0001193125-17-181303.txt : 20170524 0001193125-17-181303.hdr.sgml : 20170524 20170524143107 ACCESSION NUMBER: 0001193125-17-181303 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170524 DATE AS OF CHANGE: 20170524 EFFECTIVENESS DATE: 20170524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL JENNISON SMALL CO FUND, INC. CENTRAL INDEX KEY: 0000318531 IRS NUMBER: 133040042 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03084 FILM NUMBER: 17866344 BUSINESS ADDRESS: STREET 1: 655 BROAD STREET STREET 2: 17TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 9738026469 MAIL ADDRESS: STREET 1: 655 BROAD STREET STREET 2: 17TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 FORMER COMPANY: FORMER CONFORMED NAME: JENNISON SMALL CO FUND, INC. DATE OF NAME CHANGE: 20070801 FORMER COMPANY: FORMER CONFORMED NAME: JENNISON SMALL CO FUND INC DATE OF NAME CHANGE: 20030716 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL SMALL CO FUND INC DATE OF NAME CHANGE: 20000926 0000318531 S000004629 PRUDENTIAL JENNISON SMALL COMPANY FUND, INC. C000012606 Class A PGOAX C000012607 Class B CHNDX C000012608 Class C PSCCX C000012609 Class Z PSCZX C000012610 Class R JSCRX C000093652 Class Q PJSQX N-CSRS 1 d357566dncsrs.htm PRUDENTIAL JENNISON SMALL COMPANY FUND, INC. Prudential Jennison Small Company Fund, Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number:    811-03084
Exact name of registrant as specified in charter:    Prudential Jennison Small Company Fund, Inc.
Address of principal executive offices:    655 Broad Street, 17th Floor
   Newark, New Jersey 07102
Name and address of agent for service:    Deborah A. Docs
   655 Broad Street, 17th Floor
   Newark, New Jersey 07102
Registrant’s telephone number, including area code:    800-225-1852
Date of fiscal year end:    9/30/2017
Date of reporting period:    3/31/2017

 

 

 


Item 1 – Reports to Stockholders – [INSERT REPORT]


LOGO

 

PRUDENTIAL JENNISON SMALL COMPANY FUND, INC.

 

 

SEMIANNUAL REPORT

MARCH 31, 2017

 

LOGO

 

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Objective: Capital growth

 

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

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, 2017 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. ® 2017 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

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Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for the Prudential Jennison Small Company Fund informative and useful. The report covers performance for the six-month period ended March 31, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with

the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.

 

Since market conditions change over time, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. We’re part of PGIM, the 9th-largest global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

Prudential Jennison Small Company Fund, Inc.

May 15, 2017

 

Prudential Jennison Small Company Fund, Inc.     3  


Your Fund’s Performance (unaudited)

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

   

Total Returns  as of 3/31/17

(without Sales Charges)

  Average Annual Total Returns as of 3/31/17
(with Sales Charges)
   

Six Months* (%)

  One Year  (%)   Five Years  (%)   Ten Years  (%)   Since Inception (%)
Class A   11.99   13.12   10.07   7.03  
Class B   11.51   13.72   10.40   6.76  
Class C   11.65   17.86   10.53   6.86  
Class Q   12.23   20.13   11.85   N/A   11.59 (11/29/10)
Class R   11.93   19.49   11.12   7.39  
Class Z   12.16   20.09   11.63   7.89  
Russell 2500 Index   10.11   21.53   12.60   7.71  
S&P SmallCap 600 Index   12.32   24.59   14.25   8.80  
Lipper Small-Cap Core Funds Average   11.39   21.99   11.35   6.75  

 

*Not annualized

Source: PGIM Investments LLC and Lipper Inc.

Inception returns are provided for any share class with less than 10 calendar years of returns.

 

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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class B*   Class C   Class Q   Class R   Class Z
Maximum initial sales charge   5.50% of the public offering price   None   None   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1% on sales of $1 million or more made within 12 months of purchase   5% (Yr.1) 4% (Yr.2) 3% (Yr.3) 2% (Yr.4) 1% (Yr.5) 1% (Yr.6) 0% (Yr.7)   1% on sales made within 12 months of purchase   None   None   None
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets)   .30%   1%   1%   None   .75% (.50% currently)   None

 

*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.

 

Benchmark Definitions

 

Russell 2500 Index—The Russell 2500 Index is an unmanaged index that measures the performance of the 2,500 smallest companies in the Russell 3000 Index, which represents approximately 20% of the total market capitalization of the Russell 3000 Index. The average annual total return for the Index measured from the month-end closest to the inception date through 3/31/17 is 12.81% for Class Q shares.

 

S&P SmallCap 600 Index—The Standard & Poor’s SmallCap 600 Index (S&P SmallCap 600 Index) is an unmanaged, capital-weighted index of 600 smaller-company US common stocks that cover all industry sectors. The average annual total return for the Index measured from the month-end closest to the inception date through 3/31/17 is 14.60% for Class Q shares.

 

Lipper Small-Cap Core Funds Average—The Lipper Small-Cap Core Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Small-Cap Core Funds universe for the periods noted. Funds in the Lipper Small-Cap Core Funds universe invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap core funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the S&P SmallCap 600 Index. The average annual total return for the Average measured from the month-end closest to the inception date through 3/31/17 is 11.42% for Class Q shares.

 

Prudential Jennison Small Company Fund, Inc.     5  


Your Fund’s Performance (continued)

 

 

Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Indexes and Lipper Average are measured from the closest month-end to the inception date for Class Q shares, and not from the Class’s actual inception date.

 

Five Largest Holdings expressed as a
percentage of net assets as of 3/31/17 (%)
     
Vantiv, Inc., IT Services     2.7  
Global Payments, Inc., IT Services     2.6  
Vail Resorts, Inc., Hotels, Restaurants & Leisure     2.5  
Ulta Beauty, Inc., Specialty Retail     2.1  
East West Bancorp, Inc., Banks     1.9  

 

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a
percentage of net assets as of 3/31/17 (%)
     
Banks     11.7  
Equity Real Estate Investment Trusts (REITs)     7.9  
Hotels, Restaurants & Leisure     5.8  
Specialty Retail     5.5  
IT Services     5.3  

 

Industry weightings reflect only long-term investments and are subject to change.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 through the six-month period ended March 31, 2017. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses

 

Prudential Jennison Small Company Fund, Inc.     7  


Fees and Expenses (continued)

 

paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Prudential
Jennison Small
Company Fund, Inc.
 

Beginning Account

Value
October 1, 2016

    Ending  Account
Value
March 31, 2017
   

Annualized

Expense Ratio
Based on the
Six-Month Period

    Expenses  Paid
During the
Six-Month Period*
 
Class A   Actual   $ 1,000.00     $ 1,119.90       1.14   $ 6.03  
  Hypothetical   $ 1,000.00     $ 1,019.25       1.14   $ 5.74  
Class B   Actual   $ 1,000.00     $ 1,115.10       1.84   $ 9.70  
  Hypothetical   $ 1,000.00     $ 1,015.76       1.84   $ 9.25  
Class C   Actual   $ 1,000.00     $ 1,116.50       1.84   $ 9.71  
  Hypothetical   $ 1,000.00     $ 1,015.76       1.84   $ 9.25  
Class Q   Actual   $ 1,000.00     $ 1,122.30       0.69   $ 3.65  
  Hypothetical   $ 1,000.00     $ 1,021.49       0.69   $ 3.48  
Class R   Actual   $ 1,000.00     $ 1,119.30       1.34   $ 7.08  
  Hypothetical   $ 1,000.00     $ 1,018.25       1.34   $ 6.74  
Class Z   Actual   $ 1,000.00     $ 1,121.60       0.84   $ 4.44  
    Hypothetical   $ 1,000.00     $ 1,020.74       0.84   $ 4.23  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 182 days in the six-month period ended March 31, 2017, and divided by the 365 days in the Fund’s fiscal year ending September 30, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.

 

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Portfolio of Investments (unaudited)

as of March 31, 2017

 

Description    Shares        Value  

LONG-TERM INVESTMENTS    98.6%

       

COMMON STOCKS

                   

Aerospace & Defense    0.4%

                   

Curtiss-Wright Corp.

     153,920        $ 14,046,739  

Airlines    0.8%

                   

Spirit Airlines, Inc.*

     557,687          29,596,449  

Auto Components    0.5%

                   

Dorman Products, Inc.*(a)

     199,314          16,369,659  

Banks    11.7%

                   

Bank of the Ozarks, Inc.(a)

     1,048,970          54,556,930  

BankUnited, Inc.

     1,174,225          43,810,335  

Columbia Banking System, Inc.(a)

     752,953          29,357,638  

Eagle Bancorp, Inc.*

     324,133          19,350,740  

East West Bancorp, Inc.

     1,333,899          68,842,527  

First Republic Bank(a)

     392,809          36,849,412  

Investors Bancorp, Inc.(a)

     762,829          10,969,481  

Pinnacle Financial Partners, Inc.

     934,566          62,101,911  

Seacoast Banking Corp. of Florida*

     263,428          6,317,003  

Signature Bank*

     329,266          48,859,782  

Wintrust Financial Corp.

     494,510          34,180,531  
       

 

 

 
          415,196,290  

Biotechnology     1.9%

                   

Amicus Therapeutics, Inc.*(a)

     2,151,665          15,341,371  

La Jolla Pharmaceutical Co.*

     499,957          14,923,716  

Otonomy, Inc.*(a)

     1,236,094          15,142,152  

Radius Health, Inc.*(a)

     534,077          20,642,076  
       

 

 

 
          66,049,315  

Building Products    2.0%

                   

Allegion PLC

     193,023          14,611,841  

JELD-WEN Holding, Inc.*

     175,657          5,770,333  

Owens Corning

     545,086          33,451,928  

PGT Innovations, Inc.*

     1,534,423          16,495,047  
       

 

 

 
          70,329,149  

Capital Markets    0.4%

                   

Moelis & Co. (Class A Stock)(a)

     381,771          14,698,184  

Chemicals    2.2%

                   

Axalta Coating Systems Ltd.*

     413,773          13,323,491  

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     9  


Portfolio of Investments (unaudited) (continued)

as of March 31, 2017

 

Description    Shares        Value  

COMMON STOCKS (Continued)

       

Chemicals (cont’d.)

                   

Ferro Corp.*

     2,065,775        $ 31,379,122  

PolyOne Corp.

     977,496          33,322,839  
       

 

 

 
          78,025,452  

Commercial Services & Supplies    2.6%

                   

Advanced Disposal Services, Inc.*

     861,790          19,476,454  

Mobile Mini, Inc.

     1,086,263          33,131,021  

West Corp.

     1,571,154          38,367,581  
       

 

 

 
          90,975,056  

Communications Equipment    1.0%

                   

CommScope Holding Co., Inc.*

     856,826          35,738,212  

Construction & Engineering    0.3%

                   

Great Lakes Dredge & Dock Corp.*

     2,531,600          10,126,400  

Construction Materials    1.5%

                   

Summit Materials, Inc. (Class A Stock)*

     2,209,155          54,588,220  

Containers & Packaging    0.5%

                   

Bemis Co., Inc.

     354,237          17,308,020  

Distributors    0.1%

                   

Core-Mark Holding Co., Inc.

     126,558          3,947,344  

Diversified Telecommunication Services    1.4%

                   

Cogent Communications Holdings, Inc.

     832,631          35,844,764  

Frontier Communications Corp.(a)

     6,248,605          13,372,015  
       

 

 

 
       49,216,779  

Electric Utilities    1.1%

                   

El Paso Electric Co.

     597,562          30,176,881  

Portland General Electric Co.

     232,241          10,316,145  
       

 

 

 
       40,493,026  

Electronic Equipment, Instruments & Components    3.9%

                   

Anixter International, Inc.*

     304,729          24,165,009  

CDW Corp.

     992,780          57,293,334  

IPG Photonics Corp.*(a)

     311,814          37,635,950  

Littelfuse, Inc.

     112,436          17,979,641  
       

 

 

 
       137,073,934  

 

See Notes to Financial Statements.

 

10  


Description    Shares        Value  

COMMON STOCKS (Continued)

       

Energy Equipment & Services    0.7%

                   

Forum Energy Technologies, Inc.*(a)

     1,255,329        $ 25,985,310  

Equity Real Estate Investment Trusts (REITs)    7.9%

                   

Chatham Lodging Trust

     1,147,855          22,670,136  

Colony NorthStar, Inc. (Class A Stock)(a)

     3,570,100          46,089,991  

Forest City Realty Trust, Inc. (Class A Stock)

     1,888,812          41,138,325  

Gaming and Leisure Properties, Inc.

     1,131,076          37,800,560  

Hersha Hospitality Trust

     2,064,355          38,789,231  

National Storage Affiliates Trust

     1,687,707          40,336,197  

Pebblebrook Hotel Trust

     660,189          19,284,121  

QTS Realty Trust, Inc. (Class A Stock)

     215,277          10,494,754  

Summit Hotel Properties, Inc.

     1,364,801          21,809,520  
       

 

 

 
       278,412,835  

Food & Staples Retailing    2.3%

                   

Performance Food Group Co.*

     1,699,118          40,439,009  

Sprouts Farmers Market, Inc.*(a)

     1,708,378          39,497,699  
       

 

 

 
       79,936,708  

Food Products    2.0%

                   

Adecoagro SA (Argentina)*

     3,487,209          39,963,415  

Darling Ingredients, Inc.*

     1,537,243          22,320,769  

Hain Celestial Group, Inc. (The)*

     256,630          9,546,636  
       

 

 

 
       71,830,820  

Health Care Equipment & Supplies    1.8%

                   

ABIOMED, Inc.*

     99,491          12,456,273  

Integra LifeSciences Holdings Corp.*(a)

     322,112          13,570,579  

Nevro Corp.*(a)

     388,174          36,371,904  
       

 

 

 
       62,398,756  

Health Care Providers & Services    1.8%

                   

Acadia Healthcare Co., Inc.*(a)

     370,213          16,141,287  

Air Methods Corp.*(a)

     480,893          20,678,399  

Envision Healthcare Corp.*(a)

     409,604          25,116,917  

Surgery Partners, Inc.*(a)

     121,194          2,363,283  
       

 

 

 
       64,299,886  

Hotels, Restaurants & Leisure    5.8%

                   

ClubCorp Holdings, Inc.

     1,353,689          21,726,709  

Pinnacle Entertainment, Inc.*

     1,341,618          26,188,383  

Planet Fitness, Inc. (Class A Stock)(a)

     1,398,198          26,943,276  

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     11  


Portfolio of Investments (unaudited) (continued)

as of March 31, 2017

 

Description    Shares        Value  

COMMON STOCKS (Continued)

       

Hotels, Restaurants & Leisure (cont’d.)

                   

Texas Roadhouse, Inc.

     364,263        $ 16,220,631  

Vail Resorts, Inc.

     462,888          88,828,207  

Wingstop, Inc.(a)

     220,772          6,243,432  

Zoe’s Kitchen, Inc.*(a)

     1,113,822          20,605,707  
       

 

 

 
       206,756,345  

Household Durables    0.8%

                   

Toll Brothers, Inc.*(a)

     815,038          29,431,022  

Independent Power & Renewable Electricity Producers    0.5%

                   

NRG Yield, Inc. (Class A Stock)

     506,335          8,805,165  

NRG Yield, Inc. (Class C Stock)(a)

     553,774          9,801,800  
       

 

 

 
       18,606,965  

Insurance    3.3%

                   

Validus Holdings Ltd.

     695,867          39,239,940  

W.R. Berkley Corp.

     604,296          42,681,426  

White Mountains Insurance Group Ltd.

     39,294          34,574,005  
       

 

 

 
       116,495,371  

Internet & Direct Marketing Retail    0.4%

                   

Wayfair, Inc. (Class A Stock)*(a)

     366,830          14,852,947  

Internet Software & Services    1.9%

                   

Criteo SA (France), ADR*(a)

     484,246          24,207,457  

MuleSoft, Inc. (Class A Stock)*(a)

     214,661          5,222,702  

New Relic, Inc.*(a)

     197,320          7,314,652  

Q2 Holdings, Inc.*(a)

     516,089          17,985,702  

Shutterstock, Inc.*(a)

     267,599          11,065,219  
       

 

 

 
       65,795,732  

IT Services    5.3%

                   

Global Payments, Inc.

     1,119,718          90,338,848  

Vantiv, Inc. (Class A Stock)*

     1,492,808          95,718,849  
       

 

 

 
       186,057,697  

Life Sciences Tools & Services    1.3%

                   

INC Research Holdings, Inc. (Class A Stock)*

     468,069          21,460,964  

Patheon NV*

     16,433          432,845  

VWR Corp.*

     812,234          22,904,999  
       

 

 

 
       44,798,808  

 

See Notes to Financial Statements.

 

12  


Description    Shares        Value  

COMMON STOCKS (Continued)

       

Machinery    3.4%

                   

Actuant Corp. (Class A Stock)(a)

     668,422        $ 17,612,920  

NN, Inc.(a)

     1,487,038          37,473,358  

Rexnord Corp.*

     2,118,523          48,895,511  

Terex Corp.

     225,206          7,071,468  

Trinity Industries, Inc.

     397,170          10,544,863  
       

 

 

 
       121,598,120  

Media    1.5%

                   

Cinemark Holdings, Inc.

     1,222,845          54,220,947  

Metals & Mining    0.3%

                   

Tahoe Resources, Inc.(a)

     1,413,919          11,353,770  

Mortgage Real Estate Investment Trusts (REITs)    2.3%

                   

Chimera Investment Corp.

     603,973          12,188,175  

MFA Financial, Inc.

     5,219,125          42,170,530  

Starwood Property Trust, Inc.

     1,227,462          27,716,092  
       

 

 

 
       82,074,797  

Oil, Gas & Consumable Fuels    4.9%

                   

Arch Coal, Inc. (Class A Stock)*

     202,877          13,986,340  

Cheniere Energy Partners LP Holdings LLC

     1,373,537          33,541,773  

PDC Energy, Inc.*

     177,628          11,075,106  

SemGroup Corp. (Class A Stock)

     921,303          33,166,908  

Tallgrass Energy GP LP(a)

     1,599,581          46,003,950  

WPX Energy, Inc.*

     2,775,135          37,159,058  
       

 

 

 
       174,933,135  

Pharmaceuticals    2.0%

                   

Aerie Pharmaceuticals, Inc.*(a)

     509,817          23,120,201  

Aratana Therapeutics, Inc.*(a)

     938,977          4,976,578  

Dermira, Inc.*

     651,263          22,214,581  

Intersect ENT, Inc.*

     1,219,414          20,912,950  
       

 

 

 
       71,224,310  

Professional Services    1.0%

                   

Korn/Ferry International

     1,094,291          34,459,224  

Road & Rail    0.7%

                   

Genesee & Wyoming, Inc. (Class A Stock)*

     340,717          23,121,056  

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     13  


Portfolio of Investments (unaudited) (continued)

as of March 31, 2017

 

Description    Shares        Value  

COMMON STOCKS (Continued)

       

Semiconductors & Semiconductor Equipment    2.3%

                   

Cavium, Inc.*(a)

     301,322        $ 21,592,734  

MACOM Technology Solutions Holdings, Inc.*(a)

     1,233,249          59,565,927  
       

 

 

 
       81,158,661  

Software    4.0%

                   

CyberArk Software Ltd. (Israel)*(a)

     502,421          25,558,156  

Fortinet, Inc.*

     333,649          12,795,439  

Paycom Software, Inc.*(a)

     1,180,734          67,904,013  

Varonis Systems, Inc.*

     1,071,109          34,061,266  
       

 

 

 
       140,318,874  

Specialty Retail    5.5%

                   

Burlington Stores, Inc.*(a)

     562,835          54,758,217  

Five Below, Inc.*(a)

     726,472          31,463,502  

Foot Locker, Inc.(a)

     417,058          31,200,109  

Party City Holdco, Inc.*(a)

     232,768          3,270,391  

Ulta Beauty, Inc.*

     254,593          72,617,561  
       

 

 

 
       193,309,780  

Textiles, Apparel & Luxury Goods    0.2%

                   

Kate Spade & Co.*

     303,315          7,046,007  

Trading Companies & Distributors    2.4%

                   

MSC Industrial Direct Co., Inc. (Class A Stock)

     206,335          21,202,985  

Univar, Inc.*

     2,037,431          62,467,634  
       

 

 

 
       83,670,619  
       

 

 

 

TOTAL LONG-TERM INVESTMENTS
(cost $2,710,392,733)

 

       3,487,926,730  
       

 

 

 

SHORT-TERM INVESTMENTS    16.8%

       

AFFILIATED MUTUAL FUNDS

                   

Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(b)

     28,616,924          28,616,924  

Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund (cost $566,484,101; includes $566,018,093 of cash collateral for securities on loan)(b)(c)

     566,460,414          566,573,706  
       

 

 

 

TOTAL SHORT-TERM INVESTMENTS
(cost $595,101,025)

 

       595,190,630  
       

 

 

 

TOTAL INVESTMENTS    115.4%
(cost $3,305,493,758)

 

       4,083,117,360  

Liabilities in excess of other assets    (15.4)%

 

       (545,037,729
       

 

 

 

NET ASSETS    100.0%

 

     $ 3,538,079,631  
       

 

 

 

 

See Notes to Financial Statements.

 

14  


 

The following abbreviations are used in the semiannual report:

ADR—American Depositary Receipt

REIT—Real Estate Investment Trust

* Non-income producing security.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $555,045,439; cash collateral of $566,018,093 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments.
(b) PGIM Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund.
(c) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

The following is a summary of the inputs used as of March 31, 2017 in valuing such portfolio securities:

 

    Level 1         Level 2             Level 3      

Investments in Securities

     

Common Stocks

     

Aerospace & Defense

  $ 14,046,739     $     —     $     —  

Airlines

    29,596,449              

Auto Components

    16,369,659              

Banks

    415,196,290              

Biotechnology

    66,049,315              

Building Products

    70,329,149              

Capital Markets

    14,698,184              

Chemicals

    78,025,452              

Commercial Services & Supplies

    90,975,056              

Communications Equipment

    35,738,212              

Construction & Engineering

    10,126,400              

Construction Materials

    54,588,220              

Containers & Packaging

    17,308,020              

Distributors

    3,947,344              

Diversified Telecommunication Services

    49,216,779              

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     15  


Portfolio of Investments (unaudited) (continued)

as of March 31, 2017

 

    Level 1         Level 2             Level 3      

Common Stocks (Continued)

     

Electric Utilities

  $ 40,493,026     $     —     $     —  

Electronic Equipment, Instruments & Components

    137,073,934              

Energy Equipment & Services

    25,985,310              

Equity Real Estate Investment Trusts (REITs)

    278,412,835              

Food & Staples Retailing

    79,936,708              

Food Products

    71,830,820              

Health Care Equipment & Supplies

    62,398,756              

Health Care Providers & Services

    64,299,886              

Hotels, Restaurants & Leisure

    206,756,345              

Household Durables

    29,431,022              

Independent Power & Renewable Electricity Producers

    18,606,965              

Insurance

    116,495,371              

Internet & Direct Marketing Retail

    14,852,947              

Internet Software & Services

    65,795,732              

IT Services

    186,057,697              

Life Sciences Tools & Services

    44,798,808              

Machinery

    121,598,120              

Media

    54,220,947              

Metals & Mining

    11,353,770              

Mortgage Real Estate Investment Trusts (REITs)

    82,074,797              

Oil, Gas & Consumable Fuels

    174,933,135              

Pharmaceuticals

    71,224,310              

Professional Services

    34,459,224              

Road & Rail

    23,121,056              

Semiconductors & Semiconductor Equipment

    81,158,661              

Software

    140,318,874              

Specialty Retail

    193,309,780              

Textiles, Apparel & Luxury Goods

    7,046,007              

Trading Companies & Distributors

    83,670,619              

Affiliated Mutual Funds

    595,190,630              
 

 

 

   

 

 

   

 

 

 

Total

  $ 4,083,117,360     $     $  
 

 

 

   

 

 

   

 

 

 

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of March 31, 2017 were as follows:

 

Affiliated Mutual Funds (including 16.0% of collateral for securities on loan)

    16.8

Banks

    11.7  

Equity Real Estate Investment Trusts (REITs)

    7.9  

Hotels, Restaurants & Leisure

    5.8  

Specialty Retail

    5.5  

IT Services

    5.3  

Oil, Gas & Consumable Fuels

    4.9  

 

See Notes to Financial Statements.

 

16  


Industry Classification (cont’d.)

 

Software

    4.0 %  

Electronic Equipment, Instruments & Components

    3.9  

Machinery

    3.4  

Insurance

    3.3  

Commercial Services & Supplies

    2.6  

Trading Companies & Distributors

    2.4  

Mortgage Real Estate Investment Trusts (REITs)

    2.3  

Semiconductors & Semiconductor Equipment

    2.3  

Food & Staples Retailing

    2.3  

Chemicals

    2.2  

Food Products

    2.0  

Pharmaceuticals

    2.0  

Building Products

    2.0  

Biotechnology

    1.9  

Internet Software & Services

    1.9  

Health Care Providers & Services

    1.8  

Health Care Equipment & Supplies

    1.8  

Construction Materials

    1.5  

Media

    1.5  

Diversified Telecommunication Services

    1.4  

Life Sciences Tools & Services

    1.3  

Electric Utilities

    1.1  

Communications Equipment

    1.0  

Professional Services

    1.0  

Airlines

    0.8  

Household Durables

    0.8  

Energy Equipment & Services

    0.7  

Road & Rail

    0.7  

Independent Power & Renewable Electricity Producers

    0.5  

Containers & Packaging

    0.5  

Auto Components

    0.5  

Internet & Direct Marketing Retail

    0.4  

Capital Markets

    0.4  

Aerospace & Defense

    0.4  

Metals & Mining

    0.3  

Construction & Engineering

    0.3  

Textiles, Apparel & Luxury Goods

    0.2  

Distributors

    0.1  
 

 

 

 
    115.4  

Liabilities in excess of other assets

    (15.4
 

 

 

 
    100.0
 

 

 

 

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Fund entered into financial transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements other financial transactions, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of financial instruments/transactions assets and liabilities:

 

Description

  Gross
Amounts
of Recognized
Assets(1)
    Collateral
Received(2)
    Net
Amount
 

Securities on Loan

  $ 555,045,439     $ (555,045,439   $   —  
 

 

 

     

 

(1) Amount represents market value.
(2) Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions.

 

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     17  


Statement of Assets & Liabilities (unaudited)

as of March 31, 2017

 

Assets

 

Investments at value, including securities on loan of $555,045,439:

  

Unaffiliated investments (cost $2,710,392,733)

   $ 3,487,926,730  

Affiliated investments (cost $595,101,025)

     595,190,630  

Cash

     30,884  

Receivable for investments sold

     24,096,679  

Receivable for Fund shares sold

     9,599,732  

Dividends receivable

     4,534,717  

Tax reclaim receivable

     19,153  

Prepaid expenses

     14,650  
  

 

 

 

Total Assets

     4,121,413,175  
  

 

 

 

Liabilities

        

Payable to broker for collateral for securities on loan

     566,018,093  

Payable for Fund shares reacquired

     13,301,625  

Management fee payable

     1,989,584  

Accrued expenses

     783,065  

Payable for investments purchased

     748,830  

Distribution fee payable

     368,664  

Affiliated transfer agent fee payable

     122,437  

Deferred directors’ fees

     1,246  
  

 

 

 

Total Liabilities

     583,333,544  
  

 

 

 

Net Assets

   $ 3,538,079,631  
  

 

 

 
          

Net assets were comprised of:

  

Common stock, at par

   $ 1,439,532  

Paid-in capital in excess of par

     2,708,063,219  
  

 

 

 
     2,709,502,751  

Undistributed net investment income

     5,672,226  

Accumulated net realized gain on investment transactions

     45,281,052  

Net unrealized appreciation on investments

     777,623,602  
  

 

 

 

Net assets, March 31, 2017

   $ 3,538,079,631  
  

 

 

 

 

See Notes to Financial Statements.

 

18  


Class A

 

Net asset value and redemption price per share
($787,398,581 ÷ 32,726,739 shares of common stock issued and outstanding)

  $ 24.06  

Maximum sales charge (5.50% of offering price)

    1.40  
 

 

 

 

Maximum offering price to public

  $ 25.46  
 

 

 

 

Class B

       

Net asset value, offering price and redemption price per share
($8,654,385 ÷ 618,044 shares of common stock issued and outstanding)

  $ 14.00  
 

 

 

 

Class C

       

Net asset value, offering price and redemption price per share
($96,138,159 ÷ 6,761,315 shares of common stock issued and outstanding)

  $ 14.22  
 

 

 

 

Class Q

       

Net asset value, offering price and redemption price per share
($891,916,803 ÷ 35,138,174 shares of common stock issued and outstanding)

  $ 25.38  
 

 

 

 

Class R

       

Net asset value, offering price and redemption price per share
($177,432,261 ÷ 7,545,481 shares of common stock issued and outstanding)

  $ 23.52  
 

 

 

 

Class Z

       

Net asset value, offering price and redemption price per share
($1,576,539,442 ÷ 61,163,475 shares of common stock issued and outstanding)

  $ 25.78  
 

 

 

 

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     19  


Statement of Operations (unaudited)

Six Months Ended March 31, 2017

 

Net Investment Income (Loss)

 

Income

  

Unaffiliated dividend income (net of foreign withholding taxes of $25,451)

   $ 25,685,483  

Income from securities lending, net (including affiliated income of $374,500)

     1,136,409  

Affiliated dividend income

     505,884  
  

 

 

 

Total income

     27,327,776  
  

 

 

 

Expenses

  

Management fee

     11,455,207  

Distribution fee—Class A

     1,192,430  

Distribution fee—Class B

     44,889  

Distribution fee—Class C

     503,583  

Distribution fee—Class R

     642,658  

Transfer agent’s fees and expenses (including affiliated expense of $316,100)

     1,915,000  

Custodian and accounting fees

     175,000  

Shareholders’ reports

     92,000  

Registration fees

     76,000  

Directors’ fees

     35,000  

Insurance expenses

     22,000  

Legal fees and expenses

     20,000  

Audit fee

     12,000  

Miscellaneous

     19,899  
  

 

 

 

Total expenses

     16,205,666  

Distribution fee waiver—Class R

     (214,226
  

 

 

 

Net expenses

     15,991,440  
  

 

 

 

Net investment income (loss)

     11,336,336  
  

 

 

 

Realized And Unrealized Gain (Loss) On Investments

        

Net realized gain (loss) on investment transactions (including affiliated of $12,558)

     60,407,894  

Net change in unrealized appreciation (depreciation) on investments (including affiliated of $89,605)

     326,112,818  
  

 

 

 

Net gain (loss) on investment transactions

     386,520,712  
  

 

 

 

Net Increase (Decrease) In Net Assets Resulting From Operations

   $ 397,857,048  
  

 

 

 

 

See Notes to Financial Statements.

 

20  


Statement of Changes in Net Assets (unaudited)

    Six Months
Ended
March 31, 2017
     Year
Ended
September 30, 2016
 

Increase (Decrease) in Net Assets

                

Operations

    

Net investment income (loss)

  $ 11,336,336      $ 20,055,060  

Net realized gain (loss) on investment transactions

    60,407,894        184,593,045  

Net change in unrealized appreciation (depreciation) on investments

    326,112,818        108,119,237  
 

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

    397,857,048        312,767,342  
 

 

 

    

 

 

 

Dividends and Distributions

    

Dividends from net investment income

    

Class A

    (4,862,418      (1,165,088

Class B

    (53,163       

Class C

    (611,557       

Class Q

    (7,671,246      (3,694,094

Class R

    (766,947       

Class Z

    (12,745,838      (6,454,482
 

 

 

    

 

 

 
    (26,711,169      (11,313,664
 

 

 

    

 

 

 

Distributions from net realized gains and capital gain distributions received

    

Class A

    (36,931,546      (106,883,970

Class B

    (660,035      (2,224,731

Class C

    (7,592,622      (23,858,454

Class Q

    (34,899,598      (78,082,655

Class R

    (8,112,976      (20,732,398

Class Z

    (67,220,942      (185,243,621
 

 

 

    

 

 

 
    (155,417,719      (417,025,829
 

 

 

    

 

 

 

Fund share transactions (Net of share conversions)

    

Net proceeds from shares sold

    506,429,387        779,470,707  

Net asset value of shares issued in reinvestment of dividends and distributions

    169,023,900        395,495,409  

Cost of shares reacquired

    (661,513,629      (1,023,499,794
 

 

 

    

 

 

 

Net increase (decrease) in net assets from Fund share transactions

    13,939,658        151,466,322  
 

 

 

    

 

 

 

Total increase (decrease)

    229,667,818        35,894,171  

Net Assets:

                

Beginning of period

    3,308,411,813        3,272,517,642  
 

 

 

    

 

 

 

End of period(a)

  $ 3,538,079,631      $ 3,308,411,813  
 

 

 

    

 

 

 

(a) Includes undistributed net investment income of:

  $ 5,672,226      $ 21,047,059  
 

 

 

    

 

 

 

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     21  


Notes to Financial Statements (unaudited)

 

Prudential Jennison Small Company Fund, Inc. (the “Fund”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund was established as a Maryland corporation on July 28, 1980. The investment objective of the Fund is to achieve capital growth.

 

Note 1. Accounting Policies

 

The Fund follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Fund consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Fund holds securities and other assets that are fair valued at the close of each day (generally 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.

 

Various inputs determine how the Fund’s investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy.

 

22  


In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Common and preferred stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stocks discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Fund may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the investment. Therefore, the Fund may find it difficult to sell illiquid securities at the time considered most

 

Prudential Jennison Small Company Fund, Inc.     23  


Notes to Financial Statements (unaudited) (continued)

 

advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Fund’s Subadviser under the guidelines adopted by the Trustees of the Fund. However, the liquidity of the Fund’s investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Notwithstanding the above, the Fund does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations; such amounts are included in net realized gains (losses) on foreign currency transactions.

 

Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currency transactions.

 

24  


Master Netting Arrangements: The Fund may be subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Securities Lending: The Fund may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral. The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities, in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Fund also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

REITs: The Fund invests in REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. These estimates are adjusted periodically when the actual source of distributions is disclosed by the REITs.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the

 

Prudential Jennison Small Company Fund, Inc.     25  


Notes to Financial Statements (unaudited) (continued)

 

accrual basis which may require the use of certain estimates by management that may differ from actual.

 

Net investment income or loss (other than distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) and unrealized and realized gains (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 from net investment income and distributions from net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

Taxes: It is the Fund’s policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

Note 2. Agreements

 

The Fund has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services. PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Fund. In connection therewith, Jennison is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of .70% of the Fund’s average daily net assets up to and including $1 billion

 

26  


and .65% of such average daily net assets in excess of $1 billion. The effective management fee rate was .66% of the average daily net assets of the Fund for the six months ended March 31, 2017.

 

The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class Q, Class R and Class Z shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C and Class R shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Fund.

 

Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to .30%, 1%, 1% and .75% of the average daily net assets of the Class A, B, C and R shares, respectively. PIMS has contractually agreed through January 31, 2018 to limit such fees to .50% of the average daily net assets of Class R shares.

 

PIMS has advised the Fund that it received $171,304 in front-end sales charges resulting from sales of Class A shares, during the six months ended March 31, 2017. From these fees, PIMS paid such sales charges to affiliated broker/dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Fund that for the six months ended March 31, 2017, it received $1, $3,416 and $2,622 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B and Class C shareholders, respectively.

 

PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

Note 3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Fund may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.

 

 

Prudential Jennison Small Company Fund, Inc.     27  


Notes to Financial Statements (unaudited) (continued)

 

The Fund may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund (the “Core Fund”) and its securities lending cash collateral in the Prudential Institutional Money Market Fund, (the “Money Market Fund”), each a series of Prudential Investments Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the period ended March 31, 2017, the PGIM, Inc., an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, was compensated $204,237 by PGIM Investments for managing the Fund’s securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and the Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

Note 4. Portfolio Securities

 

The aggregate cost of purchases and the proceeds from sales of portfolio securities (excluding short-term investments and U.S. Treasury securities) for the six months ended March 31, 2017, were $640,054,328 and $714,938,532, respectively.

 

Note 5. Tax Information

 

The United States federal income tax basis of the Fund’s investments and net unrealized appreciation as of March 31, 2017 were as follows:

 

Tax Basis

   $ 3,312,181,833  
  

 

 

 

Appreciation

     916,100,673

Depreciation

     (145,165,146
  

 

 

 

Net Unrealized Appreciation

   $ 770,935,527
  

 

 

 

 

The book basis may differ from tax basis due to certain tax related adjustments.

 

Management has analyzed the Fund’s tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

Note 6. Capital

 

The Fund offers Class A, Class B, Class C, Class Q, Class R and Class Z shares. Class A shares are sold with a front-end sales charge of up to 5.50%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months

 

28  


of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefit plans. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis, approximately seven years after purchase. Class B shares are closed to new purchases. 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 CDSC of 1% on shares redeemed within the first 12 months of purchase. Class Q, Class R and Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

Under certain limited circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.

 

There are 1.25 billion shares of common stock authorized, $.01 par value per share, divided into seven classes, designated Class A, Class B, Class C, Class Q, Class R, Class T and Class Z shares, each of which consists of 100 million, 10 million, 50 million, 225 million, 225 million, 325 million and 315 million authorized shares, respectively.

 

As of March 31, 2017, 5 shareholders of record held 40% of the Fund’s outstanding shares on behalf of multiple beneficial owners.

 

Transactions in shares of common stock were as follows:

 

Class A

     Shares      Amount  

Six months ended March 31, 2017:

       

Shares sold

       3,272,109      $ 75,864,418  

Shares issued in reinvestment of dividends and distributions

       1,721,807        38,929,957  

Shares reacquired

       (6,542,093      (151,914,934
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       (1,548,177      (37,120,559

Shares issued upon conversion from other share class(es)

       132,585        3,114,483  

Shares reacquired upon conversion into other share class(es)

       (788,530      (18,489,011
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (2,204,122    $ (52,495,087
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       6,405,718      $ 138,558,040  

Shares issued in reinvestment of dividends and distributions

       4,830,202        100,468,195  

Shares reacquired

       (10,863,814      (235,889,632
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       372,106        3,136,603  

Shares issued upon conversion from other share class(es)

       138,893        3,057,961  

Shares reacquired upon conversion into other share class(es)

       (521,988      (11,548,355
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (10,989    $ (5,353,791
    

 

 

    

 

 

 

 

Prudential Jennison Small Company Fund, Inc.     29  


Notes to Financial Statements (unaudited) (continued)

 

Class B

     Shares      Amount  

Six months ended March 31, 2017:

       

Shares sold

       48,331      $ 660,041  

Shares issued in reinvestment of dividends and distributions

       51,207        675,424  

Shares reacquired

       (63,716      (870,778
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       35,822        464,687  

Shares reacquired upon conversion into other share class(es)

       (86,659      (1,229,451
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (50,837    $ (764,764
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       29,165      $ 382,077  

Shares issued in reinvestment of dividends and distributions

       163,759        2,068,270  

Shares reacquired

       (130,060      (1,717,813
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       62,864        732,534  

Shares reacquired upon conversion into other share class(es)

       (132,844      (1,773,934
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (69,980    $ (1,041,400
    

 

 

    

 

 

 

Class C

               

Six months ended March 31, 2017:

       

Shares sold

       572,935      $ 7,947,004  

Shares issued in reinvestment of dividends and distributions

       527,624        7,064,885  

Shares reacquired

       (1,153,374      (15,989,525
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       (52,815      (977,636

Shares reacquired upon conversion into other share class(es)

       (998,055      (13,792,998
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (1,050,870    $ (14,770,634
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       1,172,041      $ 15,813,296  

Shares issued in reinvestment of dividends and distributions

       1,587,429        20,319,092  

Shares reacquired

       (2,497,366      (33,417,442
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       262,104        2,714,946  

Shares reacquired upon conversion into other share class(es)

       (544,672      (8,019,480
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (282,568    $ (5,304,534
    

 

 

    

 

 

 

Class Q

               

Six months ended March 31, 2017:

       

Shares sold

       6,672,500      $ 162,219,717  

Shares issued in reinvestment of dividends and distributions

       1,626,886        38,752,416  

Shares reacquired

       (4,514,186      (109,289,278
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       3,785,200      $ 91,682,855  
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       11,424,844      $ 268,370,827  

Shares issued in reinvestment of dividends and distributions

       3,362,801        73,510,822  

Shares reacquired

       (5,517,046      (126,259,743
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       9,270,599        215,621,906  

Shares issued upon conversion from other share class(es)

       93,278        1,975,633  
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       9,363,877      $ 217,597,539  
    

 

 

    

 

 

 

 

30  


Class R

     Shares      Amount  

Six months ended March 31, 2017:

       

Shares sold

       655,850      $ 14,837,780  

Shares issued in reinvestment of dividends and distributions

       391,026        8,645,570  

Shares reacquired

       (1,021,601      (23,077,379
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       25,275        405,971  

Shares reacquired upon conversion into other share class(es)

       (867      (19,980
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       24,408      $ 385,991  
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       1,778,511      $ 37,896,560  

Shares issued in reinvestment of dividends and distributions

       988,923        20,144,361  

Shares reacquired

       (1,837,547      (39,088,431
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       929,887        18,952,490  

Shares issued upon conversion from other share class(es)

       2,013        43,699  

Shares reacquired upon conversion into other share class(es)

       (1,458      (31,498
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       930,442      $ 18,964,691  
    

 

 

    

 

 

 

Class Z

               

Six months ended March 31, 2017:

       

Shares sold

       9,874,366      $ 244,900,427  

Shares issued in reinvestment of dividends and distributions

       3,096,062        74,955,648  

Shares reacquired

       (14,355,686      (360,371,735
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       (1,385,258      (40,515,660

Shares issued upon conversion from other share class(es)

       1,240,524        30,924,361  

Shares reacquired upon conversion into other share class(es)

       (20,463      (507,404
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (165,197    $ (10,098,703
    

 

 

    

 

 

 

Year ended September 30, 2016:

       

Shares sold

       13,787,100      $ 318,449,907  

Shares issued in reinvestment of dividends and distributions

       8,073,282        178,984,669  

Shares reacquired

       (24,826,602      (587,126,733
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding before conversion

       (2,966,220      (89,692,157

Shares issued upon conversion from other shares class(es)

       804,011        19,251,306  

Shares reacquired upon conversion into other share class(es)

       (133,822      (2,955,332
    

 

 

    

 

 

 

Net increase (decrease) in shares outstanding

       (2,296,031    $ (73,396,183
    

 

 

    

 

 

 

 

Note 7. Borrowings

 

The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. Prior to October 6, 2016, the Funds had a prior SCA that provided a commitment of $900 million in which the Funds paid an annualized commitment fee of .11% of the unused portion of the prior SCA. For the SCA and the prior SCA, the Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings

 

Prudential Jennison Small Company Fund, Inc.     31  


Notes to Financial Statements (unaudited) (continued)

 

under each SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

The Fund did not utilize the SCA during the six months ended March 31, 2017.

 

Note 8. Recent Accounting Pronouncements and Reporting Updates

 

On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. Also under the new rules, the SEC will permit open-end funds, with the exception of money market funds, to offer swing pricing, subject to board approval and review. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.

 

Note 9. Other

 

At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agency (including sub-transfer agency and networking) and Blue Sky fees. The impact to the net assets of the Fund and individual share classes is not ascertainable at the present time. Management expects to implement the changes by December 31, 2017.

 

32  


Financial Highlights (unaudited)

 

Class A Shares                
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning Of Period     $22.65               $23.76       $28.09       $27.95       $21.81       $17.39  
Income (loss) from investment operations:                                                        
Net investment income (loss)     .05               .09       .07       .07       .12       .06  
Net realized and unrealized gain (loss) on investment transactions     2.59               1.96       (.19     2.72       6.12       4.36  
Total from investment operations     2.64               2.05       (.12     2.79       6.24       4.42  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.15             (.03     (.06     (.09     (.10     -  
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.23             (3.16     (4.21     (2.65     (.10     -  
Net asset value, end of period     $24.06               $22.65       $23.76       $28.09       $27.95       $21.81  
Total Return(b):     11.99%               9.82%       (1.16)%       10.55%       28.76%       25.42%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $787,399               $791,197       $830,116       $971,441       $1,109,515       $989,346  
Average net assets (000)     $797,180               $796,776       $944,315       $1,059,916       $1,034,609       $1,014,383  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.14% (d)              1.14%       1.13%       1.14%       1.15%       1.17%  
Expenses before waivers and/or expense reimbursement     1.14% (d)              1.14%       1.13%       1.14%       1.15%       1.17%  
Net investment income (loss)     .45% (d)              .42%       .27%       .25%       .48%       .29%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     33  


Financial Highlights (unaudited) (continued)

 

Class B Shares  
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning Of Period     $13.67               $15.65       $19.95       $20.60       $16.13       $12.98  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (.02             (.04     (.08     (.09     (.03     (.07
Net realized and unrealized gain (loss) on investment transactions     1.52               1.19       (.07     2.00       4.52       3.22  
Total from investment operations     1.50               1.15       (.15     1.91       4.49       3.15  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.09             -       -       -       (.02     -  
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.17             (3.13     (4.15     (2.56     (.02     -  
Net asset value, end of period     $14.00               $13.67       $15.65       $19.95       $20.60       $16.13  
Total Return(b):     11.51%               8.98%       (1.90)%       9.97%       27.88%       24.27%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $8,654               $9,143       $11,566       $14,556       $18,250       $18,965  
Average net assets (000)     $9,003               $10,434       $14,015       $17,001       $18,899       $20,997  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.84% (d)              1.84%       1.83%       1.84%       1.85%       1.87%  
Expenses before waivers and/or expense reimbursement     1.84% (d)              1.84%       1.83%       1.84%       1.85%       1.87%  
Net investment income (loss)     (.26)% (d)              (.30)%       (.43)%       (.44)%       (.19)%       (.42)%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

34  


Class C Shares                                                 
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning Of Period     $13.85               $15.82       $20.12       $20.79       $16.29       $13.08  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (.02             (.04     (.08     (.09     (.04     (.06
Net realized and unrealized gain (loss) on investment transactions     1.56               1.20       (.07     1.98       4.56       3.27  
Total from investment operations     1.54               1.16       (.15     1.89       4.52       3.21  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.09             -       -       -       (.02     -  
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.17             (3.13     (4.15     (2.56     (.02     -  
Net asset value, end of period     $14.22               $13.85       $15.82       $20.12       $20.79       $16.29  
Total Return(b):     11.65%               8.94%       (1.88)%       9.77%       27.79%       24.54%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $96,138               $108,219       $128,022       $123,856       $119,436       $92,886  
Average net assets (000)     $101,000               $114,415       $135,406       $124,252       $105,977       $94,960  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.84% (d)              1.84%       1.83%       1.84%       1.85%       1.87%  
Expenses before waivers and/or expense reimbursement     1.84% (d)              1.84%       1.83%       1.84%       1.85%       1.87%  
Net investment income (loss)     (.26)% (d)              (.30)%       (.43)%       (.45)%       (.24)%       (.41)%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     35  


Financial Highlights (unaudited) (continued)

 

Class Q Shares  
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                  
Net Asset Value, Beginning Of Period     $23.87               $24.87       $29.22       $28.95       $22.60       $17.97  
Income (loss) from investment operations:                                                        
Net investment income (loss)     .11               .20       .20       .20       .24       .17  
Net realized and unrealized gain (loss) on investment transactions     2.72               2.08       (.21     2.83       6.31       4.54  
Total from investment operations     2.83               2.28       (.01     3.03       6.55       4.71  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.24             (.15     (.19     (.20     (.20     (.08
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.32             (3.28     (4.34     (2.76     (.20     (.08
Net asset value, end of period     $25.38               $23.87       $24.87       $29.22       $28.95       $22.60  
Total Return(b):     12.23%               10.36%       (.73)%       11.10%       29.27%       26.29%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $891,917               $748,480       $546,771       $429,165       $293,225       $240,377  
Average net assets (000)     $816,615               $667,511       $531,193       $427,179       $259,446       $189,399  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     .69% (d)              .69%       .69%       .69%       .70%       .70%  
Expenses before waivers and/or expense reimbursement     .69% (d)              .69%       .69%       .69%       .70%       .70%  
Net investment income (loss)     .90% (d)              .88%       .71%       .70%       .94%       .78%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

36  


Class R Shares  
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning Of Period     $22.14               $23.31       $27.63       $27.53       $21.50       $17.17  
Income (loss) from investment operations:                                                        
Net investment income (loss)     .03               .05       .04       .02       .07       .02  
Net realized and unrealized gain (loss) on investment transactions     2.54               1.91       (.20     2.68       6.02       4.31  
Total from investment operations     2.57               1.96       (.16     2.70       6.09       4.33  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.11             -       (.01     (.04     (.06     -  
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.19             (3.13     (4.16     (2.60     (.06     -  
Net asset value, end of period     $23.52               $22.14       $23.31       $27.63       $27.53       $21.50  
Total Return(b):     11.93%               9.57%       (1.35)%       10.36%       28.42%       25.22%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $177,432               $166,550       $153,606       $47,538       $59,157       $50,449  
Average net assets (000)     $171,851               $159,631       $86,446       $56,323       $54,213       $48,728  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.34% (d)              1.34%       1.33%       1.34%       1.35%       1.37%  
Expenses before waivers and/or expense reimbursement     1.59% (d)              1.59%       1.58%       1.59%       1.60%       1.62%  
Net investment income (loss)     .25% (d)              .23%       .14%       .06%       .28%       .10%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

Prudential Jennison Small Company Fund, Inc.     37  


Financial Highlights (unaudited) (continued)

 

Class Z Shares                                                 
     Six Months
Ended
March 31,
          Year Ended September 30,  
     2017            2016     2015     2014     2013     2012  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning Of Period     $24.21               $25.19       $29.56       $29.27       $22.85       $18.22  
Income (loss) from investment operations:                                                        
Net investment income (loss)     .09               .17       .16       .16       .20       .13  
Net realized and unrealized gain (loss) on investment transactions     2.77               2.09       (.23     2.85       6.38       4.55  
Total from investment operations     2.86               2.26       (.07     3.01       6.58       4.68  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (.21             (.11     (.15     (.16     (.16     (.05
Distributions from net realized gains     (1.08             (3.13     (4.15     (2.56     -       -  
Total dividends and distributions     (1.29             (3.24     (4.30     (2.72     (.16     (.05
Net asset value, end of period     $25.78               $24.21       $25.19       $29.56       $29.27       $22.85  
Total Return(b):     12.16%               10.14%       (.95)%       10.89%       29.04%       25.73%  
             
Ratios/Supplemental Data:  
Net assets, end of period (000)     $1,576,539               $1,484,823       $1,602,437       $1,514,147       $1,603,451       $1,359,627  
Average net assets (000)     $1,561,791               $1,498,820       $1,715,343       $1,545,618       $1,428,455       $1,332,921  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     .84% (d)              .84%       .83%       .84%       .85%       .87%  
Expenses before waivers and/or expense reimbursement     .84% (d)              .84%       .83%       .84%       .85%       .87%  
Net investment income     .75% (d)              .72%       .57%       .55%       .77%       .60%  
Portfolio turnover rate     19% (e)              37%       52%       41%       50%       47%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.

 

See Notes to Financial Statements.

 

38  


   MAIL      TELEPHONE      WEBSITE

655 Broad Street

Newark, NJ 07102

 

(800) 225-1852

 

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding Kevin J. Bannon Scott E. Benjamin Linda W. Bynoe Keith F. Hartstein  Michael S. Hyland Stuart S. Parker Richard A. Redeker Stephen G. Stoneburn Grace C. Torres

 

OFFICERS
Stuart S. Parker, President Scott E. Benjamin, Vice President M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer Raymond A. O’Hara, Chief Legal Officer Deborah A. Docs, Secretary Chad A. Earnst, Chief Compliance Officer Theresa C. Thompson, Deputy Chief Compliance Officer Charles H. Smith, Anti-Money Laundering Compliance Officer Jonathan D. Shain, Assistant Secretary Claudia DiGiacomo, Assistant Secretary Andrew R. French, Assistant Secretary Peter Parrella, Assistant Treasurer Lana Lomuti, Assistant Treasurer Linda McMullin, Assistant Treasurer Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC  

655 Broad Street

Newark, NJ 07102

 

INVESTMENT SUBADVISER   Jennison Associates LLC  

466 Lexington Avenue

New York, NY 10017

 

DISTRIBUTOR   Prudential Investment Management Services LLC  

655 Broad Street

Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon  

225 Liberty Street

New York, NY 10281

 

TRANSFER AGENT   Prudential Mutual Fund Services LLC  

PO Box 9658

Providence, RI 02940

 

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
  KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP  

787 Seventh Avenue

New York, NY 10019

 


An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Jennison Small Company Fund, Inc., PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY
FEDERAL GOVERNMENT AGENCY
  MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED
BY ANY BANK OR ANY BANK AFFILIATE


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PRUDENTIAL JENNISON SMALL COMPANY FUND, INC.

 

SHARE CLASS   A   B   C   Q   R   Z
NASDAQ   PGOAX   CHNDX   PSCCX   PJSQX   JSCRX   PSCZX
CUSIP   74441N101   74441N200   74441N309   74441N887   74441N507   74441N408

 

MF109E2    


Item 2 – Code of Ethics – Not required, as this is not an annual filing.

 

Item 3 – Audit Committee Financial Expert – Not required, as this is not an annual filing.

 

Item 4 – Principal Accountant Fees and Services – Not required, as this is not an annual filing.

 

Item 5 – Audit Committee of Listed Registrants – Not required, as this is not an annual filing.

 

Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

 

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.

 

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not applicable.

 

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

 

Item 10 – Submission of Matters to a Vote of Security Holders – Not applicable.

 

Item 11 – Controls and Procedures

 

  (a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

 

  (b) There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 – Exhibits

 

  (a) (1) Code of Ethics – Not required, as this is not an annual filing.

 

  (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.

 

  (3) Any written solicitation to purchase securities under Rule 23c-1. – Not applicable.

 

  (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Registrant:            Prudential Jennison Small Company Fund, Inc.
By:   

/s/ Deborah A. Docs

   Deborah A. Docs
   Secretary                                                                                
Date:    May 18, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:                       

/s/ Stuart S. Parker

  

Stuart S. Parker

  

President and Principal Executive Officer

Date:

  

May 18, 2017

By:   

/s/ M. Sadiq Peshimam

  

M. Sadiq Peshimam

  

Treasurer and Principal Financial and Accounting Officer

Date:

  

May 18, 2017

EX-99.CERT 2 d357566dex99cert.htm CERTIFICATIONS PURSUANT TO SECTION 302 Certifications pursuant to Section 302

Item 12

Prudential Jennison Small Company Fund, Inc.

Semi-Annual period ending 3/31/17

File No. 811-03084

CERTIFICATIONS

I, Stuart S. Parker, certify that:

 

  1. I have reviewed this report on Form N-CSR of the above named Fund;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and;

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

1


  5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 18, 2017

 

/s/ Stuart S. Parker

Stuart S. Parker
President and Principal Executive Officer

 

2


Item 12

Prudential Jennison Small Company Fund, Inc.

Semi-Annual period ending 3/31/17

File No. 811-03084

CERTIFICATIONS

I, M. Sadiq Peshimam, certify that:

 

  1. I have reviewed this report on Form N-CSR of the above named Fund;

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and;

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

3


  5. The registrant’s other certifying officers and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 18, 2017

 

/s/ M. Sadiq Peshimam

M. Sadiq Peshimam
Treasurer and Principal Financial and
Accounting Officer

 

4

EX-99.906CERT 3 d357566dex99906cert.htm CERTIFICATIONS PURSUANT TO SECTION 906 Certifications pursuant to Section 906

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Name of Issuer:             Prudential Jennison Small Company Fund, Inc.

In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his or her knowledge, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

 

May 18, 2017    

/s/ Stuart S. Parker

    Stuart S. Parker
    President and Principal Executive Officer
May 18, 2017    

/s/ M. Sadiq Peshimam

    M. Sadiq Peshimam
    Treasurer and Principal Financial and Accounting Officer
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