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PRUDENTIAL'S
GIBRALTAR FUND
[PHOTO]
SEMIANNUAL REPORT
TO PLANHOLDERS
PRUDENTIAL'S FINANCIAL
SECURITY PROGRAM
JUNE 30, 1997
[LOGO] PRUDENTIAL
The Prudential Insurance Company of America
751 Broad Street
Newark, NJ 07102-3777
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[LOGO]
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TABLE OF CONTENTS
I. LETTER TO PLANHOLDER 2
1. Market Review 4
2. Investment Advisor's Outlook 8
3. Prudential's Gibraltar Fund 10
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 B1
3. Notes to Financial Statements C1
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PERIOD ENDED JUNE 30, 1997
LETTER TO PLANHOLDER
[PHOTO]
JONATHAN M. GREENE
PRESIDENT
DEAR PLANHOLDER:
We are pleased to provide our Semiannual Report to you on the
investment performance of Prudential's Gibraltar Fund.
Once again, the news is outstanding. In the first half of this year, stock
prices surged nearly 21%, two times their rise in an average full year. In fact,
the Dow Jones Industrial Average broke through 8000 on July 16, two weeks after
the end of the first half. This certainly was not what most Wall Street experts
had predicted.
Bonds, too, performed favorably in the first half of the of 1997. Bonds returned
3.1% over the last six months, as measured by the Lehman Brothers Aggregate
Index. Corporate High Yield bonds in general were the strongest, returning 5.8%
for the period.
What led to such excellent performance? Conditions were idyllic for most
investors in the first half - economic growth was strong and interest rates were
relatively stable, so corporate profits rose. Unemployment fell to a 23-year low
and consumer confidence hit a 28-year high.
HOW DID THE GIBRALTAR FUND PERFORM?
The Prudential Gibraltar Fund delivered a return of 11.18% in the first
six-months of the year, slightly below the Lipper (VIP) Growth Average
of 13.52%.
IT'S LONG-TERM PERFORMANCE THAT COUNTS.
Although in this report we're focusing primarily on performance for
the first half of the year, remember that it's long-term performance that
counts. Review your Fund's performance so far in 1997, but also be sure
to note its longer-term record as well. You will note that over the past
five and 10 years the Gibraltar Fund has delivered excellent performance, both
on an absolute basis and in comparison with funds having similar objectives. Our
goal is to achieve this kind of above-average investment performance over time.
Such consistency is important, because most people buy variable annuity products
to finance long-term goals.
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"Conditions were idyllic for most investors in the first half - economic growth
was strong and interest rates were relatively stable, so corporate profits
rose."
2
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COULD THE THIRD TIME BE A CHARM?
When the U.S. stock market rose 37% in 1995, we doubted it would be repeated any
time soon. Then stocks advanced 23% in 1996. Again, we suggested that this kind
of performance was unlikely to be duplicated again. And now, through the first
half 1997, stocks are already up nearly 21%.
It's clear that we - and, we venture, most other investors - cannot predict the
stock market. Nevertheless, it's even more important now to repeat what we wrote
six months ago - that the U.S. stock market sits at valuation beyond all
historic boundaries.
Now, more than ever, we believe it is worth reminding you that the Gibraltar
Fund is subject to the same risks and rewards as the general stock market and
that your expectations should be reasonable. What's reasonable? Well, over the
last 70 years the average annual return of U.S. stocks is 10.7% as measured by
the S&P 500.
With this in mind, your Prudential Representative/Pruco Securities Registered
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 - one who
understands you and your long-term investment needs - is a valuable resource
given today's market.
All of us at Prudential thank you for your business and look forward to helping
you plan for your future financial security.
/s/ Jonathan M. Greene /s/ Mendel Melzer
Jonathan M. Greene Mendel A. Melzer, CFA
President, Chairman,
Prudential's Gibraltar Fund Prudential's Gibraltar Fund
July 23, 1997
[PHOTO]
MENDEL A. MELZER, CFA
CHAIRMAN
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IMPORTANT NOTE
The rates of return quoted on the following pages reflect the deduction of
investment management fees and investment-related expenses, but not product
charges. They reflect the reinvestment of dividend and capital gains
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
and when redeemed, may be worth more or less than original cost. 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 the contract. These
contract charges effectively reduce the dollar amount of any net gains and
increase the dollar amount of any net losses.
3
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1997 MARKET REVIEW
U.S. STOCKS
THE DOW: 6600, 6800, 7000, 7200, 7400, 7600 . . .
After rising 37% in 1995 and 23% in 1996, stock prices rose another 21% in the
first six months of 1997. This stunning performance prompted analysts and
economists alike to reach for superlatives.
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HOW THE MARKETS COMPARED.(1)
Average Return Over
Year-to-Date 1997 Past 20 Years (Annualized)
Money Market 2.5% 7.7%
Bonds 3.1% 9.5%
Foreign Stocks 15.6% 15.1%
U.S. Stocks 20.6% 15.9%
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THIS CHART COMPARES THE 6-MONTH RETURN AS OF 6/30/97 FOR VARIOUS CATEGORIES OF
INVESTMENTS WITH THE AVERAGE ANNUAL TOTAL RETURN OVER 20 YEARS FOR THE SAME
INVESTMENT. AS YOU CAN SEE, STOCK AND BOND MARKET RETURNS CAN VARY CONSIDERABLY
FROM YEAR TO YEAR. UNLIKE STOCKS, BONDS GENERALLY OFFER A FIXED RATE OF RETURN
AND PRINCIPAL IF HELD TO MATURITY. AN INVESTMENT'S PAST PERFORMANCE SHOULD NEVER
BE USED TO PREDICT FUTURE RESULTS. THERE ARE DIFFERENT RISKS ASSOCIATED WITH
EACH INVESTMENT SECTOR, WHICH SHOULD BE CAREFULLY CONSIDERED BEFORE INVESTING.
(1) SOURCE: PRUDENTIAL. FOR PURPOSES OF COMPARISON ONLY. U.S. MONEY MARKETS AS
MEASURED BY LIPPER MONEY MARKET AVERAGE. BONDS AS MEASURED BY THE LEHMAN
BROTHERS AGGREGATE INDEX. FOREIGN STOCKS AS MEASURED BY THE MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD INDEX. U.S. STOCKS AS MEASURED BY THE S&P 500 INDEX.
The wonder was the economy. The current U.S. economic expansion is now in its
seventh year, the third longest in history. Unemployment is at its lowest since
1973. Inflation seems like a distant memory. All of this means higher corporate
revenues and stable corporate borrowing costs -- and as a result, higher
corporate profits. It's a nearly idyllic investment environment.
To be sure, the stock market did not rocket straight up in the first half of the
year. Stocks actually fell nearly 10% in the spring, amid short-lived fears of
higher interest rates. Back in March, the Federal Reserve increased short-term
interest rates (by a quarter of a percentage point), for the first time in two
years. The nation's central bankers feared that first-quarter economic growth
would set off a new round of inflation. Stocks recovered in April amid evidence
the growth rate was moderating.
LARGE STOCKS WERE THE LEADERS, AGAIN.
In the first half of the year, the biggest stocks were the best performers. The
five biggest companies in the S&P 500 gained 34% in the first half of the year,
while the top 25 companies gained 28%. Of the largest companies, the drug stocks
seemed to do the best as a group, with Warner Lambert up 67%, Eli Lilly rising
51%, Bristol-Myers Squibb climbing 49% and Pfizer advancing 45% during the
period.
Small company stocks trailed larger companies, as they have for several years
now, rising 10% in the first half of 1997 as measured by the Russell 2000*.
(These companies are generally defined as those whose outstanding stock is
valued at less than $1 billion.) Still, performance of these stocks has been
improving in recent months. Consumer growth stocks (powered by the
pharmaceutical companies) led the market, followed by financial and consumer
cyclical stocks (auto, retail and housing stocks whose fortunes tend to mirror
the ups and downs of the economy).
4
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U.S. STOCKS: CONSUMER GROWTH TOPS.
Y-T-D
6/30-97
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Consumer Growth 24.5%
Finance 23.6%
Consumer Cyclical 21.1%
Technology 21.0%
Industrials 19.4%
Energy 18.6%
Utilities 7.8%
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SOURCE: PRUDENTIAL
CONSUMER GROWTH stocks rose almost 25% during the first half of 1997, powered
primarily by drug companies, beverages and household products. As stock prices
rose higher and higher, investors seemed to favor the very largest companies
that produce the most steadily predictable earnings and therefore stocks that
can be traded most easily. Widely owned Coca-Cola rose 30%. Another household
name, Gillette, rose 22%. Drug companies also did well, as previously
mentioned.
FINANCIAL stocks climbed nearly 24% for the period. Mergers and acquisitions
among financial companies continued to dominate (such as Morgan Stanley and Dean
Witter), helping to fuel interest in this area. A feeling that the Federal
Reserve would not raise short-term interest rates any further helped power bank
stocks higher.
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THE DOW IN THE PAST TWELVE MONTHS.
The Dow marched from 5500 to 7000 in 8 months.
Jul 5,473.06
5,679.83
5,681.31
5,689.45
5,722.74
Aug 5,616.21
5,659.86
5,838.52
5,888.46
Sep 5,872.92
5,992.86
5,969.38
6,094.23
Oct 6,007.02
6,021.93
6,219.82
6,348.03
6,471.76
Nov 6,521.7
6,381.94
6,304.87
6,484.4
Dec 6,560.91
6,544.09
6,703.79
6,833.1
6,696.48
Jan 6,813.09
6,855.8
6,988.96
6,931.62
Feb 6,877.74
7,000.89
6,935.46
6,804.79
In March and April, fears of higher interest rates shook the market.
Mar 6,740.59
6,526.07
6,391.69
6,703.55
Apr 6,738.87
7,071.2
7,169.53
7,194.67
7,345.91
May 7,331.04
7,435.78
7,782.04
7,796.51
Jun 7,687.72
The Dow rose 20% in 11 weeks, closing at 7688.
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WEEKLY CLOSE OF THE DOW JONES INDUSTRIAL AVERAGE FOR THE PAST TWELVE MONTHS.
CONSUMER CYCLICAL stocks ranked third, rising 21% during the period, as the U.S.
economy grew at 4.9% in the first quarter, and unemployment was at its lowest
since 1973. Retailers led, powered by major gainers Nordstrom, up 39%; Home
Depot, advancing 38%; and Dayton Hudson, climbing 37%.
LARGE STOCKS OUTPERFORMED SMALL STOCKS.
Y-T-D 20-Year
6/30/97 Average
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S&P 500* 20.6% 15.9%
NASDAQ* 11.7% 14.3%
Russell 2000* 10.2% 15.7%
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* THE STANDARD & POOR'S 500, NASDAQ, AND RUSSELL 2000 ARE UNMANAGED INDICES THAT
ARE CONSIDERED TO BE GENERALLY REPRESENTATIVE OF U.S. STOCK MARKETS. INVESTORS
CANNOT INVEST DIRECTLY IN INDICES OR MARKET AVERAGES. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
5
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1997 MARKET REVIEW CONTINUED
U.S. BONDS
INTEREST RATES: SOMEWHAT STABLE.
Long-term interest rates rose, then fell, in the first half of the year, ending
slightly higher at midyear. The Federal Reserve raised short-term interest rates
for the first time in two years, lifting the overnight bank lending rate by a
quarter of a percentage point in March to 5.5% as a precaution against too-
strong economic growth. In response, long-term interest rates at first rose.
Rates later eased as inflation worries subsided, along with concerns of further
action by the Federal Reserve.
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30-YEAR U.S. TREASURY YIELDS.
Jul 6.97
Aug 7.12
Sep 6.92
Oct 6.64
Yields bottomed at 6.35% on Nov. 29.
Nov 6.35
Dec 6.64
Jan 6.79
Feb 6.8
Mar 7.1
Inflation fears drove yields up to 7.17% on April 14.
Apr 6.96
May 6.91
Slower economic growth pushed yields down to 6.78% on June 30.
Jun 6.78
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MONTHLY CLOSING YIELDS FOR THE PAST TWELVE MONTHS. SOURCE: LEHMAN BROTHERS, AS
OF 6/30/97.
Bonds returned 3.1% over the first six months of 1997 as measured by the Lehman
Brothers Aggregate Index. The yield on the bellwether 30-year U.S. Treasury bond
rose to 6.78% on June 30, 1997, from 6.64% on December 31, 1996. Short-term
rates, as measured by the three-month U.S. Treasury bill, actually fell
slightly, to 5.17% on June 30, 1997.
Corporate high yield bonds in general were the strongest, returning 5.8% for the
period. High yield corporate bonds fared well on solid economic growth, rising
corporate profits, minimal defaults and powerful demand as a broadening base of
institutional investors seeking higher yields became interested in this sector.
A large number of new issues were sold in the first half -- $55 billion -- only
$8 billion less than in all of last year. Better-rated high yield securities, as
a group, outperformed those with poorer credit ratings.
Solid economic growth, stable inflation and steady governments also helped
emerging markets bonds to a strong first half. Argentina led all of Latin
America, rising 11% as financial stability in the region improved generally.
Brazil, Mexico and Venezuela followed, as reported by Morgan Stanley.
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HIGH YIELD BONDS PERFORMED BEST.
High Yield Bonds 5.8%
Mortgage Bonds 3.9%
AGGREGATE INDEX 3.1%
Corporate Bonds 3.1%
Government Bonds 2.6%
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SOURCE: LEHMAN BROTHERS, AS OF 6/30/97.
6
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FOREIGN STOCKS
EUROPE STRONG; JAPAN AND PACIFIC REGION REBOUND.
Although stock markets in Europe and the Pacific couldn't match the torrid
performance of the U.S. market in the first half of 1997, European stocks
were strong and Pacific stock markets -- especially Japan, which represents
two-thirds of the region -- came alive in the second quarter.
In the Pacific, returns for the full first six months of the year were
comparatively subdued: Pacific stocks rose 7% and Japanese stocks climbed 9%.
But these returns masked a 24% gain by Japanese stocks for U.S. investors in the
second quarter, because the yen strengthened significantly against the U.S.
dollar.
LET'S DO EUROPE.
Europe was the best region outside the United States in the first six months (as
measured in dollars), as stocks of many more-efficient export-oriented companies
led markets higher. European stocks in general have benefited from the movement
toward monetary unity in 1999, which has forced governments to economize,
reducing interest rates. Export-oriented companies fared best, rising in the
second quarter.
JAPAN RISES.
A strengthening yen powered Japanese stocks to their highest levels since
December, igniting gains throughout the Pacific region. The U.S. dollar lost 12%
against the yen in just five weeks in May and June. This helped Japanese stocks
rise 24% for U.S. investors in the second quarter. But because Japanese stocks
had lost ground in the first quarter of 1997, they were ahead only 9% in U.S.
dollars for the first half of the year.
Hong Kong stocks also performed well, as investors overcame their fear of
turning over the British colony to China after more than 150 years.
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U.S. TOPS FOREIGN MARKETS.
Y-T-D
6/30/97
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MSCI World Index 15.6%
MSCI Europe Index 14.5%
MSCI EAFE Index 11.4%
MSCI Japan Index 9.2%
MSCI Pacific Index 7.3%
S&P 500 INDEX 20.6%
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SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL.
THE MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX IS A WEIGHTED,
UNMANAGED INDEX OF PERFORMANCE OF 1,472 SECURITIES LISTED ON THE STOCK EXCHANGES
OF THE U.S., EUROPE, CANADA, AUSTRALIA, NEW ZEALAND AND THE FAR EAST. INVESTORS
CANNOT INVEST DIRECTLY IN AN INDEX.
MORGAN STANLEY COUNTRY INDICES [EUROPE, ASIA, FAR EAST (EAFE), PACIFIC AND
JAPAN] ARE UNMANAGED INDICES THAT INCLUDE THOSE STOCKS MAKING UP THE LARGEST
TWO-THIRDS OF EACH COUNTRY'S TOTAL STOCK MARKET CAPITALIZATION. THIS CHART IS
FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT INDICATIVE OF THE PAST, PRESENT OR
FUTURE PERFORMANCE OF ANY SPECIFIC INVESTMENT. INVESTORS CANNOT INVEST DIRECTLY
IN STOCK INDICES.
THE STANDARD & POOR'S 500 IS A WEIGHTED, UNMANAGED INDEX COMPRISED OF 500
STOCKS, WHICH PROVIDES A BROAD INDICATOR OF STOCK PRICE MOVEMENTS.
7
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1997 INVESTMENT ADVISOR'S OUTLOOK
THE ECONOMY.
Our economists at Prudential suspect that growth will remain relatively subdued
for the rest of the year. Economic growth slowed sharply in the second quarter.
They also expect inflation will remain benign, below 3%. As a result, the
Federal Reserve will likely refrain from raising short-term interest rates any
further this year, and the central bankers may ultimately lower rates by early
next year, our economists predict.
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ECONOMIC OUTLOOK.
Est.
1997
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GDP 2.7%
Inflation 2.2%
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SOURCE: PRUDENTIAL ECONOMICS.
U.S. STOCKS: WHAT'S AFTER 8000?
Now that the Dow Jones Industrial Average has hurdled 8000, with some analysts
now predicting a Dow of 10,000, it's only natural to wonder how long all this
good news can continue. After all, stock prices have doubled in the last two and
a half years.
At these high price levels, stock selection is even more crucial. So, too, is
understanding the objective, strategy and risks of the portfolio in which your
contract values are invested. Some stocks now sell at very high prices --
particularly those of large, well-known companies. But other stocks remain
attractive. Some of our managers like industrial companies, real estate
investment trusts and securities brokerages, because they believe they have room
to appreciate. Others like insurance, paper and retailing, thinking they are
undervalued. Our growth stock managers who have done very well with the
pharmaceuticals, also think that technology is due for an upswing after hitting
what seemed like a bottom in April.
8
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BONDS: WE'RE SEARCHING FOR YIELD.
We suspect that prices in the bond market will remain relatively stable through
the rest of the year, depending on the relative weakness or strength that
investors see in the economy.
We are focusing now on finding bonds that provide more yield than U.S. Treasurys
while offering comparatively little additional risk.
We are particularly interested in crossover bonds -- those with split ratings of
investment grade (BBB) by one rating agency and just below investment grade (BB)
by another. Frequently, we can buy these bonds at more attractive prices than
bonds rated below investment grade (high yield bonds), because of the
uncertainty over their credit strength.
We are also interested in emerging markets. Relative stability in governments,
economic growth and low inflation made emerging markets bonds the best-
performing bonds in the world in the first half of the year. We've added
Russian, South African, Panamanian and Polish bonds, among others, to our
portfolios.
FOREIGN STOCKS: LOOK FOR THE JAPANESE SURPRISE.
The Japanese stock market may be a pleasant surprise this year. We've
purchased stocks of domestically oriented Japanese companies that sell their
products and services within the country; they are more attractively priced than
export-oriented multinational companies.
In Europe, we see the opposite. We are invested in multinational stocks,
particularly those that are restructuring to increase efficiency. We believe
that the movement toward a common European currency will continue to constrain
economic growth rates within Europe, so we are most interested in companies
listed on European stock exchanges but that derive most of their revenues from
outside Europe.
In Hong Kong, we suspect that the new Chinese control will limit the escalation
of real estate prices. Since property-related stocks are about a third of the
market index, prices in general will have to struggle to move
higher.
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A REALITY CHECK.
Stock prices in general have nearly doubled in the last two and a half years.
We're quite pleased with the unusually high returns that stocks have provided
for our Contract Owners over the past few years, and we are certain that you
are, too. Those types of returns bring you closer to your goals of financial
security faster than you might have expected.
Since 1926, the U.S. stock market's average return has been 10.7%, as measured
by the S&P 500. Yet, in recent years, returns have been much higher, as the
chart below shows.
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RETURNS OF THE U.S. STOCK MARKET.
Average
Annual
Return
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LAST 70 YEARS
1926-1996 10.7%
LAST TWO YEARS
1995 37.4%
1996 23.0%
LAST SIX MONTHS
1997 20.6%
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SOURCE: PRUDENTIAL.
As much as we would like this tremendous performance to continue year after
year, we know it cannot. It's simply the law of averages.
9
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PRUDENTIAL'S GIBRALTAR FUND
PERFORMANCE SUMMARY.
Your Fund returned 11.18% over the past half year. U.S. stocks extended
their long climb through the first half of 1997, except for a month-long slide
around the end of the first quarter. General equity funds trailed the market
and the Prudential Gibraltar Fund trailed the Lipper (VIP) Growth Average by 2.4
percentage points, as reported by Lipper Analytical Services. Over a full
12 months, your returns were much higher than the Lipper average.
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AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1997
<TABLE>
<CAPTION>
Six One Three Five Ten
Months Year Years Years Years
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<S> <C> <C> <C> <C> <C>
Gibraltar Fund(1) 11.18% 28.92% 19.35% 18.44% 14.20%
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Lipper (VIP) Growth Avg.(2) 13.52% 23.63% 23.74% 17.87% 13.23%
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S&P 500(3) 20.60% 34.68% 28.83% 19.76% 14.63%
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GIBRALTAR FUND INCEPTION DATE: 3/14/68.
</TABLE>
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$10,000 INVESTED OVER TEN YEARS
<TABLE>
<CAPTION>
$37,727.90 $34,683.00 Lipper (VIP) $39,172 S&P 500(3)
Gibraltar Fund(1) Growth Avg(2)
<S> <C> <C> <C>
87 10,000 10,000 10,000
7,777 8,305.76 8,258.57
88 9,701.03 9,434.12 9,307.13
9,772.82 9,520.65 9,626.4
89 11,136.1 11,103.4 11,216.8
11,946.8 12,215.5 12,671.4
90 12,185.8 12,718.1 13,061.5
11,611.8 11,643.1 12,277.4
91 13,577.7 13,490.1 14,024.3
15,600.8 15,883.5 16,009.8
92 15,593 15,290.6 15,902.2
18,343.6 17,037.5 17,227.9
93 21,304.2 17,987.9 18,065.9
22,706.1 19,441.5 18,960.4
94 22,190.6 18,242.5 18,318.9
22,405.9 19,032.6 19,209.5
95 25,907.9 22,441.4 23,087.1
26,692.9 25,214.5 26,419.5
96 29,266.1 27,722.1 29,085
33,934.1 30,417.8 32,481.5
97 37,727.9 34,683 39,171.8
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</TABLE>
(1) PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO
PERFORMANCE IS NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT
CHARGES.
(2) THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) GROWTH AVERAGE IS CALCULATED
BY LIPPER ANALYTICAL SERVICES, INC., AND REFLECTS THE INVESTMENT RETURN OF
CERTAIN PORTFOLIOS UNDERLYING VARIABLE LIFE AND ANNUITY PRODUCTS. THESE
RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT
CHARGES.
(3) 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
PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER
SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE
ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO,
AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE.
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[CHART COMPARING RELATIVE RISKS OF INVESTMENT TYPES]
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INVESTMENT GOAL
Growth
TYPES OF INVESTMENTS
Primarily stocks of a diversified group of companies in a variety of industries.
INVESTMENT STYLE
This Portfolio uses a "growth" investment style to select stocks based on their
potential to deliver above-average growth in revenue and earnings.
PERFORMANCE REVIEW.
Technology both helped and hurt. The technology sector had
a down and up half year, coming out moderately well for the six months.
Overall, our technology stocks performed well, but we had a focus on the
computer networking industry, where stock prices had gotten ahead of earnings.
Prices "corrected", i.e., declined slightly.
Our long-term view of the industry hasn't changed. We took some profits and
expect to buy again if the sector shows the seasonal weakness it has in the
past.
REAL ESTATE SAW A SUPPLY/DEMAND CORRECTION. In real estate as well, our real
estate investment trusts (REITs) did not keep up with the overall stock market,
as supply exceeded demand. We believe this is temporary.
10
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STRATEGY SESSION.
TECHNOLOGY STOCKS TEND TO BE SEASONAL. The technology sector has been
seasonal in the past, and we took advantage of the seasonal high to take
profits. For example, we significantly reduced our holdings of Intel, which
we had bought for about half their current price. We reduced the share of our
portfolio in technology stocks -- we had owned proportionately more than the
overall market and now we hold less. Should the seasonal pattern repeat itself
this year, we'll rebuild our holdings in the summer weakness.
FINANCIALS ARE VULNERABLE TO INTEREST RATES. The financial sector did quite well
in the first six months of 1997. It was the second fastest-rising sector in this
hot market and we had a focus in the sector. However, we suspect that over the
next half year or so, the interest rate environment will not be favorable for
banks. We are taking our profits here, too, and waiting to see what happens.
RETAILERS LOOK INTERESTING IN THE CONSUMER SECTOR. We see some interesting
opportunities in both consumer cyclicals and consumer growth. They include large
retailing chains, such as Sears Roebuck, and drug store chains.
OUTLOOK
PORTFOLIO MANAGER
GREG P. GOLDBERG
OPPORTUNITY IN ENERGY AND UTILITIES.
"I think there are some interesting opportunities arising in the energy and
utilities sectors. Some old nuclear plants are disliked by their neighbors and
are uncompetitive in producing energy, but represent such a large investment
that their owners cannot afford to write them off while they still work. It is
to everyone's advantage to decommission these plants as soon as possible, and I
expect governments to provide tax concessions to make it financially feasible
for their owners to do so. Getting rid of these anchors will improve the
competitiveness of their owners. Over the long term, I believe demand for energy
is stronger than supply, but the balance will be volatile in the short term. I
favor oil service companies that develop the infrastructure that is needed to
process oil, no matter who finds or sells the oil. The next phase in the
industry belongs to the service companies."
[PHOTO]
PORTFOLIO MANAGER
GREG P. GOLDBERG
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
6/30/97 12/31/96
------- --------
Consumer Growth 29% 16%
Energy 17% 11%
Finance 15% 20%
Technology 14% 23%
Consumer Cyclical 8% 6%
Utility 7% 1%
Industrial 6% 11%
Cash 4% 12%
- --------------------------------------------------------------------------------
SOURCE: PRUDENTIAL. HOLDINGS ARE SUBJECT TO CHANGE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
6/30/97
-------
Novartis Corp. 3.8%
Aetna, Inc. 3.1%
First Nat'l Bank of Chicago 3.1%
Uniphase Corp. 2.7%
Smith International, Inc. 2.6%
Schlumberger LTD. 2.6%
UCAR International Inc. 2.3%
Unilever NV-ADR 2.2%
Exxon Corp. 2.1%
Sears Roebuck & Co. 2.1%
- --------------------------------------------------------------------------------
SOURCE: PRUDENTIAL. HOLDINGS ARE SUBJECT TO CHANGE.
11
<PAGE>
FINANCIAL STATEMENTS OF
PRUDENTIAL'S GIBRALTAR FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1997
<S> <C>
ASSETS
Investments, at value (cost:
$261,403,385)............................ $ 316,514,393
Cash....................................... 184,160
Receivable for investments sold............ 1,652,544
Interest and dividends receivable.......... 486,155
--------------
Total Assets............................. 318,837,252
--------------
LIABILITIES
Payable for investments purchased.......... 4,411,380
Payable to investment adviser.............. 91,580
Accrued expenses........................... 59,271
--------------
Total Liabilities........................ 4,562,231
--------------
NET ASSETS................................... $ 314,275,021
--------------
--------------
Net assets were comprised of:
Common stock, at $1 par value.............. $ 26,075,277
Paid-in capital, in excess of par.......... 214,437,632
--------------
240,512,909
Undistributed net investment income.......... 252,981
Accumulated net realized gains on
investments................................ 18,398,123
Net unrealized appreciation on investments... 55,111,008
--------------
Net assets, June 30, 1997.................. $ 314,275,021
--------------
--------------
Net asset value and redemption price per
share (26,075,278 outstanding shares of
common stock; authorized 75,000,000
shares).................................. $ 12.05
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1997
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of $5,363 foreign
withholding taxes)....................... $ 2,076,637
Interest................................... 1,050,325
---------------
3,126,962
---------------
EXPENSES
Investment advisory fee.................... 183,446
State franchise tax expense................ 30,000
Miscellaneous expenses..................... 9,905
Directors' fees............................ 4,000
Custodian expense.......................... 2,000
---------------
Total expenses............................. 229,351
---------------
NET INVESTMENT INCOME........................ 2,897,611
---------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments........... 18,398,123
Net change in unrealized appreciation on
investments.............................. 9,994,141
---------------
NET GAIN ON INVESTMENTS...................... 28,392,264
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 31,289,875
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------------ -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income.................................................................. $ 2,897,611 $ 3,868,291
Net realized gain on investments....................................................... 18,398,123 35,522,025
Net change in unrealized appreciation on investments................................... 9,994,141 28,188,380
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................... 31,289,875 67,578,696
------------------ -------------------
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................................... (3,247,184) (3,659,501)
Distributions from net realized capital gains.......................................... (11,966,730) (31,301,947)
------------------ -------------------
TOTAL DIVIDENDS AND DISTRIBUTIONS........................................................ (15,213,914) (34,961,448)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock issued in reinvestment of dividends and distributions [1,274,527 and
2,971,950 shares, respectively]....................................................... 15,213,914 33,969,659
Capital stock repurchased [1,565,443 and (2,374,885) shares, respectively]............. (18,311,475) (26,513,694)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS................ (3,097,561) 7,455,965
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 12,978,400 40,073,213
NET ASSETS:
Beginning of period.................................................................... 301,296,621 261,223,408
------------------ -------------------
End of period.......................................................................... $ 314,275,021 $ 301,296,621
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
A1
<PAGE>
SCHEDULE OF INVESTMENTS
PRUDENTIAL'S GIBRALTAR FUND
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS -- 96.0%
VALUE
COMMON STOCKS -- 92.5% SHARES (NOTE 1)
------------- --------------
<S> <C> <C>
BANKS AND SAVINGS & LOANS -- 0.9%
Chase Manhattan Corp............................ 30,500 $ 2,960,406
--------------
CHEMICALS -- 0.7%
Agrium, Inc..................................... 192,300 2,211,450
--------------
COMPUTER SERVICES -- 6.2%
3Com Corp. (a).................................. 65,000 2,925,000
Cisco Systems, Inc. (a)......................... 71,100 4,772,587
Computer Associates International, Inc.......... 62,300 3,469,331
Larscom, Inc. (Class 'A' Stock) (a)............. 175,900 1,890,925
Microsoft Corp., (a)............................ 51,000 6,445,125
--------------
19,502,968
--------------
DIVERSIFIED OPERATIONS -- 1.8%
General Electric Co............................. 86,500 5,654,937
--------------
DRUGS AND MEDICAL SUPPLIES -- 8.4%
Johnson & Johnson............................... 82,000 5,278,750
Novartis Corp., AG ADR (Switzerland)............ 150,600 12,048,000
Pfizer, Inc.,................................... 51,600 6,166,200
Pharmacia & Upjohn, Inc. (a).................... 85,000 2,953,750
--------------
26,446,700
--------------
ELECTRONICS -- 3.2%
Intel Corp...................................... 11,000 1,559,937
Uniphase Corp. (a).............................. 146,100 8,510,325
--------------
10,070,262
--------------
FINANCIAL SERVICES -- 4.6%
Federal National Mortgage Association........... 150,000 6,543,750
Imperial Credit Industries, Inc. (a)............ 76,800 1,579,200
The Money Store, Inc............................ 219,100 6,285,431
--------------
14,408,381
--------------
FOOD & BEVERAGES -- 1.0%
PepsiCo, Inc.................................... 81,800 3,072,612
--------------
HEALTHCARE -- 0.2%
Sierra Health Services, Inc. (a)................ 20,970 655,312
--------------
HOSPITALS/ HOSPITAL MANAGEMENT -- 2.7%
Columbia/HCA Healthcare Corp.................... 156,800 6,164,200
Manor Care, Inc................................. 66,400 2,166,300
--------------
8,330,500
--------------
INSURANCE -- 8.7%
Aetna, Inc...................................... 96,700 9,899,662
American International Group, Inc............... 18,170 2,714,144
CIGNA Corp...................................... 35,400 6,283,500
Provident Companies, Inc........................ 59,000 3,156,500
Travelers Group Inc............................. 84,133 5,305,637
--------------
27,359,443
--------------
LEISURE -- 4.8%
Carnival Corp. (Class 'A' Stock)................ 130,100 5,366,625
Hilton Hotels Corp.............................. 185,500 4,927,344
La Quinta Inns, Inc............................. 222,300 4,862,813
--------------
15,156,782
--------------
METALS-FERROUS -- 2.3%
UCAR International, Inc. (a).................... 156,100 7,141,575
--------------
</TABLE>
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------- --------------
<S> <C> <C>
METALS-NON FERROUS -- 1.5%
Aluminum Company of America..................... 63,800 $ 4,808,925
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 2.1%
Unilever N.V., ADR, (United Kingdom)............ 31,000 6,758,000
--------------
OIL & GAS -- 6.3%
Alberta Energy Co., Ltd......................... 111,600 2,803,950
Exxon Corp...................................... 108,600 6,678,900
McDermott International, Inc.................... 213,500 6,231,531
Texaco, Inc..................................... 38,500 4,186,875
--------------
19,901,256
--------------
OIL & GAS SERVICES -- 10.8%
B.J. Services Co. (a)........................... 113,100 6,064,988
Bouyges Offshore SA, ADR, (France) (a).......... 208,700 2,608,750
Input/Output, Inc. (a).......................... 76,400 1,384,750
J. Ray McDermott, SA............................ 126,600 3,418,200
Parker & Parsley Petroleum Co................... 110,500 3,908,938
Schlumberger Ltd................................ 65,400 8,175,000
Smith International, Inc. (a)................... 135,600 8,237,700
--------------
33,798,326
--------------
REAL ESTATE DEVELOPMENT -- 5.5%
Crescent Operating, Inc......................... 11,170 134,040
Crescent Real Estate Equities, Inc.............. 111,700 3,546,475
Developers Diversified Realty................... 89,000 3,560,000
Equity Residential Properties Trust............. 86,700 4,118,250
Meditrust Corp.................................. 26,800 1,068,650
Patriot American Hospitality, Inc............... 191,800 4,890,900
--------------
17,318,315
--------------
RETAIL -- 8.4%
American Stores Co.............................. 90,300 4,458,563
CVS Corp........................................ 94,900 4,863,625
Sears, Roebuck & Co............................. 124,000 6,665,000
The Gap, Inc.................................... 103,000 4,004,125
Toys 'R' Us, Inc. (a)........................... 181,000 6,335,000
--------------
26,326,313
--------------
TELECOMMUNICATIONS -- 3.6%
ADC Telecommunications, Inc. (a)................ 92,325 3,081,347
Ascend Communications, Inc. (a)................. 56,600 2,228,625
Glenayre Technologies, Inc. (a)................. 116,300 1,904,413
Westell Technologies, Inc. (a).................. 168,900 4,222,500
--------------
11,436,885
--------------
TOBACCO -- 1.8%
Phillip Morris Co. Inc.,........................ 127,400 5,653,375
--------------
UTILITY - COMMUNICATIONS -- 0.9%
BellSouth Corp.................................. 60,200 2,791,775
--------------
UTILITY - ELECTRIC -- 6.1%
Duke Power Co................................... 100,000 4,793,750
Long Island Lighting Co......................... 76,800 1,766,400
Pinnacle West Capital Corp...................... 137,000 4,118,563
Texas Utilities Co.............................. 98,600 3,395,538
Unicom Corp..................................... 222,700 4,955,075
--------------
19,029,326
--------------
TOTAL COMMON STOCKS
(cost $235,818,930)............................................ 290,793,824
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
B1
<PAGE>
PRUDENTIAL'S GIBRALTAR FUND (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PREFERRED STOCKS -- 2.1% (NOTE 1)
--------------
<S> <C> <C>
FINANCIAL SERVICES -- 0.1%
Advanta Corp. (Class 'B' Stock)................. 10,150 $ 347,638
--------------
RETAIL -- 2.0%
Kmart Corp. (Cum. Conv.)........................ 113,800 6,244,775
--------------
TOTAL PREFERRED STOCKS
(cost $6,138,093).............................................. 6,592,413
--------------
PRINCIPAL
MOODY'S AMOUNT
CONVERTIBLE BONDS -- 1.4% RATING (000)
------------ ---------
COMPUTER SERVICES -- 0.3%
The Learning Co., Inc.
5.50%, 11/01/00............................... NR $ 1,280 1,049,600
--------------
RETAIL -- 1.1%
Sunglass Hut International
5.25%, 06/15/03............................... B2 4,595 3,279,681
--------------
TOTAL CONVERTIBLE BONDS
(cost $4,647,487)........................................................ 4,329,281
--------------
TOTAL LONG-TERM INVESTMENTS
(cost $246,604,510)...................................................... 301,715,518
--------------
SHORT-TERM INVESTMENTS -- 4.7%
COMMERCIAL PAPER -- 1.6%
Citicorp,
5.90%, 07/10/97............................... P3 5,000 4,992,875
--------------
TIME DEPOSIT -- 3.1%
First National Bank of Chicago,
6.25%, 07/01/97............................... P1 9,806 9,806,000
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $14,798,875)....................................................... 14,798,875
--------------
TOTAL INVESTMENTS -- 100.7%
(cost $261,403,385; Note 3).............................................. 316,514,393
--------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%)............................ (2,239,372)
--------------
TOTAL NET ASSETS -- 100.0%................................................. $ 314,275,021
--------------
--------------
</TABLE>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French
Corporation)
(a) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS.
B2
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUDENTIAL'S GIBRALTER FUND
NOTE 1: ACCOUNTING POLICIES
Prudential's Gibralter Fund (the 'Fund') is a Delaware Corporation is registered
as an open-end, diversified management investment company under the Investment
Company Act of 1940, as amended. The Fund was organized by The Prudential to
serve as the investment medium for the variable contracts accounts of The
Prudential Financial Security Program. The Fund does not sell its shares to the
public. The accounts will redeem shares of the Fund to the extent necessary to
provide benefits under the contracts or for such other purposes as may be
consistent with the contracts.
SECURITIES VALUATION: Securities traded on a national securities exchange are
valued at the last sales price (or the mean between the last bid and asked 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 mean 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 mean between the last bid and asked 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 last sale price or, if there was no
sale on such day, at the mean between the most recently quoted bid and asked
prices 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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian or designated
subcustodians, as the case may be under triparty repurchase agreements, take
possession of the underlying collateral securities, the value of which exceeds
the principal amount of the repurchase transaction, including accrued interest.
If the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Fund may be delayed or limited.
SECURITIES TRANSACTIONS AND NET INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis. Expenses
are recorded on the accrual basis which may require the use of certain estimates
by management.
DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income are declared
and paid semi-annually. The Fund will distribute at least annually net capital
gains in excess of loss carryforwards, if any. Dividends and distributions are
recorded on the ex-dividend date. 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.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
TAXES: It is the Fund's policy to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net income to its shareholders. Therefore, no
federal income tax provision is required. Withholding taxes on foreign dividends
have been provided for in accordance with the Fund's understanding of the
applicable country's tax rules and rates.
NOTE 2: INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE: The investment advisory fee, which is computed daily
at an effective annual rate of .0125% of the net assets of the Fund, is payable
quarterly to The Prudential Insurance Company of America ('The Prudential') as
required under the investment advisory agreement. 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.
C1
<PAGE>
During the period ended June 30, 1997, Prudential Securities Incorporated, an
affiliate of The Prudential, earned approximately $12,060 in brokerage
commissions as a result of executing transactions in portfolio securities on
behalf of the Fund.
NOTE 3: PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments,
for the period ended June 30, 1997 aggregated $185,855,217 and $177,440,043,
respectively.
The federal income tax basis of the Fund's investments at June 30, 1997 was
$261,413,988 and, accordingly, net unrealized appreciation for federal income
tax purposes was $55,100,405 (gross unrealized appreciation $58,861,931; gross
unrealized depreciation $3,761,526).
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS Year ended
ENDED December 31,
JUNE 30, ---------------------------------------------------------------
1997 1996 1995(a) 1994(a) 1993(a) 1992(a)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of period... $ 11.43 $ 10.14 $ 9.40 $ 11.29 $ 11.13 $ 11.39
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................. 0.11 0.16 0.18 0.21 0.18 0.18
Net realized and unrealized gains
(losses) on investments.............. 1.08 2.56 1.65 (0.40) 2.43 1.77
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations... 1.19 2.72 1.83 (0.19) 2.61 1.95
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.12) (0.15) (0.17) (0.22) (0.19) (0.19)
Distributions for realized gains....... (0.45) (1.28) (0.92) (1.48) (2.26) (2.02)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions................ (0.57) (1.43) (1.09) (1.70) (2.45) (2.21)
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, end of period......... $ 12.05 $ 11.43 $ 10.14 $ 9.40 $ 11.29 $ 11.13
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT RETURN(b)............. 11.18% 27.13% 19.13% (1.33)% 23.79% 17.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions)............................ $314.3 $301.3 $261.2 $242.5 $264.3 $230.1
Ratios to average net assets:
Expenses............................. 0.15%(c) 0.16% 0.14% 0.15% 0.16% 0.19%
Net investment income................ 1.94%(c) 1.38% 1.68% 1.98% 1.45% 1.58%
Portfolio turnover rate................ 65% 97% 105% 93% 92% 73%
Average commission rate paid per
share................................ $0.0576 $0.0576 N/A N/A N/A N/A
</TABLE>
(a) Calculations are based on average month-end shares outstanding.
(b) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for less than a full year are
not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
BOARD OF
DIRECTORS PRUDENTIAL'S GIBRALTAR FUND
MENDEL A. MELZER W. SCOTT McDONALD, JR., JONATHAN M. GREENE
CHAIRMAN, PhD. PRESIDENT,
PRUDENTIAL'S GIBRALTAR VICE PRESIDENT, PRUDENTIAL'S GIBRALTAR
FUND KALUDIS CONSULTING FUND
GROUP
SAUL K. FENSTER, PhD. JOSEPH WEBER, PhD.
PRESIDENT, NEW JERSEY VICE PRESIDENT,
INSTITUTE OF TECHNOLOGY INTERCLASS
(INTERNATIONAL
CORPORATE LEARNING)
- --------------------------------------------------------------------------------
C2
<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.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Whether providing insurance protection for home, family and business, or
arranging to cover future education and retirement expenses, Prudential people
have always been able to deliver something more: personal service, quality,
attention to detail and the financial strength of The Rock-Registered
Trademark-. Since 1875, Prudential has been helping individuals and families
meet their financial needs.
P.O. Box 197 -------------
Minneapolis, MN 55440-0197 Bulk Rate
U.S. Postage
Address Service Requested PAID
Prudential
-------------
[LOGO]
FSP SAR 6/97 Printed in the U.S.A. PI-MV-0797-1190
on recycled paper. MRA-1997-A017124
