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PRUDENTIAL'S GIBRALTAR FUND, INC.
SUPPLEMENT, DATED JANUARY 11, 2001
TO
STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 2000
On January 10, 2001, Planholders with voting rights with respect to
Prudential's Gibraltar Fund, Inc. (the "Fund") held a special meeting at which
they approved a number of changes to the Fund. The following information
replaces the information in the May 1, 2000 Statement of Additional Information
section titled "Investment Advisory and other Services--Prudential" on page 9
(other than the information about the Administrative Services Agreement, which
remains unchanged):
Prudential Investments Fund Management LLC ("PIFM") serves as overall
investment adviser of the Fund. The Fund pays PIFM an advisory fee equal to
0.125% per year of the average daily net assets of the Fund. Under a previous
agreement, under which Prudential itself served as investment adviser, the Fund
paid Prudential $480,403 in 1999, $404,800 in 1998, and $390,676 in 1997.
The Fund operates under a manager-of-managers structure. PIFM is authorized to
select (with approval of the Board's independent directors) one or more
subadvisers to handle the actual day-to-day investment management of the Fund.
PIFM monitors each subadviser's performance through quantitative and
qualitative analysis and periodically reports to the Board as to whether each
subadviser's agreement should be renewed, terminated or modified. It is
possible that PIFM will continue to be satisfied with the performance record of
the existing subadviser and not recommend any additional subadvisers. PIFM is
also responsible for allocating assets among the subadvisers if the Fund were
to have more than one subadviser. In those circumstances, the allocation for
each subadviser could range from 0% to 100% of the Fund's assets, and PIFM can
change the allocations without Board or shareholder approval. Shareholders will
be notified of any new subadvisers or materially amended subadvisory
agreements.
The manager-of-managers structure operates under an order issued by the
Securities and Exchange Commission ("SEC"). The current order permits us to
hire or amend subadvisory agreements, without shareholder approval, only with
subadvisers that are not affiliated with Prudential.
The current order imposes the following conditions:
1. PIFM will provide general management and administrative services to the
Fund including overall supervisory responsibility for the general
management and investment of the Fund's securities portfolio, and,
subject to review and approval by the Board, will (i) set the Fund's
overall investment strategies; (ii) select subadvisers; (iii) monitor
and evaluate the performance of subadvisers; (iv) allocate and, when
appropriate, reallocate the Fund's assets among its subadvisers in those
cases where the Fund has more than one subadviser; and (v) implement
procedures reasonably designed to ensure that the subadvisers comply
with the Fund's investment objectives, policies, and restrictions.
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2. Before the Fund may rely on the order, the operation of the Fund in the
manner described in the Application will be approved by a majority of
its outstanding voting securities, as defined in the Investment Company
Act, or, in the case of a new Fund whose public shareholders purchased
shares on the basis of a prospectus containing the disclosure
contemplated by condition (4) below, by the sole shareholder before
offering of shares of such Fund to the public.
3. The Fund will furnish to shareholders all information about a new
subadviser or subadvisory agreement that would be included in a proxy
statement. Such information will include any change in such disclosure
caused by the addition of a new subadviser or any proposed material
change in the Fund's subadvisory agreement. The Fund will meet this
condition by providing shareholders with an information statement
complying with the provisions of Regulation 14C under the Securities
Exchange Act of 1934, as amended, and Schedule 14C thereunder. With
respect to a newly retained subadviser, or a change in a subadvisory
agreement, this information statement will be provided to shareholders
of the Portfolio a maximum of ninety (90) days after the addition of the
new subadviser or the implementation of any material change in a
subadvisory agreement. The information statement will also meet the
requirements of Schedule 14A under the Exchange Act.
4. The Fund will disclose in its prospectus the existence, substance and
effect of the order granted pursuant to the Application.
5. No director or officer of the Fund or director or officer of PIFM will
own directly or indirectly (other than through a pooled investment
vehicle that is not controlled by such director or officer) any interest
in any subadviser except for (i) ownership of interests in PIFM or any
entity that controls, is controlled by or is under common control with
PIFM, or (ii) ownership of less than 1% of the outstanding securities of
any class of equity or debt of a publicly-traded company that is either
a subadviser or any entity that controls, is controlled by or is under
common control with a subadviser.
6. PIFM will not enter into a subadvisory agreement with any subadviser
that is an affiliated person, as defined in Section 2(a)(3) of the
Investment Company Act, of the Fund or PIFM other than by reason of
serving a subadviser to the Fund (an "Affiliated Subadviser") without
such agreement, including the compensation to be paid thereunder, being
approved by the shareholders of the Fund.
7. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the Fund as defined in
Section 2(a)(19) of the Investment Company Act ("Independent
Directors"), and the nomination of new or additional Independent
Directors will be placed within the discretion of the then existing
Independent Directors.
8. When a subadviser change is proposed for a Fund with an Affiliated
Subadviser, the Board, including a majority of the Independent
Directors, will make a separate finding, reflected in the Board's
minutes, that such change is in the best interests of the Fund and its
shareholders and does not involve a conflict of interest from which PIFM
or the Affiliated subadviser derives an inappropriate advantage.
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The Fund intends to seek an amendment to the current order or a new order from
the SEC permitting us to (1) hire one or more new affiliated subadvisers
without shareholder approval, (2) amend existing agreements with affiliated
subadvisers without shareholder approval, and (3) disclose only the aggregate
fees (both as a dollar amount and as a percentage of the Fund's net assets)
paid to each unaffiliated subadviser ("Aggregate Fee Disclosure") by PIFM, not
the Fund. We will, of course, comply with any conditions imposed by the SEC
under any new or amended order.
The agreement between the Fund and PIFM, which was approved by the Board on
August 22, 2000 and by shareholders on January 10, 2001, provides that: PIFM
will administer the Fund's business affairs and supervise the Fund's
investments and PIFM may engage one or more subadvisers for the Fund, which
will have primary responsibility for determining what investments the Fund will
purchase, retain, and sell; PIFM (or the subadviser, acting under PIFM's
supervision) will select brokers to effect trades for the Fund, and may pay a
higher commission to a broker that provides research services; PIFM will pay
the salaries and expenses of any employee or officer of the Fund (other than
the fees and expenses of the Fund's independent directors), all expenses
incurred by PIFM in connection with managing the Fund's business except
expenses covered by the Fund under the agreement, registration expenses,
prospectus and sales literature expenses, shareholder report expenses, legal
and auditing expenses, shareholder meeting expenses, and custodial expenses;
the Fund will pay the fees and expenses of the Fund's independent directors,
brokers' commissions, taxes, insurance expenses, litigation and indemnification
expenses, other extraordinary expenses, and certain distribution expenses; PIFM
will pay any subadvisory fee; PIFM may replace a Portfolio's subadviser or
amend a subadvisory agreement; and if a Portfolio has more than one subadviser,
PIFM will determine the allocation of assets among the Portfolio's subadvisers.
The agreement may be terminated by either party on not more than 60 days
written notice.
Jennison Associates LLC ("Jennison") serves as the subadviser for the Fund.
PIFM pays Jennison a fee equal to 0.0625% annually of the assets under
Jennison's management. The agreement among the Fund, PIFM and Jennison provides
that: Jennison will provide day-to-day management of the portion of the Fund
allocated to it; Jennison will select brokers to effect trades for the Fund and
may pay a higher commission to a broker that provides research services;
Jennison will maintain certain books and records on behalf of the Fund; and
PIFM will be responsible for compensating Jennison for its services out of the
investment advisory fee PIFM receives from the Fund. The agreement permits the
Fund, PIFM or Jennison to terminate the agreement on not more than 60 days
written notice.
The Fund, PIFM and Jennison have all adopted codes of ethics which have been
approved by the Board of Directors of the Fund. The codes permit personnel
subject to them, including the portfolio managers, to invest in securities for
their personal account, including securities that may be purchased or held by
the Fund. The codes, however, include protective provisions that prohibit
certain investments and implement certain black-out periods, i.e., periods
during which personnel may not make certain investments.
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PRUDENTIAL'S GIBRALTAR FUND, INC.
SUPPLEMENT, DATED JANUARY 11, 2001
TO
PROSPECTUS, DATED MAY 1, 2000
On January 10, 2001, Planholders with voting rights with respect to
Prudential's Gibraltar Fund, Inc. (the "Fund") held a special meeting at which
they approved a number of changes to the Fund. The following information
replaces the information in the May 1, 2000 prospectus section titled "Fund
Management" on page 5 (other than the table listing 1999 Fund expenses):
Prudential Investments Fund Management LLC ("PIFM"), a wholly-owned subsidiary
of Prudential, serves as the overall investment adviser for the Fund. PIFM is
located at 100 Mulberry Street, Newark, NJ 07102-4077. PIFM and its
predecessors have served as manager and administrator to investment companies
since 1987. As of October 31, 2000, PIFM served as the manager to 48 mutual
funds, and as manager or administrator to 21 closed-end investment companies,
with aggregate assets of approximately $74.7 billion.
The Fund uses a "manager-of-managers" structure. Under this structure, PIFM is
authorized to select (with approval of the Fund's independent directors) one or
more sub-advisers to handle the actual day-to-day investment management of the
Fund. PIFM monitors the sub-adviser's performance through quantitative and
qualitative analysis, and periodically reports to the Fund's board of directors
as to whether the sub-adviser's agreement should be renewed, terminated or
modified. If the Fund were to have more than one sub-adviser, PIFM would be
responsible for allocating assets among the sub-advisers. The Fund will notify
shareholders of any new sub-adviser or any material changes to any existing
sub-advisory agreement.
Jennison Associates LLC ("Jennison"), a wholly-owned subsidiary of Prudential,
serves as the sole sub-adviser for the Fund. Jennison's address is 466
Lexington Avenue, New York, NY 10017. As of September 30, 2000, Jennison had
over $86.2 billion in assets under management for institutional and mutual fund
clients. Jennison's fee is paid by PIFM out of the fee that PIFM receives from
the Fund.
Jeffrey Siegel has been portfolio manager of the Fund since 2000. Mr. Siegel
has been an Executive Vice President of Jennison since June 1999. Previously he
was at TIAA-CREF from 1988-1999, where he held positions as a portfolio manager
and analyst. Prior to joining TIAA-CREF, Mr. Siegel was an analyst for
Equitable Capital Management and held positions at Chase Manhattan Bank and
First Fidelity Bank. Mr. Siegel earned a B.A. from Rutgers University.
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