PRUDENTIAL SERIES FUND INC, 497, 2000-05-05

PRUDENTIAL SERIES FUND INC
497, 2000-05-05

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THE PRUDENTIAL SERIES FUND, INC.
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CONSERVATIVE BALANCED PORTFOLIO PROSPECTUS

DIVERSIFIED BOND PORTFOLIO April 30, 2000

EQUITY PORTFOLIO

EQUITY INCOME PORTFOLIO

FLEXIBLE MANAGED PORTFOLIO

GLOBAL PORTFOLIO

HIGH YIELD BOND PORTFOLIO

MONEY MARKET PORTFOLIO

PRUDENTIAL JENNISON PORTFOLIO

STOCK INDEX PORTFOLIO

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THE FUND'S SHARES NOR HAS THE SEC DETERMINED THAT THIS
PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.

[LOGO] PRUDENTIAL
INVESTMENTS
<PAGE>

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TABLE OF CONTENTS

RISK /RETURN SUMMARY

1 Investment Objectives and Principal Strategies
4 Principal Risks
5 Evaluating Performance

15 HOW THE PORTFOLIOS INVEST

15 Investment Objectives and Policies
15 Conservative Balanced Portfolio
16 Diversified Bond Portfolio
18 Equity Portfolio
19 Equity Income Portfolio
20 Flexible Managed Portfolio
21 Global Portfolio
22 High Yield Bond Portfolio
23 Money Market Portfolio
24 Prudential Jennison Portfolio
25 Stock Index Portfolio

26 OTHER INVESTMENTS AND STRATEGIES

26 ADRs
26 Convertible Debt and Convertible Preferred Stock
26 Derivatives
26 Dollar Rolls
26 Forward Foreign Currency Exchange Contracts
26 Futures
27 Interest Rate Swaps
27 Joint Repurchase Account
27 Loan Participations
27 Mortgage-related Securities
27 Options
27 Real Estate Investment Trusts
27 Repurchase Agreements
28 Reverse Repurchase Agreements
28 Short Sales
28 Short Sales Against-the-Box
28 When-issued and Delayed Delivery Securities

29 INVESTMENT RISKS

34 HOW THE FUND IS MANAGED

34 Board of Directors
34 Investment Adviser
34 Investment Sub-Advisers
35 Portfolio Managers

37 HOW TO BUY AND SELL SHARES OF THE FUND

38 Net Asset Value
39 Distributor
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39 OTHER INFORMATION

39 Federal Income Taxes
39 European Monetary Union
39 Monitoring for Possible Conflicts

F-1 FINANCIAL HIGHLIGHTS

(For more information see back cover)
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RISK/RETURN SUMMARY

This prospectus is for use with the accompanying variable universal life
insurance contract (the Contract) and describes only those portfolios of The
Prudential Series Fund, Inc. (the Fund) that are available for investment
through that Contract. This prospectus should be read together with the current
prospectus for the Contract.

The Fund is a diversified, open-end investment management company -- commonly
known as a mutual fund. Ten of the Fund's seventeen portfolios (the Portfolios)
are available under the Contract:

CONSERVATIVE BALANCED PORTFOLIO GLOBAL PORTFOLIO
DIVERSIFIED BOND PORTFOLIO HIGH YIELD BOND PORTFOLIO
EQUITY MONEY MARKET PORTFOLIO
EQUITY INCOME PORTFOLIO PRUDENTIAL JENNISON PORTFOLIO
FLEXIBLE MANAGED PORTFOLIO STOCK INDEX PORTFOLIO

The following section highlights key information about each Portfolio.
Additional information follows this summary and is provided in the Fund's
Statement of Additional Information (SAI).

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES

The following summarizes the investment objectives, principal strategies and
principal risks for each of the Portfolios. We describe the terms "company
risk," "credit risk," "foreign investment risk," "interest rate risk," and
"market risk" in the section on Principal Risks, on page 4. While we make every
effort to achieve the investment objective for each Portfolio, we can't
guarantee success.

CONSERVATIVE BALANCED PORTFOLIO

The Portfolio's investment objective is TOTAL INVESTMENT RETURN CONSISTENT WITH
A CONSERVATIVELY MANAGED DIVERSIFIED PORTFOLIO. This Portfolio may be
appropriate for an investor who wants diversification with a relatively lower
risk of loss than that associated with the Flexible Managed Portfolio (see
below). To achieve our objective, we invest in a mix of equity securities, debt
obligations and money market instruments. Up to 30% of the Portfolio's total
assets may be invested in foreign securities. In addition, we may invest a
portion of the Portfolio's assets in high-yield/high-risk debt securities. While
we make every effort to achieve our objective, we can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

DIVERSIFIED BOND PORTFOLIO

The Portfolio's investment objective is a HIGH LEVEL OF INCOME OVER A LONGER
TERM WHILE PROVIDING REASONABLE SAFETY OF CAPITAL. This means we look for
investments that we think will provide a high level of current income, but which
are not expected to involve a substantial risk of loss of capital through
default. To achieve our objective, we invest primarily in higher-grade debt
obligations and high-quality money market investments. We may also purchase U.S.
dollar denominated securities that are issued outside the U.S. by foreign or
U.S. issuers. In addition, we may invest a portion of the Portfolio's assets in
high-yield/high-risk debt securities. While we make every effort to achieve our
objective, we can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK
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EQUITY PORTFOLIO

The Portfolio's 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:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

EQUITY INCOME PORTFOLIO

The Portfolio's investment objective is both CURRENT INCOME AND CAPITAL
APPRECIATION. To achieve our objective, we invest primarily in common stocks and
convertible securities that we believe provide good prospects for returns above
those of the Standard & Poor's 500 Stock Index (S&P 500) or the NYSE Composite
Index. 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:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

FLEXIBLE MANAGED PORTFOLIO

The Portfolio's investment objective is a HIGH TOTAL RETURN CONSISTENT WITH AN
AGGRESSIVELY MANAGED DIVERSIFIED PORTFOLIO. This Portfolio may be appropriate
for an investor who wants diversification and is willing to accept a relatively
high level of loss in an effort to achieve greater appreciation. To achieve our
objective, we invest in a mix of equity securities, debt obligations and money
market instruments. The Portfolio may also invest in foreign securities. A
portion of the debt portion of the Portfolio may be invested in
high-yield/high-risk debt securities which have speculative characteristics and
generally are riskier than higher-rated securities. While we make every effort
to achieve our objective, we can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

GLOBAL PORTFOLIO

The Portfolio's investment objective is LONG-TERM GROWTH OF CAPITAL. To achieve
this objective, we invest primarily in common stocks (and their equivalents) of
foreign and U.S. companies. Generally, we invest in at least three countries,
including the U.S., but we may invest up to 35% of the Portfolio's assets in
companies located in any one country other than the U.S. While we make every
effort to achieve our objective, we can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

2
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HIGH YIELD BOND PORTFOLIO

The Portfolio's investment objective is A HIGH TOTAL RETURN. In pursuing our
objective, we invest primarily in high-yield/high-risk debt securities. Such
securities have speculative characteristics and generally are riskier than
higher-rated securities. In addition, the Portfolio may invest up to 20% of its
total assets in foreign debt obligations. While we make every effort to achieve
our objective, we can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o INTEREST RATE RISK
o MARKET RISK

MONEY MARKET PORTFOLIO

The Portfolio's investment objective is MAXIMUM CURRENT INCOME CONSISTENT WITH
THE STABILITY OF CAPITAL AND THE MAINTENANCE OF LIQUIDITY. To achieve our
objective, we invest in high-quality short-term money market instruments issued
by the U.S. government or its agencies, as well as by corporations and banks,
both domestic and foreign. The Portfolio will invest only in instruments that
mature in thirteen months or less, and which are denominated in U.S. dollars.
While we make every effort to achieve our objective, we can't guarantee success.

PRINCIPAL RISKS:
o CREDIT RISK
o INTEREST RATE RISK

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An investment in the Money Market Portfolio is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Portfolio seeks to maintain a net asset value of
$10 per share, it is possible to lose money by investing in the Portfolio.
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PRUDENTIAL JENNISON PORTFOLIO

The Portfolio's investment objective is to achieve LONG-TERM GROWTH OF CAPITAL.
To achieve this objective, we invest primarily in equity securities of major,
established corporations that we believe offer above-average growth prospects.
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:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

STOCK INDEX PORTFOLIO

The Portfolio's investment objective is INVESTMENT RESULTS THAT GENERALLY
CORRESPOND TO THE PERFORMANCE OF PUBLICLY-TRADED COMMON STOCKS. To achieve our
objective, we attempt to duplicate the price and yield of the S&P 500 Index. The
S&P 500 Index represents more than 70% of the total market value of all
publicly-traded common stocks and is widely viewed as representative of
publicly-traded common stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to select stocks.
Rather, the portfolio manager purchases stocks in proportion to their weighting
in the S&P 500 Index. While we make every effort to achieve our objective, we
can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o MARKET RISK

3
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PRINCIPAL RISKS

Although we try to invest wisely, all investments involve risk. Like any mutual
fund, an investment in a Portfolio could lose value, and you could lose money.
The following summarizes the principal risks of investing in the Portfolios.

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.

CREDIT RISK. Debt obligations are generally subject to the risk that the issuer
may be unable to make principal and interest payments when they are due. There
is also the risk that the securities could lose value because of a loss of
confidence in the ability of the borrower to pay back debt. Non-investment grade
debt -- also known as "junk bonds" - have a higher risk of default and tend to
be less liquid than higher-rated securities.

FOREIGN INVESTMENT RISK. Investing in foreign securities generally involves more
risk than investing in securities of U.S. issuers. Foreign investment risk is
comprised of the specific risks described below.

FOREIGN MARKET RISK. Foreign markets, especially those in developing countries,
tend to be more volatile than U.S. markets and are generally not subject to
regulatory requirements comparable to those in the U.S. Because of differences
in accounting standards and custody and settlement practices, investing in
foreign securities generally involves more risk than investing in securities of
U.S. issuers.

CURRENCY RISK. Changes in currency exchange rates may affect the value of
foreign securities held by a Portfolio and the amount of income available for
distribution. If a foreign currency grows weaker relative to the U.S. dollar,
the value of securities denominated in that foreign currency generally decreases
in terms of U.S. dollars. If a Portfolio does not correctly anticipate changes
in exchange rates, its share price could decline as a result. In addition,
certain hedging activities may cause the Portfolio to lose money and could
reduce the amount of income available for distribution.

POLITICAL DEVELOPMENTS. Political developments may adversely affect the value of
a Portfolio's foreign securities.

INTEREST RATE RISK. The risk that the securities could lose value because of
interest rate changes. For example, bonds tend to decrease in value if interest
rates rise. Debt obligations with longer maturities typically offer higher
yields, but are subject to greater price shifts as a result of interest rate
changes than debt obligations with shorter maturities.

MARKET RISK. Common stocks are 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 sentiment
turns 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 large companies are more stable
than the stock prices of smaller companies, but this is not always the case.
Smaller companies often offer a smaller range of products and services than
large companies. They may also have limited financial resources and may lack
management depth. As a result, stocks issued by smaller companies may fluctuate
in value more than the stocks of larger, more established companies.

* * *

For more information about the risks associated with the Portfolios, see "How
the Portfolios Invest -- Investment Risks."

* * *

4
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EVALUATING PERFORMANCE

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CONSERVATIVE BALANCED PORTFOLIO
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A number of factors--including risk--can affect how the Portfolio performs. The
bar chart and table below demonstrate the risk of investing in the Portfolio by
showing how returns can change from year to year and by showing how the
Portfolio's average annual returns compare with a stock index and a group of
similar mutual funds. Past performance does not mean that the Portfolio will
achieve similar results in the future.

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 5.27%
1991 19.07%
1992 6.95%
1993 12.20%
1994 -.97%
1995 17.27%
1996 12.63%
1997 13.45%
1998 11.74%
1999 6.69%

Best Quarter: 7.62% (2nd quarter of 1997) Worst Quarter: (3.17)% (3rd quarter of
1998)

*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.

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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) Balanced 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. The "Since
Inception" return reflects the closest calendar month-end return (4/30/83).
Source: Lipper, Inc.

5
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DIVERSIFIED BOND PORTFOLIO
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Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 8.32%
1991 16.44%
1992 7.19%
1993 10.13%
1994 -3.23%
1995 20.73%
1996 4.40%
1997 8.57%
1998 7.15%
1999 -0.74%

Best Quarter: 7.32% (2nd quarter of 1995) Worst Quarter: (2.83)% (1st quarter of
1994)

*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 12/31/99)
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SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/13/83)
------ ------- -------- ---------
Class I shares (0.74)% 7.80% 7.69% 8.62%
Lehman Aggregate Index** (0.82)% 7.73% 7.70% 9.31%
Lipper Average*** (1.62)% 7.83% 7.62% 7.59%

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*The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

**The Lehman Aggregate Index (LAI) is comprised of more than 5,000 government
and corporate bonds. These returns do not include the effect of any sales
charges. These returns would be lower if they included the effect of sales
charges. The "Since Inception" return reflects the closest calendar month-end
return (4/30/83). Source: Lipper, Inc.

***The Lipper Variable Insurance Products (VIP) Corporate Debt 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.
The "Since Inception" return reflects the closest calendar month-end return
(4/30/83). Source: Lipper, Inc.

6
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EQUITY PORTFOLIO
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Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -5.21%
1991 26.01%
1992 14.17%
1993 21.87%
1994 2.78%
1995 31.29%
1996 18.52%
1997 24.66%
1998 9.34%
1999 12.49%

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.

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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.

7
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EQUITY INCOME PORTFOLIO
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Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -3.73%
1991 27.50%
1992 10.14%
1993 22.28%
1994 1.44%
1995 21.70%
1996 21.74%
1997 36.61%
1998 -2.38%
1999 12.52%

Best Quarter: 16.54% (2nd quarter of 1997) Worst Quarter: (18.14)% (3rd quarter
of 1998)

*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 12/31/99)
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SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (2/19/88)
------ ------- -------- ---------
Class I shares 12.52% 17.33% 14.06% 14.70%
S&P 500** 21.03% 28.54% 18.19% 18.54%
Lipper Average*** 9.78% 20.59% 14.64% 14.62%

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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 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 (2/29/88). Source: Lipper, Inc.

*** The Lipper Variable Insurance Products (VIP) Equity Income 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.
The "Since Inception" return reflects the closest calendar month-end return
(2/29/88). Source: Lipper, Inc.

8
<PAGE>

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FLEXIBLE MANAGED PORTFOLIO
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Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 1.91%
1991 25.43%
1992 7.61%
1993 15.58%
1994 -3.16%
1995 24.13%
1996 13.64%
1997 17.96%
1998 10.24%
1999 7.78%

Best Quarter: 10.89% (2nd quarter of 1997) Worst Quarter: (8.50)% (3rd quarter
of 1998)

* 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.

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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) Flexible 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. The "Since
Inception" return reflects the closest calendar month-end return (4/30/83).
Source: Lipper, Inc.

9
<PAGE>

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GLOBAL PORTFOLIO
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Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -12.91%
1991 11.39%
1992 -3.42%
1993 43.14%
1994 -4.89%
1995 15.88%
1996 19.97%
1997 6.98%
1998 25.08%
1999 48.27%

Best Quarter: 31.04% (4th quarter of 1999) Worst Quarter: (14.21)% (3rd quarter
of 1998)

*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 12/31/99)
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SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (9/19/88)
------ ------- -------- ---------
Class I shares 48.27% 22.44% 13.38% 14.33%
Morgan Stanley World
Index** 24.93% 19.76% 11.42% 12.67%
Lipper Average*** 44.18% 19.42% 11.73% 12.55%

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* The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

**The Morgan Stanley World Index (MSWI) is a weighted index comprised of
approximately 1,500 companies listed on the stock exchanges of the U.S.A.,
Europe, Canada, Australia, New Zealand and the Far East. The "Since Inception"
return reflects the closest calendar month-end return (9/30/88). Source: Lipper,
Inc.

***The Lipper Variable Insurance Products (VIP) Global 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. The "Since Inception"
return reflects the closest calendar month-end return (9/30/88). Source: Lipper,
Inc.

10
<PAGE>

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HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -11.84%
1991 38.99%
1992 17.53%
1993 19.27%
1994 -2.72%
1995 17.56%
1996 11.39%
1997 13.78%
1998 -2.36%
1999 4.61%

Best Quarter: 15.89% (1st quarter of 1991) Worst Quarter: (9.68)% (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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (2/23/87)
------ ------- -------- ---------
Class I shares 4.61% 8.76% 9.78% 7.97%
Lehman High Yield Index** 2.39% 9.31% 10.72% 9.22%
Lipper Average*** 3.83% 9.48% 10.15% 8.97%

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*The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

** The Lehman High Yield Index is made up of over 700 noninvestment grade bonds.
The index is an unmanaged index that includes the reinvestment of all interest
but does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Portfolio. The "Since Inception" return
reflects the closest calendar month-end return (2/28/87). Source: Lipper, Inc.

*** The Lipper Variable Insurance Products (VIP) High Current Yield 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.
The "Since Inception" return reflects the closest calendar month-end return
(2/28/87). Source: Lipper, Inc.

11
<PAGE>

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MONEY MARKET PORTFOLIO
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A number of factors--including risk--can affect how the Portfolio performs. The
bar chart and table below demonstrate the risk of investing in the Portfolio by
showing how returns can change from year to year and by showing how the
Portfolio's average annual returns compare with a stock index and a group of
similar mutual funds. Past performance does not assure that the Portfolio will
achieve similar results in the future.

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 8.16%
1991 6.16%
1992 3.79%
1993 2.95%
1994 4.05%
1995 5.80%
1996 5.22%
1997 5.41%
1998 5.39%
1999 4.97%

Best Quarter: 2.00% (2nd quarter of 1990) Worst Quarter: 0.71% (2nd quarter of
1993)

*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.

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

*The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

** The Lipper Variable Insurance Products (VIP) Money Market Average is
calculated by Lipper Analytical Services, Inc., and reflects the investment
return of certain portfolios underlying variable life and annuity products.
These returns are net of investment fees and fund expenses but not product
charges.

7-DAY YIELD* (AS OF 12/31/99)
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Money Market Portfolio 5.65%

Average Money Market Fund** 5.16%

- --------------------------------------------------------------------------------
* The Portfolio's yield is after deduction of expenses and does not include
Contract charges.

**Source: IBC Financial Data, Inc. As of 12/28/99, based on 311 funds in the IBC
Taxable General Purpose, First and Second Tier Money Market Fund. The "Since
Inception" return reflects the closest calendar month-end return (4/30/83).
Source: Lipper, Inc.

12
<PAGE>

- --------------------------------------------------------------------------------
PRUDENTIAL JENNISON PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1996 14.41%
1997 31.71%
1998 37.46%
1999 41.76%

Best Quarter: 29.46% (4th quarter of 1998) Worst Quarter: (12.07)% (3rd quarter
of 1998)

*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.

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

*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 (4/30/95). 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.
The "Since Inception" return reflects the closest calendar month-end return
(4/30/95). Source: Lipper, Inc.

13
<PAGE>

- --------------------------------------------------------------------------------
STOCK INDEX PORTFOLIO
- --------------------------------------------------------------------------------

Annual Return* (Class I shares)

[REPRESENTATION OF CHART]

1990 -3.63%
1991 29.72%
1992 7.13%
1993 9.66%
1994 1.01%
1995 37.06%
1996 22.57%
1997 32.83%
1998 28.42%
1999 20.54%

Best Quarter: 21.44% (4th quarter of 1998) Worst Quarter: (13.72)% (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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (10/19/87)
------ ------- -------- ----------
Class I shares 20.54% 28.14% 17.75% 18.96%
S&P 500** 21.03% 28.54% 18.19% 18.71%
Lipper Average*** 20.48% 28.07% 17.74% 18.24%

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

*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 (10/31/87). Source: Lipper, Inc.

***The Lipper Variable Insurance Products (VIP) S&P 500 Index 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.
The "Since Inception" return reflects the closest calendar month-end return
(10/31/87). Source: Lipper, Inc.

14
<PAGE>

HOW THE PORTFOLIOS INVEST

INVESTMENT OBJECTIVES AND POLICIES

We describe each Portfolio's investment objective and policies below. We
describe certain investment instruments that appear in bold lettering below in
the section entitled Other Investments and Strategies. Although we make every
effort to achieve each Portfolio's objective, we can't guarantee success. Each
Portfolio's investment objective is a fundamental policy that cannot be changed
without shareholder approval. The Board of Directors can change investment
policies that are not fundamental.

An investment in a Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

- --------------------------------------------------------------------------------
CONSERVATIVE BALANCED PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to seek A TOTAL INVESTMENT RETURN
CONSISTENT WITH A CONSERVATIVELY MANAGED DIVERSIFIED PORTFOLIO.

- -------------------------------
BALANCED PORTFOLIO We invest To achieve our objective, we
in all three types of invest in a mix of equity and
securities--equity, debt and equity-related securities,
money market--in order to debt obligations and money
achieve diversification in a market instruments. We adjust
single portfolio. We seek to the percentage of Portfolio
maintain a conservative blend assets in each category
of investments that will have depending on our expectations
strong performance in a down regarding the different
market and solid, but not markets. While we make every
necessarily outstanding, effort to achieve our
performance in up markets. objective, we can't guarantee
This Portfolio may be success.
appropriate for an investor
looking for diversification We will vary how much of the
with less risk than that of Portfolio's assets are invested in a
the Flexible Managed particular type of security
Portfolio, while recognizing depending on how we think the
that this reduces the chances different markets will perform.
of greater appreciation.
- -------------------------------

Under normal conditions, we will invest within the ranges shown below:

ASSET TYPE MINIMUM NORMAL MAXIMUM
---------- ------- ------ -------
Stocks 15% 35% 75%
Debt obligations and money 25% 65% 85%
market securities

DEBT SECURITIES in general are basically written promises to repay a debt. There
are numerous types of debt securities which vary as to the terms of repayment
and the commitment of other parties to honor the obligations of the issuer. Most
of the securities in the debt portion of this Portfolio will be rated
"investment grade." This means major rating services, like Standard & Poor's
Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), have rated the
securities within one of their four highest rating categories.

The Portfolio may also invest in lower-rated securities, which are riskier and
are considered speculative. These securities are sometimes referred to as "junk
bonds." We may also invest in instruments that are not rated, but which we
believe are of comparable quality to the instruments described above.

The Portfolio may also invest up to 30% of its total assets in foreign equity
and debt securities that are not denominated in the U.S. dollar. In addition, up
to 20% of the Portfolio's total assets may be invested in debt securities that
are issued outside the U.S. by foreign or U.S. issuers, provided the securities
are denominated in U.S. dollars. For these purposes, we do not consider American
Depositary Receipts (ADRs) as foreign securities.

The stock portion of the Portfolio will be invested mainly in equity and
equity-related securities of major, established corporations which we believe
are in sound financial condition and offer better total returns than broad based
market indexes.

15
<PAGE>

The money market portion of the Portfolio will be invested in high-quality money
market instruments. We manage this portion of the Portfolio to comply with
specific rules designed for money market mutual funds. We will not acquire any
security with a remaining maturity exceeding thirteen months, and we will
maintain a dollar-weighted average portfolio of 90 days or less. (Weighted
average maturity is calculated by adding the maturities of all the bonds in a
portfolio and dividing by the number of bonds on a weighted basis.)

In response to adverse market conditions or when restructuring the Portfolio, we
may temporarily invest up to 100% of the Portfolio's total assets in money
market instruments. Investing heavily in these securities limits our ability to
achieve our investment objective, but can help to preserve the value of the
Portfolio's assets when the markets are unstable.

We may also invest in loans arranged through private negotiations between a
corporation which is the borrower and one or more financial institutions that
are the lenders. Generally, these types of investments are in the form of LOAN
PARTICIPATIONS.

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.

We may: purchase and sell OPTIONS on equity securities, debt securities, stock
indexes and foreign currencies; purchase and sell stock index, interest rate and
foreign currency futures contracts and options on those 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. No more than 25% of the
Portfolio's net assets may be used as collateral or segregated for purposes of
securing a short sale obligation. The Portfolio may also enter into SHORT SALES
AGAINST-THE-BOX.

We may also use INTEREST RATE SWAPS in the management of the fixed-income
portion of the Portfolio.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund and other affiliated funds
in a JOINT REPURCHASE ACCOUNT under an order obtained from the SEC.

We may also invest in REVERSE REPURCHASE AGREEMENTS and DOLLAR ROLLS in the
management of the fixed-income portion of the Portfolio. The Portfolio will not
use more than 30% of its net assets in connection with reverse repurchase
transactions and dollar rolls.

- --------------------------------------------------------------------------------
DIVERSIFIED BOND PORTFOLIO
- --------------------------------------------------------------------------------

Our investment objective is A HIGH LEVEL OF INCOME OVER A LONGER TERM WHILE
PROVIDING REASONABLE SAFETY OF CAPITAL. This means we look for investments that
we think will provide a high level of current income, but which are not expected
to involve a substantial risk of loss of capital through default. To achieve our
objective, we invest primarily in intermediate and long term debt obligations
that are rated investment grade and high-quality money market investments. While
we make every effort to achieve our objective, we can't guarantee success.

- -----------------------------------
OUR STRATEGY In general, the Debt obligations, in general,
value of debt obligations are basically written promises
moves in the opposite to repay a debt. The terms of
direction as interest repayment vary among the
rates--if a bond is purchased different types of debt
and then interest rates go up, obligations, as do the
newer bonds will be worth more commitments of other parties
relative to existing bonds to honor the obligations of
because they will have a the issuer of the security.
higher rate of interest. We The types of debt obligations
will adjust the mix of the in which we can invest include
Portfolio's short-term, U.S. government securities,
intermediate and long term MORTGAGE-RELATED SECURITIES
debt obligations in an attempt and corporate bonds.
to benefit from price
appreciation when interest
rates go down and to incur
smaller declines when rates go
up.
- -----------------------------------

16
<PAGE>

it is no longer rated by a major rating service. We may also invest in lower
rated securities which are riskier and considered speculative. These securities
are sometimes referred to as "junk bonds." We may also invest in instruments
that are not rated, but which we believe are of comparable quality to the
instruments described above.

The Portfolio may invest without limit in debt obligations issued or guaranteed
by the U.S. government and government-related entities. An example of a debt
security that is backed by the full faith and credit of the U.S. government is
an obligation of the Government National Mortgage Association (Ginnie Mae). In
addition, we may invest in U.S. government securities issued by other government
entities, like the Federal National Mortgage Association (Fannie Mae) and the
Student Loan Marketing Association (Sallie Mae) which are not backed by the full
faith and credit of the U.S. government. Instead, these issuers have the right
to borrow from the U.S. Treasury to meet their obligations. The Portfolio may
also invest in the debt securities of other government-related entities, like
the Farm Credit System, which depend entirely upon their own resources to repay
their debt.

We may also invest up to 20% of the Portfolio's total assets in debt securities
issued outside the U.S. by U.S. or foreign issuers provided the securities are
denominated in U.S. dollars.

The Portfolio may also invest in CONVERTIBLE DEBT SECURITIES and CONVERTIBLE AND
NON-CONVERTIBLE PREFERRED STOCKS of any rating. The Portfolio will not acquire
any common stock except by converting a convertible debt security or exercising
a warrant. No more than 10% of the Portfolio's total assets will be held in
common stocks, and those will usually be sold as soon as a favorable opportunity
arises.

Under normal conditions, the Portfolio may invest a portion of its assets in
high-quality money market instruments. In response to adverse market conditions
or when restructuring the Portfolio, we may temporarily invest up to 100% of the
Portfolio's assets in money market instruments. Investing heavily in these
securities limits our ability to achieve our investment objective, but can help
to preserve the value of the Portfolio's assets when the markets are unstable.

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.

We may: purchase and sell OPTIONS on debt securities; purchase and sell interest
rate FUTURES CONTRACTS and options on those contracts; and purchase securities
on a WHEN-ISSUED or DELAYED DELIVERY basis.

We may also use INTEREST RATE SWAPS in the management of the Portfolio.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

The Portfolio may also invest up to 30% of its net assets in REVERSE REPURCHASE
AGREEMENTS and DOLLAR ROLLS. The Portfolio will not use more than 30% of its net
assets in connection with reverse repurchase transactions and dollar rolls.

17
<PAGE>

- --------------------------------------------------------------------------------
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this 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.

- ------------------------------------
VALUE APPROACH To achieve our investment
We use a value approach to objective, we invest primarily
investing which means we look in common stocks of major
for companies whose stock is established corporations as
selling below the price that well as smaller companies.
we believe reflects its true
worth based on earnings, book A portion of the Portfolio's
value and other financial assets may be invested in
measures. short, intermediate or long
term debt obligations,
To achieve our value including convertible and
investment strategy, we nonconvertible preferred stock
usually buy securities that and other equity-related
are out of favor and that many securities. Up to 5% of these
other investors are selling. holdings may be rated below
We attempt to invest in investment grade. These
companies and industries securities are considered
before other investors speculative and are sometimes
recognize their true value. 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.

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.

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.

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.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

18
<PAGE>

- --------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to seek BOTH CURRENT INCOME AND
CAPITAL APPRECIATION. This means we seek investments whose price will increase
as well as pay dividends and other income. To achieve this objective, we look
for securities we believe will provide investment returns above those of the
Standard & Poor's 500 Stock Index (S&P 500 Index) or the NYSE Composite Index.
While we make every effort to achieve this objective, we can't guarantee
success.

- ------------------------------------
CONTRARIAN APPROACH We will normally invest at
To achieve our value least 65% of the Portfolio's
investment strategy, we total assets in equity and
generally take a strong equity-related securities. We
contrarian approach to buy common stock of companies
investing. In other words, we of every size--small, medium
usually buy securities that and large capitalization. When
are out of favor and that many deciding which stocks to buy,
other investors are selling, we look at a company's
and we attempt to invest in earnings, balance sheet and
companies and industries cash flow and then at how
before other investors these factors impact the
recognize their true value. stock's price and return. We
Using these guidelines, we also buy equity-related
focus on long-term securities--like bonds,
performance, not short-term corporate notes and preferred
gain. stock--that can be converted
- ------------------------------------ into a company's common stock
or other equity security.

Up to 35% of the Portfolio's total assets may be invested in other debt
obligations including non-convertible preferred stock. When acquiring these
types of securities, we usually invest in obligations rated A or better by
Moody's or S&P. We may also invest in obligations rated as low as CC by Moody's
or Ca by S&P. These securities are considered speculative and are sometimes
referred to as "junk bonds." We may also invest in instruments that are not
rated, but which we believe are of comparable quality to the instruments
described above.

Under normal circumstances, the Portfolio may invest up to 35% of its total
assets in high-quality money market instruments. In response to adverse market
conditions or when we are restructuring the Portfolio, we may temporarily invest
up to 100% of the Portfolio's assets in money market instruments. 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.

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.

The Portfolio may also enter into SHORT SALES AGAINST-THE-BOX.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

19
<PAGE>

- --------------------------------------------------------------------------------
FLEXIBLE MANAGED PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to seek A HIGH TOTAL RETURN
CONSISTENT WITH AN AGGRESSIVELY MANAGED DIVERSIFIED PORTFOLIO.

- -------------------------------------
BALANCED PORTFOLIO To achieve our objective, we
We invest in all three types invest in a mix of equity and
of securities-- equity, debt equity-related securities,
and money market--in order to debt obligations and money
achieve diversification in a market instruments. We adjust
single portfolio. We seek to the percentage of Portfolio
maintain a more aggressive mix assets in each category
of investments than the depending on our expectations
Conservative Balanced regarding the different
Portfolio. This Portfolio may markets. While we make every
be appropriate for an investor effort to achieve our
looking for diversification objective, we can't guarantee
who is willing to accept a success.
relatively high level of loss
in an effort to achieve
greater appreciation.
- -------------------------------------

Generally, we will invest within the ranges shown below:

ASSET TYPE MINIMUM NORMAL MAXIMUM
---------- ------- ------ -------
Stocks 25% 60% 100%
Fixed income securities 0% 40% 75%
Money market securities 0% 0% 75%

The stock portion of the Portfolio will be invested in a broadly diversified
portfolio of stocks generally consisting of large and mid-size companies,
although it may also hold stocks of smaller companies. We will invest in
companies and industries that, in our judgment, will provide either attractive
long-term returns, or are desirable to hold in the Portfolio to manage risk.

Most of the securities in the fixed income portion of this Portfolio will be
investment grade, however, we may also invest up to 25% of this portion of the
Portfolio in debt securities rated as low as BB, Ba or lower by a major rating
service at the time they are purchased. These high-yield or "junk bonds" are
riskier and considered speculative. We may also invest in instruments that are
not rated, but which we believe are of comparable quality to the instruments
described above.

The fixed income portion of the Portfolio may also include LOAN PARTICIPATIONS.

The Portfolio may also invest up to 30% of its total assets in foreign equity
and debt securities that are not denominated in the U.S. dollar. In addition, up
to 20% of the Portfolio's total assets may be invested in debt securities that
are issued outside of the U.S. by foreign or U.S. issuers provided the
securities are denominated in U.S. dollars. For these purposes, we do not
consider American Depositary Receipts (ADRS) as foreign securities.

The money market portion of the Portfolio will be invested in high-quality money
market instruments. In response to adverse market conditions or when we are
restructuring the Portfolio, we may temporarily invest up to 100% of the
Portfolio's assets in money market instruments. 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.

The Portfolio may also invest in REAL ESTATE INVESTMENT TRUSTS (REITs).

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.

We may: purchase and sell OPTIONS on equity securities, debt securities, stock
indexes, and foreign currencies; purchase and sell stock index, interest rate
and foreign currency FUTURES CONTRACTS and options on those contracts; enter
into FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS; and purchase securities on a
WHEN-ISSUED or DELAYED DELIVERY basis.

20
<PAGE>

We may also use INTEREST RATE SWAPS in the management of the fixed income
portion of the Portfolio.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

- --------------------------------------------------------------------------------
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is LONG TERM GROWTH OF CAPITAL. To
achieve this objective, we invest primarily in equity and equity-related
securities of foreign and U.S. companies. While we make every effort to achieve
this objective, we can't guarantee success.

- -------------------------------------
GLOBAL INVESTING When selecting stocks, we use
This Portfolio is intended to a growth approach which means
provide investors with the we look for companies that
opportunity to invest in have above-average growth
companies located throughout prospects. In making our stock
the world. Although we are not picks, we look for companies
required to invest in a that have had growth in
minimum number of countries, earnings and sales, high
we intend generally to invest returns on equity and assets
in at least three countries, or other strong financial
including the U.S. However, in characteristics. Often, the
response to market conditions, companies we choose have
we can invest up to 35% of the superior management, a unique
Portfolio's total assets in market niche or a strong new
any one country other than the product.
U.S.
- -------------------------------------

The Portfolio may invest up to 100% of its 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.

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.

We may: purchase and sell OPTIONS on equity securities, stock indexes and
foreign currencies; purchase and sell FUTURES contracts on stock indexes, debt
securities, interest rate indexes and foreign currencies 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.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

21
<PAGE>

- --------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is A HIGH TOTAL RETURN. In pursuing
our objective, we invest in high yield/high risk debt securities. While we make
every effort to achieve this objective, we can't guarantee success.

- --------------------------------------------------------------------------------
HIGH YIELD/HIGH RISK Normally, we will invest at
Lower rated and comparable least 80% of the Portfolio's
unrated securities tend to total assets in medium to
offer better yields than lower rated debt securities.
higher rated securities with These high-yield or "junk
the same maturities because bonds" are riskier than higher
the issuer's past financial rated bonds and are considered
condition may not have been as speculative.
strong as that of higher rated
issuers. Changes in the The Portfolio may also invest
perception of the up to 20% of its total assets
creditworthiness of the in U.S. dollar denominated
issuers of lower rated debt securities issued outside
securities tend to occur more the U.S. by foreign and U.S.
frequently and in a more issuers.
pronounced manner than for
issuers of higher rated
securities.
- --------------------------------------------------------------------------------

The Portfolio may also acquire CONVERTIBLE AND NONCONVERTIBLE DEBT SECURITIES
and PREFERRED STOCK. The Portfolio will not invest in common stocks, except when
they are included as part of a debt security.

Under normal circumstances, the Portfolio may invest in money market instruments
and commercial paper of domestic corporations. In response to adverse market
conditions or when we are restructuring the Portfolio, we may temporarily invest
up to 100% of the Portfolio's assets in money market instruments. 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.

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.

We may: purchase and sell OPTIONS on debt securities; purchase and sell interest
rate FUTURES CONTRACTS and options on these futures contracts; and purchase
securities on a WHEN-ISSUED or DELAYED DELIVERY basis.

We may also use INTEREST RATE SWAPS in the management of the Portfolio.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

The Portfolio may use up to 30% of its net assets in connection with REVERSE
REPURCHASE AGREEMENTS and DOLLAR ROLLS.

22
<PAGE>

- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to SEEK THE MAXIMUM CURRENT INCOME
THAT IS CONSISTENT WITH STABILITY OF CAPITAL AND MAINTENANCE OF LIQUIDITY. This
means we seek investments that we think will provide a high level of current
income. While we make every effort to achieve our objective, we can't guarantee
success.

- ----------------------------------
STEADY NET ASSET VALUE We invest in a diversified
The net asset value for the portfolio of short-term debt
Portfolio will ordinarily obligations issued by the U.S.
remain at $10 per share government, its agencies and
because dividends are declared instrumentalities, as well as
and reinvested daily. The commercial paper, asset backed
price of each share remains securities, funding
the same, but you will have agreements, certificates of
more shares when dividends are deposit, floating and variable
declared. rate demand notes, notes and
- ---------------------------------- other obligations issued by
banks, corporations and other
companies (including trust
structures), and obligations
issued by foreign banks,
companies or foreign
governments.

We make investments that meet the requirements of specific rules for money
market mutual funds, such as Investment Company Act Rule 2a-7. As such, we will
not acquire any security with a remaining maturity exceeding thirteen months,
and we will maintain a dollar-weighted average portfolio maturity of 90 days or
less. In addition, we will comply with the diversification, quality and other
requirements of Rule 2a-7. This means, generally, that the instruments that we
purchase present "minimal credit risk" and are of "eligible quality." "Eligible
quality" for this purpose means a security is: (i) rated in one of the two
highest short-term rating categories by at least two major rating services (or
if only one major rating service has rated the security, as rated by that
service); or (ii) if unrated, of comparable quality in our judgment. All
securities that we purchase will be denominated in U.S. dollars.

Commercial paper is short-term debt obligations of banks, corporations and other
borrowers. The obligations are usually issued by financially strong businesses
and often include a line of credit to protect purchasers of the obligations. An
asset-backed security is a loan or note that pays interest based upon the cash
flow of a pool of assets, such as mortgages, loans and credit card receivables.
Funding agreements are contracts issued by insurance companies that guarantee a
return of principal, plus some amount of interest. When purchased by money
market funds, funding agreements will typically be short-term and will provide
an adjustable rate of interest. Certificates of deposit, time deposits and
bankers' acceptances are obligations issued by or through a bank. These
instruments depend upon the strength of the bank involved in the borrowing to
give investors comfort that the borrowing will be repaid when promised.

We may purchase debt securities that include demand features, which allow us to
demand repayment of a debt obligation before the obligation is due or "matures."
This means that longer term securities can be purchased because of our
expectation that we can demand repayment of the obligation at a set price within
a relatively short period of time, in compliance with the rules applicable to
money market mutual funds.

The Portfolio may also purchase floating rate and variable rate securities.
These securities pay interest at rates that change periodically to reflect
changes in market interest rates. Because these securities adjust the interest
they pay, they may be beneficial when interest rates are rising because of the
additional return the Portfolio will receive, and they may be detrimental when
interest rates are falling because of the reduction in interest payments to the
Portfolio.

The securities that we may purchase may change over time as new types of money
market instruments are developed. We will purchase these new instruments,
however, only if their characteristics and features follow the rules governing
money market mutual funds.

We may also use alternative investment strategies 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.

We may purchase securities on a WHEN-ISSUED or DELAYED DELIVERY basis.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

23
<PAGE>

The Portfolio may use up to 10% of its net assets in connection with REVERSE
REPURCHASE AGREEMENTS.

- --------------------------------------------------------------------------------
An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Portfolio seeks to preserve the value of an investment at
$10 per share, it is possible to lose money by investing in the Portfolio.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
PRUDENTIAL JENNISON PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to achieve LONG TERM GROWTH OF
CAPITAL. This means we seek investments whose price will increase over several
years. While we make every effort to achieve this objective, we can't guarantee
success.

- -----------------------------------
INVESTMENT STRATEGY In pursuing our objective, we
We seek to invest in equity normally invest 65% of the
securities of established Portfolio's total assets in
companies with above-average common stocks and preferred
growth prospects. We select stocks of companies with
stocks on a company-by-company capitalization in excess of $1
basis using fundamental billion.
analysis. In making our stock
picks, we look for companies For the balance of the
that have had growth in Portfolio, we may invest in
earnings and sales, high common stocks, preferred
returns on equity and assets stocks and other
or other strong financial equity-related securities of
characteristics. Often, the companies that are undergoing
companies we choose have changes in management, product
superior management, a unique and/or marketing dynamics
market niche or a strong new which we believe have not yet
product. been reflected in reported
- ----------------------------------- earnings or recognized by
investors.

In addition, we may invest in debt securities and mortgage-related securities.
These securities may be rated as low as Baa by Moody's or BBB by S&P (or if
unrated, of comparable quality in our judgment).

The Portfolio may also invest in obligations issued or guaranteed by the U.S.
government, its agencies and instrumentalities. In addition, up to 30% of the
Portfolio's assets may be invested in foreign equity and equity-related
securities. For these purposes, we do not consider American Depositary Receipts
(ADRS) as foreign securities.

In response to adverse market conditions or when restructuring the Portfolio, we
may invest up to 100% of the Portfolio's assets in money market instruments.
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.

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.

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 those 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.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

24
<PAGE>

- --------------------------------------------------------------------------------
STOCK INDEX PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to achieve INVESTMENT RESULTS THAT
GENERALLY CORRESPOND TO THE PERFORMANCE OF PUBLICLY-TRADED COMMON STOCKS. To
achieve this goal, we attempt to duplicate the performance of the S&P 500 Index.
While we make every effort to achieve this objective, we can't guarantee
success.

- --------------------------------
S&P 500 INDEX Under normal conditions, we
We attempt to duplicate the attempt to invest in all 500
performance of the S&P 500 stocks represented in the S&P
Index (500 Index), a 500 Index in proportion to
market-weighted index which their weighting in the 500
represents more than 70% of Index. We will attempt to
the market value of all remain as fully invested in
publicly-traded common stocks. the S&P 500 stocks as possible
- -------------------------------- in light of cash flow into and
out of the Portfolio.

To manage investments and redemptions in the Portfolio, we may temporarily hold
cash or invest in high-quality money market instruments. To the extent we do so,
the Portfolio's performance will differ from that of the 500 Index. We attempt
to minimize differences in the performance of the Portfolio and the 500 Index by
using stock index FUTURES CONTRACTS, options on stock indexes and OPTIONS on
stock index futures contracts. The Portfolio will not use these derivative
securities for speculative purposes or to hedge against a decline in the value
of the Portfolio's holdings.

We may also use alternative investment strategies to try to improve the
Portfolio's returns 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.

We may: purchase and sell OPTIONS on stock indexes; purchase and sell stock
index FUTURES CONTRACTS and options on those futures contracts.

The Portfolio may also enter into SHORT SALES AGAINST-THE-BOX.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

- --------------------------------------------------------------------------------
A stock's inclusion in the S&P 500 Index in no way implies S&P's opinion as to
the stock's attractiveness as an investment. The Portfolio is not sponsored,
endorsed, sold or promoted by S&P. S&P makes no representations regarding the
advisability of investing in the Portfolio. "Standard & Poor's," "Standard &
Poor's 500" and "500" are trademarks of McGraw Hill.
- --------------------------------------------------------------------------------

* * *

The Statement of Additional Information - which we refer to as the SAI -
contains additional information about the Portfolios. To obtain a copy, see the
back cover page of this prospectus.

* * *

25
<PAGE>

OTHER INVESTMENTS AND STRATEGIES

As indicated in the description of the Portfolios above, we may use the
following investment strategies to increase a Portfolio's return or protect its
assets if market conditions warrant.

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.

CONVERTIBLE DEBT AND CONVERTIBLE PREFERRED STOCK--A convertible security is a
security--for example, a bond or preferred stock--that may be converted into
common stock of the same or different issuer. The convertible security sets the
price, quantity of shares and time period in which it may be so converted.
Convertible stock is senior to a company's common stock but is usually
subordinated to debt obligations of the company. Convertible securities provide
a steady stream of income which is generally at a higher rate than the income on
the company's common stock but lower than the rate on the company's debt
obligations. At the same time, they offer--through their conversion
mechanism--the chance to participate in the capital appreciation of the
underlying common stock. The price of a convertible security tends to increase
and decrease with the market value of the underlying common stock.

DERIVATIVES--A derivative is an investment instrument that derives its price,
performance, value, or cash flow from one or more underlying securities or other
interests. Derivatives involve costs and can be volatile. With derivatives, the
investment adviser tries to predict whether the underlying investment--a
security, market index, currency, interest rate 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 a Portfolio's overall investment objective.
The investment adviser will consider other factors (such as cost) in deciding
whether to employ any particular strategy, or use any particular instrument. Any
derivatives we use may not fully offset a Portfolio's underlying positions and
this could result in losses to the Portfolio that would not otherwise have
occurred.

DOLLAR ROLLS--Dollar rolls involve the sale by the Portfolio of a security for
delivery in the current month with a promise to repurchase from the buyer a
substantially similar--but not necessarily the same--security at a set price and
date in the future. During the "roll period," the Portfolio does not receive any
principal or interest on the security. Instead, it is compensated by the
difference between the current sales price and the price of the future purchase,
as well as any interest earned on the cash proceeds from the original sale.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--A foreign currency forward contract
is an obligation to buy or sell a given currency on a future date at a set
price. When a Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when a Portfolio anticipates the
receipt in a foreign currency of dividends or interest payments on a security
which it holds, the Portfolio may desire to "lock-in" the U.S. dollar price of
the security or the U.S. dollar equivalent of such dividend or interest payment,
as the case may be. By entering into a forward contract for a fixed amount of
dollars, for the purchase or sale of the amount of foreign currency involved in
the underlying transactions, the Portfolio will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received. At the maturity of a forward contract, a Portfolio may either sell the
security and make delivery of the foreign currency or it may retain the security
and terminate its contractual obligation to deliver the foreign currency by
purchasing an "offsetting" contract with the same currency trader obligating it
to purchase, on the same maturity date, the same amount of the foreign currency.

FUTURES--A futures contract is an agreement to buy or sell a set quantity of an
underlying product at a future date, or to make or receive a cash payment based
on the value of a securities index. When a futures contract is entered into,
each party deposits with a futures commission merchant (or in a segregated
account) approximately 5% of the contract amount. This is known as the "initial
margin." Every day during the futures contract, either the buyer or the futures
commission merchant will make payments of "variation margin." In other words, if
the value of the underlying security, index or interest rate increases, then the
buyer will have to add to the margin account so that the account balance equals
approximately 5% of the value of the contract on that day. The next day, the
value of the underlying security, index or interest rate may decrease, in which
case the buyer would receive money from the account equal to the amount by which
the account balance exceeds 5% of the value of the contract on that day. A stock
index futures contract is an agreement between the buyer and the seller of the
contract to transfer an amount of cash

26
<PAGE>

equal to the daily variation margin of the contract. No physical delivery of the
underlying stocks in the index is made.

INTEREST RATE SWAPS--In an interest rate swap, the Portfolio and another party
agree to exchange interest payments. For example, the Portfolio may wish to
exchange a floating rate of interest for a fixed rate. We would enter into that
type of a swap if we think interest rates are going down.

JOINT REPURCHASE ACCOUNT--In a joint repurchase transaction, uninvested cash
balances of various Portfolios are added together and invested in one or more
repurchase agreements. Each of the participating Portfolios receives a portion
of the income earned in the joint account based on the percentage of its
investment.

LOAN PARTICIPATIONS--In loan participations, the Portfolio will have a
contractual relationship with the lender but not with the borrower. This means
the Portfolio will only have rights to principal and interest received by the
lender. It will not be able to enforce compliance by the borrower with the terms
of the loan and may not have a right to any collateral securing the loan. If the
lender becomes insolvent, the Portfolio may be treated as a general creditor and
will not benefit from any set-off between the lender and the borrower.

MORTGAGE-RELATED SECURITIES are usually pass-through instruments that pay
investors a share of all interest and principal payments from an underlying pool
of fixed or adjustable rate mortgages. We may invest in mortgage-related
securities issued and guaranteed by the U.S. government or its agencies like the
Federal National Mortgage Association (Fannie Maes) and the Government National
Mortgage Association (Ginnie Maes) and debt securities issued (but not
guaranteed) by the Federal Home Loan Mortgage Company (Freddie Macs). Private
mortgage-related securities that are not guaranteed by U.S. governmental
entities generally have one or more types of credit enhancement to ensure timely
receipt of payments and to protect against default.

Mortgage-related securities include collateralized mortgage obligations,
multi-class pass through securities and stripped mortgage-backed securities. A
collateralized mortgage-backed obligation (CMO) is a security backed by an
underlying portfolio of mortgages or mortgage-backed securities that may be
issued or guaranteed by entities such as banks, U.S. governmental entities or
broker-dealers. A multi-class pass-through security is an equity interest in a
trust composed of underlying mortgage assets. Payments of principal and interest
on the mortgage assets and any reinvestment income provide the money to pay debt
service on the CMO or to make scheduled distributions on the multi-class
pass-through security. A stripped mortgage-backed security (MBS strip) may be
issued by U.S. governmental entities or by private institutions. MBS strips take
the pieces of a debt security (principal and interest) and break them apart. The
resulting securities may be sold separately and may perform differently. MBS
strips are highly sensitive to changes in prepayment and interest rates.

OPTIONS--A call option on stock is a short-term contract that gives the option
purchaser or "holder" the right to acquire a particular equity security for a
specified price at any time during a specified period. For this right, the
option purchaser pays the option seller a certain amount of money or "premium"
which is set before the option contract is entered into. The seller or "writer"
of the option is obligated to deliver the particular security if the option
purchaser exercises the option. A put option on stock is a similar contract. In
a put option, the option purchaser has the right to sell a particular security
to the option seller for a specified price at any time during a specified
period. In exchange for this right, the option purchaser pays the option seller
a premium. Options on debt securities are similar to stock options except that
the option holder has the right to acquire or sell a debt security rather than
an equity security. Options on stock indexes are similar to options on stocks,
except that instead of giving the option holder the right to receive or sell a
stock, it gives the holder the right to receive an amount of cash if the closing
level of the stock index is greater than (in the case of a call) or less than
(in the case of a put) the exercise price of the option. The amount of cash the
holder will receive is determined by multiplying the difference between the
index's closing price and the option's exercise price, expressed in dollars, by
a specified "multiplier". Unlike stock options, stock index options are always
settled in cash, and gain or loss depends on price movements in the stock market
generally (or a particular market segment, depending on the index) rather than
the price movement of an individual stock.

REAL ESTATE INVESTMENT TRUSTS (REITS)--A REIT is a company that manages a
portfolio of real estate to earn profits for its shareholders. Some REITs
acquire equity interests in real estate and then receive income from rents and
capital gains when the buildings are sold. Other REITs lend money to real estate
developers and receive interest income from the mortgages. Some REITs invest in
both types of interests.

REPURCHASE AGREEMENTS--In a repurchase transaction, the Portfolio agrees to
purchase certain securities and the seller agrees to repurchase the same
securities at an agreed upon price on a specified date. This creates a fixed
return for the Portfolio.

27
<PAGE>

REVERSE REPURCHASE AGREEMENTS--In a reverse repurchase transaction, the
Portfolio sells a security it owns and agrees to buy it back at a set price and
date. During the period the security is held by the other party, the Portfolio
may continue to receive principal and interest payments on the security.

SHORT SALES--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.

SHORT SALES AGAINST-THE-BOX--A short sale against-the-box means the Portfolio
owns securities identical to those sold short.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--With when-issued or delayed
delivery securities, the delivery and payment can take place a month or more
after the date of the transaction. A Portfolio will make commitments for
when-issued transactions only with the intention of actually acquiring the
securities. A Portfolio's custodian will maintain in a segregated account,
liquid assets having a value equal to or greater than such commitments. 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
security, incur a gain or loss.

* * *

Except for the Money Market Portfolio, each Portfolio also follows certain
policies when it borrows money (a Portfolio may borrow up to 5% of the value of
its total assets); lends its securities; and holds illiquid securities (a
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). If the Portfolio were to exceed this limit, the investment adviser
would take prompt action to reduce a Portfolio's holdings in illiquid securities
to no more than 15% of its net assets, as required by applicable law. A
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.

The Money Market Portfolio also follows certain policies when it borrows money
(the Portfolio may borrow up to 5% of the value of its total assets) and holds
illiquid securities (the Portfolio may hold up to 10% 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). If the Portfolio were to exceed this
limit, the investment adviser would take prompt action to reduce the Portfolio's
holdings in illiquid securities to no more than 10% of its net assets, as
required by applicable law. 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.

We will consider other factors (such as cost) in deciding whether to employ any
particular strategy or use any particular instrument. For more information about
these strategies, see the SAI, "Investment Objectives and Policies of the
Portfolios."

28
<PAGE>

INVESTMENT RISKS

- --------------------------------------------------------------------------------------------------------------
EQUITY AND EQUITY SECURITIES: o Individual stocks could lose o Historically, stocks have
EQUITY-RELATED ALL PORTFOLIOS EXCEPT MONEY value outperformed other
SECURITIES MARKET investments over the long
o The equity markets could go term
(% VARIES) down, resulting in a decline
in value of the Portfolio's o Generally, economic growth
EQUITY-RELATED SECURITIES: investments means higher corporate
CONSERVATIVE BALANCED, profits, which lead to an
DIVERSIFIED BOND, EQUITY, o Changes in economic or increase in stock prices,
EQUITY INCOME, FLEXIBLE political conditions, both known as capital
MANAGED, GLOBAL, HIGH YIELD domestic and international, appreciation
BOND, PRUDENTIAL JENNISON may result in a decline in
value of the Portfolio's
(% VARIES) investments

- --------------------------------------------------------------------------------------------------------------
FIXED INCOME ALL PORTFOLIOS EXCEPT MONEY o The Portfolio's holdings, o Regular interest income
OBLIGATIONS MARKET, STOCK INDEX share price and total return
may fluctuate in response to o High-quality debt
(% VARIES) bond market movements obligations are generally
more secure than stocks
o Credit risk--the risk that since companies must pay
the default of an issuer their debts before they pay
would leave the Portfolio dividends
with unpaid interest and/or
principal. The lower a o Most bonds will rise in
bond's quality, the higher value when interest rates
its potential volatility fall

o Market risk--the risk that o Bonds have generally
the market value of an outperformed money market
investment may move up or instruments over the long
down, sometimes rapidly or term, with less risk than
unpredictably. Market risk stocks
may affect an industry, a
sector, or the market as a o Investment grade bonds have
whole a lower risk of default than
junk bonds
o Interest rate risk--the risk
that 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
- --------------------------------------------------------------------------------------------------------------
</TABLE>

29
<PAGE>

- --------------------------------------------------------------------------------------------------------------
FOREIGN CONSERVATIVE BALANCED, o Foreign markets, economies and o Investors can participate
SECURITIES DIVERSIFIED BOND, EQUITY, political systems may not be in foreign markets and
EQUITY INCOME, FLEXIBLE as stable as in the U.S. companies operating in
MANAGED, GLOBAL, HIGH YIELD those markets
BOND, MONEY MARKET, o Currency risk--changing values
PRUDENTIAL JENNISON of foreign currencies can o May profit from changing
cause losses values of foreign
(% VARIES) currencies
o May be less liquid than U.S.
OPTIONS ON FOREIGN CURRENCIES: stocks and bonds o Opportunities for
CONSERVATIVE BALANCED, diversification
EQUITY, EQUITY INCOME, o Differences in foreign laws,
FLEXIBLE MANAGED, GLOBAL, accounting standards, public
PRUDENTIAL JENNISON information, custody and
settlement practices provide
(% VARIES) less reliable information on
foreign investments and
FUTURES ON FOREIGN CURRENCIES: involve more risk
CONSERVATIVE BALANCED,
EQUITY, EQUITY INCOME,
FLEXIBLE MANAGED, GLOBAL,
PRUDENTIAL JENNISON

(% VARIES)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

30
<PAGE>

<TABLE>
<CAPTION>
==============================================================================================================
INVESTMENT PORTFOLIO &
TYPE % OF ASSETS RISKS POTENTIAL REWARDS
==============================================================================================================
<S> <C> <C> <C>
DERIVATIVES OPTIONS ON EQUITY o Derivatives, such as o A Portfolio could make money
SECURITIES: CONSERVATIVE futures, options and foreign and protect against losses
BALANCED, EQUITY, EQUITY currency forward contracts if the investment analysis
INCOME, FLEXIBLE MANAGED, that are used for hedging proves correct
GLOBAL, PRUDENTIAL JENNISON, purposes, may not fully
STOCK INDEX offset the underlying o Derivatives that involve
positions and this could leverage could generate
(% VARIES) result in losses to the substantial gains at low
Portfolio that would not cost
OPTIONS ON DEBT SECURITIES: have otherwise occurred
CONSERVATIVE BALANCED, o One way to manage a
DIVERSIFIED BOND, FLEXIBLE o Derivatives used for risk Portfolio's risk/return
MANAGED, HIGH YIELD BOND management may not have the balance is to lock in the
intended effects and may value of an investment
(% VARIES) result in losses or missed ahead of time
opportunities
OPTIONS ON STOCK INDEXES:
CONSERVATIVE BALANCED, o The other party to a
EQUITY, EQUITY INCOME, derivatives contract could
FLEXIBLE MANAGED, GLOBAL, default
PRUDENTIAL JENNISON, STOCK
INDEX o Derivatives that involve
leverage could magnify
(% VARIES) losses

FUTURES CONTRACTS ON STOCK o Certain types of derivatives
INDEXES: CONSERVATIVE involve costs to the
BALANCED, EQUITY, EQUITY Portfolio that can reduce
INCOME, FLEXIBLE MANAGED, returns
GLOBAL, PRUDENTIAL JENNISON,
STOCK INDEX

(% VARIES)

FUTURES ON DEBT SECURITIES
AND INTEREST RATE INDEXES:
CONSERVATIVE BALANCED,
DIVERSIFIED BOND, FLEXIBLE
MANAGED, GLOBAL, HIGH YIELD
BOND

(% VARIES)

INTEREST RATE SWAPS:
CONSERVATIVE BALANCED,
DIVERSIFIED BOND, FLEXIBLE
MANAGED, HIGH YIELD BOND

(% VARIES)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

31
<PAGE>

<TABLE>
<CAPTION>
==============================================================================================================
INVESTMENT PORTFOLIO &
TYPE % OF ASSETS RISKS POTENTIAL REWARDS
==============================================================================================================
<S> <C> <C> <C>
MORTGAGE- DIVERSIFIED BOND, MONEY o Prepayment risk--the risk that o Regular interest income
RELATED MARKET, PRUDENTIAL JENNISON the underlying mortgage or
SECURITIES other debt may be prepaid o Pass-through instruments
(% VARIES) partially or completely, provide greater
generally during periods of diversification than
falling interest rates, which direct ownership of loans
could adversely affect yield
to maturity and could require o Certain mortgage-backed
the Portfolio to reinvest in securities may benefit
lower-yielding securities from security interest in
real estate collateral
o Credit risk--the risk that
the underlying mortgages will
not be paid by debtors or by
credit insurers or guarantors
of such instruments. Some
mortgage securities are
unsecured or secured by
lower-rated insurers or
guarantors and thus may
involve greater risk

o See market risk and interest
rate risk
- --------------------------------------------------------------------------------------------------------------
REAL ESTATE FLEXIBLE MANAGED o Performance depends on the o Real estate holdings can
INVESTMENT strength of real estate generate good returns from
TRUSTS (% VARIES) markets, REIT management and rents, rising market
property management which can values, etc.
(REITS) be affected by many factors,
including national and o Greater diversification
regional economic conditions than direct ownership
- --------------------------------------------------------------------------------------------------------------
ILLIQUID ALL PORTFOLIOS EXCEPT MONEY o May be difficult to value o May offer a more
SECURITIES MARKET (UP TO15% OF ITS NET precisely attractive yield or
ASSETS) potential for growth than
o May be difficult to sell at more widely traded
MONEY MARKET PORTFOLIO (10% the time or price desired securities
OF ITS NET ASSETS)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

32
<PAGE>

<TABLE>
<CAPTION>
==============================================================================================================
INVESTMENT PORTFOLIO &
TYPE % OF ASSETS RISKS POTENTIAL REWARDS
==============================================================================================================
<S> <C> <C> <C>
LOAN CONSERVATIVE BALANCED, o Credit risk o May offer right to receive
PARTICIPATIONS DIVERSIFIED BOND, FLEXIBLE principal, interest and
MANAGED, HIGH YIELD BOND, o Market risk fees without as much risk
MONEY MARKET as lender
o A Portfolio has no rights
(% VARIES) against the borrower in the
event the borrower does not
repay the loan
- --------------------------------------------------------------------------------------------------------------
WHEN-ISSUED WHEN-ISSUED AND DELAYED o Use of such instruments and o Use of instruments may
AND DELAYED DELIVERY SECURITIES: strategies may magnify magnify underlying
DELIVERY CONSERVATIVE BALANCED, underlying investment losses investment gains
SECURITIES, DIVERSIFIED BOND, EQUITY,
REVERSE EQUITY INCOME, FLEXIBLE o Investment costs may exceed
REPURCHASE MANAGED, GLOBAL, HIGH YIELD potential underlying
AGREEMENTS, BOND, MONEY MARKET, investment gains
DOLLAR ROLLS PRUDENTIAL JENNISON
AND SHORT
SALES (% VARIES)

REVERSE REPURCHASE AGREEMENTS:
CONSERVATIVE BALANCED,
DIVERSIFIED BOND, FLEXIBLE
MANAGED, HIGH YIELD BOND,
MONEY MARKET AND THE MONEY
MARKET PORTION OF ANY
PORTFOLIO

(% VARIES)

DOLLAR ROLLS:
CONSERVATIVE BALANCED,
DIVERSIFIED BOND, FLEXIBLE
MANAGED, HIGH YIELD BOND

(% VARIES)

SHORT SALES:
CONSERVATIVE BALANCED,
DIVERSIFIED BOND, FLEXIBLE
MANAGED, HIGH YIELD BOND,

(% VARIES)

SHORT SALES AGAINST THE BOX:
ALL PORTFOLIOS EXCEPT THE
MONEY MARKET

(% VARIES)
- --------------------------------------------------------------------------------------------------------------
</TABLE>

33
<PAGE>

HOW THE FUND IS MANAGED

BOARD OF DIRECTORS

The Board of Directors oversees the actions of the Investment Adviser, the
sub-advisers and the Distributor and decides on general policies. The Board also
oversees the Fund's officers who conduct and supervise the daily business
operations of the Fund.

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- --------------------------------------------------------------------------------

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 each Portfolio. As of December 31, 1999,
Prudential had total assets under management of approximately $364 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 preliminary
steps necessary to allow the company to demutualize. On July 1, 1998,
legislation was enacted in New Jersey that would permit the 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. Prudential is working toward completing
this process in 2001 and currently expects adoption by the Board of Directors to
take place in the latter part of 2000. However, there is no certainty that the
demutualization will be completed in this timeframe or that the necessary
approvals will be obtained. Also it is possible that after careful review,
Prudential could decide not to demutualize or could decide to delay its plans.

The following chart lists the total investment advisory fees paid in 1999 as a
percentage of the Portfolio's average net assets.

- --------------------------------------------------------------------------------
TOTAL ADVISORY FEES AS %
PORTFOLIO OF AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Conservative Balanced 0.55
Diversified Bond 0.40
Equity 0.45
Equity Income 0.40
Flexible Managed 0.60
Global 0.75
High Yield Bond 0.55
Money Market 0.40
Prudential Jennison 0.60
Stock Index 0.35
- --------------------------------------------------------------------------------
INVESTMENT SUB-ADVISERS
- --------------------------------------------------------------------------------

For each Portfolio, a sub-adviser provides day-to-day investment management.
Prudential pays the sub-adviser out of the fee Prudential receives from the
Fund.

Prudential Investment Corporation (PIC), a wholly owned subsidiary of
Prudential, provides substantially all of the investment advisory services for
the Portfolios, except the services provided by the sub-adviser listed below and
has served as an investment adviser to investment companies since 1984. PIC's
address is 751 Broad Street, Newark, New Jersey 07102.

Jennison Associates LLC (Jennison), a wholly owned subsidiary of Prudential,
provides substantially all of the investment advisory services for the
Prudential Jennison Portfolio. Jennison's address is 466 Lexington Avenue, New
York, New York 10017. As of December 31, 1999, Jennison had over $59 billion in
assets under management for institutional and mutual fund clients.

34
<PAGE>

- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------

Prudential Investments' Fixed Income Group, which provides portfolio management
services to the Conservative Balanced, Diversified Bond, Flexible Managed, High
Yield Bond and Money Market Portfolios, manages more than $127 billion for
Prudential's retail investors, institutional investors, and policyholders.
Senior Managing Directors James J. Sullivan and Jack W. Gaston head the Group,
which is organized into teams specializing in different market sectors.
Top-down, broad investment decisions are made by the Fixed Income Policy
Committee, whereas bottom-up security selection is made by the sector teams.

Mr. Sullivan has overall responsibility for overseeing portfolio management and
credit research. Prior to joining Prudential Investments in 1998, he was a
Managing Director in Prudential's Capital Management Group, where he oversaw
portfolio management and credit research for Prudential's General Account and
subsidiary fixed-income portfolios. He has more than 16 years of experience in
risk management, arbitrage trading and corporate bond investing.

Mr. Gaston has overall responsibility for overseeing quantitative research and
risk management. Prior to his appointment in 1999, he was Senior Managing
Director of the Capital Management Group where he was responsible for the
investment performance and risk management for Prudential's General Account and
subsidiary fixed-income portfolios. He has more than 20 years of experience in
investment management, including extensive experience applying quantitative
techniques to portfolio management.

The Fixed Income Investment Policy Committee is comprised of key senior
investment managers. Members include seven sector team leaders, the chief
investment strategist, and the head of risk management. The Committee uses a
top-down approach to investment strategy, asset allocation and general risk
management, identifying sectors in which to invest.

CONSERVATIVE BALANCED PORTFOLIO AND FLEXIBLE MANAGED PORTFOLIO

These Portfolios are managed by a team of portfolio managers. Mark Stumpp,
Ph.D., Senior Managing Director of Prudential Investments, a division of
Prudential, has been the lead portfolio manager of the Portfolios since 1994 and
is responsible for the overall asset allocation decisions.

Warren Spitz, Managing Director of Prudential Investments, has been a portfolio
manager of the Portfolios since 1995 and manages a portion of each Portfolio's
equity holdings.

The Corporate Team, headed by Steven Kellner, is primarily responsible for
overseeing the day-to-day management of the fixed income portion of the
Portfolios. This team uses a bottom-up approach, which focuses on individual
securities, while staying within the guidelines of the Investment Policy
Committee and the Portfolios' investment restrictions and policies. In addition,
the Credit Research team of analysts supports the sector teams using bottom-up
fundamentals, as well as economic and industry trends. Other sector teams may
contribute to securities selection when appropriate.

CORPORATE

ASSETS UNDER MANAGEMENT (as of December 31, 1999): $47.3 billion.

TEAM LEADER: Steven Kellner. GENERAL INVESTMENT EXPERIENCE: 13 years.

PORTFOLIO MANAGERS: 8. Average General Investment Experience: 13 years,
which includes team members with mutual fund experience.

SECTOR: U.S. investment-grade corporate securities.

INVESTMENT STRATEGY: Focus is on identifying spread, credit quality and
liquidity trends to capitalize on changing opportunities in the market.
Ultimately, they seek the highest expected return with the least risk.

John Moschberger, CFA, Vice President of Prudential Investments, manages the
portions of each Portfolio designed to duplicate the performance of the S&P 500
Index. Mr. Moschberger joined Prudential in 1980 and has been a portfolio
manager since 1986.

35
<PAGE>

DIVERSIFIED BOND PORTFOLIO

The Corporate Team, headed by Steven Kellner, is primarily responsible for
overseeing the day-to-day management of the Portfolio. The Corporate Team is
described above in the description of the Conservative Balanced and Flexible
Managed Portfolios.

EQUITY PORTFOLIO

Thomas Jackson, Managing Director of Prudential Investments, has managed this
Portfolio since 1990. Mr. Jackson 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. He is a member of
the New York Society of Security Analysts.

EQUITY INCOME PORTFOLIO

Warren Spitz, Managing Director of Prudential Investments, has managed this
Portfolio since 1988. (See description under "Conservative Balanced Portfolio
and Flexible Managed Portfolio," above.)

GLOBAL PORTFOLIO

Daniel Duane, CFA, Managing Director of Prudential Investments, Ingrid Holm,
CFA, Vice President of Prudential Investments and Michelle Picker, CFA, Vice
President of Prudential Investments, have been co-managers of this Portfolio
since 1997. Mr. Duane has managed the Portfolio since 1990. Ms. Holm has
assisted in the management of Prudential mutual funds since 1994 and has managed
a portion of Prudential's general account. Prior to 1994, Ms. Holm headed the
high yield research group for Prudential's general account. Ms. Picker has been
an analyst in Prudential's global equity investments groups since 1992 and has
managed a portion of Prudential's general account.

HIGH YIELD BOND PORTFOLIO

The High Yield Team, headed by Casey Walsh, is primarily responsible for
overseeing the day-to-day management of the fixed income portfolio of the
Portfolio. This Team uses a bottom-up approach, which focuses on individual
securities, while staying within the guidelines of the Investment Policy
Committee and the Portfolio's investment restrictions and policies. In addition,
the Credit Research team of analysts supports the sector teams using bottom-up
fundamentals, as well as economic and industry trends. Other sector teams may
contribute to securities selection when appropriate.

HIGH YIELD

ASSETS UNDER MANAGEMENT (as of December 31, 1999): $9.4 billion.

TEAM LEADER: Casey Walsh. GENERAL INVESTMENT EXPERIENCE: 17 years.

PORTFOLIO MANAGERS: 7. AVERAGE GENERAL INVESTMENT EXPERIENCE: 19 years,
which includes team members with significant mutual fund experience.

SECTOR: Below-investment-grade corporate securities.

INVESTMENT STRATEGY: Focus is generally on bonds with high total return
potential, given existing risk parameters. They also seek securities with
high current income, as appropriate. The Team uses a relative value
approach.

MONEY MARKET PORTFOLIO

The Money Market Team, headed by Joseph Tully, is primarily responsible for
overseeing the day-to-day management of the Portfolio. This team uses a
bottom-up approach, which focuses on individual securities, while staying within
the guidelines of the Investment Policy Committee and the Portfolio's investment
restrictions and policies.

36
<PAGE>

MONEY MARKET

ASSETS UNDER MANAGEMENT (as of December 31, 1999): $3.6 billion.

TEAM LEADER: Joseph Tully. GENERAL INVESTMENT EXPERIENCE: 16 years.

PORTFOLIO MANAGERS: 8. AVERAGE GENERAL INVESTMENT EXPERIENCE: 12 years,
which includes team members with significant mutual fund experience.

SECTOR: High-quality short-term debt securities, including both taxable
and tax-exempt instruments.

INVESTMENT STRATEGY: Focus is on safety of principal, liquidity and
controlled risk.

PRUDENTIAL JENNISON PORTFOLIO

This Portfolio is managed by Spiros "Sig" Segalas, Michael A. Del Balso, and
Kathleen A. McCarragher. Mr. Segalas is a founding member and President and
Chief Investment Officer of Jennison. He has been in the investment business for
over 35 years.

Mr. Del Balso, a Director and Executive Vice President of Jennison, has been
part of the Jennison team since 1972 when he joined the firm from White, Weld &
Company. Mr. Del Balso is a member of the New York Society of Security Analysts.

Ms. McCarragher, Director and Executive Vice President of Jennison, is also
Jennison's Growth Equity Investment Strategist, having joined Jennison in 1998
after a 20 year investment career, including positions with Weiss, Peck & Greer
and State Street Research and Management Company, where she was a member of the
Investment Committee.

STOCK INDEX PORTFOLIO

John Moschberger, CFA, Vice President of Prudential Investments, has managed
this Portfolio since 1990. (See description under "Conservative Balanced
Portfolio and Flexible Managed Portfolio," above.)

HOW TO BUY AND SELL SHARES OF THE FUND

The Fund offers two classes of shares in each Portfolio--Class I and Class II.
Class I shares are sold only to separate accounts of Prudential as investment
options under variable life insurance and variable annuity contracts including
the Contract. (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.) Class II shares are offered
only to separate accounts of non-Prudential insurance companies for the same
types of contracts.

HOW TO BUY AND SELL SHARES

The only way to invest in the Portfolios 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 Portfolios.

Class I shares of a Portfolio are sold without any sales charge at the net asset
value of the Portfolio. 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.

37
<PAGE>

NET ASSET VALUE

Any purchase or sale of Portfolio shares is made at the net asset value, or NAV,
of such shares. The price at which a purchase or redemption is made is based on
the next calculation of the NAV after the order is received in good order. The
NAV of each share class of each Portfolio (except the Money Market 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 Portfolios' NAVs will be calculated some time between the closing
time and 4:15 p.m. on that day. The NAV for the Money Market Portfolio is
determined as of 12:00 p.m. on each day the New York Stock Exchange is open for
business.

The NAV for each of the Portfolios other than the Money Market Portfolio is
determined by a simple calculation. It's the total value of a Portfolio (assets
minus liabilities) divided by the total number of shares outstanding. The NAV
for the Money Market Portfolio will ordinarily remain at $10 per share. (The
price of each share remains the same but you will have more shares when
dividends are declared.)

To determine a 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 a sale on that day, 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.

A Portfolio may own securities that are primarily listed on foreign exchanges
that trade on weekends or other days when the Portfolios do not price their
shares. Therefore, the value of a Portfolio's assets may change on days when
shareholders cannot purchase or redeem Portfolio shares.

All SHORT-TERM DEBT SECURITIES held by the Money Market Portfolio are valued at
amortized cost. Short-term debt securities with remaining maturities of 12
months or less held by the Conservative Balanced and Flexible Managed Portfolios
are valued on an amortized cost basis. The amortized cost 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.

For each Portfolio other than the Money Market Portfolio, and except as
discussed above for the Conservative Balanced and Flexible Managed Portfolios,
short-term debt securities, including bonds, notes, debentures and other debt
securities, and money market instruments such as certificates of deposit,
commercial paper, bankers' acceptances and obligations of domestic and foreign
banks, with remaining maturities of more than 60 days, for which market
quotations are readily available, are valued by an independent pricing agent or
principal market maker (if available, otherwise a primary market dealer).

SHORT-TERM DEBT SECURITIES with remaining maturities of 60 days or less are
valued at cost with interest accrued or discount amortized to the date of
maturity, unless such valuation, in the judgment of Prudential or a sub-adviser,
does not represent fair value.

CONVERTIBLE DEBT SECURITIES that are traded in the over-the-counter market,
including listed convertible debt securities for which the primary market is
believed by Prudential or a sub-adviser to be over-the-counter, are valued at
the mean between the last bid and asked prices provided by a principal market
maker (if available, otherwise a primary market dealer).

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 last sale price on such exchange on the day of
valuation or, if there was no such sale on such day, at the mean between the
most recently quoted bid and asked prices on such exchange.

38
<PAGE>

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.

FORWARD CURRENCY EXCHANGE CONTRACTS are valued at the cost of covering or
offsetting such contracts calculated on the day of valuation. Securities which
are valued in accordance herewith in a currency other than U.S. dollars shall be
converted to U.S. dollar equivalents at a rate obtained from a recognized bank,
dealer or independent service on the day of valuation.

OVER-THE-COUNTER (OTC) options are valued at the mean between bid and asked
prices provided by a dealer (which may be the counterparty). A sub-adviser will
monitor the market prices of the securities underlying the OTC options with a
view to determining the necessity of obtaining additional bid and ask quotations
from other dealers to assess the validity of the prices received from the
primary pricing dealer.

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. PIMS' principal business
address is 751 Broad Street, Newark, New Jersey 07102-3777. 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 each Portfolio pays 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. These 12b-1 fees do not apply to Class I.

OTHER INFORMATION

FEDERAL INCOME TAXES

If you own or are considering purchasing a Contract, you should consult the
Contract prospectus for tax information. 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.

EUROPEAN MONETARY UNION

On January 1, 1999, 11 of the 15 member states of the European Monetary Union
introduced the "euro" as a common currency. During a three-year transitional
period, the euro will coexist with each participating state's currency and, on
July 1, 2002, the euro is expected to become the sole currency of the
participating states. During the transition period, the Fund will treat the euro
as a separate currency from that of any participating state. The conversion may
adversely affect the Fund if the euro does not take effect as planned; if a
participating state withdraws from the European Monetary Union; or if the
computing, accounting and trading systems used by the Fund's service providers,
or by entities with which the Fund or its service providers do business, are not
capable of recognizing the euro as a distinct currency at the time of, and
following, euro conversion. In addition, the conversion could cause markets to
become more volatile.

MONITORING FOR POSSIBLE CONFLICTS

The Fund sells its shares to fund variable life insurance contracts and variable
annuity contracts and is authorized to 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.

<PAGE>
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 FOUR YEARS ENDED DECEMBER 31, 1999 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 ONE YEAR ENDED DECEMBER 31, 1995 WAS AUDITED BY OTHER INDEPENDENT
AUDITORS WHOSE REPORT WAS ALSO UNQUALIFIED.

<TABLE>
<CAPTION>
CONSERVATIVE BALANCED
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 15.08 $ 14.97 $ 15.52 $ 15.31 $ 14.10
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.62 0.66 0.76 0.66 0.63
Net realized and unrealized gains on
investments.......................... 0.37 1.05 1.26 1.24 1.78
-------- -------- -------- -------- --------
Total from investment operations... 0.99 1.71 2.02 1.90 2.41
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.62) (0.66) (0.76) (0.66) (0.64)
Distributions from net realized
gains................................ (0.06) (0.94) (1.81) (1.03) (0.56)
Distributions in excess from net
realized gains....................... (0.03) -- -- -- --
-------- -------- -------- -------- --------
Total distributions................ (0.71) (1.60) (2.57) (1.69) (1.20)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 15.36 $ 15.08 $ 14.97 $ 15.52 $ 15.31
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ 6.69% 11.74% 13.45% 12.63% 17.27%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $4,387.1 $4,796.0 $4,744.2 $4,478.8 $3,940.8
Ratios to average net assets:
Expenses............................. 0.57% 0.57% 0.56% 0.59% 0.58%
Net investment income................ 4.02% 4.19% 4.48% 4.13% 4.19%
Portfolio turnover rate................ 109% 167% 295% 295% 201%
</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 year reported and includes
reinvestment of dividends and distributions.

F-1
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
DIVERSIFIED BOND
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 11.06 $ 11.02 $ 11.07 $ 11.31 $ 10.04
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.67 0.69 0.80 0.76 0.76
Net realized and unrealized gains
(losses) on investments.............. (0.75) 0.08 0.11 (0.27) 1.29
-------- -------- -------- -------- --------
Total from investment operations... (0.08) 0.77 0.91 0.49 2.05
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... -- (0.69) (0.83) (0.73) (0.75)
Distributions from net realized
gains................................ (0.03) (0.04) (0.13) -- (0.03)
-------- -------- -------- -------- --------
Total distributions................ (0.03) (0.73) (0.96) (0.73) (0.78)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 10.95 $ 11.06 $ 11.02 $ 11.07 $ 11.31
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ (0.74)% 7.15% 8.57% 4.40% 20.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $1,253.8 $1,122.6 $816.7 $720.2 $655.8
Ratios to average net assets:
Expenses............................. 0.43% 0.42% 0.43% 0.45% 0.44%
Net investment income................ 6.25% 6.40% 7.18% 6.89% 7.00%
Portfolio turnover rate................ 171% 199% 224% 210% 199%
</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 year reported and includes
reinvestment of dividends and distributions.

F-2
<PAGE>
FINANCIAL HIGHLIGHTS

The information for the FOUR YEARS AND PERIOD ENDED DECEMBER 31, 1999 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 ONE YEAR ENDED DECEMBER 31, 1995 WAS AUDITED BY OTHER
INDEPENDENT AUDITORS WHOSE REPORT WAS ALSO UNQUALIFIED.

<TABLE>
<CAPTION>
EQUITY CLASS I EQUITY CLASS II
------------------------------------------------------- -----------------
YEAR ENDED
DECEMBER 31, MAY 3, 1999(d)
------------------------------------------------------- THROUGH
1999 1998 1997 1996 1995A DECEMBER 31, 1999
--------- --------- --------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of period... $ 29.64 $ 31.07 $ 26.96 $ 25.64 $ 20.66 $ 32.79
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.54 0.60 0.69 0.71 0.55 0.28
Net realized and unrealized gains on
investments.......................... 3.02 2.21 5.88 3.88 5.89 (0.60)
-------- -------- -------- -------- -------- -------
Total from investment operations... 3.56 2.81 6.57 4.59 6.44 (0.32)
-------- -------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.53) (0.60) (0.70) (0.67) (0.52) (0.34)
Distributions from net realized
gains................................ (3.77) (3.64) (1.76) (2.60) (0.94) (3.21)
-------- -------- -------- -------- -------- -------
Total distributions................ (4.30) (4.24) (2.46) (3.27) (1.46) (3.55)
-------- -------- -------- -------- -------- -------
Net Asset Value, end of period......... $ 28.90 $ 29.64 $ 31.07 $ 26.96 $ 25.64 $ 28.92
======== ======== ======== ======== ======== =======
TOTAL INVESTMENT RETURN:(b)............ 12.49% 9.34% 24.66% 18.52% 31.29% (0.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions)............................ $6,235.0 $6,247.0 $6,024.0 $4,814.0 $3,813.8 $0.3
Ratios to average net assets:
Expenses............................. 0.47% 0.47% 0.46% 0.50% 0.48% 0.87%(c)
Net investment income................ 1.72% 1.81% 2.27% 2.54% 2.28% 1.33%(c)
Portfolio turnover rate................ 9% 25% 13% 20% 18% 9%
</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.

(d) Commencement of offering of Class II shares.

F-3
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 20.03 $ 22.39 $ 18.51 $ 16.27 $ 14.48
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.51 0.56 0.61 0.58 0.64
Net realized and unrealized gains
(losses) on investments.............. 1.89 (1.03) 6.06 2.88 2.50
Dividends and distributions............
-------- -------- -------- -------- --------
Total from investment operations... 2.40 (0.47) 6.67 3.46 3.14
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.50) (0.59) (0.57) (0.71) (0.62)
Distributions from net realized
gains................................ (2.41) (1.30) (2.22) (0.51) (0.73)
-------- -------- -------- -------- --------
Total distributions................ (2.91) (1.89) (2.79) (1.22) (1.35)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 19.52 $ 20.03 $ 22.39 $ 18.51 $ 16.27
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ 12.52% (2.38)% 36.61% 21.74% 21.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $2,024.0 $2,142.3 $2,029.8 $1,363.5 $1,110.0
Ratios to average net assets:
Expenses............................. 0.42% 0.42% 0.41% 0.45% 0.43%
Net investment income................ 2.34% 2.54% 2.90% 3.36% 4.00%
Portfolio turnover rate................ 16% 20% 38% 21% 64%
</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 year reported and includes
reinvestment of dividends and distributions.

F-4
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FLEXIBLE MANAGED PORTFOLIO
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 16.56 $ 17.28 $ 17.79 $ 17.86 $ 15.50
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.58 0.58 0.59 0.57 0.56
Net realized and unrealized gains on
investments.......................... 0.69 1.14 2.52 1.79 3.15
-------- -------- -------- -------- --------
Total from investment operations... 1.27 1.72 3.11 2.36 3.17
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... -- (0.59) (0.58) (0.58) (0.56)
Distributions from net realized
gains................................ (0.19) (1.85) (3.04) (1.85) (0.79)
-------- -------- -------- -------- --------
Total distributions................ (0.19) (2.44) (3.62) (2.43) (1.35)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 17.64 $ 16.56 $ 17.28 $ 17.79 $ 17.86
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ 7.78% 10.24% 17.96% 13.64% 24.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $5,125.3 $5,410.0 $5,490.1 $4,896.9 $4,261.2
Ratios to average net assets:
Expenses............................. 0.62% 0.61% 0.62% 0.64% 0.63%
Net investment income................ 3.20% 3.21% 3.02% 3.07% 3.30%
Portfolio turnover rate................ 76% 138% 227% 233% 173%
</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 year reported and includes
reinvestment of dividends and distributions.

F-5
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
GLOBAL
----------------------------------------------
YEAR ENDED
DECEMBER 31,
----------------------------------------------
1999 1998 1997 1996 1995(A)
--------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 21.16 $17.92 $17.85 $15.53 $13.88
-------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.06 0.07 0.09 0.11 0.06
Net realized and unrealized gains
(losses) on investments.............. 10.04 4.38 1.11 2.94 2.14
-------- ------ ------ ------ ------
Total from investment operations... 10.10 4.45 1.20 3.05 2.20
-------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income... -- (0.16) (0.13) (0.11) (0.24)
Dividends in excess of net investment
income............................... (0.10) (0.12) (0.10) -- --
Distributions from net realized
gains................................ (0.18) (0.93) (0.90) (0.62) (0.31)
-------- ------ ------ ------ ------
Total distributions................ (0.28) (1.21) (1.13) (0.73) (0.55)
-------- ------ ------ ------ ------
Net Asset Value, end of year........... $ 30.98 $21.16 $17.92 $17.85 $15.53
======== ====== ====== ====== ======
TOTAL INVESTMENT RETURN:(b) 48.27% 25.08% 6.98% 19.97% 15.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $1,298.3 $844.5 $638.4 $580.6 $400.1
Ratios to average net assets:
Expenses............................. 0.84% 0.86% 0.85% 0.92% 1.06%
Net investment income................ 0.21% 0.29% 0.47% 0.64% 0.44%
Portfolio turnover rate................ 76% 73% 70% 41% 59%
</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 year reported and includes
reinvestment of dividends and distributions. Total investment returns for
less than a full year are not annualized.

F-6
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
HIGH YIELD BOND
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 7.21 $ 8.14 $ 7.87 $ 7.80 $ 7.37
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.79 0.77 0.78 0.80 0.81
Net realized and unrealized gains
(losses) on investments.............. (0.46) (0.94) 0.26 0.06 0.46
Dividends and distributions............
-------- -------- -------- -------- --------
Total from investment operations... 0.33 (0.17) 1.04 0.86 1.27
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.02) (0.76) (0.77) (0.78) (0.84)
Dividends in excess of net investment
income............................... -- -- -- (0.01) --
-------- -------- -------- -------- --------
Total distributions................ (0.02) (0.76) (0.77) (0.79) (0.84)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 7.52 $ 7.21 $ 8.14 $ 7.87 $ 7.80
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ 4.61% (2.36)% 13.78% 11.39% 17.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $802.2 $789.3 $568.7 $432.9 $367.9
Ratios to average net assets:
Expenses............................. 0.60% 0.58% 0.57% 0.63% 0.61%
Net investment income................ 10.48% 10.31% 9.78% 9.89% 10.34%
Portfolio turnover rate................ 58% 63% 106% 88% 139%
</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 year reported and includes
reinvestment of dividends and distributions.

F-7
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
MONEY MARKET
----------------------------------------------
YEAR ENDED
DECEMBER 31,
----------------------------------------------
1999 1998 1997 1996 1995(A)
--------- ------- ------- ------- --------
<S> <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
-------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income and realized and
unrealized gains..................... 0.49 0.52 0.54 0.51 0.56
Dividends and distributions............ (0.49) (0.52) (0.54) (0.51) (0.56)
-------- ------ ------ ------ ------
Net Asset Value, end of year........... $ 10.00 $10.00 $10.00 $10.00 $10.00
======== ====== ====== ====== ======
TOTAL INVESTMENT RETURN:(b)............ 4.97% 5.39% 5.41% 5.22% 5.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $1,335.5 $920.2 $657.5 $668.8 $613.3
Ratios to average net assets:
Expenses............................. 0.42% 0.41% 0.43% 0.44% 0.44%
Net investment income................ 4.90% 5.20% 5.28% 5.10% 5.64%
</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 year reported and includes
reinvestment of dividends and distributions.

F-8
<PAGE>
FINANCIAL HIGHLIGHTS

The information for the FOUR YEARS ENDED DECEMBER 31, 1999 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 PERIOD ENDED DECEMBER 31, 1995 WAS AUDITED BY OTHER INDEPENDENT AUDITORS
WHOSE REPORT WAS ALSO UNQUALIFIED.

<TABLE>
<CAPTION>
PRUDENTIAL JENNISON
--------------------------------------------------------------
YEAR ENDED
DECEMBER 31, APRIL 25, 1995(d)(a)
---------------------------------------- TO
1999 1998 1997 1996 DECEMBER 31, 1995
--------- --------- -------- -------- --------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of period... $ 23.91 $ 17.73 $ 14.32 $ 12.55 $ 10.00
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.05 0.04 0.04 0.02 0.02
Net realized and unrealized gains on
investments.......................... 9.88 6.56 4.48 1.78 2.54
-------- -------- ------- ------- -------
Total from investment operations... 9.93 6.60 4.52 1.80 2.56
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.05) (0.04) (0.04) (0.03) (0.01)
Distributions from net realized
gains................................ (1.40) (0.38) (1.07) -- --
-------- -------- ------- ------- -------
Total distributions................ (1.45) (0.42) (1.11) (0.03) (0.01)
-------- -------- ------- ------- -------
Net Asset Value, end of period......... $ 32.39 $ 23.91 $ 17.73 $ 14.32 $ 12.55
======== ======== ======= ======= =======
TOTAL INVESTMENT RETURN:(b)............ 41.76% 37.46% 31.71% 14.41% 24.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
millions)............................ $2,770.7 $1,198.7 $495.9 $226.5 $63.1
Ratios to average net assets:
Expenses............................. 0.63% 0.63% 0.64% 0.66% 0.79%(c)
Net investment income................ 0.17% 0.20% 0.25% 0.20% 0.15%(c)
Portfolio turnover rate................ 58% 54% 60% 46% 37%
</TABLE>

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

(d) Commencement of offering of investment operations.

F-9
<PAGE>
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
STOCK INDEX
-----------------------------------------------------
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
1999 1998 1997 1996 1995(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of year..... $ 37.74 $ 30.22 $ 23.74 $ 19.96 $ 14.96
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.44 0.42 0.43 0.40 0.40
Net realized and unrealized gains
(losses) on investments.............. 7.23 8.11 7.34 4.06 5.13
-------- -------- -------- -------- --------
Total from investment operations... 7.67 8.53 7.77 4.46 5.53
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.43) (0.42) (0.42) (0.40) (0.38)
Distributions from net realized
gains................................ (0.53) (0.59) (0.87) (0.28) (0.15)
-------- -------- -------- -------- --------
Total distributions................ (0.96) (1.01) (1.29) (0.68) (0.53)
-------- -------- -------- -------- --------
Net Asset Value, end of year........... $ 44.45 $ 37.74 $ 30.22 $ 23.74 $ 19.96
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN:(b)............ 20.54% 28.42% 32.83% 22.57% 37.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
millions)............................ $4,655.0 $3,548.1 $2,448.2 $1,581.4 $1,031.3
Ratios to average net assets:
Expenses............................. 0.39% 0.37% 0.37% 0.40% 0.38%
Net investment income................ 1.09% 1.25% 1.55% 1.95% 2.27%
Portfolio turnover rate................ 2% 3% 5% 1% 1%
</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 year reported and includes
reinvestment of dividends and distributions.

F-10

<PAGE>

(This page intentionally left blank.)

<PAGE>

FOR MORE INFORMATION

Additional information about the Fund and each 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 Portfolios' 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 20549-0102

BY ELECTRONIC REQUEST:

[email protected]

(The SEC charges a fee to copy documents.)

IN PERSON:

Public Reference Room
in Washington, DC
(For hours of operation, call 1-202-942-8090.)

VIA THE INTERNET:

on the EDGAR Database at
http://www.sec.gov

SEC File No. 811-03623

<PAGE>

THE PRUDENTIAL SERIES FUND, INC.
- --------------------------------------------------------------------------------

CONSERVATIVE BALANCED PORTFOLIO PROSPECTUS

DIVERSIFIED BOND PORTFOLIO April 30, 2000

EQUITY PORTFOLIO

FLEXIBLE MANAGED PORTFOLIO

GLOBAL PORTFOLIO

GOVERNMENT INCOME PORTFOLIO

STOCK INDEX PORTFOLIO

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THE FUND'S
SHARES NOR HAS THE SEC DETERMINED THAT THIS PROSPECTUS
IS COMPLETE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO
STATE OTHERWISE.

[LOGO] PRUDENTIAL
INVESTMENTS

A particular Portfolio may not be available under the
variable life insurance or variable annuity contract
which you have chosen. The prospectus of the specific
contract which you have chosen will indicate which
Portfolios are available and should be read in
conjunction with this prospectus.

<PAGE>

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

TABLE OF CONTENTS

1 RISK/RETURN SUMMARY

1 Investment Objectives and Principal Strategies
3 Principal Risks
5 Evaluating Performance

12 HOW THE PORTFOLIOS INVEST

12 Investment Objectives and Policies
12 Conservative Balanced Portfolio
13 Diversified Bond Portfolio
15 Equity Portfolio
15 Flexible Managed Portfolio
16 Global Portfolio
17 Government Income Portfolio
18 Stock Index Portfolio

18 OTHER INVESTMENTS AND STRATEGIES

19 ADRs
19 Convertible Debt and Convertible Preferred Stock
19 Derivatives
19 Dollar Rolls
19 Forward Foreign Currency Exchange Contracts
19 Futures
19 Interest Rate Swaps
20 Joint Repurchase Account
20 Loan Participations
20 Mortgage-related Securities
20 Options
20 Real Estate Investment Trusts
20 Repurchase Agreements
20 Reverse Repurchase Agreements
21 Short Sales
21 Short Sales Against-the-Box
21 When-issued and Delayed Delivery Securities

22 INVESTMENT RISKS

27 HOW THE FUND IS MANAGED

27 Board of Directors
27 Investment Adviser
27 Investment Sub-Advisers
27 Portfolio Managers
<PAGE>

29 HOW TO BUY AND SELL SHARES OF THE FUND

30 Net Asset Value
31 Distributor

31 OTHER INFORMATION

31 Federal Income Taxes
31 European Monetary Union
31 Monitoring for Possible Conflicts

F-1 FINANCIAL HIGHLIGHTS

For more information see back cover
<PAGE>

RISK/RETURN SUMMARY

THIS PROSPECTUS IS FOR USE WITH THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-24
CONTRACT (THE VCA-24 CONTRACT) AND ONLY DESCRIBES THOSE PORTFOLIOS OF THE
PRUDENTIAL SERIES FUND, INC. (THE FUND) THAT ARE AVAILABLE FOR INVESTMENT
THROUGH THE VCA-24 CONTRACT. THIS PROSPECTUS SHOULD BE READ TOGETHER WITH THE
CURRENT PROSPECTUS FOR THE VCA-24 CONTRACT.

The Fund is a diversified, open-end investment company -- commonly known as a
mutual fund. Seven of the Fund's seventeen portfolios (the Portfolios) are
available under the VCA-24 Contract:

CONSERVATIVE BALANCED PORTFOLIO GLOBAL PORTFOLIO
DIVERSIFIED BOND PORTFOLIO GOVERNMENT INCOME PORTFOLIO
EQUITY PORTFOLIO STOCK INDEX PORTFOLIO
FLEXIBLE MANAGED PORTFOLIO

This section highlights key information about each Portfolio. Additional
information follows this summary and is also provided in the Fund's Statement of
Additional Information (SAI).

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES

The following summarizes the investment objectives, principal strategies and
principal risks for each of the Portfolios. We describe the terms "company
risk," "credit risk," "foreign investment risk," "interest rate risk," and
"market risk" in the section on Principal Risks, on page 3. While we make every
effort to achieve the investment objective for each Portfolio, we can't
guarantee success.

CONSERVATIVE BALANCED PORTFOLIO

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

DIVERSIFIED BOND PORTFOLIO

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK
<PAGE>

EQUITY PORTFOLIO

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

FLEXIBLE MANAGED PORTFOLIO

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

GLOBAL PORTFOLIO

PRINCIPAL RISKS:
o COMPANY RISK
o CREDIT RISK
o FOREIGN INVESTMENT RISK
o INTEREST RATE RISK
o MARKET RISK

GOVERNMENT INCOME PORTFOLIO

The Portfolio's investment objective is A HIGH LEVEL OF INCOME OVER THE LONG
TERM CONSISTENT WITH THE PRESERVATION OF CAPITAL. To achieve our objective, we
invest primarily in U.S. government securities, including intermediate and long
term U.S. Treasury securities and debt obligations issued by agencies or
instrumentalities established by the U.S. government. The Portfolio may also
invest in mortgage-related securities, collateralized mortgage obligations and
corporate debt securities. While we make every effort to achieve our objective,
we can't guarantee success.

PRINCIPAL RISKS:
o CREDIT RISK
o INTEREST RATE RISK
o MARKET RISK

- --------------------------------------------------------------------------------
An investment in the Government Income Portfolio is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
- --------------------------------------------------------------------------------

2
<PAGE>

STOCK INDEX PORTFOLIO

The Portfolio's investment objective is INVESTMENT RESULTS THAT GENERALLY
CORRESPOND TO THE PERFORMANCE OF PUBLICLY-TRADED COMMON STOCKS. To achieve our
objective, we attempt to duplicate the price and yield of the S&P 500. The S&P
500 Index represents more than 70% of the total market value of all
publicly-traded common stocks and is widely viewed as representative of
publicly-traded common stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to select stocks.
Rather, the portfolio manager purchases stocks in proportion to their weighting
in the S&P 500 Index. While we make every effort to achieve our objective, we
can't guarantee success.

PRINCIPAL RISKS:
o COMPANY RISK
o MARKET RISK

PRINCIPAL RISKS

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.

CREDIT RISK. Debt obligations are generally subject to the risk that the
issuer may be unable to make principal and interest payments when they are due.
There is also the risk that the securities could lose value because of a loss of
confidence in the ability of the borrower to pay back debt. Non-investment grade
debt--also known as "junk bonds"--have a higher risk of default and tend to be
less liquid than higher-rated securities.

INTEREST RATE RISK. The risk that the securities could lose value because
of interest rate changes. For example, bonds tend to decrease in value if
interest rates rise. Debt obligations with longer maturities typically offer
higher yields, but are subject to greater price shifts as a result of interest
rate changes than debt obligations with shorter maturities.

MARKET RISK. Common stocks are 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
sentiment turns 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 large companies are
more stable than the stock prices of smaller companies, but this is not always
the case. Smaller companies often offer a smaller range of products and services
than large companies. They may also have limited financial resources and may
lack management depth. As a result, stocks issued by smaller companies may
fluctuate in value more than the stocks of larger, more established companies.

FOREIGN INVESTMENT RISK. Investing in foreign securities generally
involves more risk than investing in securities of U.S. issuers. Foreign
investment risk is comprised of the specific risks described below.

FOREIGN MARKET RISK. Foreign markets, especially those in developing
countries, tend to be more volatile than U.S. markets and are generally not
subject to regulatory requirements comparable to those in the U.S. Because of
differences in accounting standards and custody and settlement practices,
investing in foreign securities generally involves more risk than investing in
securities of U.S. issuers.

3
<PAGE>

Portfolio does not correctly anticipate changes in exchange rates, its share
price could decline as a result. In addition, certain hedging activities may
cause the Portfolio to lose money and could reduce the amount of income
available for distribution.

POLITICAL DEVELOPMENTS. Political developments may adversely affect the
value of a Portfolio's foreign securities.

* * *

For more information about the risks associated with the Portfolios, see
"How the Portfolios Invest--Investment Risks."

* * *

4
<PAGE>

EVALUATING PERFORMANCE

- --------------------------------------------------------------------------------
CONSERVATIVE BALANCED PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 5.27%
1991 19.07%
1992 6.95%
1993 12.20%
1994 -0.97%
1995 17.27%
1996 12.63%
1997 13.45%
1998 11.74%
1999 6.69%

Best Quarter: 7.62% (2nd quarter of 1997) Worst Quarter: (3.17)% (3rd quarter of
1998)

*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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/13/83)
------ ------- -------- ---------
Class I shares 6.69% 12.30% 10.28% 10.60%
S&P 500** 21.03% 28.54% 18.19% 17.29%
Lipper Average*** 8.58% 15.99% 11.65% 11.94%
- --------------------------------------------------------------------------------

*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.

5
<PAGE>

- --------------------------------------------------------------------------------
DIVERSIFIED BOND PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 8.32%
1991 16.44%
1992 7.19%
1993 10.13%
1994 -3.23%
1995 20.73%
1996 4.40%
1997 8.57%
1998 7.15%
1999 -0.74%

Best Quarter: 7.32% (2nd quarter of 1995) Worst Quarter: (2.83)% (1st quarter of
1994)

*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.

*The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

6
<PAGE>

- --------------------------------------------------------------------------------
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -5.21%
1991 26.01%
1992 14.17%
1993 21.87%
1994 2.78%
1995 31.29%
1996 18.52%
1997 24.66%
1998 9.34%
1999 12.49%

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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/13/83)
------ ------- -------- ---------
Class I shares 12.49% 18.99% 15.08% 14.98%
S&P 500** 21.03% 28.54% 18.19% 17.29%
Lipper Average*** 31.48% 26.45% 17.79% 16.01%
- --------------------------------------------------------------------------------

*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.

7
<PAGE>

- --------------------------------------------------------------------------------
FLEXIBLE MANAGED PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 1.91%
1991 25.43%
1992 7.61%
1993 15.58%
1994 -3.16%
1995 24.13%
1996 13.64%
1997 17.96%
1998 10.24%
1999 7.78%

Best Quarter: 10.89% (2nd quarter of 1997) Worst Quarter: (8.50)% (3rd quarter
of 1998)

* 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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/13/83)
------ ------- -------- ---------
Class I shares 7.78% 14.60% 11.77% 11.80%
S&P 500** 21.03% 28.54% 18.19% 17.29%
Lipper Average*** 12.07% 17.11% 12.94% 12.84%
- --------------------------------------------------------------------------------

*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.

8
<PAGE>

- --------------------------------------------------------------------------------
GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 -12.91%
1991 11.39%
1992 -3.42%
1993 43.14%
1994 -4.89%
1995 15.88%
1996 19.97%
1997 6.98%
1998 25.08%
1999 48.27%

Best Quarter: 31.04% (4th quarter of 1999) Worst Quarter: (14.21)% (3rd quarter
of 1998)

*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.

* The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

9
<PAGE>

- --------------------------------------------------------------------------------
GOVERNMENT INCOME PORTFOLIO
- --------------------------------------------------------------------------------

Annual Returns* (Class I shares)

[REPRESENTATION OF CHART]

1990 6.34%
1991 16.11%
1992 5.85%
1993 12.56%
1994 -5.16%
1995 19.48%
1996 2.22%
1997 9.67%
1998 9.09%
1999 -2.70%

Best Quarter: 6.95% (3rd quarter of 1991) Worst Quarter: (3.93)% (1st quarter of
1994)

* 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 12/31/99)
- --------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/1/89)
------ ------- --------- --------
Class I shares (2.70)% 7.29% 7.09% 7.73%
Lehman Govt. Index** (2.23)% 7.44% 7.48% 9.14%
Lipper Average*** (2.13)% 6.94% 7.11% 8.66%
- --------------------------------------------------------------------------------

*The Portfolio's returns are after deduction of expenses and do not include
Contract charges.

**The Lehman Government Index is a weighted index comprised of securities issued
or backed by the U.S. government, its agencies and instrumentalities with a
remaining maturity of one to 30 years. The "Since Inception" return reflects the
closest calendar month-end return (4/30/89). Source: Lipper, Inc.

***The Lipper Variable Insurance Products (VIP) General U.S. Government 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.
The "Since Inception" return reflects the closest calendar month-end return
(4/30/89). Source: Lipper, Inc.

10
<PAGE>

- --------------------------------------------------------------------------------
STOCK INDEX PORTFOLIO
- --------------------------------------------------------------------------------

Annual Return* (Class I shares)

[REPRESENTATION OF CHART]

1990 -3.63%
1991 29.72%
1992 7.13%
1993 9.66%
1994 1.01%
1995 37.06%
1996 22.57%
1997 32.83%
1998 28.42%
1999 20.54%

Best Quarter: 21.44% (4th quarter of 1998) Worst Quarter: (13.72)% (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.

*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 (10/31/87). Source: Lipper, Inc.

11
<PAGE>

HOW THE PORTFOLIOS INVEST

INVESTMENT OBJECTIVES AND POLICIES

An investment in a Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

- --------------------------------------------------------------------------------
CONSERVATIVE BALANCED PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to seek A TOTAL INVESTMENT RETURN
CONSISTENT WITH A CONSERVATIVELY MANAGED DIVERSIFIED PORTFOLIO.

- --------------------------------------
BALANCED PORTFOLIO
We invest in all three types of To achieve our objective, we invest
securities-- equity, debt and money in a mix of equity and
market--in order to achieve equity-related securities, debt
diversification in a single obligations and money market
portfolio. We seek to maintain a instruments. We adjust the
conservative blend of investments percentage of Portfolio assets in
that will have strong performance in each category depending on our
a down market and solid, but not expectations regarding the different
necessarily outstanding, performance markets. While we make every effort
in up markets. This Portfolio may be to achieve our objective, we can't
appropriate for an investor looking guarantee success.
for diversification with less risk
than that of the Flexible Managed We will vary how much of the
Portfolio, while recognizing that Portfolio's assets are invested in a
this reduces the chances of greater particular type of security
appreciation. depending on how we think the
- -------------------------------------- different markets will perform.

Under normal conditions, we will invest within the ranges shown below:

ASSET TYPE MINIMUM NORMAL MAXIMUM
---------- ------- ------ -------
Stocks 15% 35% 75%
Debt obligations and money 25% 65% 85%
market securities

12
<PAGE>

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.

We may also use INTEREST RATE SWAPS in the management of the fixed-income
portion of the Portfolio.

- --------------------------------------------------------------------------------
DIVERSIFIED BOND PORTFOLIO
- --------------------------------------------------------------------------------

- ------------------------------------
OUR STRATEGY
In general, the value of debt Debt obligations, in general, are
obligations moves in the opposite basically written promises to repay
direction as interest rates--if a a debt. The terms of repayment vary
bond is purchased and then interest among the different types of debt
rates go up, newer bonds will be obligations, as do the commitments
worth more relative to existing of other parties to honor the
bonds because they will have a obligations of the issuer of the
higher rate of interest. We will security. The types of debt
adjust the mix of the Portfolio's obligations in which we can invest
short-term, intermediate and long include U.S. government securities,
term debt obligations in an attempt MORTGAGE-RELATED SECURITIES and
to benefit from price appreciation corporate bonds.
when interest rates go down and to
incur smaller declines when rates go
up.
- ------------------------------------

13
<PAGE>

We may also invest up to 20% of the Portfolio's total assets in debt securities
issued outside the U.S. by U.S. or foreign issuers provided the securities are
denominated in U.S. dollars.

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.

We may also use INTEREST RATE SWAPS in the management of the Portfolio.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

14
<PAGE>

- --------------------------------------------------------------------------------
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------

- ------------------------------------
VALUE APPROACH To achieve our investment objective,
We use a value approach to investing we invest primarily in common stocks
which means we look for companies of major established corporations as
whose stock is selling below the well as smaller companies.
price that we believe reflects its
true worth based on earnings, book A portion of the Portfolio's assets
value and other financial measures. may be invested in short,
intermediate or long-term debt
To achieve our value investment obligations, including convertible
strategy, we usually buy securities and nonconvertible preferred stock
that are out of favor and that many and other equity-related securities.
other investors are selling. We Up to 5% of these holdings may be
attempt to invest in companies and rated below investment grade. These
industries before other investors securities are considered
recognize their true value. speculative and are sometimes
- ------------------------------------ referred to as "junk bonds."

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.

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.

The Portfolio may also enter into REPURCHASE AGREEMENTS. The Portfolio may
participate with certain other Portfolios of the Fund in a JOINT REPURCHASE
ACCOUNT under an order obtained from the SEC.

- --------------------------------------------------------------------------------
FLEXIBLE MANAGED PORTFOLIO
- --------------------------------------------------------------------------------

The investment objective of this Portfolio is to seek A HIGH TOTAL RETURN
CONSISTENT WITH AN AGGRESSIVELY MANAGED DIVERSIFIED PORTFOLIO.

- ------------------------------------
BALANCED PORTFOLIO To achieve our objective, we invest
We invest in all three types of in a mix of equity and
securities--equity, debt and money equity-related securities, debt
market--in order to achieve obligations and money market
diversification in a single instruments. We adjust the
portfolio. We seek to maintain a percentage of Portfolio assets in
more aggressive mix of investments each category depending on our
than the Conservative Balanced expectations regarding the different
Portfolio. This Portfolio may be markets. While we make every effort
appropriate for an investor looking to achieve our objective, we can't
for diversification who is willing guarantee success.
to accept a relatively high level of
loss in an effort to achieve greater
appreciation.
- ------------------------------------