enterprises, Inc.
7,107,000
---------
- ---
11,649,706
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
PRUDENTIAL SMALL COMPANY
March 31, 1999 (Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Electrical Equipment--0.9%
441,300 Belden, Inc. $
7,529,681
- ------------------------------------------------------------
Electronics--1.2%
355,900 Marshall Industries(a)
4,804,650
946,200 Pioneer-Standard Electronics, Inc.
6,209,438
---------
- ---
11,014,088
- ------------------------------------------------------------
Food Distribution--1.6%
66,200 Fleming Cos., Inc.
566,837
632,400 Richfood Holdings, Inc.
13,636,125
---------
- ---
14,202,962
- ------------------------------------------------------------
Foods--1.9%
395,600 International Home Foods Inc.(a)
6,354,325
303,200 Suiza Foods Corp.(a)
10,214,050
---------
- ---
16,568,375
- ------------------------------------------------------------
Furniture--1.2%
284,000 Furniture Brands International,
Inc.(a)
6,283,500
201,100 Stanley Furniture Company, Inc.(a)
3,921,450
---------
- ---
10,204,950
- ------------------------------------------------------------
Gas Distribution--1.1%
278,000 Eastern Enterprises, Inc.
10,112,250
- ------------------------------------------------------------
Health Services--3.7%
969,700 Beverly Enterprises, Inc.(a)
4,969,713
835,500 Foundation Health Systems, Inc.(a)
10,182,656
627,600 Raytel Medical Corp.(a)
2,588,850
1,124,250 Sierra Health Services, Inc.(a)
14,615,250
---------
- ---
32,356,469
- ------------------------------------------------------------
Hospital Management--3.4%
837,200 Quorum Health Group, Inc.(a)
8,372,000
499,700 Universal Health Services, Inc.
Class B(a) $
21,612,025
---------
- ---
29,984,025
- ------------------------------------------------------------
Hotel/Motel--2.7%
1,174,700 Lodgian, Inc.(a)
5,212,731
483,400 Prime Hospitality Corp.(a)
4,803,788
852,100 Red Roof Inns, Inc.(a)
13,420,575
---------
- ---
23,437,094
- ------------------------------------------------------------
Household Products--1.9%
499,100 Premark International, Inc.
16,439,106
- ------------------------------------------------------------
Insurance--10.6%
567,427 Amerus Life Holdings, Inc. Class A
13,618,248
291,700 ARM Financial, Inc.
4,357,269
578,700 Capital Re Corp.
9,982,575
563,700 CNA Surety Corp.
6,975,788
551,400 Enhance Financial Services Group,
Inc.
12,544,350
512,300 Financial Security Assurance
Holdings, Ltd.
25,422,887
538,600 Harleysville Group, Inc.
10,435,375
681,600 MMI Cos., Inc.
10,479,600
---------
- ---
93,816,092
- ------------------------------------------------------------
Machinery--1.9%
278,580 Allied Products Corp.
835,740
829,800 CTB International Corp.(a)
5,289,975
864,500 Omniquip International, Inc.(a)
10,157,875
---------
- ---
16,283,590
- ------------------------------------------------------------
Media--2.2%
749,290 Granite Broadcasting Corp.(a)
4,964,046
309,300 Young Broadcasting, Inc., Class
A(a)
14,111,813
---------
- ---
19,075,859
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
PRUDENTIAL SMALL COMPANY
March 31, 1999 (Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Metals Processing--2.5%
441,450 Chase Industries, Inc.(a) $
3,366,056
557,900 Hawk Corporation
4,463,200
685,900 Ladish Co., Inc.
4,715,563
447,500 Wolverine Tube, Inc.(a)
9,453,437
---------
- ---
21,998,256
- ------------------------------------------------------------
Miscellaneous Industrial--12.2%
1,118,400 Aztec Corp.(a)
5,382,300
702,300 Blount International, Inc., Class A
20,278,912
272,650 Clarcor, Inc.
4,652,091
790,900 Coinmach Laundry Corp.(a)
8,106,725
610,100 DT Industries, Inc.
4,308,831
325,700 Graco, Inc.
7,185,756
641,500 Griffon Corp.
4,410,313
302,900 Kimball International, Inc. Class B
4,505,637
227,300 Lincoln Electric Holdings, Inc.
4,233,463
197,446 Mark IV Industries, Inc.
2,579,138
204,000 Pentair, Inc.
6,885,000
544,300 Regal Beloit Corp.
9,831,419
370,735 Robbins & Myers, Inc.
6,395,179
582,100 United Dominion Industries, Ltd.
(Canada)
11,569,237
471,000 Vari-Lite International, Inc.(a)
1,265,813
248,400 Varian Associates Inc.(a)
4,331,475
47,543 Varlen Corp.
1,045,946
---------
- ---
106,967,235
- ------------------------------------------------------------
Oil & Gas Exploration/Production--6.5%
1,055,000 Bellwether Exploration Co.
3,758,438
345,900 Cabot Oil & Gas Corp.
4,993,931
1,213,900 Comstock Resources, Inc.(a)
3,717,569
211,900 Devon Energy Corp.
5,840,494
620,900 Louis Dreyfus Natural Gas Corp.(a)
9,003,050
650,900 Santa Fe Energy Resources, Inc.(a)
4,759,706
501,700 Snyder Oil Corp.
7,431,431
442,300 St. Mary Land & Exploration Co.
7,684,962
1,133,900 Vintage Petroleum, Inc.
10,205,100
---------
- ---
57,394,681
Paper & Packaging--0.7%
544,300 Schweitzer-Mauduit International,
Inc. $
6,259,450
- ------------------------------------------------------------
Printing & Publishing--3.7%
658,500 Big Flower Holdings, Inc.(a)
20,495,812
578,000 World Color Press, Inc.(a)
12,282,500
---------
- ---
32,778,312
- ------------------------------------------------------------
Regional Banks--1.5%
235,300 Community First Bankshares, Inc.
4,706,000
466,600 Peoples Heritage Financial Group
8,398,800
---------
- ---
13,104,800
- ------------------------------------------------------------
Restaurants--3.7%
114,300 CKE Restaurants, Inc.
2,257,425
944,800 Host Marriott Services Corp.
6,377,400
84,500 Ruby Tuesday, Inc.(a)
1,468,187
1,184,000 Ryan's Family Steak Houses, Inc.(a)
14,282,000
480,600 VICORP Restaurants, Inc.(a)
7,689,600
---------
- ---
32,074,612
- ------------------------------------------------------------
Retail--3.6%
659,800 Bon-Ton Stores, Inc.(a)
4,866,025
587,600 Dress Barn, Inc.(a)
8,152,950
465,600 Pier 1 Imports, Inc.
3,783,000
892,500 Stage Stores, Inc.(a)
6,470,625
795,800 Stein Mart, Inc.(a)
7,958,000
---------
- ---
31,230,600
- ------------------------------------------------------------
Savings & Loan--2.6%
462,100 Astoria Financial Corp.
23,105,000
- ------------------------------------------------------------
Specialty Chemicals--2.3%
277,300 Cambrex Corp.
6,135,262
464,400 Lilly Industries, Inc., Class A
7,169,175
527,500 M.A. Hanna Co.
6,758,594
---------
- ---
20,063,031
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of
PRUDENTIAL SMALL COMPANY
March 31, 1999 (Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Steel - Producers--0.5%
176,700 Northwest Pipe Co.(a) $
2,915,550
85,389 Ryerson Tull, Inc.
1,254,151
---------
- ---
4,169,701
- ------------------------------------------------------------
Textiles--1.2%
685,100 Dan River Inc., Class A(a)
5,823,350
493,700 Guilford Mills, Inc.
4,319,875
---------
- ---
10,143,225
- ------------------------------------------------------------
Trucking & Shipping--0.7%
466,300 Interpool, Inc.
6,295,050
---------
- ---
Total common stocks
(cost $948,940,942)
845,488,795
- ------------------------------------------------------------
CORPORATE BOND--0.3%
Principal
Amount
(000)
$ 2,679 Robbins & Myers, Inc.,
Convertible to 36.7 shares per
1,000 par 6.50%, 9/1/03
(Misc. Industrial)
(cost $2,679,000)
2,411,100
---------
- ---
Total long-term investments
(cost $951,619,942)
847,899,895
SHORT-TERM INVESTMENT--3.3%
- ------------------------------------------------------------
28,567 Joint Repurchase Agreement Account,
4.91%, 4/1/99
(cost $28,567,000; Note 5)
28,567,000
- ------------------------------------------------------------
Total Investments--100.0%
(cost $980,186,942; Note 4)
876,466,895
Liabilities in excess of other
assets
(73,789)
---------
- ---
Net Assets--100%
$876,393,106
---------
- ---
---------
- ---
</TABLE>
- ---------------
ADR--American Depository Receipt.
(a) Non-income producing security.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL
SMALL COMPANY
(Unaudited) VALUE FUND,
INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
<S>
<C>
Investments, at value (cost
$980,186,942)...............................................
................... $ 876,466,895
Cash........................................................
...............................................
100,491
Receivable for investments
sold........................................................
.................... 9,946,241
Receivable for Fund shares
sold........................................................
.................... 1,188,187
Dividends and interest
receivable..................................................
........................ 961,597
Deferred expense and other
assets......................................................
.................... 13,649
- --------------
Total
assets......................................................
...................................... 888,677,060
- --------------
Liabilities
Payable for Fund shares
reacquired..................................................
....................... 7,123,423
Payable for investments
purchased...................................................
....................... 3,978,797
Management fee
payable.....................................................
................................ 531,950
Distribution fee
payable.....................................................
.............................. 445,468
Accrued
expenses....................................................
....................................... 194,361
Withholding tax
payable.....................................................
............................... 9,955
- --------------
Total
liabilities.................................................
...................................... 12,283,954
- --------------
Net
Assets......................................................
........................................... $
876,393,106
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 758,489
Paid-in capital in excess of
par.........................................................
............... 964,239,724
- --------------
964,998,213
Net investment
loss........................................................
............................. (1,352,925)
Accumulated net realized gain on
investments.................................................
........... 16,467,865
Net unrealized depreciation on
investments.................................................
............. (103,720,047)
- --------------
Net assets, March 31,
1999........................................................
......................... $ 876,393,106
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($333,674,338 / 27,489,227 shares of common stock
issued and outstanding)............................
$12.14
Maximum sales charge (5% of offering
price)......................................................
....... .64
- --------------
Maximum offering price to
public......................................................
.................. $12.78
- --------------
- --------------
Class B:
Net asset value, offering price and redemption price per
share
($399,234,893 / 36,427,505 shares of common stock
issued and outstanding)............................
$10.96
- --------------
- --------------
Class C:
Net asset value and redemption price per share
($24,911,585 / 2,272,957 shares of common stock issued
and outstanding)..............................
$10.96
Sales charge (1% of offering
price)......................................................
............... .11
- --------------
Offering price to
public......................................................
.......................... $11.07
- --------------
- --------------
Class Z:
Net asset value, offering price and redemption price per
share
($118,572,290 / 9,659,187 shares of common stock
issued and outstanding).............................
$12.28
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
PRUDENTIAL SMALL COMPANY
VALUE FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six
Months
Ended
Net Investment Income (Loss) March 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding taxes
of $30,586).............................. $
4,846,515
Interest....................................
1,837,943
----------
- ----
Total income.............................
6,684,458
----------
- ----
Expenses
Management fee..............................
3,567,185
Distribution fee--Class A...................
462,545
Distribution fee--Class B...................
2,457,244
Distribution fee--Class C...................
139,775
Transfer agent's fees and expenses..........
1,103,000
Reports to shareholders.....................
90,000
Registration fees...........................
80,000
Custodian's fees and expenses...............
73,000
Legal fees and expenses.....................
19,000
Insurance expense...........................
15,500
Audit fees and expenses.....................
12,500
Directors' fees and expenses................
12,500
Miscellaneous...............................
5,134
----------
- ----
Total expenses...........................
8,037,383
----------
- ----
Net investment income (loss)...................
(1,352,925)
----------
- ----
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on investment transactions...
1,272,594
Net change in unrealized appreciation
(depreciation) on investments...............
(17,484,477)
----------
- ----
Net loss on investments........................
(16,211,883)
----------
- ----
Net Decrease in Net Assets
Resulting from Operations......................
$(17,564,808)
----------
- ----
----------
- ----
</TABLE>
PRUDENTIAL SMALL COMPANY
VALUE FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended
Increase (Decrease) Ended September
30,
in Net Assets March 31, 1999 1998
<S> <C> <C>
Operations
Net investment income
(loss)................... $ (1,352,925) $
(4,946,053)
Net realized gain on
investments.............. 1,272,594
150,641,304
Net change in unrealized
appreciation
(depreciation) on
investments.............. (17,484,477)
(392,297,749)
-------------- ---------
- -----
Net decrease in net assets
resulting from
operations............... (17,564,808)
(246,602,498)
-------------- ---------
- -----
Distributions from net realized
gains (Note 1)
Class A..................... (41,109,661)
(40,869,566)
Class B..................... (62,450,536)
(70,405,034)
Class C..................... (3,389,932)
(2,549,512)
Class Z..................... (14,727,094)
(14,791,748)
-------------- ---------
- -----
(121,677,223)
(128,615,860)
-------------- ---------
- -----
Fund share transactions (net of
conversions) (Note 6)
Proceeds from shares sold... 280,995,930
864,798,421
Net asset value of shares
issued in reinvestment of
distributions............ 117,928,503
124,093,166
Cost of shares reacquired... (415,453,352)
(813,331,700)
-------------- ---------
- -----
Net increase (decrease) in
net assets from Fund
share transactions....... (16,528,919)
175,559,887
-------------- ---------
- -----
Total decrease................. (155,770,950)
(199,658,471)
Net Assets
Beginning of period............ 1,032,164,056
1,231,822,527
-------------- ---------
- -----
End of period.................. $ 876,393,106
$1,032,164,056
-------------- ---------
- -----
-------------- ---------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
Notes to Financial Statements PRUDENTIAL SMALL
COMPANY
(Unaudited) VALUE FUND, INC.
- ------------------------------------------------------------
- --------------------
Prudential Small Company Value Fund, Inc. 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 by investing
in a carefully selected portfolio of common stocks.
Investment income is of
incidental importance, and the Fund may invest in securities
which do not
produce any income.
- ------------------------------------------------------------
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 Net 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. Expenses are
recorded on the accrual basis which may require the use of
certain estimates by
management.
Net investment income (loss), other than distribution fees,
and unrealized and
realized gains 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.
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.
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.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has
responsibility for all
investment advisory services and supervises the subadviser's
performance of such
services. Pursuant to a subadvisory agreement between PIFM
and The Prudential
Investment Corporation ('PIC'), PIC furnishes investment
advisory services in
connection with the management of the Fund. PIFM pays for
the cost of the
subadviser's services, the compensation of officers of the
Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund
bears all other
costs and expenses.
The management fee paid PIFM 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 a distribution agreement with Prudential
Investment Management
Services LLC ('PIMS'), which acts as the distributor of the
Class A, Class B,
Class C and Class Z shares of the Fund. The Fund compensates
PIMS for
distributing and servicing the Fund's Class A, Class B and
Class C shares,
pursuant to plans of distribution, (the 'Class A, B and C
Plans'), regardless of
expenses actually incurred by them. The distribution fees
are accrued daily and
payable monthly. No distribution or service fees are paid to
PIMS as distributor
of the Class Z shares of the Fund.
- ------------------------------------------------------------
- --------------------
10
<PAGE>
Notes to Financial Statements PRUDENTIAL SMALL
COMPANY
(Unaudited) VALUE FUND, INC.
- ------------------------------------------------------------
- --------------------
Pursuant to the Class A, B and C Plans, the Fund compensates
PIMS for
distribution-related activities at an annual rate of up to
.30 of 1%, 1% and 1%,
of the average daily net assets of the Class A, B and C
shares, respectively.
Such expenses were .25 of 1%, 1% and 1% of the average daily
net assets of the
Class A, Class B and Class C shares, respectively, for the
six months ended
March 31, 1999.
PIMS has advised the Fund that it received approximately
$251,000 in front-end
sales charges resulting from sales of Class A and Class C
shares during the six
months ended March 31, 1999. From these fees, PIMS paid such
sales charges to
affiliated broker-dealers, which in turn paid commissions to
salespersons and
incurred other distribution costs.
PIMS has advised the Fund that for the six months ended
March 31, 1999, it
received approximately $879,000 and $8,702 in contingent
deferred sales charges
imposed upon certain redemptions by Class B and Class C
shareholders,
respectively.
PIFM, PIMS and PIC are indirect, wholly owned subsidiaries
of The Prudential
Insurance Company of America.
As of March 11, 1999, the Company along with other
unaffiliated registered
investment companies (the 'Funds'), entered into a
syndicated agreement ('SCA')
with an unaffiliated lender. The maximum commitment under
the SCA is $1 billion.
The Funds pay a commitment fee at an annual rate of .065 of
1% on the unused
portion of the credit facility, which is accrued and paid
quarterly on a pro
rata basis by the Funds. The SCA expires on March 10, 2000.
Prior to March 11,
1999, the Funds had a credit agreement with a maximum
commitment of
$200,000.000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements is to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Fund incurred fees of approximately $1,125,000 for the
services of PMFS. As
of March 31, 1999, approximately $201,000 of such fees were
due to PMFS.
Transfer agent fees and expenses in Statement of Operations
include certain
out-of-pocket expenses paid to nonaffliates.
For the six months ended March 31, 1999, PSI earned
approximately $4,000 in
brokerage commissions from portfolio transactions executed
on behalf of the
Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999 were $190,832,827
and $297,119,189,
respectively.
The federal income tax basis of the Fund's investments at
March 31, 1999 was
$980,392,030 and, accordingly, net unrealized depreciation
for federal income
tax purposes was $103,925,135 (gross unrealized appreciation-
- -$100,691,899 gross
unrealized depreciation--$204,617,034).
- ------------------------------------------------------------
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 March
31, 1999, the Fund
had an 5.14% undivided interest in the joint account. The
undivided interest for
the Fund represents $28,567,000 in the principal amount. As
of such date, each
repurchase agreement in the joint account and the collateral
therefor were as
follows:
Bear Stearns & Co., 4.92%, in the principal amount of
$170,000,000, repurchase
price $170,023,233, due 4/1/99. The value of the collateral
including accrued
interest was $174,282,442.
Salomon Smith Barney, Inc., 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
SBC Warburg Dillon Read, Inc., 4.97%, in the principal
amount of $44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are
sold with a front-end sales charge of up to to 5%. Class B
shares are sold with
a contingent deferred sales charge which declines from 5%
- ------------------------------------------------------------
- --------------------
11
<PAGE>
Notes to Financial Statements PRUDENTIAL
SMALL COMPANY
(Unaudited) VALUE FUND,
INC.
- ------------------------------------------------------------
- --------------------
to zero depending on the period of time the shares are held.
Class C shares are
sold with a front-end sales charge of 1% and a contingent
deferred sales charge
of 1% during the first 18 months. Prior to November 2, 1998,
Class C shares were
sold with a contingent deferred sales charge of 1% during
the first year. Class
B shares will automatically convert to Class A shares on a
quarterly basis
approximately seven years after purchase. A special exchange
privilege is also
available for shareholders who qualify to purchase Class A
shares at net asset
value. Class Z shares are not subject to any sales or
redemption charge and are
offered exclusively for sale to a limited group of
investors.
There are 750 million shares of common stock authorized $.01
par value per
share, divided into four classes, designated Class A, Class
B, Class C and Class
Z common stock. Class A, Class B and Class Z shares each
consist of 200 million
authorized shares. Class C shares consist of 150 million
authorized shares.
Transactions in shares of common stock for the six months
ended March 31, 1999
and year ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 9,957,438 $
128,651,038
Shares issued in reinvestment of
distributions.................... 2,977,458
39,600,186
Shares reacquired.................. (13,448,570)
(172,012,109)
----------- ---------
- ----
Net decrease in shares outstanding
before conversion................ (513,674)
(3,760,885)
Shares issued upon conversion from
Class B.......................... 1,504,238
18,860,136
----------- ---------
- ----
Net increase in shares
outstanding...................... 990,564 $
15,099,251
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 16,276,703 $
281,232,761
Shares issued in reinvestment of
distributions.................... 2,427,115
39,246,447
Shares reacquired.................. (15,693,393)
(272,105,329)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 3,010,425
48,373,879
Shares issued upon conversion from
Class B.......................... 1,693,186
28,221,380
----------- ---------
- ----
Net increase in shares
outstanding...................... 4,703,611 $
76,595,259
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class B Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 6,943,591 $
83,002,073
Shares issued in reinvestment of
distributions.................... 5,000,512
60,256,172
Shares reacquired.................. (14,549,690)
(168,114,652)
----------- ---------
- ----
Net decrease in shares outstanding
before conversion................ (2,605,587)
(24,856,407)
Shares reacquired upon conversion
into Class A..................... (1,663,777)
(18,860,136)
----------- ---------
- ----
Net decrease in shares
outstanding...................... (4,269,364) $
(43,716,543)
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 20,431,318 $
330,294,528
Shares issued in reinvestment of
distributions.................... 4,531,677
67,567,307
Shares reacquired.................. (19,026,353)
(301,792,212)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 5,936,642
96,069,623
Shares reacquired upon conversion
into Class A..................... (1,842,451)
(28,221,380)
----------- ---------
- ----
Net increase in shares
outstanding...................... 4,094,191 $
67,848,243
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class C
- -----------------------------------
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 748,985 $
8,981,444
Shares issued in reinvestment of
distributions.................... 278,300
3,353,512
Shares reacquired.................. (875,902)
(10,106,527)
----------- ---------
- ----
Net increase in shares
outstanding...................... 151,383 $
2,228,429
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 1,868,621 $
30,323,339
Shares issued in reinvestment of
distributions.................... 167,005
2,490,049
Shares reacquired.................. (1,164,216)
(18,657,047)
----------- ---------
- ----
Net increase in shares
outstanding...................... 871,410 $
14,156,341
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class Z
- -----------------------------------
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 4,538,022 $
60,361,375
Shares issued in reinvestment of
distributions.................... 1,095,136
14,718,633
Shares reacquired.................. (5,012,091)
(65,220,064)
----------- ---------
- ----
Net increase in shares
outstanding...................... 621,067 $
9,859,944
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 12,690,019 $
222,947,793
Shares issued in reinvestment of
distributions.................... 908,438
14,789,363
Shares reacquired.................. (12,501,837)
(220,777,112)
----------- ---------
- ----
Net increase in shares
outstanding...................... 1,096,620 $
16,960,044
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
12
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL SMALL
COMPANY VALUE FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A
- ------------------------------------------------------------
- --
Six Months
Ended Year Ended September 30,
March 31, ---------------------------------------------
- --
1999 1998 1997 1996 1995
- ---------- -------- -------- -------- ------
- --
<S>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 13.79 $ 18.95
$ 15.30 $ 14.18 $ 12.40
- ---------- -------- -------- -------- ------
- --
Income from investment operations
Net investment income
(loss)................................. .01
- --(a) .02(a) .04(a) .05(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
(.13) (3.31) 6.06 1.75 2.57
- ---------- -------- -------- -------- ------
- --
Total from investment
operations.......................... (.12)
(3.31) 6.08 1.79 2.62
- ---------- -------- -------- -------- ------
- --
Less distributions
Distributions from net realized
gains........................ (1.53) (1.85)
(2.43) (.67) (.84)
- ---------- -------- -------- -------- ------
- --
Net asset value, end of
period............................... $ 12.14 $
13.79 $ 18.95 $ 15.30 $ 14.18
- ---------- -------- -------- -------- ------
- --
- ---------- -------- -------- -------- ------
- --
TOTAL
RETURN(b):.............................................
(27.14)% (18.90)% 45.92% 13.38% 23.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $333,674
$365,431 $412,980 $237,306 $242,231
Average net assets
(000)..................................... $371,053
$443,189 $287,894 $223,091 $174,449
Ratios to average net assets:
Expenses, including distribution
fees..................... 1.23%(c) 1.17%
1.21% 1.24% 1.33%
Expenses, excluding distribution
fees..................... .98%(c) .92%
.96% .99% 1.08%
Net investment income
(loss).............................. .08%(c)
- -- .15% .33% .30%
For Class A, B, C and Z shares:
Portfolio
turnover........................................
20% 36% 58% 53% 64%
<CAPTION>
1994
- --------
<S>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 13.06
- --------
Income from investment operations
Net investment income
(loss)................................. --(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
.13
- --------
Total from investment
operations.......................... .13
- --------
Less distributions
Distributions from net realized
gains........................ (.79)
- --------
Net asset value, end of
period............................... $ 12.40
- --------
- --------
TOTAL
RETURN(b):.............................................
1.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $103,078
Average net assets
(000)..................................... $ 97,877
Ratios to average net assets:
Expenses, including distribution
fees..................... 1.33%
Expenses, excluding distribution
fees..................... 1.09%
Net investment income
(loss).............................. .00%
For Class A, B, C and Z shares:
Portfolio
turnover........................................ 82%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares
outstanding during the year.
(b) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of less than a
full year are not
annualized.
(c) Annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
Financial Highlights PRUDENTIAL
SMALL COMPANY
(Unaudited) VALUE FUND,
INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B
- ------------------------------------------------------------
- --
Six Months
Ended Year Ended September 30,
March 31, ---------------------------------------------
- --
1999 1998 1997 1996 1995
- ---------- -------- -------- -------- ------
- --
<S>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 12.63 $ 17.64
$ 14.49 $ 13.56 $ 11.99
- ---------- -------- -------- -------- ------
- --
Income from investment operations
Net investment income
(loss)................................. (.04)
(.12)(a) (.09)(a) (.06)(a) (.06)(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
(.10) (3.04) 5.67 1.66 2.47
- ---------- -------- -------- -------- ------
- --
Total from investment
operations.......................... (.14)
(3.16) 5.58 1.60 2.41
- ---------- -------- -------- -------- ------
- --
Less distributions
Distributions from net realized
gains........................ (1.53) (1.85)
(2.43) (.67) (.84)
- ---------- -------- -------- -------- ------
- --
Net asset value, end of
period............................... $ 10.96 $
12.63 $ 17.64 $ 14.49 $ 13.56
- ---------- -------- -------- -------- ------
- --
- ---------- -------- -------- -------- ------
- --
TOTAL
RETURN(b):.............................................
(27.68)% (19.52)% 44.91% 12.56% 22.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $399,235
$514,159 $645,579 $378,861 $361,873
Average net assets
(000)..................................... $492,799
$678,462 $443,761 $355,636 $349,929
Ratios to average net assets:
Expenses, including distribution
fees..................... 1.98%(c) 1.92%
1.96% 1.99% 2.08%
Expenses, excluding distribution
fees..................... .98%(c) .92%
.96% .99% 1.08%
Net investment income
(loss).............................. (.67)%(c)
(.75)% (.60)% (.42)% (.51)%
<CAPTION>
1994
- --------
<S>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 12.74
- --------
Income from investment operations
Net investment income
(loss)................................. (.09)(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
.13
- --------
Total from investment
operations.......................... .04
- --------
Less distributions
Distributions from net realized
gains........................ (.79)
- --------
Net asset value, end of
period............................... $ 11.99
- --------
- --------
TOTAL
RETURN(b):.............................................
.34%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $425,502
Average net assets
(000)..................................... $399,920
Ratios to average net assets:
Expenses, including distribution
fees..................... 2.09%
Expenses, excluding distribution
fees..................... 1.09%
Net investment income
(loss).............................. (.76)%
</TABLE>
- ---------------
(a) Calculated based upon weighted average shares
outstanding during the year.
(b) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of less than a
full year are not
annualized.
(c) Annualized
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 14
<PAGE>
Financial Highlights
PRUDENTIAL SMALL COMPANY
(Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C
- ---------------------------------------------------------
Six Months
Ended Year Ended September 30,
March 31, ------------------------------------------
1999 1998 1997 1996 1995
- ---------- -------- ------- ------ ------
<S>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 12.63 $ 17.64
$ 14.49 $13.56 $11.99
- ---------- -------- ------- ------ ------
Income from investment operations
Net investment income
(loss)................................. (.04)
(.12)(a) (.09)(a) (.06)(a) (.06)(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
(.10) (3.04) 5.67 1.66 2.47
- ---------- -------- ------- ------ ------
Total from investment
operations.......................... (.14)
(3.16) 5.58 1.60 2.41
- ---------- -------- ------- ------ ------
Less distributions
Distributions from net realized
gains........................ (1.53) (1.85)
(2.43) (.67) (.84)
- ---------- -------- ------- ------ ------
Net asset value, end of
period............................... $ 10.96 $
12.63 $ 17.64 $14.49 $13.56
- ---------- -------- ------- ------ ------
- ---------- -------- ------- ------ ------
TOTAL
RETURN(b):.............................................
(27.68)% (19.52)% 44.91% 12.56% 22.37%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $ 24,912 $
26,804 $22,049 $4,323 $1,545
Average net assets
(000)..................................... $ 28,032
$ 29,259 $ 8,762 $2,786 $ 784
Ratios to average net assets:
Expenses, including distribution
fees..................... 1.98%(c) 1.92%
1.96% 1.99% 2.08%
Expenses, excluding distribution
fees..................... .98%(c) .92%
.96% .99% 1.08%
Net investment income
(loss).............................. (.67)%(c)
(.75)% (.60)% (.42)% (.46)%
<CAPTION>
August 1,
1994(d)
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)(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
.39
- -----
Total from investment
operations.......................... .38
- -----
Less distributions
Distributions from net realized
gains........................ --
- -----
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 income
(loss).............................. (.31)%(c)
</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.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 15
<PAGE>
Financial Highlights
PRUDENTIAL SMALL COMPANY
(Unaudited) VALUE
FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z
- ------------------------------------------------------
March 1,
Six Months Year Ended September 1996(d)
Ended 30, Through
March 31, --------------------- September 30,
1999 1998 1997 1996
- ---------- -------- -------- -------------
<S>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 13.92 $ 19.04
$ 15.32 $ 13.69
- ---------- -------- -------- ------
Income from investment operations
Net investment income
(loss)................................. .02
.04(a) .06(a) .05(a)
Net realized and unrealized gain (loss) on investment
transactions..............................................
(.13) (3.31) 6.09 1.58
- ---------- -------- -------- ------
Total from investment
operations.......................... (.11)
(3.27) 6.15 1.63
- ---------- -------- -------- ------
Less distributions
Distributions from net realized
gains........................ (1.53) (1.85)
(2.43) --
- ---------- -------- -------- ------
Net asset value, end of
period............................... $ 12.28 $
13.92 $ 19.04 $ 15.32
- ---------- -------- -------- ------
- ---------- -------- -------- ------
TOTAL
RETURN(b):.............................................
(26.93)% (18.58)% 46.38% 11.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $118,572
$125,770 $151,215 $68,516
Average net assets
(000)..................................... $130,112
$154,623 $ 97,310 $66,228
Ratios to average net assets:
Expenses, including distribution
fees..................... .98%(c) .92%
.96% .99%(c)
Expenses, excluding distribution
fees..................... .98%(c) .92%
.96% .99%(c)
Net investment income
(loss).............................. .33%(c)
.25% .40% .58%(c)
</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 Z shares.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 16
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's portfolio
holdings are for the period covered by this report, and are
subject to change
thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
743968109
743968208 MF109E2
743968307 743968406
