(ICON)
Prudential
Jennison
Fund, Inc.
SEMI
ANNUAL
REPORT
March 31, 1996
(LOGO)
<PAGE>
Prudential Jennison Fund, Inc.
Performance At A Glance.
The Prudential Jennison Fund began investing on November 2, 1995. It finished
the reporting period ended March 31, 1996 with positive returns, but trailed the
average capital appreciation fund. Weakness in technology stocks, in which
nearly a third of the Fund was invested, held back performance. Despite the
recent volatility of technology stocks, we remain committed to them and to the
stocks of other companies which exhibit attractive, above-average, and long-term
growth prospects.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 3/31/96
Since Since
Inception2 Inception2
(Without Sales Charge) (With Sales
Charge)
<S> <C> <C>
Class A 3.9% -1.3%
Class B 3.6 -1.4
Class C 3.6 2.6
Class Z3 N/A N/A
Lipper Capital Appreciation Avg4 8.7 N/A
</TABLE>
Past performance is not indicative 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.
1Source: Prudential Mutual Fund Management and Lipper Analytical Services. 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 C shares have a 1% CDSC for one
year. Class B shares will automatically convert to Class A shares on a quarterly
basis after approximately seven years. Class Z shares are not subject to a sales
charge or a distribution fee. No average annual total returns are shown because
the Fund has been in operation for less than one year.
2Inception date: 11/2/95 for Class A, Class B and Class C shares; 4/15/96 for
Class Z shares.
3Class Z shares were first offered on 4/15/96 and are currently available only
to participants in the PSI 401(k) Plan, an employee benefit plan sponsored by
Prudential Securities.
4These are the average returns of 183 funds in the capital appreciation category
since inception of the Fund, as determined by Lipper Analytical Services.
How Investments Compared.
(As of 3/31/96)
(CHART)
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 included
historical 20-year average annual returns. The 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 Market 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.
* 19 years for General Muni Debt Funds.
<PAGE>
David Poiesz, Fund Manager
Peter Reinemann, Associate Fund Manager (PHOTO)
Portfolio
Managers' Report (PHOTO)
The Prudential Jennison Fund seeks long-term growth of capital by primarily
investing in stocks of established companies with above-average growth
prospects. The Fund may also invest in stocks from foreign issuers, investment
grade bonds, and securities (including mortgage backed securities) issued or
guaranteed by the U.S. government and its agencies. There can be no assurance
that the Fund's investment objective will be achieved.
Strategy Session.
Our strategy is to identify and purchase stocks with sales and earnings that
are -- or will be -- higher than that of the average company. We believe that
these stocks will have the potential for attractive, long-term capital
appreciation.
During the past five months, we invested in companies that met this criteria.
For example, we bought Boeing, a large aircraft manufacturer, and pharmaceutical
giant Johnson & Johnson. These companies delivered superior earnings growth and
their investors were rewarded by a rising stock price.
We also saw growth potential in technology stocks and invested nearly a third
of the Fund's assets in them. Unfortunately, technology stocks -- particularly
those of personal computer, cellular telephone and semiconductor companies --
faltered in November and December of 1995 and then again in March of 1996. The
market forces that affected these stocks are discussed in the "And Not So Well"
portion of this letter.
If technology stocks were such a disappointment, why didn't we sell them?
Because we thought -- and continue to think -- that their long-term capital
appreciation potential was compelling. In fact, short-term setbacks caused by
a bad earnings report or other business-related development can either expose
the underlying weakness of a bad company or obscure the strength of a good one.
We think the latter is true of the technology stocks we own.
A Focus On Technology.
Expressed as a percentage of
total net assets as of 3/31/96.
(CHART)
Off And Running.
The Prudential Jennison Fund has concluded its first five months of operations
and we would like to thank you for your support. Growth stock investors should
expect periods of uncertainty in their pursuit of higher returns. Still,
weathering a volatile market is never easy. It's best to keep a long-term
focus on your investment.
<PAGE>
What Went Well.
Over the past five months, careful stock selection helped the Fund's returns.
Here are a few examples:
Boeing Takes Off.
Boeing, a well-established aircraft manufacturer, was an early purchase and a
good one. We liked this stock for several reasons -- the company received a
major upswing in orders for replacement aircraft; new aircraft orders were up
and the roll out of Boeing's new 777 airliner appeared successful. These events
led the company to expand its production rate. We expect similar good news in
the future.
Healthy Prospects For
Drugs & HMOs.
We also seized opportunities in the pharmaceutical and health-care industries.
Among drug manufacturers, we targeted companies that had recently consolidated
or restructured their businesses, enabling them to once again generate new
products. Our favorites included Johnson & Johnson, Pfizer, Eli Lilly, Astra
and SmithKline Beecham.
In the health maintenance organization (HMO) industry we purchased United
Healthcare. Our investment strategy looks at long-term prospects, and we
believe United Healthcare's are good. The trend toward managed health care is
growing as more corporations and small businesses seek to control medical
expenses. As this occurs, companies like United Healthcare should be major
players.
And Not So Well.
Tech Stocks Short-Circuit.
As stated earlier, nearly a third of the Fund's assets were invested in
technology stocks. Unfortunately, these stocks -- particularly manufacturers
of personal computers, cellular telephones and semiconductors -- came under
pressure as the Fund was launched. Here is a brief overview of what occurred:
- -Personal computer companies were hurt by excessive inventories and competition
which led to lower stock prices.
- -Cellular phone manufacturers and services were hindered bya general market
slowdown caused by new and changing technological standards for cellular phone
equipment.
- -Semiconductor businesses suffered as a matter of course because their two
major markets -- personal computers and cell phones -- had less demand for
semiconductors.
Consumer demand should help personal computer stock prices turn around fairly
quickly. In turn, increased computer sales should also lead to higher prices
for semiconductor stocks. Cellular phone companies face a somewhat longer road,
but we believe their stock prices will show strength again once technological
issues are resolved later this year.
Five Largest Issuers.
3.4% Boeing Co.
3.1% Walt Disney Co.
2.5% Cisco Systems, Inc.
2.4% Astra AB
2.4% United Healthcare Corp.
Expressed as a percentage of total net assets as of 3/31/96.
Looking Ahead.
As we went to press, the economy's direction was still unclear. Some reports
indicate that the economy is strengthening while others show the opposite. This
is also a presidential election year, which adds another degree of uncertainty.
Taken together these factors may spell more volatility for stock prices in the
coming months.
The Prudential Jennison Fund should do well in a moderate growth, low inflation
and stable interest rate environment. We also believe that investors will
rediscover the growth potential inherent in technology stocks. If this happens,
the Fund is well-positioned to take advantage of rising technology stock prices.
1
<PAGE>
President's Letter May 1, 1996
Dear Shareholder:
Last year, stocks and bonds generally posted extraordinary returns. Investors
celebrated this performance by putting record amounts of new money into mutual
funds in the first few months of 1996. According to figures released by the
Investment Company Institute, a mutual fund industry trade group, new
investments in mutual funds reached an all-time monthly high of $33 billion in
January of 1996. An additional $47 billion was invested in February and March.
While we are pleased that mutual funds are attracting new investors, we're
concerned that some of them may be "buying last year's returns." Few expect
1995's virtual non-stop returns from the stock and bond markets. In fact,
1996's markets have been volatile so far (stock and bond prices go down just
as they go up). There's no better time than now to be talking with your
Financial Advisor or Registered Representative. She or he can help you
determine reasonable expectations about both the potential performance and
risks associated with your investments.
Board of Directors Election.
Late this summer, we'll be sending you a notice about a special shareholder
meeting to elect new Prudential mutual fund boards of directors. Your Board of
Directors has approved a proposal to place a common board of experienced
directors across many of Prudential's mutual funds to improve business
efficiency and reduce costs to your fund(s). The materials you'll receive
this summer will contain more complete information about this proposal.
Changes at Prudential.
Finally, there have been some important changes recently at Prudential that
were made with you in mind. Prudential Mutual Funds has moved under the
umbrella of Prudential's newly created "Money Management Group." This group
manages and administers nearly $190 billion in client assets and provides mutual
funds, annuities, defined benefit and defined contribution plans to our
individual and institutional investors. We plan to improve the range and
quality of investment products and services that we can provide you by better
leveraging Prudential's strengths. There will, however, be no change in the
service you receive from your Financial Advisor, Registered Representative or
our Customer Service unit.
We're excited about our future and hope that you are, too. Thank you for your
continued support and confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
2
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--96.9%
COMMON STOCKS--96.9%
------------------------------------------------------------
Aerospace/Defense--3.4%
94,500 Boeing Co. $ 8,186,063
- ------------------------------------------------------------
Airlines--1.8%
56,000 Delta Airlines, Inc. 4,305,000
- ------------------------------------------------------------
Beverages--3.3%
35,100 Coca-Cola Co. 2,900,137
80,000 PepsiCo Inc. 5,060,000
------------
7,960,137
- ------------------------------------------------------------
Biotechnology--1.1%
27,900 Chiron Corp. (a) 2,741,175
- ------------------------------------------------------------
Business Services--7.9%
100,000 CUC International, Inc. (a) 2,925,000
94,200 Eagle River Interactive, Inc. (a) 1,224,600
59,600 First Data Corp. 4,201,800
112,800 Omnicom Group, Inc. 5,076,000
86,000 Reuters Holdings PLC (ADR)
(United Kingdom) 5,600,750
------------
19,028,150
- ------------------------------------------------------------
Cellular Communications--1.3%
85,300 Vodafone Group PLC (ADR)
(United Kingdom) 3,198,750
- ------------------------------------------------------------
Computer Systems/Peripherals--4.9%
168,800 EMC Corp. (a) 3,692,500
59,300 Hewlett-Packard Co. 5,574,200
48,000 Seagate Technology, Inc. (a) 2,628,000
------------
11,894,700
- ------------------------------------------------------------
EDP Software & Services--12.3%
72,000 America Online Inc. 4,032,000
85,600 AutoDesk, Inc. 3,231,400
75,600 Computer Associates International,
Inc. 5,414,850
62,000 General Motors Corp., Class E $ 3,534,000
48,700 Intuit Inc. 2,191,500
82,200 Macromedia Inc. (a) 3,514,050
47,000 Microsoft Corp. (a) 4,846,875
61,800 SAP AG (ADR) (Germany) 2,950,950
------------
29,715,625
- ------------------------------------------------------------
Financial Companies--2.0%
148,300 Federal National Mortgage Assn. 4,727,062
- ------------------------------------------------------------
Health Care Services--5.1%
96,000 Healthsouth Corp. (a) 3,264,000
78,400 PhyCor, Inc. (a) 3,449,600
92,600 United Healthcare Corp. 5,694,900
------------
12,408,500
- ------------------------------------------------------------
Household & Personal Care Products--1.9%
28,900 Duracell International, Inc. 1,434,163
61,900 Gillette Co. 3,203,325
------------
4,637,488
- ------------------------------------------------------------
Hotels--2.4%
20,500 Hilton Hotels Corp. 1,927,000
63,300 ITT Corp. 3,798,000
------------
5,725,000
- ------------------------------------------------------------
Industrial Tech/Instruments--1.2%
81,900 Symbol Technologies, Inc. (a) 2,876,738
- ------------------------------------------------------------
Insurance--4.3%
28,800 CIGNA Corp. 3,290,400
49,700 ITT Hartford Group, Inc. 2,435,300
83,400 MGIC Investment Corp. 4,545,300
------------
10,271,000
- ------------------------------------------------------------
Machinery--1.1%
66,400 Harnischfeger Industries, Inc. 2,573,000
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3 -----
<PAGE>
<PAGE>
Portfolio of Investments as of March 31, 1996
(Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media--4.4%
115,400 Disney (Walt) Co. $ 7,371,175
73,300 Infinity Broadcasting Corp., Class
A (a) 3,179,387
------------
10,550,562
- ------------------------------------------------------------
Networking--3.9%
128,900 Cisco Systems, Inc. (a) 5,977,737
86,500 3Com Corp. (a) 3,449,187
------------
9,426,924
- ------------------------------------------------------------
Oil Services--1.0%
31,500 Schlumberger, Ltd. 2,492,438
- ------------------------------------------------------------
Pharmaceuticals--11.6%
124,800 Astra AB Class A (ADR) (Sweden) 5,787,600
51,900 Ciba-Geigy AG (ADR) (Switzerland) 3,230,775
47,700 Johnson & Johnson Co. 4,400,325
76,000 Lilly (Eli) & Co. 4,940,000
76,900 Pfizer Inc. 5,152,300
83,900 Smith Kline Beecham PLC (ADR)
(United Kingdom) 4,320,850
------------
27,831,850
- ------------------------------------------------------------
Publishing--1.3%
44,700 Scholastic Corp. (a) 3,073,125
- ------------------------------------------------------------
Retail--10.3%
139,900 AutoZone, Inc. (a) 4,739,112
90,000 Corporate Express, Inc. (a) 2,970,000
138,500 General Nutrition Companies, Inc.
(a) 3,462,500
115,400 Gymboree Corp. (a) 3,014,825
70,300 Home Depot, Inc. 3,365,613
50,200 Kohl's Corp. (a) 3,181,425
55,800 Micro Warehouse, Inc. (a) 2,315,700
22,200 NIKE, Inc. 1,803,750
------------
24,852,925
Semiconductors & Related Devices--5.4%
82,500 Intel Corp. $ 4,692,187
135,500 International Rectifier Corp. (a) 2,439,000
105,300 KLA Instruments Corp. (a) 2,382,413
135,600 LSI Logic Corp. 3,627,300
------------
13,140,900
- ------------------------------------------------------------
Telecommunications Equipment--3.2%
110,200 Ericsson (L.M.) Telephone Co. (ADR)
(Sweden) 2,355,525
47,000 Nokia AB (ADR) (Finland) 1,609,750
76,600 Tellabs, Inc. (a) 3,705,525
------------
7,670,800
- ------------------------------------------------------------
Telephones--1.8%
141,900 MCI Communications Corp. 4,292,475
------------
Total long-term investments
(cost $220,038,850) 233,580,387
</TABLE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000)
- -------- ---------
<C> <C> <S> <C>
SHORT-TERM INVESTMENT--2.8%
- ------------------------------------------------------------
Corporate Notes--2.8%
P1 $ 6,684 Ford Motor Credit Corp.
5.38%, 4/1/96
(cost $6,684,000) 6,684,000
- ------------------------------------------------------------
Total Investments--99.7%
(cost $226,722,850; Note
4) 240,264,387
Other assets in excess
of
liabilities--0.3% 644,936
------------
Net Assets--100% $240,909,323
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
- --------------------------------------------------------------------------------
- -----4 See Notes to Financial Statements.
<PAGE>
<PAGE>
Statement of Assets and Liabilities (Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
March 31, 1996
Investments, at value (cost
$226,722,850)..................................................................
$240,264,387
Cash.........................................................................
.............................. 44,293
Receivable for Fund shares
sold............................................................................
3,613,745
Receivable for investments
sold............................................................................
1,360,851
Dividends and interest
receivable...................................................................
....... 208,417
Deferred expenses and other
assets.........................................................................
230,130
--------------
Total
assets.......................................................................
..................... 245,721,823
--------------
Liabilities
Payable for investments
purchased....................................................................
...... 3,428,870
Payable for Fund shares
reacquired...................................................................
...... 902,502
Accrued expenses and other
liabilities.....................................................................
211,144
Distribution fees
payable......................................................................
............ 152,124
Management fee
payable......................................................................
............... 117,860
--------------
Total
liabilities..................................................................
..................... 4,812,500
--------------
Net
Assets.......................................................................
.......................... $240,909,323
--------------
--------------
Net assets were comprised of:
Common stock, at
par..........................................................................
.......... $ 23,243
Paid-in capital in excess of
par........................................................................
233,402,585
--------------
233,425,828
Accumulated net investment
loss.........................................................................
(469,661)
Accumulated net realized loss on
investments............................................................
(5,588,381)
Net unrealized appreciation on
investments..............................................................
13,541,537
--------------
Net assets, March 31,
1996.........................................................................
........ $240,909,323
--------------
--------------
Class A:
Net asset value and redemption price per share
($71,302,592 / 6,863,673 shares of common stock issued and
outstanding).............................. $10.39
Maximum sales charge (5.0% of offering
price)...........................................................
.55
--------------
Maximum offering price to
public........................................................................
$10.94
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($156,909,428 / 15,152,747 shares of common stock issued and
outstanding)............................ $10.36
--------------
--------------
Class C:
Net asset value, offering price and redemption price per share
($12,697,303 / 1,226,160 shares of common stock issued and
outstanding).............................. $10.36
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5 -----
<PAGE>
<PAGE>
PRUDENTIAL JENNISON FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
November 2, 1995(a)
Through
Net Investment Income March 31, 1996
<S> <C>
Income
Dividends............................ $ 578,402
Interest............................. 283,597
-------------------
Total income...................... 861,999
-------------------
Expenses
Distribution fee--Class A............ 62,056
Distribution fee--Class B............ 495,519
Distribution fee--Class C............ 43,189
Management fee....................... 472,159
Transfer agent's fees and expenses... 64,000
Registration fees.................... 63,000
Custodian's fees and expenses........ 38,000
Reports to shareholders.............. 36,000
Amortization of deferred organization
expense........................... 20,663
Audit fee and expenses............... 12,500
Directors' fees...................... 11,250
Legal fees and expenses.............. 9,000
Miscellaneous........................ 4,324
-------------------
Total expenses.................... 1,331,660
-------------------
Net investment loss..................... (469,661)
-------------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized loss on investment
transactions......................... (5,588,381)
Net unrealized appreciation of
investments.......................... 13,541,537
-------------------
Net gain on investments................. 7,953,156
-------------------
Net Increase in Net Assets Resulting
from Operations......................... $ 7,483,495
-------------------
-------------------
- ---------------
(a) Commencement of investment operations.
</TABLE>
PRUDENTIAL JENNISON FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
November 2, 1995(a)
Increase (Decrease) Through
in Net Assets March 31, 1996
<S> <C>
Operations
Net investment loss.................. $ (469,661)
Net realized loss on investments..... (5,588,381)
Net unrealized appreciation on
investments....................... 13,541,537
-------------------
Net increase in net assets resulting
from operations................... 7,483,495
-------------------
Fund share transactions (Note 5)
Net proceeds from shares sold........ 270,604,646
Cost of shares reacquired............ (37,278,818)
-------------------
Net increase in net assets from Fund
share transactions................ 233,325,828
-------------------
Total increase.......................... 240,809,323
Net Assets
Beginning of period..................... 100,000
-------------------
End of period........................... $ 240,909,323
-------------------
-------------------
- ---------------
(a) Commencement of investment operations.
</TABLE>
- --------------------------------------------------------------------------------
- ----- 6 See Notes to Financial Statements.
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
Prudential Jennison Fund, Inc (the ``Fund''), which was incorporated in Maryland
on August 10, 1995, is registered under the Investment Company Act of 1940, as
a
diversified, open-end management investment company. The Fund had no significant
operations other than the issuance of 3,334 shares of Class A and 3,333 shares
of each Class B and Class C common stock for $100,000 on September 13, 1995 to
Prudential Mutual Fund Management, Inc. (``PMF''). Investment operations
commenced on November 2, 1995.
The Fund's investment objective is to achieve long-term growth of capital by
investing primarily in equity securities (common stock, preferred stock and
securities convertible into common stock) of established companies with
above-average growth prospects.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: Securities listed on a securities exchange (other than
options on securities and indices) are valued at the last sales price on the day
of valuation, or, if there was no sale on such day, at the average of readily
available closing bid and asked prices on such day as provided by a pricing
service. Securities that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, are valued by an independent pricing service. Convertible debt
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed to be
over-the-counter, are valued at the average of the most recently quoted bid and
asked prices provided by a principle market maker or dealer. Options on
securities and indices traded on an exchange are valued at the average of the
most recently quoted bid and asked prices provided by the respective exchange.
Futures contracts and options thereon are valued at the last sales price as of
the close of business of the exchange. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
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 or losses on sales of securities are
calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date; interest income is recorded on the accrual basis. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
Net investment income (loss), other than distribution fees, and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of net assets of each class at the beginning of the
day.
Dividends and Distributions: The Fund expects to pay dividends of net investment
income, if any, semi-annually and to make distributions of any net capital gains
at least annually. Dividends and distributions are recorded on the ex-dividend
date. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Taxes: It is the Fund's policy to 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.
Deferred Organization Expenses: Approximately $250,000 of expenses were incurred
in connection with the organization of the Fund. These costs have been deferred
and are being amortized ratably over a period of sixty months from the date the
Fund commenced investment operations.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has entered into a management agreement with PMF. PMF is an indirect
wholly-owned subsidiary of The Prudential Insurance Company of America
(``Prudential'').
The management fee paid PMF will be computed daily and payable monthly, at an
annual rate of .60 of 1% of the average daily net assets of the Fund.
Pursuant to a subadvisory agreement between PMF and Jennison Associates Capital
Corp. (``Jennison''), a wholly-owned subsidiary of Prudential, Jennison
furnishes investment advisory services in connection with the management of the
Fund. Under the Subadvisory Agreement, Jennison, subject to the supervision of
PMF, is responsible for managing the assets of the Fund in accordance with its
investment objectives, investment program and policies. Jennison determines what
securities and other instruments are purchased and sold for the Fund and is
responsible for obtaining and evaluating financial data relevant to the Fund.
PMF pays Jennison a subadvisory fee at an annual rate of .30 of 1% of the
average daily net assets of the Fund up to and including $300 million and .25
of
1% of such assets in excess of $300 million. PMF also pays the cost of
- --------------------------------------------------------------------------------
7 -----
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
compensation of officers and employees of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears all other costs and
expenses.
The Fund has a distribution agreement with Prudential Securities Incorporated
(``PSI''), which acts as the distributor of the 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.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI 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.
With respect to the Class A Plan, PSI has agreed to limit its
distribution-related costs to .25 of 1% of average daily net assets for the
fiscal year ending September 30, 1996. With respect to the Class B and Class C
Plans, the Fund compensates PSI for its distribution-related fees at an annual
rate of 1% of the average daily net assets.
PSI has advised the Fund that it has received approximately $2,500,000 in
front-end sales charges resulting from sales of Class A shares during the period
ended March 31, 1996. From these fees, PSI paid such sales charges to Pruco
Securities Corporation and affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the period ended March 31, 1996, it received
approximately $63,000 and $2,000 in contingent deferred sales charges imposed
upon certain redemptions by Class B and C shareholders, respectively.
PSI is a wholly-owned subsidiary of Prudential.
- ------------------------------------------------------------
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 period ended March 31,
1996, the Fund incurred fees of approximately $60,000 for the services of PMFS.
As of March 31, 1996, approximately $26,000 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to non-affiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the period ended March 31, 1996 were $262,386,656 and $36,759,424,
respectively.
The federal income tax cost basis of the Fund's investments at March 31, 1996,
was $227,397,851 and, accordingly, net unrealized appreciation of investments
for federal income tax purposes was $12,866,536 (gross unrealized
appreciation-$23,022,844; gross unrealized depreciation--$10,156,308).
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B and Class C shares. The Fund will commence
offering Class Z shares on April 15, 1996. Class A shares are sold with a
front-end sales charge of up to 5%. Class B shares are sold with a contingent
deferred sales charge which declines from 5% to zero depending on the period of
time the shares are held. Class C shares are sold with a contigent deferred
sales charge of 1% during the first year. 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 2.5 billion shares of $.001 par value common stock authorized divided
into four classes, designated Class A, Class B, Class C and Class Z, each of
which consists of 1 billion, 500 million, 500 million and 500 million authorized
shares, respectively.
Transactions in shares of common stock for the period November 2, 1995
(commencement of operations) through March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------------ ---------- ------------
<S> <C> <C>
Shares sold......................... 9,776,881 $ 98,801,764
Shares reacquired................... (2,916,542) (30,029,290)
---------- ------------
Net increase in shares
outstanding....................... 6,860,339 $ 68,772,474
---------- ------------
---------- ------------
<CAPTION>
Class B
- ------------------------------------
<S> <C> <C>
Shares sold......................... 15,791,915 $158,817,765
Shares reacquired................... (642,501) (6,531,020)
---------- ------------
Net increase in shares
outstanding....................... 15,149,414 $152,286,745
---------- ------------
---------- ------------
<CAPTION>
Class C
- ------------------------------------
<S> <C> <C>
Shares sold......................... 1,293,658 $ 12,985,117
Shares reacquired................... (70,831) (718,508)
---------- ------------
Net increase in shares
outstanding....................... 1,222,827 $ 12,266,609
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
- -----8
<PAGE>
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL JENNISON FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class C
----------- ----------- -----------
<S>
<C> <C> <C>
November 2, November 2, November 2,
1995(a) 1995(a) 1995(a)
Through Through Through
March 31, March 31, March 31,
1996 1996 1996
----------- ----------- -----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period................................................. $ 10.00 $
10.00 $ 10.00
----------- ----------- -----------
Income from investment operations
Net investment
loss..................................................................
- -- (.03) (.03)
Net realized and unrealized gain on investment
transactions.......................... .39 .39
.39
----------- ----------- -----------
Total from investment
operations.................................................. .39
.36 .36
----------- ----------- -----------
Net asset value, end of
period....................................................... $ 10.39
$ 10.36 $ 10.36
----------- ----------- -----------
----------- ----------- -----------
TOTAL
RETURN(c)......................................................................
3.90% 3.60% 3.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000)...................................................... $71,303
$ 156,909 $12,697
Average net assets
(000)............................................................. $60,165
$ 120,106 $10,468
Ratios to average net assets(b):
Expenses, including distribution
fees............................................. 1.18% 1.93%
1.93%
Expenses, excluding distribution
fees............................................. .93% .93%
.93%
Net investment
loss...............................................................
(.09)% (.84)% (.84)%
Portfolio turnover
rate.............................................................. 19%
19% 19%
Average commission rate paid per
share............................................... $ .0595 $
.0595 $ .0595
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions.
Total returns for periods of less than a full year are not annualized.
- --------------------------------------------------------------------------------
9 -----
<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. 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. 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 is fairly presented 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
Change Your Mind.
You can exchange your shares in most Prudential Mutual Funds for shares in most
other Prudential Mutual Funds, without charges. This may be most helpful if your
investment needs change.
Reinvest Dividends Free Of Charge.
Reinvest your dividends and/or capital gains distributions automatically --
without charge.
Invest For Retirement.
There is no minimum investment for an IRA. Plus, you defer taxes on your
investment earnings by investing in an IRA.
If you'd like, you can contribute up to $2,000 a year in an IRA. If you are
married, you and your spouse (if not working outside the home) can contribute
up to $2,250 a year. (Withdrawals are taxed as ordinary income and may be
subject to a 10% penalty prior to age 59 1/2.)
Change Your Job.
You can take your pension with you. Use a rollover IRA to manage your
company-sponsored retirement plan while retaining the special tax-deferred
advantages.
Invest In Your Children.
There's no fee to open a custodial account for a child's education or other
needs.
Take Income.
Would you like to receive monthly or quarterly checks in any amount from your
fund account? Just let us know. We'll take care of it. Of course, there are
minimum amounts. And shares redeemed may be subject to tax, and Class B and C
shares may be subject to contingent deferred sales charges. We'll gladly
answer your questions.
Keep Informed.
We want to keep you up-to-date. Of course, you receive account activity
statements every quarter. But you also receive annual and semi-annual fund
reports, as well as other important updates on events that affect your
investments, including tax information.
This material is only authorized for distribution when preceded or accompanied
by a current prospectus. Read the prospectus carefully before you invest or send
money.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
(800) 225-1852
http:\\www.prudential.com
Directors
Thomas R. Anderson
Eugene C. Dorsey
Richard A. Redeker
Robin B. Smith
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Eugene S. Stark, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Ellyn C. Acker, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
Jennison Associates Capital Corp.
466 Lexington Avenue
New York, NY 10017
Distributor
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 Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, NY 10022
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, 1996 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>
<PAGE>
(LOGO)
BULK RATE
Prudential Mutual Funds U.S. POSTAGE
One Seaport Plaza PAID
New York, NY 10292 Permit 6807
(800) 225-1852 New York, NY
74437E107
74437E206 MF168E2
74437E305 Cat# 42M155P
74437E404
