<PAGE>
THE PRUDENTIAL [Logo]
Semi-Annual
Report to
Planholders
June 30, 1995
PRUDENTIAL'S
FINANCIAL SECURITY
PROGRAM
Prudential's Gibraltar Fund
and
Prudential's Investment Plan Account
Prudential's Annuity Plan Account
Prudential's Annuity Plan Account-2
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
<PAGE>
TABLE OF CONTENTS
NOTE: **The back inside cover provides important
telephone numbers for customer service.
PAGE
I. LETTER TO PLANHOLDERS
Summarizes the results of Prudential's Financial Security Program
and provides an economic overview................................. 1
II. PRUDENTIAL'S GIBRALTAR FUND
The Prudential's Financial Security Program is the only account
investing in Prudential's Gibraltar Fund.
1. FINANCIAL STATEMENTS............................................ A1
2. SCHEDULE OF INVESTMENTS
Lists the holdings in Prudential's Gibraltar Fund............... A2
3. NOTES TO THE FINANCIAL STATEMENTS............................... A4
III. PRUDENTIAL'S INVESTMENT PLAN ACCOUNT
PRUDENTIAL'S ANNUITY PLAN ACCOUNT
PRUDENTIAL'S ANNUITY PLAN ACCOUNT-2
1. FINANCIAL STATEMENTS
Provides financial data at the product level including
investment results net of certain product related charges....... B1
2. NOTES TO FINANCIAL STATEMENTS................................... B4
IV. APPENDIX
1. GLOSSARY........................................................ i
2. BOARDS OF DIRECTORS............................................. ii
3. NOTICE OF ELECTION.............................................. iii
<PAGE>
FINANCIAL MARKETS
REVIEW
STOCKS SOAR AS RATES FALL;
BEST SIX MONTHS IN 9 YEARS.
Stocks (as well as bonds) soared during the first half of 1995, with stocks
powered primarily by higher corporate profits and bonds by lower interest rates.
Stocks posted double-digit returns for the six months ended June 30, their best
six months since the period ending in April 1986. The Standard & Poor's 500
Stock Index, a broad measure of the U.S. stock market, rose 20%.
Interest rates peaked last fall when an inflation scare drove the yield of the
30-year U.S. Treasury bond to 8.2%. Eight months later on June 30, that yield
had plummeted to 6.6%, falling almost as rapidly as it rose last year. Why the
sharp change in sentiment? Last year the Federal Reserve started driving up
short-term interest rates, doubling them to 6% by February 1995, to try to slow
the rapidly growing economy. When economic growth did slow and the inflation
threat did break, interest rates began declining.
The Dow Jones Industrial Average, a very narrow but frequently cited market
average, set new records of 4000 in March and 4500 in June. Just to put the
first half's highly unusual performance in perspective, consider that the stock
market's rise in 1995 to date is more than its increase in all of 1993 and 1994
combined.
- TECHNOLOGY stocks were turbo-charged, returning 39%, as a group. In
companies around the globe, improving technology has helped increase
productivity and has kept wages under control. As a result, worldwide
demand is surging for technology-related goods and services.
- FINANCIAL stocks, including banks, insurance and financial services
companies, returned 27% as a group. Financial services stocks were direct
beneficiaries of lower long-term interest rates, which made the cost of
their raw material -- money -- cheaper.
- ENERGY stocks rose as demand for energy from industries around the world
began to outstrip supply for the first time in years.
PRUDENTIAL'S
GIBRALTAR FUND
SIX MONTHS ENDED JUNE 30, 1995
DEAR PLANHOLDER:
OVER THE PAST SIX MONTHS, BOTH THE U.S. STOCK AND BOND MARKETS ENJOYED THEIR
BEST PERFORMANCE IN NINE YEARS. AFTER 1994'S WEAK SHOWING, BOTH MARKETS CAME
ROARING BACK IN THE FIRST SIX MONTHS OF THIS YEAR WITH DOUBLE-DIGIT RETURNS.
THESE RESULTS SHOW WHY IT MAY BE HELPFUL TO STAY THE COURSE.
HISTORY SHOWS THAT STOCKS TEND TO PERFORM BETTER THAN OTHER INVESTMENTS IN THE
LONG RUN -- DESPITE SHORT-TERM VOLATILITY. WE APPRECIATE THE CONFIDENCE YOU HAVE
SHOWN IN US BY ENTRUSTING YOUR ASSETS TO PRUDENTIAL'S GIBRALTAR FUND.
WE'VE WRITTEN THIS REPORT TO EXPLAIN THE INVESTMENT STRATEGIES AND PERFORMANCE
OF THE FUND OVER THE LAST SIX MONTHS. WE CONCLUDE WITH OUR OUTLOOK FOR THE
SECOND HALF OF 1995. IN SHORT, WE EXPECT THE POSITIVE MOMENTUM TO CONTINUE,
ALBEIT AT A MUCH SLOWER PACE. WE DO NOT EXPECT A REPEAT OF THE FIRST HALF'S
UNUSUALLY ROBUST PERFORMANCE ANY TIME SOON.
IMPORTANT NOTE:
THE RATES OF RETURN QUOTED ON THE FOLLOWING PAGES REFLECT DEDUCTION OF
INVESTMENT MANAGEMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. THEY
REFLECT THE REINVESTMENT OF DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. THEY ARE
NOT AN ESTIMATE OR A GUARANTEE OF FUTURE PERFORMANCE. CONTRACT UNIT VALUES
INCREASE OR DECREASE BASED ON THE PERFORMANCE OF THE FUND. CHANGES IN CONTRACT
VALUES DEPEND NOT ONLY ON THE INVESTMENT PERFORMANCE OF THE FUND, BUT ALSO ON
THE INSURANCE AND ADMINISTRATIVE CHARGES, APPLICABLE SALES CHARGES, AND THE
MORTALITY AND EXPENSE RISK CHARGE APPLICABLE UNDER A CONTRACT. THESE CONTRACT
CHARGES EFFECTIVELY REDUCE THE DOLLAR AMOUNT OF ANY NET GAINS AND INCREASE THE
DOLLAR AMOUNT OF ANY NET LOSSES.
<PAGE>
INVESTMENT ADVISOR'S OUTLOOK
WE'VE HAD A HIGHLY UNUSUAL RETURN FOR STOCKS IN A SIX-MONTH PERIOD -- THE BEST
IN NINE YEARS. WE THINK IT WILL BE NEARLY IMPOSSIBLE TO REPEAT ANYTIME SOON.
WE'RE EXPECTING RETURNS TO BE IN THE RANGE OF 8-10% A YEAR FROM THE STOCK MARKET
IN THE NEXT FEW YEARS, AND ENCOURAGE YOU TO ADJUST YOUR EXPECTATIONS AS WELL.
HOW THE MARKETS COMPARE
Total Returns By Asset Class
26.1%
13.7%
11.2%
13.6%
12.6%
1 year: 6/30/94 to 6/30/95
10.0%
20 years: Average Annual Returns
4.9%
7.7%
0 5 10 15 20 25 30%
*Lehman Aggregate start date is as of 12/31/75
Source: Prudential Investment Corporation. For purposes of comparison only. U.S.
stocks as measured by the S&P 500 Index. Global stocks as measured by the Morgan
Stanley Capital International-World Index. Bonds as measured by the Lehman
Brothers Government/Corporate Aggregate. U.S. money markets as measured by
Lipper Money Market Average.
Financial Markets change, so an investment's past performance should never be
used to predict future results. This chart compares the 12-month total return
and the average annual total return over 20 years (both including reinvested
dividends) for various categories. There are different risks associated with
each investment sector, which should be considered before investing.
U.S. STOCKS
OUTLOOK
We think the stock market's risk level has gone up, not just because stock
prices are higher now than they were at the beginning of the year, but also
because the economy may be slowing down. Stocks generally don't thrive in a slow
economy, which usually is accompanied by lower corporate earnings.
- We still like financial stocks; these companies will profit as the economy
slows and interest rates fall.
- Electric utilities can benefit from falling interest rates. And a slowdown
in the pace of competition-enhancing regulatory changes continues to help
prices. We believe this is only a short-term phenomenon, however.
- We like consumer cyclical stocks, like retailers and automobile
manufacturers because they have already discounted a recession and are
priced to benefit as the stock market begins to anticipate another pickup
in economic growth later this year or early next year.
CAN WE HELP?
WE HOPE THE FIRST HALF OF THE YEAR HAS BEEN GOOD TO YOU, AND WISH YOU CONTINUED
HAPPY RETURNS FOR THE REST OF 1995.
YOUR PRUDENTIAL/PRUCO SECURITIES REPRESENTATIVE STANDS READY TO DISCUSS THESE
ISSUES AND TO ASSIST YOU IN ANY WAY HE OR SHE CAN. WE BELIEVE THAT YOUR PERSONAL
FINANCIAL REPRESENTATIVE --- THE ONE WHO UNDERSTANDS YOU AND YOUR LONG-TERM
INVESTMENT NEEDS -- IS A VERY VALUABLE RESOURCE GIVEN TODAY'S OFTEN VOLATILE
FINANCIAL MARKETS. WE URGE YOU TO TAKE ADVANTAGE OF YOUR REPRESENTATIVE'S
TRAINING AND EXPERIENCE TO HELP YOU MANAGE YOUR INSURANCE NEEDS IN A MANNER MOST
BENEFICIAL TO YOU AND YOUR FAMILY.
ALL OF US AT THE PRUDENTIAL THANK YOU FOR YOUR BUSINESS AND LOOK FORWARD TO
HELPING YOU PROVIDE FOR YOUR FUTURE FINANCIAL SECURITY.
E. MICHAEL CAULFIELD
PRESIDENT
PRUDENTIAL'S GIBRALTAR FUND
ROBERT P. HILL
CHAIRMAN
PRUDENTIAL'S GIBRALTAR FUND
<PAGE>
PRUDENTIAL'S GIBRALTAR FUND
The Fund gained 15.6% during the six months ended June 30, in line with the
Lipper VIP Growth Fund Average.
Using a value investment strategy, the Fund buys stocks that are inexpensively
priced in relation to certain financial measures of business worth, including
earnings, book value and cash flow.
The Fund has a new manager: Greg Goldberg, effective in June. Greg manages
several mutual funds for The Prudential: Prudential Allocation Fund --
Conservatively Managed and Strategy Portfolios and Prudential Multi-Sector Fund.
Our positions were concentrated primarily in the industrial, technology and
consumer growth sectors of the market -- three of the four leading sectors for
the first half of 1995. During this period, we increased our holdings in
industrial stocks to 46% of assets from 42%, our technology position to 17% from
15% and our consumer growth allocation to 16% from 15%.
The Fund's cash position rose as high as 14% of assets during the period, as we
took profits and searched for value, but it was as low as 2% at the beginning of
the year and was 3% on June 30.
-------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN GIBRALTAR FUND VS. S&P 500 AND LIPPER VIP GROWTH
AVERAGE OVER TEN YEARS(1)
$45,000
- - - S&P 500 $25,961
----- Lipper VIP Growth Avg $24,650
35,000 ===== Gibraltar Fund $24,796
25,000
15,000
85 86 87 88 89 90 91 92 93 94
-------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
Six One Three Five Ten
Month Year Year Year Year
Gibraltar Fund 15.6% 16.8% 18.4% 16.3% 15.9%
Lipper VIP Growth Avg.(2) 17.6 23.0 13.3 11.9 13.6
S&P 500 20.2 26.1 13.3 12.1 14.7
INCEPTION DATE: 3/14/68
(1) Past performance is not predictive of future performance. Fund performance
does not reflect Separate Account expenses or other product charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
The S&P 500 is a capital weighted index, representing the aggregate market value
of the common equity of 500 stocks primarily traded on the New York Stock
Exchange. The S&P 500 is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs and advisory
fees associated with an investment in the Fund. The securities that comprise the
S&P 500 may differ substantially from the securities in the Fund. The S&P 500 is
not the only index that may be used to characterize performance of this Fund and
other indexes may portray different comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
DATA BANK
PORTFOLIO MANAGER
GREG GOLDBERG
-------------------------------------
HOW THE FUND IS INVESTED
SECTOR ALLOCATION
AS OF 6/30/95
Industrial. . . . . . 46%
Technology. . . . . . 17
Consumer Growth . . . 16
Finance . . . . . . . 7
Utility . . . . . . . 6
Consumer Cyclical . . 3
Energy. . . . . . . . 2
Cash. . . . . . . . . 3
[GRAPH]
TOP FIVE HOLDINGS
AS A % OF TOTAL NET ASSETS ON 6/30/95
-------------------------------------
Williamette Holdings. . 4.2%
Precision Casting . . . 3.8
Frontier Corp . . . . . 3.8
United Technology . . . 3.7
Archer Daniels. . . . . 3.5
<PAGE>
FINANCIAL STATEMENTS OF
PRUDENTIAL'S GIBRALTAR FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$227,760,651)............................ $ 264,253,326
Cash....................................... 2,358
Interest and dividends receivable.......... 187,006
--------------
Total Assets............................. 264,442,690
--------------
LIABILITIES
Accrued expenses........................... 43,860
Payable for securities purchased........... 76,938
Payable to investment adviser.............. 80,291
--------------
Total Liabilities........................ 201,089
--------------
NET ASSETS................................... $ 264,241,601
--------------
--------------
Net assets were comprised of:
Common stock, at $1 par value............ $ 24,315,000
Paid-in capital, in excess of par........ 197,841,269
--------------
222,156,269
Undistributed net investment income........ 1,947,531
Accumulated net realized gains............. 3,645,126
Net unrealized appreciation................ 36,492,675
--------------
Net assets, June 30, 1995.................. $ 264,241,601
--------------
--------------
Net asset value per share of 24,315,000
outstanding shares of common stock
(authorized 75,000,000 shares)........... $ 10.8674
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $1,110 foreign
withholding tax)......................... $ 1,856,490
Interest................................... 565,535
---------------
2,422,025
---------------
EXPENSES
Investment management fee.................. 156,615
State franchise tax expense................ 17,195
Directors' expense......................... 3,561
Custodian expense -- net................... 2,480
---------------
179,851
---------------
NET INVESTMENT INCOME........................ 2,242,174
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments
[identified cost basis].................. 5,543,345
Net unrealized gain on investments......... 29,021,626
---------------
NET GAIN ON INVESTMENTS...................... 34,564,971
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 36,807,145
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 2,242,174 $ 5,060,650
Net realized gain on investments....................................................... 5,543,345 16,126,282
Net unrealized gain(loss) on investments............................................... 29,021,626 (24,285,324)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 36,807,145 (3,098,392)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. 0 (5,085,500)
Net realized gain from investment transactions......................................... 0 (34,178,638)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ 0 (39,264,138)
------------------ -------------------
CAPITAL TRANSACTIONS:
Reinvestment of dividend distributions [-0- and 4,008,764 shares, respectively]........ 0 38,225,359
Capital stock repurchased [(1,488,061) and (1,619,845) shares, respectively]........... (15,069,854) (17,638,028)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (15,069,854) 20,587,331
------------------ -------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................................................ 21,737,291 (21,775,199)
NET ASSETS:
Beginning of period.................................................................... 242,504,310 264,279,509
------------------ -------------------
End of period.......................................................................... $ 264,241,601 $ 242,504,310
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A4 AND A5.
A1
<PAGE>
PRUDENTIAL'S GIBRALTAR FUND
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 97.3% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 11.8%
Boeing Co....................................... 120,000 $ 7,515,000
+Coltec Industries, Inc......................... 225,000 3,881,250
Precision Castparts Corp........................ 285,000 10,010,625
United Technologies Corp........................ 125,000 9,765,625
--------------
31,172,500
--------------
AIRLINES -- 1.8%
Southwest Airlines Co........................... 200,000 4,775,000
--------------
AUTOS - CARS & TRUCKS -- 2.3%
General Motors Corp. (Class 'H' Stock).......... 100,000 3,950,000
Standard Products Co............................ 95,000 2,066,250
--------------
6,016,250
--------------
BANKS AND SAVINGS & LOANS -- 1.0%
Norwest Corp.................................... 75,000 2,156,250
+Riggs National Corp............................ 70,000 682,500
--------------
2,838,750
--------------
CHEMICALS -- 4.4%
A. Schulman, Inc................................ 94,875 2,703,938
E.I. Du Pont de Nemours & Co.................... 45,100 3,100,625
Sigma-Aldrich Corp.............................. 120,000 5,895,000
--------------
11,699,563
--------------
CHEMICALS - SPECIALTY -- 4.2%
Raychem Corp.................................... 200,000 7,675,000
Witco Corp...................................... 110,000 3,547,500
--------------
11,222,500
--------------
COMMERCIAL SERVICES -- 1.5%
Measurex Corp................................... 130,000 3,948,750
--------------
COMPUTER SERVICES -- 2.0%
+Cisco Systems, Inc............................. 32,500 1,643,281
+Western Digital Corp........................... 50,000 868,750
+Zilog, Inc..................................... 55,500 2,768,063
--------------
5,280,094
--------------
DIVERSIFIED GAS -- 1.0%
Mitchell Energy & Development Corp. (Class 'A'
Stock)........................................ 60,000 1,095,000
Mitchell Energy & Development Corp. (Class 'B'
Stock)........................................ 84,350 1,507,756
--------------
2,602,756
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 2.5%
Honeywell, Inc.................................. 90,000 3,881,250
International Business Machines Corp............ 28,000 2,688,000
--------------
6,569,250
--------------
DRUGS AND HOSPITAL SUPPLIES -- 3.6%
+ALZA Corp...................................... 200,000 4,675,000
IVAX Corp....................................... 200,000 4,925,000
--------------
9,600,000
--------------
ELECTRICAL EQUIPMENT -- 2.2%
Belden, Inc..................................... 60,000 1,620,000
W.W. Grainger, Inc.............................. 70,000 4,112,500
--------------
5,732,500
--------------
ELECTRONICS -- 8.6%
+ADT Ltd........................................ 225,000 2,643,750
+Arrow Electronics, Inc......................... 110,000 5,472,500
+Cirrus Logic, Inc.............................. 31,500 1,974,656
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Marshall Industries............................ 120,000 $ 4,020,000
Methode Electronics, Inc. (Class 'A' Stock)..... 225,000 4,331,250
Sundstrand Corp................................. 70,000 4,182,500
--------------
22,624,656
--------------
FINANCIAL SERVICES -- 2.4%
American Express Co............................. 125,000 4,390,625
Salomon, Inc.................................... 50,000 2,006,250
--------------
6,396,875
--------------
FOODS -- 5.7%
Archer-Daniels-Midland Co....................... 495,000 9,219,375
Dole Food Co., Inc.............................. 200,000 5,825,000
--------------
15,044,375
--------------
FOREST PRODUCTS -- 5.7%
Mosinee Paper Corp.............................. 49,830 1,071,345
Weyerhaeuser Co................................. 60,000 2,827,500
Willamette Industries, Inc...................... 200,000 11,100,000
--------------
14,998,845
--------------
INSURANCE -- 2.7%
Aon Corp........................................ 65,000 2,421,250
Progressive Corp................................ 125,000 4,796,875
--------------
7,218,125
--------------
LEISURE -- 1.4%
+MGM Grand, Inc................................. 131,000 3,586,125
--------------
MACHINERY -- 2.8%
Eaton Corp...................................... 25,000 1,453,125
Timken Co....................................... 130,000 5,996,250
--------------
7,449,375
--------------
MEDIA -- 1.7%
+Viacom, Inc. (Class 'B' Stock)................. 95,000 4,405,625
--------------
MINERAL RESOURCES -- 0.5%
Potash Corp. of Saskatchewan, Inc............... 25,000 1,396,875
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 8.2%
Air Express International Corp.................. 105,400 2,476,900
Carlisle Companies, Inc......................... 30,000 1,147,500
GATX Corp....................................... 50,000 2,356,250
Mark IV Industries, Inc......................... 21,990 472,785
Millipore Corp.................................. 15,000 1,012,500
Topps Company, Inc.............................. 121,000 756,250
Trinity Industries, Inc......................... 260,000 8,645,000
Tyco International Ltd.......................... 90,000 4,860,000
--------------
21,727,185
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.6%
Eastman Kodak Co................................ 70,000 4,243,750
--------------
PETROLEUM -- 4.7%
Cabot Corp...................................... 160,000 8,440,000
Diamond Shamrock, Inc........................... 51,000 1,313,250
KN Energy, Inc.................................. 100,374 2,546,990
--------------
12,300,240
--------------
PETROLEUM SERVICES -- 0.9%
Sonat, Inc...................................... 75,000 2,287,500
--------------
RAILROADS -- 3.8%
CSX Corp........................................ 35,000 2,629,375
Kansas City Southern Industries, Inc............ 200,000 7,450,000
--------------
10,079,375
--------------
</TABLE>
A2
<PAGE>
PRUDENTIAL'S GIBRALTAR FUND (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
REAL ESTATE DEVELOPMENT -- 1.0%
Duke Realty Investments, Inc.................... 50,000 $ 1,412,500
Equity Residential Properties Trust............. 40,000 1,115,000
--------------
2,527,500
--------------
RETAIL -- 0.8%
Stride Rite Corp................................ 210,300 2,181,862
--------------
RUBBER -- 1.2%
Bandag, Inc..................................... 50,000 3,125,000
--------------
TELECOMMUNICATIONS -- 4.5%
Frontier Corp................................... 416,500 9,996,000
TCA Cable TV, Inc............................... 75,000 2,006,250
--------------
12,002,250
--------------
TRUCKING/SHIPPING -- 0.8%
+Interpool, Inc................................. 155,000 2,111,875
--------------
TOTAL COMMON STOCKS
(Cost $220,672,651)............................................ 257,165,326
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 2.7% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS
Fuji Bank Ltd., C.D.,
6.313%, 07/03/95.............................. 7,088,000 7,088,000
--------------
LIABILITIES -- 0.0%
(net of other assets).......................................... (11,725)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 264,241,601
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
C.D. Certificates of Deposit
+No dividend was paid on this security during the 12 months ending June 30,
1995.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A4 AND A5.
A3
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUDENTIAL'S GIBRALTAR FUND
FOR THE PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
NOTE 1: GENERAL
The Fund is registered as an open-end, diversified management investment company
under the Investment Company Act of 1940, as amended.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES VALUATION: Securities traded on a national securities exchange are
valued at the last sales price (or the last bid price if there were no sales of
the security that day) on the New York Stock Exchange, or if not traded on such
exchange, such last sales or bid price at the time of close of the New York
Stock Exchange on the principal exchange on which such securities are traded on
the last business day of the year. For any securities not traded on a national
securities exchange but traded in the over-the-counter market, the value is the
last bid price available, except that securities for which quotations are
furnished through a nationwide automated quotation system approved by the
National Association of Securities Dealers, Inc. (NASDAQ) are valued at the
closing best bid price on the date of valuation provided by a pricing service
which utilizes NASDAQ quotations. Short-term investments are valued at amortized
cost which, with accrued interest, approximates market value. Amortized cost is
computed using the cost on the date of purchase adjusted for constant
amortization of discount or premium to maturity.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Dividend income is recorded on
the ex-dividend date. Interest income is accrued daily on short-term
investments. Interest income also includes net amortization from the purchase of
fixed-income securities. Security transactions are recorded on the first
business day following the trade date, except that transactions on the last
business day of the reporting cycle are recorded on that day. Transactions in
short-term debt securities are recorded on the trade date. Realized gains and
losses from securities transactions are determined and accounted for on the
basis of identified cost.
DISTRIBUTIONS AND TAXES: As in prior years, the Fund intends to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code. As
a result, by distributing substantially all of its net investment income and net
realized capital gains, the Fund will not be subject to federal income tax on
the investment income and capital gains so distributed. Dividend distributions
to stockholders are recorded on the ex-dividend date.
NOTE 3: INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT FEE: The investment management fee, which is computed
daily at an effective annual rate of 0.125% of the net assets of the Fund, is
payable to The Prudential Insurance Company of America (The Prudential) as
required by the investment advisory agreement. Under the terms of the investment
advisory agreement and a separate contract which remains in force as long as The
Prudential, or its separate accounts, or organizations approved by it are the
only purchasers of Fund shares, The Prudential pays all expenses of the Fund
except for fees and expenses of those members of the Fund's Board of Directors
who are not officers or employees of The Prudential and its affiliates; transfer
and any other local, state or federal taxes; and brokers' commissions and other
fees and charges attributable to investment transactions.
BROKERAGE COMMISSIONS: For the period ended June 30, 1995, Prudential
Securities Incorporated, an indirect, wholly owned subsidiary of The Prudential,
earned $0 in brokerage commissions from transactions executed on behalf of the
Fund.
NOTE 4: DISTRIBUTIONS
Dividends from net investment income and net realized capital gains of the Fund
will normally be declared and reinvested in additional full and fractional
shares twice a year.
NOTE 5: PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and the proceeds from sales of securities
(excluding short-term investments) for the period ended June 30, 1995 was
$98,143,420 and $106,494,217, respectively.
A4
<PAGE>
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments were as follows:
<TABLE>
<S> <C>
Gross Unrealized Appreciation: $ 39,128,091
Gross Unrealized Depreciation: (2,635,416)
Net Unrealized Appreciation/Depreciation: 36,492,675
Tax Basis: 227,760,651
</TABLE>
NOTE 6: FINANCIAL HIGHLIGHTS
The following average per share data, ratios and supplemental information have
been derived from information provided in the financial statements.
<TABLE>
<CAPTION>
PRUDENTIAL'S GIBRALTAR FUND
------------------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88
TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $ 9.398 $ 11.287 $ 11.133 $ 11.390 $ 9.400 $ 10.590 $ 10.290 $ 9.190
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income From Investment
Operations:
Net investment income.... 0.089 0.214 0.180 0.184 0.220 0.340 0.360 0.310
Net realized and
unrealized gains
(losses) on
investments............ 1.380 (0.405) 2.426 1.771 2.900 (0.640) 1.920 2.000
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations........... 1.469 (0.191) 2.606 1.955 3.120 (0.300) 2.280 2.310
Distributions to
Shareholders:
Distributions from net
investment income...... 0.000 (0.216) (0.188) (0.193) (0.260) (0.370) (0.370) (0.370)
Distributions from net
realized gains......... 0.000 (1.482) (2.264) (2.019) (0.870) (0.520) (1.610) (0.840)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total
distributions........ 0.000 (1.698) (2.452) (2.212) (1.130) (0.890) (1.980) (1.210)
Net increase (decrease)
in Net Asset Value..... 1.469 (1.889) 0.154 (0.257) 1.990 (1.190) 0.300 1.100
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value at end of
period................. $ 10.867 $ 9.398 $ 11.287 $ 11.133 $ 11.390 $ 9.400 $ 10.590 $ 10.290
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Investment Rate of
Return:**.............. 15.63% (1.33%) 23.79 % 17.60 % 34.40 % (2.80 %) 22.30 % 25.60%
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $264.2 $242.5 $264.3 $230.1 $214.2 $174.4 $197.0 $183.3
Ratio of expenses net of
reimbursement to
average net assets..... 0.07 % 0.15 % 0.16 % 0.19 % 0.19 % 0.21 % 0.16 % 0.16%
Ratio of net investment
income to average net
assets................. 0.89 % 1.98 % 1.45 % 1.58 % 1.98 % 3.38 % 3.19 % 2.95%
Portfolio turnover
rate................... 41.80 % 92.49 % 91.83 % 72.82 % 76.35 % 108.08 % 66.79 % 31.69%
Number of shares
outstanding at end of
period (in millions)... 24.3 25.8 23.4 20.7 18.8 18.6 18.6 17.8
<CAPTION>
01/01/87 01/01/86
TO TO
12/31/87 12/31/86
----------- -----------
<S> <C> <C>
Net Asset Value at
beginning of period.... $ 12.440 $ 14.660
----------- -----------
Income From Investment
Operations:
Net investment income.... 0.400 0.360
Net realized and
unrealized gains
(losses) on
investments............ 0.230 1.650
----------- -----------
Total from investment
operations........... 0.630 2.010
Distributions to
Shareholders:
Distributions from net
investment income...... (0.650) (0.450)
Distributions from net
realized gains......... (3.230) (3.780)
----------- -----------
Total
distributions........ (3.880) (4.230)
Net increase (decrease)
in Net Asset Value..... (3.250) (2.220)
----------- -----------
Net Asset Value at end of
period................. $ 9.190 $ 12.440
----------- -----------
----------- -----------
Total Investment Rate of
Return:**.............. 2.53 % 15.73 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $170.0 $186.5
Ratio of expenses net of
reimbursement to
average net assets..... 0.15 % 0.16 %
Ratio of net investment
income to average net
assets................. 3.11 % 2.76 %
Portfolio turnover
rate................... 31.53 % 67.56 %
Number of shares
outstanding at end of
period (in millions)... 18.5 15.0
</TABLE>
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
All calculations are based on average month-end shares outstanding, where
available.
A5
<PAGE>
FINANCIAL STATEMENTS OF
PRUDENTIAL'S INVESTMENT PLAN ACCOUNT
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS (UNAUDITED)
June 30, 1995
<S> <C>
Investment in 19,442,773 shares of
Prudential's Gibraltar Fund at net
asset value of $10.8674 per share
(Cost: $193,698,354)................................. $ 211,292,971
Accrued expenses......................................... (42,972)
----------------
NET ASSETS............................................... $ 211,249,999
----------------
----------------
Net assets were comprised of:
Paid-in capital.......................................... $ 194,424,488
Distributions in excess of net
investment income...................................... (4,458,393)
Accumulated net realized gains........................... 3,689,287
Net unrealized appreciation.............................. 17,594,617
----------------
Net assets, June 30, 1995................................ $ 211,249,999
----------------
----------------
Net asset value per share of
19,794,324 outstanding
Securities Shares...................................... $ 10.6723
----------------
----------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
Period Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividend distributions received......................... $ 0
EXPENSES
Administration charge [Note 1].......................... 743,995
---------------
NET INVESTMENT LOSS....................................... (743,995)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Capital gains distributions received.................... 0
Realized loss on shares redeemed
[identified cost basis]............................... (920,675)
Net unrealized gain on investments...................... 30,081,389
---------------
NET GAIN ON INVESTMENTS................................... 29,160,714
---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 28,416,719
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).... $ (743,995) $ 2,504,877
Capital gains distributions
received....................... 0 26,877,899
Realized loss on shares
redeemed....................... (920,675) (111,234)
Net unrealized gain (loss) on
investments.................... 30,081,389 (33,217,396)
------------------ -----------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 28,416,719 (3,945,854)
------------------ -----------------
DIVIDENDS TO PLANHOLDERS FROM
[NOTE 5]:
Net investment income........... 0 (6,180,311)
Net realized gain from
investment transactions........ 0 (23,192,440)
------------------ -----------------
TOTAL DIVIDENDS TO PLANHOLDERS.... 0 (29,372,751)
------------------ -----------------
SECURITIES SHARES TRANSACTIONS:
Purchase payments............... 225,917 30,028,358
Security Shares liquidated...... (8,597,554) (13,361,790)
------------------ -----------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING
FROM SECURITIES SHARES
TRANSACTIONS.................... (8,371,637) 16,666,568
------------------ -----------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... 20,045,082 (16,652,037)
NET ASSETS:
Beginning of period............. 191,204,917 207,856,954
------------------ -----------------
End of period................... $ 211,249,999 $ 191,204,917
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE B4.
B1
<PAGE>
FINANCIAL STATEMENTS OF
PRUDENTIAL'S ANNUITY PLAN ACCOUNT
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS (UNAUDITED)
June 30, 1995
<S> <C>
Investment in 234,102 shares of
Prudential's Gibraltar Fund at net
asset value of $10.8674 per share
(Cost: $2,206,167)................................... $ 2,544,087
Accrued expenses......................................... (39)
----------------
NET ASSETS............................................... $ 2,544,048
----------------
----------------
NET ASSETS, representing:
Equity of annuitants [Note 4].......................... 2,380,160
Equity of The Prudential
Insurance Company
of America........................................... 163,888
----------------
$ 2,544,048
----------------
----------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
Period Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividend distributions received......................... $ 0
EXPENSES
Charges to annuitants for assuming mortality
and expense risks and for administration [Note 1]..... 4,361
---------------
NET INVESTMENT LOSS....................................... (4,361)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Capital gains distributions received.................... 0
Realized loss on shares redeemed
[identified cost basis]............................... (5,667)
Net unrealized gain on investments...................... 379,387
---------------
NET GAIN ON INVESTMENTS................................... 373,720
---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 369,359
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).... $ (4,361) $ 43,010
Capital gains distributions
received....................... 0 362,212
Realized gain (loss) on shares
redeemed....................... (5,667) 5,575
Net unrealized gain (loss) on
investments.................... 379,387 (446,695)
------------------ -----------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 369,359 (35,898)
------------------ -----------------
ANNUITY BENEFIT PAYMENTS.......... (192,280) (521,684)
------------------ -----------------
NET DECREASE IN NET ASSETS
RESULTING
FROM SURPLUS TRANSFERS.......... (77,423) (178,479)
------------------ -----------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... 99,656 (736,061)
NET ASSETS:
Beginning of period............. 2,444,392 3,180,453
------------------ -----------------
End of period................... $ 2,544,048 $ 2,444,392
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE B5.
B2
<PAGE>
FINANCIAL STATEMENTS OF
PRUDENTIAL'S ANNUITY PLAN ACCOUNT-2
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS (UNAUDITED)
June 30, 1995
<S> <C>
Investment in 4,638,125 shares of
Prudential's Gibraltar Fund at net
asset value of $10.8674 per share
(Cost: $41,725,686).................................. $ 50,404,499
Accrued expenses......................................... (2,038)
----------------
NET ASSETS............................................... $ 50,402,461
----------------
----------------
NET ASSETS, representing:
Equity of planholders [Notes 1 & 6].................... $ 49,622,167
Equity of annuitants [Note 6].......................... 517,844
Equity of The Prudential Insurance
Company of America................................... 262,450
----------------
$ 50,402,461
----------------
----------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
Period Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividend distributions received......................... $ 0
EXPENSES
Charges to planholders and annuitants
for assuming mortality and expense
risks and for administration [Note 2]................. 164,869
---------------
NET INVESTMENT LOSS....................................... (164,869)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Capital gains distributions received.................... 0
Realized loss on shares redeemed
[identified cost basis]............................... (419,728)
Net unrealized gain on investments...................... 7,692,309
---------------
NET GAIN ON INVESTMENTS................................... 7,272,581
---------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 7,107,712
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).... $ (164,869) $ 686,137
Capital gains distributions
received....................... 0 6,938,526
Realized loss on shares
redeemed....................... (419,728) (193,248)
Net unrealized gain (loss) on
investments.................... 7,692,309 (8,399,444)
------------------ -----------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS....... 7,107,712 (968,029)
------------------ -----------------
ACCUMULATION AND ANNUITY
TRANSACTIONS:
Purchase payments............... 1,126,888 761,329
Accumulation Shares
liquidated..................... (6,246,123) (4,000,211)
Annuity benefit payments........ (39,348) (80,619)
------------------ -----------------
NET DECREASE IN NET ASSETS
RESULTING FROM
ACCUMULATION AND ANNUITY
TRANSACTIONS.................... (5,158,583) (3,319,501)
------------------ -----------------
NET DECREASE IN NET ASSETS
RESULTING FROM SURPLUS
TRANSFERS....................... (370,588) (92,573)
------------------ -----------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... 1,578,541 (4,380,103)
NET ASSETS:
Beginning of period............. 48,823,920 53,204,023
------------------ -----------------
End of period................... $ 50,402,461 $ 48,823,920
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B6 AND B7.
B3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
PRUDENTIAL'S INVESTMENT PLAN ACCOUNT
NOTE 1: ADMINISTRATION CHARGE
The administration charge is applied daily at an effective annual rate of 0.750%
against the net assets of the Account. This charge is paid to The Prudential
Insurance Company of America (The Prudential).
NOTE 2: TAXES
For federal income tax purposes, Prudential's Investment Plan Account is a
separate entity taxable as a corporation, and as such has elected to be taxed as
a regulated investment company under Subchapter M of the Internal Revenue Code.
As a result, by distributing substantially all of its net investment income and
net realized capital gains, the Account will not be subject to federal income
tax on the investment income and capital gains so distributed.
NOTE 3: SECURITIES SHARE TRANSACTIONS
The number of Securities Shares purchased and liquidated for the periods ended
June 30, 1995 and December 31, 1994, respectively, are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Securities Shares purchased: 53,307 78,232
Securities Shares liquidated: 900,580 669,145
Reinvestment of dividend distributions: -0- -0-
</TABLE>
NOTE 4: SECURITIES SHARE INFORMATION
<TABLE>
<CAPTION>
DIVIDENDS FROM NET CAPITAL GAINS
YEAR NET ASSET VALUE INVESTMENT INCOME DISTRIBUTION
--------- ---------------- --------------------- ---------------
<S> <C> <C> <C>
12/31/90 9.3873 .2954 .5359
12/31/91 11.3754 .1785 .8650
12/31/92 11.1042 .1045 2.0436
12/31/93 11.2631 .0898 2.2692
12/31/94 9.2631 .1427 1.5380
06/30/95 10.6723 N/A N/A
</TABLE>
NOTE 5: DISTRIBUTIONS
The date of distribution ordinarily occurs at the end of the calendar year.
$61,085 of the gross distributions of $29,372,751 were applied to pay custodial
charges for the year ended December 31, 1994. The annual charges were not in
excess of $3.80 per planholder.
B4
<PAGE>
PRUDENTIAL'S ANNUITY PLAN ACCOUNT
NOTE 1: MORTALITY RISK, EXPENSE RISK, AND ADMINISTRATION CHARGES
The mortality risk charge, the expense risk charge, and the administration
charge, at effective annual rates of 0.075%, 0.150%, and 0.150%, respectively
(for a total of 0.375% per year), are applied daily against the net assets of
the Account. These charges are paid to The Prudential.
NOTE 2: TAXES
The operations of Prudential's Annuity Plan Account form a part of, and are
taxed with, the operations of The Prudential. Under the Internal Revenue Code,
all ordinary income and capital gains allocated to the annuitants are not taxed
to The Prudential. As a result, the Annuity Share Value is not affected by
federal income taxes on such distributions received by the Account.
NOTE 3: NET DECREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS
The decrease in net assets resulting from surplus transfers represents the net
contributions of The Prudential to the Account.
NOTE 4: ANNUITY SHARE INFORMATION
Payments to annuitants are based on the value of an Annuity Share. The
investment results of the Account are reflected in changes in the value of an
Annuity Share to the extent that they are greater or less than the assumed
investment result in the annuitant's contract. The December 31 values are
reflected in the annuity payments made for February of the next year. The June
30 values are reflected in the annuity payment made for August.
<TABLE>
<CAPTION>
ANNUITY SHARE VALUE ANNUITY SHARE VALUE
YEAR USING A 3 1/2% ASSUMED INVESTMENT RESULT USING A 5% ASSUMED INVESTMENT RESULT
--------- ----------------------------------------- ---------------------------------------
<S> <C> <C>
12/31/90 2.6087 1.9713
12/31/91 3.3758 2.5146
12/31/92 3.8225 2.8064
12/31/93 4.5546 3.2961
12/31/94 4.3166 3.0794
06/30/95 4.8974 3.4687
</TABLE>
B5
<PAGE>
PRUDENTIAL'S ANNUITY PLAN ACCOUNT-2
NOTE 1: EQUITY OF PLANHOLDERS
Equity of planholders at June 30, 1995 is divided as follows:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION
SHARES SHARE VALUE EQUITY
------------- ------------- -------------
<S> <C> <C> <C>
Class of contracts introduced prior to September 16, 1977 401,374 $ 121.5429 $ 48,784,236
Class of contracts introduced on September 16, 1977 8,159 $ 102.6972 837,932
-------------
$ 49,662,168
-------------
-------------
</TABLE>
NOTE 2: MORTALITY RISK, EXPENSE RISK, AND ADMINISTRATION CHARGES
The following charges, at effective annual rates as indicated, are applied daily
against the net assets of the Account attributable to the respective contracts
and are paid to The Prudential Insurance Company of America (The Prudential).
For the class of contracts introduced prior to September 16, 1977 the mortality
risk charge, the expense risk charge, and the administration charge are 0.100%,
0.200%, and 0.375%, respectively (for a total of 0.675% per year), during their
accumulation period and 0.075%, 0.150%, and 0.150%, respectively (for a total of
0.375% per year), during their payout period.
For the class of contracts introduced on September 16, 1977, the mortality risk
charge, the expense risk charge, and the administration charge are 0.600%,
0.200%, and 0.500%, respectively (for a total of 1.300% per year), during both
their accumulation period and their payout period.
NOTE 3: TAXES
The operations of Prudential's Annuity Plan Account-2 form a part of, and are
taxed with, the operations of The Prudential. Under the Internal Revenue Code,
all ordinary income and capital gains allocated to the annuitants and
planholders are not taxed to The Prudential. As a result, the share values of
the Account are not affected by federal income taxes on such distributions
received by the Account.
NOTE 4: ACCUMULATION SHARE TRANSACTIONS
The number of Accumulation Shares purchased and liquidated for the periods ended
June 30, 1995 and December 31, 1994, respectively, are as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accumulation Shares purchased: 8,986 6,413
Accumulation Shares liquidated: 55,026 37,258
</TABLE>
B6
<PAGE>
PRUDENTIAL'S ANNUITY PLAN ACCOUNT-2 (CONTINUED)
NOTE 5: NET DECREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS
The decrease in net assets resulting from surplus transfers represents the net
contributions of The Prudential to the Account.
NOTE 6: ACCUMULATION AND ANNUITY SHARE INFORMATION
A. Payments to annuitants are based on the value of an Annuity Share. The
investment results of the Account are reflected in changes in the value of
an Annuity Share to the extent that they are greater or less than the
assumed investment result in the annuitant's contract. The December 31
values are reflected in the annuity payments made for February of the next
year. The June 30 values are reflected in the Annuity payments made for
August.
B. Columns (1) and (2) reflect share values applicable to the class of
contracts introduced prior to September 16, 1977 and the class of contracts
introduced on September 16, 1977, respectively.
<TABLE>
<CAPTION>
ANNUITY SHARE VALUE ANNUITY SHARE VALUE
USING A USING A
ACCUMULATION 3 1/2% ASSUMED 5% ASSUMED
YEAR SHARE VALUE INVESTMENT RESULT INVESTMENT RESULT
---------- ------------------------ -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(1) (2) (1) (2) (1) (2)
12/31/90 56.3262 48.9863 2.8883 3.0797 2.1255 2.5314
12/31/91 75.1258 64.8977 3.7375 3.9442 2.7112 3.1957
12/31/92 87.7124 75.2709 4.2320 4.4216 3.0258 3.5310
12/31/93 107.8466 91.9758 5.0426 5.2202 3.5538 4.1093
12/31/94 105.4652 89.3888 4.7791 4.9023 3.3202 3.8040
06/30/95 121.5429 102.6972 5.4220 3.7399 5.5363 4.2653
</TABLE>
B7
<PAGE>
GLOSSARY OF TERMS FOR THE REPORT TO PLANHOLDERS
(NOTE: ADDITIONAL EXPLANATIONS WILL BE FOUND IN NOTES TO FINANCIAL STATEMENTS)
ACCUMULATION UNIT -- The measure for determining the Planholder's share in the
separate account of a deferred variable annuity during the accumulation period
before annuity benefits begin to be paid. Planholder transactions such as
purchase payments, transfers, and withdrawals result in changes to the number of
accumulation units credited to the Planholder. Investment results and daily
charges affect the value of the accumulation unit.
ANNUITY UNIT -- The measure of the fixed number of benefit units purchased by
the accumulation units when annuitizing via a variable payout annuity.
AMERICAN DEPOSITORY RECEIPT (ADR) -- A certificate issued by an American bank to
evidence ownership of a block of foreign shares. The certificate can be traded
like a share of stock.
CERTIFICATE OF DEPOSIT (CD) -- A short-term, interest-bearing bond issued by a
bank or a savings and loan.
COMMERCIAL PAPER -- A short-term, unsecured promissory note issued by either a
corporation or bank.
COMMON STOCK -- The basic unit of ownership of a public corporation which
entitles stockholders to dividend payments, although amount and frequency of
dividends are not guaranteed. (see also Stock)
CONVERTIBLE BOND -- A bond that is exchangeable for another type of security
(usually common stock).
COUPON RATE -- The annual rate of interest the issuer of a bond will pay
bondholders.
LOAN PARTICIPATION -- A loan to a corporation which is sold by a bank in the
form of a short-term, unsecured promissory note.
NET ASSETS -- The term used to designate the total value of securities owned,
cash, receivables, and other assets less any liabilities.
MARKET VALUE -- The dollar value of a security on a given day, usually based on
the last sales price of that given day.
PREFERRED STOCK -- A high quality unit of ownership of a public corporation
which entitles the holder to preference over common stock holders in the payment
of dividends. (see also Stock)
PORTFOLIO TURNOVER -- A measure of portfolio trading activity.
REALIZED GAIN/LOSS -- The amount of profit or loss from the sale of securities.
Calculated as the sale price minus the purchase price.
REPURCHASE AGREEMENT -- An agreement where an investor loans cash to a bank in
exchange for a Treasury security held as collateral and interest on the loan.
The agreement indicates that the cash and collateral are exchanged back the
following day. These securities are used to invest idle cash.
RESTRICTED SECURITY -- A security which is sold privately because it is not
registered with the SEC.
RIGHT -- Privilege granted to stockholders of a company to buy shares of a new
issue of common stock (at a price below the public offering price) before it is
offered to the public.
STOCK -- Unit of ownership in a public corporation. The value of a share of
stock varies, according to how buyers and sellers of the stock view the
corporation's future success. Shareholders generally receive dividend payments,
which are their part of the corporation's earnings. (see also Common Stock;
Preferred Stock)
TIME DEPOSIT (TD) -- A non-negotiable short-term, interest bearing bond issued
by a bank or savings & loan. The maturity period can be from 1 day to 6 months.
UNREALIZED GAIN/LOSS -- The increase or decrease in the value of a security,
based on its daily market price and its original purchase price. A gain or loss
is "unrealized" until the sale of the security.
WARRANT -- A security which entitles the holder to buy additional shares of
common stock at a specified price (usually higher than the market price at the
time of issuance), over a period of years.
I
<PAGE>
BOARD OF
DIRECTORS PRUDENTIAL'S GIBRALTAR FUND
ROBERT P. HILL W. SCOTT McDONALD, JR., E. MICHAEL CAULFIELD
EXECUTIVE VICE PhD. CEO,
PRESIDENT, EXECUTIVE VICE PRUDENTIAL PREFERRED
THE PRUDENTIAL PRESIDENT, FINANCIAL SERVICES;
INSURANCE FAIRLEIGH DICKINSON PRESIDENT OF THE FUND
COMPANY OF AMERICA UNIVERSITY
CHAIRMAN OF THE BOARD
OF THE FUND
SAUL K. FENSTER, PhD. JOSEPH WEBER, PhD.
PRESIDENT, NEW JERSEY VICE PRESIDENT,
INSTITUTE OF TECHNOLOGY INTERCLASS
(INTERNATIONAL
CORPORATE LEARNING)
--------------------------------------------------------------------------------
BOARD OF
DIRECTORS THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
FRANKLIN E. AGNEW ROGER A. ENRICO ARTHUR F. RYAN
BUSINESS CONSULTANT CHAIRMAN AND CEO, CHAIRMAN, CEO,
FREDERIC K. BECKER PEPSICO WORLDWIDE AND PRESIDENT,
PRESIDENT, RESTAURANTS THE PRUDENTIAL
WILENTZ, GOLDMAN, & ALLAN D. GILMOUR CHARLES R. SITTER
SPITZER FORMER VICE CHAIRMAN, PRESIDENT,
WILLIAM W. BOESCHENSTEIN FORD MOTOR COMPANY EXXON CORPORATION
FORMER CHAIRMAN, WILLIAM H. GRAY III DONALD L. STAHELI
OWENS-CORNING PRESIDENT AND CEO, CHAIRMAN AND CEO,
FIBERGLAS CORPORATION UNITED NEGRO COLLEGE CONTINENTAL GRAIN
LISLE C. CARTER, JR. FUND, INC. COMPANY
FORMER SENIOR VICE JON F. HANSON RICHARD M. THOMSON
PRESIDENT CHAIRMAN, HAMPSHIRE CHAIRMAN AND CEO,
AND GENERAL COUNSEL, MANAGEMENT COMPANY THE TORONTO-DOMINION
UNITED WAY OF AMERICA CONSTANCE J. HORNER BANK
JAMES G. CULLEN GUEST SCHOLAR, P. ROY VAGELOS, M.D.
VICE CHAIRMAN, THE BROOKINGS FORMER CHAIRMAN AND
BELL ATLANTIC INSTITUTION CEO,
CORPORATION ALLEN F. JACOBSON MERCK & CO., INC.
CAROLYNE K. DAVIS, PhD. FORMER CHAIRMAN AND STANLEY C. VAN NESS
NATIONAL AND CEO, COUNSELOR AT LAW,
INTERNATIONAL MINNESOTA MINING AND PICCO HERBERT KENNEDY
HEALTH CARE ADVISOR, MANUFACTURING (3M) PAUL A. VOLCKER
ERNST & YOUNG GARNETT L. KEITH, JR. CHAIRMAN AND CEO,
VICE CHAIRMAN, JAMES D. WOLFENSOHN,
THE PRUDENTIAL INC.
BURTON G. MALKIEL JOSEPH H. WILLIAMS
PROFESSOR, DIRECTOR,
PRINCETON UNIVERSITY THE WILLIAMS COMPANIES,
JOHN R. OPEL INC.
RETIRED CHAIRMAN,
IBM CORPORATION
II
<PAGE>
This report is authorized for use with prospective investors only when preceded
or accompanied by current prospectuses for Systematic Investment Plan Contracts,
Variable Annuity Contracts and Prudential's Gibraltar Fund. These prospectuses
contain more information concerning sales charges and other material facts and
should be read carefully before you invest or send money.
In the past, contract owners who held several contracts of the same type, at the
same address, received multiple copies of Annual Reports and Semi-Annual
Reports. In an effort to lessen waste and to reduce your Fund's expense of
postage and printing, we will now mail only one copy of each contract owner
report for your related contracts at the same address. No action on your part is
necessary. Upon request, we will furnish you with additional reports. The
following telephone numbers should be used to request any additional copies.
Proxy material and tax information will continue to be sent to each account of
record.
(612) 553-6929
(612) 553-6913
<PAGE>
PEACE OF MIND. IT COMES WITH EVERY PIECE OF THE
ROCK.
Since 1875, The Prudential has been helping
individuals and families meet their financial
needs. Changing times mean changing needs. Whether
providing superior insurance protection for home,
family, and business, providing for future
education and retirement expenses, or offering
innovations like our Living Needs
Benefit-Registered Trademark- and Critical Care
Access, Prudential people have always been able to
deliver something more: personal service, quality,
attention to detail, and the financial strength of
The Rock.
If you have questions regarding your contract(s),
please contact your Prudential/Pruco Securities
representative or your local office.
BULK RATE
U.S. Postage
PAID
Jersey City, N.J.
Permit No. 60
[Logo]
Printed in the U.S.A. on recycled
paper using soybean ink
FSP SAR 6/95
<PAGE>
Graph 1: (Prudential's Gibraltar Fund)
Graph represents the growth of $10,000 invested in Prudential's Gibraltar
Fund compared with the S&P 500 and Lipper VIP Growth Average. In the ten years
ended 6/30/95, an investment of $10,000 would have a value
of $43,652, $39,255, and $35,380 respectively.
Graph 2: (Prudential's Gibraltar Fund)
How the Markets Compare - Total Returns by Asset Class
Graph represents comparison of markets for 1-year total return and 20-year
average annual return for period ending 6/30/95. Investment total Returns for
the one year ending 6/30/95; U.S. Bonds - 12.6%; U.S. Stocks - 26.1%; Global
Stocks - 11.2%; U.S. Money Markets - 4.9%. Investment Total Returns for the
twenty-year period ending 6/30/95; U.S. Bonds - 10.0%; U.S. Stocks - 13.7%;
Global Stocks - 13.6%; U.S. Money Markets - 7.7%.
