PRUDENTIAL SERIES FUND INC, 497, 1997-07-01

PRUDENTIAL SERIES FUND INC
497, 1997-07-01

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PROSPECTUS

MAY 1, 1997

THE PRUDENTIAL
SERIES FUND, INC.

THIS PROSPECTUS IS FOR USE ONLY WITH THE PRUDENTIAL DISCOVERY SELECT(SM) GROUP
VARIABLE ANNUITY CONTRACT ACCOUNT, AS IT DESCRIBES ONLY THE PORTFOLIOS AVAILABLE
FOR INVESTMENT THROUGH THAT ACCOUNT. THIS PROSPECTUS SHOULD BE READ IN
CONJUNCTION WITH THE CURRENT PROSPECTUS FOR THE PRUDENTIAL DISCOVERY SELECT
GROUP VARIABLE ANNUITY CONTRACT ACCOUNT.

The Prudential Series Fund, Inc. (the "Series Fund") is a diversified, open-end
management investment company (commonly known as a "mutual fund") that is
intended to provide a range of investment alternatives through its fifteen
separate portfolios, each of which is, for investment purposes, in effect a
separate fund. Eleven of the Series Fund's portfolios are currently available
for investment by Participants in the Prudential DISCOVERY SELECT Program. The
portfolios are: the Money Market Portfolio, the Diversified Bond Portfolio, the
Government Income Portfolio, the Conservative Balanced Portfolio, the Flexible
Managed Portfolio, the High Yield Bond Portfolio, the Stock Index Portfolio, the
Equity Income Portfolio, the Equity Portfolio, the Prudential Jennison
Portfolio, and the Global Portfolio. A separate class of capital stock is issued
for each portfolio. Shares of the Series Fund are currently sold only to
separate accounts (the "Accounts") of The Prudential Insurance Company of
America ("Prudential") and certain other insurers to fund the benefits under
variable life insurance and variable annuity contracts (the "Contracts") issued
by those Companies. The Accounts invest in shares of the Series Fund through
subaccounts that correspond to the portfolios. The Accounts will redeem shares
of the Series Fund to the extent necessary to provide benefits under the
Contracts or for such other purposes as may be consistent with the Contracts.

SHARES OF THE MONEY MARKET PORTFOLIO AND THE GOVERNMENT INCOME PORTFOLIO ARE
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. WHILE THE MONEY MARKET
PORTFOLIO SEEKS TO MAINTAIN A STABLE PRICE PER SHARE, THERE IS NO ASSURANCE THAT
THE PORTFOLIO WILL BE ABLE TO DO SO.

---------------------------------------

THE INVESTMENT OBJECTIVES OF THE ELEVEN PORTFOLIOS
CAN BE FOUND ON THE NEXT PAGE

---------------------------------------

Information contained in this prospectus should be read carefully by a
prospective investor before an investment is made. Additional information about
the Series Fund has been filed with the Securities and Exchange Commission in a
statement of additional information, dated May 1, 1997 which information is
incorporated herein by reference and is available without charge upon written
request to Prudential Retirement Services, 30 Scranton Office Park, Scranton,
Pennsylvania 18507-1789, or by telephoning 1-(800)-458-6333.

---------------------------------------

PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE PRUDENTIAL SERIES FUND, INC.
Prudential Plaza
Newark, New Jersey 07102-3777
Telephone: (800) 445-4571

PSF-GDSA Ed 5-97
<PAGE>

INVESTMENT OBJECTIVES OF THE PORTFOLIOS ARE AS FOLLOWS:

FIXED INCOME PORTFOLIOS

MONEY MARKET PORTFOLIO. The maximum current income that is consistent with
stability of capital and maintenance of liquidity through investment in
high-quality short-term debt obligations.

DIVERSIFIED BOND PORTFOLIO. A high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that provide
attractive yields but do not involve substantial risk of loss of capital through
default.

GOVERNMENT INCOME PORTFOLIO. Achievement of a high level of income over the
longer term consistent with the preservation of capital through investment
primarily in U.S. Government securities, including intermediate and long-term
U.S. Treasury securities and debt obligations issued by agencies of or
instrumentalities established, sponsored or guaranteed by the U.S. Government.
At least 65% of the total assets of the portfolio will be invested in U.S.
Government securities.

BALANCED PORTFOLIOS

CONSERVATIVE BALANCED PORTFOLIO. Achievement of a favorable total investment
return consistent with a portfolio having a conservatively managed mix of money
market instruments, fixed income securities, and common stocks, in proportions
believed by the investment manager to be appropriate for an investor desiring
diversification of investment who prefers a relatively lower risk of loss than
that associated with the Flexible Managed Portfolio while recognizing that this
reduces the chances of greater appreciation.

FLEXIBLE MANAGED PORTFOLIO. Achievement of a high total return consistent with a
portfolio having an aggressively managed mix of money market instruments, fixed
income securities, and common stocks, in proportions believed by the investment
manager to be appropriate for an investor desiring diversification of investment
who is willing to accept a relatively high level of loss in an effort to achieve
greater appreciation.

HIGH YIELD BOND PORTFOLIOS

HIGH YIELD BOND PORTFOLIO. Achievement of a high total return through investment
in high yield/high risk fixed income securities in the medium to lower quality
ranges. SUCH SECURITIES MAY HAVE SPECULATIVE CHARACTERISTICS AND GENERALLY
INVOLVE GREATER RISKS OF LOSS OF INCOME AND PRINCIPAL THAN HIGHER RATED
SECURITIES.

DIVERSIFIED STOCK PORTFOLIOS

STOCK INDEX PORTFOLIO. Achievement of investment results that correspond to the
price and yield performance of publicly traded common stocks in the aggregate by
following a policy of attempting to duplicate the price and yield performance of
the Standard & Poor's 500 Composite Stock Price Index.

EQUITY INCOME PORTFOLIO. Both current income and capital appreciation through
investment primarily in common stocks and convertible securities that provide
favorable prospects for investment income returns above those of the Standard &
Poor's 500 Composite Stock Price Index or the NYSE Composite Index.

EQUITY PORTFOLIO. Capital appreciation through investment primarily in common
stocks of companies, including major established corporations as well as smaller
capitalization companies, that appear to offer attractive prospects of price
appreciation that is superior to broadly-based stock indices. Current income, if
any, is incidental.

PRUDENTIAL JENNISON PORTFOLIO. Long-term growth of capital through investment
primarily in equity securities of established companies with above-average
growth prospects. Current income, if any, is incidental.

GLOBAL PORTFOLIO. Long-term growth of capital through investment primarily in
common stock and common stock equivalents of foreign and domestic issuers.
Current income, if any, is incidental.

There can be no assurance that the objectives of any portfolio will be realized.
See INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS, page 8. The Series
Fund may in the future establish other portfolios with different investment
objectives.
<PAGE>

CONTENTS

Page

FINANCIAL HIGHLIGHTS......................................................... 1

PORTFOLIO RATES OF RETURN.................................................... 7

THE SERIES FUND.............................................................. 8

THE ACCOUNTS AND THE CONTRACTS............................................... 8

INVESTMENT MANAGER........................................................... 8

INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS......................... 8
FIXED INCOME PORTFOLIOS................................................ 9
Money Market Portfolio................................................. 9
Diversified Bond Portfolio............................................. 9
Government Income Portfolio............................................ 10
BALANCED PORTFOLIOS.................................................... 12
Conservative Balanced Portfolio........................................ 12
Flexible Managed Portfolio............................................. 13
HIGH YIELD BOND PORTFOLIOS............................................. 14
High Yield Bond Portfolio.............................................. 14
DIVERSIFIED STOCK PORTFOLIOS........................................... 16
Stock Index Portfolio.................................................. 16
Equity Income Portfolio................................................ 18
Equity Portfolio....................................................... 19
Prudential Jennison Portfolio.......................................... 19
Global Portfolio....................................................... 20
CONVERTIBLE SECURITIES................................................. 21
LOAN PARTICIPATIONS.................................................... 21
FOREIGN SECURITIES..................................................... 21
OPTIONS ON EQUITY SECURITIES........................................... 22
OPTIONS ON DEBT SECURITIES............................................. 23
OPTIONS ON STOCK INDICES............................................... 24
OPTIONS ON FOREIGN CURRENCIES.......................................... 25
FUTURES CONTRACTS...................................................... 25
OPTIONS ON FUTURES CONTRACTS........................................... 26
REPURCHASE AGREEMENTS.................................................. 26
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS......................... 26
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES............................ 27
SHORT SALES............................................................ 27
SHORT SALES AGAINST THE BOX............................................ 28
INTEREST RATE SWAPS.................................................... 28
LOANS OF PORTFOLIO SECURITIES.......................................... 28

INVESTMENT RESTRICTIONS APPLICABLE TO THE PORTFOLIOS......................... 28

INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES.............................. 28

PURCHASE AND REDEMPTION OF SHARES............................................ 29

DETERMINATION OF NET ASSET VALUE............................................. 29

DIVIDENDS, DISTRIBUTIONS, AND TAXES.......................................... 31

OTHER INFORMATION CONCERNING THE SERIES FUND................................. 32
INCORPORATION AND AUTHORIZED STOCK..................................... 32
VOTING RIGHTS.......................................................... 32
MONITORING FOR POSSIBLE CONFLICT....................................... 32
PERIODIC REPORTS....................................................... 32
PORTFOLIO BROKERAGE AND RELATED PRACTICES.............................. 33
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT........................... 33
ADDITIONAL INFORMATION................................................. 33

APPENDIX: SECURITIES IN WHICH THE MONEY MARKET PORTFOLIO MAY
CURRENTLY INVEST .......................................................... A1
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

The following highlights for the year ended December 31, 1996 have been audited
by Price Waterhouse LLP, independent accountants, whose report thereon was
unqualified. In addition, the financial highlights for each of the years prior
to and including the period ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, whose report thereon was also
unqualified. Their reports are included in the Statement of Additional
Information.

<TABLE>
<CAPTION>
MONEY MARKET
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of year...... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income and
net realized gains..... 0.51 0.56 0.40 0.29 0.37 0.60 0.78 0.88 0.72 0.63
Dividends and
distributions.......... (0.51) (0.56) (0.40) (0.29) (0.37) (0.60) (0.78) (0.88) (0.72) (0.63)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value, end of
year................... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
======== ======== ======== ======== ======== ======== ======== ======== ========= =========
TOTAL INVESTMENT RATE OF
RETURN:(b)............. 5.22% 5.80% 4.05% 2.95% 3.79% 6.16% 8.16% 9.25% 7.35% 6.52%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $668.8 $613.3 $583.3 $474.7 $528.7 $529.6 $434.2 $236.1 $155.9 $107.2
Ratios to average net
assets:
Expenses............... 0.44% 0.44% 0.47% 0.45% 0.47% 0.46% 0.50% 0.55% 0.57% 0.53%
Net investment
income............... 5.10% 5.64% 4.02% 2.90% 3.72% 5.96% 7.80% 8.77% 7.17% 6.30%
</TABLE>

<TABLE>
<CAPTION>
DIVERSIFIED BOND
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of year...... $ 11.31 $ 10.04 $ 11.10 $ 10.83 $ 11.00 $ 10.33 $ 10.32 $ 9.94 $ 10.04 $ 11.05
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.76 0.76 0.68 0.68 0.76 0.80 0.83 0.89 0.88 0.86
Net realized and
unrealized gains
(losses) on
investments............ (0.27) 1.29 (1.04) 0.40 0.01 0.84 (0.01) 0.42 (0.07) (0.82)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations......... 0.49 2.05 (0.36) 1.08 0.77 1.64 0.82 1.31 0.81 0.04
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.73) (0.75) (0.68) (0.66) (0.72) (0.78) (0.81) (0.85) (0.91) (0.99)
Distributions from net
realized gains......... -- (0.03) (0.02) (0.15) (0.22) (0.19) -- (0.08) -- (0.06)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions...... (0.73) (0.78) (0.70) (0.81) (0.94) (0.97) (0.81) (0.93) (0.91) (1.05)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value, end of
year................... $ 11.07 $ 11.31 $ 10.04 $ 11.10 $ 10.83 $ 11.00 $ 10.33 $ 10.32 $ 9.94 $ 10.04
======== ======== ======== ======== ======== ======== ======== ======== ========= =========
TOTAL INVESTMENT
RETURN:(b)............. 4.40% 20.73% (3.23%) 10.13% 7.19% 16.44% 8.32% 13.49% 8.19% 0.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $720.2 $655.8 $541.6 $576.2 $428.8 $318.7 $227.7 $191.1 $148.8 $139.5
Ratios to average net
assets:
Expenses............... 0.45% 0.44% 0.45% 0.46% 0.47% 0.49% 0.47% 0.53% 0.53% 0.53%
Net investment
income............... 6.89% 7.00% 6.41% 6.05% 6.89% 7.43% 8.06% 8.56% 8.52% 8.15%
Portfolio turnover
rate................... 210% 199% 32% 41% 61% 131% 42% 273% 222% 238%
</TABLE>

(a) Calculations are based on average month-end shares outstanding, where
applicable.

(b) Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

1 - SERIES FUND
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

<TABLE>
<CAPTION>
GOVERNMENT INCOME
---------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
---------------------------------------------------------------------------------
MAY 1,
1989(d)
TO
DECEMBER
31,
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a)
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period.... $ 11.72 $ 10.46 $ 11.78 $ 11.09 $ 11.13 $ 10.15 $ 10.32 $ 10.02
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.75 0.74 0.70 0.70 0.73 0.73 0.79 0.54
Net realized and
unrealized gains
(losses) on
investments............ (0.51) 1.28 (1.31) 0.68 (0.09) 0.85 (0.17) 0.61
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations......... 0.24 2.02 (0.61) 1.38 0.64 1.58 0.62 1.15
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.74) (0.76) (0.71) (0.64) (0.59) (0.60) (0.77) (0.49)
Distributions from net
realized gains......... -- -- -- (0.05) (0.09) -- (0.02) (0.36)
-------- -------- -------- -------- -------- -------- -------- --------
Total
distributions...... (0.74) (0.76) (0.71) (0.69) (0.68) (0.60) (0.79) (0.85)
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, end of
period................. $ 11.22 $ 11.72 $ 10.46 $ 11.78 $ 11.09 $ 11.13 $ 10.15 $ 10.32
======== ======== ======== ======== ======== ======== ======== ========
TOTAL INVESTMENT
RETURN:(b)............. 2.22% 19.48% (5.16%) 12.56% 5.85% 16.11% 6.34% 11.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).......... $482.0 $501.8 $487.6 $540.1 $315.5 $95.0 $23.7 $17.0
Ratios to average net
assets:
Expenses............... 0.46% 0.45% 0.45% 0.46% 0.53% 0.58% 0.74% 0.50%(c)
Net investment
income............... 6.38% 6.55% 6.30% 5.91% 6.58% 6.97% 7.86% 5.06%(c)
Portfolio turnover
rate................... 95% 195% 34% 19% 81% 127% 379% 209%
</TABLE>

<TABLE>
<CAPTION>
CONSERVATIVE BALANCED
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of year...... $ 15.31 $ 14.10 $ 14.91 $ 14.24 $ 14.32 $ 13.06 $ 13.36 $ 12.30 $ 11.89 $ 12.57
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.66 0.63 0.53 0.49 0.56 0.69 0.82 0.89 0.77 0.66
Net realized and
unrealized gains
(losses) on
investments............ 1.24 1.78 (0.68) 1.23 0.41 1.74 (0.14) 1.15 0.43 (0.40)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations......... 1.90 2.41 (0.15) 1.72 0.97 2.43 0.68 2.04 1.20 0.26
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.66) (0.64) (0.51) (0.47) (0.54) (0.67) (0.81) (0.89) (0.79) (0.71)
Distributions from net
realized gains......... (1.03) (0.56) (0.15) (0.58) (0.51) (0.50) (0.17) (0.09) -- (0.23)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions...... (1.69) (1.20) (0.66) (1.05) (1.05) (1.17) (0.98) (0.98) (0.79) (0.94)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value, end of
year................... $ 15.52 $ 15.31 $ 14.10 $ 14.91 $ 14.24 $ 14.32 $ 13.06 $ 13.36 $ 12.30 $ 11.89
======== ======== ======== ======== ======== ======== ======== ======== ========= =========
TOTAL INVESTMENT
RETURN:(b)............. 12.63% 17.27% (0.97%) 12.20% 6.95% 19.07% 5.27% 16.99% 10.19% 1.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $4,478.8 $3,940.8 $3,501.1 $3,103.2 $2,114.0 $1,500.0 $1,100.2 $976.0 $815.6 $803.9
Ratios to average net
assets:
Expenses............... 0.59% 0.58% 0.61% 0.60% 0.62% 0.63% 0.65% 0.64% 0.65% 0.66%
Net investment
income................. 4.13% 4.19% 3.61% 3.22% 3.88% 4.89% 6.21% 6.81% 6.22% 5.05%
Portfolio turnover
rate................... 295% 201% 125% 79% 62% 115% 44% 154% 111% 141%
Average commission rate
paid per share......... $0.0554 N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>

(a) Calculations are based on average month-end shares outstanding, where
applicable.
(b) Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns. Total investment return for
periods of less than one year are not annualized.
(c) Annualized.
(d) Commencement of investment operations.

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

2 - SERIES FUND
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

<TABLE>
<CAPTION>
FLEXIBLE MANAGED
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of year...... $ 17.86 $ 15.50 $ 16.96 $ 16.01 $ 16.29 $ 14.00 $ 14.45 $ 13.12 $ 12.33 $ 13.56
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.57 0.56 0.47 0.57 0.58 0.65 0.72 0.82 0.72 0.57
Net realized and
unrealized gains
(losses) on
investments............ 1.79 3.15 (1.02) 1.88 0.61 2.81 (0.47) 1.99 0.84 (0.75)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations......... 2.36 3.71 (0.55) 2.45 1.19 3.46 0.25 2.81 1.56 (0.18)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.58) (0.56) (0.45) (0.57) (0.56) (0.66) (0.70) (0.81) (0.77) (0.67)
Distributions from net
realized gains......... (1.85) (0.79) (0.46) (0.93) (0.91) (0.51) -- (0.67) -- (0.38)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions...... (2.43) (1.35) (0.91) (1.50) (1.47) (1.17) (0.70) (1.48) (0.77) (1.05)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value, end of
year................... $ 17.79 $ 17.86 $ 15.50 $ 16.96 $ 16.01 $ 16.29 $ 14.00 $ 14.45 $ 13.12 $ 12.33
======== ======== ======== ======== ======== ======== ======== ======== ========= =========
TOTAL INVESTMENT
RETURN:(b)............. 13.64% 24.13% (3.16%) 15.58% 7.61% 25.43% 1.91% 21.77% 12.83% (1.83%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $4,896.9 $4,261.2 $3,481.5 $3,292.2 $2,435.6 $1,990.7 $1,507.8 $1,386.5 $1,103.9 $1,062.4
Ratios to average net
assets:
Expenses............... 0.64% 0.63% 0.66% 0.66% 0.67% 0.67% 0.69% 0.69% 0.70% 0.71%
Net investment
income................. 3.07% 3.30% 2.90% 3.30% 3.63% 4.23% 5.13% 5.66% 5.52% 4.09%
Portfolio turnover
rate................... 233% 173% 124% 63% 59% 93% 52% 141% 128% 124%
Average commission rate
paid per share......... $0.0563 N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
HIGH YIELD BOND
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
FEBRUARY
23,
1987(d)
TO
DECEMBER
31,
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period.... $ 7.80 $ 7.37 $ 8.41 $ 7.72 $ 7.21 $ 5.84 $ 7.67 $ 8.90 $ 8.74 $10.00
-------- -------- -------- -------- -------- -------- -------- -------- --------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.80 0.81 0.87 0.82 0.82 0.83 0.94 1.07 1.07 0.97
Net realized and
unrealized gains
(losses) on
investments............ 0.06 0.46 (1.10) 0.63 0.42 1.40 (1.79) (1.22) 0.06 (1.43)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ------
Total from investment
operations......... 0.86 1.27 (0.23) 1.45 1.24 2.23 (0.85) (0.15) 1.13 (0.46)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.78) (0.84) (0.81) (0.76) (0.73) (0.86) (0.98) (1.08) (0.97) (0.80)
Dividends in excess of
net investment
income................. (0.01) -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------- ------
Total
distributions...... (0.79) (0.84) (0.81) (0.76) (0.73) (0.86) (0.98) (1.08) (0.97) (0.80)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ------
Net Asset Value, end of
period................. $ 7.87 $ 7.80 $ 7.37 $ 8.41 $ 7.72 $ 7.21 $ 5.84 $ 7.67 $ 8.90 $ 8.74
======== ======== ======== ======== ======== ======== ======== ======== ========= ======
TOTAL INVESTMENT
RETURN:(b)............. 11.39% 17.56% (2.72%) 19.27% 17.54% 39.71% (11.84%) (2.05%) 13.17% (4.91%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).......... $432.9 $367.9 $306.2 $282.9 $153.7 $78.7 $49.8 $60.0 $65.8 $40.4
Ratios to average net
assets:
Expenses............... 0.63% 0.61% 0.65% 0.65% 0.70% 0.75% 0.75% 0.71% 0.75% 0.73%(c)
Net investment
income............... 9.89% 10.34% 9.88% 9.91% 10.67% 12.05% 13.42% 12.29% 11.60% 10.13%(c)
Portfolio turnover
rate................... 88% 139% 69% 96% 75% 57% 35% 61% 71% 17%
</TABLE>

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

3 - SERIES FUND
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

<TABLE>
<CAPTION>
STOCK INDEX
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
OCTOBER
19,
1987(d)
TO
DECEMBER
31,
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period.... $ 19.96 $ 14.96 $ 15.20 $ 14.22 $ 13.61 $ 10.76 $ 11.73 $ 9.45 $ 8.53 $8.07
-------- -------- -------- -------- -------- -------- -------- -------- --------- -----
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.40 0.40 0.38 0.36 0.35 0.35 0.36 0.33 0.36 0.05
Net realized and
unrealized gains
(losses) on
investments............ 4.06 5.13 (0.23) 1.00 0.60 2.82 (0.79) 2.57 0.95 0.55
-------- -------- -------- -------- -------- -------- -------- -------- --------- -----
Total from investment
operations......... 4.46 5.53 0.15 1.36 0.95 3.17 (0.43) 2.90 1.31 0.60
-------- -------- -------- -------- -------- -------- -------- -------- --------- -----
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.40) (0.38) (0.37) (0.35) (0.33) (0.31) (0.31) (0.35) (0.39) (0.14)
Distributions from net
realized gains......... (0.28) (0.15) (0.02) (0.03) (0.01) (0.01) (0.23) (0.27) -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------- -----
Total
distributions...... (0.68) (0.53) (0.39) (0.38) (0.34) (0.32) (0.54) (0.62) (0.39) (0.14)
-------- -------- -------- -------- -------- -------- -------- -------- --------- -----
Net Asset Value, end of
period................. $ 23.74 $ 19.96 $ 14.96 $ 15.20 $ 14.22 $ 13.61 $ 10.76 $ 11.73 $ 9.45 $8.53
======== ======== ======== ======== ======== ======== ======== ======== ========= =====
TOTAL INVESTMENT
RETURN:(b)............. 22.57% 37.06% 1.01% 9.66% 7.13% 29.72% (3.63%) 30.93% 15.44% 7.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).......... $1,581.4 $1,031.3 $664.5 $615.1 $433.5 $236.9 $104.5 $53.8 $36.0 $24.5
Ratios to average net
assets:
Expenses............... 0.40% 0.38% 0.42% 0.42% 0.46% 0.47% 0.60% 0.69% 0.78% 0.45%(c)
Net investment
income............... 1.95% 2.27% 2.50% 2.43% 2.56% 2.82% 3.23% 2.95% 3.87% 0.53%(c)
Portfolio turnover
rate................... 1% 1% 2% 1% 1% 1% 18% 15% 16% --
Average commission rate
paid per share......... $0.0250 N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
EQUITY INCOME
--------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
----------------------------------------------------------------------------------------------
FEBRUARY
19,
1988(d)
TO
DECEMBER
31,
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period $ 16.27 $ 14.48 $ 15.66 $ 13.67 $ 13.21 $ 11.24 $ 12.25 $ 10.62 $10.13
-------- -------- -------- -------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.58 0.64 0.67 0.55 0.58 0.58 0.51 0.54 0.45
Net realized and
unrealized gains
(losses) on
investments............ 2.88 2.50 (0.45) 2.46 0.72 2.43 (0.98) 1.84 0.69
-------- -------- -------- -------- -------- -------- -------- -------- ------
Total from investment
operations......... 3.46 3.14 0.22 3.01 1.30 3.01 (0.47) 2.38 1.14
-------- -------- -------- -------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.71) (0.62) (0.56) (0.50) (0.52) (0.54) (0.46) (0.46) (0.42)
Distributions from net
realized gains......... (0.51) (0.73) (0.82) (0.52) (0.32) (0.50) (0.08) (0.29) (0.23)
-------- -------- -------- -------- -------- -------- -------- -------- ------
Total
distributions...... (1.22) (1.35) (1.38) (1.02) (0.84) (1.04) (0.54) (0.75) (0.65)
-------- -------- -------- -------- -------- -------- -------- -------- ------
Net Asset Value, end of
period................. $ 18.51 $ 16.27 $ 14.48 $ 15.66 $ 13.67 $ 13.21 $ 11.24 $ 12.25 $10.62
======== ======== ======== ======== ======== ======== ======== ======== ======
TOTAL INVESTMENT
RETURN:(b)............. 21.74% 21.70% 1.44% 22.28% 10.14% 27.50% (3.73%) 22.67% 11.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).......... $1,363.5 $1,110.0 $859.7 $602.8 $234.4 $106.9 $55.5 $34.9 $11.3
Ratios to average net
assets:
Expenses............... 0.45% 0.43% 0.52% 0.54% 0.57% 0.57% 0.60% 0.74% 0.64%(c)
Net investment
income............... 3.36% 4.00% 3.92% 3.56% 4.32% 4.53% 4.53% 4.48% 4.08%(c)
Portfolio turnover
rate................... 21% 64% 63% 41% 40% 60% 55% 57% 61%
Average commission rate
paid per share......... $0.0553 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

4 - SERIES FUND
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

<TABLE>
<CAPTION>
EQUITY
-------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a) 1987(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of year...... $ 25.64 $ 20.66 $ 21.49 $ 18.90 $ 17.91 $ 15.45 $ 18.54 $ 15.46 $ 13.62 $ 14.82
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.71 0.55 0.51 0.42 0.44 0.48 0.58 0.47 0.40 0.39
Net realized and
unrealized gains
(losses) on
investments............ 3.88 5.89 0.05 3.67 2.05 3.42 (1.58) 4.07 1.91 (0.07)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations......... 4.59 6.44 0.56 4.09 2.49 3.90 (1.00) 4.54 2.31 0.32
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.67) (0.52) (0.49) (0.40) (0.44) (0.48) (0.56) (0.50) (0.47) (0.50)
Distributions from net
realized gains......... (2.60) (0.94) (0.90) (1.10) (1.06) (0.96) (1.53) (0.96) -- (1.02)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions...... (3.27) (1.46) (1.39) (1.50) (1.50) (1.44) (2.09) (1.46) (0.47) (1.52)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value, end of
year................... $ 26.96 $ 25.64 $ 20.66 $ 21.49 $ 18.90 $ 17.91 $ 15.45 $ 18.54 $ 15.46 $ 13.62
======== ======== ======== ======== ======== ======== ======== ======== ========= =========
TOTAL INVESTMENT
RETURN:(b)............. 18.52% 31.29% 2.78% 21.87% 14.17% 26.01% (5.21%) 29.73% 17.05% 1.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in millions).......... $4,814.0 $3,813.8 $2,617.8 $2,186.5 $1,416.6 $1,032.8 $700.5 $675.5 $500.1 $451.0
Ratios to average net
assets:
Expenses............... 0.50% 0.48% 0.55% 0.53% 0.53% 0.51% 0.56% 0.56% 0.57% 0.51%
Net investment
income............... 2.54% 2.28% 2.39% 1.99% 2.33% 2.66% 3.37% 2.66% 2.67% 2.34%
Portfolio turnover
rate................... 20% 18% 7% 13% 16% 21% 85% 74% 62% 80%
Average commission rate
paid per share......... $0.0524 N/A N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
PRUDENTIAL JENNISON
-------------------
APRIL
25,
1995(d)
YEAR TO
ENDED DECEMBER
DECEMBER 31,
31, 1996 1995(a)
-------- --------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period ... $ 12.55 $ 10.00
------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ... 0.02 0.02
Net realized and
unrealized gains
(losses) on
investments ........... 1.78 2.54
------- -------
Total from investment
operations ........ 1.80 2.56
------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income ..... (0.03) (0.01)
Distributions from net
realized gains ........ -- --
------- -------
Total
distributions ..... (0.03) (0.01)
------- -------
Net Asset Value, end of
period ................ $ 14.32 $ 12.55
======= =======
TOTAL INVESTMENT
RETURN:(b) 14.41% 24.2%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) ......... $ 226.5 $ 63.1
Ratios to average net
assets:
Expenses .............. 0.66% 0.79%(c)
Net investment
income .............. 0.20% 0.15%(c)
Portfolio turnover
rate .................. 46% 37%
Average commission rate
paid per share......... $0.0603 N/A
</TABLE>

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

5 - SERIES FUND
<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
FINANCIAL HIGHLIGHTS

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

<TABLE>
<CAPTION>
GLOBAL
--------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
--------------------------------------------------------------------------------------------
SEPTEMBER
19,
1988(d)
TO
DECEMBER
31,
1996 1995(a) 1994(a) 1993(a) 1992(a) 1991(a) 1990(a) 1989(a) 1988(a)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value,
beginning of period.... $ 15.53 $ 13.88 $ 14.64 $ 10.37 $ 10.79 $ 9.87 $ 11.55 $ 10.51 $ 9.82
-------- -------- -------- -------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.11 0.06 0.02 0.02 0.05 0.09 0.20 0.08 0.05
Net realized and
unrealized gains
(losses) on
investments............ 2.94 2.14 (0.74) 4.44 (0.42) 1.02 (1.80) 1.81 0.79
-------- -------- -------- -------- -------- -------- -------- -------- ------
Total from investment
operations......... 3.05 2.20 (0.72) 4.46 (0.37) 1.11 (1.60) 1.89 0.84
-------- -------- -------- -------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income...... (0.11) (0.24) (0.02) (0.08) (0.05) (0.10) (0.07) (0.07) (0.15)
Distributions from net
realized gains......... (0.62) (0.31) (0.02) (0.11) -- (0.09) (0.01) (0.78) --
-------- -------- -------- -------- -------- -------- -------- -------- ------
Total
distributions...... (0.73) (0.55) (0.04) (0.19) (0.05) (0.19) (0.08) (0.85) (0.15)
-------- -------- -------- -------- -------- -------- -------- -------- ------
Net Asset Value, end of
period................. $ 17.85 $ 15.53 $ 13.88 $ 14.64 $ 10.37 $ 10.79 $ 9.87 $ 11.55 $10.51
======== ======== ======== ======== ======== ======== ======== ======== ======
TOTAL INVESTMENT
RETURN:(b)............. 19.97% 15.88% (4.89%) 43.14% (3.42%) 11.39% (12.91%) 18.82% 8.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).......... $580.6 $400.1 $345.7 $129.1 $34.0 $34.3 $26.2 $29.4 $26.9
Ratios to average net
assets:
Expenses............... 0.92% 1.06% 1.23% 1.44% 1.87% 1.62% 1.67% 1.47% 0.42%(c)
Net investment
income............... 0.64% 0.44% 0.20% 0.18% 0.49% 0.92% 1.92% 0.70% 0.51%(c)
Portfolio turnover
rate................... 41% 59% 37% 55% 78% 136% 43% 48% 6%
Average commission rate
paid per share......... $0.0358 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>

This information should be read in conjunction with the financial statements of
The Prudential Series Fund, Inc. and notes thereto, which appear in the
Statement of Additional Information.

Further information about performance of the portfolios is contained in the
Annual Report to Contract Owners which may be obtained without charge.

6 - SERIES FUND
<PAGE>
PORTFOLIO RATES OF RETURN

The following table, based upon the immediately preceding financial highlights
for the Series Fund, shows first the average annual compounded net rates of
return for each Portfolio for the year ended December 31, 1996, for the 5 year
and 10 year periods ending on that date, and from the inception date of each
Portfolio to December 31, 1996. These rates of return should not be regarded as
an estimate or prediction of future performance. They may be useful in assessing
the competence and performance of the Series Fund's investment advisor and in
helping you to decide which portfolios to choose. THIS INFORMATION RELATES ONLY
TO THE SERIES FUND AND DOES NOT REFLECT THE VARIOUS OTHER CHARGES MADE UNDER THE
CONTRACTS.

<TABLE>
<CAPTION>
5 YEARS 10 YEARS INCEPTION
INCEPTION YEAR ENDED ENDED ENDED DATE TO
PORTFOLIO DATE 12/31/96 12/31/96 12/31/96 12/31/96
- -------------------------- ------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
MONEY MARKET 5/83 5.22% 4.36% 5.91% 6.53%
DIVERSIFIED BOND 5/83 4.40% 7.56% 8.38% 9.45%
GOVERNMENT INCOME 5/89 2.22% 6.65% N/A 8.74%
CONSERVATIVE BALANCED 5/83 12.63% 9.43% 9.92% 10.60%
FLEXIBLE MANAGED 5/83 13.64% 11.18% 11.35% 11.77%
HIGH YIELD BOND 2/87 11.39% 12.27% N/A 8.85%
STOCK INDEX 10/87 22.57% 14.80% N/A 16.40%
EQUITY INCOME 2/88 21.74% 15.15% N/A 14.77%
EQUITY 5/83 18.52% 17.34% 15.16% 14.91%
PRUDENTIAL JENNISON 5/95 14.41% N/A N/A 24.20%
GLOBAL 9/88 19.97% 12.82% N/A 10.48%
</TABLE>

7 - SERIES FUND

<PAGE>

THE SERIES FUND

The Prudential Series Fund, Inc. (the "Series Fund"), a diversified open-end
management investment company, is a Maryland corporation organized on November
15, 1982. The Prudential DISCOVERY SELECT(SM) Group Variable Contract Account
(the "Discovery Account") may currently invest in eleven of the Series Fund's
portfolios: the Money Market Portfolio, the Diversified Bond Portfolio, the
Government Income Portfolio, the Conservative Balanced Portfolio, the Flexible
Managed Portfolio, the High Yield Bond Portfolio, the Stock Index Portfolio, the
Equity Income Portfolio, the Equity Portfolio, the Prudential Jennison
Portfolio, and the Global Portfolio. Each portfolio is, for investment purposes,
in effect a separate investment fund, and a separate class of capital stock is
issued for each portfolio. In other respects the Series Fund is treated as one
entity. Each share of capital stock issued with respect to a portfolio has a
pro-rata interest in the assets of that portfolio and has no interest in the
assets of any other portfolio. Each portfolio bears its own liabilities and also
its proportionate share of the general liabilities of the Series Fund. The
Series Fund is registered under the Investment Company Act of 1940 (the "1940
Act") as an open-end, diversified, management investment company. This
registration does not imply any supervision by the Securities and Exchange
Commission over the Series Fund's management or its investment policies or
practices.

THE ACCOUNTS AND THE CONTRACTS

Shares in the Series Fund are currently sold only to separate accounts of The
Prudential Insurance Company of America ("Prudential") and certain other
insurers to fund benefits under variable life insurance and variable annuity
contracts issued by those Companies. All the separate accounts are referred to
as the "Accounts," and all the contracts are referred to as the "Contracts."
Each Contract owner allocates the net premiums and the assets relating to the
Contract, within the limitations described in the Contracts, among the
subaccounts of the Accounts which in turn invest in the corresponding portfolios
of the Series Fund. Not all portfolios of the Series Fund are currently
available to all Contracts. The attached prospectus for the Contracts lists the
portfolios that are currently available and describes the particular type of
Contract selected and the relationship between changes in the value of shares of
each portfolio and changes in the benefits payable under the Contracts. The
rights of the Accounts as shareholders should be distinguished from the rights
of a Contract owner which are described in the Contracts. The terms
"shareholder" or "shareholders" in this prospectus refer to the Accounts.

INVESTMENT MANAGER

Prudential is the investment advisor of the Series Fund. Prudential's principal
business address is Prudential Plaza, Newark, New Jersey 07102-3777.

Prudential has entered into a Service Agreement with its wholly-owned subsidiary
The Prudential Investment Corporation ("PIC"), which provides that PIC will
furnish to Prudential such services as Prudential may require in connection with
the performance of its obligations under an Investment Advisory Agreement with
the Series Fund. One of PIC's business groups is Prudential Investments. In
addition, Prudential has entered into a Subadvisory Agreement with its
wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio. See INVESTMENT MANAGEMENT
ARRANGEMENTS AND EXPENSES, page 28.

Prudential will continue to have responsibility for all investment advisory
services under its Investment Advisory Agreement with respect to the Series
Fund.

INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIOS

Each portfolio of the Series Fund has a different investment objective which it
pursues through separate investment policies as described below. Since each
portfolio has a different investment objective, each can be expected to have
different investment results and incur different market and financial risks. The
Series Fund may in the future establish other portfolios with different
investment objectives.

The investment objectives of each portfolio are fundamental and may not be
changed without the approval of the holders of a majority of the outstanding
shares of the portfolio affected (which for this purpose and under the 1940 Act
means the lesser of: (i) 67% of the shares represented at a meeting at which
more than 50% of the outstanding shares are represented; or (ii) more than 50%
of the outstanding shares). The policies by which a portfolio seeks to achieve
its investment objectives, however, are not fundamental. They may be changed by
the Board of Directors of the Series Fund without the approval of the
shareholders.

8 - Series Fund
<PAGE>

The portfolio turnover rate of the portfolios that were available for investment
as of December 31, 1996 can be found in the FINANCIAL HIGHLIGHTS table on pages
1 through 6. The portfolio turnover rate is, generally, the percentage computed
by dividing the lesser of portfolio purchases or sales by the average value of
the portfolio, in each case excluding securities with maturities of 1 year or
less. Generally, the higher the portfolio turnover rate, the greater the
brokerage costs incurred by a portfolio.

The following paragraphs describe the investment objectives and policies of each
portfolio. There is no guarantee that any of these objectives will be met.

FIXED INCOME PORTFOLIOS

MONEY MARKET PORTFOLIO. The objective of this portfolio is to achieve, through
investment in high-quality short-term debt obligations, the maximum current
income that is consistent with stability of capital and maintenance of
liquidity.

The portfolio seeks to achieve this objective by following the policy of
investing primarily in money market instruments denominated in U.S. dollars that
mature in 397 days or less from the date the portfolio acquires them. Money
market instruments include short-term obligations of the United States and
foreign governments, their agencies, instrumentalities, and political
subdivisions, and of domestic and foreign banks and corporations. They also
include commercial paper, other corporate obligations, obligations of savings
and loan associations and savings banks, and variable amount demand master
notes. The portfolio may also enter into repurchase and reverse repurchase
agreements and may purchase and sell securities on a when-issued and delayed
delivery basis. These investment techniques may involve additional risks. A
detailed description of the money market instruments in which the portfolio may
invest, of the repurchase and reverse repurchase agreements it may enter into,
and of the risks associated with those instruments and agreements may be found
in the Appendix to this prospectus.

Because of the high quality, short-term nature of the portfolio's holdings,
increases in the value of an investment in the portfolio will be derived almost
entirely from interest on the securities held by it. Accordingly, the results
for the portfolio are subject to the risk of fluctuation in short-term interest
rates.

DIVERSIFIED BOND PORTFOLIO. The objective of this portfolio is to achieve a high
level of income over the longer term while providing reasonable safety of
capital through investment primarily in readily marketable intermediate and
long-term fixed income securities that provide attractive yields but do not
involve substantial risk of loss of capital through default.

The portfolio seeks to achieve this objective by following the policies of
purchasing primarily debt securities of investment grade or, if not rated, of
comparable quality in the opinion of the portfolio manager and of investing from
time to time a portion of its assets in high quality money market instruments of
the kind held in the Money Market Portfolio as described in the Appendix to this
prospectus. Moreover, when conditions dictate a temporary defensive strategy or
during temporary periods of portfolio structuring and restructuring, the
Diversified Bond Portfolio may invest, without limit, in high quality money
market instruments of the kind held by the Money Market Portfolio.

Since the value of fixed income securities generally fluctuates inversely with
changes in interest rates, the proportions of intermediate or longer-term
securities and short-term debt obligations held in the portfolio will vary to
reflect Prudential's assessment of prospective changes in interest rates, so
that the portfolio may benefit from relative price appreciation when interest
rates decline and suffer lesser declines in value when interest rates rise. The
success of this strategy will depend on Prudential's ability to forecast changes
in interest rates, and there is a corresponding risk that the value of the
securities held in the portfolio will decline.

At least 80% of the portfolio's holdings (including short-term debt obligations)
will generally consist of debt securities that at the time of purchase have a
rating within the four highest grades determined by Moody's Investor Services,
Inc. ("Moody's"), Standard & Poor's Rating Group ("S&P"), or a similar
nationally-recognized rating service. The portfolio may retain a security whose
rating has dropped below the four highest grades as determined by a commercial
rating service. Without limitation, the portfolio may invest in obligations of
the U.S. Government and its agencies and instrumentalities. The Appendix to the
statement of additional information defines the ratings that are given to debt
securities by Moody's and S&P and describes the standards applied by them in
assigning these ratings.

The remaining assets of the portfolio may be invested in, among other things,
debt securities that are not rated within the four highest grades or convertible
debt securities, preferred stocks or convertible preferred stocks of any
quality. On occasion, however, the portfolio may acquire common stock, not
through direct investment but by the conversion of convertible debt securities
or the exercise of warrants. For additional information regarding warrants, see
INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS in the statement of
additional information. No more than 10% of the value of the total assets of the
portfolio will be held in common stocks, and those will usually be sold as soon
as a favorable opportunity is available.

9 - Series Fund
<PAGE>

The portfolio may invest up to 20% of its total assets in United States currency
denominated debt securities issued outside the United States by foreign or
domestic issuers. For additional information regarding such securities, see
FOREIGN SECURITIES on page 21.

In addition, the portfolio may: (i) purchase and sell options on debt
securities; (ii) purchase and sell interest rate futures contracts and options
thereon; (iii) purchase securities on a when-issued or delayed delivery basis;
(iv) use interest rate swaps; and (v) make short sales. These techniques are
described on pages 23 through 28, and further information about some of them is
included in the statement of additional information.

Barbara Kenworthy, Managing Director, Prudential Investments, has been portfolio
manager of the Diversified Bond Portfolio since 1995. Ms. Kenworthy is also
portfolio manager of the Prudential Diversified Bond Fund, Inc., the Prudential
Government Income Fund, Inc., and the Government Income and Zero Coupon Bond
Portfolios 2000 and 2005 of the Series Fund. Prior to 1994, Ms. Kenworthy was a
portfolio manager and president of several taxable fixed-income funds for The
Dreyfus Corp.

GOVERNMENT INCOME PORTFOLIO. The objective of this portfolio is to achieve a
high level of income over the longer term consistent with the preservation of
capital through investment primarily in intermediate and long-term U.S. Treasury
securities and debt obligations issued by agencies of or instrumentalities
established, sponsored or guaranteed by the U.S. Government. At least 65% of the
total assets of the portfolio will be invested in U.S. Government securities.

The portfolio seeks to achieve this objective by investing at least 65% of its
assets in U.S. Treasury securities, obligations issued or guaranteed by U.S.
Government agencies and instrumentalities, mortgage-related securities issued by
U.S. Government instrumentalities or non-governmental corporations, or related
collateralized mortgage obligations. These instruments are described below. The
portfolio may invest up to a total of 35% of its assets in the following three
categories: (1) money market instruments of the kind held in the Money Market
Portfolio; (2) securities of issuers other than the U.S. Government and related
entities, usually foreign governments, where the principal and interest are
substantially guaranteed (generally to the extent of 90% thereof) by U.S.
Government agencies whose guarantee is backed by the full faith and credit of
the United States and where an assurance of payment on the unguaranteed portion
is provided for in a comparable way; (3) Foreign Government Securities including
debt securities issued or guaranteed, as to payment of principal and interest,
by governments, governmental agencies, supranational entities and other
governmental entities denominated in U.S. dollars. A supranational entity is an
entity constituted by the national governments of several countries to promote
economic development. Examples of such supranational entities include, among
others, the World Bank (International Bank for Reconstruction and Development),
the European Investment Bank and the Asian Development Bank; and (4)
asset-backed securities rated in either of the top two ratings by Moody's or
Standard & Poor's, or if not rated, determined by the portfolio manager to be of
comparable quality. A description of corporate bond ratings is contained in the
Appendix to the statement of additional information. When conditions dictate a
temporary defensive strategy or during temporary periods of portfolio
structuring and restructuring, the Government Income Portfolio may invest,
without limit, in high quality money market instruments of the kind held by the
Money Market Portfolio.

U.S. Treasury Securities. U.S. Treasury securities include bills, notes, and
bonds issued by the U.S. Treasury. These instruments are direct obligations of
the U.S. Government and, as such, are backed by the full faith and credit of the
United States. They differ primarily in their coupons, the lengths of their
maturities, and the dates of their issuances.

Obligations Issued or Guaranteed by U.S. Government Agencies and
Instrumentalities. Obligations issued by agencies of the U.S. Government or
instrumentalities established or sponsored by the U.S. Government include
securities that are guaranteed by federal agencies or instrumentalities, and may
or may not be backed by the full faith and credit of the United States.
Obligations of the Government National Mortgage Association ("GNMA"), the
Farmers Home Administration, and the Export-Import Bank are backed by the full
faith and credit of the United States. Securities in which the portfolio may
invest that are not backed by the full faith and credit of the United States
include obligations issued by the Tennessee Valley Authority, The Federal
National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC"), the United States Postal Service, each of which has the
right to borrow from the United States Treasury to meet its obligations, and
obligations of the Federal Farm Credit Bank and the Federal Home Loan Bank, the
obligations of which may be satisfied only by the individual credit of the
issuing agency. In the case of securities not backed by the full faith and
credit of the U.S. Government, the portfolio must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment and may not be
able to assert a claim against the U.S. Government if the agency or
instrumentality does not meet its commitments.

U.S. Government Securities are considered among the most creditworthy of fixed
income investments. The yields available from U.S. Government Securities are
generally lower than the yields available from corporate debt securities. The
values of U.S. Government Securities (like those of fixed income securities,
generally) will change as interest rates fluctuate. During periods of falling
U.S. interest rates, the values of outstanding long-term U.S.

10 - Series Fund
<PAGE>

Government Securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. The magnitude
of these fluctuations will generally be greater for securities with longer
maturities. Although changes in the value of U.S. Government Securities will not
affect investment income from those securities, they will affect the portfolio's
net asset value. The proportions of intermediate and long-term securities held
in the portfolio will vary to reflect Prudential's assessment of prospective
changes in interest rates, so that the portfolio may benefit from relative price
appreciation when interest rates decline and suffer lesser declines in value
when interest rates rise. The success of this strategy will depend on
Prudential's ability to forecast changes in interest rates, and there is a
corresponding risk that the value of the securities held in the portfolio will
decline.

Mortgage-Related Securities Issued by U.S. Government Instrumentalities or by
Non-Governmental Corporations. The portfolio may invest in the following three
types of mortgage-backed securities: (i) those issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities, such as Government
National Mortgage Association (GNMA), Federal National Mortgage Association
(FNMA) and Federal Home Loan Mortgage Corporation (FHLMC); (ii) those issued by
private issuers that represent an interest in or are collateralized by
mortgage-backed securities issued or guaranteed by the U.S. Government or one of
its agencies or instrumentalities; and (iii) those issued by private issuers
that represent an interest in or are collateralized by whole mortgage loans or
mortgage-backed securities without government guarantee but usually having some
form of private credit enhancement. The portfolio may invest in adjustable rate
and fixed rate mortgage securities. With respect to private mortgage-backed
securities not collateralized by securities of the U.S. Government or its
agencies, the portfolio will only purchase such securities rated not lower than
Aa by Moody's or AA by Standard & Poor's or similarly rated by another
nationally recognized rating service or, if unrated, of comparable quality in
the opinion of the portfolio manager. The mortgages backing these securities
include conventional 30 year fixed rate mortgages, 15 year fixed rate mortgages,
graduated payment mortgages, and adjustable rate mortgages ("ARMs"). The
mortgage-backed securities may include those representing an undivided ownership
interest in a pool of mortgages, e.g. GNMA, FNMA and FHLMC certificates. The
U.S. Government or the issuing agency guarantees the payment of interest and
principal of mortgage-backed securities issued by the U.S. Government or its
agencies/instrumentalities. However, these guarantees do not extend to the
securities' yield or value, which are likely to vary inversely with fluctuations
in interest rates, nor do the guarantees extend to the yield or value of the
portfolio's shares. Mortgage-backed securities are in most cases pass-through
instruments, through which the holders receive a share of all interest and
principal payments from the mortgages underlying the securities, net of certain
fees. Because the prepayment characteristics of the underlying mortgages vary,
it is not possible to predict accurately the average life of a particular issue
of pass-through securities. Mortgage-backed securities are often subject to more
rapid repayment then their stated maturity date would indicate as a result of
the pass-through of prepayments of principal on the underlying mortgage
obligations. For example, securities backed by mortgages with 30 year maturities
are customarily treated as prepaying fully in the 12th year and securities
backed by mortgages with 15 year maturities are customarily treated as prepaying
fully in the seventh year. While the timing of prepayments of graduated payment
mortgages differs somewhat from that of conventional mortgages, the prepayment
experience of graduated payment mortgages is basically the same as that of the
conventional mortgages of the same maturity dates over the life of the pool.
During periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. When the mortgage
obligations are prepaid, the portfolio reinvests the prepaid amounts in
securities, the yields of which reflect interest rates prevailing at the time.
Therefore, the portfolio's ability to maintain a portfolio of high yielding
mortgage-backed securities will be adversely affected to the extent that
prepayments of mortgages must be reinvested in securities which have lower
yields than the prepaid mortgages. Moreover, prepayments of mortgages which
underlie securities purchased at a premium could result in capital losses.
Mortgage-backed securities of the types described under (i) and (ii) above are
considered to be U.S. Government Securities for purposes of meeting the
requirement that at least 65% of the portfolio's assets be invested in U.S.
Government Securities.

Adjustable rate mortgage securities are pass-through mortgage securities
collateralized by mortgages with adjustable rather than fixed rates. Generally
ARMs have a specified maturity date and amortize principal over their life. In
periods of declining interest rates, there is a reasonable likelihood that ARMs
will experience increased rates of pre-payment of principal. However, the major
difference between ARMs and fixed rate mortgage securities is that the interest
rate and the rate of amortization of principal of ARMs can and do change in
accordance with movements in a particular pre-specified, published interest rate
index.

CMOs. The portfolio may also purchase collateralized mortgage obligations
("CMOs"). A CMO is a security issued by a corporation or a U.S. Government
instrumentality that is backed by a portfolio of mortgages or mortgage-backed
securities. The issuer's obligation to make interest and principal payments is
secured by the underlying portfolio of mortgages or mortgage-backed securities.
CMOs are partitioned into several classes with a ranked priority by which the
classes of obligations are redeemed. The portfolio may invest in CMOs issued by
agencies or instrumentalities of the U.S. Government or by private originators
of, or investors in mortgage loans, including depository institutions, mortgage
banks, investment banks and special purpose subsidiaries of the

11 - Series Fund
<PAGE>

foregoing. With respect to privately issued CMOs, the portfolio will only
purchase such securities rated not lower than Aa by Moody's or AA by Standard &
Poor's or similarly rated by another nationally recognized rating service, or if
unrated, of comparable quality in the opinion of the portfolio manager.
Privately issued CMOs that are collateralized by mortgage-backed securities
issued by GNMA, FHLMC or FNMA, and CMOs issued by agencies or instrumentalities
of the U.S. Government are considered to be U.S. Government Securities for
purposes of meeting the requirement that at least 65% of the portfolio's assets
be invested in U.S. Government Securities. Neither the United States Government
nor any U.S. Government agency guarantees the payment of principal or interest
on these securities.

Asset-Backed Securities. Asset-backed securities represent a participation in,
or are secured by and payable from, a stream of payments generated by particular
assets, such as automobile or credit card receivables. Asset-backed securities
present certain risks, including the risk that the underlying obligor on the
asset, such as the automobile purchaser or the credit card holder, may default
on his or her obligation. In addition, asset-backed securities often do not
provide a security interest in the related collateral. For example, credit card
receivables are generally unsecured, and for automobile receivables the security
interests in the underlying automobiles are often not transferred when the pool
is created, with the resulting possibility that the collateral could be resold.

Under normal circumstances, this portfolio's turnover rate is not expected to
exceed 200%. Purchases of U.S. Government Securities are generally made from
dealers at prices which usually include a profit to the dealer. See PORTFOLIO
BROKERAGE AND RELATED PRACTICES, page 33.

Barbara Kenworthy, Managing Director, Prudential Investments, has been portfolio
manager of the Government Income Portfolio since 1995. Ms. Kenworthy is also
portfolio manager of the Prudential Diversified Bond Fund, Inc., the Prudential
Government Income Fund, Inc., and the Diversified Bond and Zero Coupon Bond
Portfolios 2000 and 2005 of the Series Fund. Prior to 1994, Ms. Kenworthy was a
portfolio manager and president of several taxable fixed-income funds for The
Dreyfus Corp.

BALANCED PORTFOLIOS

CONSERVATIVE BALANCED PORTFOLIO. The objective of this portfolio is to achieve a
favorable total investment return consistent with a portfolio having a
conservatively managed mix of money market instruments, fixed income securities,
and common stocks in proportions believed by the investment manager to be
appropriate for an investor desiring diversification of investment who prefers a
relatively lower risk of loss than that associated with the Flexible Managed
Portfolio while recognizing that this reduces the chances of greater
appreciation.

To achieve this objective, the Conservative Balanced Portfolio will follow a
policy of maintaining a more conservative asset mix among stocks, bonds and
money market instruments than the Flexible Managed Portfolio. In general, the
portfolio manager will observe the following range of target asset allocation
mixes:

Asset Type Minimum Normal Maximum
---------- ------- ------ -------
Stocks 15% 35% 50%
Bonds and Money Market 25% 65% 70%

The portfolio manager will make variations in the proportions of each investment
category in accordance with its judgment about the expected returns and risks of
the various investment categories, but will maintain at least 25% of the value
of the portfolio's assets in fixed-income senior securities.

The bond portion of this portfolio will be invested primarily in securities with
maturities of 2 to 10 years and ratings at the time of purchase within the four
highest grades determined by Moody's, S&P, or a similar nationally-recognized
rating service or if unrated, of comparable quality in the opinion of the
portfolio manager. However, the portfolio may purchase below-investment grade
debt. The risks of medium to lower rated securities, also known as high risk
securities, are described below in connection with the High Yield Bond
Portfolio. A description of corporate bond ratings is contained in the Appendix
to the statement of additional information. Because of their shorter maturities,
the value of the notes and bonds in this portfolio will be less sensitive to
changes in interest rates than the longer-term bonds likely to be held in the
Flexible Managed Portfolio. Thus, there will be less of a risk of loss of
principal, but not as much of a likelihood for greater appreciation in value. Up
to 20% of the bond portion of this portfolio may be invested in United States
currency denominated debt securities issued outside the United States by foreign
or domestic issuers. The stock portion of this portfolio will be invested
primarily in the equity securities of major, established corporations in sound
financial condition that appear to offer attractive prospects of a total return
from dividends and capital appreciation that is superior to broadly based stock
indices. The portfolio may also invest in preferred stock, including below
investment grade preferred stock. The

12 - Series Fund
<PAGE>

money market portion of the portfolio will hold high quality money market
instruments of the kind held by the Money Market Portfolio. Moreover, when
conditions dictate a temporary defensive strategy or during temporary periods of
portfolio structuring and restructuring, the Conservative Balanced Portfolio may
invest, without limit, in high quality money market instruments of the kind held
by the Money Market Portfolio.

To the extent permitted by applicable insurance law, this portfolio may invest
up to 30% of its total assets in nonUnited States currency denominated debt and
equity securities of foreign and U.S. issuers. The particular risks of
investments in foreign securities are described under FOREIGN SECURITIES on page
21.

In addition, the portfolio may: (i) purchase and sell options on equity
securities, debt securities, stock indices and foreign currencies; (ii) purchase
and sell stock index, interest rate and foreign currency futures contracts and
options thereon; (iii) enter into forward foreign currency exchange contracts;
(iv) purchase securities on a when-issued or delayed delivery basis; (v) use
interest rate swaps; and (vi) make short sales. These techniques are described
on pages 22 through 28, and further information about some of them is included
in the statement of additional information.

The Conservative Balanced Portfolio is managed by a team of portfolio managers.
Mark Stumpp, Senior Managing Director, Prudential Investments, has been lead
portfolio manager of the Conservative Balanced Portfolio since 1994 and is
responsible for the overall asset allocation decisions. Mr. Stumpp has
supervisory responsibility of the portfolio management team. Warren Spitz,
Managing Director, Prudential Investments, has been the portfolio manager of the
equity portion of the portfolio since 1995. It is the intention of the portfolio
to appoint Patricia Bannan, Managing Director, Prudential Investments, to manage
a portion (to be determined by Mr. Stumpp) of the portfolio's equity holdings.
Upon Ms. Bannan's appointment, Mr. Spitz will continue to manage the other
portion of the portfolio's equity holdings. Tony Rodriguez, Vice President,
Prudential Investments, has been the portfolio manager of the fixed income
portion of the portfolio since 1993. Mr. Stumpp also supervises the team of
portfolio managers for the Flexible Managed Portfolio. Mr. Stumpp is also
portfolio manager for several employee benefit trusts including The Prudential
Retirement System for U.S. Employees and Special Agents. Prior to 1994, he was
responsible for corporate pension asset management for Prudential Diversified
Investment Strategies' corporate clients. Mr. Spitz is also portfolio manager of
the Prudential Equity Income Fund and the Equity Income and Flexible Managed
Portfolios of the Series Fund. Ms. Bannan has been portfolio manager of the
equity portion of the Flexible Managed Portfolio since 1996. Prior to 1996, Ms.
Bannan was President of Phoenix Investment Counsel where she personally managed
$3 billion in assets, including a $2.5 billion balanced mutual fund. Mr.
Rodriguez is also portfolio manager for the Prudential Structured Maturity Fund,
Inc. and the Flexible Managed Portfolio of the Series Fund.

FLEXIBLE MANAGED PORTFOLIO. The objective of this portfolio is achievement of a
high total return consistent with a portfolio having an aggressively managed mix
of money market instruments, fixed income securities, and common stocks, in
proportions believed by the investment manager to be appropriate for an investor
desiring diversification of investment who is willing to accept a relatively
high level of loss in an effort to achieve greater appreciation.

To achieve this objective, the Flexible Managed Portfolio will follow a policy
of maintaining a more aggressive asset mix among stocks, bonds and money market
investments than the Conservative Balanced Portfolio. In general, the portfolio
manager will observe the following range of target asset allocation mixes:

Asset Type Minimum Normal Maximum
---------- ------- ------ -------
Stocks 25% 60% 100%
Bonds 0% 40% 75%
Money Market 0% 0% 75%

The portfolio manager may make short-run, and sometimes substantial, variations
in the asset mix based upon its judgment about the expected returns and risks of
the various investment categories. In varying the asset mix in accordance with
these judgments, Prudential will also seek to take advantage of imbalances in
fundamental values among the different markets.

The bond component of this portfolio is expected under normal circumstances to
have a weighted average maturity of greater than 10 years. The values of bonds
with long maturities are generally more sensitive to changes in interest rates
than those of shorter maturities. The bond portion of this portfolio will
primarily be invested in securities that have a rating at the time of purchase
within the four highest grades determined by Moody's, S&P, or a similar
nationally-recognized rating service. A description of corporate bond ratings is
contained in the Appendix to the statement of additional information. However,
up to 25% of the bond component of this portfolio may be invested in securities
having ratings at the time of purchase of "BB," "Ba" or lower, or if not rated,
of comparable quality in the opinion of the portfolio manager, also known as
high risk securities. The risks of medium to lower rated securities, are
described below in connection with the High Yield Bond Portfolio. Up to 20% of
the bond portion of this portfolio may be invested in United States currency
denominated debt securities issued outside the United States by foreign or
domestic issuers. The established company common stock component of this
portfolio will consist of the equity securities of major corporations that are
believed to be in sound financial

13 - Series Fund
<PAGE>

condition. In selecting stocks of smaller capitalization companies, the
portfolio manager may invest in companies that show above average profitability
(measured by return-on-equity, earnings, and dividend growth rates) with modest
price/earnings ratios or alternatively, in companies whose stock is undervalued
relative to other stocks in the market. The individual equity selections for
this portfolio may have more volatile market values than the equity securities
selected for the Equity Portfolio or the Conservative Balanced Portfolio. The
portfolio may also invest in preferred stock, including below investment grade
preferred stock. The money market portion of the portfolio will hold high
quality money market instruments of the kind held by the Money Market Portfolio.
Moreover, when conditions dictate a temporary defensive strategy or during
temporary periods of portfolio structuring and restructuring, the Flexible
Managed Portfolio may invest, without limit, in high quality money market
instruments of the kind held by the Money Market Portfolio.

To the extent permitted by applicable insurance law, this portfolio may invest
up to 30% of its total assets in non-United States currency denominated debt and
equity securities of foreign and U.S. issuers. The particular risks of
investments in foreign securities are described under FOREIGN SECURITIES, page
21.

The facts that this portfolio will invest in a mix of common stocks regarded as
having higher risks than the mix of common stocks that will be purchased by the
Conservative Balanced Portfolio; that it will invest in bonds with longer
maturities; and that the "normal" mix for this portfolio will include a higher
percentage of stocks all combine to mean that the risk of investing in this
portfolio is relatively higher--to the extent that each of these factors results
in greater risks--than the risk of investing in the Conservative Balanced
Portfolio.

The Flexible Managed Portfolio is managed by a team of portfolio managers. Mark
Stumpp, Senior Managing Director, Prudential Investments, has been lead
portfolio manager of the Flexible Managed Portfolio since 1994 and is
responsible for the overall asset allocation decisions. Mr. Stumpp has
supervisory responsibility of the portfolio management team. Patricia Bannan,
Managing Director, Prudential Investments, has been the portfolio manager of the
equity portion of the portfolio since 1996. It is the intention of the portfolio
to appoint Warren Spitz, Managing Director, Prudential Investments, to manage a
portion (to be determined by Mr. Stumpp) of the portfolio's equity holdings.
Upon Mr. Spitz's appointment, Ms. Bannan will continue to manage the other
portion of the portfolio's equity holdings. Tony Rodriguez, Vice President,
Prudential Investments, has been the portfolio manager of the fixed income
portion of the portfolio since 1993. Mr. Stumpp also supervises the team of
portfolio managers for the Conservative Balanced Portfolio. Mr. Stumpp is also
portfolio manager for several employee benefit trusts including The Prudential
Retirement System for U.S. Employees and Special Agents. Prior to 1994, he was
responsible for corporate pension asset management for Prudential Diversified
Investment Strategies' corporate clients. Prior to 1996, Ms. Bannan was
President of Phoenix Investment Counsel where she personally managed $3 billion
in assets including a $2.5 billion balanced mutual fund. Mr. Spitz has been
portfolio manager of the equity portion of the Conservative Balanced Portfolio
since 1995 and is also portfolio manager of the Prudential Equity Income Fund
and the Equity Income Portfolio of the Series Fund. Mr. Rodriguez is also
portfolio manager for the Prudential Structured Maturity Fund, Inc., and the
Flexible Managed Portfolio of the Series Fund.

HIGH YIELD BOND PORTFOLIOS

HIGH YIELD BOND PORTFOLIO. The objective of this portfolio is to achieve a high
total return through investment in a diversified portfolio of high yield/high
risk fixed income securities.

The portfolio seeks to achieve its objective by following a policy of generally
investing in fixed income securities rated in the medium to lower categories by
recognized rating services or in unrated fixed income securities of comparable
quality. The portfolio expects to invest principally in fixed income securities
rated Baa or lower by Moody's, or BBB or lower by S&P. These securities are
sometimes known as "junk bonds." Corporate bonds which are rated Baa by Moody's
are described by Moody's as being investment grade, but are also characterized
as having speculative characteristics. Corporate bonds rated below Baa by
Moody's and BBB by S&P are considered speculative. A description of corporate
bond ratings is contained in the Appendix to the statement of additional
information.

Medium to lower rated and comparable non-rated securities tend to offer higher
yields than higher rated securities with the same maturities because the
historical financial condition of the issuers of such securities may not have
been as strong as that of other issuers. Since medium to lower rated securities
generally involve greater risks of loss of income and principal than higher
rated securities, investors should consider carefully the relative risks
associated with investments in high yield/high risk securities which carry
medium to lower ratings and in

14 - Series Fund
<PAGE>

comparable non-rated securities. Investors should understand that such
securities are not generally meant for short-term investing.

The achievement of the portfolio's investment objectives will depend on
Prudential's analytical and portfolio management skills. These skills are more
important in connection with the investment in medium to lower rated and
comparable unrated securities and to the portfolio's performance than would be
the case if the portfolio invested in higher quality fixed income securities. In
selecting securities for the portfolio, Prudential will evaluate, among other
things, an issuer's financial history, condition, prospects and management. A
credit rating assigned by a commercial rating service will not measure the
market risk of high yield/high risk bonds and may not be a timely reflection of
the condition and economic viability of an individual issuer. In its credit
analysis, Prudential therefore will not rely principally on the ratings assigned
by the ratings services (e.g., Moody's and S&P), although such ratings will be
considered. Through careful selection and by investment in a diversified mix of
securities, Prudential will seek to reduce the risks that are associated with
investing in medium to lower rated and comparable unrated debt securities.

Fixed income securities are subject to the risk of an issuer's inability to meet
principal and interest payments on the obligations (credit risk) and may also be
subject to price volatility due to such factors as interest rate sensitivity,
market perception of the creditworthiness of the issuer and general market
liquidity (market risk). The value of the fixed income securities in the
portfolio will be directly impacted by the market perception of the
creditworthiness of the securities' issuers and will fluctuate inversely with
changes in interest rates. Lower rated or unrated securities are more likely to
react to developments affecting market and credit risk than are more highly
rated securities, which react primarily to movements in the general level of
interest rates. For example, because investors generally perceive that there are
greater risks associated with investing in medium or lower rated securities, the
yields and prices of such securities may tend to fluctuate more than those of
higher rated securities. Moreover, in the lower quality segments of the fixed
income securities market, changes in perception of the creditworthiness of
individual issuers tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the fixed income securities
market. The yield and price of medium to lower rated securities therefore may
experience greater volatility than is the case with higher rated securities.
Prudential considers both credit risk and market risk in selecting securities
for the portfolio. By holding a diversified selection of such securities, the
portfolio seeks to reduce this volatility.

The secondary market for high yield/high risk securities, which is concentrated
in relatively few market makers, may not be as liquid as the secondary market
for more highly rated securities. Under adverse market or economic conditions,
the secondary market for high yield/high risk securities could contract further,
independent of any specific adverse changes in the condition of a particular
issuer. As a result, Prudential could find it more difficult to sell such
securities or may be able to sell the securities only at prices lower than if
such securities were widely traded. Prices realized upon the sale of such lower
rated or unrated securities therefore may be less than the prices used in
calculating the portfolio's net asset value. In the absence of readily available
market quotations, high yield/high risk securities will be valued by the Series
Fund's Board of Directors using a method that, in the good faith belief of the
Board, accurately reflects fair value. Valuing such securities in an illiquid
market is a difficult task. The Board's judgment plays a more significant role
in valuing such securities than those securities for which more objective market
data are available.

From time to time, federal laws have been enacted which have required the
divestiture by companies of their investments in high yield bonds and have
limited the deductibility of interest by certain corporate issuers of high yield
bonds. These types of laws could adversely affect the portfolio's net asset
value and investment practices, the secondary market for high yield securities,
the financial condition of issuers of these securities and the value of
outstanding high yield securities. There is currently no legislation pending
that would adversely impact the market for high yield/high risk securities.
However, there can be no assurance that such legislation will not be proposed or
enacted in the future.

During the fiscal year ended December 31, 1996, the monthly dollar weighted
average ratings of the debt obligations held by the High Yield Bond Portfolio,
expressed as a percentage of the portfolio's total investments, were as follows:

15 - Series Fund
<PAGE>

--------------------------------------------------
Percentage of Total
RATINGS Investments
--------------------------------------------------
AAA/Aaa 0%
AA/Aa 0%
A/A 0%
BBB/Baa 0.3%
BB/Ba 18.5%
B/B 60.0%
CCC/Caa or lower 8.3%
Unrated 12.9%
--------------------------------------------------

Consistent with its investment objective, the portfolio anticipates that under
normal conditions at least 80% of the value of its total assets will be invested
in high yield/high risk, medium to lower rated fixed income securities. Fixed
income securities appropriate for the portfolio may include both convertible and
nonconvertible debt securities and preferred stock. The portfolio will not
acquire common stocks, except when attached to or included in a unit with fixed
income securities which otherwise would be attractive to the portfolio.

The portfolio may invest up to 20% of its total assets in United States currency
denominated fixed-income securities issued outside the United States by foreign
and domestic issuers. For additional information regarding such securities, see
FOREIGN SECURITIES on page 21.

The portfolio may, when it has temporary cash available, invest in money market
instruments of the kind held by the Money Market Portfolio. The portfolio may
also invest in commercial paper of domestic corporations that does not meet the
quality restrictions applicable to the investments of the Money Market
Portfolio. Moreover, when conditions dictate a temporary defensive strategy or
during temporary periods of portfolio structuring and restructuring, the High
Yield Bond Portfolio may invest, without limit, in high quality money market
instruments of the kind held by the Money Market Portfolio. The portfolio may
also: (i) purchase and sell options on debt securities; (ii) purchase and sell
interest rate futures contracts and options thereon; (iii) purchase securities
on a when-issued or delayed delivery basis; (iv) use interest rate swaps; and
(v) make short sales. These techniques are described on pages 23 through 28, and
further information about some of them is included in the statement of
additional information.

Although the portfolio is not expected to engage in substantial short-term
trading, it may sell securities it owns without regard to the length of time
they have been held. The portfolio's turnover rate is not expected to exceed
150%.

Lars Berkman, Managing Director, Prudential Investments, and Michael Snyder,
Vice President, Prudential Investments, have been co-managers of the High Yield
Bond Portfolio since 1995. Mr. Berkman is also portfolio manager of the
Prudential High Yield Fund and has been employed as a portfolio manager in the
mutual fund unit since 1990. Mr. Snyder is also the portfolio manager of the
High Yield Income Fund, Inc. for Prudential and has been employed as a portfolio
manager in the mutual fund unit since 1993.

DIVERSIFIED STOCK PORTFOLIOS

STOCK INDEX PORTFOLIO. The objective of this portfolio is to achieve investment
results that correspond to the price and yield performance of publicly-traded
common stocks in the aggregate.

The portfolio seeks to achieve this objective by following the policy of
attempting to duplicate the price and yield performance of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500 Index"), an index which represents
more than 70% of the total market value of all publicly-traded common stocks and
is widely viewed among investors as representative of the performance of
publicly-traded common stocks as a whole. The S&P 500 Index is composed of 500
selected common stocks, over 95% of which are listed on the New York Stock
Exchange ("NYSE"). Standard & Poor's Corporation chooses the stocks to be
included in the index on a statistical basis taking into account market values
and industry diversification. Inclusion in the index in no way implies an
opinion by Standard & Poor's Corporation as to a stock's attractiveness as an
investment. "Standard & Poor's," "Standard & Poor's 500" and "500" are
trademarks of McGraw Hill, Inc. and have been licensed for use by The Prudential
Insurance Company of America and its affiliates and subsidiaries. The Series
Fund is not sponsored, endorsed, sold or promoted by S&P and S&P makes no
representation regarding the advisability of investing in the Series Fund.
Reference is made to the statement of additional information which sets forth
certain additional disclaimers and limitations of liabilities on behalf of S&P.

The S&P 500 Index is a "weighted" index in which the weighting of each stock
depends on its relative total market value: its market price per share times the
number of shares outstanding. Because of this weighting, approximately 11% of
the S&P 500 Index's value is accounted for by the stocks of the five largest
companies by relative market

16 - Series Fund

<PAGE>

value. As of December 31, 1996 those companies were: General Electric Co.,
Coca-Cola Co., Exxon Corp., Intel, and Microsoft Corp.

This portfolio will not be "managed" in the traditional sense of using economic,
financial or market analysis to determine the stocks to be purchased by the
portfolio. Rather, the portfolio manager will purchase stocks for the portfolio
in proportion to their weighting in the S&P 500 Index. Thus, adverse financial
performance by a company will not result in reduction or elimination of the
portfolio's holdings of its stock and, conversely, superior financial
performance by a company will not lead the portfolio to increase its holdings of
the company's stock. If a stock held by this portfolio is eliminated from the
S&P 500 Index, the portfolio will sell its holdings of the stock regardless of
the prospects of the company. Because the portfolio will not be "managed" in the
traditional sense, portfolio turnover is expected to be low and is generally not
expected to exceed 10%. A 10% portfolio turnover rate would occur if one-tenth
of the portfolio's securities were sold and either repurchased or replaced
within 1 year. Because of the expected low turnover, transaction costs, such as
brokerage commissions, are also expected to be relatively low.

The following table shows the performance of the S&P 500 Index for the 25 years
ending in 1996. The period covered by this table is one of generally rising
stock prices, and the performance of the S&P 500 Index in this period should not
be viewed as a representation of any future performance by that index. In
addition, the fees and costs involved in the operation of the Stock Index
Portfolio mean that the performance of a share of stock in the portfolio may not
equal the performance of the S&P 500 Stock Index even if the assets held by the
portfolio do equal that performance.

- --------------------------------------------------------------------------------
*S&P 500 WITH DIVIDENDS REINVESTED
ANNUAL PERCENTAGE CHANGE
- --------------------------------------------------------------------------------
1972 +18.90 1985 +31.57
1973 -14.77 1986 +18.56
1974 -26.39 1987 +5.10
1975 +37.16 1988 +16.61
1976 +23.57 1989 +31.69
1977 -7.42 1990 -3.10
1978 +6.38 1991 +30.47
1979 +18.20 1992 +7.61
1980 +32.27 1993 +10.08
1981 -5.01 1994 +1.32
1982 +21.44 1995 +37.58
1983 +22.38 1996 +22.96
1984 +6.10
- --------------------------------------------------------------------------------
Source: Standard & Poor's Corporation. Percentage change calculated in
accordance with specifications of SEC release number IA-327.
- --------------------------------------------------------------------------------

In the nine full years since this portfolio was established its total return,
compared to that of the S&P 500 Index, was as follows:

-----------------------------------------------------------------
ANNUAL PERCENTAGE CHANGE TOTAL RETURN
S&P 500 WITH STOCK INDEX PORTFOLIO
DIVIDENDS REINVESTED (AFTER DEDUCTION OF EXPENSES)
-----------------------------------------------------------------
1988 +16.61 +15.44
1989 +31.69 +30.93
1990 -3.10 -3.63
1991 +30.47 +29.72
1992 +7.61 +7.13
1993 +10.08 +9.66
1994 +1.32 +1.01
1995 +37.58 +37.06
1996 +22.96 +22.57
-----------------------------------------------------------------

Under normal circumstances, the portfolio generally intends to purchase all 500
stocks represented in the S&P 500 Index and to invest its assets as fully in
those stocks (in proportion to their weighting in the index) as is feasible in
light of cash flows into and out of the portfolio. In order to reduce
transaction costs, a weighted investment in the 500 stocks comprising the S&P
500 Index is most efficiently made in relatively large amounts. As additional
cash is received from the purchase of shares in the portfolio, it may be held
temporarily in short-term, high quality

17 - Series Fund

<PAGE>

investments of the sort in which the Money Market Portfolio invests, until the
portfolio has a sufficient amount of assets in such investments to make an
efficient weighted investment in the 500 stocks comprising the S&P 500 Index. If
net cash outflows from the portfolio are anticipated, the portfolio may sell
stocks (in proportion to their weighting in the S&P 500 Index) in amounts in
excess of those needed to satisfy the cash outflows and hold the balance of the
proceeds in short-term investments if such a transaction appears, taking into
account transaction costs, to be more efficient than selling only the amount of
stocks needed to meet the cash requirements. The portfolio will not, however,
increase its holdings of cash in anticipation of any decline in the value of the
S&P 500 Index or of the stock markets generally. The portfolio will instead
remain as fully invested in the S&P 500 Index stocks as feasible in light of its
cash flow patterns during periods of market declines as well as advances, and
investors in the portfolio thus run the risk of remaining fully invested in
common stocks during a period of general decline in the stock markets.

Tracking accuracy is measured by the difference between total return for the S&P
Index with dividends reinvested and total return for the portfolio with
dividends reinvested before deductions of portfolio fees and expenses. Tracking
accuracy is monitored by the portfolio manager on a daily basis. All tracking
accuracy deviations are reviewed to determine the effectiveness of investment
policies and techniques.

If the portfolio does hold short-term investments as a result of the patterns of
cash flows to and from the portfolio, such holdings may cause its performance to
differ from that of the S&P 500 Index. The portfolio will attempt to minimize
any such difference in performance through transactions involving stock index
futures contracts, options on stock indices, and/or options on stock index
future contracts. These derivative investment instruments are described under
OPTIONS ON STOCK INDICES, FUTURES CONTRACTS, and OPTIONS ON FUTURES CONTRACTS on
pages 24 through 26. The portfolio will not use such instruments for speculative
purposes or to hedge against any decline in the value of the stocks held in the
portfolio, but instead will employ them only as a temporary substitute for
investment of cash holdings directly in the 500 stocks when the portfolio's cash
holdings are too small to make such an investment in an efficient manner.

For example, if the portfolio's cash reserves are insufficient to invest
efficiently in another unit of the basket of stocks comprising the S&P 500
Index, the portfolio may purchase S&P 500 futures contracts to hedge against a
rise in the value of the stocks the portfolio intends to acquire. In its attempt
to minimize any difference in performance between the portfolio and the S&P 500
Index, the portfolio currently intends to engage in transactions involving the
S&P 500 Index futures contracts, the NYSE Composite Index futures contracts,
options on the S&P 500 Index, the S&P 100 Index, and the NYSE Composite Index,
and options on the S&P 500 Index futures contracts and the NYSE Composite Index
futures contracts. There can be no assurance that the portfolio's attempt to
minimize such performance difference through the use of any of these instruments
will succeed. See the statement of additional information for a more detailed
discussion of the manner in which the portfolio will employ these instruments
and for a description of other risks involved in the use of such instruments.

The above described investment policies and techniques of the Stock Index
Portfolio are non-fundamental and may be changed without shareholder approval if
it is determined that alternative investment techniques would be more effective
in achieving the portfolio's objective.

EQUITY INCOME PORTFOLIO. The objective of this portfolio is both current income
and capital appreciation through investment primarily in common stocks and
convertible securities that provide favorable prospects for investment income
returns above those of the Standard & Poor's 500 Stock Index or the NYSE
Composite Index. In selecting these securities, the portfolio will put emphasis
on earnings, balance sheet and cash flow analysis, and the relationships that
these factors have to the price and return of a given security. Under normal
circumstances, the portfolio intends to invest at least 65% of its total assets
in such securities.

The portfolio may invest the balance of its assets in other stocks, other
securities convertible into common stocks, debt securities (including money
market instruments), options on stocks and stock indices, and stock index
futures. The portfolio may under normal circumstances invest up to 35% of its
total assets in money market instruments of the kind held by the Money Market
Portfolio. Moreover, when conditions dictate a temporary defensive strategy or
during temporary periods of portfolio structuring and restructuring, the Equity
Income Portfolio may invest, without limit, in high quality money market
instruments of the kind held by the Money Market Portfolio.

In addition, up to 35% of the portfolio's total assets may be invested in other
fixed-income obligations including convertible and nonconvertible preferred
stock. The portfolio anticipates that these will primarily be rated A or better
by Moody's or S&P. However, the portfolio may also invest in lower-rated
fixed-income securities, although it will not invest in securities rated lower
than CC or Ca by Moody's or S&P, respectively. The risks of medium to lower
rated securities, also known as high risk securities, are described above in
connection with the High Yield Bond Portfolio. A description of debt ratings is
contained in the Appendix to the statement of additional information. The
portfolio may also invest in non-rated fixed-income securities which, in the
opinion of the manager, are of a quality comparable to rated securities in which
the portfolio may invest.

18 - Series Fund
<PAGE>

To the extent permitted by applicable insurance law, the portfolio may invest up
to 30% of its total assets in non-United States currency denominated debt and
equity securities of foreign and U.S. issuers. The particular risks of
investments in foreign securities are described under FOREIGN SECURITIES on page
21.

In addition, the portfolio may: (i) purchase and sell options on equity
securities, stock indices and foreign currencies; (ii) purchase and sell stock
index and foreign currency futures contracts and options thereon; (iii) enter
into forward foreign currency exchange contracts; and (iv) purchase securities
on a when-issued or delayed delivery basis. These techniques are described on
pages 22 through 27, and further information about some of them is included in
the statement of additional information.

As a result of its investment policies, the portfolio's turnover rate may exceed
100%, although it is not expected to exceed 200%.

Warren Spitz, Managing Director, Prudential Investments, has been portfolio
manager of the Equity Income Portfolio since 1988. Mr. Spitz is also portfolio
manager of the Prudential Equity Income Fund and the Conservative Balanced and
Flexible Managed Portfolios of the Series Fund.

EQUITY PORTFOLIO. The objective of this portfolio is to achieve capital
appreciation through investment primarily in common stocks of companies,
including major established corporations as well as smaller capitalization
companies, that appear to offer attractive prospects of price appreciation that
is superior to broadly-based stock indices. Current income, if any, is
incidental.

Although the portfolio will be invested primarily in common stocks, it may also
invest to a limited extent in short, intermediate or long term debt, either
convertible or nonconvertible into common stock, as well as in nonconvertible
preferred stock. In addition, it may also invest up to 5% of its assets in below
investment grade debt securities. The risks of medium to lower rated securities,
also known as high risk securities, are described above in connection with the
High Yield Bond Portfolio. A description of corporate bond ratings is contained
in the Appendix to the statement of additional information. The portfolio will
attempt to maintain a flexible approach to the selection of common stocks of
various types of companies whose valuations appear to offer opportunities for
above-average appreciation. Thus, the portfolio may invest in securities of
companies whose estimated growth in earnings exceeds that projected for the
market as a whole because of factors such as expanding market share, new
products or changes in market environment. Or it may invest in "undervalued"
securities which are often characterized by a lack of investor recognition of
the basic value of a company's assets. Securities of companies with sales and
earnings trends which are currently unfavorable but which are expected to
reverse may also be in the portfolio. The effort to achieve price appreciation
that is superior to broadly based stock indices necessarily involves accepting a
greater risk of declining values. During periods when stock prices decline
generally, it can be expected that the value of the portfolio will also decline.

To the extent permitted by applicable insurance law, this portfolio may invest
up to 30% of its total assets in nonUnited States currency denominated common
stock and fixed-income securities convertible into common stock of foreign and
U.S. issuers. The particular risks of investments in foreign securities are
described under FOREIGN SECURITIES on page 21.

A portion of the portfolio may be invested in money market instruments of the
kind held by the Money Market Portfolio in order to make effective use of cash
reserves pending investment in common stocks. Moreover, when conditions dictate
a temporary defensive strategy or during temporary periods of portfolio
structuring and restructuring, the Equity Portfolio may invest, without limit,
in high quality money market instruments of the kind held by the Money Market
Portfolio.

Thomas Jackson, Managing Director, Prudential Investments, has been portfolio
manager of the Equity Portfolio since 1990. Mr. Jackson is also portfolio
manager of the Prudential Equity Fund, Inc.

PRUDENTIAL JENNISON PORTFOLIO. The objective of the Prudential Jennison
Portfolio is to achieve long-term growth of capital through investment primarily
in equity securities of established companies with above-average growth
prospects. Current income, if any, is incidental.

In order to achieve this objective, the Prudential Jennison Portfolio will
follow a policy of selecting stocks on a company-by-company basis primarily
through the use of fundamental analysis. The portfolio manager will look for
companies that have demonstrated growth in earnings and sales, high returns on
equity and assets, or other strong financial characteristics, and in the opinion
of the portfolio manager, are attractively valued. These companies tend to have
a unique market niche, a strong new product profile or superior management.
Under normal market

19 - Series Fund
<PAGE>

conditions, at least 65% of the value of the total assets of the portfolio will
be invested in common stocks and preferred stocks of companies which exceed $1
billion in market capitalization.

The portfolio may invest up to 35% of its total assets in: (i) common stocks,
preferred stocks, and other equity-related securities of companies that are
undergoing changes in management or product and marketing dynamics which have
not yet been reflected in reported earnings but which are expected to impact
earnings in the intermediate term -- these securities often lack investor
recognition and are often favorably valued; (ii) other equity-related
securities; (iii) with respect to a maximum of 30% of its total assets, common
stocks, preferred stocks and other equity-related securities of non-United
States currency denominated issuers or American Depository Receipts ("ADRs");
(iv) investment grade fixed income securities and mortgage-backed securities,
including lower rated securities [rated in the fourth highest rating category by
a nationally recognized rating service (e.g. Baa by Moody's Investor Services or
BBB by Standard & Poor's)] or, if not rated, determined by the portfolio manager
to be of comparable quality to securities so rated (a description of debt
ratings is contained in the Appendix to the statement of additional
information); and (v) obligations issued or guaranteed by the U.S. Government,
its agencies and instrumentalities.

In addition, the portfolio may: (i) purchase and sell options on equity
securities, stock indices, and foreign currencies; (ii) lend its portfolio
securities; (iii) purchase and sell stock index and foreign currency futures
contracts and options thereon; (iv) enter into forward foreign currency exchange
contracts; and (v) enter into repurchase agreements and purchase securities on a
when-issued or delayed delivery basis. These techniques are described on pages
22 through 27, and further information about some of them is included in the
statement of additional information.

The effort to achieve superior investment returns necessarily involves a risk of
exposure to declining values. Securities in which the portfolio may primarily
invest have historically been more volatile than the Standard & Poor's 500
Composite Stock Price Index. Accordingly, during periods when stock prices
decline generally, it can be expected that the value of the portfolio will
decline more than the market indices.

David Poiesz, Director and Senior Vice President of Jennison Associates Capital
Corp. ("Jennison"), is the portfolio manager, and Peter Reinemann, Director and
Senior Vice President of Jennison, is the associate portfolio manager of the
Prudential Jennison Portfolio. Mr. Poiesz is responsible for the day to day
management of the portfolio and has been portfolio manager of the Prudential
Jennison Portfolio since its inception in 1995. Mr. Poiesz also manages the
Prudential Jennison Growth Fund. Mr. Poiesz joined Jennison in 1983 as an equity
research analyst and has been an equity portfolio manager since 1991. Mr.
Reinemann is also the associate portfolio manager for the Prudential Jennison
Growth Fund, the Prudential Jennison Growth & Income Fund, and the Prudential
Active Balanced Fund. Mr. Reinemann has been with Jennison since 1992 as an
associate portfolio manager. Prior to 1992, he served as a Vice President at
Paribas Asset Management, Inc.

GLOBAL PORTFOLIO. The objective of this portfolio is long-term growth of capital
through investment primarily in common stocks and common stock equivalents (such
as convertible debt securities) of foreign and domestic issuers. Current income,
if any, is incidental.

The portfolio is intended to provide investors with the opportunity to invest in
a portfolio of securities of companies located throughout the world. In making
the allocation of assets among the various countries and geographic regions, the
portfolio manager ordinarily considers such factors as: prospects for relative
economic growth between foreign countries; expected levels of inflation and
interest rates; government policies influencing business conditions; the range
of individual investment opportunities available to international investors; and
other pertinent financial, tax, social, political and national factors--all in
relation to the prevailing prices of the securities in each country or region.

There are, generally, no geographic limitations on companies in which the
portfolio may invest. Depending upon market conditions, the portfolio may be
invested primarily in foreign securities. Investments may be made in companies
based in the Pacific Basin (for example, Japan, Australia, New Zealand,
Singapore, Malaysia, and Hong Kong) and Western Europe (for example, the United
Kingdom, Spain, Germany, Switzerland, the Netherlands, France, and Scandinavia),
as well as the United States, Canada, and such other areas and countries as the
portfolio manager may determine from time to time. The portfolio may seek to
hedge its position in foreign currencies as more fully described herein.

The portfolio is not required to maintain any particular geographic or currency
mix of its investments. The portfolio intends to maintain investments in at
least three countries (including the United States), but may, when market
conditions warrant, invest up to 35% of its assets in companies located in any
one country (other than the United States).

In analyzing companies for investment, the portfolio manager ordinarily looks
for one or more of the following characteristics: prospects for above-average
earnings growth per share; high return on invested capital; healthy balance
sheet; sound financial and accounting policies and overall financial strength;
strong competitive

20 - Series Fund
<PAGE>

advantages; effective research and product development and marketing; efficient
service; pricing flexibility; strength of management; and general operating
characteristics which will enable the companies to compete successfully in their
marketplace--all in relation to the prevailing prices of the securities of such
companies.

Investing in securities of foreign companies and countries involves special
risks. The particular risks of investments in foreign securities are described
under FOREIGN SECURITIES on page 21.

When conditions dictate a temporary defensive strategy or during temporary
periods of portfolio structuring and restructuring, the Global Portfolio may
invest, without limit, in high quality money market instruments of the kind held
by the Money Market Portfolio.

In addition, the portfolio may: (i) purchase and sell options on equity
securities, stock indices and foreign currencies; (ii) purchase and sell stock
index, interest rate and foreign currency futures contracts and options thereon;
(iii) enter into forward foreign currency exchange contracts; and (iv) purchase
securities on a when-issued or delayed delivery basis. These techniques are
described on pages 21 through 27, and further information about some of them is
included in the statement of additional information.

The operating expense ratio of the portfolio can be expected to be significantly
higher than that of a fund investing exclusively in domestic securities since
the expenses of the portfolio, such as custodial, valuation and communication
costs, as well as the rate of the investment management fee (0.75% of the
portfolio's average daily net assets), though similar to such expenses of other
global funds, are higher than those generally incurred by funds investing solely
in the securities of U.S. issuers.

As a result of its investment policies, the portfolio's turnover rate may exceed
100% although it is not expected to exceed 200%.

Daniel Duane, Managing Director, Prudential Investments, has been the portfolio
manager of the Global Portfolio since 1990. Mr. Duane also manages several
mutual funds including the Prudential Global Fund, Inc.

CONVERTIBLE SECURITIES

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may invest in convertible securities and such
securities may constitute a major part of the holdings of the Equity Income, and
Global Portfolios. A convertible security is a fixed-income security (a bond or
preferred stock) which may be converted at a stated price within a specified
period of time into a certain quantity of the common stock of the same or a
different issuer. Convertible securities are senior to common stocks in a
corporation's capital structure, but are usually subordinated to similar
nonconvertible securities. While providing a fixed income stream (generally
higher in yield than the income derivable from a common stock but lower than
that afforded by a similar nonconvertible security), a convertible security also
affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation attendant upon a market price advance in
the convertible security's underlying common stock. The price of a convertible
security tends to increase as the market value of the underlying stock rises,
whereas it tends to decrease as the market value of the underlying stock
declines. While no securities investment is without risk, investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.

LOAN PARTICIPATIONS

The Diversified Bond, Conservative Balanced, Flexible Managed, and High Yield
Bond Portfolios may invest in fixed and floating rate loans ("Loans") arranged
through private negotiations between a corporate borrower and one or more
financial institutions ("Lenders"). The portfolios may invest in such Loans
generally in the form of participations in Loans ("Participations").
Participations typically will result in the Series Fund having a contractual
relationship only with the Lender, not with the borrower. The Series Fund will
have the right to receive payments of principal, interest and any fees to which
it is entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Series Fund generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the Loan, nor any rights of set-off against the borrower, and the Series Fund
may not benefit directly from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Series Fund will assume the credit
risk of both the borrower and the Lender that is selling the Participation. In
the event of the insolvency of the Lender selling a Participation, the Series
Fund may be treated as a general creditor of the Lender and may not benefit from
any set-off between the Lender and the borrower.

FOREIGN SECURITIES

The Global Portfolio may invest up to 100% of its total assets in common stock
and convertible securities denominated in a foreign currency and issued by
foreign or domestic issuers. The Diversified Bond and High Yield Bond Portfolios
may each invest up to 20% of their assets in United States currency denominated
debt securities

21 - Series Fund
<PAGE>

issued outside the United States by foreign or domestic issuers. In addition,
the bond components of the Conservative Balanced and Flexible Managed Portfolios
may each invest up to 20% of their assets in such securities. To the extent
permitted by applicable law, the Conservative Balanced, Flexible Managed, and
Equity Income Portfolios may invest up to 30% of their total assets in debt and
equity securities denominated in a foreign currency and issued by foreign or
domestic issuers. Further, to the extent permitted by applicable insurance law,
the Equity and Prudential Jennison Portfolios may invest up to 30% of their
total assets in non-United States currency denominated common stock and
fixed-income securities convertible into common stock of foreign and U.S.
issuers. Securities issued outside the United States and not publicly traded in
the United States, as well as American Depository Receipts ("ADRs"), and
securities denominated in a foreign currency are referred to collectively in
this prospectus as "foreign securities."

ADRs are U.S. dollar-denominated certificates issued by a United States bank or
trust company and represent the right to receive securities of a foreign issuer
deposited in a domestic bank or foreign branch of a United States bank and
traded on a United States exchange or in an over-the-counter market. Investment
in ADRs has certain advantages over direct investment in the underlying foreign
securities because they are easily transferable, have readily available market
quotations, and the foreign issuers are usually subject to comparable auditing,
accounting, and financial reporting standards as domestic issuers.

Foreign securities involve certain risks, which should be considered carefully
by an investor. These risks include political or economic instability in the
country of the issuer, the difficulty of predicting international trade
patterns, the possibility of imposition of exchange controls and, in the case of
securities not denominated in United States currency, the risk of currency
fluctuations. Such securities may be subject to greater fluctuations in price
than domestic securities. Under certain market conditions, foreign securities
may be less liquid than domestic securities. In addition, there may be less
publicly available information about a foreign company than about a domestic
company. Foreign companies generally are not subject to uniform accounting,
auditing, and financial reporting standards comparable to those applicable to
domestic companies. There is generally less government regulation of securities
exchanges, brokers, and listed companies abroad than in the United States, and,
with respect to certain foreign countries, there is a possibility of
expropriation, confiscatory taxation or diplomatic developments which could
affect investment in those countries. Finally, in the event of a default of any
foreign debt obligations, it may be more difficult for a portfolio to obtain or
to enforce a judgment against the issuers of such securities.

If the security is denominated in foreign currency, it may be affected by
changes in currency rates and in exchange control regulations, and costs may be
incurred in connection with conversions between currencies. The portfolios that
may invest in foreign securities may, but need not, enter into forward foreign
currency exchange contracts for the purchase or sale of foreign currency for
hedging purposes, including: locking-in the U.S. dollar price equivalent of
interest or dividends to be paid on such securities which are held by the
portfolio; and protecting the U.S. dollar value of such securities which are
held by the portfolio. The portfolios will not enter into such forward contracts
or maintain a net exposure to such contracts where the consummation of the
contracts would obligate the portfolio to deliver an amount of foreign currency
in excess of the value of the portfolio's portfolio securities or other assets
denominated in that currency. See FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS in
the statement of additional information. In addition, the portfolios may, for
hedging purposes, enter into certain transactions involving options on foreign
currencies, foreign currency futures contracts and options on foreign currency
futures contracts. See OPTIONS ON FOREIGN CURRENCIES, FUTURES CONTRACTS, and
OPTIONS ON FUTURES CONTRACTS on pages 25 through 26.

OPTIONS ON EQUITY SECURITIES

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may purchase and write (i.e., sell) put and call
options on equity securities that are traded on securities exchanges, are listed
on the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or that result from privately negotiated transactions with
broker-dealers ("OTC options"). A call option is a short-term contract pursuant
to which the purchaser or holder, in return for a premium paid, has the right to
buy the equity security underlying the option at a specified exercise price at
any time during the term of the option. The writer of the call option, who
receives the premium, has the obligation, upon exercise of the option, to
deliver the underlying equity security against payment of the exercise price. A
put option is a similar contract which gives the purchaser or holder, in return
for a premium, the right to sell the underlying equity security at a specified
price during the term of the option. The writer of the put, who receives the
premium, has the obligation to buy the underlying equity security at the
exercise price upon exercise by the holder of the put.

A portfolio will write only "covered" options on stocks. A call option is
covered if: (1) the portfolio owns the security underlying the option; or (2)
the portfolio has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) upon conversion or exchange of other
securities it holds; or (3) the portfolio holds on a share-for-share basis a
call on the same security as the call written where the exercise price of the
call held is equal to or less than

22 - Series Fund

<PAGE>

the exercise price of the call written or greater than the exercise price of the
call written if the difference is maintained by the portfolio in cash, Treasury
bills or other high grade short-term debt obligations in a segregated account
with its custodian. A put option is covered if: (1) the portfolio deposits and
maintains with its custodian in a segregated account cash, U.S. Government
securities or other liquid unencumbered assets having a value equal to or
greater than the exercise price of the option; or (2) the portfolio holds on a
share-for-share basis a put on the same security as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or less than the exercise price if the difference is maintained
by the portfolio in cash, Treasury bills or other high grade short-term debt
obligations in a segregated account with its custodian.

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may also purchase "protective puts" (i.e., put
options acquired for the purpose of protecting a portfolio security from a
decline in market value). In exchange for the premium paid for the put option,
the portfolio acquires the right to sell the underlying security at the exercise
price of the put regardless of the extent to which the underlying security
declines in value. The loss to the portfolio is limited to the premium paid for,
and transaction costs in connection with, the put plus the initial excess, if
any, of the market price of the underlying security over the exercise price.
However, if the market price of the security underlying the put rises, the
profit the portfolio realizes on the sale of the security will be reduced by the
premium paid for the put option less any amount (net of transaction costs) for
which the put may be sold. Similar principles apply to the purchase of puts on
debt securities and stock indices, as described under OPTIONS ON DEBT
SECURITIES, page 23 and OPTIONS ON STOCK INDICES, page 24.

These portfolios may purchase call options for hedging and investment purposes.
No portfolio intends to invest more than 5% of its net assets at any one time in
the purchase of call options on stocks. These portfolios may also purchase
putable and callable equity securities, which are securities coupled with a put
or a call option provided by the issuer.

If the writer of an exchange-traded option wishes to terminate the obligation,
he or she may effect a "closing purchase transaction" by buying an option of the
same series as the option previously written. Similarly, the holder of an
exchange-traded option may liquidate his or her position by exercise of the
option or by effecting a "closing sale transaction" by selling an option of the
same series as the option previously purchased. A portfolio will realize a
profit from a closing transaction if the price of the transaction is less than
the premium received from writing the option or is more than the premium paid to
purchase the option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from a closing purchase transaction with respect to a call option
is likely to be offset in whole or in part by appreciation of the underlying
equity security owned by the portfolio. Unlike exchange-traded options, OTC
options generally do not have a continuous liquid market. Consequently, the
portfolio will generally be able to realize the value of an OTC option it has
purchased only by exercising it or reselling it to the dealer who issued it.
Similarly, when the portfolio writes an OTC option, it generally will be able to
close out the OTC option prior to its expiration only by entering into a closing
purchase transaction with the dealer to which the portfolio originally wrote the
OTC option. There is, in general, no guarantee that closing purchase or closing
sale transactions can be effected.

There are certain special risks associated with the portfolios' transactions in
stock options, in addition to a risk that the market value of the security will
move adversely to the portfolio's option position. These risks, which relate
primarily to liquidity, are discussed in the statement of additional
information.

OPTIONS ON DEBT SECURITIES

The Diversified Bond, Government Income, Conservative Balanced, Flexible
Managed, and High Yield Bond Portfolios may purchase and write (i.e., sell) put
and call options on debt securities (including U.S. Government debt securities)
that are traded on U.S. securities exchanges or that result from privately
negotiated transactions with primary U.S. Government securities dealers
recognized by the Federal Reserve Bank of New York ("OTC options"). Options on
debt are similar to options on stock, except that the option holder has the
right to take or make delivery of a debt security, rather than stock.

A portfolio will write only "covered" options. Options on debt securities are
covered in the same manner as options on stocks, discussed above, except that,
in the case of call options on U.S. Treasury Bills, the portfolio might own U.S.
Treasury Bills of a different series from those underlying the call option, but
with a principal amount and value corresponding to the option contract amount
and a maturity date no later than that of the securities deliverable under the
call option. The principal reason for a portfolio to write an option on one or
more of its securities is to realize through the receipt of the premiums paid by
the purchaser of the option a greater current return than would be realized on
the underlying security alone. Calls on debt securities will not be written
when, in the opinion of Prudential, interest rates are likely to decline
significantly, because under those circumstances the premium received by writing
the call likely would not fully offset the foregone appreciation in the value of
the underlying security.

23 - Series Fund
<PAGE>

These portfolios may also write straddles (i.e., a combination of a call and a
put written on the same security at the same strike price where the same issue
of the security is considered "cover" for both the put and the call). In such
cases, the portfolio will also segregate or deposit for the benefit of the
portfolio's broker cash or liquid high-grade debt obligations equivalent to the
amount, if any, by which the put is "in the money." It is contemplated that each
portfolio's use of straddles will be limited to 5% of the portfolio's net assets
(meaning that the securities used for cover or segregated as described above
will not exceed 5% of the portfolio's net assets at the time the straddle is
written). The writing of a call and a put on the same security at the same
strike price where the call and the put are covered by different securities is
not considered a straddle for purposes of this limit.

These portfolios may purchase "protective puts" in an effort to protect the
value of a security that it owns against a substantial decline in market value.
Protective puts are described in OPTIONS ON EQUITY SECURITIES, page 22. A
portfolio may wish to protect certain portfolio securities against a decline in
market value at a time when put options on those particular securities are not
available for purchase. A portfolio may therefore purchase a put option on
securities other than those it wishes to protect even though it does not hold
such other securities in its portfolio. While changes in the value of the put
option should generally offset changes in the value of the securities being
hedged, the correlation between the two values may not be as close in these
transactions as in transactions in which the portfolio purchases a put option on
an underlying security it owns.

These portfolios may also purchase call options on debt securities for hedging
or investment purposes. No portfolio currently intends to invest more than 5% of
its net assets at any one time in the purchase of call options on debt
securities. A portfolio may also purchase putable and callable debt securities,
which are securities coupled with a put or call option provided by the issuer.

If the writer of an exchange-traded option wishes to terminate the obligation,
he or she may effect a "closing purchase transaction" or a "closing sale
transaction" in a manner similar to that discussed above in connection with
options on equity securities.

The staff of the Securities and Exchange Commission has taken the position that
purchased OTC options and the assets used as "cover" for written OTC options are
illiquid for purposes of a portfolio's 15% limitation on investment in illiquid
securities. However, pursuant to the terms of certain no-action letters issued
by the staff, the securities used as cover for written OTC options may be
considered liquid provided that the portfolio sells OTC options only to
qualified dealers who agree that the portfolio may repurchase any OTC option it
writes for a maximum price to be calculated by a predetermined formula. In such
cases, the OTC option would be considered illiquid only to the extent that the
maximum repurchase price under the formula exceeds the intrinsic value of the
option.

There are certain risks associated with the portfolios' transactions in debt
options, in addition to a risk that the market value of the security will move
adversely to the portfolio's option position. These risks, which relate
primarily to liquidity, are discussed in the statement of additional
information.

OPTIONS ON STOCK INDICES

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may purchase and sell put and call options on
stock indices traded on securities exchanges, listed on NASDAQ or that result
from privately negotiated transactions with broker-dealers ("OTC options"). The
Stock Index Portfolio may utilize options on stock indices by constructing
"put/call" combinations that are economically comparable to a long stock index
futures position, as described in the statement of additional information.
Options on stock indices are similar to options on stock except that, rather
than the right to take or make delivery of stock at a specified price, an option
on a stock index gives the holder the right to receive, upon exercise of the
option, an amount of cash if the closing level of the stock index upon which the
option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to
such difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple (the "multiplier").
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount. Unlike stock options, all settlements are in cash,
and gain or loss depends on price movements in the stock market generally (or in
a particular industry or segment of the market) rather than price movements in
individual stocks.

The multiplier for an index option performs a function similar to the unit of
trading for a stock option. It determines the total dollar value per Contract of
each point in the difference between the exercise price of an option and the
current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.

A portfolio will write only "covered" options on stock indices. The manner in
which these options are covered is discussed in the statement of additional
information.

These portfolios may purchase put and call options for hedging and investment
purposes. No portfolio intends to invest more than 5% of its net assets at any
time in the purchase of puts and calls on stock indices. A portfolio

24 - Series Fund
<PAGE>

may effect closing sale and purchase transactions involving options on stock
indices, as described above in connection with stock options.

OPTIONS ON FOREIGN CURRENCIES

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may purchase and write put and call options on
foreign currencies traded on U.S. or foreign securities exchanges or boards of
trade for hedging purposes in a manner similar to that in which forward foreign
currency exchange contracts (discussed under FOREIGN SECURITIES, page 21 and
futures contracts on foreign currencies (discussed under FUTURES CONTRACTS, page
25) will be employed. Options on foreign currencies are similar to options on
stock, except that the option holder has the right to take or make delivery of a
specified amount of foreign currency, rather than stock.

A portfolio may purchase and write options to hedge the portfolio's securities
denominated in foreign currencies. If there is a decline in the dollar value of
a foreign currency in which the portfolio's securities are denominated, the
dollar value of such securities will decline even though the foreign currency
value remains the same. To hedge against the decline of the foreign currency, a
portfolio may purchase put options on such foreign currency. If the value of the
foreign currency declines, the gain realized on the put option would offset, in
whole or in part, the adverse effect such decline would have on the value of the
portfolio's securities. Alternatively, a portfolio may write a call option on
the foreign currency. If the foreign currency declines, the option would not be
exercised and the decline in the value of the portfolio securities denominated
in such foreign currency would be offset in part by the premium the portfolio
received for the option.

If, on the other hand, the portfolio manager anticipates purchasing a foreign
security and also anticipates a rise in such foreign currency (thereby
increasing the cost of such security), a portfolio may purchase call options on
the foreign currency. The purchase of such options could offset, at least
partially, the effects of the adverse movements of the exchange rates.
Alternatively, a portfolio could write a put option on the currency and, if the
exchange rates move as anticipated, the option would expire unexercised.

A portfolio's successful use of currency exchange options on foreign currencies
depends upon the manager's ability to predict the direction of the currency
exchange markets and political conditions, which requires different skills and
techniques than predicting changes in the securities markets generally. For
instance, if the currency being hedged has moved in a favorable direction, the
corresponding appreciation of the portfolio's securities denominated in such
currency would be partially offset by the premiums paid on the options. Further,
if the currency exchange rate does not change, the portfolio net income would be
less than if the portfolio had not hedged since there are costs associated with
options.

The use of these options is subject to various additional risks. The correlation
between movements in the price of options and the price of the currencies being
hedged is imperfect. The use of these instruments will hedge only the currency
risks associated with investments in foreign securities, not market risks. The
portfolio's ability to establish and maintain positions will depend on market
liquidity. The ability of the portfolio to close out an option depends upon a
liquid secondary market. There is no assurance that liquid secondary markets
will exist for any particular option at any particular time.

FUTURES CONTRACTS

The Conservative Balanced, Flexible Managed, Stock Index, Equity Income, Equity,
Prudential Jennison, and Global Portfolios may, to the extent permitted by
applicable regulations, attempt to reduce the risk of investment in equity
securities by hedging a portion of their equity portfolios through the use of
stock index futures contracts. A stock index futures contract is an agreement in
which the seller of the contract agrees to deliver to the buyer an amount of
cash equal to a specific dollar amount times the difference between the value of
a specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made. No physical delivery of the underlying
stocks in the index is made.

The Diversified Bond, Government Income, Conservative Balanced, Flexible
Managed, High Yield Bond, and Global Portfolios may, to the extent permitted by
applicable regulations, purchase and sell for hedging purpose futures contracts
on interest-bearing securities (such as U.S. Treasury bonds and notes) or
interest rate indices (referred to collectively as "interest rate futures
contracts").

The Conservative Balanced, Flexible Managed, Equity Income, Equity, Prudential
Jennison, and Global Portfolios may, to the extent permitted by applicable
regulations, purchase and sell futures contracts on foreign currencies or groups
of foreign currencies for hedging purposes.

When the futures contract is entered into, each party deposits with a futures
commission merchant (or in a segregated custodial account) approximately 5% of
the contract amount, called the "initial margin." Subsequent payments to and
from the futures commission merchant, called the "variation margin," will be
made on a daily basis as the underlying security, index or rate fluctuates
making the long and short positions in the futures

25 - Series Fund
<PAGE>

contracts more or less valuable, a process known as "marking to the market." The
Board of Directors currently intends to limit futures trading for hedging
purposes so that a portfolio will not enter into futures contracts or related
options if the aggregate initial margins and premiums exceed 5% of the fair
market value of its assets, after taking into account unrealized profits and
unrealized losses on any such contracts and options.

In addition, as permitted by applicable regulations, the Conservative Balanced
and Flexible Managed Portfolios may purchase and sell stock index futures
contracts and interest rate futures contracts to adjust the portfolio's asset
mix. For example, if the investment manager expects bonds to outperform stocks,
it may purchase interest rate futures contracts rather than actually selling
stocks and buying bonds. Neither portfolio will enter into futures contracts or
related options for this purpose if the aggregate initial margins and premiums
for futures and options for this purpose exceed 5% of the fair market of that
portfolio's assets, taking into account unrealized profits and unrealized losses
on any such futures and options.

A portfolio's successful use of futures contracts depends upon the investment
manager's ability to predict the direction of the relevant market. The
correlation between movement in the price of the futures contract and the price
of the securities or currencies being hedged is imperfect. The ability of a
portfolio to close out a futures position depends on a liquid secondary market.
There is no assurance that liquid secondary markets will exist for any
particular futures contract at any particular time.

OPTIONS ON FUTURES CONTRACTS

To the extent permitted by applicable insurance law and federal regulations, the
Conservative Balanced, Flexible Managed, Stock Index, Equity Income, Equity,
Prudential Jennison, and Global Portfolios may enter into certain transactions
involving options on stock index futures contracts; the Diversified Bond,
Government Income, Conservative Balanced, Flexible Managed, High Yield Bond and
Global Portfolios may enter into certain transactions involving options on
interest rate futures contracts; and the Conservative Balanced, Flexible
Managed, Equity Income, Equity, Prudential Jennison, and Global Portfolios may
enter into certain transactions involving options on foreign currency futures
contracts. An option on a futures contract gives the purchaser or holder the
right, but not the obligation, to assume a position in a futures contract (a
long position if the option is a call and a short position if the option is a
put) at a specified price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accomplished by
delivery of the accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. As an alternative to
exercise, the holder or writer of an option may terminate a position by selling
or purchasing an option of the same series. There is no guarantee that such
closing transactions can be effected. The Stock Index Portfolio intends to
utilize options on stock index futures contracts by constructing "put/call"
combinations that are economically comparable to a long stock index futures
position, as described in the statement of additional information. The other
portfolios intend to utilize options on futures contracts for the same purposes
that they use the underlying futures contracts.

REPURCHASE AGREEMENTS

The portfolios may enter into repurchase agreements, subject to each portfolio's
investment limit in short-term debt obligations, whereby the seller of a
security agrees to repurchase that security from the portfolio at a mutually
agreed-upon time and price. The period of maturity is usually quite short,
possibly overnight or a few days, although it may extend over a number of
months. The resale price is in excess of the purchase price, reflecting an
agreed-upon rate of return effective for the period of time the portfolio's
money is invested in the repurchase agreement. The repurchase agreements will at
all times be fully collateralized in an amount at least equal to the resale
price. The instruments held as collateral are valued daily, and if the value of
the instruments declines, the portfolio will require additional collateral. If
the seller defaults and the value of the collateral securing the repurchase
agreement declines, the portfolio may incur a loss. All portfolios, except the
Global Portfolio, participate in a joint repurchase account pursuant to an order
of the SEC. On a daily basis, any uninvested cash balances of the portfolios may
be aggregated and invested in one or more repurchase agreements. Each portfolio
participates in the income earned or accrued in the joint account based on the
percentage of its investment.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS

The Diversified Bond, Government Income and High Yield Bond Portfolios, as well
as the fixed income portions of the Conservative Balanced and Flexible Managed
Portfolios, may use reverse repurchase agreements and dollar rolls. The Money
Market Portfolio and the money market portion of any portfolio may use reverse
repurchase agreements. Reverse repurchase agreements involve the sale of
securities held by a portfolio with an agreement by the portfolio to repurchase
the same securities at an agreed upon price and date. During the reverse
repurchase

26 - Series Fund
<PAGE>

period, the portfolio often continues to receive principal and interest payments
on the sold securities. The terms of each agreement reflect a rate of interest
for use of the funds for the period, and thus these agreements have the
characteristics of borrowing by the portfolio. Dollar rolls involve sales by a
portfolio of securities for delivery in the current month with a simultaneous
contract to repurchase substantially similar securities (same type and coupon)
from the same party at an agreed upon price and date. During the roll period,
the portfolio forgoes principal and interest paid on the securities. A portfolio
is compensated by the difference between the current sales price and the forward
price for the future purchase (often referred to as the "drop") as well as by
the interest earned on the cash proceeds of the initial sale. A "covered roll"
is a specific type of dollar roll for which there is an offsetting cash position
or a cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction. A portfolio will establish a
segregated account with its custodian in which it will maintain cash, U.S.
Government securities or other liquid unencumbered assets equal in value to its
obligations in respect of reverse repurchase agreements and dollar rolls.
Reverse repurchase agreements and dollar rolls involve the risk that the market
value of the securities retained by the portfolio may decline below the price of
the securities the portfolio has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities under a reverse repurchase
agreement or dollar roll files for bankruptcy or becomes insolvent, the
portfolio's use of the proceeds of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the portfolio's obligation to repurchase the securities. The Diversified Bond,
Government Income and High Yield Bond Portfolios, as well as the fixed income
portions of the Conservative Balanced and Flexible Managed Portfolios, will not
obligate more than 30% of their net assets in connection with reverse repurchase
agreements and dollar rolls. No other portfolio will obligate more than 10% of
its net assets in connection with reverse repurchase agreements.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

From time to time, in the ordinary course of business, the Diversified Bond,
Government Income, Conservative Balanced, Flexible Managed, High Yield Bond,
Equity Income, Equity, Prudential Jennison, and Global Portfolios may purchase
or sell securities on a when-issued or delayed delivery basis, that is, delivery
and payment can take place a month or more after the date of the transaction. A
portfolio will make commitments for such when-issued transactions only with the
intention of actually acquiring the securities. A portfolio's custodian will
maintain, in a separate account, cash, U.S. Government securities or other
liquid unencumbered assets having a value equal to or greater than such
commitments. If a portfolio chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with the disposition
of any other portfolio security, incur a gain or loss due to market
fluctuations.

In addition, the Money Market Portfolio and short-term portions of the other
portfolios may purchase money market securities on when-issued or delayed
delivery basis on the terms set forth in the Appendix to this prospectus.

SHORT SALES

The Diversified Bond, Government Income, Conservative Balanced, Flexible Managed
and High Yield Bond Portfolios may sell securities they do not own in
anticipation of a decline in the market value of those securities ("short
sales"). To complete such a transaction, the portfolio will borrow the security
to make delivery to the buyer. The portfolio is then obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the portfolio. Until the security is replaced, the
portfolio is required to pay to the lender any interest which accrues during the
period of the loan. To borrow the security the portfolio may be required to pay
a fee which would increase the cost of the security sold. The proceeds of the
short sale will be retained by the broker to the extent necessary to meet margin
requirements until the short position is closed out. Until the portfolio
replaces the borrowed security, it will (a) maintain in a segregated account
cash, U.S. Government securities or other liquid unencumbered assets at such a
level that the amount deposited in the account plus the amount deposited with
the broker as collateral will equal the current market value of the security
sold short and will not be less than the market value of the security at the
time it was sold short or (b) otherwise cover its short position.

The portfolio will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the portfolio replaces the borrowed security. The portfolio will realize a gain
if the security declines in price between those dates. This result is the
opposite of what one would expect from a cash purchase of a long position in a
security. The amount of any gain will be decreased, and the amount of any loss
will be increased, by the amount of any fee or interest paid in connection with
the short sale. No more than 25% of any portfolio's net assets will be, when
added together: (i) deposited as collateral for the obligation to replace
securities borrowed to effect short sales and (ii) allocated to segregated
accounts in connection with short sales.

27 - Series Fund
<PAGE>

SHORT SALES AGAINST THE BOX

All portfolios (other than the Money Market Portfolio) may make short sales of
securities or maintain a short position, provided that at all times when a short
position is open the portfolio owns an equal amount of such securities or
securities convertible into or exchangeable, with or without payment of any
further consideration, for an equal amount of the securities of the same issuer
as the securities sold short (a "short sale against the box"); provided, that if
further consideration is required in connection with the conversion or exchange,
cash, U.S. Government securities or other liquid unencumbered assets in an
amount equal to such consideration must be put in a segregated account.

INTEREST RATE SWAPS

The Diversified Bond, Government Income and High Yield Bond Portfolios and the
fixed income portions of the Conservative Balanced and Flexible Managed
Portfolios may use interest rate swaps to increase or decrease a portfolio's
exposure to long- or short-term interest rates. No portfolio currently intends
to invest more than 5% of its net assets at any one time in interest rate swaps.
For more information, see the statement of additional information.

LOANS OF PORTFOLIO SECURITIES

All of the portfolios except the Money Market Portfolio may from time to time
lend the securities they hold to broker-dealers, provided that such loans are
made pursuant to written agreements and are continuously secured by collateral
in the form of cash, U.S. Government securities or irrevocable standby letters
of credit in an amount equal to at least the market value at all times of the
loaned securities plus the accrued interest and dividends. During the time
securities are on loan, the portfolio will continue to receive the interest and
dividends or amounts equivalent thereto, on the loaned securities while
receiving a fee from the borrower or earning interest on the investment of the
cash collateral. The right to terminate the loan will be given to either party
subject to appropriate notice. Upon termination of the loan, the borrower will
return to the lender securities identical to the loaned securities. The
portfolio will not have the right to vote securities on loan, but would
terminate the loan and retain the right to vote if that were considered
important with respect to the investment.

The primary risk in lending securities is that the borrower may become insolvent
on a day on which the loaned security is rapidly advancing in price. In such
event, if the borrower fails to return the loaned securities, the existing
collateral might be insufficient to purchase back the full amount of the
security loaned, and the borrower would be unable to furnish additional
collateral. The borrower would be liable for any shortage; but the portfolio
would be an unsecured creditor with respect to such shortage and might not be
able to recover all or any of it. However, this risk may be minimized by a
careful selection of borrowers and securities to be lent and by monitoring
collateral.

No portfolio will lend securities to broker-dealers affiliated with Prudential,
including Prudential Securities Incorporated. This will not affect a portfolio's
ability to maximize its securities lending opportunities.

INVESTMENT RESTRICTIONS APPLICABLE
TO THE PORTFOLIOS

The Series Fund is subject to certain investment restrictions which are
fundamental to the operations of the Series Fund and may not be changed except
with the approval of a majority vote (as defined under INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIOS on page 8) of the persons participating in the
affected portfolio.

The investments of the various portfolios are generally subject to certain
additional restrictions under state laws. In the event of future amendments to
the applicable statutes, each portfolio will comply, without the approval of the
shareholders, with the statutory requirements as so modified.

For a detailed discussion of investment restrictions applicable to the Series
Fund, see INVESTMENT RESTRICTIONS in the statement of additional information.

INVESTMENT MANAGEMENT ARRANGEMENTS
AND EXPENSES

The Series Fund has entered into an Investment Advisory Agreement with
Prudential under which Prudential will, subject to the direction of the Board of
Directors of the Series Fund, be responsible for the management of the Series
Fund, and provide investment advice and related services to each portfolio. The
directors, in addition to reviewing the actions of the Series Fund's investment
advisor, decide upon matters of general policy. The Series Fund's officers
conduct and supervise the daily business operations of the Series Fund.

28 - Series Fund
<PAGE>

Prudential, founded in 1875 under the laws of New Jersey, is subject to
regulation by the Department of Insurance of the State of New Jersey as well as
by the insurance departments of all the other states and jurisdictions in which
it does business. Prudential is registered both as a broker-dealer under the
Securities Exchange Act of 1934 and as an investment advisor under the
Investment Advisers Act of 1940. Prudential's principal business address is
Prudential Plaza, Newark, New Jersey 07102-3777.

Subject to Prudential's supervision, substantially all of the investment
advisory services provided to the Series Fund by Prudential are furnished, with
respect to ten of the eleven Series Fund portfolios described in the prospectus,
by its wholly-owned subsidiary PIC, pursuant to the Service Agreement between
Prudential and PIC. The Agreement provides that a portion of the fee received by
Prudential for providing investment advisory services will be paid to PIC.
Investment advisory services with respect to the Prudential Jennison Portfolio
provided by Prudential are furnished by another wholly-owned subsidiary,
Jennison Associates Capital Corp. ("Jennison"), pursuant to an Investment
Subadvisory Agreement between Prudential and Jennison. That Agreement provides
that a portion of the fee received by Prudential for providing investment
advisory services to the Prudential Jennison Portfolio will be paid to Jennison.
PIC and Jennison are both registered as investment advisors under the Investment
Advisers Act of 1940.

Under the Investment Advisory Agreement, Prudential receives an investment
management fee as compensation for its services to the Series Fund. The fee is a
daily charge, payable quarterly, equal to an annual percentage of the average
daily net assets of each individual portfolio.

The investment management fee for the Stock Index Portfolio is equal to an
annual rate of 0.35% of the average daily net assets of the portfolio. For the
Money Market, Diversified Bond, Government Income, and Equity Income Portfolios
that fee is equal to an annual rate of 0.4% of the average daily net assets of
each of the portfolios. For the Equity Portfolio, the fee is equal to an annual
rate of 0.45% of the average daily net assets of the portfolio. The fee for the
Conservative Balanced and the High Yield Bond Portfolios is equal to an annual
rate of 0.55% of the average daily net assets of each of the portfolios. For the
Flexible Managed and Prudential Jennison Portfolios, the fee is equal to an
annual rate of 0.6% of the average daily net assets of each of the portfolios.
The fee for the Global Portfolio is equal to an annual rate of 0.75% of the
average daily net assets of the portfolio. For further information about the
expenses of the Series Fund, see INVESTMENT MANAGEMENT ARRANGEMENTS AND EXPENSES
in the statement of additional information.

PURCHASE AND REDEMPTION OF SHARES

Shares in the Series Fund are currently offered continuously, without sales
charge, at prices equal to the respective net asset values of the portfolios,
only to the Accounts to fund benefits payable under the Contracts. The Series
Fund may at some later date also offer its shares to other separate accounts of
Prudential or other insurers. Pruco Securities Corporation ("Prusec"), an
indirect wholly-owned subsidiary of Prudential, acts as the principal
underwriter of the Series Fund. Prusec's principal business address is 213
Washington Street, Newark, New Jersey 07102-2992.

The Series Fund is required to redeem all full and fractional shares of the
Series Fund for cash within 7 days of receipt of proper notice of redemption.
The redemption price is the net asset value per share next determined after the
initial receipt of proper notice of redemption.

The right to redeem shares or to receive payment with respect to any redemption
may be suspended only for any period during which trading on the NYSE is
restricted as determined by the Securities and Exchange Commission or when such
exchange is closed (other than customary weekend and holiday closings), for any
period during which an emergency exists as defined by the Securities and
Exchange Commission as a result of which disposal of a portfolio's securities or
determination of the net asset value of each portfolio is not reasonably
practicable, and for such other periods as the Securities and Exchange
Commission may by order permit for the protection of shareholders of each
portfolio.

DETERMINATION OF NET ASSET VALUE

The net asset value of the shares of each portfolio is determined once daily, as
of 4:15 p.m. New York City time (12:00 noon New York City time in the case of
the Money Market Portfolio) on each day during which the NYSE is open for
business. The NYSE is open for business Monday through Friday except for the
days on which the following holidays are observed: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. In the event the New York Stock Exchange closes early on any
business day, the net asset value of each portfolio shall be determined at a
time between such closing and 4:15 p.m. New York City time. The net asset value
per share of each portfolio except the Money Market Portfolio is computed by
adding the sum of the value of the securities held by that portfolio plus any
cash or other assets it

29 - Series Fund
<PAGE>

holds, subtracting all its liabilities, and dividing the result by the total
number of shares outstanding of that portfolio at such time. Expenses, including
the investment management fee payable to Prudential, are accrued daily.

In determining the net asset value of the Diversified Bond, Government Income
and High Yield Bond Portfolios, securities (other than debt obligations with
remaining maturities of less than 60 days, which are valued at amortized cost)
will be valued utilizing an independent pricing service to determine valuations
for normal institutional size trading units of securities. The pricing service
considers such factors as security prices, yields, maturities, call features,
ratings, and developments relating to specific securities in arriving at
securities valuations.

The net asset value of shares of the Money Market Portfolio will normally remain
at $10 per share, because the net investment income of this portfolio (including
realized and unrealized gains and losses on portfolio holdings) will be declared
as a dividend each time the portfolio's net income is determined, see DIVIDENDS,
DISTRIBUTIONS, AND TAXES, page 31. If in the view of the Board of Directors of
the Series Fund it is inadvisable to continue to maintain the net asset value of
the Money Market Portfolio at $10 per share, the Board reserves the right to
alter the procedure. The Series Fund will notify shareholders of any such
alteration.

All short-term debt obligations in the Money Market Portfolio of 397 days'
maturity or less are valued on an amortized cost basis. This means that each
obligation will be valued initially at its purchase price and thereafter by
amortizing any discount or premium uniformly to maturity, regardless of the
impact of fluctuating interest rates on the market value of the obligation. This
highly practical method of valuation is in widespread use and almost always
results in a value that is extremely close to the actual market value. In order
to continue to utilize the amortized cost method of valuation, the Money Market
Portfolio may not purchase any security with a remaining maturity of more than
397 days and must maintain a dollar-weighted average of portfolio maturity of 90
days or less. In the event of sizeable changes in interest rates, however, the
value determined by this method may be higher or lower than the price that would
be received if the obligation were sold. The Board of Directors has established
procedures to determine whether, on these occasions, if any should occur, the
deviation might be enough to affect the value of shares in the portfolio by more
than 1/2 of one percent, and, if it does, an appropriate adjustment will be made
in the value of the obligations. The portfolio may only be invested in
securities of high quality as described in detail in the Appendix to this
prospectus.

The net asset value of the Stock Index, Equity Income, Equity, Prudential
Jennison, and Global Portfolios will be determined in the following manner. Any
security for which the primary market is on an exchange is generally valued at
the last sale price on such exchange as of the close of the NYSE (which is
currently 4:00 p.m. New York City time) or, in the absence of recorded sales, at
the mean between the most recently quoted bid and asked prices. NASDAQ National
Market System equity securities 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. Other over-the-counter equity securities are valued at the mean
between the most recently quoted bid and asked prices. Convertible debt
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed to be
over-the-counter, are valued at the mean between the most recently quoted bid
and asked prices. Corporate bonds (other than convertible debt securities) and
Government bonds held by the Equity Income Portfolio are valued on the same
basis as securities in the Diversified Bond and High Yield Bond Portfolios, as
described above. Short-term debt instruments which mature in less than 60 days
are valued at amortized cost. For valuation purposes, quotations of foreign
securities in a foreign currency are converted to U.S. dollar equivalents.

In determining the net asset value of each of the Balanced Portfolios, the
method of valuation of a security depends on the type of investment involved.
Intermediate or long-term fixed income securities are valued in the same way as
such securities in the Diversified Bond Portfolio, and common stocks and
convertible debt securities are valued in the same way as such securities are
valued in the Equity Portfolio. Short-term debt obligations with a maturity of
12 months or less are valued on an amortized cost basis in accordance with an
order obtained from the Securities and Exchange Commission. Each Balanced
Portfolio must maintain a dollar-weighted average maturity for its short-term
debt obligations of 120 days or less. As discussed above in connection with the
Money Market Portfolio, the values determined by the amortized cost method may
deviate from market value under certain circumstances. The Board of Directors
has established procedures to monitor whether any material deviation occurs and,
if so, will promptly consider what action, if any, should be initiated to
prevent unfair results to Contract owners. The short-term portion of these
portfolios may be invested only in high quality instruments, as described in the
Appendix to this prospectus.

With respect to all the portfolios which utilize such investments, options on
stock and stock indices traded on national securities exchanges are valued at
the average of the bid and asked prices as of the close of the respective
exchange (which is currently 4:10 p.m. New York City time). Futures contracts
and options thereon are valued at the last sale price at the close of the
applicable commodities exchanges or board of trade (which is currently 4:15 p.m.
New York City time) or, if there was no sale on the applicable commodities
exchange or board of trade on such day, at the mean between the most recently
quoted bid and asked prices on such exchange or board of trade.

30 - Series Fund
<PAGE>

Securities or assets for which market quotations are not readily available will
be valued at fair value as determined by Prudential under the direction of the
Board of Directors of the Series Fund.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

The Series Fund intends to continue to qualify as a regulated investment company
under certain provisions of the Internal Revenue Code (the "Code"). Under such
provisions, the Series Fund will not be subject to federal income tax on the
part of its net ordinary income and net realized capital gains that it
distributes to the Accounts. The Series Fund intends to meet the requirements
for treatment as a regulated investment company both on a portfolio-by-portfolio
basis and for the Series Fund as a whole. The Series Fund's compliance with
those requirements may prevent a portfolio from utilizing options and futures
contracts as much as the portfolio manager might otherwise believe to be
desirable.

The Series Fund intends to distribute as dividends substantially all the net
investment income, if any, of each portfolio. For dividend purposes, net
investment income of each portfolio, other than the Money Market Portfolio, will
consist of all payments of dividends (other than stock dividends) or interest
received by such portfolio less the estimated expenses of such portfolio
(including fees payable to the Investment Manager). Net investment income of the
Money Market Portfolio consists of: (i) interest accrued and/or discount earned
(including both original issue and market discount); (ii) plus or minus all
realized and unrealized gains and losses; (iii) less the expenses of the
portfolio (including the fees payable to the Investment Manager). Each portfolio
will raise the cash necessary to make such distributions by selling securities
or from interest income. This may require the portfolio to sell securities when
it would not do so for investment reasons, and may cause the portfolio to
realize additional gains. The Contract owner is not subject to federal or state
income taxes on distributions from the Series Fund portfolios to the
corresponding subaccounts.

Dividends on the Money Market Portfolio will be declared and reinvested daily in
additional full and fractional shares of the portfolio. Shares will begin
accruing dividends on the day following the date on which they are issued.
Dividends from investment income of the other portfolios will normally be
declared and reinvested in additional full and fractional shares
quarter-annually.

The Series Fund will also declare and distribute annually all net realized
capital gains of the Series Fund, other than short-term gains of the Money
Market Portfolio, which are declared as dividends daily.

The Code generally imposes a 4% excise tax on a portion of the undistributed
income of a regulated investment company if that company fails to distribute
required percentages of its ordinary income and capital gain net income. The
Series Fund intends to employ practices that will eliminate or minimize the
imposition of this excise tax.

In addition, Section 817(h) of the Code requires that assets underlying variable
life insurance and variable annuity contracts must meet certain diversification
requirements if the contracts are to qualify as life insurance and annuity
contracts. The diversification requirements ordinarily must be met within 1 year
after Contract owner funds are first allocated to the particular portfolio, and
within 30 days after the end of each calendar quarter thereafter. In order to
meet the diversification requirements set forth in Treasury Regulations issued
pursuant to Section 817(h), each portfolio must meet one of two alternative
tests. Under the first test, no more than 55% of the portfolio's assets can be
invested in any one investment; no more than 70% of the assets can be invested
in any two investments; no more than 80% of the assets can be invested in any
three investments; and no more than 90% can be invested in any four investments.
Under the second test, the portfolio must meet the tax law diversification
requirements for a regulated investment company and no more than 55% of the
value of the portfolio's assets can be invested in cash, cash items, Government
securities, and securities of other regulated investment companies. A third test
is available for portfolios that underlie only variable life insurance
contracts. Under this test, such portfolios can be invested without limit in
Treasury securities and, where the portfolio is invested in part in Treasury
securities, the percentages of the first test are revised and applied to the
portion of the portfolio not invested in Treasury securities.

For purposes of determining whether a variable account is adequately
diversified, each United States Government agency or instrumentality is treated
as a separate issuer for purposes of determining whether a variable account is
adequately diversified. The Series Fund's compliance with the diversification
requirements will generally limit the amount of assets that may be invested in
federally insured certificates of deposit and all types of securities issued or
guaranteed by each United States Government agency or instrumentality.

The Global Portfolio may be required to pay withholding or other taxes to
foreign governments. If so, the taxes will reduce the portfolio's dividends.
Foreign tax withholding from dividends and interest (if any) is typically set at
a rate between 10% and 15%. While Contract owners will thus bear the cost of
foreign tax withholding, they will not be able to claim a foreign tax credit or
deduction for foreign taxes paid by the portfolio.

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code

31 - Series Fund
<PAGE>

sections and the Treasury Regulations promulgated thereunder. The Code and these
Regulations are subject to change by legislative or administrative actions.

OTHER INFORMATION CONCERNING THE SERIES FUND

INCORPORATION AND AUTHORIZED STOCK

The Series Fund was incorporated under Maryland law on November 15, 1982. The
authorized Capital Stock of the Series Fund consists of 2 billion shares, par
value $0.01 per share. As of the date of this prospectus, the shares of Capital
Stock are divided into fifteen classes: Money Market Portfolio Capital Stock
(225 million shares), Diversified Bond Portfolio Capital Stock (200 million
shares), Government Income Portfolio Capital Stock (100 million shares), Zero
Coupon Bond Portfolio 2000 Capital Stock (25 million shares), Zero Coupon Bond
Portfolio 2005 Capital Stock (50 million shares), Conservative Balanced
Portfolio Capital Stock (300 million shares), Flexible Managed Portfolio Capital
Stock (300 million shares), High Yield Bond Portfolio Capital Stock (100 million
shares), Stock Index Portfolio Capital Stock (100 million shares), Equity Income
Portfolio Capital Stock (100 million shares), Common Stock Portfolio Capital
Stock (200 million shares), Prudential Jennison Portfolio Capital Stock (50
million shares), Small Capitalization Stock Portfolio Capital Stock (50 million
shares), Global Portfolio Capital Stock (100 million shares), Natural Resources
Portfolio Capital Stock (100 million shares). The shares of each portfolio, when
issued, will be fully paid and non-assessable, will have no conversion, exchange
or similar rights, and will be freely transferable.

Each share of stock will have a pro rata interest in the assets of the portfolio
to which the stock of that class relates and will have no interest in the assets
of any other portfolio. Holders of shares of any portfolio are entitled to
redeem their shares as set forth under PURCHASE AND REDEMPTION OF SHARES, page
29.

From time to time, Prudential has purchased Series Fund shares to provide
initial capital for the Series Fund and to enable portfolios to avoid
unrealistically poor investment performance that might otherwise result because
the amounts available for investment were too small. Prudential will not redeem
any of its shares until a portfolio is large enough so that redemption will not
have an adverse effect upon investment performance. As of December 31, 1996,
Prudential held $14,361,824 worth of shares in the Prudential Jennison
Portfolio. Prudential will vote its shares in the same manner and in the same
proportion as the shares held in the Accounts, which generally are voted in
accordance with instructions of Contract owners.

VOTING RIGHTS

The voting rights of Contract owners, and limitations on those rights, are
explained in the accompanying prospectus for the Contracts. Prudential and
certain other insurers with separate accounts which invest in the Series Fund,
as the owners of the assets in the Accounts, vote all of the shares of the
Series Fund, but they will generally do so in accordance with the instructions
of Contract owners pursuant to the current SEC requirements and staff
interpretations regarding pass-through voting. Under certain circumstances,
however, the Companies may disregard voting instructions received from Contract
owners. The Series Fund does not hold annual meetings of shareholders in any
year in which it is not required to do so either under Maryland law or the
Investment Company Act of 1940. For additional information describing how the
Companies will vote the shares of the Series Fund, see VOTING RIGHTS in the
accompanying prospectus for the Contracts.

MONITORING FOR POSSIBLE CONFLICT

As stated above, Series Fund shares will be sold to separate accounts of
Prudential and certain other insurers to fund both variable life insurance and
variable annuity contracts. The Board of Directors of the Series Fund intends to
monitor events for the existence of any material conflict between the interests
of variable life insurance and variable annuity contract owners. The Companies
have agreed to be responsible for reporting any potential or existing conflicts
to the Board of Directors. Moreover, the Companies have agreed to be
responsible, at their cost, to remedy any material irreconcilable conflict up to
and including establishing a new registered management investment company and
segregating the assets underlying the variable life insurance and variable
annuity contracts.

PERIODIC REPORTS

The Series Fund will send each shareholder, at least annually, statements
showing as of a specified date the number of shares in each portfolio credited
to the shareholder. The Series Fund will also send Contract owners annual and
semi-annual reports showing the financial condition of the portfolios and the
investments held in each. If a single individual or company invests in the
Series Fund through more than one variable insurance contract, then the
individual or company will receive only one copy of each annual or semi-annual
report issued by the Series Fund. However, if such individual or company wishes
to receive multiple copies of any such report, a request may be made by calling
the toll-free telephone number listed on the cover page of this prospectus. The
annual report

32 - Series Fund
<PAGE>

may take the form of an updated copy of this prospectus and its accompanying
statement of additional information.

PORTFOLIO BROKERAGE AND RELATED PRACTICES

Prudential is responsible for decisions to buy and sell securities for the
portfolios, the selection of brokers and dealers to effect the transactions and
the negotiation of brokerage commissions, if any. Transactions on a stock
exchange in equity securities will be executed primarily through brokers that
will receive a commission paid by the portfolio. The Money Market, Diversified
Bond, High Yield Bond, and Government Income Portfolios, on the other hand, will
not normally incur any brokerage commissions. Fixed income securities, as well
as equity securities traded in the over-the-counter market, are generally traded
on a "net" basis with dealers acting as principals for their own accounts
without a stated commission, although the price of the security usually includes
a profit to the dealer. In underwritten offerings, securities are purchased at a
fixed price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's concession or discount. Certain of
these securities may also be purchased directly from an issuer, in which case
neither commissions nor discounts are paid.

An affiliated broker may be employed to execute brokerage transactions on behalf
of the portfolios, as long as the commissions are reasonable and fair compared
to the commissions received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time. The Series Fund may not
engage in any transactions in which Prudential or its affiliates, including
Prudential Securities Incorporated, acts as principal, including
over-the-counter purchases and negotiated trades in which such a party acts as a
principal. Additional information about portfolio brokerage and related
transactions is included in the statement of additional information.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Prudential is the transfer agent and dividend disbursing agent for the Series
Fund. Prudential as transfer agent issues and redeems shares of the Series Fund
and maintains records of ownership for the shareholders. Prudential's principal
business address is Prudential Plaza, Newark, New Jersey 07102-3777.

ADDITIONAL INFORMATION

This prospectus and the statement of additional Information referred to on the
cover page do not contain all the information set forth in the registration
statement, certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The omitted information
may be obtained from the Commission's principal office in Washington, D.C., upon
payment of the fees prescribed by the Commission.

For further information, shareholders may also contact the Series Fund's office,
the address and phone number of which are set forth on the cover of this
prospectus.

33 - Series Fund
<PAGE>

APPENDIX

SECURITIES IN WHICH THE MONEY MARKET PORTFOLIO
MAY CURRENTLY INVEST

The Money Market Portfolio, and the other portfolios to the extent their
investment policies so provide, may invest in the following liquid, short-term,
debt securities regularly bought and sold by financial institutions:

1. U.S. Treasury Bills and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. These are debt securities
(including bills, certificates of indebtedness, notes, and bonds) issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
Government that is established under the authority of an act of Congress.
Although all obligations of agencies and instrumentalities are not direct
obligations of the U.S. Treasury, payment of the interest and principal on them
is generally backed directly or indirectly by the U.S. Government. This support
can range from the backing of the full faith and credit of the United States, to
U.S. Treasury guarantees or to the backing solely of the issuing instrumentality
itself. Securities which are not backed by the full faith and credit of the
United States include but are not limited to obligations of the Tennessee Valley
Authority, the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and the United States Postal Service, each of which has
the right to borrow from the U.S. Treasury to meet its obligations, and
obligations of the Federal Farm Credit System and the Federal Home Loan Banks,
the obligations of which may only be satisfied by the individual credit of the
issuing agency. Obligations of the Government National Mortgage Association, the
Farmers Home Administration, and the Export-Import Bank are examples of
securities that are backed by the full faith and credit of the United States.

2. Obligations (including certificates of deposit, bankers' acceptances, and
time deposits) of domestic banks, foreign branches of U.S. banks, U.S. branches
of foreign banks, and foreign offices of foreign banks provided that such bank
has, at the time of the portfolio's investment, total assets of at least $1
billion or the equivalent. Obligations of any savings and loan association or
savings bank organized under the laws of the United States or any state thereof,
provided that such association or savings bank has, at the time of the
portfolio's investment, total assets of at least $1 billion. The term
"certificates of deposit" includes both Eurodollar certificates of deposit,
which are traded in the over-the-counter market, and Eurodollar time deposits,
for which there is generally not a market. "Eurodollars" are dollars deposited
in banks outside the United States. An investment in Eurodollar instruments
involves risks that are different in some respects from an investment in debt
obligations of domestic issuers, including future political and economic
developments such as possible expropriation or confiscatory taxation that might
adversely affect the payment of principal and interest on the Eurodollar
instruments.

"Certificates of deposit" are certificates evidencing the indebtedness of a
commercial bank to repay funds deposited with it for a definite period of time
(usually from 14 days to 1 year). "Bankers' acceptances" are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on it by
a customer. These instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. "Time deposits"
are non-negotiable deposits in a bank for a fixed period of time.

3. Commercial paper, variable amount demand master notes, bills, notes, and
other obligations issued by a U.S. company, a foreign company or a foreign
government, its agencies, instrumentalities or political subdivisions,
denominated in U.S. dollars, and, at the date of investment, rated at least A or
A-2 by Standard & Poor's Rating Group ("S&P"), A or Prime-2 by Moody's Investors
Service ("Moody's") or, if not rated, issued by an entity having an outstanding
unsecured debt issue rated at least A or A-2 by S&P or A or Prime-2 by Moody's.
A description of corporate bond ratings is contained in the Appendix to the
statement of additional information. If such obligations are guaranteed or
supported by a letter of credit issued by a bank, such bank (including a foreign
bank) must meet the requirements set forth in paragraph 2 above. If such
obligations are guaranteed or insured by an insurance company or other non-bank
entity, such insurance company or other non-bank entity must represent a credit
of high quality, as determined by the Series Fund's investment advisor under the
supervision of the Series Fund's Board of Directors.

As stated above in paragraphs 2 and 3, the Money Market Portfolio and short-term
portions of the other portfolios may contain obligations of foreign branches of
domestic banks and domestic branches of foreign banks, as well as commercial
paper, bills, notes, and other obligations issued in the United States by
foreign issuers, including foreign governments, their agencies, and
instrumentalities. This involves certain additional risks. These risks include
future political and economic developments in the country of the issuer, the
possible imposition of withholding taxes on interest income payable on such
obligations held by the Series Fund, the possible seizure or nationalization of
foreign deposits, and the possible establishment of exchange controls or other
foreign governmental laws or restrictions which might affect adversely the
payment of principal and interest on such obligations held by the Series Fund.
In addition, there may be less publicly available information about a foreign
issuer than about a domestic one, and foreign issuers may not be subject to the
same accounting, auditing and financial recordkeeping standards, and
requirements as domestic issuers. Securities issued by foreign issuers may

A1 - Series Fund
<PAGE>

be subject to greater fluctuations in price than securities issued by U.S.
entities. Finally, in the event of a default with respect to any such foreign
debt obligations, it may be more difficult for the Series Fund to obtain or to
enforce a judgment against the issuers of such securities.

4. Repurchase Agreements. When the Money Market Portfolio purchases money market
securities of the types described above, it may on occasion enter into a
repurchase agreement with the seller wherein the seller and the buyer agree at
the time of sale to a repurchase of the security at a mutually agreed upon time
and price. The period of maturity is usually quite short, possibly overnight or
a few days, although it may extend over a number of months. The resale price is
in excess of the purchase price, reflecting an agreed-upon market rate effective
for the period of time the portfolio's money is invested in the security, and is
not related to the coupon rate of the purchased security. Repurchase agreements
may be considered loans of money to the seller of the underlying security, which
are collateralized by the securities underlying the repurchase agreement. The
Series Fund will not enter into repurchase agreements unless the agreement is
"fully collateralized" (i.e., the value of the securities is, and during the
entire term of the agreement remains, at least equal to the amount of the "loan"
including accrued interest). The Series Fund will take possession of the
securities underlying the agreement and will value them daily to assure that
this condition is met. The Series Fund has adopted standards for the parties
with whom it will enter into repurchase agreements which it believes are
reasonably designed to assure that such a party presents no serious risk of
becoming involved in bankruptcy proceedings within the time frame contemplated
by the repurchase agreement. In the event that a seller defaults on a repurchase
agreement, the Series Fund may incur a loss in the market value of the
collateral, as well as disposition costs; and, if a party with whom the Series
Fund had entered into a repurchase agreement becomes involved in bankruptcy
proceedings, the Series Fund's ability to realize on the collateral may be
limited or delayed and a loss may be incurred if the collateral securing the
repurchase agreement declines in value during the bankruptcy proceedings.

The Series Fund will not enter into repurchase agreements with Prudential or its
affiliates, including Prudential Securities Incorporated. This will not affect
the Series Fund's ability to maximize its opportunities to engage in repurchase
agreements.

5. Reverse Repurchase Agreements. The Money Market Portfolio may use reverse
repurchase agreements, which are described on page 26 of the prospectus. No
portfolio may obligate more than 10% of its net assets in connection with
reverse repurchase agreements, except that the Diversified Bond, High Yield
Bond, and Government Income Portfolios, as well as the fixed income portions of
the Conservative Balanced and Flexible Managed Portfolios, may obligate up to
30% of their net assets in connection with reverse repurchase agreements and
dollar rolls.

6. When-Issued and Delayed Delivery Securities. From time to time, in the
ordinary course of business, the Money Market Portfolio may purchase securities
on a when-issued or delayed delivery basis (i.e., delivery and payment can take
place a month or more after the date of the transaction). The purchase price and
the interest rate payable on the securities are fixed on the transaction date.
The securities so purchased are subject to market fluctuation, and no interest
accrues to the portfolio until delivery and payment take place. At the time the
portfolio makes the commitment to purchase securities on a when-issued or
delayed delivery basis, it will record the transaction and thereafter reflect
the value, each day, of such securities in determining its net asset value. The
portfolio will make commitments for when-issued transactions only with the
intention of actually acquiring the securities and, to facilitate such
acquisitions, the Series Fund's custodian bank will maintain in a separate
account securities of the portfolio having a value equal to or greater than such
commitments. On delivery dates for such transactions, the portfolio will meet
its obligations from maturities or sales of the securities held in the separate
account and/or from then available cash flow. If the portfolio chooses to
dispose of the right to acquire a when issued security prior to its acquisition,
it could, as with the disposition of any other obligation, incur a gain or loss
due to market fluctuation. No when-issued commitments will be made if, as a
result, more than 15% of the portfolio's net assets would be so committed.

The Board of Directors of the Series Fund has adopted policies for the Money
Market Portfolio to conform to amendments of an SEC rule applicable to money
market funds, like the portfolio. These policies do not apply to any other
portfolio. The policies are as follows: (1) The portfolio will not invest more
than 5% of its assets in the securities of any one issuer (except U.S.
Government securities); however, the portfolio may exceed the 5% limit with
respect to a single security rated in the highest rating category for up to
three business days after the purchase thereof; (2) To be eligible for
investment, a security must be a United States dollar-denominated instrument
that the Series Fund's Board has determined to present minimal credit risks and
must be rated in one of the two highest rating categories by at least two
nationally recognized statistical rating organizations ("NRSROs") assigning a
rating to the security or issue, or if only one NRSRO has assigned a rating,
that NRSRO. An unrated security must be deemed to be of comparable quality as
determined by the Series Fund's Board. In other words, the portfolio will invest
in only first tier or second tier securities. First tier securities are
securities which are rated by at least two NRSROs, or by the only NRSRO that has
rated the security, in the highest short-term rating category, or unrated
securities of comparable quality as determined by the Series Fund's Board.

A2 - Series Fund
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Second tier securities are eligible securities that are not first tier
securities; (3) The portfolio will not invest more than 5% of its total assets
in second tier securities; (4) The portfolio may not invest more than 1% of its
assets in second tier securities of any one issuer; (5) In the event a first
tier security held by the portfolio is downgraded and becomes a second tier
security, or in the case of an unrated security the Series Fund's Board
determines it is no longer of comparable quality to a first tier security, or in
the event Prudential becomes aware that a NRSRO has rated a second tier security
or an unrated portfolio security below its second highest rating, the Board will
reassess promptly whether the security presents minimal credit risks and shall
cause the portfolio to take such action as the Board determines is in the best
interests of the portfolio and its shareholders; (6) In the event of a default
or because of a rating downgrade a security held in the portfolio is no longer
an eligible investment, the portfolio will sell the security as soon as
practicable unless the Series Fund's Board makes a specific finding that such
action would not be in the best interest of the portfolio; and (7) The
portfolio's dollar-weighted average maturity will be no more than 90 days. The
Series Fund's Board of Directors has adopted written procedures delegating to
the investment advisor under certain guidelines the responsibility to make
several of the above-described determinations, including certain credit quality
determinations.

A3 - Series Fund