(ICON)
Prudential
Jennison
Growth
Fund
ANNUAL
REPORT
Sept. 30, 1996
(LOGO)
<PAGE>
Prudential Jennison Growth Fund
A Series of the Prudential Jennison Series Fund, Inc.
Performance At A Glance.
While U.S. stock indexes pushed on to record highs during
the past 11 months,
not all stocks participated. In fact, many stocks,
particularly technology
stocks, fluctuated sharply last winter and again this
summer. The Prudential
Jennison Growth Fund's significant technology holdings got
caught in these
market downturns, and as a result the Fund substantially
lagged the performance
of the average growth fund, as measured by Lipper Analytical
Services. The Fund
holds about one-third of its assets in the technology
sector, nearly three
times as much as the market (as measured by the S&P 500) as
a whole.
<TABLE>
<CAPTION>
Cumulative Total Returns1
As of 9/30/96
Since
Inception2
<S> <C>
Class A 9.70%
Class B 8.90
Class C 8.90
Class Z 6.40
Lipper Growth Fund Avg3 15.7
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be
worth more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper
Analytical Services. The
cumulative total returns do not take into account sales
charges. No average
annual total returns are shown because the Fund has been in
operation for less
than one year. The Fund charges a maximum front-end sales
load of 5% for Class
A shares and a declining contingent deferred sales charge
(CDSC) of 5%, 4%, 3%,
2%, 1% and 1% for six years, for Class B shares. Class C
shares have a 1% CDSC
for one year. Class B shares will automatically convert to
Class A shares on a
quarterly basis, after approximately seven years. Class Z
shares are not
subject to a sales charge or a distribution fee.
2Inception dates: 11/2/95 for Class A, Class B and Class C
shares; 4/15/96 for
Class Z shares.
3Lipper average returns are for 649 funds since inception of
the Class A, Class
B and Class C shares on 11/2/95.
4On September 20, 1996, the assets and liabilities of The
Prudential
Institutional Fund -- Growth Stock Fund (Growth Stock Fund)
were transferred to
the Prudential Jennison Growth Fund in exchange solely for
Class Z shares of
the Fund. The investment objective and policies of the
Growth Stock Fund were
substantially similar to those of the Prudential Jennison
Growth Fund and both
funds had the same investment adviser. Accordingly, we are
showing the Growth
Stock Fund's performance since commencement of investment
operations (November
5, 1992) through September 20, 1996, for your information.
Past performance of
the Growth Stock Fund is not indicative of future results of
the Fund.
<TABLE>
<CAPTION>
Growth Stock Fund Cumulative and Average Annual
Total Returns
All Data As Of 9/20/96 10/1/95
10/1/93
to 9/20/96 to
9/20/96 Since Inception
Cum* Avg* Cum*
Avg* Cum* Avg*
<S> <C> <C> <C>
<C> <C> <C>
Growth Stock Fund 12.0% 12.3% 50.7%
14.8% 82.6% 16.8%
Lipper Growth Fund Avg** 13.9 N/A 50.2
N/A 71.4 N/A
</TABLE>
* Source: Prudential Retirement Services and Lipper
Analytical Services. The
Growth Stock Fund did not charge a sales load.
**Lipper average returns are for 623 funds for one year, 400
funds for three
years and 307 funds since inception of the Growth Stock
Fund (November 5,
1992).
How Investments Compared.
(As of 9/30/96)
(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. 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 historically
have been 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.
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.
<PAGE>
David Poiesz, Fund Manager
Peter Reinemann, Associate Fund Manager
Portfolio
Managers' (PICTURE)
(PICTURE)
Report
The Prudential Jennison Growth Fund invests primarily in
stocks of medium and
large companies (those with a total market value of at least
$1 billion) with
above-average growth prospects. The Fund may also invest in
stocks of foreign
companies, investment grade bonds, and securities issued or
backed by the U.S.
government and its agencies, such as mortgage backed
securities. There can be
no assurance that the Fund will reach its investment
objective.
Overview.
There are two major schools of investing: growth, where
accelerating revenues
and profits are more important than low stock prices, and
value, where buying
a company's stock at a low price is more important. We're
growth investors, and
we're pleased to report that growth has performed better
than value in 1995 and
this year, as measured by Lipper Analytical Services.
Strategy Session.
We look for companies with above-average returns on equity
and assets, growth
in sales and/or earnings, or other fundamental strengths.
When researching a
company, we carefully examine the quality of its management
and new products.
We especially like companies whose products or services fill
a unique need.
Companies that met our requirements during the past 11
months included Boeing,
SmithKline Beecham and Pfizer. Boeing, a market leader in
commercial aircraft
production, benefited from a rebounding airline industry.
SmithKline and Pfizer,
two pharmaceutical companies, profited from higher demand
for their drugs from
Health Maintenance Organizations, which continue to reshape
the healthcare
industry. All three companies were among our top
performers.
From its inception, the Fund has invested substantially in
technology, which
includes many of the fastest growing companies today.
However, reward does not
come without risk. Investors must carefully weigh the
prospects of high returns
against the possibility of disappointments.
We must confess that technology shares have tried our
patience during the
past 11 months. They've twice declined significantly only to
surge late this
summer. But we firmly believe that if we are going to invest
in growth, we have
to remain long-term investors in technology. This sector
holds some of the
fastest growing companies in the world -- household names
like Microsoft and
Intel, with long track records of superior financial
performance through
technological innovation. This is clearly where the growth
is. Unfortunately,
growth does not always follow a straight line.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 9/30/96.
(CHART)
<PAGE>
What Went Well.
Growth Stocks Ruled.
Many of the growth stocks we invested in make products that
are household names,
including
- - NIKE: This stock rose 47% over the last six months, as
revenues of this maker
of athletic shoes and sport apparel climbed dramatically.
- - Gillette and Duracell Int'l.: These stocks rose 49% and
22%, respectively,
over the past 11 months, as the maker of personal care
products agreed in
September to acquire the battery producer.
- - Coca-Cola: It rose 39% during the time we held it. When
the risks of holding
it outweighed the likelihood of higher profits, we decided
to sell.
Technology Was Hot. . .
Technology stocks have been some of the strongest performers
in the market in
recent years. These stocks led all other sectors in 1995 and
again this year
through September 30. This is what they have done for us:
- - Computer Associates Int'l.: This computer software
company stock rose 61%
over the past 11 months.
- - Cisco Systems: This leading networking company stock,
which designs systems
to link computers, rose 53% in the past 11 months.
- - Dell Computer: This mail-order computer manufacturer
stock rose 60% during
the time we held it.
Five Largest Holdings.
3.8% Intel
Electronic Components
2.9% Boeing
Aerospace/Defense
2.9% Cisco Systems
Networking
2.7% Computer Associates Int'l.
EDP Software & Svcs.
2.6% 3Com
Networking
Expressed as a percentage of total net assets as of
9/30/96.
And Not So Well.
Sometimes, Too Hot.
While technology stocks offer the highest rewards in the
marketplace, they also
can pose significant risks. During 1995's fourth quarter,
some semiconductor
stocks lost all of their 1995 gains as concerns of a supply
glut and falling
prices rattled investors. Until July, we thought we had
overcome the setbacks
we sustained in late 1995. Technology stocks had generally
risen 20% to 30%
above their lowest prices. Then technology stocks dropped by
more than 15% in
July from their earlier 1996 gains before recovering.
Amid all this turbulence, some of our holdings did not
perform as well as we had
hoped. Most of these were semiconductor industry stocks:
- - LSI Logic: The stock of this leading supplier of high
performance
semiconductors fell by 50% over the last 11 months as demand
for its products
fell.
- - KLA Instruments: The stock price of this maker of
semiconductor manufacturing
equipment was off 48% over the past year as manufacturers
delayed plans to step
up capacity.
- - Intuit: The stock price of this maker of financial
software, including the
popular Quicken, fell by 62% over the last 11 months, as a
result of sluggish
growth and startup costs for bill payment systems.
Looking Ahead.
Most major stock indexes have continued to set all-time
highs this year. This
bull market is now more than five years old. It can continue
to run if interest
rates and inflation remain stable and the economy continues
to grow at a
moderate pace. But one question remains: can corporate
earnings continue to
grow as fast as they have? We're more cautious than we were
earlier in the year,
and are being more selective. But given the right economic
conditions, we
believe stocks can continue to go higher.
1
<PAGE>
President's Letter
November 1, 1996
(PICTURE)
Dear Shareholder:
Last year, U.S. 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 $66 billion was
invested in the
following three months, although this rapid inflow subsided
somewhat in late
spring.
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.
Changes at Prudential.
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 "Prudential Investments." 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 September 30, 1996 PRUDENTIAL JENNISON GROWTH FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--99.1%
COMMON STOCKS--99.1%
- ------------------------------------------------------------
Aerospace/Defense--2.9%
215,900 Boeing Co. $
20,402,550
- ------------------------------------------------------------
Airlines--1.5%
144,300 Delta Airlines, Inc.
10,389,600
- ------------------------------------------------------------
Apparel--1.4%
78,700 NIKE, Inc., Class B
9,562,050
- ------------------------------------------------------------
Banks & Financial Services--1.6%
135,200 Chase Manhattan Corp.
10,832,900
- ------------------------------------------------------------
Beverages--1.2%
285,300 PepsiCo, Inc.
8,059,725
- ------------------------------------------------------------
Biotechnology--0.6%
219,232 Chiron Corp. (a)
4,165,408
- ------------------------------------------------------------
Business Services--8.8%
323,250 CUC International, Inc. (a)
12,889,594
377,600 Eagle River Interactive, Inc. (a)
3,870,400
127,033 First Data Corp.
10,369,068
235,000 Manpower, Inc.
7,813,750
263,600 Omnicom Group
12,323,300
199,000 Reuters Holdings PLC (ADR) (United
Kingdom)
13,780,750
---------
- ---
61,046,862
- ------------------------------------------------------------
Cellular Communications--0.9%
186,800 Vodafone Group PLC (ADR) (United
Kingdom)
6,374,550
- ------------------------------------------------------------
Computer Systems/Peripherals--4.8%
119,300 Dell Computer Corp. (a)
9,275,575
311,000 Hewlett-Packard Co. $
15,161,250
160,000 Seagate Technology, Inc. (a)
8,940,000
---------
- ---
33,376,825
- ------------------------------------------------------------
EDP Software & Services--11.0%
245,600 America Online, Inc. (a)
8,749,500
315,325 Computer Associates International,
Inc.
18,840,669
162,200 Electronic Data Systems Corp.,
(New)
9,955,025
199,700 Intuit, Inc. (a)
6,290,550
290,400 Macromedia, Inc. (a)
6,025,800
127,800 Microsoft Corp. (a)
16,853,625
174,400 SAP AG (ADR) (Germany)
9,897,200
---------
- ---
76,612,369
- ------------------------------------------------------------
Electrical Equipment--1.3%
256,700 Picturetel Corp. (a)
9,048,675
- ------------------------------------------------------------
Financial Companies--0.5%
96,500 Federal National Mortgage Assn.
3,365,438
- ------------------------------------------------------------
Health Care Services--3.4%
267,900 Healthsouth Corp. (a)
10,280,663
345,200 PhyCor, Inc. (a)
13,139,175
---------
- ---
23,419,838
- ------------------------------------------------------------
Household & Personal Care Products--4.2%
245,400 Gillette Co.
17,699,475
126,100 Kimberly-Clark Corp.
11,112,563
---------
- ---
28,812,038
- ------------------------------------------------------------
Hotels--2.0%
497,200 Hilton Hotels Corp.
14,108,050
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
3 -----
<PAGE>
Portfolio of Investments
as of September 30, 1996 PRUDENTIAL JENNISON GROWTH FUND
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Industrial Technology/Instruments--2.1%
204,100 KLA Instruments Corp. (a) $
4,592,250
220,200 Symbol Technologies, Inc. (a)
10,129,200
---------
- ---
14,721,450
- ------------------------------------------------------------
Insurance--5.0%
80,600 CIGNA Corp.
9,661,925
181,900 MGIC Investment Corp.
12,255,512
260,432 Mutual Risk Management, Ltd.
7,552,528
84,500 UNUM Corp.
5,418,563
---------
- ---
34,888,528
- ------------------------------------------------------------
Machinery--1.0%
187,000 Harnischfeger Industries, Inc.
7,059,250
- ------------------------------------------------------------
Media--4.8%
118,000 Clear Channel Communications, Inc.
(a)
10,443,000
252,200 Disney (Walt) Co.
15,983,175
219,350 Infinity Broadcasting Corp., Class
A (a)
6,909,525
---------
- ---
33,335,700
- ------------------------------------------------------------
Networking--6.8%
301,800 3Com Corp. (a)
18,126,862
130,300 Ascend Communications, Inc. (a)
8,616,088
327,600 Cisco Systems, Inc. (a)
20,331,675
---------
- ---
47,074,625
- ------------------------------------------------------------
Oil Services--1.3%
111,700 Schlumberger, Ltd.
9,438,650
- ------------------------------------------------------------
Pharmaceuticals--10.0%
101,400 Astra AB (Sweden)
4,285,261
82,600 Astra AB Class A (ADR) (Sweden)
3,484,688
80,800 Ciba-Geigy AG (ADR) (Switzerland)
5,140,900
4,190 Ciba-Geigy AG (Switzerland)
5,358,176
252,100 Johnson & Johnson Co.
12,920,125
162,900 Lilly (Eli) & Co.
10,507,050
181,200 Pfizer, Inc. $
14,337,450
220,500 SmithKline Beecham PLC (ADR)
(United Kingdom)
13,422,937
---------
- ---
69,456,587
- ------------------------------------------------------------
Publishing--1.5%
144,000 Scholastic Corp. (a)
10,440,000
- ------------------------------------------------------------
Restaurants--1.1%
249,000 Lone Star Steakhouse & Saloon, Inc.
(a)
7,578,938
- ------------------------------------------------------------
Retail--9.2%
373,700 AutoZone, Inc. (a)
10,837,300
267,200 Corporate Express, Inc.
10,387,400
182,500 Gap, Inc.
5,269,687
245,633 Home Depot, Inc.
13,970,377
278,400 Kohl's Corp.
10,022,400
163,400 Saks Holdings, Inc.
5,719,000
482,400 Sunglass Hut Int'l., Inc. (a)
7,688,250
---------
- ---
63,894,414
- ------------------------------------------------------------
Electronic Components--5.4%
279,800 Intel Corp.
26,703,412
223,700 International Rectifier Corp. (a)
3,103,838
341,600 LSI Logic Corp.(a)
7,942,200
---------
- ---
37,749,450
- ------------------------------------------------------------
Telecommunications Equipment--4.5%
355,900 Ericsson (L.M.) Telephone Co., Inc.
(ADR) (Sweden)
9,030,962
216,800 Nokia Corp. (ADR) (Finland)
9,593,400
178,400 Tellabs, Inc.(a)
12,599,500
---------
- ---
31,223,862
- ------------------------------------------------------------
Telephones--0.3%
76,800 MCI Communications Corp.
1,968,000
---------
- ---
Total long-term investments
(cost $579,362,421)
688,406,332
- ------------------------------------------------------------
- --------------------
- -----4 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL JENNISON GROWTH FUND
Portfolio of Investments as of September 30, 1996
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value
(Note 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--1.0%
Commercial Paper--1.0%
P1 $ 6,602 Ford Motor Credit Co.,
5.36%, 10/1/96
(cost $6,602,000) $
6,602,000
U.S. Government Security
United States Treasury
Bill
135 5.14%, 12/26/96
(cost $133,342)
133,342
-----
- -------
Total short-term
investments
(cost $6,735,342)
6,735,342
-----
- -------
- ------------------------------------------------------------
Total Investments--100.1%
(cost $586,097,763; Note
4)
695,141,674
Liabilities in excess
of other assets--(0.1%)
(464,318)
-----
- -------
Net Assets--100%
$694,677,356
-----
- -------
-----
- -------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
5 -----
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<S>
<C>
Assets
September 30, 1996
Investments, at value (cost
$586,097,763)...............................................
................ $695,141,674
Cash........................................................
............................................
453,117
Receivable for investments
sold........................................................
................. 5,671,677
Receivable for Fund shares
sold........................................................
................. 3,372,066
Dividends and interest
receivable..................................................
..................... 370,243
Deferred expenses and other
assets......................................................
................ 187,623
- ------------------
Total
assets......................................................
................................... 705,196,400
- ------------------
Liabilities
Payable for investments
purchased...................................................
.................... 6,147,013
Payable for Fund shares
reacquired..................................................
.................... 3,222,198
Accrued expenses and other
liabilities.................................................
................. 592,921
Management fee
payable.....................................................
............................. 346,672
Distribution fees
payable.....................................................
.......................... 210,240
- ------------------
Total
liabilities.................................................
................................... 10,519,044
- ------------------
Net
Assets......................................................
........................................
$694,677,356
- ------------------
- ------------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................ $ 63,469
Paid-in capital in excess of
par.........................................................
............ 594,746,508
- ------------------
594,809,977
Accumulated net realized loss on
investments.................................................
........ (9,176,492)
Net unrealized appreciation on
investments.................................................
.......... 109,043,871
- ------------------
Net assets, September 30,
1996........................................................
.................. $694,677,356
- ------------------
- ------------------
Class A:
Net asset value and redemption price per share
($85,439,568 / 7,790,185 shares of common stock issued
and outstanding)...........................
$10.97
Maximum sales charge (5.0% of offering
price)......................................................
.. .58
- ------------------
Maximum offering price to
public......................................................
............... $11.55
- ------------------
- ------------------
Class B:
Net asset value, offering price and redemption price per
share
($231,541,269 / 21,258,423 shares of common stock
issued and outstanding).........................
$10.89
- ------------------
- ------------------
Class C:
Net asset value, offering price and redemption price per
share
($15,280,552 / 1,402,944 shares of common stock issued
and outstanding............................
$10.89
- ------------------
- ------------------
Class Z:
Net asset value, offering price and redemption price per
share
($362,415,967 / 33,017,749 shares of common stock
issued and outstanding..........................
$10.98
- ------------------
- ------------------
</TABLE>
- ------------------------------------------------------------
- --------------------
- -----6 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL JENNISON GROWTH FUND
JENNISON GROWTH FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
November 2,
1995(a)
Through
Net Investment Income September 30, 1996
<S> <C>
Income
Dividends (net of foreign
witholding taxes of $54,311).... $ 1,662,651
Interest........................... 480,129
-------------------
- --
Total income.................... 2,142,780
-------------------
- --
Expenses
Distribution fee--Class A.......... 161,221
Distribution fee--Class B.......... 1,482,118
Distribution fee--Class C.......... 114,523
Management fee..................... 1,418,805
Transfer agent's fees and
expenses........................ 377,000
Registration fees.................. 245,000
Reports to shareholders............ 140,000
Custodian's fees and expenses...... 112,000
Amortization of deferred
organization expense............ 44,589
Legal fees and expenses............ 42,000
Audit fees and expenses............ 25,000
Directors' fees.................... 22,500
Miscellaneous...................... 4,861
-------------------
- --
Total expenses.................. 4,189,617
-------------------
- --
Net investment loss................... (2,046,837)
-------------------
- --
Realized and Unrealized Gain (Loss)
on Investments
Net realized loss on investment
transactions....................... (9,176,492)
Net unrealized appreciation of
investments........................ 36,196,257
-------------------
- --
Net gain on investments............... 27,019,765
-------------------
- --
Net Increase in Net Assets Resulting
from Operations....................... $ 24,972,928
-------------------
- --
-------------------
- --
- ---------------
</TABLE>
(a) Commencement of investment operations.
PRUDENTIAL JENNISON GROWTH FUND
JENNISON GROWTH FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
November 2,
1995(a)
Increase (Decrease) Through
in Net Assets September 30, 1996
<S> <C>
Operations
Net investment loss................ $ (2,046,837)
Net realized loss on investment
transactions.................... (9,176,492)
Net unrealized appreciation on
investments..................... 36,196,257
-------------------
- --
Net increase in net assets
resulting from operations....... 24,972,928
-------------------
- --
Fund share transactions (net of share
conversion) (Note 5)
Net proceeds from shares sold...... 819,026,956
Cost of shares reacquired.......... (149,422,528)
-------------------
- --
Net increase in net assets from
Fund share transactions......... 669,604,428
-------------------
- --
Total increase........................ 694,577,356
Net Assets
Beginning of period................... 100,000
-------------------
- --
End of period......................... $ 694,677,356
-------------------
- --
-------------------
- --
</TABLE>
- ---------------
(a) Commencement of investment operations.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
7 -----
<PAGE>
Notes to Financial Statements PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Prudential Jennison Growth Fund (the ``Series'') is a
separately managed series
of Prudential Jennison Series Fund, Inc., formerly
Prudential Jennison Fund,
Inc. (the ``Fund''). The Fund was incorporated in Maryland
on August 10, 1995
and is registered under the Investment Company Act of 1940
as a diversified,
open-end management investment company. The Series 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 LLC. (``PMF''). Investment
operations
commenced on November 2, 1995.
The Series' 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
Series 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 Series 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.
Reclassification of Capital Accounts: The Series accounts
and reports for
distributions to shareholders in accordance with the
American Institute of
Certified Public Accountants' Statement of Position 93-2:
Determination,
Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and
Return of Capital Distributions by Investment Companies.
During the period ended
September 30, 1996, the Series reclassified current net
operating losses by
decreasing accumulated net investment loss and decreasing
paid-in capital by
$2,046,837. Net investment income, net realized gains, and
net assets were not
affected by this change.
Taxes: It is the Series' 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.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Series' understanding of the applicable country's tax
rules and rates.
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
Series commenced investment operations.
- ------------------------------------------------------------
- --------------------
- -----8
<PAGE>
Notes to Financial Statements PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Note 2. Agreements
The Fund has a management agreement with PMF. Pursuant to a
subadvisory
agreement between PMF and Jennison Associates Capital Corp.
(``Jennison''),
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 Series in
accordance with its investment objectives, and policies.
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 Series. PMF pays
Jennison a subadvisory fee at an annual rate of .30 of 1% of
the average daily
net assets of the Series up to and including $300 million
and .25 of 1% of such
assets in excess of $300 million. PMF also pays the cost of
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 ended September 30, 1996. With respect to the
Class B and Class C
Plans, the Fund compensates PSI for its distribution-related
costs at an annual
rate of 1% of the average daily net assets.
PSI has advised the Series that it has received
approximately $909,000 in
front-end sales charges resulting from sales of Class A
shares during the period
ended September 30, 1996. From these fees, PSI paid such
sales charges to
affiliated broker-dealers, which in turn paid commissions to
salespersons and
incurred other distribution costs.
PSI has advised the Series that for the period ended
September 30, 1996, it
received approximately $350,000 and $10,000 in contingent
deferred sales charges
imposed upon certain redemptions by Class B and C
shareholders, respectively.
PMF, Jennison and PSI are wholly-owned subsidiaries of The
Prudential Insurance
Company of America.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-
owned subsidiary of
PMF, serves as the Fund's transfer agent. During the period
ended September 30,
1996, the Fund incurred fees of approximately $312,000 for
the services of PMFS.
As of September 30, 1996, approximately $41,000 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 September 30, 1996 were $441,740,023
and $121,903,591,
respectively.
The federal income tax cost basis of the Fund's investments
at September 30,
1996, was $589,584,288 and, accordingly, net unrealized
appreciation of
investments for federal income tax purposes was $105,557,386
(gross unrealized
appreciation-$127,649,114; gross unrealized depreciation--
$22,091,728).
The Fund will elect to treat net capital losses of
approximately $6,706,000
incurred in the eleven month period ended September 30, 1996
as having been
incurred in the following year.
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B
shares are sold with a
contingent deferred sales charge which declines from 5% to
zero depending on the
period of time the shares are held. Class 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. Class C shares
are sold with a
contingent deferred sales charge of 1% during the first
year. Effective April
15, 1996 the Fund commenced offering Class Z shares. Class Z
shares are not
subject to any sales or redemption charge and are offered
for sale to specific
categories of investors.
There are 2.5 billion shares of $.001 par value common stock
authorized which
are 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.
- ------------------------------------------------------------
- --------------------
9 -----
<PAGE>
Notes to Financial Statements PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Transactions in shares of common stock for the period
November 2, 1995
(commencement of investment operations) through September
30, 1996 were as
follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Shares sold........................ 18,039,463 $
185,913,237
Shares reacquired.................. (10,367,758)
(108,741,785)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 7,671,705
77,171,452
Shares issued upon conversion from
Class B.......................... 115,146
1,214,220
----------- ---------
- ----
Net increase in shares
outstanding...................... 7,786,851 $
78,385,672
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class B
- -----------------------------------
Shares sold........................ 23,516,319 $
240,060,319
Shares reacquired.................. (2,146,698)
(22,165,141)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 21,369,621
217,895,178
Shares reacquired upon conversion
into Class A..................... (114,531)
(1,214,220)
----------- ---------
- ----
Net increase in shares
outstanding...................... 21,255,090 $
216,680,958
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class C
- -----------------------------------
Shares sold........................ 1,610,012 $
16,355,793
Shares reacquired.................. (210,401)
(2,163,259)
----------- ---------
- ----
Net increase in shares
outstanding...................... 1,399,611 $
14,192,534
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class Z
- -----------------------------------
April 15, 1996(a) through
September 30, 1996
Shares sold........................ 2,971,624 $
32,570,435
Shares issued due to merger (Note
6)............................... 31,510,396
344,127,172
Shares reacquired.................. (1,464,271)
(16,352,343)
----------- ---------
- ----
Net increase in shares
outstanding...................... 33,017,749 $
360,345,264
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
(a) Commencement of offering of Class Z shares.
Of the shares outstanding at September 30, 1996, PMF and
affiliates owned
5,633,139 shares of the Fund.
- ------------------------------------------------------------
Note 6. Acquisition of The Prudential Institutional Fund--
Growth Stock Fund
On September 20, 1996, the Fund acquired all of the net
assets of The Prudential
Institutional Fund--Growth Stock Fund (``Growth Stock
Fund'') in exchange for
Class Z shares of the Fund pursuant to a plan of
reorganization approved by
Growth Stock Fund shareholders on September 6, 1996. The
acquisition was
accomplished by a tax-free exchange of 31,510,396 Class Z
shares of the Fund
(valued at $344,127,172 in the aggregate) for 19,673,729
shares of Growth Stock
Fund outstanding on September 20, 1996. The aggregate net
assets of the Fund and
Growth Stock immediately before the acquisition were
$347,516,537 and
$344,127,172 (including $72,847,614 of net unrealized
appreciation for the
Growth Stock Fund), respectively, thereby resulting in
combined net assets of
$691,643,709 immediately after the reorganization.
- ------------------------------------------------------------
- --------------------
- -----10
<PAGE>
Financial Highlights PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
<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
September 30, September 30, September 30,
1996(d) 1996(d) 1996(d)
- ------------- ------------- -------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................... $ 10.00
$ 10.00 $ 10.00
- ------ ------
- -------------
Income from investment operations
Net investment
loss................................................
(.03) (.10) (.10)
Net realized and unrealized gain on investment
transactions........ 1.00 .99
.99
- ------ ------
- -------------
Total from investment
operations................................ .97
.89 .89
- ------ ------
- -------------
Net asset value, end of
period..................................... $ 10.97
$ 10.89 $ 10.89
- ------ ------
- ------ ------
- -------------
- -------------
TOTAL
RETURN(c)...................................................
. 9.70% 8.90% 8.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000).................................... $85,440
$ 231,541 $15,281
Average net assets
(000)...........................................
$70,667 $ 162,412 $12,550
Ratios to average net assets(b):
Expenses, including distribution
fees........................... 1.23%
1.98% 1.98%
Expenses, excluding distribution
fees........................... .98%
.98% .98%
Net investment
loss.............................................
(.37)% (1.12)% (1.12)%
Portfolio turnover
rate............................................
42% 42% 42%
Average commission rate paid per
share............................. $ .0611
$ .0611 $ .0611
<CAPTION>
Class Z
- -------------
<S>
<C>
April 15,
1996(a)
Through
September 30,
1996(d)
- -------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................... $ 10.32
- -------------
Income from investment operations
Net investment
loss................................................
(.02)
Net realized and unrealized gain on investment
transactions........ .68
- -------------
Total from investment
operations................................ .66
- -------------
Net asset value, end of
period..................................... $ 10.98
- -------------
- -------------
TOTAL
RETURN(c)...................................................
. 6.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000).................................... $ 362,416
Average net assets
(000)........................................... $
26,829
Ratios to average net assets(b):
Expenses, including distribution
fees........................... .98%
Expenses, excluding distribution
fees........................... .98%
Net investment
loss.............................................
(.12)%
Portfolio turnover
rate............................................
42%
Average commission rate paid per
share............................. $ .0611
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of less than a
full year are not
annualized.
(d) Calculated based upon weighted average shares
outstanding during the period.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
11 -----
<PAGE>
Independent Auditors' Report PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
The Shareholders and Board of Directors
Prudential Jennison Growth Fund
We have audited the accompanying statement of assets and
liabilities, including
the portfolio of investments, of Prudential Jennison Growth
Fund as of September
30, 1996, the related statements of operations and of
changes in net assets, and
the financial highlights for the period November 2, 1995
(commencement of
investment operations) to September 30, 1996. These
financial statements and
financial highlights are the responsibility of the Fund's
management. Our
responsibility is to express an opinion on these financial
statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards.
Those standards require that we plan and perform the audit
to obtain reasonable
assurance about whether the financial statements and
financial highlights are
free of material misstatement. An audit includes examining,
on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. Our
procedures included confirmation of securities owned at
September 30, 1996 by
correspondence with the custodian and brokers; where replies
were not received
from brokers, we performed other auditing procedures. An
audit also includes
assessing the accounting principles used and significant
estimates made by
management, as well as evaluating the overall financial
statement presentation.
We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, such financial statements and financial
highlights present
fairly, in all material respects, the financial position of
Prudential Jennison
Growth Fund as of September 30, 1996, the results of its
operations, the changes
in its net assets and its financial highlights for the
respective stated period,
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
November 4, 1996
- ------------------------------------------------------------
- --------------------
- -----12
<PAGE>
Comparing A $10,000 Investment. // Prudential
Jennison Growth Fund
Prudential Jennison Growth Fund vs. -- S&P 500
Index
the S&P 500 Index.
Past performance is not indicative of future results.
Investment return and
principal value will fluctuate so an investor's shares, when
redeemed, will be
worth more or less than their original cost.
(CHART) CLASS A
(CHART) CLASS B
These graphs are furnished to you in accordance with SEC
regulations. They
compare a $10,000 investment in the Prudential Jennison
Growth Fund (Class A,
Class B, Class C and Class Z) with a similar investment in
the S&P 500 Index
(the Index) by portraying the initial account values at the
commencement of
operations of each class, and subsequent account values at
the end of this
reporting period (Sept. 30), as measured on a quarterly
basis, beginning in
1995 for Class A, Class B and Class C shares; and in 1996
for Class Z shares.
For purposes of the graphs, and unless otherwise indicated,
in the accompanying
tables it has been assumed (a) that the maximum applicable
front-end sales
charge was deducted from the initial $10,000 investment in
Class A shares; (b)
the maximum applicable contingent deferred sales charge was
deducted from the
value of the investment in Class B and Class C shares,
assuming full redemption
on Sept. 30, 1996; (c) all recurring fees (including
management fees) were
deducted; and (d) all dividends and distributions were
reinvested. Class B
shares will automatically convert to Class A shares, on a
quarterly basis,
beginning approximately seven years after purchase. This
conversion feature is
not reflected in the graph. Class Z shares are not subject
to a sales charge or
a distribution fee.
(CHART) CLASS C
(CHART) CLASS Z
The S&P 500 is a capital-weighted index, representing the
aggregate market value
of the common equity of 500 stocks primarily traded on the
New York Stock
Exchange. The S&P 500 is an unmanaged index and includes the
reinvestment of
all dividends, but does not reflect the payment of
transaction costs and
advisory fees associated with an investment in the Fund. The
securities in the
S&P 500 may differ substantially from the securities in the
Fund. The S&P 500
is not the only index that may be used to characterize
performance of stock
funds and other indexes may portray different comparative
performance.
<PAGE>
Prudential Mutual Funds
Gateway Center Three 100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852 http:\\www.prudential.com
(LOGO)
Directors
Edward D. Beach
Delayne D. Gold
Robert F. Gunia
Donald D. Lennox
Douglas H. McCorkindale
Mendel A. Melzer
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
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. Vogin, Assistant Secretary
Manager
Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street Newark, NJ 07102-4077
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.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
74437E107 MF168E
74437E206 Cat. #42M154R
74437E305
74437E404
