THE PRUDENTIAL SERIES FUND, INC.
EQUITY PORTFOLIO
PROSPECTUS: May 1, 1999
As with all mutual funds, filing this prospectus with the SEC does not
mean that the SEC has judged this Fund a good investment, nor has the SEC
determined that this prospectus is complete or accurate. It is a criminal
offense to state otherwise.
[PRUDENTIAL INVESTMENTS LOGO]
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TABLE OF CONTENTS
1 Risk/Return Summary
1 Investment Objective and Principal Strategies of the Equity Portfolio
1 Principal Risks
2 Evaluating Performance
3 INVESTMENT OBJECTIVE AND POLICIES OF THE EQUITY PORTFOLIO
5 INVESTMENT RISKS
8 HOW THE EQUITY PORTFOLIO IS MANAGED
8 Investment Adviser
8 Investment Sub-Adviser
8 Portfolio Manager
9 HOW TO BUY AND SELL SHARES OF THE EQUITY PORTFOLIO
9 How to Buy and Sell Shares
9 Net Asset Value
10 Distributor
10 OTHER INFORMATION
10 Federal Income Taxes
10 Year 2000
11 Monitoring for Possible Conflicts
12 FINANCIAL HIGHLIGHTS
For More Information (Back Cover)
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RISK/RETURN SUMMARY
This prospectus provides information about the Equity Portfolio (the Portfolio),
which is a separate portfolio of the Prudential Series Fund, Inc. (the Fund).
The Fund offers two classes of shares in the Portfolio: Class I and Class II.
This prospectus relates only to Class II shares of the Portfolio. Class II
shares are sold only to separate accounts of insurance companies other than The
Prudential Insurance Company of America (Prudential) as investment options under
variable life insurance and variable annuity contracts (the Contracts). (A
separate account is simply an accounting device used to keep the assets invested
in certain insurance contracts separate from the general assets and liabilities
of the insurance company.)
The following section highlights key information about the Portfolio. Additional
information follows this summary and is provided in the Fund's Statement of
Additional Information (SAI), which provides information with respect to all of
the investment portfolios of the Fund, including the Equity Portfolio.
INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES OF THE EQUITY PORTFOLIO
Our investment objective is CAPITAL APPRECIATION. To achieve our objective, we
invest primarily in common stocks of major established corporations as well as
smaller companies that we believe offer attractive prospects of appreciation. In
addition, the Portfolio may invest up to 30% of its total assets in foreign
securities. While we make every effort to achieve our objective, we can't
guarantee success.
PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. Equity
securities - such as common stocks - are subject to COMPANY RISK. The price of
the stock of a particular company can vary based on a variety of factors, such
as the company's financial performance, changes in management and product
trends, and the potential for takeover and acquisition. Common stocks are also
subject to MARKET RISK stemming from factors independent of any particular
security. Investment markets fluctuate. All markets go through cycles and market
risk involves being on the wrong side of a cycle. Factors affecting market risk
include political events, broad economic and social changes, and the mood of the
investing public. You can see market risk in action during large drops in the
stock market. If investor sentiments turn gloomy, the price of all stocks may
decline. It may not matter that a particular company has great profits and its
stock is selling at a relatively low price. If the overall market is dropping,
the values of all stocks are likely to drop. Generally, the stock prices of
small-sized companies vary more than the prices of large company stocks and may
present above average risks.
The Portfolio's investment in foreign securities involves additional risks. For
example, foreign banks and companies generally are not subject to the same types
of regulatory requirements that U.S. banks and companies are. Foreign political
developments and changes in currency rates may adversely affect the value of
foreign securities.
There is also risk involved in the investment strategies we may use. Some of our
strategies require us to try to predict whether the price or value of an
underlying investment will go up or down over a certain period of time. There is
always the risk that investments will not perform as we thought they would. Like
any mutual fund, an investment in the Portfolio could lose value, and you could
lose money. For more information about risk, see "Investment Risks."
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EVALUATING PERFORMANCE
A number of factors - including risk - affect how the Portfolio performs. The
following bar chart and table show the Portfolio's performance for each full
calendar year of operation for the last 10 years. They demonstrate the risk of
investing in the Portfolio and how returns can change from year to year. Past
performance does not mean that the Portfolio will achieve similar results in the
future.
<TABLE>
<CAPTION>
Annual Returns* (Class I shares)
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1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29.73% -5.21% 26.01% 14.17% 21.87% 2.78% 31.29% 18.52% 24.66% 9.34%
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</TABLE>
Best Quarter: 19.13% (1st quarter of 1991)
Worst Quarter: (15.59)% (3rd quarter of 1990)
* THESE ANNUAL RETURNS DO NOT INCLUDE CONTRACT CHARGES. IF CONTRACT CHARGES WERE
INCLUDED, THE ANNUAL RETURNS WOULD BE LOWER THAN THOSE SHOWN. SEE THE
ACCOMPANYING CONTRACT PROSPECTUS.
Average Annual Returns* (as of 12/31/98)
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SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/13/83)
------ ------- -------- ---------
Class I shares 9.34% 16.88% 16.74% 15.14%
S&P 500** 28.60% 24.05% 19.19% 17.29%
Lipper Average*** 24.94% 20.25% 17.83% 16.01%
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* THE PORTFOLIO'S RETURNS ARE AFTER DEDUCTION OF EXPENSES AND DO NOT INCLUDE
CONTRACT CHARGES.
** THE STANDARD & POOR'S 500 STOCK INDEX (S&P 500) - AN UNMANAGED INDEX OF 500
STOCKS OF LARGE U.S. COMPANIES - GIVES A BROAD LOOK AT HOW STOCK PRICES HAVE
PERFORMED. THESE RETURNS DO NOT INCLUDE THE EFFECT OF ANY INVESTMENT MANAGEMENT
EXPENSES. THESE RETURNS WOULD BE LOWER IF THEY INCLUDED THE EFFECT OF THESE
EXPENSES. THE "SINCE INCEPTION" RETURN REFLECTS THE CLOSEST CALENDAR MONTH-END
RETURN (4/30/83). SOURCE: LIPPER, INC.
*** THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) GROWTH FUND AVERAGE IS
CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT
RETURN OF CERTAIN PORTFOLIOS UNDERLYING VARIABLE LIFE AND ANNUITY PRODUCTS. THE
RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
THESE RETURNS WOULD BE LOWER IF THEY INCLUDED THE EFFECT OF THESE EXPENSES. THE
"SINCE INCEPTION" RETURN REFLECTS THE CLOSEST CALENDAR MONTH-END RETURN
(4/30/83). SOURCE: LIPPER, INC.
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INVESTMENT OBJECTIVE AND POLICIES OF THE EQUITY PORTFOLIO
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VALUE APPROACH
We use a value approach to investing which means we look for companies whose
stock is selling below the price that we believe reflects its true worth based
on earnings, book value and other financial measures.
To achieve our value investment strategy, we usually buy securities that are out
of favor and that many other investors are selling. We attempt to invest in
companies and industries before other investors recognize their true value.
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The investment objective of the Equity Portfolio is CAPITAL APPRECIATION. This
means we seek investments that we believe will provide investment returns above
broadly based market indexes. While we make every effort to achieve this
objective, we can't guarantee success.
To achieve our investment objective, we invest primarily in common stocks of
major established corporations as well as smaller companies.
A portion of the Portfolio's assets may be invested in short, intermediate or
long term DEBT OBLIGATIONS, including convertible and nonconvertible PREFERRED
STOCK and OTHER EQUITY-RELATED SECURITIES. Up to 5% of these holdings may be
rated below investment grade. These securities are considered speculative and
are sometimes referred to as "junk bonds."
Up to 30% of the Portfolio's total assets may be invested in FOREIGN SECURITIES,
including money market instruments, equity securities and debt obligations. For
these purposes, we do not consider American Depositary Receipts (ADRs) as
foreign securities. (ADRs are certificates representing the right to receive
foreign securities that have been deposited with a U.S. bank or a foreign branch
of a U.S. bank.)
Under normal circumstances, the Portfolio may invest a portion of its assets in
MONEY MARKET INSTRUMENTS. In addition, we may temporarily invest up to 100% of
the Portfolio's assets in money market instruments in response to adverse market
conditions or when we are restructuring the portfolio. Investing heavily in
these securities limits our ability to achieve our investment objective, but can
help to preserve the Portfolio's assets when the markets are unstable.
DERIVATIVES AND OTHER STRATEGIES
We may also use alternative investment strategies - including DERIVATIVES - to
try to improve the Portfolio's returns, protect its assets or for short-term
cash management. There is no guarantee that these strategies will work, that the
instruments necessary to implement these strategies will be available or that
the Portfolio will not lose money. With derivatives, we try to predict whether
the underlying investment - a security, market index, currency or some other
benchmark - will go up or down at some future date. We may use derivatives to
try to reduce risk or to increase return consistent with the Portfolio's overall
investment objective.
We may: purchase and sell OPTIONS on equity securities, stock indexes and
foreign currencies; purchase and sell stock index and foreign currency FUTURES
CONTRACTS and options on these futures contracts; enter into FORWARD FOREIGN
CURRENCY EXCHANGE CONTRACTS; and purchase securities on a WHEN-ISSUED or DELAYED
DELIVERY basis.
The Portfolio may also enter into SHORT SALES AGAINST-THE-BOX. In a short sale
we sell a security we do not own to take advantage of an anticipated decline in
the stock's price. The Portfolio borrows the stock for delivery and if it can
buy the stock later at a lower price, a profit results. A short sale is
"against-the-box" when the Portfolio owns an equal amount of the securities sold
short or owns securities that can be converted into the securities sold.
The Portfolio may also enter into REPURCHASE AGREEMENTS. In a repurchase
transaction, the Portfolio agrees to purchase certain securities and the seller
agrees to repurchase the same securities at a set price on a specified date.
This creates a fixed return for the Portfolio. The Portfolio may participate
with certain other investment portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC. In a joint repurchase transaction,
uninvested cash balances of various investment portfolios are added together and
invested in one or more repurchase agreements. Each of the participating
investment portfolios receives a portion of the income earned in the joint
account based on the percentage of its investment.
We will consider factors such as cost and volatility in deciding whether to
employ any particular strategy or use any
3
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particular instrument. Any derivatives we use may not match the Portfolio's
underlying holdings. For more information about these strategies, see the SAI,
"Investment Objectives and Policies of the Portfolios."
ADDITIONAL STRATEGIES
The Portfolio also follows certain policies when it BORROWS MONEY (the Portfolio
may borrow up to 5% of the value of its total assets); LENDS ITS SECURITIES; and
holds ILLIQUID SECURITIES (the Portfolio may hold up to 15% of its net assets in
illiquid securities, including securities with legal or contractual restrictions
on resale, those without a readily available market and repurchase agreements
with maturities longer than seven days). The Portfolio is subject to certain
investment restrictions that are fundamental policies, which means they cannot
be changed without shareholder approval. For more information about these
restrictions, see the SAI.
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INVESTMENT RISKS
AS NOTED, ALL INVESTMENTS INVOLVE RISK, AND INVESTING IN THE PORTFOLIOS IS NO
EXCEPTION. THIS CHART OUTLINES THE KEY RISKS AND POTENTIAL REWARDS OF THE
PRINCIPAL INVESTMENTS AND CERTAIN OTHER INVESTMENTS THE PORTFOLIO MAY MAKE. SEE
ALSO, "INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS" IN THE SAI.
<TABLE>
<CAPTION>
INVESTMENT TYPE PORTFOLIO &
% OF ASSETS RISKS POTENTIAL REWARDS
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<S> <C> <C> <C>
EQUITY AND UP TO 100% o Individual stocks could lose value o Historically, stocks have outperformed
EQUITY-RELATED other investments over the long term
SECURITIES o The equity markets could go down,
resulting in a decline in value o Generally, economic growth means
of a Portfolio's investments higher corporate profits, which leads
to an increase in stock prices, known
o Companies that pay dividends may as capital appreciation
not do so if they don't have
profits or adequate cash flow o May be a source of dividend income
o Changes in economic or political o Highly successful small-cap companies
conditions, both U.S. and can outperform larger ones
international, may result in a
decline in the value of a
Portfolio's investments
o Small-cap companies are more
likely to reinvest earnings and
not pay dividends
o Changes in interest rates may
affect the securities of small-
and medium-sized companies more
than the securities of larger
companies
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<TABLE>
<CAPTION>
INVESTMENT TYPE PORTFOLIO &
% OF ASSETS RISKS POTENTIAL REWARDS
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<S> <C> <C> <C>
INVESTMENT GRADE DEBT UP TO 35% o The Portfolio's holdings, share o Bonds have generally outperformed
SECURITIES price, yield, and total return money market instruments over the long
may fluctuate in response to bond term with less risk than stocks
market movements
o Most bonds will rise in value when
interest rates fall
o Credit risk - the default of an o Regular interest income
issuer would leave a Portfolio
with unpaid interest or principal. The o Investment grade bonds have a lower
lower a bond's quality, the higher its risk of default
potential volatility
o Market risk - the risk that the o Generally more secure than stocks
market value of an investment may since companies must pay their debts
move up or down, sometimes before they pay dividends
rapidly or unpredictably. Market
risk may affect an industry,
sector, or the market as a whole
o Interest rate risk - the value of most
bonds will fall when interest rates rise;
the longer a bond's maturity and the lower
its credit quality, the more its value
typically falls. It can lead to price
volatility
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FOREIGN UP TO 30% o Foreign markets, economies and o Investors can participate in the
SECURITIES political systems may not be as growth of foreign markets and
(INCLUDING OPTIONS ON stable as in the U.S. companies operating in those markets
FOREIGN CURRENCIES AND
FUTURES ON FOREIGN o Currency risk - changing values o Changing value of foreign currencies
CURRENCIES) of foreign currencies
o Opportunities for diversification
o May be less liquid than U.S.
stocks and bonds
o Differences in foreign laws,
accounting standards, public
information, custody and
settlement practices
o Year 2000 conversion may be more
of a problem for some foreign
issuers
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DERIVATIVES % VARIES o Derivatives, such as futures, o A Portfolio could make money and
(INCLUDING OPTIONS ON options and foreign currency protect against losses if the
forward contracts, may not fully investment analysis proves correct
offset the underlying positions
and this
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6
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<TABLE>
<CAPTION>
INVESTMENT TYPE PORTFOLIO &
% OF ASSETS RISKS POTENTIAL REWARDS
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<S> <C> <C>
EQUITY SECURITIES,
OPTIONS ON STOCK could result in losses o Derivatives that involve leverage
INDEXES AND FUTURES to a Portfolio that would not could generate substantial gains at
CONTRACTS ON STOCK have otherwise occurred low cost
INDEXES)
o Derivatives used for risk o One way to manage a Portfolio's
management may not have the risk/return balance is to lock in the
intended effects and may result value of an investment ahead of time
in losses or missed opportunities
o The other party to a derivatives
contract could default
o Derivatives that involve leverage
could magnify losses
o Certain types of derivatives
involve costs to a Portfolio that
can reduce returns
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HIGH-YIELD DEBT UP TO 5% o Higher market risk o May offer higher interest income than
SECURITIES higher quality debt securities
(JUNK BONDS) o Higher credit risk
o May be more illiquid (harder to
value and sell), in which case
valuation would depend more on
the investment adviser's
judgment than is generally the
case with higher rated
securities
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WHEN-ISSUED AND DELAYED % VARIES o Use of such instruments and o Use of instruments may magnify
DELIVERY SECURITIES, strategies may magnify underlying investment gains
REVERSE REPURCHASE underlying investment losses
AGREEMENTS AND SHORT
SALES o Investment costs may exceed
potential underlying investment
gains
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</TABLE>
7
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HOW THE EQUITY PORTFOLIO IS MANAGED
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INVESTMENT ADVISER
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Prudential serves as the overall investment adviser for the Fund. Founded in
1875, it is responsible for the management of the Fund and provides investment
advice and related services to the Portfolio. As of December 31, 1998,
Prudential had total assets under management of approximately $334 billion.
Prudential is located at 751 Broad Street, Newark, New Jersey 07102-3777.
Prudential is currently considering reorganizing itself into a publicly traded
stock company through a process known as "demutualization." On February 10,
1998, the Company's Board of Directors authorized management to take the
preliminary steps necessary to allow the Company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion to
occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of a
plan by the Company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval, all of which could take two or more years
to complete. Prudential's management and Board of Directors have not yet
determined to demutualize and it is possible that, after careful review,
Prudential could decide not to go public.
During 1998, the Portfolio paid investment advisory fees of 0.45% of its average
net assets.
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INVESTMENT SUB-ADVISER
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A sub-adviser provides day-to-day investment management for the Portfolio.
Prudential pays the sub-adviser out of the fee Prudential receives from the
Portfolio.
Prudential Investment Corporation (PIC), a wholly owned subsidiary of
Prudential, provides substantially all of the investment advisory services for
the Portfolio. PIC's address is 751 Broad Street, Newark, New Jersey 07102.
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PORTFOLIO MANAGER
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Thomas R. Jackson has managed the Portfolio since 1990. Mr. Jackson, a Managing
Director of PIC, joined PIC in 1990 and has over 30 years of professional equity
investment management experience. He was formerly co-chief investment officer of
Red Oak Advisers and Century Capital Associates, each a private money management
firm, where he managed pension and other accounts for institutions and
individuals. Mr. Jackson was also with The Dreyfus Corporation where he managed
and served as president of the Dreyfus Fund. Mr. Jackson began managing at Chase
Manhattan Bank. He is a member of the New York Society of Security Analysts.
8
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HOW TO BUY AND SELL SHARES OF THE EQUITY PORTFOLIO
The Fund offers two classes of shares in the Portfolio - Class I and Class II.
This prospectus relates only to Class II shares of the Portfolio. Class I shares
are sold only to separate accounts of Prudential as investment options under
certain Contracts. Class II is offered only to separate accounts of
non-Prudential insurance companies as investment options under certain of their
Contracts.
HOW TO BUY AND SELL SHARES
The only way to invest in the Portfolio is through certain variable life
insurance and variable annuity contracts. Together with this prospectus, you
should have received a prospectus for such a Contract. You should refer to that
prospectus for further information on investing in the Portfolio.
Class II shares of the Portfolio are sold without any sales charge at the net
asset value of the Portfolio. Class II shares, however, are subject to an annual
distribution or "12b-1" fee of 0.25% and an administration fee of 0.15% of the
average daily net assets of Class II. Class I shares do not have a distribution
or administration fee.
Shares are redeemed for cash within seven days of receipt of a proper notice of
redemption or sooner if required by law. There is no redemption charge. We may
suspend the right to redeem shares or receive payment when the New York Stock
Exchange is closed (other than weekends or holidays), when trading on the New
York Stock Exchange is restricted, or as permitted by the SEC.
NET ASSET VALUE
When you purchase or sell shares of the Portfolio the price you will pay or
receive, as the case may be, is based on the share's value. This is known as the
net asset value or NAV. The price at which a purchase or redemption is made is
based on the next calculation of the NAV after the order is placed. The NAV of
each share class of the Portfolio is determined once a day - at 4:15 p.m. New
York Time - on each day the New York Stock Exchange is open for business. If the
New York Stock Exchange closes early on a day, the Portfolio's NAV will be
calculated some time between the closing time and 4:15 p.m. on that day.
The NAV for the Portfolio is determined by a simple calculation. It's the total
value of the Portfolio (assets minus liabilities) divided by the total number of
shares outstanding.
To determine the Portfolio's NAV, its holdings are valued as follows:
EQUITY SECURITIES are generally valued at the last sale price on an exchange or
NASDAQ, or if there is not sale, at the mean between the most recent bid and
asked prices on that day. If there is no asked price, the security will be
valued at the bid price. Equity securities that are not sold on an exchange or
NASDAQ are generally valued by an independent pricing agent or principal market
maker.
The Portfolio may own securities that are primarily listed on foreign exchanges
that trade on weekends or other days when the Portfolio does not price its
shares. Therefore, the value of the Portfolio's assets may change on days when
shareholders cannot purchase or redeem their shares.
All SHORT-TERM DEBT SECURITIES with remaining maturities of 60 days or less are
valued on an amortized cost basis. This valuation method is widely used by
mutual funds. It means that the security is valued initially at its purchase
price and then decreases in value by equal amounts each day until the security
matures. It almost always results in a value that is extremely close to the
actual market value. The Fund's Board of Directors has established procedures to
monitor whether any material deviation between valuation and market value occurs
and if so, will promptly consider what action, if any, should be taken to
prevent unfair results to Contract owners.
9
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OTHER DEBT SECURITIES -- those that are not valued on an amortized cost basis --
are valued using an independent pricing service.
OPTIONS ON STOCK AND STOCK INDEXES that are traded on a national securities
exchange are valued at the average of the bid and asked prices as of the close
of that exchange.
FUTURES CONTRACTS and OPTIONS ON FUTURES CONTRACTS are valued at the last sale
price at the close of the commodities exchange or board of trade on which they
are traded. If there has been no sale that day, the securities will be valued at
the mean between the most recently quoted bid and asked prices on that exchange
or board of trade.
SECURITIES FOR WHICH NO MARKET QUOTATIONS ARE AVAILABLE will be valued at fair
value by Prudential under the direction of the Fund's Board of Directors.
DISTRIBUTOR
Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. The Fund has adopted a
distribution plan under Rule 12b-1 of the Investment Company Act of 1940
covering Class II shares. Under that plan, Class II of the Portfolio pay to PIMS
a distribution or "12b-1" fee at the annual rate of 0.25% of the average daily
net assets of Class II. This fee pays for distribution services for Class II
shares. Because these fees are paid out of the Portfolio's assets on an on-going
basis, over time these fees will increase the cost of your investment in Class
II shares and may cost you more than paying other types of sales charges.
OTHER INFORMATION
FEDERAL INCOME TAXES
If you own or are considering purchasing a variable contract, you should consult
the prospectus for the variable contract for tax information about that variable
contract. You should also consult with a qualified tax adviser for information
and advice.
The SAI provides information about certain tax laws applicable to the Fund.
YEAR 2000
The services provided to the Fund and the shareholders by the Fund's investment
adviser, sub-advisers, distributor, transfer agent and custodians depend on the
smooth functioning of their computer systems and those of outside service
providers. Many computer software systems in use today cannot distinguish the
year 2000 from the year 1900 because of the way dates are encoded and
calculated. Such event could have a negative impact on handling securities
trades, payments of interest and dividends, pricing and account services.
Although, at this time, there can be no assurance that there will be no adverse
impact on the Fund, the Fund's investment adviser, sub-advisers, distributor,
transfer agent and custodians have advised the Fund that they have been actively
working on necessary changes to their computer systems to prepare for the year
2000. The Fund and its Directors receive and have received since mid-1998
satisfactory quarterly reports from the principal service providers as to their
preparations for year 2000 readiness, although there can be no assurance that
the service providers (or other securities market participants) will
successfully complete the necessary changes in a timely manner or that there
will be no adverse impact on the Fund. Moreover, the Fund at this time has not
considered retaining alternative service providers or directly undertaken
efforts to achieve year 2000 readiness, the latter of which would involve
substantial expenses without an assurance of success.
Additionally, issuers of securities generally as well as those purchased by the
Fund may confront year 2000 compliance issues which, if material and not
resolved, could have an adverse impact on securities markets and/or a specific
issuer's performance and result in a decline in the value of the securities held
by the Fund.
10
<PAGE>
MONITORING FOR POSSIBLE CONFLICTS
The Fund sells its shares to fund variable life insurance contracts and variable
annuity contracts and may offer its shares to qualified retirement plans.
Because of differences in tax treatment and other considerations, it is possible
that the interest of variable life insurance contract owners, variable annuity
contract owners and participants in qualified retirement plans could conflict.
The Fund will monitor the situation and in the event that a material conflict
did develop, the Fund would determine what action, if any, to take in response.
11
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FINANCIAL HIGHLIGHTS
The financial highlights will help you evaluate the financial performance of
each Portfolio. The TOTAL RETURN in each chart represents the rate that a
shareholder earned on an investment in that share class of the Portfolio,
assuming reinvestment of all dividends and other distributions. The charts do
not reflect charges under any variable contract. The information is for Class I
for the periods indicated.
The information for the THREE YEARS ENDED DECEMBER 31, 1998 has been audited by
PRICEWATERHOUSECOOPERS LLP, whose unqualified report, along with the financial
statements, appear in the SAI, which is available upon request. THE INFORMATION
FOR THE TWO YEARS ENDED DECEMBER 31, 1995 WAS AUDITED BY OTHER INDEPENDENT
AUDITORS WHOSE REPORT WAS ALSO UNQUALIFIED.
<TABLE>
<CAPTION>
EQUITY
------------------------------------------------
YEAR ENDED
DECEMBER 31,
------------------------------------------------
1998 1997 1996 1995(a) 1994(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 31.07 $ 26.96 $ 25.64 $ 20.66 $ 21.49
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.60 0.69 0.71 0.55 0.51
Net realized and unrealized gains on
investments.......................... 2.21 5.88 3.88 5.89 0.05
-------- -------- -------- -------- --------
Total from investment operations... 2.81 6.57 4.59 6.44 0.56
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.60) (0.70) (0.67) (0.52) (0.49)
Distributions from net realized
gains................................ (3.64) (1.76) (2.60) (0.94) (0.90)
-------- -------- -------- -------- --------
Total distributions................ (4.24) (2.46) (3.27) (1.46) (1.39)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 29.64 $ 31.07 $ 26.96 $ 25.64 $ 20.66
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN:(b)............ 9.34% 24.66% 18.52% 31.29% 2.78%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $6,247.0 $6,024.0 $4,814.0 $3,813.8 $2,617.8
Ratios to average net assets:
Expenses............................. 0.47% 0.46% 0.50% 0.48% 0.55%
Net investment income................ 1.81% 2.27% 2.54% 2.28% 2.39%
Portfolio turnover rate................ 25% 13% 20% 18% 7%
</TABLE>
(a) Calculations are based on average month-end shares outstanding.
(b) Total investment return is calculated assuming a purchase of shares on the
first day and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions. Total investment returns for
less than a full year are not annualized.
12
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FOR MORE INFORMATION
Additional information about the Fund and the Portfolio can be obtained upon
request without charge and can be found in the following documents:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
(incorporated by reference into this prospectus)
ANNUAL REPORT
(including a discussion of market conditions and strategies that significantly
affected the Portfolio's performance during the previous year)
SEMI-ANNUAL REPORT
To obtain these documents or to ask any questions about the Fund:
- Call toll-free (800) 778-2255
- Write to The Prudential Series Fund, Inc., 751 BROAD STREET,
NEWARK, NJ 07102-3777
You can also obtain copies of Fund documents from the Securities and Exchange
Commission as follows:
By Mail:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
(The SEC charges a fee to copy documents.)
In Person:
PUBLIC REFERENCE ROOM
IN WASHINGTON, DC
(For hours of operation, call 1(800) SEC-0330.)
Via the Internet:
http://www.sec.gov
SEC File No. 811-03623
