PRUDENTIAL WORLD FUND INC, 485APOS, 1999-11-19

PRUDENTIAL WORLD FUND INC
485APOS, 1999-11-19

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As filed with the Securities and Exchange Commission on November 19, 1999

Registration Nos. 2-89725
811-3981
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 28 |X|

AND/OR

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 29 |X|
(CHECK APPROPRIATE BOX OR BOXES)

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

PRUDENTIAL WORLD FUND, INC.
(Exact name of registrant as specified in charter)

GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Address of Principal Executive Offices) (Zip Code)

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 367-3028

ROBERT C. ROSSELOT, ESQ.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
(Name and Address of Agent for Service of Process)

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

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.

It is proposed that this filing will become effective (check appropriate
box):

|_| immediately upon filing pursuant to paragraph (b)

|_| on (date) pursuant to paragraph (b)

|_| 60 days after filing pursuant to paragraph (a)(1)

|_| on (date) pursuant to paragraph (a)(1)

|x| 75 days after filing pursuant to paragraph (a)(2)

|_| on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

|_| this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

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

Title of Securities Being Registered . . . Shares of Common Stock, $.01 Par
Value.

================================================================================

<PAGE>

FUND TYPE:
- ----------------------
International Stock

INVESTMENT OBJECTIVE:
- ----------------------
Long-term growth of
capital

[PRUDENTIAL ROCK LOGO]

PRUDENTIAL JENNISON
INTERNATIONAL GROWTH
FUND
- ------------------------------------------------------
PROSPECTUS: JANUARY __, 2000

As with all mutual funds, the
Securities and Exchange
Commission has not approved
the Fund's shares, nor has the
SEC determined that this
prospectus is complete or
accurate. It is a criminal
offense to state otherwise.

<PAGE>

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TABLE OF CONTENTS
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1 Risk/Return Summary

1 Investment Objective and Principal Strategies
2 Principal Risks
2 Evaluating Performance
3 Fees and Expenses

5 How the Series Invests
5 Investment Objective and Policies
6 Other Investments and Strategies
9 Investment Risks

11 How the Series is Managed
11 Board of Directors
11 Manager
11 Investment Adviser
11 Portfolio Managers
12 Distributor

13 Series Distributions and Tax Issues
13 Distributions
14 Tax Issues
15 If You Sell or Exchange Your Shares

17 How to Buy, Sell and Exchange Shares of the Series
17 Initial Offering of Shares
18 How to Buy Shares
26 How to Sell Your Shares
30 How to Exchange Your Shares

32 The Prudential Mutual Fund Family

For More Information (Back Cover)

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PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

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RISK/RETURN SUMMARY
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This prospectus provides information about Prudential Jennison
International Growth Fund (the Series), which is a separate diversified series
of the Prudential World Fund, Inc. (the Fund). The Fund consists of two
additional series--the Global Series and the International Stock Series. This
prospectus relates only to the Series. For information about the Global Series
and the International Stock Series, you should contact the Fund.

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

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WE'RE GROWTH INVESTORS

We look primarily for stock that we believe is undervalued and/or will grow
faster--and earn better profits--than other companies. We also look for
companies with strong competitive advantages, effective research and product
development, strong management or financial strength.

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

Our investment objective is long-term growth of capital, which we seek through
investment in equity securities of foreign issuers. This means we look for
investments that we think will increase in value over a period of years. To
achieve our objective, we invest primarily in the common stock and preferred
stock of foreign (non-U.S. based) companies of all sizes. Under normal
circumstances, we invest at least 65% of the Series' total assets in
equity-related securities of non-U.S. companies in at least five different
countries. The Series may invest up to 30% of its total assets in emerging
market securities, which include securities of companies located in countries or
markets that are defined as developing or emerging by the International Finance
Corporation, the International Bank for Reconstruction and Development (World
Bank) or the United Nations or its authorities.

We use a growth investment style when deciding which securities to buy for
the Series. The Series focuses its investments on approximately 60 companies
that have one or more of the following characteristics:

o prospects for above-average earnings growth per share;
o high return on invested capital;
o healthy balance sheets;
o sound financial and accounting policies and overall financial strength;
o strong competitive advantages;
o effective research and product development and marketing;
o efficient service;
o pricing flexibility;
o strength of management; and

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<PAGE>

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RISK/RETURN SUMMARY
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o general operating characteristics that will allow the companies to compete
successfully in their marketplace.

Generally, we consider selling a security when the security no longer displays
conditions for growth, is no longer undervalued, or falls short of expectations.

While we make every effort to achieve our objective, we can't guarantee
success.

PRINCIPAL RISKS

Although we try to invest wisely, all investments involve risks. Since the
Series invests primarily in common stock and preferred stock, there is the risk
that the value of a particular security we own could go down. In addition to an
individual stock losing value, the value of the equity markets of the countries
in which we invest could go down. There is also the additional risk that foreign
political, economic and legal systems may be less stable than in the U.S. The
changing value of foreign currencies could also affect the value of the assets
we hold and our performance. In the case of investments in emerging markets
securities, these risks are heightened and may result in greater volatility in
the value of your investment.

There is also risk involved in the derivative strategies we may use. Some
of our strategies depend on correctly predicting whether the price or value of
an underlying investment will go up or down over a certain period of time. There
is always the risk that investments will not perform as we thought they would.
Like any mutual fund, an investment in the Series could lose value, and you
could lose money. The Series does not represent a complete investment program.

There are special risks that may arise with the continuing transition to
the euro as the common currency of the European Economic and Monetary Union.
These risks include the possibility that computing, accounting and trading
systems will fail to recognize the euro during the transition period, as well as
the possibility that the euro will cause markets to become more volatile.

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

EVALUATING PERFORMANCE

Because the Series will first commence operations as of the date of this
prospectus, it has no performance history to report.

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2 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

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RISK/RETURN SUMMARY
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FEES AND EXPENSES

These tables show the sales charges, fees and expenses for each share class of
the Series--Classes A, B, C and Z. Each share class has different sales
charges--known as "loads"--and expenses, but represents an investment in the
same series. Class Z shares are available only to a limited group of investors.
For more information about which share class may be right for you, see "How to
Buy, Sell and Exchange Shares of the Fund."

- ------------------------------------------------------
Shareholder Fees(1) (paid directly from your investment)
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<TABLE>
<CAPTION>

CLASS A CLASS B CLASS C CLASS Z

<S> <C> <C> <C> <C>
Maximum sales charge (load) imposed on 5% None 1% None
purchases (as a percentage of offering
price)

Maximum deferred sales charge (load) None 5%(2) 1%(3) None
imposed on sales (as a percentage
of the lower of original purchase
price or sale proceeds)

Maximum sales charge (load) imposed on None None None None
reinvested dividends and other
distributions

Redemption fees None None None None

Exchange fee None None None None
</TABLE>

- ---------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Series assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

CLASS A CLASS B CLASS C CLASS Z
<S> <C> <C> <C> <C>
Management fees .85% .85% .85% .85%

+ Distribution and service (12b-1) fees .30%(4) 1.00% 1.00% None

+ Other expenses .39% .39% .39% .39%

= Total annual Series operating expenses 1.54% 2.24% 2.24% 1.24%

- Waivers .05%(4) None None None

= Net annual Series operating expenses 1.49%(4) 2.24% 2.24% 1.24%
</TABLE>

(1) Your broker may charge you a separate or additional fee for purchases and
sales of shares.

(2) The Contingent Deferred Sales Charge (CDSC) for Class B shares decreases by
1% annually to 1% in the fifth and sixth years and 0% in the seventh year.
Class B shares covert to Class A shares approximately seven years after
purchase.

(3) The CDSC for Class C shares is 1% for shares redeemed within 18 months of
purchase.

(4) For the fiscal year ending October 31, 2000, the Distributor of the Fund
has contractually agreed to reduce its distribution and service fees for
Class A shares to .25 of 1% of the average daily net assets of the Class A
Shares.

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3

<PAGE>

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RISK/RETURN SUMMARY
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EXAMPLE

This example is intended to help you compare the cost of investing in the Series
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Series for the time
periods indicated and then sell all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Series' operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:

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1 YR 3 YRS

Class A shares $644 $957

Class B shares $727 $1,000

Class C shares $425 $793

Class Z shares $126 $393

You would pay the following expenses on the same investment if you did not sell
your shares:

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1 YR 3 YRS

Class A shares $644 $957

Class B shares $277 $700

Class C shares $325 $793

Class Z shares $126 $393

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4 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

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HOW THE SERIES INVESTS
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INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Series is to seek long-term growth of capital
through investment in equity securities of foreign (non-U.S. based) issuers.
This means we seek investments--primarily the common stock and preferred stock
of foreign companies--that will increase in value over a period of years. While
we make every effort to achieve our objective, we can't guarantee success.

- -----SIDEBAR--------------------------------------------------------------------

OUR GROWTH STRATEGY

We look for companies that are likely to produce strong growth in earnings
and/or sales, and whose stock prices do not reflect this future growth
potential. These companies usually have what we believe to be a unique market
niche, a strong new product profile or superior management. We analyze companies
using both fundamental and quantitative techniques, including analysis of
balance sheets, income statements and other financial measures.

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

In deciding whether to buy a particular security, we look at a number of
factors, including the company's sales, earnings, book value, cash flow and
overall ability to grow and profit. We take a bottom-up security selection
approach, rather than allocating by country or sector.

Under normal conditions, we intend to invest at least 65% of our total
assets in the equity-related securities of non-U.S. companies in at least five
foreign countries, We may invest anywhere in the world, including North America,
Western Europe, the United Kingdom and the Pacific Basin, but generally not the
U.S. However, under unusual market conditions, on a temporary basis, we may
invest up to 100% of the Series' total assets in the stock and other
equity-related securities of U.S. companies. Thus, the Series will not be able
to achieve its investment objective for that period.

The principal type of equity-related security in which the Series invests
is common stock. In addition to common stock, the Series may invest in
equity-related securities that include, but are not limited to, preferred stock,
rights that can be exercised to obtain stock, warrants and debt securities or
preferred stock convertible or exchangeable for common or preferred stock and
master limited partnerships. The Series may also invest in American Depositary
Receipts (ADRs). ADRs are certificates that represent an equity investment in a
foreign company or some other foreign issuer. ADRs are usually issued by a U.S.
bank or trust company and are valued in U.S. dollars. We consider ADRs to be
equity-related securities.

In selecting securities for the Series, we use a bottom-up approach based
on a company's growth potential, and we focus the Series' portfolio on
approximately 60 companies that have one or more of the following
characteristics:
- --------------------------------------------------------------------------------
5

<PAGE>

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HOW THE SERIES INVESTS
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o prospects for above-average earnings growth per share;

o high return on invested capital;

o healthy balance sheets;

o sound financial and accounting policies and overall financial strength;

o strong competitive advantages;

o effective research and product development and marketing;

o efficient service;

o pricing flexibility;

o strength of management; and

o general operating characteristics that will allow the companies to compete
successfully in their marketplace.

Generally, we consider selling a security when the security no longer
displays the conditions for growth, is no longer undervalued, or falls short of
expectations.

For more information, see "Investment Risks" and the Statement of
Additional Information, "Description of the Series, its Investments and Risks."
The Statement of Additional Information--which we refer to as the SAI--contains
additional information about the Series. To obtain a copy, see the back cover
page of this prospectus.

The Series' investment objective is a fundamental policy that cannot be
changed without shareholder approval. The Fund's Board of Directors can change
investment policies that are not fundamental.

OTHER INVESTMENTS AND STRATEGIES

While the Series invests primarily in common stock and preferred stock, it may
invest in other securities or use certain investment strategies to increase
returns or protect their assets if market conditions warrant.

Money Market Instruments, Bonds and Other Fixed-Income Obligations

Money market instruments and bonds are known as fixed-income securities because
issuers of these securities are obligated to pay interest and principal.
Typically, fixed-income securities don't increase or decrease in value in
relation to an issuer's financial condition or business prospects as stocks may,
although their value does fluctuate inversely to changes in interest rates
generally and directly in relation to their perceived credit quality.
Corporations and governments issue money market instruments and bonds to raise
money. The Series may buy obligations of companies, foreign countries or the
U.S. Government. Money market instruments include the commercial paper and
- --------------------------------------------------------------------------------
6 Prudential Jennison International Growth Fund (telephone) (800) 225-1852

<PAGE>

- --------------------------------------------------------------------------------
HOW THE SERIES INVESTS
- --------------------------------------------------------------------------------

short-term obligations of foreign and domestic corporations, banks and
governments and their agencies.

If we believe it is necessary, we may temporarily invest 100% of the
Series' assets in money market instruments. Investing heavily in these
securities limits our ability to achieve capital appreciation, but may help to
preserve the Series' assets when global or international markets are unstable.

Generally, the Series will purchase only "investment-grade" commercial
paper and bonds. This means the commercial paper and bonds have received one of
the four highest quality ratings determined by Moody's Investors Service, Inc.
("Moody's"), or Standard & Poor's Ratings Group ("S&P"), or one of the other
nationally recognized statistical rating organizations (NRSROs). On occasion,
the Series may buy instruments that are not rated, but that are of comparable
quality to the investment-grade bonds described above. For more information
about bonds and bond ratings, see the SAI, "Appendix I, Description of Security
Ratings."

Repurchase Agreements

The Series may also use repurchase agreements, where a party agrees to sell a
security to the Series and then repurchase it at an agreed-upon price at a
stated time. This creates a fixed return for the Series.

Derivative Strategies

We may use a number of alternative investment strategies--including
derivatives--to try to improve the Series' returns or protect its assets,
although we cannot guarantee these strategies will work, that the instruments
necessary to implement these strategies will be available or that the Series
will not lose money. Derivatives--such as futures, options, foreign currency
forward contracts and options on futures--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
asset, rate or index, will go up or down at some future date. We may use
derivatives to try to reduce risk or to increase return, taking into account the
Series' 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 may use may not match or
correspond exactly with the Series' actual portfolio holdings. In particular,
this will be the case when we use derivatives for return enhancement.
- --------------------------------------------------------------------------------

<PAGE>

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HOW THE SERIES INVESTS
- --------------------------------------------------------------------------------

OPTIONS

The Series may purchase and sell put and call options on equity securities,
stock indices and foreign currencies that are traded on U.S. or foreign
securities exchanges, on NASDAQ or in the over-the-counter market. An option is
the right to buy or sell securities or currencies in exchange for a premium. The
Series will sell only covered options. Covered options are described in our SAI
under "Description of the Series, it Investments and Risks--Hedging and Return
Enhancement Strategies."

Futures Contracts and Related Options, Foreign Currency Forward Contracts

The Series may purchase and sell stock and bond index futures contracts and
related options on stock and bond index futures. The Series also may purchase
and sell futures contracts on foreign currencies and related options on foreign
currency futures contracts. A futures contract is an exchange-traded 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 on a
stipulated future date. The Series may also enter into foreign currency forward
contracts to protect the value of its assets against future changes in the level
of foreign exchange rates. A foreign currency forward contract is an
over-the-counter obligation to buy or sell a given currency on a future date at
a set price.

For more information about these strategies, see the SAI, "Description of
the Series, its Investments and Risks--Hedging and Return Enhancement
Strategies."

Additional Strategies

The Series follows certain policies when it borrows money (the Series can borrow
up to 33 1/3% of the value of its total assets); lends its securities to others
(as an operating policy, which may be changed without stockholder approval, the
Series will not lend more than 30% of the value of its total assets, which for
this purpose includes the value of any collateral received in the transaction);
and holds illiquid securities (the Series may hold up to 15% of its net assets
in illiquid securities, including restricted securities with legal or
contractual restrictions, those without a readily available market and
repurchase agreements with maturities longer than seven days). The Series is
subject to certain investment restrictions that are fundamental policies, which
means they cannot be changed without shareholder approval. For more information
about these restrictions, see the SAI.
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8 Prudential Jennison International Growth Fund (telephone) (800) 225-1852

<PAGE>

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HOW THE SERIES INVESTS
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INVESTMENT RISKS

As noted, all investments involve risk, and investing in the Series is no
exception. This chart outlines the key risks and potential rewards of the
principal investments the Series may make. See, too, "Description of the Series,
Its Investments and Risks" in the SAI.
<TABLE>
<CAPTION>
- ---------------------------------------
INVESTMENT TYPE
- ------------------------------------------------------------------------------------------------------------------
% OF SERIES' TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

o Foreign markets, economies o Investors can
FOREIGN SECURITIES IN GENERAL and political systems may participate in the growth
not be as stable as in the of foreign markets and
AT LEAST 65%; UP TO 100% U.S., particularly those in companies operating in
developing countries those markets
UP TO 30% IN EMERGING MARKETS o Currency risk--changing
SECURITIES values of foreign
currencies
o May be less liquid than
U.S. stocks and bonds
o Differences in foreign
laws, accounting standards
and public information and
custody and settlement practices
o Year 2000 conversion may be more
of a problem for some foreign
issuers, governments and
securities markets.
o Investment in emerging markets
securities are subject to greater
volatility and price declines.

- ------------------------------------------------------------------------------------------------------------------
o Individual stock could o Historically, stocks
COMMON STOCKS AND lose value have outperformed other
OTHER EQUITY-RELATED SECURITIES o The equity markets investments over the long term
could go down, resulting in a o Generally, economic
AT LEAST 65%; UP TO 100% decline in value of growth means higher corporate
the Series' investments profits, which leads to an
o Companies that pay increase in stock prices, known
dividends may not do so if they as capital appreciation
don't have profits o May be a source of
or adequate cash flow dividend income
o Changes in economic or
political conditions,
both domestic and
international, resulting in
a decline in value of a Fund's
investments

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</TABLE>

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9

<PAGE>

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HOW THE SERIES INVESTS
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<TABLE>
<CAPTION>
- ---------------------------------------
INVESTMENT TYPE (CONT'D)
- ------------------------------------------------------------------------------------------------------------------
% OF SERIES' TOTAL ASSETS RISKS POTENTIAL REWARDS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
o Credit risk--the risk o Regular interest income
INVESTMENT-GRADE BONDS that the borrower can't pay o Generally more secure than
back the money borrowed stock since companies must pay
UP TO 35% or make interest payments their debts before they pay
dividends.
o Market risk--the risk
that bonds or other debt
instruments may lose
value in the market because
interest rates change or there
is a lack of confidence in the
borrower
- ------------------------------------------------------------------------------------------------------------------

o Derivatives used for risk o Derivatives could make
DERIVATIVES management may not fully correspond money and protect against
this to the underlying positions losses if the investment
PERCENTAGE VARIES and could result in losses analysis proves correct
to the Series that o Derivatives that involve
would not have otherwise leverage could generate
occurred substantial gains at flow
o Derivatives such as futures, cost
options and foreign currency o One way to manage the
forward contracts may not Series' risk/return
have the intended effects and balance is by locking in
may result in losses the value of an
or missed opportunities investment ahead of
o The other party to a time
derivatives contract could
default
o Derivatives can increase
share price volatility and
those that involve leverage
could magnify losses
o Certain types of
derivatives involve costs that
can reduce returns

- ------------------------------------------------------------------------------------------------------------------
o May be difficult to o May offer a more
ILLIQUID SECURITIES value precisely attractive yield or
o May be difficult to potential for growth than more
UP TO 15% OF NET ASSETS sell at the time or place widely traded securities
desired
- ------------------------------------------------------------------------------------------------------------------
o Limits potential for o May preserve the
MONEY MARKET INSTRUMENTS capital appreciation Series' assets
o See credit risk and
UP TO 100% ON A market risk under the heading
TEMPORARY BASIS "Investment-grade bonds" above.

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</TABLE>

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10 Prudential Jennison International Growth Fund (telephone) (800) 225-1852
<PAGE>

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HOW THE SERIES IS MANAGED
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BOARD OF DIRECTORS

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

MANAGER
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC (PIFM)
GATEWAY CENTER THREE, 100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077

Under a management agreement with the Fund, PIFM manages the Fund's investment
operations and administers its business affairs. Pursuant to the agreement, PIFM
may receive management fees of .85 of 1% of the average daily net assets of the
Series up to and including $300 million, .75 of 1% of the average daily net
assets of the Series in excess of $300 million and up to and including $1.5
billion, and .70 of 1% of the average daily net assets of the Series over $1.5
billion.

As of December 31, 1999, PIFM served as the Manager to all of the
Prudential Mutual Funds, and as Manager or administrator to closed-end
investment companies, with aggregate assets of approximately $______ billion.

INVESTMENT ADVISER

Jennison Associates LLC (Jennison) is the Series' investment adviser. Its
address is 466 Lexington Avenue, New York, NY 10017. PIFM has responsibility for
all investment advisory services and supervises Jennison. PIFM pays Jennison at
an annual rate of .60 of 1% of the average daily net assets of the Series up to
and including $300 million, .50 of 1% of the average daily net assets of the
Series in excess of $300 million and up to and including $1.5 billion, and .45
of 1% of the average daily net assets over $1.5 billion. As of December 31,
1999, Jennison managed approximately $________ billion in assets.

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11

<PAGE>

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HOW THE SERIES IS MANAGED
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PORTFOLIO MANAGERS

The Series is co-managed by Blair Boyer and Howard Moss.

Blair Boyer and Howard Moss have managed the Series since its inception. Blair
has been a director and senior vice president of Jennison since 1993. Howard has
been a director and executive vice president of Jennison since 1993. Prior to
joining Jennison, Blair and Howard were employed as portfolio managers with
Arnold and S. Bleichroeder.

DISTRIBUTOR

Prudential Investment Management Services LLC (PIMS) distributes the Fund's
shares under a Distribution Agreement with the Fund. The Fund has Distribution
and Service Plans under Rule 12b-1 of the Investment Company Act. Under the
Plans and the Distribution Agreement, PIMS pays the expenses of distributing the
Fund's Class A, B, C and Z shares, and provides certain shareholder support
services. The Fund pays distribution and other fees to PIMS as compensation for
its services for each class of shares other than Class Z. These fees--known as
12b-1 fees--are shown in the "Fees and Expenses" tables.

- --------------------------------------------------------------------------------
12 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

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SERIES DISTRIBUTIONS AND TAX ISSUES
- --------------------------------------------------------------------------------

Investors who buy shares of the Series should be aware of some important tax
issues. For example, the Series distributes dividends of ordinary income and
distributes realized net capital gains, if any, to shareholders. These
distributions are subject to taxes, unless you hold your shares in a 401(k)
plan, an Individual Retirement Account (IRA) or some other qualified
tax-deferred plan or account. Dividends and distributions from the Series may
also be subject to state income tax in the state where you live.

Also, if you sell shares of the Series for a profit, you may have to pay
capital gains taxes on the amount of your profit, again unless you hold your
shares in a qualified tax-deferred plan or account.

The following briefly discusses some of the important federal tax issues
you should be aware of, but is not meant to be tax advice. For tax advice,
please speak with your tax adviser.

DISTRIBUTIONS

The Series distributes dividends of any net investment income to shareholders,
typically once a year. For example, if the Series owns ACME Corp. stock and the
stock pays a dividend, the Series will pay out a portion of this dividend to its
shareholders, assuming the Series' income is more than its costs and expenses.
The dividends you receive from the Series will be taxed as ordinary income,
whether or not they are reinvested in the Series.

The Series also distributes realized net capital gains to shareholders--
typically once a year. Capital gains are generated when the Fund sells its
assets for a profit. For example, if the Series bought 100 shares of ACME Corp.
stock for a total of $1,000 and more than one year later sold the shares for a
total of $1,500, the Series has net long-term capital gains of $500, which it
will pass on to shareholders (assuming the Series' total gains are greater than
any losses it may have). Capital gains are taxed differently depending on how
long the Series holds the security--if a security is held more than one year
before it is sold, long-term capital gains are taxed at the rate of 20%, but if
the security is held one year or less, short-term capital gains are taxed at
rates up to 39.6%. Different rates apply to corporate shareholders.

For your convenience, Series distributions of dividends and capital gains
are automatically reinvested in the Series without any sales charge. If you ask
us to pay the distributions in cash, we will send you a check if your account is
with the Transfer Agent. Otherwise, if your account is with a broker, you will
receive a credit to your account. Either way, the distributions may be subject
to

- --------------------------------------------------------------------------------
13

<PAGE>

taxes, unless your shares are held in a qualified tax-deferred plan or
account. For more information about automatic reinvestment and other shareholder
services, see "Step 4: Additional Shareholder Services" in the next section.

TAX ISSUES
FORM 1099

Every year, you will receive a Form 1099, which reports the amount of dividends
and capital gains we distributed to you during the prior year. If you own shares
of the Series as part of a qualified tax-deferred plan or account, your taxes
are deferred, so you will not receive a Form 1099. However, you will receive a
Form 1099 when you take any distributions from your qualified tax-deferred plan
or account.

Series distributions are generally taxable to you in the year they are
received, except when we declare certain dividends in the fourth quarter, and
actually pay them in January of the following year. In such cases, the dividends
are treated as if they were paid on December 31 of the prior year. Corporate
shareholders are eligible for the 70% dividends--received deduction for certain
dividends.

WITHHOLDING TAXES

If federal tax law requires you to provide the Series with your tax
identification number and certifications as to your tax status, and you fail to
do this, or if you are otherwise subject to backup withholding, we will withhold
and pay to the U.S. Treasury 31% of your distributions and sale proceeds.
Dividends of net investment income and short-term capital gains paid to a
nonresident foreign shareholder generally will be subject to a U.S. withholding
tax of 30%. This rate may be lower, depending on any tax treaty the U.S. may
have with the shareholder's country.

IF YOU PURCHASE JUST BEFORE RECORD DATE

If you buy shares of the Series just before the record date (the date that
determines who receives the distribution), that distribution will be paid to
you. As explained above, the distribution may be subject to income or capital
gains taxes. You may think you've done well, since you bought shares one day and
soon thereafter received a distribution. That is not so because when dividends

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14 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

are paid out, the value of each share of the Series decreases by the amount of
the dividend to reflect the payout, although this may not be apparent because
the value of each share of the Series also will be affected by the market
changes, if any. The distribution you receive makes up for the decrease in share
value. However, the timing of your purchase does mean that part of your
investment came back to you as taxable income.

QUALIFIED OR TAX-DEFERRED RETIREMENT PLANS

Retirement plans and accounts allow you to defer paying taxes on investment
income and capital gains. Contributions to these plans may also be tax
deductible, although distributions from these plans generally are taxable. In
the case of Roth IRA accounts, contributions are not tax deductible, but
distributions from the plan may be tax free. Please contact your financial
adviser for information on a variety of retirement plans offered by The
Prudential Insurance Company of America.

IF YOU SELL OR EXCHANGE YOUR SHARES

If you sell any shares of the Series for a profit, you have realized a capital
gain, which is subject to tax unless you hold shares in a qualified tax-deferred
plan or account. The amount of tax you pay depends on how long you owned your
shares. If you sell shares of the Series for a loss, you may have a capital
loss, which you may use to offset certain capital gains you have.

[GRAPHICAL REPRESENTATION OF CHART]

- ---------------------------------------------
======> +$ CAPITAL GAIN
(taxes owed)
RECEIPTS
FROM SALE OR

======> -$ CAPITAL LOSS
(offset against gain)
- ---------------------------------------------

If you sell shares and realize a loss, you will not be permitted to use the
loss to the extent you replace the shares (including pursuant to the
reinvestment of a dividend) within a 61-day period (beginning 30 days before the
sale of the shares). If you acquire shares of the Series and sell your shares
within 90 days, you may not be allowed to include certain charges incurred in
acquiring the shares for purposes of calculating gain or loss realized upon the
sale of the shares.

Exchanging your shares of the Series for the shares of another Prudential
Mutual Fund is considered a sale for tax purposes. In other words, it's a
"taxable event." Therefore, if the shares you exchanged have increased in value

- --------------------------------------------------------------------------------
15

<PAGE>

since you purchased them, you have capital gains, which are subject to the taxes
described above.

Any gain or loss you may have from selling or exchanging Series shares will
not be reported on Form 1099. Therefore, unless you hold your shares in a
qualified tax-deferred plan or account, you or your financial adviser should
keep track of the dates on which you buy and sell--or exchange--Series shares,
as well as the amount of any gain or loss on each transaction. For tax advice,
please see your tax adviser.

AUTOMATIC CONVERSION OF CLASS B SHARES

We have obtained a legal opinion that the conversion of Class B shares into
Class A shares--which happens automatically approximately seven years after
purchase--is not a "taxable event" because it does not involve an actual sale of
your Class B shares. This opinion, however, is not binding on the IRS. For more
information about the automatic conversion of Class B shares, see "Class B
Shares Convert to Class A Shares After Approximately Seven Years" in the next
section.

- --------------------------------------------------------------------------------
16 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>
- --------------------------------------------------------------------------------
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE SERIES
- --------------------------------------------------------------------------------

INITIAL OFFERING OF SHARES

PIMS will solicit subscriptions for Class A, Class B, Class C and Class Z shares
of the Series during a subscription period beginning January 26, 2000 and
expected to end February 25, 2000. Fund shares subscribed for during this time
will be issued at a net asset value of $10.00 per share on a closing date
expected to occur on June 30, 2000. An initial sales charge of up to 5% (5.26%
of the net amount invested) is imposed on each transaction in Class A shares.
This initial sales charge may be reduced depending on the amount of the purchase
as shown in the table under "Reducing or Waiving Class A's Initial Sales Charge"
or the applicability of any waiver or reduction of the sales charge. An initial
sales charge of 1% (1.01% of the net amount invested) is imposed on each
transaction in Class C shares. Your broker will notify you of the end of the
subscription period. Payment for Series shares will be due within three days. If
you send an order during the subscription period along with payment, your money
will be returned unless you allow the money to be invested in Prudential
MoneyMart Assets, Inc. (MoneyMart Fund), a money market fund until commencement
of the closing period described below. If this is your first investment in
MoneyMart Fund, all amounts received and invested in MoneyMart Fund, including
any dividends received on these funds, will be automatically invested in this
Series on the closing date. If you previously owned shares of MoneyMart Fund,
dividends accrued on your shares will not be exchanged for Series shares. The
minimum initial investment is $1,000 for Class A and Class B shares and $2,500
for Class C shares. There are no minimum investment requirements for Class Z
shares and for certain retirement and employee savings plans or custodial
accounts for minors. You will not receive share certificates.

If you subscribe for shares, you will not have any rights as a shareholder
of the Series until your shares are paid for and their issuance has been
reflected in the Series' books. We reserve the right to withdraw, modify or
terminate the initial offering without notice and to refuse any order in whole
or in part.

The Funds will be closed for purchases and exchanges from on or about
___________, 2000 to __________, 2000, while the investment advisers invest the
proceeds of the offering in accordance with the Series' investment objective and
policies (the closing period). Beginning on or about ____________, 2000, the
Series will commence a continuous offering of its shares. During the closing
period, shareholderrs may redeem existing positions or exchange out of a Fund,
but the Series will be closed to new purchases and no exchanges into the Series
will be accepted.

- --------------------------------------------------------------------------------
17

<PAGE>

- --------------------------------------------------------------------------------
HOW TO BUY, SELL AND
EXCHANGE SHARES OF THE SERIES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

STEP 1: OPEN AN ACCOUNT

If you don't have an account with us or a securities firm that is permitted to
buy or sell shares of the Series for you, call Prudential Mutual Fund Services
LLC (PMFS) at (800) 225-1852 or contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: INVESTMENT SERVICES
P.O. BOX 15020
NEW BRUNSWICK, NJ 08906-5020

To purchase by wire, call the number above to obtain an application. After
PMFS receives your completed application, you will receive an account number.
For additional information about purchasing shares of the Series, see the back
cover page of this prospectus. We have the right to reject any purchase order
(including an exchange into the Series) or suspend or modify the Series' sale of
its shares.

STEP 2: CHOOSE A SHARE CLASS

Individual investors can choose among Class A, Class B, Class C, and Class Z
shares of the Series, although Class Z shares are available only to a limited
group of investors.

Multiple share classes let you choose a cost structure that better meets
your needs. With Class A shares, you pay the sales charge at the time of
purchase, but the operating expenses each year are lower than the expenses of
Class B and Class C shares. With Class B shares, you only pay a sales charge if
you sell your shares within six years (that is why it is called a Contingent
Deferred Sales Charge, or CDSC), but the operating expenses each year are higher
than the Class A share expenses. With Class C shares, you pay a 1% front-end
sales charge and a 1% CDSC if you sell within 18 months of purchase, but the
operating expenses are also higher than the expenses for Class A shares.

When choosing a share class, you should consider the following:

o The amount of your investment

o The length of time you expect to hold the shares and the impact of the
varying distribution fees

o The different sales charges that apply to each share class--Class A's
front-end sales charge vs. Class B's CDSC vs. Class C's low front-end
sales charge and low CDSC

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18 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

o Whether you qualify for any reduction or waiver of sales charges

o The fact that Class B shares automatically convert to Class A shares
approximately seven years after purchase

o Whether you qualify to purchase Class Z shares

See "How to Sell Your Shares" for a description of the impact of CDSCs.

Share Class Comparison. Use this chart to help you compare the Series' different
share classes. The discussion following this chart will tell you whether you are
entitled to a reduction or waiver of any sales charges.

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

CLASS A CLASS B CLASS C CLASS Z

Minimum purchase $1,000 $1,000 $2,500 None
amount (1)

Minimum amount for $100 $100 $100 None
subsequent purchases
(1)

Maximum initial 5% of the None 1% of the None
sales charge public public
offering offering price
price

1% on sales

Contingent Deferred None If Sold During: made within None
Sales Charge (CDSC) (2) Year 1 5% 18 months
Year 2 4% of purchase(2)
Year 3 3%
Year 4 2%
Year 5/6 1%
Year 7 0%

Annual distribution .30 of 1% 1% 1% None
and service (12b-1) (.25 of 1%
fees (shown as a currently)
percentage of average
net assets) (3)

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

(1) The minimum investment requirements do not apply to certain retirement and
employee savings plans and custodial accounts for minors. The minimum
initial and subsequent investment for purchases made through the Automatic
Investment Plan is $50. For more information, see "Additional Shareholder
Services--Automatic Investment Plan."

(2) For more information about the CDSC and how it is calculated, see
"Contingent Deferred Sales Charges (CDSC)."

(3) These distribution fees are paid from the Series' assets on a continuous
basis. Over time, the fees will increase the cost of your investment and
may cost you more than paying other types of sales charges. The service fee
for each of Class A, Class B and Class C shares is .25 of 1%. The
distribution fee for Class A shares is limited to .30 of 1% (including the
.25 of 1% service fee ) and is .75 of 1% for each of Class B and Class C
shares. For the fiscal year ending October 31, 2000, the Distributor of the
Fund has contractually agreed to reduce its distribution and service
(12b-1) fees for Class A shares to .25 of 1% of the average daily net
assets of the Class A shares.

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

<PAGE>

REDUCING OR WAIVING CLASS A'S INITIAL SALES CHARGE

The following describes the different ways investors can reduce or avoid paying
Class A's initial sales charge.

Increase the Amount of Your Investment. You can reduce Class A's sales charge by
increasing the amount of your investment. This table shows how the sales charge
decreases as the amount of your investment increases.

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

SALES CHARGE AS % SALES CHARGE AS % DEALER
AMOUNT OF PURCHASE OF OFFERING PRICE OF AMOUNT INVESTED ALLOWANCE

Less than $25,000 5.00% 5.26% 4.75%

$25,000 to $49,999 4.50% 4.71% 4.25%

$50,000 to $99,999 4.00% 4.17% 3.75%

$100,000 to $249,999 3.25% 3.36% 3.00%

$250,000 to $499,999 2.50% 2.56% 2.40%

$500,000 to $999,999 2.00% 2.04% 1.90%

$1 million and above* None None None

* If you invest $1 million or more, you can buy only Class A shares, unless you
qualify to buy Class Z shares.

To satisfy the purchase amounts above, you can

o Invest with a group of investors who are related to you;

o Buy the Class A shares of two or more Prudential Mutual Funds at the
same time;

o Use your Rights of Accumulation, which allow you to combine the
current value of Prudential Mutual Fund shares you already own with
the value of the shares you are purchasing for purposes of determining
the applicable sales charge; or

o Sign a Letter of Intent, stating in writing that you or a group of
investors will purchase a certain amount of shares in the Series and
other Prudential Mutual Funds within 13 months.

The Distributor may reallow Class A's sales charge to dealers.

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

20 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

Benefit Plans. Certain group retirement and savings plans may purchase Class A
shares without the initial sales charge if they meet the required minimum for
amount of assets, average account balance or number of eligible employees. For
more information about these requirements, call Prudential at (800) 353-2847.

Mutual Series Programs. The initial sales charge will be waived for investors in
certain programs sponsored by broker-dealers, investment advisers and financial
planners who have agreements with Prudential Investments Advisory Group relating
to:

o Mutual fund "wrap" or asset allocation program, where the sponsor
places fund trades and charges its clients a management, consulting or
other fee for its services, or

o Mutual fund "supermarket" programs where the sponsor links its
clients' accounts to a master account in the sponsor's name and the
sponsor charges a fee for its services.

Broker-dealers, investment advisers or financial planners sponsoring these
mutual fund programs may offer their clients more than one class of shares in
the Series in connection with different pricing options for their programs.
Investors should consider carefully any separate transaction and other fees
charged by these programs in connection with investing in each available share
class before selecting a share class.

Other Types of Investors. Other investors pay no sales charges, including
certain officers, employees or agents of Prudential and its affiliates,
Prudential Mutual Funds, the subadvisers of the Prudential Mutual Funds and
clients of brokers that have entered into a selected dealer agreement with the
Distributor. To qualify for a reduction or waiver of the sales charge, you must
notify the Transfer Agent or your broker at the time of purchase. For more
information about reducing or eliminating Class A's sales charge, see the SAI,
"Purchase, Redemption and Pricing of Fund Shares--Reduction and Waiver of
Initial Sales Charges--Class A Shares."

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

<PAGE>

WAIVING CLASS C'S INITIAL SALES CHARGE

Benefit Plans. Certain group retirements plans may purchase Class C shares
without the initial sales charge. For more information, call Prudential at
(800) 353-2847.

Investment of Redemption Proceeds from Other Investment Companies. The initial
sales charge will be waived for purchases of Class C shares if the purchase is
made with money from the redemption of shares of any unaffiliated investment
company, as long as the shares were not held in an account at Prudential
Securities Incorporated or one of its affiliates. These purchases must be made
within 60 days of the redemption. To qualify for this waiver, you must:

o purchase your shares through an account at Prudential Securities;

o purchase your shares through an ADVANTAGE Account or an Investor
Account with Pruco Securities Corporation; or

o purchase your shares through other brokers.

The waiver is not available to investors who purchase shares directly from
the Transfer Agent. If you are entitiled to the waiver, you must notify either
the Transfer Agent or your broker. The Transfer Agent may require any supporting
documents it considers appropriate.

QUALIFYING FOR CLASS Z SHARES

Benefit Plans. Certain group retirement plans may purchase Class Z shares if
they meet the required minimum amount of assets, average account balance or
number of eligible employees. For more information about these requirements,
call Prudential at (800) 353-2847.

Mutual Fund Programs. Class Z shares also can be purchased by participants in
any fee-based program or trust program sponsored by Prudential or an affiliate
that includes the Series as an available option. Class Z shares also can be
purchased by investors in certain programs sponsored by broker-dealers,
investment advisers and financial planners who have agreements with Prudential
Investments Advisory Group relating to:

o Mutual fund "wrap" or asset allocation programs where the sponsor
places fund trades, links its clients' accounts to a master account in
the

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

22 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

sponsor's name and charges its clients a management, consulting or
other fee for its services, or

o Mutual fund "supermarket" programs, where the sponsor links its
clients' accounts to a master account in the sponsor's name and the
sponsor charges a fee for its services.

Other Types of Investors. Class Z shares also can be purchased by any of the
following:

o Certain participants in the MEDLEY Program (group variable annuity
contracts) sponsored by Prudential for whom Class Z shares of the
Prudential mutual funds are an available option,

o Current and former Directors/Trustees of the Prudential mutual funds
(including the Series), and

o Prudential, with an investment of $10 million or more.

In connection with the sales of shares, the Manager, the Distributor or one
of their affiliates may pay brokers, financial advisers and other persons a
commission of up to 4% of the purchase price for Class B shares, up to 2% of the
purchase price for Class C shares and a finder's fee for Class A or Class Z
shares from their own resources based on a percentage of the net asset value of
shares sold or otherwise.

CLASS B SHARES CONVERT TO CLASS A SHARES AFTER APPROXIMATELY SEVEN YEARS

If you buy Class B shares and hold them for approximately seven years, we will
automatically convert them into Class A shares without charge. At that time, we
will also convert any Class B shares that you purchased with reinvested
dividends and other distributions. Since the 12b-1 fees for Class A shares are
lower than for Class B shares, converting to Class A shares lowers your Series
expenses.

When we do the conversion, you will get fewer Class A shares than the
number of Class B shares converted if the price of the Class A shares is higher
than the price of Class B shares. The total dollar value will be the same, so
you

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

<PAGE>

will not have lost any money by getting fewer Class A shares. We do the
conversions quarterly, not on the anniversary date of your purchase. For more
information, see the SAI, "Purchase, Redemption and Pricing of Fund
Shares--Conversion Feature--Class B Shares."

STEP 3: UNDERSTANDING THE PRICE YOU'LL PAY

The price you pay for each share of the Series is based on the share value. The
share value of a mutual fund--known as the net asset value or NAV--is
determined by a simple calculation--it's the total value of the Series (assets
minus liabilities) divided by the total number of shares outstanding. For
example, if the value of the investments held by Fund XYZ (minus its expenses)
is $1,000 and there are 100 shares of Fund XYZ owned by shareholders, the price
of one share of the fund--or the NAV--is $10 ($1,000 divided by 100). Portfolio
securities are valued based upon market quotations or, if not readily available,
at fair value as determined in good faith under procedures established by the
Fund's Board. Most national newspapers report the NAVs of most mutual funds,
which allows investors to check the price of mutual funds daily.

- --------------------------------------------------------------------------------
MUTUAL FUND SHARES

The NAV of mutual fund shares changes every day because the value of a fund's
portfolio changes constantly. For example, if Fund XYZ holds ACME Corp. stock in
its portfolio and the price of ACME stock goes up, while the value of the fund's
other holdings remains the same and expenses don't change, the NAV of Fund XYZ
will increase.

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

We determine the NAV of our shares once each business day at 4:15 p.m. New
York Time on days that the New York Stock Exchange (NYSE) is open for trading.
The NYSE is closed on national holidays and Good Friday. Because the Series
invests in foreign securities, its NAV can change on days when you cannot buy or
sell shares. We do not determine NAV on days when we have not received any
orders to purchase, sell or exchange Series shares, or when changes in the value
of the Series' portfolio do not materially affect the NAV.

WHAT PRICE WILL YOU PAY FOR SHARES OF THE SERIES?

For Class A and Class C shares, you'll pay the public offering price, which is
NAV next determined after we receive your order to purchase, plus an initial

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

24 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

sales charge (unless you're entitled to a waiver). For Class B and Class Z
shares, you will pay the NAV next determined after we receive your order to
purchase (remember, there are no up-front sales charges for these share
classes). Your broker may charge a separate or additional fee for purchases of
shares.

STEP 4: ADDITIONAL SHAREHOLDER SERVICES

As a Series shareholder, you can take advantage of the following services and
privileges:

Automatic Reinvestment. As we explained in the "Series Distributions and Tax
Issues" section, the Series pays out--or distributes--its net investment income
and capital gains to all shareholders. For your convenience, we will
automatically reinvest your distributions in the Series at NAV without any sales
charge. If you want your distributions paid in cash, you can indicate this
preference on your application, notify your broker, or notify the Transfer Agent
in writing (at the address below) at least five business days before the date we
determine who receives dividends.

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: ACCOUNT MAINTENANCE
P.O. BOX 15015
NEW BRUNSWICK, NJ 08906-5015

Automatic Investment Plan. You can make regular purchases of the Series for as
little as $50 by having the funds automatically withdrawn from your bank or
brokerage account at specified intervals.

Retirement Plan Services. Prudential offers a wide variety of retirement plans
for individuals and institutions, including large and small businesses. For
information on IRAs, including Roth IRAs, or SEP-IRAs for a one-person business,
please contact your financial adviser. If you are interested in opening a 401(k)
or other company-sponsored retirement plan (SIMPLES, SEP plans, Keoghs,
403(b)(7) plans, pension and profit-sharing plans), your financial adviser will
help you determine which retirement plan best meets your needs. Complete
instructions about how to establish and maintain your plan and how

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

<PAGE>

to open accounts for you and your employees will be included in the retirement
plan kit you receive in the mail.

The PruTector Program. Optional group term life insurance--which protects the
value of your Prudential Mutual Fund investment for your beneficiaries against
market declines--is available to investors who purchase their shares through
Prudential. Eligible investors who apply for PruTector coverage after the
initial 6-month enrollment period will need to provide satisfactory evidence of
insurability. This insurance is subject to other restrictions and is not
available in all states.

Systematic Withdrawal Plan. A systematic withdrawal plan is available that will
provide you with monthly, quarterly, semi-annual or annual redemption checks.
Remember, the sale of Class B and Class C shares may be subject to a CDSC.

Reports to Shareholders. Every year we will send you an annual report (along
with an updated prospectus) and a semi-annual report, which contain important
financial information about the Series. To reduce Series expenses, we will send
one annual shareholder report, one semi-annual shareholder report and one annual
prospectus per household, unless you instruct us or your broker otherwise.

HOW TO SELL YOUR SHARES

You can sell your shares of the Series for cash (in the form of a check) at any
time, subject to certain restrictions.

When you sell shares of the Series--also known as redeeming your
shares--the price you will receive will be the NAV next determined after the
Transfer Agent, the Distributor or your broker receives your order to sell. If
your broker holds your shares, he must receive your order to sell by 4:15 p.m.
New York Time to process the sale on that day. Otherwise, contact:

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

26 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: REDEMPTION SERVICES
P.O. BOX 15010
NEW BRUNSWICK, NJ 08906-5010

Generally, we will pay you for the shares that you sell within seven days
after the Transfer Agent, the Distributor or your broker receives your sell
order. If you hold shares through a broker, payment will be credited to your
account. If you are selling shares you recently purchased with a check, we may
delay sending you the proceeds until your check clears, which can take up to 10
days from the purchase date. You can avoid delay if you purchase shares by wire,
certified check or cashier's check. Your broker may charge a separate or
additional fee for purchases and sales of shares.

RESTRICTIONS ON SALES

There are certain times when you may not be able to sell shares of the Series,
or when we may delay paying you the proceeds from a sale. This may happen during
unusual market conditions or emergencies when the Series can't determine the
value of its assets or sell its holdings. For more information, see the SAI,
"Purchase, Redemption and Pricing of Series Shares--Sale of Shares."

If you are selling more than $100,000 of shares, you want the check sent to
someone or some place that is not in our records or you are a business or a
trust and you hold shares directly with the Transfer Agent, you may have to have
the signature on your sell order signature guaranteed by an "eligible guarantor
institution." An "eligible guarantor institution" includes any bank,
broker-dealer or credit union. For more information, see the SAI, "Purchase,
Redemption and Pricing of Series Shares--Sale of Shares."

CONTINGENT DEFERRED SALES CHARGES (CDSC)

If you sell Class B shares within six years of purchase or Class C shares within
18 months of purchase, you will have to pay a CDSC. To keep the CDSC as low as
possible, we will sell amounts representing shares in the following order:

o Amounts representing shares you purchased with reinvested dividends
and distributions

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<PAGE>

o Amounts representing shares that represent the increase in NAV above
the total amount of payments for shares made during the past six years
for class B shares and 18 months for Class C shares

o Amounts representing the cost of shares held beyond the CDSC period
(six years for Class B shares and 18 months for Class C shares)

Since shares that fall into any of the categories listed above are not
subject to the CDSC, selling them first helps you to avoid--or at least
minimize--the CDSC.

Having sold the exempt shares first, if there are any remaining shares that
are subject to the CDSC, we will apply the CDSC to amounts representing the cost
of shares held for the longest period of time within the applicable CDSC period.

As we noted before in the "Share Class Comparison" chart, the CDSC for
Class B shares is 5% in the first year, 4% in the second, 3% in the third, 2% in
the fourth and 1% in the fifth and sixth years. The rate decreases on the first
day of the month following the anniversary date of your purchase, not on the
anniversary date itself. The CDSC is 1% for Class C shares--which is applied to
shares sold within 18 months of purchase. For both Class B and Class C shares,
the CDSC is the lesser of the original purchase price or the redemption
proceeds. For purposes of determining how long you've held your shares, all
purchases during the month are grouped together and considered to have been made
on the last day of the month.

The holding period for purposes of determining the applicable CDSC will be
calculated from the first day of the month after initial purchase, excluding any
time shares were held in a money market fund.

WAIVER OF THE CDSC--CLASS B SHARES

The CDSC will be waived if the Class B shares are sold:

o After a shareholder is deceased or disabled (or, in the case of a
trust account, the death or disability of the grantor). This waiver
applies to individual shareholders, as well as shares owned in joint
tenancy (with rights of survivorship), provided the shares were
purchased before the death or disability;

o To provide for certain distributions--made without IRS penalty--from a
tax-deferred retirement plan, IRA, or Section 403(b) custodial
account; and

o On certain sales from a Systematic Withdrawal Plan.

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28 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

For more information on the above and other waivers, see the SAI,
"Purchase, Redemption and Pricing of Fund Share--Waiver of Contingent Deferred
Sales Charges--Class B Shares."

WAIVER OF THE CDSC--CLASS C SHARES

Benefit Plans The CDSC will be waived for redemptions by certain group
retirement plans for which Prudential or brokers not affiliated with Prudential
provide administrative or recordkeeping services. The CDSC will also be waived
for certain redemptions by benefit plans sponsored by Prudential and its
affiliates. For more information, call Prudential at (800) 353-2847.

REDEMPTION IN KIND

If the sales of Series shares you make during any 90-day period reach the lesser
of $250,000 or 1% of the value of the Series' net assets, we can then give you
securities from the Series' portfolio instead of cash. If you want to sell the
securities for cash, you would have to pay the costs charged by a broker.

SMALL ACCOUNTS

If you make a sale that reduces your account value to less than $500, we may
sell the rest of your shares (without charging any CDSC) and close your account.
We would do this to minimize the Series' expenses paid by other shareholders. We
will give you 60 days' notice, during which time you can purchase additional
shares to avoid this action. This involuntary sale does not apply to
shareholders who own their shares as part of a 401(k) plan, an IRA or some other
qualified tax-deferred plan or account.

90-DAY REPURCHASE PRIVILEGE

After you redeem your shares, you have a 90-day period during which you may
reinvest any of the redemption proceeds in shares of the same Series without
paying an initial sales charge. Also, if you paid a CDSC when you redeemed your
shares, we will credit your new account with the appropriate number of shares to
reflect the amount of the CDSC you paid. In order to take advantage of this
one-time privilege, you must notify the Transfer Agent or your broker at the
time of the repurchase. See the SAI, "Purchase, Redemption and Pricing of Series
Shares--Sale of Shares."

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

<PAGE>

RETIREMENT PLANS

To sell shares and receive a distribution from your retirement account, call
your broker or the Transfer Agent for a distribution request form. There are
special distribution and income tax withholding requirements for distributions
from retirement plans and you must submit a withholding form with your request
to avoid delay. If your retirement plan account is held for you by your employer
or plan trustee, you must arrange for the distribution request to be signed and
sent by the plan administrator or trustee. For additional information, see the
SAI.

HOW TO EXCHANGE YOUR SHARES

You can exchange your shares of the Series for shares of the same class in
certain other Prudential Mutual Funds--including certain money market funds--if
you satisfy the minimum investment requirements. For example, you can exchange
Class A shares of the Series for Class A shares of another Prudential Mutual
Fund, but you can't exchange Class A shares for Class B, Class C or Class Z
shares. Class B and C shares may not be exchanged into money market funds other
than Prudential Special Money Market Fund, Inc. After an exchange, at
redemption, the CDSC will be calculated from the first day of the month after
initial purchase, excluding any time shares were held in a money market fund. We
may change the terms of the exchange privilege after giving you 60 days' notice.

If you hold shares through a broker, you must exchange shares through your
broker. Otherwise contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTN: EXCHANGE PROCESSING
P.O. BOX 15010
NEW BRUNSWICK, NJ 08906-5010

There is no sales charge for such exchanges. However, if you exchange--and
then sell--Class B shares within approximately six years of your original
purchase or Class C shares within 18 months of your original purchase, you must
still pay the applicable CDSC. If you have exchanged Class B or Class C shares
into a money market fund, the time you hold the shares in the money market
account will not be counted in calculating the required holding periods for
CDSC liability.

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

30 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

Remember, as we explained in the section entitled "Series Distributions and
Tax Issues--If You Sell or Exchange Your Shares," exchanging shares is
considered a sale for tax purposes. Therefore, if the shares you exchange are
worth more than you paid for them, you may have to pay capital gains tax. For
additional information about exchanging shares, see the SAI, "Shareholder
Investment Account--Exchange Privilege."

If you own Class B or Class C shares and qualify to purchase either Class A
shares without paying an initial sales charge or Class Z shares, we will
automatically exchange your Class B or Class C shares which are not subject to a
CDSC for Class A or Class Z shares, as appropriate. We make such exchanges on a
quarterly basis if you qualify for this exchange privilege. We have obtained a
legal opinion that this exchange is not a "taxable event" for federal income tax
purposes. This opinion is not binding on the IRS.

FREQUENT TRADING

Frequent trading of Series shares in response to short-term fluctuations in the
market--also known as "market timing"--may make it very difficult to manage the
Series' investments. Also when market timing occurs, the Series may have to sell
portfolio securities to have the cash necessary to redeem the market timer's
shares. This can happen at a time when it is not advantageous to sell any
securities, so the Series' performance may be hurt. When large dollar amounts
are involved, market timing can also make it difficult to use long-term
investment strategies because we cannot predict how much cash the fund will have
to invest. When, in our opinion, such activity would have a disruptive effect on
portfolio management, the Series reserves the right to refuse purchase orders
and exchanges into the Series by any person, group or commonly controlled
accounts. The Series may notify a market timer of rejection of an exchange or
purchase order subsequent to the day the order is placed. If the Series allows a
market timer to trade Series shares, it may require the market timer to enter
into a written agreement to follow certain procedures and limitations.

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

<PAGE>
- --------------------------------------------------------------------------------
THE PRUDENTIAL MUTUAL FUND FAMILY
- --------------------------------------------------------------------------------

Prudential offers a broad range of mutual funds designed to meet your individual
needs. For more information about these funds, contact your financial adviser or
call us at (800) 225-1852. Read the prospectus carefully before you invest or
send money.

STOCK FUNDS

PRUDENTIAL DISTRESSED SECURITIES FUND, INC.
PRUDENTIAL EMERGING GROWTH FUND, INC.
PRUDENTIAL EQUITY FUND, INC.
PRUDENTIAL EQUITY INCOME FUND
PRUDENTIAL INDEX SERIES FUND
Prudential Small-Cap Index Fund
Prudential Stock Index Fund
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
PRUDENTIAL MID-CAP VALUE FUND
PRUDENTIAL REAL ESTATE SECURITIES FUND
PRUDENTIAL SECTOR FUNDS, INC.
Prudential Financial Service Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
PRUDENTIAL SMALL-CAP QUANTUM FUND, INC.
PRUDENTIAL SMALL COMPANY VALUE
FUND, INC.
PRUDENTIAL 20/20 FOCUS FUND
PRUDENTIAL TAX-MANAGED EQUITY FUND
PRUDENTIAL UTILITY FUND, INC.
NICHOLAS-APPLEGATE FUND, INC.
Nicholas-Applegate Growth Equity Fund
TARGET FUNDS
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
ASSET ALLOCATION/BALANCED FUNDS
PRUDENTIAL BALANCED FUND
PRUDENTIAL DIVERSIFIED FUNDS
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Prudential Active Balanced Fund
GLOBAL FUNDS
GLOBAL STOCK FUNDS
PRUDENTIAL DEVELOPING MARKETS FUND
Prudential Developing Markets
Equity Fund
Prudential Latin America Equity Fund
PRUDENTIAL EUROPE GROWTH FUND, INC.
PRUDENTIAL GLOBAL GENESIS FUND, INC.
PRUDENTIAL INDEX SERIES FUND
Prudential Europe Index Fund
Prudential Pacific Index Fund
PRUDENTIAL NATURAL RESOURCES
FUND, INC.
PRUDENTIAL PACIFIC GROWTH FUND, INC.
PRUDENTIAL WORLD FUND, INC.
Global Series
International Stock Series
Prudential Jennison International
Growth Fund
GLOBAL UTILITY FUND, INC.
TARGET FUNDS
International Equity Fund
GLOBAL BOND FUNDS
PRUDENTIAL GLOBAL LIMITED MATURITY FUND, INC.
Limited Maturity Portfolio
PRUDENTIAL GLOBAL TOTAL RETURN FUND, INC.
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
PRUDENTIAL INTERNATIONAL BOND
FUND, INC.

- --------------------------------------------------------------------------------
32 PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND (telephone) (800) 225-1852

<PAGE>

- --------------------------------------------------------------------------------
THE PRUDENTIAL MUTUAL FUND FAMILY
- --------------------------------------------------------------------------------

BOND FUNDS

TAXABLE BOND FUNDS
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
PRUDENTIAL GOVERNMENT INCOME
FUND, INC.
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Short-Intermediate Term Series
PRUDENTIAL HIGH YIELD FUND, INC.
PRUDENTIAL HIGH YIELD TOTAL RETURN
FUND, INC.
PRUDENTIAL INDEX SERIES FUND
Prudential Bond Market Index Fund
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Income Portfolio
TARGET FUNDS
Total Return Bond Fund

TAX-EXEMPT BOND FUNDS
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
California Series
California Income Series
PRUDENTIAL MUNICIPAL BOND FUND
High Income Series
Insured Series
PRUDENTIAL MUNICIPAL SERIES FUND
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.

MONEY MARKET FUNDS

TAXABLE MONEY MARKET FUNDS
CASH ACCUMULATION TRUST
Liquid Assets Fund
National Money Market Fund
PRUDENTIAL GOVERNMENT SECURITIES TRUST
Money Market Series
U.S. Treasury Money Market Series
PRUDENTIAL SPECIAL MONEY MARKET
FUND, INC.
Money Market Series
PRUDENTIAL MONEYMART ASSETS, INC.

TAX-FREE MONEY MARKET FUNDS
PRUDENTIAL TAX-FREE MONEY FUND, INC.
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
California Money Market Series
PRUDENTIAL MUNICIPAL SERIES FUND
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series

COMMAND FUNDS
COMMAND MONEY FUND
COMMAND GOVERNMENT FUND
COMMAND TAX-FREE FUND

INSTITUTIONAL MONEY MARKET FUNDS
PRUDENTIAL INSTITUTIONAL LIQUIDITY
PORTFOLIO, INC.
Institutional Money Market Series

- --------------------------------------------------------------------------------
33
<PAGE>

FOR MORE INFORMATION
- --------------------------------------------------------------------------------

Please read this prospectus before you invest in the Series and keep it for
future reference. For information or shareholder questions contact:

PRUDENTIAL MUTUAL FUND SERVICES LLC
P.O. BOX 15005
NEW BRUNSWICK, NJ 08906-5005
(800) 225-1852
(732) 417-7555
(if calling from outside the U.S.)

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

Outside Brokers Should Contact:
PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
P.O. BOX 15035
NEW BRUNSWICK, NJ 08906-5035
(800) 778-8769

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

Visit Prudential's Web Site At:
HTTP://WWW.PRUDENTIAL.COM

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

Additional information about the Fund can be obtained without charge and can be
found in the following documents:

STATEMENT OF ADDITIONAL
INFORMATION (SAI)
(incorporated by reference into
this prospectus)

ANNUAL REPORT
(contains a discussion of the market conditions and investment strategies that
significantly affect the Fund's performance)

SEMI-ANNUAL REPORT

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

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

CUSIP Numbers:
Class A Shares--
Class B Shares--
Class C Shares--
Class Z Shares--
Investment Company Act File No:
811-3981

MF ____

<PAGE>

PRUDENTIAL WORLD FUND, INC.

PRUDENTIAL JENNISON INTERNATIONAL GROWTH FUND

Statement of Additional Information

January ____, 2000

Prudential World Fund, Inc. (the Fund) is an open-end, management investment
company presently consisting of three series. This Statement of Additional
Information relates only to one of the series--Prudential Jennison International
Growth Fund (the Series).

THE SERIES' INVESTMENT OBJECTIVE IS TO ACHIEVE LONG-TERM GROWTH OF CAPITAL.
The Series will seek to achieve its objective primarily through investment in a
diversified portfolio of securities which will consist of equity securities of
foreign issuers. The Series will, under normal circumstances, invest at least
65% of the value of its total assets in common stock and preferred stock of
issuers located in at least five foreign countries. The Series may invest up to
35% of its total assets in (i) other equity-related securities of foreign
issuers; (ii) common stock, preferred stock, and other equity-related securities
of U.S. issuers; (iii) investment grade debt securities of domestic and foreign
corporations, governments, governmental entities, and supranational entities;
and (iv) high-quality domestic money market instruments and short-term fixed
income securities. There can be no assurance that the Series' investment
objective will be achieved. See "Description of the Series, Its Investments and
Risks."

The Fund's address is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077, and its telephone number is (800) 225-1852.

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Series' Prospectus, dated January _______, 2000, a
copy of which may be obtained from the Fund at the address noted above.

TABLE OF CONTENTS

PAGE
----

Fund History ............................................................ B-2
Description of the Series, Its Investments and Risks .................... B-2
Investment Restrictions ................................................. B-15
Management of the Fund and the Series ................................... B-16
Control Persons and Principal Holders of Securities ..................... B-18
Investment Advisory and Other Services .................................. B-18
Brokerage Allocation and Other Practices ................................ B-21
Capital Stock and Organization .......................................... B-22
Purchase, Redemption and Pricing of Series Shares ....................... B-22
Shareholder Investment Account .......................................... B-30
Net Asset Value ......................................................... B-34
Taxes, Dividends and Distributions ...................................... B-35
Performance Information ................................................. B-38
Balance Sheet ........................................................... B-40
Report of Independent Accountants .......................................
Appendix I--Description of Security Ratings ............................. I-1
Appendix II--General Investment Information ............................. II-1
Appendix III--Historical Performance Data ............................... III-1
Appendix IV--Information Relating to Prudential ......................... IV-1

================================================================================

MF115B
<=========================================================================
<PAGE>

FUND HISTORY

The Fund was organized under the laws of Maryland on September 28, 1994 as a
corporation.

DESCRIPTION OF THE SERIES, ITS INVESTMENTS AND RISKS

(a) CLASSIFICATION. The Fund, of which this Series is a part, is a
diversified open-end management investment company.

(b) INVESTMENT STRATEGIES AND RISKS

The investment objective of the Series is to seek long-term growth of
capital. The Series will seek to achieve this objective primarily through
investment in a diversified portfolio of securities which will consist of equity
securities of foreign issuers. The Series will, under normal circumstances,
invest at least 65% of the value of its total assets in common stock and
preferred stock of issuers located in at least five foreign countries. The
Series will focus its investment in approximately 60 companies that demonstrate
the growth characteristics described in the Series' prospectus. The Series may
invest up to 35% of its total assets in (i) other equity-related securities of
foreign issuers; (ii) common stock, preferred stock, and other equity-related
securities of U.S. issuers; (iii) investment grade debt securities of domestic
and foreign corporations, governments, governmental entities, and supranational
entities; and (iv) high-quality domestic money market instruments and short-term
fixed income securities. The Series may invest up to 30% of its total assets in
emerging markets securities. Although the Series does not purchase securities
with a view to rapid turnover, there are no limitations on the length of time
that securities must be held by the Series and the Series' annual portfolio
turnover rate may vary significantly from year to year. A higher portfolio
turnover rate may involve correspondingly greater transaction costs, which would
be borne directly by the Series, as well as additional realized gains and/or
losses to shareholders. There can be no assurance that the Series' investment
objective will be achieved. For a further description of the Series' investment
objective and policies, see "How the Series Invests--Investment Objective and
Policies" in the Prospectus.

EQUITY-RELATED SECURITIES

The Series may invest in equity-related securities. Equity-related
securities include common stock, preferred stock, rights, warrants and debt
securities or preferred stock which are convertible into or exchangeable for
common stock or preferred stock and master limited partnerships, among others.

With respect to equity-related securities, the Series may purchase American
Depositary Receipts (ADRs). ADRs are U.S. dollar-denominated certificates issued
by a United States bank or trust company and represent the right to receive
securities of a foreign issuer deposited in a domestic bank or foreign branch of
a United States bank and traded on a United States exchange or in an
over-the-counter market. Generally, ADRs are in registered form. There are no
fees imposed on the purchase or sale of ADRs when purchased from the issuing
bank or trust company in the initial underwriting, although the issuing bank or
trust company may impose charges for the collection of dividends and the
conversion of ADRs into the underlying securities. Investment in ADRs has
certain advantages over direct investment in the underlying foreign securities
since: (i) ADRs are U.S. dollar-denominated investments that are registered
domestically, easily transferable, and for which market quotations are readily
available; and (ii) issuers whose securities are represented by ADRs are usually
subject to auditing, accounting, and financial reporting standards comparable to
those of domestic issuers.

RISK FACTORS AND SPECIAL CONSIDERATION OF INVESTING IN EURO-DENOMINATED
SECURITIES

Effective January 1, 1999, 11 of the 15 member states of the European Union
introduced the "euro" as a common currency. During a three year transitional
period, the euro will coexist as legal tender with each member state's national
currency. By July 1, 2002, the euro is expected to become the sole legal tender
of the member states. During the transition period, the Series will treat the
euro as a separate currency from the national currency of any member state.

The adoption by the member states' of the euro will eliminate the
substantial currency risk among member states and will likely affect the
investment process and considerations of the Series' investment adviser. To the
extent the Series holds non-U.S. dollar-denominated securities, including those
denominated in the euro, the Series will still be subject to currency risk due
to fluctuations in those currencies as compared to the U.S. dollar.

The medium to long-term impact of the introduction of the euro in member
states cannot be determined with certainty at this time. In addition to the
effects described above, it is likely that more general long-term ramifications
can be expected, such as changes in economic environment and changes in behavior
of investors, all of which will impact the Fund's investments.

U.S. GOVERNMENT SECURITIES

Securities issued or guaranteed by the U.S. Government or one of its
agencies, authorities or instrumentalities in which the Series may invest
include debt obligations of varying maturities issued by the U.S. Treasury or
issued or guaranteed by an agency

B-2
<PAGE>

or instrumentality of the U.S. Government, including the Federal Housing
Administration, Farmers' Home Administration, Export-Import Bank of the U.S.
Small Business Administration, Government National Mortgage Association (GNMA),
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation
(FHLMC), Federal Intermediate Credit Banks, Federal Land Banks, Federal National
Mortgage Association (FNMA), Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board, Student Loan Marketing Association
and Resolution Trust Corporation. Direct obligations of the U.S. Treasury
include a variety of securities that differ in their interest rates, maturities
and dates of issuance. Because the U.S. Government is not obligated by law to
provide support to an instrumentality that it sponsors, the Series will invest
in obligations issued by an instrumentality of the U.S. Government only if
Jennison Associates LLC (the subadviser or investment adviser) determines that
the instrumentality's credit risk does not render its securities unsuitable for
investment by the Series. For further information, see "Mortgage-Related
Securities" below.

REPURCHASE AGREEMENTS

The Series may enter into repurchase agreements, whereby the seller of a
security agrees to repurchase that security from the Series at a mutually agreed
upon time and price. The period of maturity is usually quite short, possibly
overnight or a few days, although it may extend over a number of months. The
resale price is in excess of the purchase price, reflecting an agreed-upon rate
of return effective for the period of time the Series' money is invested in the
security.

The Series will only enter into repurchase agreements with banks and
securities dealers which meet the creditworthiness standards established by the
Board of Directors (Qualified Institutions). The Subadviser will monitor the
continued creditworthiness of Qualified Institutions, subject to the oversight
of the Manager and the Board of Directors. These agreements permit the Series to
keep all its assets earning interest while retaining "overnight" flexibility to
pursue investment of a longer-term nature.

The use of repurchase agreements involves certain risks. For example, if the
seller of securities under a repurchase agreement defaults on its obligation to
repurchase the underlying securities, as a result of its bankruptcy or
otherwise, the Series will seek to dispose of such securities, which action
could involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, the
Series' ability to dispose of the underlying securities may be restricted.
Finally, it is possible that the Series may not be able to substantiate its
interest in the underlying securities. To minimize this risk, the securities
underlying the agreement will be held by the Custodian at all times in an amount
at least equal to the repurchase price, including accrued interest. If the
counterparty fails to repurchase the securities, the Series may suffer a loss to
the extent proceeds from the sale of the underlying collateral are less than the
repurchase price. The Series may participate in a joint repurchase account
managed by Prudential Investments Fund Management LLC pursuant to an order of
the Commission.

FIXED INCOME SECURITIES

In general, the ratings of Moody's Investors Service, Inc. (Moody's),
Standard & Poor's Ratings Services (S&P Ratings), Duff and Phelps, Inc. (Duff &
Phelps) and other nationally recognized statistical rating organizations
(NRSROs) represent the opinions of those organizations as to the quality of debt
obligations that they rate. These ratings are relative and subjective, are not
absolute standards of quality and do not evaluate the market risk of securities.
These ratings will be among the initial criteria used for the selection of
portfolio securities. Among the factors that the rating agencies consider are
the long-term ability of the issuer to pay principal and interest and general
economic trends.

Subsequent to its purchase by the Series, an issue of debt obligations may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Series. Neither event will require the sale of the debt
obligation by the Series, but the Series' Subadviser will consider the event in
its determination of whether the Series should continue to hold the obligation.
In addition, to the extent that the ratings change as a result of changes in
rating organizations or their rating systems or owing to a corporate
restructuring of Moody's, S&P Ratings, Duff & Phelps or other NRSRO, the Series
will attempt to use comparable ratings as standards for its investments in
accordance with its investment objectives and policies. Appendix I to this
Statement of Additional Information contains further information concerning the
ratings of Moody's, S&P Ratings and Duff & Phelps and their significance.

The Series may invest, to a limited extent, in debt securities rated in the
lowest category of investment grade debt (, Baa by Moody's or BBB by S&P
Ratings). These securities have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade bonds.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Series may purchase securities on a when-issued or delayed-delivery
basis. When-issued or delayed-delivery transactions arise when securities are
purchased or sold by the Series with payment and delivery taking place in the
future in order

B-3
<PAGE>

to secure what is considered to be an advantageous price and yield to the Series
at the time of entering into the transaction. The Custodian will maintain, in a
segregated account of the Series, cash or other liquid assets, marked-to-market
daily, having a value equal to or greater than the Series' purchase commitments.
The Series will enter into when-issued or delayed delivery transactions for the
purpose of acquiring securities and not for the purpose of leverage. When-issued
securities purchased by the Series may include securities purchased on a "when,
as and if issued" basis under which the issuance of the securities depends on
the occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring.

Securities purchased on a when-issued or delayed delivery basis may expose
the Series to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Series does not accrue income with respect
to a when-issued or delayed-delivery security prior to its stated delivery date.
Purchasing securities on a when-issued or delayed delivery basis may involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself.

FORWARD ROLLS, DOLLAR ROLLS AND REVERSE REPURCHASE AGREEMENTS

The Series may commit up to 33 1/3% of the value of its net assets to
investment techniques such as dollar rolls, forward rolls and reverse repurchase
agreements. A forward roll is a transaction in which the Series sells a security
to a financial institution, such as a bank or broker-dealer, and simultaneously
agrees to repurchase the same or similar security from the institution at a
later date at an agreed-upon price. With respect to mortgage-related securities,
such transactions are often called "dollar rolls." In dollar roll transactions,
the mortgage-related securities that are repurchased will bear the same coupon
rate as those sold, but generally will be collateralized by different pools or
mortgages with different prepayment histories than those sold. During the roll
period, the Series forgoes principal and interest paid on the securities and is
compensated by the difference between the current sales price and the forward
price for the future purchase as well as by interest earned on the cash proceeds
of the initial sale. A "covered roll" is a specific type of dollar roll for
which there is an offsetting cash position or equivalent security position which
matures on or before the forward settlement date of the dollar roll transaction.

Reverse repurchase agreements involve sales by the Series of portfolio
securities to a financial institution concurrently with agreement by the Series
to repurchase the same securities at a later date at a fixed price. During the
reverse repurchase agreement period, the Series continues to receive principal
and interest payments on these securities.

Reverse repurchase agreements, forward rolls and dollar rolls involve the
risk that the market value of the securities purchased by the Series with the
proceeds of the initial sale may decline below the price of the securities the
Series has sold but is obligated to repurchase under the agreement. In the event
the buyer of securities under a reverse repurchase agreement, forward roll or
dollar roll files for bankruptcy or becomes insolvent, the Series' use of the
proceeds from the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Series'
obligations to repurchase the securities. The staff of the SEC has taken the
position that reverse repurchase agreements, forward rolls and dollar rolls are
to be treated as borrowings for purposes of the percentage limitations discussed
in the section entitled "Borrowings" below. The Series expects that under normal
conditions most of the borrowings of the Series will consist of such investment
techniques rather than bank borrowings.

MORTGAGE-RELATED SECURITIES

Mortgage-backed securities may be classified as private, governmental or
government related, depending on the issuer or guarantor. Private
mortgage-backed securities represent pass-through pools consisting principally
of conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage-backed securities are backed by the
full faith and credit of the United States. GNMA, the principal U.S. guarantor
of such securities, is a wholly-owned corporate instrumentality of the United
States within the Department of Housing and Urban Development. Pass-through
securities issued by FNMA are guaranteed as to timely payment of principal and
interest by FNMA, which guarantee is not backed by the full faith and credit of
the U.S. Government. FHLMC is a corporate instrumentality of the United States,
the stock of which is owned by the Federal Home Loan Banks. Participation
certificates representing interests in mortgages from FHLMC's national portfolio
are guaranteed as to the timely payment of interest and ultimate, but generally
not timely, collection of principal by FHLMC. The obligations of the FHLMC under
its guarantee are obligations solely of FHLMC and are not backed by the full
faith and credit of the U.S. Government.

The Series expects that private and governmental entities may create
mortgage loan pools offering pass-through investments in addition to those
described above. The mortgages underlying these securities may be alternative
mortgage instruments, that is, mortgage instruments whose principal or interest
payments may vary or whose terms to maturity may be shorter than previously
customary. As new types of mortgage-backed securities are developed and offered
to investors, the Series, consistent with its investment objective and policies,
will consider making investments in those new types of securities.

B-4
<PAGE>

The Series may also invest in pass-through securities backed by adjustable
rate mortgages that have been issued by GNMA, FNMA and FHLMC or private issuers.
These securities bear interest at a rate that is adjusted monthly, quarterly or
annually. The prepayment experience of the mortgages underlying these securities
may vary from that for fixed rate mortgages.

The average maturity of pass-through pools of mortgage-related securities
varies with the maturities of the underlying mortgage instruments. In addition,
a pool's stated maturity may be shortened by unscheduled payments on the
underlying mortgages. Factors affecting mortgage prepayments include the level
of interest rates, general economic and social conditions, the location of the
mortgaged property and age of the mortgage. Because prepayment rates of
individual pools vary widely, it is not possible to predict accurately the
average life of a particular pool. Common practice is to assume that prepayments
will result in an average life ranging from two to ten years for pools of fixed
rate 30-year mortgages. Pools of mortgages with other maturities or different
characteristics will have varying average life assumptions.

Because prepayments of principal generally occur when interest rates are
declining, it is likely that the Series will have to reinvest the proceeds of
prepayments at lower interest rates than those at which the assets were
previously invested. If this occurs, the Series' income will correspondingly
decline. Thus, mortgage-related securities may have less potential for capital
appreciation in periods of falling interest rates than other fixed-income
securities of comparable maturity, although these securities may have a
comparable risk of decline in market value in periods of rising interest rates.
To the extent that the Series purchases mortgage-related securities at a
premium, unscheduled prepayments, which are made at par, will result in a loss
equal to any unamortized premium.

Government stripped mortgage-related interest-only (IOs) and principal only
(PO) securities are currently traded in an over-the-counter market maintained by
several large investment banking firms. There can be no assurance that the
Series will be able to effect a trade of IOs or POs at a time when it wishes to
do so. The Series will acquire IOs and POs only if, in the opinion of the
Series' Subadviser, a secondary market for the securities exists at the time of
acquisition, or is subsequently expected. The Series will treat IOs and POs that
are not U.S. Government securities as illiquid and will limit its investments in
these securities, together with other illiquid investments, in order not to hold
more than 15% of its net assets in illiquid securities. With respect to IOs and
POs that are issued by the U.S. Government, the Subadviser, subject to the
supervision of the Manager and the Board of Directors, may determine that such
securities are liquid, if they determine the securities can be disposed of
promptly in the ordinary course of business at a value reasonably close to that
used in the calculation of net asset value per share.

Investing in IOs and POs involves the risks normally associated with
investing in government and government agency mortgage-related securities. In
addition, the yields on IOs and POs are extremely sensitive to the prepayment
experience on the mortgage loans underlying the certificates collateralizing the
securities. If a decline in the level of prevailing interest rates results in a
rate of principal prepayments higher than anticipated, distributions of
principal will be accelerated, thereby reducing the yield to maturity on IOs and
increasing the yield to maturity on POs. Sufficiently high prepayment rates
could result in the Series not fully recovering its initial investment in an IO.

Mortgage-related securities may not be readily marketable. To the extent any
of these securities are not readily marketable in the judgment of the Series'
Subadviser, the investment restriction limiting the Series' investment in
illiquid instruments will apply.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

The Series also may invest in, among other things, parallel pay CMOs and
Planned Amortization Class CMOs (PAC Bonds). Parallel pay CMOs are structured to
provide payments of principal on each payment date to more than one class. These
simultaneous payments are taken into account in calculating the stated maturity
date or final distribution date of each class, which, as with other CMO
structures, must be retired by its stated maturity date or final distribution
date but may be retired earlier. PAC Bonds generally require payments of a
specified amount of principal on each payment date. PAC Bonds always are
parallel pay CMOs with the required principal payment on such securities having
the highest priority after interest has been paid toall classes.

In reliance on SEC rules and orders, the Series' investments in certain
qualifying CMOs, including CMOs that have elected to be treated as Real Estate
Mortgage Investment Conduits (REMICs), are not subject to the limitation in the
Investment Company Act of 1940, as amended (Investment Company Act), on
acquiring interests in other investment companies. In order to be able to rely
on the SEC's interpretation, the CMOs and REMICs must be unmanaged, fixed-asset
issuers that (i) invest primarily in mortgage-backed securities, (ii) do not
issue redeemable securities, (iii) operate under general exemptive orders
exempting them from all provisions of the Investment Company Act, and (iv) are
not registered or regulated under the Investment Company Act as investment
companies. To the extent that the Series selects CMOs or REMICs that do not meet
the above requirements, the Series may not invest more than 10% of its assets in
all such entities and may not acquire more than 3% of the voting securities of
any single such entity.

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<PAGE>

ASSET-BACKED SECURITIES

The value of these securities may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution providing credit support
enhancement forthe pool.

SECURITIES LENDING

The Series will enter into securities lending transactions only with
Qualified Institutions. The Series will comply with the following conditions
whenever it lends securities: (i) the Series must receive at least 100% cash
collateral or equivalent securities from the borrower; (ii) the value of the
loan is "marked-to-market" on a daily basis; (iii) the Series must be able to
terminate the loan at any time; (iv) the Series must receive reasonable interest
on the loan, as well as any dividends, interest or other distributions on the
loaned securities and any increase in market value; (v) the Series may pay only
reasonable custodian fees in connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower except that, if a material event
adversely affecting the investment in the loaned securities occurs, the Series
must terminate the loan and regain the right to vote the securities. The Series
may pay reasonable finder's, administrative and custodial fees in connection
with a loan of its securities. In these transactions, there are risks of delay
in recovery and in some cases even of loss of rights in the collateral should
the borrower of the securities fail financially. The Series may lend up to 30%
of the value of its total assets.

SEGREGATED ACCOUNTS

When the Series is required to segregate assets in connection with certain
hedging transactions, it will maintain cash or liquid securities in a segregated
account with the Fund's Custodian. "Liquid assets" mean cash, U.S. Government
securities, debt obligations or other liquid unencumbered assets,
marked-to-market daily.

BORROWING

The Series may borrow an amount equal to no more than 33 1/3% of the value
of its total assets to take advantage of investment opportunities, for
temporary, extraordinary, or emergency purposes or for the clearance of
transactions and may pledge up to 20% of the value of its total assets to secure
such borrowings. The Series will only borrow when there is an expectation that
it will benefit after taking into account considerations such as interest income
and possible losses upon liquidation. Borrowing by the Series creates an
opportunity for increased net income but, at the same time, creates risks,
including the fact that leverage may exaggerate rate changes in the net asset
value of the Series' shares and in the yield on the Series. The Series does not
intend to borrow more than 5% of its total assets for investment purposes,
although it may borrow up to 33 1/3% of the value of its total assets for
temporary, extraordinary or emergency purposes and for the clearance of
transactions.

SECURITIES OF FOREIGN ISSUERS

The value of the Series' foreign investments may be significantly affected
by changes in currency exchange rates. The dollar value of a foreign security
generally decreases when the value of the dollar rises against the foreign
currency in which the security is denominated and tends to increase when the
value of the dollar falls against such currency. In addition, the value of the
Series' assets may be affected by losses and other expenses incurred in
converting between various currencies in order to purchase and sell foreign
securities and by currency restrictions and exchange control regulation.

The economies of many of the countries in which the Series may invest are
not as developed as the economy of the U.S. and may be subject to significantly
different forces. Political or social instability, expropriation or confiscatory
taxation, and limitations on the removal of funds or other assets, could also
adversely affect the value of investments.

Foreign companies are generally not subject to the regulatory controls
imposed on U.S. issuers and, in general, there is less publicly available
information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the Series may be reduced by a withholding tax at the source
which would reduce dividend income payable to shareholders.

Brokerage commission rates in foreign countries, which are generally fixed
rather than subject to negotiation as in the U.S. are likely to be higher. The
securities markets in many of the countries in which the Series may invest will
have substantially less trading volume than the principal U.S. markets. As a
result, the securities of some companies in these countries may be less liquid
and more volatile than comparable U.S. securities. There is generally less
government regulation and supervision of foreign stock exchanges, brokers and
issuers which may make it difficult to enforce contractual obligations.

B-6
<PAGE>

EMERGING MARKETS SECURITIES

Up to 30% of the Series' total assets may be invested in emerging markets
securities. The risks of investing in foreign securities are heightened for
emerging markets securities. Moreover, emerging markets securities present
additional risks which should be considered carefully by an investor in the
Series. Investing in emerging markets securities involves exposure to economies
that are less diverse and mature, and political and legal systems which are less
stable, than those of developed markets. In addition, investment decisions by
international investors, such as the Series, particularly concurrent buying or
selling programs, have a greater effect on securities prices and currency values
than in more developed markets. As a result, emerging markets securities have
historically been, and may continue to be, subject to greater volatility and
share price declines than securities issued by U.S. corporations or companies in
other markets that are considered developed.

Many emerging markets have also experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
impact on securities prices.

LIQUIDITY PUTS

The Series may purchase instruments together with the right to resell the
instruments at an agreed-upon price or yield, within a specified period prior to
the maturity date of the instruments. This instrument is commonly known as a
"put bond" or a "tender option bond."

Consistent with the Series' investment objective, the Series may purchase a
put so that it will be fully invested in securities while preserving the
necessary liquidity to purchase securities on a when-issued basis, to meet
unusually large redemptions and to purchase at a later date securities other
than those subject to the put. The Series will generally exercise the puts or
tender options on their expiration date when the exercise price is higher than
the current market price for the related fixed income security. Puts or tender
options may be exercised prior to the expiration date in order to fund
obligations to purchase other securities or to meet redemption requests. These
obligations may arise during periods in which proceeds from sales of the Series'
shares and from recent sales of portfolio securities are insufficient to meet
such obligations or when the funds available are otherwise allocated for
investment. In addition, puts may be exercised prior to the expiration date in
the event the Subadviser for the Series revises its evaluation of the
creditworthiness of the issuer of the underlying security. In determining
whether to exercise puts or tender options prior to their expiration date and in
selecting which puts or tender options to exercise in such circumstances, the
Series' Subadviser considers, among other things, the amount of cash available
to the Series, the expiration dates of the available puts or tender options, any
future commitments for securities purchases, the yield, quality and maturity
dates of the underlying securities, alternative investment opportunities and the
desirability of retaining the underlying securities in the Series.

ILLIQUID SECURITIES

The Series may hold up to 15% of its net assets in illiquid securities.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (Securities Act),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.

However, a large institutional market has developed for certain securities
that are not registered under the Securities Act including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.

Rule 144A of the Securities Act allows for a broader institutional trading
market for securities otherwise subject to restriction on resale to the general
public. Rule 144A establishes a "safe harbor" from the registration requirements
of the Securities Act for resales of certain securities to qualified
institutional buyers. The Subadviser anticipates that the market for certain
restricted securities such as institutional commercial paper will expand further
as a result of this regulation and the development of automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the NASD.

B-7
<PAGE>

Restricted securities eligible for resale pursuant to Rule 144A and
commercial paper for which there is a readily available market are not
considered illiquid for purposes of this limitation under procedures established
by the Board of Directors. The Subadviser will monitor the liquidity of such
restricted securities, subject to the supervision of Prudential Investments Fund
Management LLC (the Manager) and the Board of Directors. In reaching liquidity
decisions, the Subadviser will consider, among other things, the following
factors: (1) the frequency of trades and quotes for the security; (2) the number
of dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the marketplace trades
(E.G., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer). In addition, in order for commercial
paper that is issued in reliance on Section 4(2) of the Securities Act to be
considered liquid, (i) it must be rated in one of the two highest rating
categories by at least two NRSROs, or if only one NRSRO rates the securities, by
that NRSRO, or, if unrated, be of comparable quality in the view of the relevant
Subadviser, and (ii) it must not be "traded flat" (i.e., without accrued
interest) or in default as to principal or interest. Repurchase agreements
subject to demand are deemed to have a maturity equal to the notice period.

The staff of the SEC has taken the position that purchased over-the-counter
options and assets used as "cover" for written over-the-counter options are
illiquid securities unless the Series and the counterparty have provided for the
Series, at the Series' election, to unwind the over-the-counter option. The
exercise of such an option ordinarily would involve the payment by the Series of
an amount designed to reflect the counterparty's economic loss from an early
termination, but does allow the Series to treat the assets used as "cover" as
"liquid."

JOINT TRADING ACCOUNTS

The Series intends to participate in one or more joint trading accounts
whereby the Series, along with other investment companies managed by Prudential
Investments Fund Management LLC, will jointly engage in repurchase agreements
and jointly purchase money market instruments and short-term investment
securities. The ability of the Series to participate in these joint trading
accounts will be conditioned upon requirements imposed by an order received from
the Securities and Exchange Commission, as may be amended from time to time.

HEDGING AND RETURN ENHANCEMENT STRATEGIES

OPTIONS ON SECURITIES AND SECURITIES INDICES

The Series may purchase and sell put and call options on any security in
which it may invest or options on any securities index based on securities in
which the Series may invest. The Series is also authorized to enter into closing
purchase and sale transactions in order to realize gains or minimize losses on
options sold or purchased by the Series.

A call option on equity securities gives the purchaser, in exchange for a
premium paid, the right for a specified period of time to purchase the
securities subject to the option at a specified price (the exercise price or
strike price). The writer of a call option, in return for the premium, has the
obligation, upon exercise of the option, to deliver, depending upon the terms of
the option contract, the underlying securities to the purchaser upon receipt of
the exercise price. When the Series writes a call option, the Series gives up
the potential for gain on the underlying securities in excess of the exercise
price of the option during the period that the option is open.

A put option on equity securities gives the purchaser, in return for a
premium, the right, for a specified period of time, to sell the securities
subject to the option to the writer of the put at the specified exercise price.
The writer of the put option, in return for the premium, has the obligation,
upon exercise of the option, to acquire the securities underlying the option at
the exercise price. The Series as the writer of a put option might, therefore,
be obligated to purchase underlying securities for more than their current
market price.

The Series will write only "covered" options. A written option is covered
if, as long as the Series is obligated under the option, it (i) owns an
offsetting position in the underlying security or currency or (ii) maintains in
a segregated account cash or liquid assets in an amount equal to or greater than
its obligation under the option. Under the first circumstance, the Series'
losses are limited because it owns the underlying security or currency; under
the second circumstance, in the case of a written call option, the Series'
losses are potentially unlimited.

Options on securities indices are similar to options on equity securities,
except that the exercise of securities index options requires cash payments and
does not involve the actual purchase or sale of securities. Rather than the
right to take or make delivery of the securities at a specified price, an option
on a securities index gives the holder the right, in return for a premium paid,
to receive, upon exercise of the option, an amount of cash if the closing level
of the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option. The writer of an index option, in return for the premium, is obligated
to pay the amount of cash due upon exercise of the option.

B-8
<PAGE>

The Series may purchase and sell put and call options on securities indices
for hedging against a decline in the value of the securities owned by the Series
or against an increase in the market value of the type of securities in which
the Series may invest. Securities index options are designed to reflect price
fluctuations in a group of securities or segment of the securities market rather
than price fluctuations in a single security.

The Series may also purchase and write put and call options on equity and
debt securities, on currencies and on stock indices in the over-the-counter
market (OTC options). Unlike exchange-traded options, OTC options are contracts
between the Series and its counterparty without the interposition of any
clearing organization.

A number of risk factors are associated with options transactions. There is
no assurance that a liquid secondary market on an options exchange will exist
for any particular option, at any particular time. If the Series is unable to
effect a closing purchase transaction with respect to covered options it has
written, the Series will not be able to sell the underlying securities or
dispose of assets held in a segregated account until the options expire or are
exercised. Similarly, if the Series is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and may incur transaction costs upon
the purchase or sale of underlying securities. The ability to terminate
over-the-counter (OTC) option positions is more limited than the ability to
terminate exchange-traded option positions because the Series would have to
negotiate directly with a counterparty. In addition, with OTC options, there is
a risk that the counterparty in such transactions will not fulfill its
obligations.

The Series pays brokerage commissions or spreads in connection with its
options transactions, as well as for purchases and sales of underlying
securities. The writing of options could result in significant increases in a
Series' turnover rate.

The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Series writes a
call option on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. The
Series can offset some of the risk of writing a call index option position by
holding a diversified portfolio of securities similar to those on which the
underlying index is based. However, the Series cannot, as a practical matter,
acquire and hold a portfolio containing exactly the same securities as underlie
the index and, as a result, bears a risk that the value of the securities held
will vary from the value of the index.

Even if the Series could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Series, as the call writer, will
not know that the call has been exercised until the next business day at the
earliest. The time lag between exercise and notice of exercise poses no risk for
the writer of a covered call on a specific underlying security, such as a common
stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been exercised, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.

If the Series has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Series will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer.

The Series will not purchase put options or call options if, after any such
purchase, the aggregate premiums paid for such options would exceed 20% of the
Series' net assets. The aggregate value of the obligations underlying put
options will not exceed 25% of the Series' net assets.

OPTIONS TRANSACTIONS. The Series would normally purchase call options to
attempt to hedge against an increase in the market value of the type of
securities in which the Series may invest. The Series would ordinarily realize a
gain if, during the options period, the value of such securities exceeds the sum
of the exercise price, the premium paid and transaction costs; otherwise, the
Series would realize a loss on the purchase of the call option. The Series may
also write a put option, which can serve as a limited long hedge because
increases in value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security depreciates to
a price lower than the exercise price of the put option, it can be expected that
the option will be exercised, and the Series will be obligated to buy the
security at more than its market value.

B-9
<PAGE>

The Series would normally purchase put options to hedge against a decline in
the market value of securities in its portfolio (protective puts). Gains and
losses on the purchase of protective puts would tend to be offset by
countervailing changes in the value of underlying Series' securities. The Series
would ordinarily realize a gain if, during the option period, the value of the
underlying securities decreases below the exercise price sufficiently to cover
the premium and transaction costs; otherwise, the Series would realize a loss on
the purchase of the put option. The Series may also write a call option, which
can serve as a limited short hedge because decreases in value of the hedged
investment would be offset to the extent of the premium received for writing the
option. However, if the security appreciates to a price higher than the exercise
price of the call option, it can be expected that the option will be exercised
and the Series will be obligated to sell the security at less than its market
value.

RISKS OF TRANSACTIONS IN STOCK OPTIONS. Writing of options involves the risk
that there will be no market in which to effect a closing transaction. An option
position may be closed out only on an exchange which provides a secondary market
for an option of the same series. Although the Series will generally write only
those options for which there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options no secondary
market on an exchange may exist. If the Series as a covered call option writer
is unable to effect a closing purchase transaction in a secondary market, it
will not be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise.

RISKS OF OPTIONS ON INDICES. The Series' purchase and sale of options on
indices will be subject to risks described above under "Risks of Transactions in
Stock Options." In addition, the distinctive characteristics of options on
indices create certain risks that are not present with stock options.

Because the value of an index option depends upon movements in the level of
the index rather than the price of a particular stock, whether the Series will
realize a gain or loss on the purchase or sale of an option on an index depends
upon movements in the level of stock prices in the stock market generally or in
an industry or market segment rather than movements in the price of a particular
stock. Accordingly, successful use by the Series of options on indices would be
subject to the Subadviser's ability to predict correctly movements in the
direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.

Index prices may be distorted if trading of certain stocks included in the
index is interrupted. Trading in the index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
stocks included in the index. If this occurred, the Series would not be able to
close out options which it had purchased or written and, if restrictions on
exercise were imposed, may be unable to exercise an option it holds, which could
result in substantial losses to the Series. It is the Series' policy to purchase
or write options only on indices which include a number of stocks sufficient to
minimize the likelihood of a trading halt in the index.

Trading in index options commenced in April 1983 with the S&P 100 option
(formerly called the CBOE 100). Since that time a number of additional index
option contracts have been introduced including options on industry indices.
Although the markets for certain index option contracts have developed rapidly,
the markets for other index options are still relatively illiquid. The ability
to establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
this market will develop in all index option contracts. The Series will not
purchase or sell any index option contract unless and until, in the Subadviser's
opinion, the market for such options has developed sufficiently that the risk in
connection with such transactions is no greater than the risk in connection with
options on stocks.

SPECIAL RISKS OF WRITING CALLS ON INDICES. Because exercises of index
options are settled in cash, a call writer such as the Series cannot determine
the amount of its settlement obligations in advance and, unlike call writing on
specific stocks, cannot provide in advance for, or cover, its potential
settlement obligations by acquiring and holding the underlying securities.

Price movements in the Series' portfolio probably will not correlate
precisely with movements in the level of the index and, therefore, the Series
bears the risk that the price of the securities held by the Series may not
increase as much as the index. In such event, the Series would bear a loss on
the call which is not completely offset by movements in the price of the its
portfolio. It is also possible that the index may rise when the Series'
portfolio of stocks does not rise. If this occurred, the Series would experience
a loss on the call which is not offset by an increase in the value of its
portfolio and might also experience a loss in its portfolio. However, because
the value of a diversified portfolio will, over time, tend to move in the same
direction as the market, movements in the value of the Series' portfolio in the
opposite direction as the market would be likely to occur for only a short
period or to a small degree.

Unless the Series has other liquid assets which are sufficient to satisfy
the exercise of a call, it would be required to liquidate portfolio securities
in order to satisfy the exercise. Because an exercise must be settled within
hours after receiving the notice of exercise, if the Series fails to anticipate
an exercise, it may have to borrow (in amounts not exceeding 33-1/3% of the
Series' total assets) pending settlement of the sale of securities in its
portfolio and would incur interest charges thereon.

B-10
<PAGE>

When the Series has written a call on an index, there is also a risk that
the market may decline between the time the Series has a call exercised against
it, at a price which is fixed as of the closing level of the index on the date
of exercise, and the time the Series is able to sell securities in its portfolio
to generate cash to settle the exercise. As with stock options, the Series will
not learn that an index option has been exercised until the day following the
exercise date but, unlike a call on stock where the Series would be able to
deliver the underlying securities in settlement, the Series may have to sell
part of its stock portfolio in order to make settlement in cash, and the price
of such stocks might decline before they can be sold. This timing risk makes
certain strategies involving more than one option substantially more risky with
index options than with stock options. For example, even if an index call which
the Series has written is "covered" by an index call held by the Series with the
same strike price, the Series will bear the risk that the level of the index may
decline between the close of trading on the date the exercise notice is filed
with the clearing corporation and the close of trading on the date the Series
exercises the call it holds or the time the Series sells the call which in
either case would occur no earlier than the day following the day the exercise
notice was filed.

SPECIAL RISKS OF PURCHASING PUTS AND CALLS ON INDICES. If the Series holds
an index option and exercises it before final determination of the closing index
value for that day, it runs the risk that the level of the underlying index may
change before closing. If such a change causes the exercised option to fall
out-of-the-money, the Series will be required to pay the difference between the
closing index value and the exercise price of the option (times the applicable
multiple) to the writer of that option. Although the Series may be able to
minimize this risk by withholding exercise instructions until just before the
daily cut off time or by selling rather than exercising an option when the index
level is close to the exercise price, it may not be possible to eliminate this
risk entirely because the cut off times for index options may be earlier than
those fixed for other types of options and may occur before definitive closing
index values are announced.

SPECIAL RISKS OF PURCHASING OTC OPTIONS. When the Series writes an OTC
option, it generally will be able to close out the OTC option prior to its
expiration only by entering into an offsetting purchase transaction with the
dealer or counterparty with which the relevant Series originally wrote the OTC
option. Any such cancellation, if agreed to, may require the Series to pay a
premium to the counterparty. While the Series will enter into OTC options only
with dealers which agree to, and which are expected to be capable of, entering
into offsetting transactions with the Series, there can be no assurance that the
Series will be able to liquidate an OTC option at a favorable price at any time
prior to expiration. Until the Series is able to effect an offsetting purchase
transaction with respect to a covered OTC call option that the Series has
written, it will not be able to liquidate securities held as cover until the
option expires or is exercised or different cover is substituted. Alternatively,
the Series could write an OTC call option to, in effect, close an existing OTC
call option or write an OTC put option to close its position on an OTC put
option. However, the Series would remain exposed to each counterparty's credit
risk on the put or call until such option is exercised or expires. There is no
guarantee that the Series will be able to write put or call options, as the case
may be, that would effectively close an existing position. In the event of
default or insolvency of the counterparty, the Series may be unable to liquidate
an OTC option.

In entering into OTC options, the Series will be exposed to the risk that
the counterparty will default on, or be unable to fulfill, due to bankruptcy or
otherwise, its obligation under the option. In such event, the Series may lose
the benefit of the transaction. The value of an OTC option to the Series is
dependent upon the financial viability of the counterparty. If the Series
decides to enter into transactions in OTC options, the Subadviser will take into
account the credit quality of counterparties in order to limit the risk of
default by the counterparty.

FOREIGN CURRENCY FORWARD CONTRACTS, OPTIONS AND FUTURES TRANSACTIONS

A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. There is no limitation on the value of
forward contracts into which the Series may enter. However, the Series'
transactions in forward contracts will be limited to hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of a forward contract with respect to specific receivables or
payables of the Series generally arising in connection with the purchase or sale
of its securities and accruals of interest or dividends receivable and Series
expenses. Position hedging is the sale of a foreign currency with respect to
security positions denominated or quoted in that currency. The Series may not
position hedge with respect to a particular currency for an amount greater than
the aggregate market value (determined at the time of making any sale of a
forward contract) of securities, denominated or quoted in, or currently
convertible into, such currency. A forward contract generally has no deposit
requirements, and no commissions are charged for such trades.

The Series may enter into a forward contract to hedge against risk in the
following circumstances: (i) during the time period when the Series contracts
for the purchase or sale of a security denominated in a foreign currency, or
(ii) when the Series anticipates the receipt of dividends or interest payments
in a foreign currency with respect to a security it holds. By entering into a
forward contract for the purchase or sale of the amount of foreign currency
involved in the underlying transaction in exchange for

B-11
<PAGE>

a fixed amount of dollars, the Series 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 subject 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.
Additionally, when the Series' Subadviser believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, the Series may enter into a forward contract, for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of some
or all of the securities of the Series denominated in such foreign currency.
Further, the Series may enter into a forward contract in one foreign currency,
or basket of currencies, to hedge against the decline or increase in value in
another foreign currency. Use of a forward contract in a different currency or
basket of currencies for hedging against market movements in another currency
magnifies the risk that movements in the price of the forward contract will not
correlate or will correlate unfavorably with the foreign currency being hedged.

Forward currency contracts (i) are traded in an interbank market conducted
directly between currency traders (typically commercial banks or other financial
institutions) and their customers, (ii) generally have no deposit requirements
and (iii) are typically consummated without payment of any commissions. Failure
by the Series' counterparty to make or take delivery of the underlying currency
at the maturity of a forward contract would result in a loss to a Series of any
expected benefit of the transaction.

As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures, by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Secondary markets
generally do not exist for forward currency contracts, with the result that
offsetting closing transactions generally require negotiating directly with the
counterparty to the forward contract. Thus, there can be no assurance that the
Series will in fact be able to close out a forward currency contract at a
favorable price prior to its maturity. In addition, in the event of insolvency
of the counterparty, the Series might be unable to close out a forward currency
contract at any time prior to maturity. In either event, the Series would
continue to be subject to market risk with respect to the position, and would
continue to be required to maintain a position in the securities or currencies
that are the subject of the hedge or to maintain cash or securities in a
segregated account.

The Series may also purchase and sell futures contracts on foreign
currencies and groups of foreign currencies to protect against the effect of
adverse changes on foreign currencies. The Series will engage in transactions in
only those futures contracts and options thereon that are traded on a
commodities exchange or a board of trade. A "sale" of a futures contract means
the assumption of a contractual obligation to deliver the specified amount of
foreign currency at a specified price in a specified future month. A "purchase"
of a futures contract means the assumption of a contractual obligation to
acquire the currency called for by the contract at a specified price in a
specified future month. At the time a futures contract is purchased or sold, the
Series must allocate cash or securities as a deposit payment (initial margin).
Thereafter, the futures contract is valued daily, and the payment of "variation
margin" may be required, meaning the Series will provide or receive cash that
reflects any decline or increase, as appropriate, in the contract's value, a
process known as "marking to market."

The Series may purchase and write put and call options on foreign currencies
traded on securities exchanges or boards of trade (foreign and domestic) and OTC
options for hedging purposes in a manner similar to that in which forward
foreign currency exchange contracts and futures contracts on foreign currencies
will be employed. Options on foreign currencies are similar to options on
securities, except that the Series has the right to take or make delivery of a
specified amount of foreign currency, rather than securities.

Generally, OTC foreign currency options used by the Series are
European-style options. This means that the option is only exercisable
immediately prior to its expiration. This is in contrast to American-style
options, which are exercisable at any time prior to the expiration date of the
option.

If the Series' Subadviser anticipates purchasing a foreign security and also
anticipates a rise in the value of the currency of such foreign security
(thereby increasing the cost of such security), the Series may purchase call
options or write put options on the foreign currency. The Series could also
enter into a long forward contract or a long futures contract on such currency,
or purchase a call option, or write a put option, on a currency futures
contract. The use of such instruments could offset, at least partially, the
effects of the adverse movements of currency exchange rates.

FOREIGN CURRENCY STRATEGIES--SPECIAL CONSIDERATIONS

The Series may use options on foreign currencies, futures contracts on
foreign currencies, options on futures contracts on foreign currencies and
forward currency contracts, to hedge against movements in the values of the
foreign currencies in which the Series' securities are denominated. Such
currency hedges can protect against price movements in a security that the
Series owns or intends to acquire that are attributable to changes in the value
of the currency in which it is denominated. Such hedges do not, however, protect
against price movements in the securities that are attributable to other causes.

B-12
<PAGE>

The Series might seek to hedge against changes in the value of a particular
currency when no futures contract, forward contract or option involving that
currency is available or such contracts are more expensive than certain other
contracts. In such cases, the Series may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the value of which the Series' Subadviser believes will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.

The value of most futures contracts, options on futures contracts, forward
contracts and options on foreign currencies in the interbank market depends on
the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might involve
substantially larger amounts than those involved in the use of futures
contracts, forward contracts or options, the Series could be disadvantaged by
dealing in the odd-lot market (generally consisting of transactions of less than
$1 million) of the interbank market for the underlying foreign currencies at
prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign
currencies in the interbank market or any regulatory requirements that
quotations available through dealers or other market sources be firm or revised
on a timely basis. Quotation information generally is representative of very
large transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market. To the extent the U.S.
options or futures markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements might take place in
the underlying currency markets that cannot be reflected in the markets for the
futures contracts or options until they reopen.

Settlement of futures contracts, forward contracts and options involving
foreign currencies might be required to take place within the country issuing
the underlying currency. Thus, the Series might be required to accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.

COVERED FORWARD CURRENCY CONTRACTS, FUTURES CONTRACTS AND OPTIONS

Transactions using forward currency contracts, futures contracts and options
(other than options that the Series has purchased) expose the Series to an
obligation to another party. The Series will not enter into any such
transactions unless it owns either (1) an offsetting (covered) position in
securities, currencies, or other options, forward currency contracts or futures
contracts, or (2) liquid assets with a value sufficient at all times to cover
its potential obligations not covered as provided in(1) above. The Series will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require,set aside cash or liquid assets in a segregated account
with its Custodian in the prescribed amount.

Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward currency contract, futures contract or
option is open, unless they are replaced with similar assets. As a result, the
commitment of a large portion of the Series' assets to cover segregated accounts
could impede portfolio management or the Series' ability to meet redemption
requests or other current obligations.

RISKS OF TRANSACTIONS IN OPTIONS ON FOREIGN CURRENCIES

An option position may be closed out only on an exchange, board of trade or
other trading facility which provides a secondary market for an option of the
same series. Although the Series will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options no secondary
market on an exchange or otherwise may exist. In such event it might not be
possible to effect offsetting transactions in particular options, with the
result that the Series would have to exercise its options in order to realize
any profits and would incur brokerage commissions upon the exercise of call
options and upon the subsequent disposition of underlying currencies acquired
through the exercise of call options or upon the purchase of underlying
currencies for the exercise of put options. If the Series as a covered call
option writer is unable to effect an offsetting purchase transaction in a
secondary market, it will not be able to sell the underlying currency until the
option expires or it delivers the underlying currency upon exercise.

Reasons for the absence of a liquid secondary market on an options exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more

B-13
<PAGE>

exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in the class or series of options) would cease to exist,
although outstanding options on that exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms. There is no assurance that higher
than anticipated trading activity or other unforeseen events might not, at
times, render certain of the facilities of any of the clearing corporations
inadequate, and thereby result in the institution by an exchange of special
procedures which may interfere with the timely execution of customers' orders.
The Series intends to purchase and sell only those options which are cleared by
a clearinghouse whose facilities are considered to be adequate to handle the
volume of options transactions.

RISKS OF OPTIONS ON FOREIGN CURRENCIES

Options on foreign currencies involve the currencies of two nations and,
therefore, developments in either or both countries can affect the values of
such options. These risks include government actions affecting currency
valuation and the movements of currencies from one country to another. The
quality of currency underlying option contracts represent odd lots in a market
dominated by transactions between banks; this can mean extra transaction costs
upon exercise. Options markets may be closed while round-the-clock interbank
currency markets are open, which can create price and rate discrepancies.

RISKS OF TRANSACTIONS IN FUTURES CONTRACTS

There are several risks in connection with the use of futures contracts as a
hedging device. Due to the imperfect correlation between the price of futures
contracts and movements in the underlying currency or group of currencies, the
price of a futures contract may move more or less than the price of the
currencies being hedged. Therefore, a correct forecast of currency rates, market
trends or international political trends by the Manager or the Subadviser may
still not result in a successful hedging transaction.

Although the Series will purchase or sell futures contracts only on
exchanges where there appears to be an adequate secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular contract or at any particular time. Accordingly, there can be no
assurance that it will be possible, at any particular time, to close out a
futures position. In the event the Series could not close out a futures position
and the value of such position declined, the Series would be required to
continue to make daily cash payments of variation margin. There is no guarantee
that the price movements of the portfolio securities denominated in foreign
currencies will, in fact, correlate with the price movements in the futures
contracts and thus provide an offset to losses on a futures contract. Currently,
futures contracts are available on the Australian Dollar, British Pound,
Canadian Dollar, Japanese Yen, Swiss Franc, Deutsche Mark and Eurodollar.

Under regulations of the Commodity Exchange Act, investment companies
registered under the Investment Company Act are exempt from the definition of
"commodity pool operator," subject to compliance with certain conditions. The
exemption is conditioned upon a requirement that all of the Series' futures or
options on futures transactions constitute bona fide hedging transactions within
the meaning of the Commodity Futures Trading Commission's (CFTC's) regulations.
The Series will use currency futures and options on futures in a manner
consistent with this requirement. The Series may also enter into futures or
related options contracts for income enhancement and risk management purposes if
the aggregate initial margin and option premiums do not exceed 5% of the
liquidation value of the Series' total assets.

Successful use of futures contracts by the Series is also subject to the
ability of the Series' Manager or Subadviser to predict correctly movements in
the direction of markets and other factors affecting currencies generally. For
example, if the Series has hedged against the possibility of an increase in the
price of securities in its portfolio and the price of such securities increases
instead, the Series will lose part or all of the benefit of the increased value
of its securities because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Series has insufficient cash
to meet daily variation margin requirements, it may need to sell securities to
meet such requirements. Such sales of securities will not necessarily be at
increased prices that reflect the rising market. The Series may have to sell
securities at a time when it is disadvantageous to do so.

The hours of trading of futures contracts may not conform to the hours
during which the Series may trade the underlying securities. To the extent that
the futures markets close before the securities markets, significant price and
rate movements can take place in the securities markets that cannot be reflected
in the futures markets.

OPTIONS ON FUTURES CONTRACTS

An option on a futures contract gives the purchaser the right, but not the
obligation, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option exercise period. The writer of the
option is required upon exercise to assume an offsetting futures position (a
short position if the option is a call and a long position if the option is a
put). Upon exercise of the option, the assumption of offsetting futures

B-14
<PAGE>

positions by the writer and holder of the option will be accompanied by delivery
of the accumulated cash balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. Currently options can
be purchased or written with respect to futures contracts on the Australian
Dollar, British Pound, Canadian Dollar, Japanese Yen, Swiss Franc, Deutsche Mark
and Eurodollar.

The holder or writer of an option may close out its position by selling or
purchasing an offsetting option of the same series. There is no guarantee that
such close out transactions can be effected.

OTHER INVESTMENT TECHNIQUES

The Series may take advantage of opportunities in the area of options and
futures contracts and any other derivative instruments that are not presently
contemplated for use by it or that are not currently available but that may be
developed, to the extent such opportunities are both consistent with its
investment objective and legally permissible for it.

INVESTMENT RESTRICTIONS

The investment restrictions listed below have been adopted by the Series as
fundamental policies, except as otherwise indicated. Under the Investment
Company Act, a fundamental policy of the Series may not be changed without the
vote of a majority of the outstanding voting securities of the Series. As
defined in the Investment Company Act, a "majority of a Fund's outstanding
voting securities" means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are present in person
or represented by proxy or (ii) more than 50% of the outstanding shares. For
purposes of the following limitations: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations does not
require elimination of any asset from the Series.

THE SERIES MAY NOT:

1. Issue senior securities, borrow money or pledge its assets, except that
the Series may borrow up to 33-1/3% of the value of its total assets (calculated
when the loan is made) for temporary, extraordinary or emergency purposes or for
the clearance of transactions. The Series may pledge up to 20% of the value of
its total assets to secure such borrowings. For the purpose of this restriction,
the purchase or sale of securities on a when-issued or delayed delivery basis,
forward foreign currency exchange contracts and collateral and collateral
arrangements relating thereto, and collateral arrangements with respect to
futures contracts and options thereon and with respect to the writing of options
and obligations of the Series to Directors pursuant to deferred compensation
arrangements are not deemed to be a pledge of assets or the issuance of a senior
security.

2. Purchase any security (other than obligations of the U.S. Government, its
agencies, or instrumentalities) if as a result: (i) with respect to 75% of the
Series' total assets, more than 5% of such assets (determined at the time of
investment) would then be invested in securities of a single issuer, or (ii) 25%
or more of the Series' total assets (determined at the time of investment) would
be invested in a single industry.

3. Purchase any security if as a result the Series would then hold more than
10% of the outstanding voting securities of an issuer.

4. Buy or sell real estate or interests invest in real estate, except that
the Series may purchase and sell securities which are secured by real estate,
securities of companies which invest or deal in real estate and publicly traded
securities of real estate investment trusts.

5. Purchase or sell commodities or contracts on commodities, except to the
extent that the Series may do so in accordance with applicable law, as may be
amended from time to time, and without registering as a commodity pool operator
under the Commodity Exchange Act.

6. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
certain federal securities laws.

7. Make loans, except through (i) repurchase agreements and (ii) loans of
portfolio securities.

Whenever any fundamental investment policy or investment restriction states
a maximum percentage of the Series' assets or net assets, it is intended that if
the percentage limitation is met at the time the investment is made, then a
later change in percentage resulting from changing total or net asset values
will not be considered a violation of such policy. However, in the event that
the Series' asset coverage for borrowings falls below 300%, the Series will take
action within three days to reduce its borrowings, as required by applicable
law.

B-15

<PAGE>

MANAGEMENT OF THE FUND

(A) DIRECTORS

The Fund has Directors who, in addition to overseeing the actions of the
Series' Manager, Subadviser and Distributor, decide upon matters of general
policy.

The Directors also review the actions of the Fund's officers who conduct and
supervise the daily business operations of the Series.

(B) MANAGEMENT INFORMATION--DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE(1) FUND DURING PAST FIVE YEARS
- --------------------- ------------- ----------------------
<S> <C> <C>
Delayne Dedrick Gold (60) Director Marketing and Management Consultant; Director of The High
Yield Income Fund, Inc.

* Robert F. Gunia (52) Vice President Vice President, Prudential Investments since September 1997;
and Director Executive Vice President and Treasurer (since December
1996), Prudential Investments Fund Management LLC (PIFM);
Senior Vice President (since March 1987) of Prudential
Securities Incorporated (Prudential Securities); formerly
Chief Administrative Officer (July 1990-September 1996),
Director (January 1989-September 1996) and Executive Vice
President, Treasurer and Chief Financial Officer (June
1987-September 1996) of Prudential Mutual Fund Management,
Inc. (PMF), Vice President and Director (since May 1989) of
The Asia Pacific Fund, Inc.; Director of The High Yield
Income Fund, Inc.

Robert E. LaBlanc (64) Director President (since 1981) of Robert E. LaBlanc Associates, Inc.
(telecommunications); formerly General Partner at Salomon
Brothers and Vice-Chairman of Continental Telecom; Director
of Storage Technology Corporation, Titan Corporation,
Salient 3 Communications, Inc. and Tribune Company; and
Trustee of Manhattan College.

* David R. Odenath (42) Director Officer in Charge, President, Chief Executive Officer and
Chief Operating Officer (since June 1999), PIFM; Senior
Vice President (since June 1999), Prudential; Senior Vice
President (August 1993-May 1999), PaineWebber Group, Inc.;
Director or Trustee of 44 fund within the Prudential Mutual
Funds. Director

Robin B. Smith (59) Chairman (since August 1996) and Chief Executive Officer
(since January 1988), formerly President (September
1981-August 1996) and Chief Operating Officer (September
1981-December 1988) of Publishers Clearing House; Director
of BellSouth Corporation, Texaco Inc., Springs Industries
Inc. and Kmart Corporation. Director

Stephen Stoneburn (55) President and Chief Executive Officer (since June 1996) of
Quadrant Media Corp. (a publishing company); formerly,
President (June 1995-June 1996) of Argus Integrated Media,
Inc.; formerly Senior Vice President and Managing Director,
(January 1993-1995) Cowles Business Media; and Senior Vice
President (January 1991-1992) of Gralla Publications (a
division of United Newspapers, U.K.); and Senior Vice
President of Fairchild Publications, Inc.
</TABLE>

B-16
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE(1) FUND DURING PAST FIVE YEARS
- --------------------- ------------- ----------------------
<S> <C> <C>
* John R. Strangfeld, Jr. (45) Director, Chief Executive Officer, Chairman, President and Director
President and (since January 1990), of The Prudential Investment
Chief Executive Corporation, Executive Vice President (since February
Officer 1998), Prudential Global Asset Management Group of
Prudential, and Chairman (since August 1989), Pricoa
Capital Group; formerly various positions, including Chief
Executive Officer (November 1994-December 1998), Private
Asset Management Group of Prudential and Senior Vice
President (January 1986-August 1989), Prudential Capital
Group, a unit of Prudential; President and Director or

Nancy H. Teeters (68) Director Economist; formerly Vice President and Chief Economist (March
1986- June 1990) of International Business Machines
Corporation; Director (since July 1991) of Inland Steel
Corporation; Director of The High Yield Income Fund, Inc.

Clay T. Whitehead (61) Director President of National Exchange Inc. (new business development
firm) (since May 1983); Director or Trustee of 33 funds
within the Prudential Mutual Funds.

Grace C. Torres (40) Treasurer First Vice President (since December 1996) of PIFM; First
and Principal Vice President (since March 1994) of Prudential Securities;
Financial and formerly First Vice President (March 1994-September 1996),
Accounting Prudential Mutual Fund Management, Inc. and Vice President
Officer (July 1989-March 1994) of Bankers Trust Corporation.

Robert C. Rosselot (39) Secretary Assistant General Counsel (since September 1997) of PIFM.
Formerly, partner with the law firm of Howard & Howard,
Bloomfield Hills, Michigan (December 1995-September 1997)
and, prior thereto, Corporate Counsel, Federated Investors
(1990-1995).

Stephen M. Ungerman (45) Assistant Vice President and Tax Director (since March 1996), Prudential
Treasurer Investments; formerly First Vice President, Prudential Mutual
Fund Management, Inc. (February 1993-September 1996)
</TABLE>

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

(1) The address for each of the above persons is c/o Prudential Investments
Fund Management LLC, Gateway Center Three, 100 Mulberry Street, 9th Floor,
Newark, New Jersey 07102-4077.

* Interested director, as defined in the Investment Company Act, by reason of
his affiliation with Prudential Investment Management Services LLC or PIFM.

Directors and officers of the Fund are also trustees, directors and
officers of some or all of the other investment companies distributed by
Prudential Investment Management Services LLC.

The Fund pays each of its Directors who is not an "affiliated" person of
PIFM annual compensation of $7,000, in addition to certain out-of-pocket
expenses. The amount of annual compensation paid to each Director may change as
a result of the introduction of additional funds upon which the Director will be
asked to serve.

Directors may receive their Directors' fees pursuant to a deferred fee
agreement with the Fund. Under the terms of such agreement, the Fund accrues
daily the amount of Directors' fees which accrue interest at a rate equivalent
to the prevailing rate applicable to 90-day U.S. Treasury Bills at the beginning
of each calendar quarter or, pursuant to an SEC exemptive order, at the daily
rate of return of the Fund (the Fund rate). Payment of the interest so accrued
is also deferred and accruals become payable at the option of the Director. The
Fund's obligation to make payments of deferred Directors' fees, together with
interest thereon, is a general obligation of the Fund.

The Directors have adopted a retirement policy which calls for the
retirement of Directors on December 31 of the year in which they reach the age
of 72.

Pursuant to the terms of the Management Agreement with the Fund, the
Manager pays all compensation of officers and employees of the Fund as well as
the fees and expenses of all Directors of the Fund who are affiliated persons of
the Manager.

B-17
<PAGE>

The following table sets forth the aggregate compensation paid by the Fund
for the fiscal year ended October 31, 1999 to the Directors who are not
affiliated with the Manager and the aggregate compensation paid to such
Directors for service on the Fund's board and that of all other investment
companies managed by Prudential Investments Fund Management LLC (Fund Complex)
for the calendar year ended December 31, 1999. Below are listed the Directors
who have served the Fund during its most recentfiscal year.

COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL 1999
PENSION OR COMPENSATION
RETIREMENT FROM FUND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
COMPENSATION AS PART OF FUND BENEFITS UPON COMPLEX PAID
NAME AND POSITION FROM FUND EXPENSES RETIREMENT TO DIRECTORS(2)
- -------------------------------------------- ------------ ---------------- - -------------- ---------------
<S> <C> <C> <C> <C>
Edward D. Beach--Former Director $ None N/A $ *
Delayne D. Gold--Director None N/A *
Robert F. Gunia (1)--Director -- None N/A --
Don G. Hoff--Former Director None N/A *
Robert F. LaBlanc--Director None N/A *
Mendel A. Melzer (1)--Former Director -- None N/A --
Robin B. Smith--Director None N/A *
Stephen Stoneburn--Director None N/A *
John R. Strangfeld, Jr. -- None N/A --
Nancy H. Teeters--Director None N/A *
Clay T. Whitehead None N/A *

</TABLE>

- ----------

* Indicates number of funds/portfolios in Fund Complex (including the Fund) to
which aggregate compensation relates.

(1) Directors who are "interested" do not receive compensation from Fund Complex
(including the Fund).

(2) Total compensation from all the Funds in the Fund Complex for the calendar
year ended December 31, 1999, includes amounts deferred at the election of
Directors under the Funds' deferred compensation plans. Including accrued
interest, total compensation amounted to $_________ for Director Robin B. Smith.
Currently, Ms. Smith has agreed to defer some of her fees at the T-Bill rate and
other fees at the Fund rate.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

PIFM, as purchaser of shares of the Series prior to commencement of the
public offering of the Series' shares, is deemed to be a control person of the
Series.

INVESTMENT ADVISORY AND OTHER SERVICES

(a) INVESTMENT ADVISORS

The manager of the Series is Prudential Investments Fund Management LLC
(PIFM or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077. PIFM serves as manager to substantially all of the other
investment companies that, together with the Series, comprise the "Prudential
Mutual Funds." See "How the Series is Managed--Manager" in the Prospectus. As of
_____________, 1999 PIFM managed and/or administered open-end and closed-end
management investment companies with assets of approximately $_______ billion
and, according to the Investment Company Institute, as of _____________, 1999,
the Prudential Mutual Funds were the __th largest family of mutual funds in the
United States.

PIFM is a subsidiary of Prudential Securities. Prudential Mutual Fund
Services LLC (PMFS or the Transfer Agent), a wholly-owned subsidiary of PIFM,
serves as the transfer agent for the Prudential Mutual Funds and, in addition,
provides customerservice, recordkeeping and management and administration
services to qualified plans.

Pursuant to the Management Agreement with the Fund with respect to the
Series (the Management Agreement), PIFM, subject to the supervision of the
Fund's Board of Directors and in conformity with the stated policies of the
Series, manages both the investment operations of the Series and the composition
of the Series' portfolio, including the purchase, retention, disposition and
loan of securities. In connection therewith, PIFM is obligated to keep certain
books and records of the Series. PIFM also administers the Series' business
affairs and, in connection therewith, furnishes the Series with office
facilities, together with those ordinary clerical and bookkeeping services which
are not being furnished by State Street Bank and Trust Company, the

B-18

<PAGE>

Fund's custodian, and PMFS, the Fund's transfer and dividend disbursing agent.
The management services of PIFM for the Series are not exclusive under the terms
of the Management Agreement and PIFM is free to, and does, render management
services to others.

For its services, PIFM receives, pursuant to the Management Agreement, a
fee at an annual rate of .85 of 1% of the average daily net assets of the Series
up to and including $300 million, .75 of 1% of the average daily net assets of
the Series in excess of $300 million and up to and including $1.5 billion, and
.70 of 1% of the average daily net assets of the Series over $1.5 billion. The
fee is computed daily and payable monthly by the Series.

In connection with its management of the business affairs of the Series,
PIFM bears the following expenses:

(a) the salaries and expenses of all of its and the Series' personnel
except the fees and expenses of Directors who are not affiliated persons of
PIFM or the Series' Subadviser;

(b) all expenses incurred, by PIFM or by the Series in connection with
managing the ordinary course of the Series' business, other than those
assumed by the Series as described below; and

(c) the fees payable to Jennison Associates LLC (Jennison) pursuant to
the subadvisory agreement between PIFM and Jennison.

Under the terms of the Management Agreement, the Series is responsible for
the payment of the following expenses: (a) the fees payable to the Manager, (b)
the fees and expenses of Directors who are not affiliated persons of the Manager
or the Series' Subadviser, (c) the fees and certain expenses of the Custodian
and Transfer and Dividend Disbursing Agent, including the cost of providing
records to the Manager in connection with its obligation of maintaining required
records of the Series and of pricing the Series' shares, (d) the charges and
expenses of legal counsel and independent accountants for the Series, (e)
brokerage commissions and any issue or transfer taxes chargeable to the Series
in connection with its securities transactions, (f) all taxes and corporate fees
payable by the Series to governmental agencies, (g) the fees of any trade
associations of which the Series may be a member, (h) the cost of stock
certificates representing shares of the Series, (i) the cost of fidelity and
liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Series and of its shares with the Securities and
Exchange Commission, filing notices under state securities laws, and the
preparation and printing of the Fund's registration statements and prospectuses
for purposes of regulatory filings, (k) allocable communications expenses with
respect to investor services and all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing reports, proxy statements and
prospectuses to shareholders in the amount necessary for distribution to the
shareholders, (l) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Series'
business and (m) distribution fees. With respect to each of the foregoing
general corporate expenses of the Fund, the Fund will allocate such expenses
among all of its series, including the Prudential Jennison International Growth
Fund, based on each series' relative net assets.

The Management Agreement provides that PIFM will not be liable for any
error of judgment or for any loss suffered by the Series in connection with the
matters to which the Management Agreement relates, except a loss resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Management Agreement provides that it will terminate automatically if
assigned, and that it may be terminated without penalty by either party upon not
more than 60 days' nor less than 30 days' written notice. The Management
Agreement will continue in effect for a period of more than two years from the
date of execution only so long as such continuance is specifically approved at
least annually in conformity with the Investment Company Act.

PIFM has entered into a Subadvisory Agreement (the Subadvisory Agreement)
with Jennison. The Subadvisory Agreement with Jennison provides that PIFM will
compensate Jennison for its services at an annual rate of .60% of the Series'
average daily net assets up to and including $300 million, .50% of the Series'
average daily net assets in excess of $300 million and up to and including $1.5
billion and .45% of the Series' average daily net assets in excess of $1.5
billion. As of December 31, 1999, Jennison had approximately $ billion in assets
under management. The Subadvisory Agreement provides that Jennison will furnish
investment advisory services in connection with the management of the Series. In
connection therewith, Jennison is obligated to keep certain books and records of
the Series. PIFM continues to have responsibility for all investment advisory
services pursuant to the Management Agreement and supervises Jennison's
performance of such services.

The Subadvisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Investment Company Act) or upon the
termination of the Management Agreement. The Subadvisory Agreement may be
terminated by the Fund, PIFM, or Jennison upon not more than 60 days', nor less
than 30 days', written notice. The Subadvisory Agreement provides that it will
continue in effect for a period of more than two years from its execution only
so long as such continuance is specifically approved at least annually in
accordance with the requirements of the Investment Company Act.

B-19
<PAGE>

(B) DISTRIBUTOR AND RULE 12B-1 PLANS

Prudential Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts
as the distributor of the shares of the Series.

Pursuant to separate Distribution and Service Plans (the Class A Plan, the
Class B Plan and the Class C Plan, collectively the Plans) adopted by the Fund
on behalf of the Series under Rule 12b-1under the Investment Company Act and a
distribution agreement (the Distribution Agreement), the Distributor incurs the
expenses of distributing the Fund's Class A, Class B and Class C shares. PIMS
serves as the Distributor of the Class Z shares and incurs the expenses of
distributing the Series' Class Z shares under the Distribution Agreement with
the Fund, none of which are reimbursed by or paid for by the Series. See "How
the Fund is Managed--Distributor" in the Prospectus.

The Series' Class A Plan provides that (i) .25 of 1% of the average daily
net assets of the Class A shares of the Series will be paid as compensation for
personal service and the maintenance of shareholder accounts (service fee) and
(ii) total distribution fees (including the service fee of .25 of 1%) may not
exceed .30 of 1% of the average daily net assets of the Class A shares of such
Series. The Series Class B Plan provides that (i) .25 of 1% of the average daily
net assets of the Class B shares of such Series will be paid as a service fee
and (ii) .75 of 1% (not including the service fee) per annum of such Series'
average daily net assets will be paid as compensation for distribution-related
expenses with respect to the Class B shares (asset-based sales charge). The
Series' Class C Plan provides that (i) .25 of 1% of the average daily net assets
of the Class C shares of the Series will be paid as a service fee and (ii) .75
of 1% (not including the service fee) per annum of the Series' average daily net
assets will be paid as compensation for distribution-related expenses with
respect to the Class C shares (asset-based sales charge).

The Class A, Class B and Class C Plans continue in effect from year to
year, provided that each such continuance is approved at least annually by a
vote of the Board of Directors, including a majority vote of the Rule 12b-1
Directors, cast in person at a meeting called for the purpose of voting on such
continuance. The Plans may each be terminated at any time, without penalty, by
the vote of a majority of the Rule 12b-1 Directors or by the vote of the holders
of a majority of the outstanding shares of the applicable class of the Series to
which such Plan relates. The Plans may not be amended to increase materially the
amounts to be spent for the services described therein without approval by the
shareholders of the applicable class, and all material amendments are required
to be approved by the Board of Directors in the manner described above. The
Series will not be contractually obligated to pay expenses incurred under any
Plan if it is terminated or not continued.

Pursuant to each Plan, the Board of Directors will review at least
quarterly a written report of the distribution expenses incurred on behalf of
each class of shares of the Series by the Distributor. The report includes an
itemization of the distribution expenses and the purposes of such expenditures.
In addition, as long as the Plans remain in effect, the selection and nomination
of Rule 12b-1 Directors shall be committed to the Rule 12b-1 Directors.

Pursuant to the Distribution Agreement, the Fund has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933, as amended.

The distribution and/or service fees may also be used by the Distributor to
compensate on a continuing basis Dealers in consideration for the distribution,
marketing, administrative and other services and activities provided by dealers
with respect to the promotion of the sale of the Fund's shares and the
maintenance of related shareholder accounts.

In addition to distribution and service fees paid by each Series under the
Class A, Class B and Class C Plans, the Manager (or one of its affiliates) may
make payments out of its own resources to Dealers and other persons which
distribute shares of the Series (including Class Z shares). Such payments may be
calculated by reference to the net asset value of shares sold by such persons or
otherwise.

NASD MAXIMUM SALES CHARGE RULE. Pursuant to rules of the NASD, the
Distributor is required to limit aggregate initial sales charges, deferred sales
charges and asset-based sales charges to 6.25% of total gross sales of each
class of shares. Interest charges on unreimbursed distribution expenses equal to
the prime rate plus one percent per annum may be added to the 6.25% limitation.
Sales from the reinvestment of dividends and distributions are not included in
the calculation of the 6.25% limitation. The annual asset-based sales charge on
shares of the Series may not exceed .75 of 1% per class. The 6.25% limitation
applies to the Series rather than on a per shareholder basis. If aggregate sales
charges were to exceed 6.25% of total gross sales of any class, all sales
charges on shares of that class would be suspended.

State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, serves as Custodian for the Fund's portfolio securities and
cash and, in that capacity, maintains certain financial and accounting books and
records pursuant to an agreement with the Fund. Subcustodians provide custodial
services for the Fund's foreign assets held outside the United States.

B-20
<PAGE>

Prudential Mutual Fund Services LLC (PMFS), Raritan Plaza One, Edison, New
Jersey 08837, serves as the transfer and dividend disbursing agent of the Fund.
PMFS is a wholly-owned subsidiary of PIFM. PMFS provides customary transfer
agency services to the Fund, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, the payment of dividends and distributions and
related functions. For these services, PMFS receives an annual fee per
shareholder account, a new account set-up fee for each manually established
account and a monthly inactive zero balance account fee per shareholder account.
PMFS is also reimbursed for its out-of-pocket expenses, including but not
limited to postage, stationery, printing, allocable communication expenses and
other costs. For the fiscal year ended October 31, 1999, the Fund incurred fees
of approximately $________ for the services of PMFS.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York, 10036, serves as the Fund's independent accountants and in that capacity
audits the Fund's annual financial statements.

BROKERAGE ALLOCATION AND OTHER PRACTICES

The Manager is responsible for decisions to buy and sell securities,
options and futures contracts for the Series, the selection of brokers, dealers
and futures commission merchants to effect the transactions and the negotiation
of brokerage commissions, if any. Purchases and sales of securities, options or
futures on a national securities exchange or board of trade are effected through
brokers or futures commission merchants who charge a negotiated commission for
their services; on foreign securities exchanges, commissions may be fixed.
Orders may be directed to any broker or futures commission merchant including,
to the extent and in the manner permitted by applicable law, Prudential
Securities and its affiliates. The term "Manager" as used in this section
includes the Subadviser.

In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. The Series will not deal with Prudential
Securities or any affiliate in any transaction in which Prudential Securities or
any affiliate acts as principal. Thus, they will not deal in over-the-counter
securities with Prudential Securities acting as market maker, and they will not
execute a negotiated trade with Prudential Securities if execution involves
Prudential Securities' acting as principal with respect to any part of the
Series' order.

Portfolio securities may not be purchased from any underwriting or selling
syndicate of which Prudential Securities (or any affiliate), during the
existence of the syndicate, is a principal underwriter (as defined in the
Investment Company Act), except in accordance with rules of the Commission. This
limitation, in the opinion of the Series, will not significantly affect the
Series' ability to pursue its present investment objective. However, in the
future, in other circumstances, the Series may be at a disadvantage because of
this limitation in comparison to other funds with similar objectives but not
subject to such limitations.

In placing orders for portfolio securities of the Series, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. This means that the Manager will seek to execute each
transaction at a price and commission, if any, which provide the most favorable
total cost or proceeds reasonably attainable in the circumstances. While the
Manager generally seeks reasonably competitive spreads or commissions, the
Series will not necessarily be paying the lowest spread or commission available.
Within the framework of this policy, the Manager will consider research and
investment services provided by brokers, dealers or futures commission merchants
who effect or are parties to portfolio transactions of the Series, the Manager
or its clients. Such research and investment services are those which brokerage
houses customarily provide to institutional investors and include statistical
and economic data and research reports on particular companies and industries.
Such services are used by the Manager in connection with all of its investment
activities, and some of such services obtained in connection with the execution
of transactions for the Series may be used in managing other investment
accounts. Conversely, brokers, dealers or futures commission merchants
furnishing such services may be selected for the execution of transactions of
such other accounts, whose aggregate assets are far larger than those of the
Series, and the services furnished by such brokers, dealers or futures
commission merchants may be used by the Manager in providing investment
management for the Series. Commission rates are established pursuant to
negotiations with the broker, dealer or futures commission merchant based on the
quality and quantity of execution services provided by the broker, dealer or
futures commission merchant in the light of generally prevailing rates. The
Manager is authorized to pay higher commissions on brokerage transactions for
the Series to brokers, dealers or futures commission merchants other than
Prudential Securities in order to secure research and investment services
described above, subject to review by the Fund's Board of Directors from time to
time as to the extent and continuation of this practice. The allocation of
orders among brokers, dealers and futures commission merchants and the
commission rates paid are reviewed periodically by the Fund's Board of
Directors.

Subject to the above considerations, Prudential Securities may act as a
broker or futures commission merchant for the Fund. In order for Prudential
Securities (or any affiliate) to effect any portfolio transactions for the
Series, the commissions, fees or other

B-21
<PAGE>

remuneration received by Prudential Securities (or any affiliate) must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers or futures commission merchants in connection with comparable
transactions involving similar securities or futures being purchased or sold on
a securities exchange or board of trade during a comparable period of time. This
standard would allow Prudential Securities (or any affiliate) to receive no more
than the remuneration which would be expected to be received by an unaffiliated
broker in a commensurate arm's-length transaction. Furthermore, the Board of
Directors of the Fund, including a majority of the noninterested directors, has
adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to Prudential Securities (or any
affiliate) are consistent with the foregoing standard. In accordance with
Section 11(a) of the Securities Exchange Act of 1934, Prudential Securities may
not retain compensation for effecting transactions on a national securities
exchange for the Series unless the Series has expressly authorized the retention
of such compensation. Prudential Securities must furnish to the Series at least
annually a statement setting forth the total amount of all compensation retained
by Prudential Securities from transactions effected for the Series during the
applicable period. Brokerage transactions with Prudential Securities (or any
affiliate) are also subject to such fiduciary standards as may be imposed upon
Prudential Securities (or such affiliate) by applicable law.

CAPITAL STOCK AND ORGANIZATION

THE FUND IS AUTHORIZED TO ISSUE 1.5 BILLION SHARES OF COMMON STOCK, $.01
PER SHARE WHICH ARE CURRENTLY DIVIDED INTO THREE PORTFOLIOS OR SERIES, GLOBAL
SERIES AND INTERNATIONAL STOCK SERIES AND PRUDENTIAL JENNISON INTERNATIONAL
GROWTH FUND, EACH OF WHICH CONSISTS OF 500 MILLION AUTHORIZED SHARES. THE SHARES
OF EACH SERIES ARE CURRENTLY DIVIDED INTO FOUR CLASSES, DESIGNATED CLASS A,
CLASS B, CLASS C AND CLASS Z SHARES. Each class of shares represents an interest
in the same assets of each Series and is identical in all respects except that
(i) each class is subject to different sales charges and distribution and/or
service fees (except for Class Z shares, which are not subject to any sales
charges and distribution and/or service fees), which may affect performance,
(ii) each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement and has separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class, (iii) each class has a
different exchange privilege, (iv) only Class B shares have a conversion feature
and (v) Class Z shares are offered exclusively for sale to a limited group of
investors. See "How the Series is Managed--Distributor" in the Prospectus. In
accordance with the Fund's Articles of Incorporation, the Directors may
authorize the creation of additional series and classes within such series, with
such preferences, privileges, limitations and voting and dividend rights as the
Directors may determine.

The Articles of Incorporation further provide that no Director, officer,
employee or agent of the Fund is liable to the Fund or to a shareholder, nor is
any Director, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise from
his or her own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or her duties. It also provides that all third parties shall
look solely to the Fund property for satisfaction of claims arising in
connection with the affairs of the Fund. With the exceptions stated, the
Articles of Incorporation permit the Directors to provide for the
indemnification of Directors, officers, employees or agents of the Fund against
all liability in connection with the affairs of the Fund.

Pursuant to the Articles of Incorporation, the Directors may authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios with distinct investment
objectives and policies and share purchase, redemption and net asset value
procedures) with such preferences, privileges, limitations and voting and
dividend rights as the Directors may determine. All consideration received by
the Fund for shares of any additional series, and all assets in which such
consideration is invested, would belong to that series (subject only to the
rights of creditors of that series) and would be subject to the liabilities
related thereto. Pursuant to the Investment Company Act, shareholders of any
additional series of shares would normally have to approve the adoption of any
advisory contract relating to such series and of any changes in the investment
policies related thereto. The Directors have no intention of authorizing
additional series at the present time.

The Directors have the power to alter the number and the terms of office of
the Directors and they may at any time lengthen their own terms or make their
terms of unlimited duration and appoint their own successors, provided that
always at least a majority of the Directors have been elected by the
shareholders of the Fund. The voting rights of shareholders are not cumulative,
so that holders of more than 50 percent of the shares voting can, if they
choose, elect all Directors being selected, while the holders of the remaining
shares would be unable to elect any Directors.

PURCHASE, REDEMPTION AND PRICING OF SERIES SHARES

Shares of the Series may be purchased at a price equal to the next
determined net asset value per share plus a sales charge which, at the election
of the investor, may be imposed either (i) at the time of purchase (Class A
shares) or (ii) on a deferred basis (Class B or Class C shares). Class Z shares
of the Series are offered to a limited group of investors at net asset value
without any sales charges.

B-22
<PAGE>

Each class represents an interest in the same assets of the Series and is
identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service fees (except for Class Z shares,
which are not subject to any sales charge or distribution and/or service fee),
which may affect performance, (ii) each class has exclusive voting rights on any
matter submitted to shareholders that relates solely to its arrangements and has
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class, (iii) each
class has a different exchange privilege, (iv) only Class B shares have a
conversion feature and (v) Class Z shares are offered exclusively for sale to a
limited group of investors.

PURCHASE BY WIRE. For an initial purchase of shares of the Series by wire,
you must complete an application and telephone PMFS at (800) 225-1852
(toll-free) to receive an account number. The following information will be
requested: your name, address, tax identification number, class election,
dividend distribution election, amount being wired and wiring bank. Instructions
should then be given by you to your bank to transfer funds by wire to State
Street Bank and Trust Company (State Street), Boston, Massachusetts, Custody and
Shareholder Services Division, Attention: Prudential World Fund, Inc.,
Prudential Jennison International Growth Fund, specifying on the wire the
account number assigned by PMFS and your name and identifying the class in which
you are eligible to invest (Class A, Class B, Class C or Class Z shares).

If you arrange for receipt by State Street of Federal Funds prior to the
calculation of NAV (4:15 P.M., New York time) on a business day, you may
purchase shares of the Fund as of that day. See "Net Asset Value."

In making a subsequent purchase order by wire, you should wire State Street
directly and should be sure that the wire specifies Prudential World Fund, Inc.,
Jennison International Growth Fund, Class A, Class B, Class C or Class Z shares,
as applicable, and your name and individual account number. It is not necessary
to call PMFS to make subsequent purchase orders utilizing Federal Funds. The
minimum amount which may be invested by wire is $1,000.

ISSUANCE OF SERIES SHARES FOR SECURITIES

Transactions involving the issuance of Series shares for securities (rather
than cash) will be limited to (i) reorganizations, (ii) statutory mergers, or
(iii) other acquisitions of portfolio securities that: (a) meet the investment
objective and policies of the Series, (b) are liquid and not subject to
restrictions on resale, (c) have a value that is readily ascertainable via
listing on or trading in a recognized United States or international exchange or
market, and (d) is approved by the series' investment adviser.

SPECIMEN PRICE MAKE-UP

Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold at a maximum sales charge of 5%, Class C*
shares are sold at a maximum sales charge of 1% and Class B* and Class Z shares
are sold at net asset value. Using each Series' net asset value at January __,
2000, the maximum offering price of the Series' shares is as follows:

<TABLE>
<S> <C>
CLASS A
Net asset value and redemption price per Class A share .................... $10.00
Maximum sales charge (5% of offering price) ............................... .53
------
Offering price to public .................................................. $10.53
======

CLASS B
Net asset value, offering price and redemption price per Class B share* ... $10.00
======

CLASS C
Net asset value and redemption price per Class C share* ................... $10.00
Maximum sales charge (1% of offering price) ............................... .10
------
Offering price to public .................................................. $10.10
======

CLASS Z
Net asset value, offering price and redemption price per Class Z share .... $10.00
======
</TABLE>
- ----------

* Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "How to Buy, Sell and Exchange Shares of
the Fund--How to Sell Your Series--Contingent Deferred Sales Charges" in
the Prospectus.

SELECTING A PURCHASE ALTERNATIVE

The following is provided to assist you in determining which method of
purchase best suits your individual circumstances and is based on current fees
and expenses being charged to the Series:

B-23
<PAGE>

If you intend to hold your investment in the Series for less than 7 years
and do not qualify for a reduced sales charge on Class A shares, since Class A
shares are subject to a maximum initial sales charge of 5% and Class B shares
are subject to a CDSC of 5% which declines to zero over a 6 year period, you
should consider purchasing Class C shares over either Class A or Class B shares.

If you intend to hold your investment for 7 years or more and do not
qualify for a reduced sales charge on Class A shares, since Class B shares
convert to Class A shares approximately 7 years after purchase and because all
of your money would be invested initially in the case of Class B shares, you
should consider purchasing Class B shares over either Class A or Class C shares.

If you qualify for a reduced sales charge on Class A shares, it may be more
advantageous for you to purchase Class A shares over either Class B or Class C
shares regardless of how long you intend to hold your investment. However,
unlike Class B and Class C shares, you would not have all of your money invested
initially because the sales charge on Class A shares is deducted at the time of
purchase.

If you do not qualify for a reduced sales charge on Class A shares and you
purchase Class B or Class C shares, you would have to hold your investment for
more than 6 years in the case of Class B shares and Class C shares for the
higher cumulative annual distribution-related fee on those shares to exceed the
initial sales charge plus cumulative annual distribution-related fees on Class A
shares. This does not take into account the time value of money, which further
reduces the impact of the higher Class B or Class C distribution-related fee on
the investment, fluctuations in NAV, the effect of the return on the investment
over this period of time or redemptions when the CDSC is applicable.

REDUCTION AND WAIVER OF INITIAL SALES CHARGES--CLASS A SHARES

Class A shares may be purchased at NAV, through the Distributor or the
Transfer Agent, by the following persons: (a) officers of the Prudential Mutual
Funds (including the Fund), (b) employees of Prudential Securities, PIFM and
their subsidiaries and members of the families of such persons who maintain an
"employee related" account at Prudential Securities or the Transfer Agent, (c)
employees of subadvisers of the Prudential Mutual Funds provided that purchases
at NAV are permitted by such person's employer, (d) Prudential, employees and
special agents of Prudential and its subsidiaries and all persons who have
retired directly from active service with Prudential or one of its subsidiaries,
(e) registered representatives and employees of Dealers who have entered into a
selected dealer agreement with the Distributor provided that purchases at NAV
are permitted by such person's employer, (f) investors who have a business
relationship with a financial adviser who joined Prudential Securities from
another investment firm, provided that (i) the purchase is made within 180 days
of the commencement of the financial adviser's employment at Prudential
Securities, or within one year in the case of Benefit Plans, (ii) the purchase
is made with proceeds of a redemption of shares of any open-end non-money market
fund sponsored by the financial adviser's previous employer (other than a fund
which imposes a distribution or service fee of .25 of 1% or less) and (iii) the
financial adviser served as the client's broker on the previous purchase, and
(g) investors in Individual Retirement Accounts, provided the purchase is made
with the proceeds of a tax-free rollover of assets from a Benefit Plan for which
Prudential Investments serves as the recordkeeper or administrator.

For an investor to obtain any reduction or waiver of the initial sales
charges, at the time of the sale either the Transfer Agent must be notified
directly by the investor or the Distributor must be notified by the Dealer
facilitating the transaction that the sale qualifies for the reduced or waived
sales charge. The reduction or waiver will be granted subject to confirmation of
your entitlement. No initial sales charges are imposed upon Class A shares
acquired upon the reinvestment of dividends and distributions.

COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of the Series
concurrently with Class A shares of other Prudential Mutual Funds, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of break points under "How to Buy, Sell and
Exchange Shares of the Series--Reducing or Waiving Class A's Initial Sales
Charge" in the Prospectus.

An eligible group of related Series investors includes any combination of
the following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

(d) any company controlled by the individual (a person, entity or group
that holds 25% or more of the outstanding voting securities of a
company will be deemed to control the company, and a partnership will
be deemed to be controlled by each of its general partners);

(e) a trust created by the individual, the beneficiaries of which are the
individual, his or her spouse, parents or children;

B-24
<PAGE>

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account
created by the individual or the individual's spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

In addition, an eligible group of related Series investors may include the
following: an employer (or group of related employers) and one or more
retirement plans of such employer or employers (an employer controlling,
controlled by or under common control with another employer is deemed related to
that employer).

The Transfer Agent, the Distributor or your Dealer must be notified at the
time of purchase that the investor is entitled to a reduced sales charge. The
reduced sales charge will be granted subject to confirmation of the investor's
holdings. The Combined Purchase and Cumulative Purchase Privilege does not apply
to individual participants in any retirement or group plans.

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of the shares of
the Series and shares of other Prudential Mutual Funds (excluding money market
funds other than those acquired pursuant to the exchange privilege) to determine
the reduced sales charge. However, the value of shares held directly with the
Transfer Agent and through your Dealer will not be aggregated to determine the
reduced sales charge. All shares must be held either directly with the Transfer
Agent or through Prudential Securities. The value of existing holdings for
purposes of determining the reduced sales charge is calculated using the maximum
offering price (NAV plus maximum sales charge) as of the previous business day.
The Distributor or the Transfer Agent must be notified at the time of purchase
that the investor is entitled to a reduced sales charge. The reduced sales
charge will be granted subject to confirmation of the investor's holdings.
Rights of accumulation are not available to individual participants in any
retirement or group plans.

LETTERS OF INTENT. Reduced sales charges are also available to investors
(or an eligible group of related investors), including retirement and group
plans, who enter into a written Letter of Intent providing for the purchase,
within a thirteen-month period, of shares of the Portfolio and shares of other
Prudential Mutual Funds (Investment Letter of Intent). Retirement and group
plans may also qualify to purchase Class A shares at NAV by entering into a
Letter of Intent whereby they agree to enroll, within a thirteen-month period, a
specified number of eligible employees or participants (Participant Letter of
Intent).

For purposes of the Investment Letter of Intent, all shares of each
Portfolio and shares of other Prudential Mutual Funds (excluding money market
funds other than those acquired pursuant to the exchange privilege) which were
previously purchased and are still owned are also included in determining the
applicable reduction. However, the value of shares held directly with the
Transfer Agent and through your Dealer will not be aggregated to determine the
reduced sales charge.

A Letter of Intent permits a purchaser, in the case of an Investment Letter
of Intent, to establish a total investment goal to be achieved by any number of
investments over a thirteen-month period and, in the case of a Participant
Letter of Intent, to establish minimum eligible employee or participant goal
over a thirteen-month period. Each investment made during the period, in the
case of an Investment Letter of Intent, will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. In the case of a Participant Letter of Intent, each investment made
during the period will be made at net asset value. Escrowed Class A shares
totaling 5% of the dollar amount of the Letter of Intent will be held by the
Transfer Agent in the name of the purchaser, except in the case of retirement
and group plans where the employer or plan sponsor will be responsible for
paying any applicable sales charge. The effective date of an Investment Letter
of Intent (except in the case of retirement and group plans) may be back-dated
up to 90 days, in order that any investment made during this 90-day period,
valued at the purchaser's cost, can be applied to the fulfillment of the Letter
of Intent goal.

The Investment Letter of Intent does not obligate the investor to purchase,
nor the Series to sell, the indicated amount. Similarly, the Participant Letter
of Intent does not obligate the retirement or group plan to enroll the indicated
number of eligible employees or participants. In the event the Letter of Intent
goal is not achieved within the thirteen-month period, the purchaser (or the
employer or plan sponsor in the case of any retirement or group plan) is
required to pay the difference between the sales charge otherwise applicable to
the purchases made during this period and sales charges actually paid. Such
payment may be made directly to the Distributor or, if not paid, the Distributor
will liquidate sufficient escrowed shares to obtain such difference. Investors
electing to purchase Class A shares of a Portfolio pursuant to a Letter of
Intent should carefully read such Letter of Intent.

The Distributor must be notified at the time of purchase that the investor
is entitled to a reduced sales charge. The reduced sales charges will, in the
case of an Investment Letter of Intent, be granted subject to confirmation of
the investor's holdings or in the case of a Participant Letter of Intent,
subject to confirmation of the number of eligible employees or participants in
the retirement or group plan. Letters of Intent are not available to any
individual participant in any retirement or group plans.

B-25
<PAGE>

CLASS B AND CLASS C SHARES

The offering price of Class B shares is the NAV next determined following
receipt of an order by the Transfer Agent, your Dealer or the Distributor. Class
C shares are sold at a maximum sales charge of 1%. Redemptions of Class B and
Class C shares may be subject to a CDSC. See "Contingent Deferred Sales
Charges."

The Distributor will pay, from its own resources, sales commissions of up
to 4% of the purchase price of Class B shares to Dealers, financial advisers and
other persons who sell Class B shares at the time of sale. This facilitates the
ability of the Fund to sell the Class B shares without an initial sales charge
being deducted at the time of purchase. The Distributor anticipates that it will
recoup its advancement of sales commissions from the combination of the CDSC and
the distribution fee. See "How the Series is Managed--Distributor." In
connection with the sale of Class C shares, the Distributor will pay, from its
own resources, dealers, financial advisers and other persons which distribute
Class C shares a sales commission of up to 1% of the purchase price at the time
of the sale.

CLASS Z SHARES

Class Z shares of the Series may be purchased by certain savings,
retirement and deferred compensation plans, qualified or non-qualified under the
Internal Revenue Code of 1986, as amended (the Internal Revenue Code), provided
that (i) the plan purchases shares of the Series pursuant to an investment
management agreement with The Prudential Insurance Company of America or its
affiliates, (ii) the Series is an available investment option under the
agreement and (iii) the plan will participate in the PruArray and SmartPath
Programs (benefit plan recordkeeping services) sponsored by Prudential Mutual
Fund Services LLC. These plans include pension, profit-sharing, stock-bonus or
other employee benefit plans under Section 401 of the Internal Revenue Code and
deferred compensation and annuity plans under Sections 457 or 403(b)(7) of the
Internal Revenue Code.

SALE OF SHARES

You can redeem your shares at any time for cash at the NAV next determined
after the redemption request is received in proper form (in accordance with
procedures established by the Transfer Agent in connection with investors'
accounts) by the Transfer Agent. In certain cases, however, redemption proceeds
will be reduced by the amount of any applicable CDSC, as described below. See
"Contingent Deferred Sales Charges" below. If you are redeeming your shares
through a Dealer, your Dealer must receive your sell order before the Fund
computes its NAV for that day (i.e., 4:15 P.M., New York time) in order to
receive that day's NAV. Your Dealer will be responsible for furnishing all
necessary documentation to the Distributor and may charge you for its services
in connection with redeeming shares of the Fund.

If you hold shares of the Series through Prudential Securities, you must
redeem your shares through Prudential Securities. Please contact your Prudential
Securities financial adviser.

If you hold shares in non-certificate form, a written request for
redemption signed by you exactly as the account is registered is required. If
you hold certificates, the certificates, signed in the name(s) shown on the face
of the certificates, must be received by the Transfer Agent, the Distributor or
your Dealer in order for the redemption request to be processed. If redemption
is requested by a corporation, partnership, trust or fiduciary, written evidence
of authority acceptable to the Transfer Agent must be submitted before such
request will be accepted. All correspondence and documents concerning
redemptions should be sent to the Fund in care of its Transfer Agent, Prudential
Mutual Fund Services LLC, Attention: Redemption Services, P.O. Box 15010, New
Brunswick, New Jersey 08906-5010, the Distributor or to your Dealer.

If the proceeds of the redemption (a) exceed $100,000, (b) are to be paid
to a person other than the record owner, (c) are to be sent to an address other
than the address on the Transfer Agent's records, or (d) are to be paid to a
corporation, partnership, trust or fiduciary, the signature(s) on the redemption
request and on the certificates, if any, or stock power must be guaranteed by an
"eligible guarantor institution." An "eligible guarantor institution" includes
any bank, broker, dealer or credit union. The Transfer Agent reserves the right
to request additional information from, and make reasonable inquiries of, any
eligible guarantor institution. For clients of Prusec, a signature guarantee may
be obtained from the agency or office manager of most Prudential Insurance and
Financial Services or Preferred Services offices. In the case of redemptions
from a PruArray or SmartPath Plan, if the proceeds of the redemption are
invested in another investment option of the plan in the name of the record
holder and at the same address as reflected in the Transfer Agent's records, a
signature guarantee is not required.

Payment for shares presented for redemption will be made by check within
seven days after receipt by the Transfer Agent, the Distributor or your Dealer
of the certificate and/or written request, except as indicated below. If you
hold shares through

B-26
<PAGE>

Prudential Securities, payment for shares presented for redemption will be
credited to your account at your Dealer, unless you indicate otherwise. Such
payment may be postponed or the right of redemption suspended at times (a) when
the New York Stock Exchange is closed for other than customary weekends and
holidays, (b) when trading on such Exchange is restricted, (c) when an emergency
exists as a result of which disposal by the Series of securities owned by it is
not reasonably practicable or it is not reasonably practicable for the Series
fairly to determine the value of its net assets, or (d) during any other period
when the SEC, by order, so permits; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
prescribed in (b), (c) or (d) exist.

Payment for redemption of recently purchased shares will be delayed until
the Series or its Transfer Agent has been advised that the purchase check has
been honored, which may take up to 10 calendar days from the time of receipt of
the purchase check by the Transfer Agent. Such delay may be avoided by
purchasing shares by wire or by certified or cashier's check.

REDEMPTION IN KIND. If the Directors determine that it would be detrimental
to the best interests of the remaining shareholders of the Series to make
payment wholly or partly in cash, the Series may pay the redemption price in
whole or in part by a distribution in kind of securities from the investment
portfolio of the Series, in lieu of cash, in conformity with applicable rules of
the Commission. Securities will be readily marketable and will be valued in the
same manner as in a regular redemption. See "How the Series Values their
Shares." If your shares are redeemed in kind, you would incur transaction costs
in converting the assets into cash. The Fund, however, has elected to be
governed by Rule 18f-1 under the Investment Company Act, under which each Series
is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1%
of the NAV of the Series during any 90-day period for any one shareholder.

INVOLUNTARY REDEMPTION. In order to reduce expenses of the Series, the
Trustees may redeem all of the shares of any shareholder, other than a
shareholder which is an IRA or other tax-deferred retirement plan, whose account
has a net asset value of less than $500 due to a redemption. The Series will
give such shareholders 60 days' prior written notice in which to purchase
sufficient additional shares to avoid such redemption. No CDSC will be imposed
on any such involuntary redemption.

90-DAY REPURCHASE PRIVILEGE. If you redeem your shares and have not
previously exercised the repurchase privilege, you may reinvest any portion or
all of the proceeds of such redemption in shares of the Series at the NAV next
determined after the order is received, which must be within 90 days after the
date of redemption. Any CDSC paid in connection with such redemption will be
credited (in shares) to your account. (If less than a full repurchase is made,
the credit will be on a PRO RATA basis.) You must notify the Transfer Agent
either directly or through The Distributor of your Dealer, at the time the
repurchase privilege is exercised to adjust your account for the CDSC you
previously paid. Thereafter, any redemptions will be subject to the CDSC
applicable at the time of the redemption. See "Contingent Deferred Sales
Charges" below. Exercise of the repurchase privilege will generally not affect
federal tax treatment of any gain realized upon redemption. However, if the
redemption was made within a 30 day period of the repurchase and if the
redemption resulted in a loss, some or all of the loss, depending on the amount
reinvested, may not be allowed for federal income tax purposes.

CONTINGENT DEFERRED SALES CHARGES

Redemptions of Class B shares will be subject to a contingent deferred
sales charge or CDSC declining from 5% to zero over a six-year period. Class C
shares redeemed within 18 months of purchase will be subject to a 1% CDSC. The
CDSC will be deducted from the redemption proceeds and reduce the amount paid to
you. The CDSC will be imposed on any redemption by you which reduces the current
value of your Class B or Class C shares to an amount which is lower than the
amount of all payments by you for shares during the preceding six years, in the
case of Class B shares, and one year, in the case of Class C shares. A CDSC will
be applied on the lesser of the original purchase price of the current value of
the shares being redeemed. Increases in the value of your shares or shares
acquired through reinvestment of dividends or distributions are not subject to a
CDSC. The amount of any CDSC will be paid to and retained by the Distributor.

The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of shares until the time of redemption
of such shares. Solely for purposes of determining the number of years from the
time of any payment for the purchase of shares, all payments during a month will
be aggregated and deemed to have been made on the last day of the month. The
CDSC will be calculated from the first day of the month after the initial
purchase, excluding the time shares were held in a money market fund.

B-27
<PAGE>

The following table sets forth the rates of the CDSC applicable to
redemptions of Class B shares:

CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE PURCHASE OF DOLLARS INVESTED OR
PAYMENT MADE REDEMPTION PROCEEDS
------------------- -------------------------
First ............................ 5.0%
Second ........................... 4.0%
Third ............................ 3.0%
Fourth ........................... 2.0%
Fifth ............................ 1.0%
Sixth ............................ 1.0%
Seventh .......................... None

In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in NAV above the total amount of
payments for the purchase of Series shares made during the preceding six years;
then of amounts representing the cost of shares held beyond the applicable CDSC
period; and finally, of amounts representing the cost of shares held for the
longest period of time within the applicable CDSC period.

For example, assume you purchased 100 Class B shares at $10 per share for a
cost of $1,000. Subsequently, you acquired 5 additional Class B shares through
dividend reinvestment. During the second year after the purchase you decided to
redeem $500 of your investment. Assuming at the time of the redemption the NAV
had appreciated to $12 per share, the value of your Class B shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be applied to the value
of the reinvested dividend shares and the amount that represents appreciation
($260). Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4% (the applicable rate in the second year after
purchase) for a total CDSC of $9.60.

For federal income tax purposes, the amount of the CDSC will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares.

WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. The CDSC
will be waived in the case of a redemption following the death or disability of
a shareholder or, in the case of a trust account, following the death or
disability of the grantor. The waiver is available for total or partial
redemptions of shares owned by a person either individually or in joint tenancy
(with right of survivorship), at the time of death or initial determination of
disability, provided that the shares were purchased prior to death or
disability.

The CDSC will also be waived in the case of a total or partial redemption
in connection with certain distributions made without penalty under the Internal
Revenue Code from a tax-deferred retirement plan, an IRA or Section 403(b)
custodial account. These distributions are: (i) in the case of a tax-deferred
retirement plan, a lump-sum or other distribution after retirement; (ii) in the
case of an IRA (including a Roth IRA), a lump-sum or other distribution after
attaining age 59-1/2; or a periodic distribution based on life expectancy; (iii)
in the case of a Section 403(b) custodial account, a lump sum or other
distribution after attaining age 59-1/2 and (iv) a tax-free return of an excess
contribution or plan distributions following the death or disability of the
shareholder, provided that the shares were purchased prior to death or
disability. The waiver does not apply in the case of a tax-free rollover or
transfer of assets, other than one following a separation from service (i.e.,
following voluntary or involuntary termination of employment or following
retirement). Under no circumstances will the CDSC be waived on redemptions
resulting from the termination of a tax-deferred retirement plan, unless such
redemptions otherwise qualify for a waiver as described above. In the case of
Direct Account and Prudential Securities or Subsidiary Prototype Benefit Plans,
the CDSC will be waived on redemptions which represent borrowings from such
plans. Shares purchased with amounts used to repay a loan from such plans on
which a CDSC was not previously deducted will thereafter be subject to a CDSC
without regard to the time such amounts were previously invested. In the case of
a 401(k) plan, the CDSC will also be waived upon the redemption of shares
purchased with amounts used to repay loans made from the account to the
participant and from which a CDSC was previously deducted.

SYSTEMATIC WITHDRAWAL PLAN. The CDSC will be waived (or reduced) on certain
redemptions from a Systematic Withdrawal Plan. On an annual basis, up to 12% of
the total dollar amount subject to the CDSC may be redeemed without charge. The
Transfer Agent will calculate the total amount available for this waiver
annually on the anniversary date of your purchase. The CDSC will be waived (or
reduced) on redemptions until this 12% threshold is reached.

In addition, the CDSC will be waived on redemptions of shares held by
Directors of the Fund.

B-28
<PAGE>

In connection with waivers of the CDSC, the Transfer Agent will require you
to submit the supporting documentation set forth below.
<TABLE>
<CAPTION>
CATEGORY OF WAIVER REQUIRED DOCUMENTATION
<S> <C>
Death A copy of the shareholder's death certificate or, in
the case of a trust, a copy of the grantor's death
certificate, plus a copy of the trust agreement
identifying the grantor.

Disability--An individual will be considered disabled A copy of the Social Security Administration award
if he or she is unable to engage in any substantial letter or a letter from a physician on the physician's
gainful activity by reason of any medically letterhead stating that the shareholder (or, in the
determinable physical or mental impairment which can be case of a trust, the grantor) is permanently disabled.
expected to result in death or to be of long-continued The letter must also indicate and the date of
indefinite duration. disability.

Distribution from an IRA or 403(b) Custodial Account A copy of the distribution form from the custodial
firm indicating (i) the date of birth of the
shareholder and (ii) that the shareholder is over age
59-1/2 and is taking a normal distribution--signed by
the shareholder.

Distribution from Retirement Plan A letter signed by the plan administrator/trustee
indicating the reason for the distribution.

Excess Contributions A letter from the shareholder (for an IRA) or the plan
administrator/trustee on company letterhead indicating
the amount of the excess and whether or not taxes have
been paid.
</TABLE>

The Transfer Agent reserves the right to request such additional documents
as it may deem appropriate.

WAIVER OF CONTINGENT DEFERRED SALES CHARGES--CLASS C SHARES

PRUARRAY OR SMARTPATH PLAN. The CDSC will be waived on redemptions from
qualified and non-qualified retirement and deferred compensation plans that
participate in the PruArray and SmartPath programs.

CONVERSION FEATURE--CLASS B SHARES

Class B shares will automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. Conversions will be effected at
relative net asset value without the imposition of any additional sales charge.

Since the Series tracks amounts paid rather than the number of shares
bought on each purchase of Class B shares, the number of Class B shares eligible
to convert to Class A shares (excluding shares acquired through the automatic
reinvestment of dividends and other distributions) (the Eligible Shares) will be
determined on each conversion date in accordance with the following formula: (i)
the ratio of (a) the amounts paid for Class B shares purchased at least seven
years prior to the conversion date to (b) the total amount paid for all Class B
shares purchased and then held in your account (ii) multiplied by the total
number of Class B shares purchased and then held in your account. Each time any
Eligible Shares in your account convert to Class A shares, all shares or amounts
representing Class B shares then in your account that were acquired through the
automatic reinvestment of dividends and other distributions will convert to
Class A shares.

For purposes of determining the number of Eligible Shares, if the Class B
shares in your account on any conversion date are the result of multiple
purchases at different net asset values per share, the number of Eligible Shares
calculated as described above will generally be either more or less than the
number of shares actually purchased approximately seven years before such
conversion date. For example, if 100 shares were initially purchased at $10 per
share (for a total of $1,000) and a second purchase of 100 shares was
subsequently made at $11 per share (for a total of $1,100), 95.24 shares would
convert approximately seven years from the initial purchase (i.e., $1,000
divided by $2,100 (47.62%), multiplied by 200 shares equals 95.24 shares). The
Manager reserves the right to modify the formula for determining the number of
Eligible Shares in the future as it deems appropriate on notice to shareholders.

Since annual distribution-related fees are lower for Class A shares than
Class B shares, the per share NAV of the Class A shares may be higher than that
of the Class B shares at the time of conversion. Thus, although the aggregate
dollar value will be the same, you may receive fewer Class A shares than Class B
shares converted.

For purposes of calculating the applicable holding period for conversions,
all payments for Class B shares during a month will be deemed to have been made
on the last day of the month, or for Class B shares acquired through exchange,
or a series of

B-29
<PAGE>

exchanges, on the last day of the month in which the original payment for
purchases of such Class B shares was made. For Class B shares previously
exchanged for shares of a money market fund, the time period during which such
shares were held in the money market fund will be excluded. For example, Class B
shares held in a money market fund for one year would not convert to Class A
shares until approximately eight years from purchase. For purposes of measuring
the time period during which shares are held in a money market fund, exchanges
will be deemed to have been made on the last day of the month. Class B shares
acquired through exchange will convert to Class A shares after expiration of the
conversion period applicable to the original purchase of such shares.

The conversion feature may be subject to the continuing availability of
opinions of counsel or rulings of the Internal Revenue Service (i) that the
dividends and other distributions paid on Class A, Class B, Class C and Class Z
shares will not constitute "preferential dividends" under the Internal Revenue
Code and (ii) that the conversion of shares does not constitute a taxable event.
The conversion of Class B shares into Class A shares may be suspended if such
opinions or rulings are no longer available. If conversions are suspended, Class
B shares of the Fund will continue to be subject, possibly indefinitely, to
their higher annual distribution and service fee.

SHAREHOLDER INVESTMENT ACCOUNT

Upon the initial purchase of the Series' shares, a Shareholder Investment
Account is established for each investor under which a record of the shares held
is maintained by the Transfer Agent. If a stock certificate is desired, it must
be requested in writing for each transaction. Certificates are issued only for
full shares and may be redeposited in the Account at any time. There is no
charge to the investor for the issuance of a certificate. The Series makes
available to the shareholders the following privileges and plans.

AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR DISTRIBUTIONS

For the convenience of investors, all dividends and distributions are
automatically reinvested in full and fractional shares of the Series at the net
asset value per share at the close of business on the record date. An investor
may direct the Transfer Agent in writing not less than five full business days
prior to the record date to have subsequent dividends and/or distributions sent
in cash rather than reinvested. In the case of recently purchased shares for
which registration instructions have not been received on the record date, cash
payment will be made directly to the dealer. Any shareholder who receives a cash
payment representing a dividend or distribution may reinvest such distribution
at NAV by returning the check or the proceeds to the Transfer Agent within 30
days after the payment date. Such investment will be made at the NAV per share
next determined after receipt of the check or proceeds by the Transfer Agent.
Such shareholder will receive credit for any CDSC paid in connection with the
amount of proceeds being reinvested.

EXCHANGE PRIVILEGE

The Series makes available to its shareholders the privilege of exchanging
their shares of the Series for shares of certain other Prudential Mutual Funds,
including one or more specified money market funds, subject in each case to the
minimum investment requirements of such funds. Shares of such other Prudential
Mutual Funds may also be exchanged for shares of the Series. All exchanges are
made on the basis of the relative NAV next determined after receipt of an order
in proper form. An exchange will be treated as a redemption and purchase for tax
purposes. Shares may be exchanged for shares of another fund only if shares of
such fund may legally be sold under applicable state laws. For retirement and
group plans having a limited menu of Prudential Mutual Funds, the Exchange
Privilege is available for those funds eligible for investment in the particular
program.

It is contemplated that the exchange privilege may be applicable to new
mutual funds whose shares may be distributed by the Distributor.

CLASS A. Shareholders of the Series may exchange their Class A shares for Class
A shares of certain other Prudential Mutual Funds, shares of Prudential
Structured Maturity Fund and Prudential Government Securities Trust
(Short-Intermediate Term Series) and shares of the money market funds specified
below. No fee or sales load will be imposed upon the exchange. Shareholders of
money market funds who acquired such shares upon exchange of Class A shares may
use the Exchange Privilege only to acquire Class A shares of the Prudential
Mutual Funds participating in the Exchange Privilege.

B-30
<PAGE>

The following money market funds participate in the Class A Exchange
Privilege:

Prudential California Municipal Fund
(California Money Market Series)

Prudential Government Securities Trust
(Money Market Series)
(U.S. Treasury Money Market Series)

Prudential Municipal Series Fund
(Connecticut Money Market Series)
(Massachusetts Money Market Series)
(New Jersey Money Market Series)
(New York Money Market Series)

Prudential Money Mart Assets (Class A Shares)

Prudential Tax-Free Money Fund

CLASS B AND CLASS C. Shareholders of the Series may exchange their Class B and
Class C shares for Class B and Class C shares, respectively, of certain other
Prudential Mutual Funds and shares of Prudential Special Money Market Fund, a
money market fund. No CDSC will be payable upon such exchange, but a CDSC may be
payable upon the redemption of Class B and Class C shares acquired as a result
of the exchange. The applicable sales charge will be that imposed by the fund in
which shares were initially purchased and the purchase date will be deemed to be
the date of the initial purchase, rather than the date of the exchange.

Class B and Class C shares of the Series may also be exchanged for shares
of an eligible money market fund without imposition of any CDSC at the time of
exchange. Upon subsequent redemption from such money market fund or after
re-exchange into the Series, such shares may be subject to the CDSC calculated
without regard to the time such shares were held in the money market fund. In
order to minimize the period of time in which shares are subject to a CDSC,
shares exchanged out of the money market fund will be exchanged on the basis of
their remaining holding periods, with the longest remaining holding periods
being transferred first. In measuring the time period shares are held in a money
market fund and "tolled" for purposes of calculating the CDSC holding period,
exchanges are deemed to have been made on the last day of the month. Thus, if
shares are exchanged into a Series from a money market fund during the month
(and are held in the Series at the end of the month), the entire month will be
included in the CDSC holding period. Conversely, if shares are exchanged into a
money market fund prior to the last day of the month (and are held in the money
market fund on the last day of the month), the entire month will be excluded
from the CDSC holding period. For purposes of calculating the seven year holding
period applicable to the Class B conversion feature, the time period during
which Class B shares were held in a money market fund will be excluded.

At any time after acquiring shares of other funds participating in the
Class B and Class C exchange privilege, a shareholder may again exchange those
shares (and any reinvested dividends and distributions) for Class B and Class C
shares of the Series, respectively, without subjecting such shares to any CDSC.
Shares of any fund participating in the Class B or Class C exchange privilege
that were acquired through reinvestment of dividends or distributions may be
exchanged for Class B or Class C shares of other funds, respectively, without
being subject to any CDSC.

CLASS Z. Class Z shares may be exchanged for Class Z shares of other Prudential
Mutual Funds.

In order to exchange shares by telephone, you must authorize telephone
exchanges on your initial application form or by written notice to the Transfer
Agent and hold shares in non-certificate form. Thereafter, you may call the Fund
at (800) 225-1852 to execute a telephone exchange of shares, on weekdays, except
holidays, between the hours of 8:00 A.M. and 6:00 P.M., New York time. For your
protection and to prevent fraudulent exchanges, your telephone call will be
recorded and you will be asked to provide your personal identification number. A
written confirmation of the exchange transaction will be sent to you. Neither
the Fund nor its agents will be liable for any loss, liability or cost which
results from acting upon instructions reasonably believed to be genuine under
the foregoing procedures. All exchanges will be made on the basis of the
relative NAV of the two funds next determined after the request is received in
good order. The Exchange Privilege is available only in states where the
exchange may legally be made.

If you hold shares through Prudential Securities, you must exchange your
shares by contacting your Prudential Securities financial adviser.

If you hold certificates, the certificates, signed in the name(s) shown on
the face of the certificates, must be returned in order for the shares to be
exchanged. See "Sale of Shares" above.

You may also exchange shares by mail by writing to Prudential Mutual Fund
Services LLC, Attention: Exchange Processing, P.O. Box 15010, New Brunswick, New
Jersey 08906-5010.

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In periods of severe market or economic conditions the telephone exchange
of shares may be difficult to implement and you should make exchanges by mail by
writing to Prudential Mutual Fund Services LLC, at the address noted above.

SPECIAL EXCHANGE PRIVILEGES. Special exchange privileges are available for
shareholders who qualify to purchase Class A shares at NAV (see "Purchase,
Redemption and Pricing of Fund Shares--Reduction and Waiver of Initial Sales
Charges--Class A Shares" above) and for shareholders who qualify to purchase
Class Z shares (see "Purchase, Redemption and Pricing of Fund Shares--Class Z
Shares" above). Under this first exchange privilege, amounts representing any
Class B and Class C shares (which are not subject to a CDSC) held in such a
shareholder's account will be automatically exchanged for Class A shares for
shareholders who qualify to purchase Class A shares at NAV on a quarterly basis,
unless the shareholder elects otherwise. Similarly, shareholders who qualify to
purchase Class Z shares will have their Class B and Class C shares which are not
subject to a CDSC and their Class A shares exchanged for Class Z shares on a
quarterly basis. Eligibility for these exchange privileges will be calculated on
the business day prior to the date of the exchanges. Amounts representing Class
B or Class C shares which are not subject to a CDSC include the following: (1)
amounts representing Class B or Class C shares acquired pursuant to the
automatic reinvestment of dividends and distributions, (2) amounts representing
the increase in the net asset value above the total amount of payments for the
purchase of Class B or Class C shares and (3) amounts representing Class B or
Class C shares held beyond the applicable CDSC period. Class B and Class C
shareholders must notify the Transfer Agent either directly or through
Prudential Securities, Prusec or another Dealer that they are eligible for
either of these special exchange privileges.

Participants in any fee-based program for which the Series is an available
option will have their Class A shares, if any, exchanged for Class Z shares when
they elect to have those assets become a part of the fee-based program. Upon
leaving the program (whether voluntarily or not), such Class Z shares (and, to
the extent provided for in the program, Class Z shares acquired through
participation in the program) will be exchanged for Class A shares at net asset
value. Similarly, participants in PSI's 401(k) Plan for which the Fund's Class Z
shares is an available option and who wish to transfer their Class Z shares out
of the PSI 401(k) Plan following separation from service (i.e., voluntary or
involuntary termination of employment or retirement) will have their Class Z
shares exchanged for Class A shares at NAV.

Additional details about the exchange privilege and prospectuses for each
of the Prudential Mutual Funds are available from the Series' Transfer Agent,
the Distributor or your Dealer. The exchange privilege may be modified,
terminated or suspended on 60 days' notice, and any fund, including the Series,
or the Distributor, has the right to reject any exchange application relating to
such fund's shares.

DOLLAR COST AVERAGING

Dollar cost averaging is a method of accumulating shares by investing a
fixed amount of dollars in shares at set intervals. An investor buys more shares
when the price is low and fewer shares when the price is high. The average cost
per share is lower than it would be if a constant number of shares were bought
at set intervals.

Dollar cost averaging may be used, for example, to plan for retirement, to
save for a major expenditure, such as the purchase of a home, or to finance a
college education. The cost of a year's education at a four-year college today
averages around $14,000 at a private college and around $6,000 at a public
university. Assuming these costs increase at a rate of 7% a year, as has been
projected, for the freshman class of 2011, the cost of four years at a private
college could reach $210,000 and over $90,000 at a public university.(1)

The following chart shows how much you would need in monthly investments to
achieve specified lump sums to finance your investment goals.(2)

PERIOD OF
MONTHLY INVESTMENTS: $100,000 $150,000 $200,000 $250,000
- -------------------- -------- -------- -------- --------

25 Years ............ $ 110 $ 165 $ 220 $ 275
20 Years ............ 176 264 352 440
15 Years ............ 296 444 592 740
10 Years ............ 555 833 1,110 1,388
5 Years ............. 1,371 2,057 2,742 3,428

See "Automatic Savings Accumulation Plan."
- ----------------
(1) Source information concerning the costs of education at public and
private universities is available from The College Board Annual Survey of
Colleges, 1993. Average costs for private institutions include tuition, fees,
room and board for the 1993-1994 academic year.

(2) The chart assumes an effective rate of return of 8% (assuming monthly
compounding). This example is for illustrative purposes only and is not intended
to reflect the performance of an investment in shares of the Series. The
investment return and

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<PAGE>

principal value of an investment will fluctuate so that an investor's shares
when redeemed may be worth more or less than their original cost.

AUTOMATIC INVESTMENT PLAN (AIP)

AIP is an efficient and automatic means to effect dollar cost averaging.
Under AIP, an investor may arrange to have a fixed amount automatically invested
in shares of the Fund monthly by authorizing his or her bank account or
brokerage account (including a Prudential Securities Command Account) to be
debited to invest specified dollar amounts in shares of the Series. The
investor's bank must be a member of the Automatic Clearing House System. Stock
certificates are not issued to AIP participants.

Further information about this program and an application form can be
obtained from the Transfer Agent, the Distributor or your broker.

SYSTEMATIC WITHDRAWAL PLAN

A systematic withdrawal plan is available to shareholders through
Prudential Securities or the Transfer Agent. Such withdrawal plan provides for
monthly or quarterly checks in any amount, except as provided below, up to the
value of the shares in the shareholder's account. Withdrawals of Class B or
Class C shares may be subject to a CDSC. See "Shareholder Guide--How to Sell
Your Shares--Contingent Deferred Sales Charges" in the Prospectus.

In the case of shares held through the Transfer Agent (i) a $10,000 minimum
account value applies, (ii) withdrawals may not be for less than $100 and (iii)
the shareholder must elect to have all dividends and/or distributions
automatically reinvested in additional full and fractional shares at NAV on
shares held under this plan. See "Shareholder Investment Account--Automatic
Reinvestment of Dividends and/or Distributions" above.

Prudential Securities and the Transfer Agent act as agents for the
shareholder in redeeming sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment. The systematic withdrawal plan may be
terminated at any time, and the Distributor reserves the right to initiate a fee
of up to $5 per withdrawal, upon 30 days' written notice to the shareholder.

Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.

Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the sales charge applicable to (i) the purchase of Class
A shares and (ii) the withdrawal of Class B and Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences of
the systematic withdrawal plan, particularly if used in connection with a
retirement plan.

TAX-DEFERRED RETIREMENT PLANS

Various qualified retirement plans, including a 401(k) Plan, self-directed
individual retirement accounts and "tax sheltered accounts" under Section
403(b)(7) of the Internal Revenue Code are available through the Distributor.
These plans are for use by both self-employed individuals and corporate
employers. These plans permit either self-direction of accounts by participants
or a pooled account arrangement. Information regarding the establishment of
these plans, the administration, custodial fees and other details are available
from Prudential Securities or the Transfer Agent.

Investors who are considering the adoption of such a plan should consult
with their own legal counsel or tax adviser with respect to the establishment
and maintenance of any such plan.

TAX-DEFERRED RETIREMENT ACCOUNTS

INDIVIDUAL RETIREMENT ACCOUNTS. An individual retirement account (IRA)
permits the deferral of federal income tax on income earned in the account until
the earnings are withdrawn. The following chart represents a comparison of the
earnings in a personal savings account with those in an IRA, assuming a $2,000
annual contribution, an 8% rate of return and a 39.6% federal income tax bracket
and shows how much more retirement income can accumulate within an IRA as
opposed to a taxable individual savings account.

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TAX-DEFERRED COMPOUNDING(1)

CONTRIBUTIONS PERSONAL
MADE OVER: SAVINGS IRA
------------- -------- --------
10 years $ 26,165 $ 31,291
15 years 44,676 58,649
20 years 68,109 98,846
25 years 97,780 157,909
30 years 135,346 244,692

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

(1) The chart is for illustrative purposes only and does not represent the
performance of any class of the Series or any specific investment. It shows
taxable versus tax-deferred compounding for the periods and on the terms
indicated. Earnings in a traditional IRA account will be subject to tax when
withdrawn from the account. Distributions from a Roth IRA which meet the
conditions required under the Internal Revenue Code will not be subject to tax
upon withdrawal from the account.

MUTUAL FUND PROGRAMS

From time to time, the Series may be included in a mutual fund program with
other Prudential Mutual Funds. Under such a program, a group of portfolios will
be selected and thereafter promoted collectively. Typically, these programs are
created with an investment theme, e.g., to seek greater diversification,
protection from interest rate movements or access to different management
styles. In the event such a program is instituted, there may be a minimum
investment requirement for the program as a whole. The Series may waive or
reduce its minimum initial investment requirements in connection with such a
program.

The mutual funds in the program may be purchased individually or as a part
of the program. Since the allocation of portfolios included in the program may
not be appropriate for all investors, investors should consult their Prudential
Securities Financial Adviser or Prudential/Pruco Securities Representative
concerning the appropriate blend of portfolios for them. If investors elect to
purchase the individual mutual funds that constitute the program in an
investment ratio different from that offered by theprogram, the standard minimum
investment requirements for the individual mutual funds will apply.

NET ASSET VALUE

The Series' net asset value per share or NAV is determined by subtracting
its liabilities from the value of its assets and dividing the remainder by the
number of outstanding shares. NAV is calculated separately for each class. The
Directors have fixed the specific time of day for the computation of the Series'
net asset value to be as of 4:15 P.M., New York time.

Under the Investment Company Act, the Directors are responsible for
determining in good faith fair value of securities of the Series. In accordance
with procedures adopted by the Directors, the value of investments listed on a
securities exchange and NASDAQ National Market System securities (other than
options on stock and stock indices) are valued at the last sale price of such
exchange system on the day of valuation or, if there was no sale on such day,
the mean between the last bid and asked prices on such day, or at the bid price
on such day in the absence of an asked price. Corporate bonds (other than
convertible debt securities and U.S. Government securities that are actively
traded in the over-the-counter market, including listed securities for which the
primary market is believed by the Manager in consultation with the Subadviser to
be over-the-counter), are valued on the basis of valuations provided by an
independent pricing agent or principal market maker which uses information with
respect to transactions in bonds, quotations from bond dealers, agency ratings,
market transactions in comparable securities and various relationships between
securities in determining value. Convertible debt securities that are actively
traded in the over-the-counter market, including listed securities for which the
primary market is believed by the Manager in consultation with the Subadviser to
be over-the-counter, are valued at the mean between the last reported bid and
asked prices provided by principal market makers. Options on stock and stock
indices traded on an exchange are valued at the mean between the most recently
bid and asked prices on the respective exchange, and futures contracts and
options thereon are valued at their last sale prices as of the close of trading
on the applicable commodities exchange or board of trade or, if there was no
sale on the applicable commodities exchange or board of trade on such day, at
the mean between the most recently bid and asked prices on such exchange
or board of trade. Quotations of foreign securities in a foreign currency are
converted to U.S. dollar equivalents at the current rate obtained from a
recognized bank or dealer, and forward currency exchange contracts are valued at
the current cost of covering or offsetting such contracts. Should an
extraordinary event, which is likely to affect the value of the security, occur
after the close of an exchange on which a portfolio security is traded, such
security will be valued at fair value considering factors determined in good
faith by the investment adviser under procedures established by and under the
general supervision of the fund's Board of Directors.

Securities or other assets for which reliable market quotations are not
readily available or for which the pricing agent or principal market maker does
not provide a valuation or methodology or provides a valuation or methodology
that, in the judgment

B-34

<PAGE>

of the Manager or Subadviser (or Valuation Committee or Board of Directors) does
not represent fair value, are valued by the Valuation Committee or Board of
Directors in consultation with the Manager or Subadviser, including its
portfolio manager, traders, and its research and credit analysts, on the basis
of the following factors: cost of the security, transactions in comparable
securities, relationships among various securities and such other factors as may
be determined by the Manager, Subadviser, Board of Directors or Valuation
Committee to materially affect the value of the security. Short-term debt
securities are valued at cost, with interest accrued or discount amortized to
the date of maturity, if their original maturity is 60 days or less, unless this
is determined by the Directors not to represent fair value. Short-term
securities with remaining maturities of more than 60 days, for which market
quotations are readily available, are valued at their current market quotations
as supplied by an independent pricing agent or principal market maker. The
Series will compute its NAV at 4:15 P.M., New York time, on each day the New
York Stock Exchange is open for trading except on days on which no orders to
purchase, sell or redeem Series shares have been received or days on which
changes in the value of the Series' portfolio securities do not affect NAV. In
the event the New York Stock Exchange closes early on any business day, the NAV
of the Series' shares shall be determined at the time between such closing and
4:15 P.M., New York Time. The New York Stock Exchange is closed on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

Although the legal rights of each class of shares are substantially
identical, the different expenses borne by each class will result in different
NAVs and dividends. The NAV of Class B and Class C shares will generally be
lower than the NAV of Class A shares as a result of the larger
distribution-related fee to which Class B and Class C shares are subject. The
NAV of Class Z shares will generally be higher than the NAV of Class A, Class B
or Class C shares as a result of the fact that the Class Z shares are not
subject to any distribution or service fee. It is expected, however, that the
NAV of the four classes will tend to converge immediately after the recording of
dividends, if any, which will differ by approximately the amount of the
distribution and/or service fee expense accrual differential among the classes.

TAXES, DIVIDENDS AND DISTRIBUTIONS

The Series has elected to qualify and intends to remain qualified as a
regulated investment company under the Internal Revenue Code for each taxable
year. Accordingly, the Series must, among other things, (a) derive at least 90%
of its gross income from dividends, interest, proceeds from loans of securities
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to its business of investing
in such securities or currencies; and (b) diversify its holdings so that, at the
end of each fiscal quarter, (i) at least 50% of the value of its assets is
represented by cash, U.S. Government securities, securities of other regulated
investment companies and other securities, with such other securities limited in
respect of any one issuer to an amount not greater than 5% of the Series'
assets, and not greater than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies). These requirements may
limit the Series' ability to invest in other types of assets.

As a regulated investment company, the Series will not be subject to
federal income tax on its net investment income and capital gains, if any, that
it distributes to its shareholders, provided (among other things) that at least
90% of the Series' net investment income (including net short-term capital
gains) other than long-term capital gains earned in the taxable year is
distributed. The Series intends to distribute annually to its shareholders all
of its taxable net investment income, which includes dividends, interest and any
net short-term capital gains in excess of net long-term capital losses. The
Board of Directors of the Fund will determine once a year whether to distribute
any net long-term capital gains in excess of any net short-term capital losses.
In determining the amount of capital gains to be distributed, any capital loss
carryovers from prior years will be offset against capital gains. A 4%
nondeductible excise tax will be imposed on the Series to the extent the Series
does not meet certain distribution requirements by the end of each calendar
year.

Gains or losses attributable to foreign currency contracts, or to
fluctuations in exchange rates between the time the Series accrues income,
expenses or other liabilities denominated in a foreign currency and the time the
Series actually collects such income or pays such liabilities, are treated as
ordinary income or ordinary loss for federal income tax purposes. Similarly,
gains or losses on the disposition of debt securities held by the Series, if
any, denominated in a foreign currency, to the extent attributable to
fluctuations in exchange rates between the acquisition and disposition dates are
also treated as ordinary income or loss.

Gains or losses on sales of securities by the Series will generally be
treated as long-term capital gains or losses if the securities have been held by
it for more than one year except in certain cases where the Series acquires a
put or writes a call thereon or otherwise holds an offsetting position with
respect to the securities. Other gains or losses on the sale of securities will
be short-term capital gains or losses. Gains and losses on the sale, lapse or
other termination of options on securities will generally be treated as gains
and losses from the sale of securities. If an option written by the Series on
securities lapses or is

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<PAGE>

terminated through a closing transaction, such as a purchase by the Series of
the option from its holder, the Series will generally realize short-term capital
gain or loss, depending on whether the premium income is greater or less than
the amount paid by the Series in the closing transaction. If securities are sold
by the Series pursuant to the exercise of a call option written by it, the
Series will include the premium received in the sale proceeds of the securities
delivered in determining the amount of gain or loss on the sale. Certain of the
Series' transactions may be subject to wash sale straddle, constructive sale and
short sale provisions of the Internal Revenue Code which may, among other
things, require the Series to defer losses, recognize gain or cause gain to be
treated as ordinary income rather than as capital gain. In addition, debt
securities acquired by the Series may be subject to original issue discount
rules which may, among other things, cause the Series to accrue income in
advance of the receipt of cash with respect to interest and market discount
rules which may, among other things, cause gains to be treated as ordinary
income.

Special rules apply to most options on stock indices, futures contracts and
options thereon, and forward foreign currency exchange contracts in which the
Series may invest. See "Investment Objectives and Policies." These investments
generally will constitute Section 1256 contracts and will be required to be
"marked to market" for federal income tax purposes at the end of the Series'
taxable year, i.e., treated as having been sold at market value. Sixty percent
of any capital gain or loss recognized on such deemed sales and on actual
dispositions will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss.

Forward currency contracts, options and futures contracts entered into by
the Series may create "straddles" for federal income tax purposes, which may
result in the deferral of losses on positions held by the Series to the extent
of any unrecognized gain on offsetting positions held by the Series and a
limitation on the deductibility of interest or other charges incurred to
purchase or carry such positions.

A "passive foreign investment company" ("PFIC") is a foreign corporation
that, in general, meets either of the following tests: (a) at least 75% of its
gross income is passive or (b) an average of at least 50% of its assets produce,
or are held for the production of, passive income. If the Series acquires and
holds stock in a PFIC beyond the end of the year of its acquisition, the Series
will be subject to federal income tax on a portion of any "excess distribution"
received on the stock or of any gain from disposition of the stock (collectively
"PFIC income"), plus interest thereon, even if the Series distributes the PFIC
income as a taxable dividend to its shareholders. If the Series elects to treat
any PFIC in which it invests as a "qualified electing fund," then in lieu of the
foregoing tax and interest obligation, the Series will be required to include in
income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain, even if they are not distributed to the
Series; those amounts would be subject to the distribution requirements
applicable to the Series described above. Because the election to treat a PFIC
as a qualifying electing Fund cannot be made without the provision of certain
information by the PFIC, the Series may not be able to make such an election. If
the Series does not or cannot elect to treat such a PFIC as a "qualified
electing fund," the Series can make a "mark-to-market" election, i.e., treat the
shares of the PFIC as sold on the last day of the Series' taxable year, and thus
avoid the special tax and interest charge. The gains the Series recognizes from
the mark-to-market election would be included as ordinary income in the net
investment income the Series must distribute to shareholders, notwithstanding
that the Series would receive no cash in respect of such gains. Any loss from
the mark-to-market election may be recognized to the extent of previously
reported mark-to-market gains.

Dividends of net investment income will be taxable to a U.S. shareholder as
ordinary income regardless of whether such shareholder receives such dividends
in additional shares or in cash. Dividends received from the Series will be
eligible for the dividends-received deduction for corporate shareholders only to
the extent that the Series' income is derived from certain dividends received
from domestic corporations. The amount of dividends qualifying for the
dividends-received deduction will be designated as such in a written notice to
shareholders mailed not later than 60 days after the end of the Series' taxable
year. Distributions of net long-term capital gains, if any, will be taxable as
long-term capital gains regardless of whether the shareholder receives such
distribution in additional shares or in cash and regardless of how long the
shareholder has held the Series' shares, and will not be eligible for the
dividends-received deduction for corporations.

Any dividends or capital gains distributions received by a shareholder will
have the effect of reducing the net asset value of the Series' shares by the
exact amount of the dividend or capital gains distribution. If the net asset
value of the shares should be reduced below a shareholder's cost as a result of
a dividend or capital gains distribution, such dividend or capital gains
distribution, although constituting a return of capital, will be taxable as
described above. Prior to purchasing shares of the Series, therefore, the
investor should carefully consider the impact of dividends or capital gains
distributions which are expected to be or have been announced.

Shareholders electing to receive dividends and distributions in the form of
additional shares will have a cost basis for federal income purposes in each
share so received equal to the net asset value of a share of the Series on the
reinvestment date.

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<PAGE>

Any loss realized on a sale, redemption or exchange of shares of the Series
by a shareholder will be disallowed to the extent the shares are replaced within
a 61-day period (beginning 30 days before the disposition of shares). Shares
purchased pursuant to the reinvestment of a dividend will constitute a
replacement of shares.

If a shareholder who acquires shares of the Series sells or otherwise
disposes of such shares within 90 days of acquisition, certain sales charges
incurred in acquiring such shares may not be included in the basis of such
shares for purposes of calculating gain or loss realized upon such sale or
disposition.

Distributions of net investment income made to a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, foreign
corporation or foreign partnership (foreign shareholder) will be subject to U.S.
withholding tax at a rate of 30% (or lower treaty rate), unless the dividends
are effectively connected with the U.S. trade or business of the shareholder and
the shareholder complies with certain filing requirements. Gains realized upon
the sale or redemption of shares of the Series by a foreign shareholder and
distributions of net long-term capital gains to a foreign shareholder will
generally not be subject to U.S. income tax unless the gain is effectively
connected with a trade or business carried on by the shareholder within the
United States or, in the case of a shareholder who is a nonresident alien
individual, the shareholder is present in the United States for more than 182
days during the taxable year and certain other conditions are met. In the case
of a foreign shareholder who is a nonresident alien individual, the Series may
be required to withhold U.S. federal income tax at the rate of 31% of
distributions of net long-term capital gains unless IRS Form W-8 is provided. If
distributions are effectively connected with a U.S. trade or business carried on
by a foreign shareholder, distributions of net investment income and net
long-term capital gains will be subject to U.S. income tax at the graduated
rates applicable to U.S. citizens or domestic corporations. Transfers by gift of
shares of the Series by a foreign shareholder who is a nonresident alien
individual will not be subject to U.S. federal gift tax, but the value of the
shares of the Series held by such a shareholder at his death will be includable
in his gross estate for U.S. federal estate tax purposes. The tax consequences
to a foreign shareholder entitled to claim the benefits of an applicable tax
treaty may be different from those described herein. Foreign shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Series.

Income received by the Series from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Series' assets to be invested in
various countries is not known.

If the Series is liable for foreign taxes, the Series expects to meet the
requirements of the Internal Revenue Code for "passing-through" to its
shareholders foreign income taxes paid, but there can be no assurance that the
Series will be able to do so. Under the Internal Revenue Code, if more than 50%
of the value of the Series' total assets at the close of its taxable year
consists of stock or securities of foreign corporations, the Series will be
eligible and may file an election with the Internal Revenue Service to
"pass-through" to the Series' shareholders the amount of foreign income taxes
paid by the Series. Pursuant to this election shareholders will be required to:
(i) include in gross income (in addition to taxable dividends actually received)
their pro rata share of the foreign income taxes paid by the Series; (ii) treat
their pro rata share of foreign income taxes as paid by them; and (iii) either
deduct their pro rata share of foreign income taxes in computing their taxable
income or, subject to certain limitations, use it as a foreign tax credit
against U.S. income taxes imposed on foreign source income. For this purpose,
the portion of dividends paid by the Series from its foreign source income will
be treated as such. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. A shareholder that is a nonresident
alien individual or foreign corporation may be subject to U.S. withholding tax
on the income resulting from the election described in this paragraph, but may
not be able to claim a credit or deduction against such tax for the foreign
taxes treated as having been paid by such shareholder. A tax-exempt shareholder
will not ordinarily benefit from this election. The amount of foreign taxes for
which a shareholder may claim a credit in any year will generally be subject to
various limitations including a separate limitation for "passive income," which
includes, among other things, dividends, interest and certain foreign currency
gains.

Each shareholder will be notified within 60 days after the close of the
Series' taxable year whether the foreign income taxes paid by the Series will
"pass-through" for that year and, if so, such notification will designate (a)
the shareholder's portion of the foreign income taxes paid to each such country
and (b) the portion of the dividend which represents income derived from sources
within each such country.

The per share dividends on Class B and Class C shares will be lower than
the per share dividends on Class A or Class Z shares as a result of the higher
distribution-related fee applicable to the Class B and Class C shares and lower
on Class A shares in relation to Class Z shares. The per share distributions of
net capital gains, if any, will be paid in the same amount for Class A, Class B,
Class C and Class Z shares.

The Series may also be subject to state or local taxes in certain states
where it is deemed to be doing business. Further, in those states which have
income tax laws, the tax treatment of the Series and of shareholders of the
Series with respect to

B-37

<PAGE>

distributions by the Series may differ from federal tax treatment. Distributions
to shareholders may be subject to additional state and local taxes. Shareholders
should consult their own tax advisers regarding specific questions as to
federal, state or local taxes.

PERFORMANCE INFORMATION

AVERAGE ANNUAL TOTAL RETURN. The Series may from time to time advertise its
average annual total return. Average annual total return is determined
separately for Class A, Class B, Class C and Class Z shares.

Average annual total return is computed according to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value at the end of the 1, 5 or
10 year periods (or fractional portion thereof) of
a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods.

Average annual total return takes into account any applicable initial or
contingent deferred sales charge but does not take into account any federal or
state income taxes that may be payable upon redemption.

YIELD. The Series may from time to time advertise its yield as calculated
over a 30-day period. YIELD IS CALCULATED SEPARATELY FOR CLASS A, CLASS B, CLASS
C AND CLASS Z SHARES. This yield will be computed by dividing a classes' net
investment income per share earned during this 30-day period by the maximum
offering price per share on the last day of this period. Yield is calculated
according to the following formula:

[( a-b )6 ]
YIELD=2[(------- +1) -1]
[( cd ) ]

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.

Yield fluctuates and an annualized yield quotation is not a representation
by the Class as to what an investment in the Class will actually yield for any
given period. Yields for the Class will vary based on a number of factors
including changes in net asset value, market conditions, the level of interest
rates and the level of the Class income and expenses.

AGGREGATE TOTAL RETURN. A Series may also advertise its aggregate total
return. Aggregate total return is determined separately for Class A, Class B,
Class C and Class Z shares.

Aggregate total return represents the cumulative change in the value of an
investment in the Class and is computed according to the following formula:

ERV - P
--------
P

Where: P = a hypothetical initial payment of $1000.
ERV = ending redeemable value at the end of the 1, 5 or
10 year periods (or fractional portion thereof)
of a hypothetical $1000 payment made at the beginning
of the 1, 5 or 10 year periods.

Aggregate total return does not take into account any federal or state
income taxes that may be payable upon redemption or any applicable initial or
contingent deferred sales charges.

B-38

<PAGE>

From time to time, the performance of the Series and its classes may be
measured against various indices. Set forth below is a chart which compares the
performance of different types of investments over the long term and the rate of
inflation.(1)

--------------------
PERFORMANCE
COMPARISON OF DIFFERENT
TYPES OF INVESTMENTS
OVER THE LONG TERM
(1/1926 - 9/1997)

COMMON STOCKS 11.0%
LONG-TERM GOVT. BONDS 5.1%
INFLATION 3.1%

- --------

(1) Source: Ibbotson Associates, STOCKS, BONDS, BILLS AND INFLATION--1997
YEARBOOK (annually updates the work of Roger G. Ibbotson and Rex A.
Sinquefield). All rights reserved. Common stock returns are based on the
Standard and Poor's 500 Stock Index, a market-weighted, unmanaged index of 500
common stocks in a variety of industry sectors. It is a commonly used indicator
of broad stock price movements. This chart is for illustrative purposes only and
is not intended to represent the performance of any particular investment or
fund. Investors cannot invest directly in an index. Past performance is not a
guarantee of future results.

B-39
<PAGE>

BALANCE SHEET

REPORT OF INDEPENDENT ACCOUNTANTS

B-40
<PAGE>

APPENDIX I--DESCRIPTION OF SECURITY RATINGS

DESCRIPTION OF S&P CORPORATE BOND RATINGS:

AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.

BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.

BB, B, CCC, CC, C - Bonds rated BB, B, CCC, CC, or C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
represents the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

Aaa - Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of these issues.

Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well-safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C - Bonds rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 in the Aa and A rating
categories. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.

I-1

<PAGE>

DESCRIPTION OF DUFF & PHELPS BOND RATINGS:

AAA - Bonds rated AAA by Duff & Phelps are considered to be of the highest
credit quality. The risk factors are negligible, being only slightly more than
for risk-free U.S. Treasury debt.

AA+, AA, AA- - Bonds rated AA+, AA or AA- are considered to be of high
credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.

A+, A, A- - Bonds rated A+, A or A- have protection factors which are
average but adequate; however, risk factors are more variable and greater in
periods of economic stress.

BBB+, BBB, BBB- - Bonds rated BBB+, BBB or BBB- have below average
protection factors but are still considered sufficient for prudent investment.
These bonds demonstrate considerable variability in risk during economic cycles.

BB+, BB, BB- - Bonds rated BB+, BB, or BB- are below investment grade but
are still deemed likely to meet obligations when due. Present or prospective
financial protection factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down frequently within this
category.

B+, B, B- - Bonds rated B+, B, or B- are below investment grade and possess
the risk that obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.

CCC - Bonds rated CCC are well below investment grade securities.
Considerable uncertainty exists as to timely payment of principal, interest or
preferred dividends. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with unfavorable company
developments.

DD - Bonds rated DD are defaulted debt obligations. The issuer failed to
meet scheduled principal and/or interest payments.

DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
Capacity for timely payment on commercial paper rated A-2 is strong, but the
relative degree of safety is not as high as for issues designated A-1.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.

DESCRIPTION OF DUFF & PHELPS COMMERCIAL PAPER RATING:

Duff & Phelps commercial paper ratings are divided into three categories,
ranging from "1" for the highest quality obligations to "3" for the lowest. No
ratings are issued for companies whose paper is not deemed investment grade.
Issues assigned the Duff 1 rating are considered top grade. This category is
further divided into three gradations as follows: Duff 1 plus -- highest
certainty of timely payment, short-term liquidity, including internal operating
factors and/or ready access to alternative sources of funds, is clearly
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations; Duff 1 -- very high certainty of timely payment, liquidity factors
are excellent and supported by strong fundamental protection factors, risk
factors are minor; Duff 1 minus-high certainty of timely payment, liquidity
factors are strong and supported by good fundamental protection factors, risk
factors are very small. Issues rated Duff 2 represent a good certainty of timely
payment; liquidity factors and company fundamentals are sound; although ongoing
internal funds needs may enlarge total financing requirements, access to capital
markets is good; risk factors are small. Duff 3 represents a satisfactory grade;
satisfactory liquidity and other protection factors qualify issue as to
investment grade; risk factors are larger and subject to more variation;
nevertheless timely payment is expected.

I-2
<PAGE>

APPENDIX II--GENERAL INVESTMENT INFORMATION

The following terms are used in mutual fund investing.

ASSET ALLOCATION

Asset allocation is a technique for reducing risk, providing balance. Asset
allocation among different types of securities within an overall investment
portfolio helps to reduce risk and to potentially provide stable returns, while
enabling investors to work toward their financial goal(s). Asset allocation is
also a strategy to gain exposure to better performing asset classes while
maintaining investment in other asset classes.

DIVERSIFICATION

Diversification is a time-honored technique for reducing risk, providing
"balance" to an overall portfolio and potentially achieving more stable returns.
Owning a portfolio of securities mitigates the individual risks (and returns) of
any one security. Additionally, diversification among types of securities
reduces the risks (and general returns) of any one type of security.

DURATION

Debt securities have varying levels of sensitivity to interest rates. As
interest rates fluctuate, the value of a bond (or a bond portfolio) will
increase or decrease. Longer term bonds are generally more sensitive to changes
in interest rates. When interest rates fall, bond prices generally rise.
Conversely, when interest rates rise, bond prices generally fall.

Duration is an approximation of the price sensitivity of a bond (or a bond
portfolio) to interest rate changes. It measures the weighted average maturity
of a bond's (or a bond portfolio's) cash flows, i.e., principal and interest
rate payments. Duration is expressed as a measure of time in years--the longer
the duration of a bond (or a bond portfolio), the greater the impact of interest
rate changes on the bond's (or the bond portfolio's) price. Duration differs
from effective maturity in that duration takes into account call provisions,
coupon rates and other factors. Duration measures interest rate risk only and
not other risks, such as credit risk and, in the case of non-U.S. dollar
denominated securities, currency risk. Effective maturity measures the final
maturity dates of a bond (or a bond portfolio).

MARKET TIMING

Market timing--buying securities when prices are low and selling them when
prices are relatively higher--may not work for many investors because it is
impossible to predict with certainty how the price of a security will fluctuate.
However, owning a security for a long period of time may help investors offset
short-term price volatility and realize positive returns.

POWER OF COMPOUNDING

Over time, the compounding of returns can significantly impact investment
returns. Compounding is the effect of continuous investment on long-term
investment results, by which the proceeds of capital appreciation (and income
distributions, if elected) are reinvested to contribute to the overall growth of
assets. The long-term investment results of compounding may be greater than that
of an equivalent initial investment in which the proceeds of capital
appreciation and income distributions are taken in cash.

STANDARD DEVIATION

Standard Deviation is an absolute (non-relative) measure of volatility
which, for a mutual fund, depicts how widely the returns varied over a certain
period of time. When a fund has a high standard deviation, its range of
performance has been very wide, implying greater volatility potential. Standard
deviation is only one of several measures of a fund's volatility.

II-1
<PAGE>

APPENDIX III--HISTORICAL PERFORMANCE DATA

The historical performance data contained in this Appendix relies on data
obtained from statistical services, reports and other services believed by the
Manager to be reliable. The information has not been independently verified by
the Manager.

This chart shows the long-term performance of various asset classes and the
rate of inflation.

[GRAPHIC OMITTED-CHART A]

Source: Stocks, Bonds, Bills and Inflation 1997 Yearbook, Ibbotson
Associates, Chicago, Illinois (annually updates work by Roger G. Ibbotson
and Rex A. Sinquefield). Used with permission. This chart is for
illustrative purposes only and is not indicative of the past, present, or
future performance of any asset class or any Prudential Mutual Fund.

Generally, stock returns are due to capital appreciation and the reinvestment of
distributions. Bond returns are attributable mainly to reinvestment of interest.
Also, stock prices are usually more volatile than bond prices over the
long-term.

Small stock returns for 1926-1980 are those of stocks comprising the 5th
quintile of the New York Stock Exchange. Thereafter, returns are those of the
Dimensional Fund Advisors (DFA) Small Company Fund. Common stock returns are
based on the S&P Composite Index, a market-weighted, unmanaged index of 500
stocks (currently) in a variety of industries. It is often used as a broad
measure of stock market performance.

Long-term government bond returns are measured using a constant one-bond
portfolio with a maturity of roughly 20 years. Treasury bill returns are for a
one-month bill. Treasuries are guaranteed by the U.S. government as to the
timely payment of principal and interest; equities are not. Inflation is
measured by the consumer price index (CPI).

IMPACT OF INFLATION. The "real" rate of investment return is that which exceeds
the rate of inflation, the percentage change in the value of consumer goods and
the general cost of living. A common goal of long-term investors is to outpace
the erosive impact of inflation on investment returns.

III-1
<PAGE>

Set forth below is historical performance data relating to various sectors
of the fixed-income securities markets. The chart shows the historical total
returns of U.S. Treasury bonds, U.S. mortgage securities, U.S. corporate bonds,
U.S. high yield bonds and world government bonds on an annual basis from 1988 to
December 1998. The total returns of the indices include accrued interest, plus
the price changes (gains or losses) of the underlying securities during the
period mentioned. The data is provided to illustrate the varying historical
total returns and investors should not consider this performance data as an
indication of the future performance of either Series or of any sector in which
a Series invests.

All information relies on data obtained from statistical services, reports
and other services believed by the Manager to be reliable. Such information has
not been verified. The figures do not reflect the operating expenses and fees of
a mutual fund. See "Fund Expenses" in the prospectus. The net effect of the
deduction of the operating expenses of a mutual fund on these historical total
returns, including the compounded effect over time, could be substantial.

HISTORICAL TOTAL RETURNS OF DIFFERENT BOND MARKET SECTOR

[GRAPHIC OMITTED-CHART B]

(1) LEHMAN BROTHERS TREASURY BOND INDEX is an unmanaged index made up of over
150 public issues of the U.S. Treasury having maturities of at least one year.

(2) LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is an unmanaged index that
includes over 600 15- and 30-year fixed-rate mortgage-backed securities of the
Government National Mortgage Association (GNMA), Federal National Mortgage
Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC).

(3) LEHMAN BROTHERS CORPORATE BOND INDEX includes over 3,000 public fixed-rate,
nonconvertible investment-grade bonds. All bonds are U.S. dollar-denominated
issues and include debt issued or guaranteed by foreign sovereign governments,
municipalities, governmental agencies or international agencies. All bonds in
the index have maturities of at least one year.

(4) LEHMAN BROTHERS HIGH YIELD BOND INDEX is an unmanaged index comprising over
750 public, fixed-rate, nonconvertible bonds that are rated Ba1 or lower by
Moody's Investors Service (or rated BB+ or lower by Standard & Poor's or Fitch
Investors Service). All bonds in the index have maturities of at least one year.

(5) SALOMON SMITH BARNEY WORLD GOVERNMENT INDEX (NON U.S.) includes over 800
bonds issued by various foreign governments or agencies, excluding those in the
U.S., but including those in Japan, Germany, France, the U.K., Canada, Italy,
Australia, Belgium, Denmark, the Netherlands, Spain, Sweden, and Austria. All
bonds in the index have maturities of at least one year.

III-2
<PAGE>
This chart illustrates the performance of major world stock markets for the
period from December 31, 1986 through September 30, 1997. It does not represent
the performance of any Prudential Mutual Fund.

[GRAPHIC OMITTED-CHART C]

Source: Morgan Stanley Capital International (MSCI) based on data retrieved from
Lipper Analytical New Application (LANA) as of 9/30/97. Morgan Stanley country
indices are unmanaged indices which include those stocks making up the largest
two-thirds of each country's total stock market capitalization. This chart is
for illustrative purposes only and is not indicative of the past, present or
future performance of any specific investment. Investors cannot invest directly
in stock indices.

This chart shows the growth of a hypothetical $10,000 investment made in the
stock representing the S&P 500 stock index with and without reinvested
dividends. As of 12/31/96.

[GRAPHIC OMITTED-CHART D]

Source: Lipper Analytical New Application (LANA). This chart is for illustrative
purposes only and is not representative of the past, present or future
performance of any Prudential Mutual Fund. Common Stock total returns are based
on the S&P 500 Index, a market-value weighted index made up of 500 of the
largest stocks in the U.S. based upon their stock market value. Investors cannot
buy or invest in market indices.

[GRAPHIC OMITTED-CHART E]

Source: Morgan Stanley Capital International, September 30, 1997. Usedwith
permission. This chart represents the capitalization of major world stock
markets as measured by the Morgan Stanley Capital International (MSCI) World
Index. The total market capitalization is based on the value of approximately
1577 companies in 22 countries (representing approximately 60% of the aggregate
market value of the stock exchanges). This chart is for illustrative purposes
only and does not represent the allocation of any Prudential Mutual Fund.

III-3
<PAGE>

This chart below shows the historical volatility of general interest rates
as measured by the long U.S. Treasury Bond.

LONG U.S. TREASURY BOND YIELD IN PERCENT (1926-1996)

[GRAPHIC OMITTED-CHART F]

- ----------------
Source: Stocks, Bonds, Bills, and Inflation 1997 Yearbook, Ibbotson Associates,
Chicago (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield).
Used with permission. All rights reserved. The chart illustrates the historical
yield of the long-term U.S. Treasury Bond from 1926-1994. Yields represent that
of an annually renewed one-bond portfolio with a remaining maturity of
approximately 20 years. This chart is for illustrative purposes and should not
be construed to represent the yields of any Prudential Mutual Fund.

The following chart, although not relevant to share ownership in the Fund,
may provide useful information about the effects of a hypothetical investment
diversified over different asset portfolios. The chart shows the range of annual
total returns for major stock and bond indices for the period from December 31,
1976 through December 31, 1996. The horizontal "Best Returns Zone" band shows
that a hypothetical blended portfolio constructed of one-third U.S. stocks (S&P
500), one-third foreign stocks (EAFE Index), and one-third U.S. bonds (Lehman
Index) would have eliminated the "highest highs" and "lowest lows" of any single
asset class.

THE RANGE OF ANNUAL TOTAL
RETURNS FOR MAJOR STOCK &
BOND INDICIES OVER THE
PAST 20 YEARS
(12/31/76--12/31/96)*

[GRAPHIC OMITTED]

- ----------------
*Source: Prudential Investment Corporation based on data from Lipper Analytical
New Application (LANA). Past performance is not indicative of future results.
The S&P 500 Index is a weighted, unmanaged index comprised of 500 stocks which
provides a broad indication of stock price movements. The Morgan Stanley EAFE
Index is an unmanaged index comprised of 20 overseas stock markets in Europe,
Australia, New Zealand and the Far East. The Lehman Aggregate Index includes all
publicly-issued investment grade debt with maturities over one year, including
U.S. government and agency issues, 15 and 30 year fixed-rate government agency
mortgage securities, dollar denominated SEC registered corporate and government
securities, as well as asset-backed securities. Investors cannot invest directly
in stock or bond market indices.

III-4
<PAGE>

APPENDIX IV--INFORMATION RELATING TO PRUDENTIAL

Set forth below is information relating to The Prudential Insurance Company
of America (Prudential) and its subsidiaries as well as information relating to
the Prudential Mutual Funds. See "How the Fund is Managed--Manager" in the
Prospectus. Thedata will be used in sales materials relating to the Prudential
Mutual Funds. Unless otherwise indicated, the information is as of December 31,
1996 and is subject to change thereafter. All information relies on data
provided by The Prudential Investment Corporation (PIC) or from other sources
believed by the Manager to be reliable. Such information has not been verified
by the Fund.

INFORMATION ABOUT PRUDENTIAL

The Manager and PIC(1) are subsidiaries of Prudential, which is one of the
largest diversified financial services institutions in the world and, based on
total assets, the largest insurance company in North America as of December 31,
1996. Principal products and services include life and health insurance, other
healthcare products, property and casualty insurance, securities brokerage,
asset management, investment advisory services and real estate brokerage.
Prudential (together with its subsidiaries) employs almost 79,000 persons
worldwide, and maintains a sales force of approximately 10,100 agents and nearly
6,500 financial advisors. Prudential is a major issuer of annuities, including
variable annuities. Prudential seeks to develop innovative products and services
to meet consumer needs in each of its business areas. Prudential uses the rock
of Gibraltar as its symbol. The Prudential rock is a recognized brand name
throughout the world.

INSURANCE. Prudential has been engaged in the insurance business since 1875.
It insures or provides financial services to nearly 40 million people worldwide.
Long one of the largest issuers of individual life insurance, the Prudential has
25 million life insurance policies and group certificates in force today with a
face value of almost $1 trillion. Prudential has the largest capital base ($12.1
billion) of any life insurance company in the United States. Prudential provides
auto insurance for more than 1.5 million cars and insures more than 1.2 million
homes.

MONEY MANAGEMENT. Prudential is one of the largest pension fund managers in
the country, providing pension services to 1 in 3 Fortune 500 firms. It manages
$36 billion of individual retirement plan assets, such as 401(k) plans. As of
December 31, 1996, Prudential had more than $370 billion in assets under
management. Prudential Investments, a business group of Prudential (of which
Prudential Mutual Funds is a key part) manages over $211 billion in assets of
institutions and individuals. In Pensions & Investments, May 12, 1997,
Prudential was ranked third in terms of total assets under management.

REAL ESTATE. The Prudential Real Estate Affiliates, the fourth largest real
estate brokerage network in the United States, has more than 37,000 brokers and
agents and more than 1,100 offices in the United States.(2)

HEALTHCARE. Over two decades ago, Prudential introduced the first
federally-funded, for-profit HMO in the country. Today, approximately 4.9
million Americans receive healthcare from a Prudential managed care membership.

FINANCIAL SERVICES. The Prudential Bank, a wholly-owned subsidiary of
Prudential, has nearly $4 billion in assets and serves nearly 1.5 million
customers across 50 states.

INFORMATION ABOUT THE PRUDENTIAL MUTUAL FUNDS

As of August 31, 1998, Prudential Investments Fund Management LLC is the
eighteenth largest mutual fund company in the country, with over 2.5 million
shareholders invested in more than 50 mutual fund portfolios and variable
annuities with more than 3.7 million shareholder accounts.

The Prudential Mutual Funds have over 30 portfolio managers who manage over
$55 billion in mutual fund and variable annuity assets. Some of Prudential's
portfolio managers have over 20 years of experience managing investment
portfolios.

- ---------------------
(1) Prudential Investments, a business group of PIC, serves as the Subadviser
to substantially all of the Prudential Mutual Funds. Wellington Management
Company serves as the subadviser to Global Utility Fund, Inc.
Nicholas-Applegate Capital Management as subadviser to Nicholas-Applegate
Fund, Inc., Jennison Associates Capital Corp. LLC as one of the subadvisers
to Prudential Investment Portfolio, Inc. and Mercator Asset Management,
L.P. as subadvisers to International Stock Series, a portfolio of
Prudential World Fund, Inc. There are multiple subadvisers for The Target
Portfolio Trust.

(2) As of December 31, 1996.

IV-1
<PAGE>
From time to time, there may be media coverage of portfolio managers and
other investment professionals associated with the Manager and the Subadviser in
national and regional publications, on television and in other media.
Additionally, individual mutual fund portfolios are frequently cited in surveys
conducted by national and regional publications and media organizations such as
THE WALL STREET JOURNAL, THE NEW YORK TIMES, BARRON'S and USA TODAY.

EQUITY FUNDS. FORBES magazines listed Prudential Equity Fund among twenty
mutual funds on its Honor Roll in its mutual fund issue of August 28, 1995.
Honorees are chosen annually among mutual funds (excluding sector funds) which
are open to new investors and have had the same management for at least five
years. Forbes considers, among other criteria, the total return of a mutual fund
in both bull and bear markets as well as a fund's risk profile. Prudential
Equity Fund is managed with a "value" investment style by PIC. In 1995,
Prudential Securities introduced Prudential Jennison Growth Fund, a growth-style
equity fund managed by Jennison Associates Capital Corp., a premier
institutional equity manager and a subsidiary of Prudential.

HIGH YIELD FUNDS. Investing in high yield bonds is a complex and research
intensive pursuit. A separate team of high yield bond analysts monitor the
approximately 200 issues held in the Prudential High Yield Fund (currently the
largest fund of its kind in the country) along with 100 or so other high yield
bonds, which may be considered for purchase.(3) Non-investment grade bonds, also
known as junk bonds or high yield bonds, are subject to a greater risk of loss
of principal and interest including default risk than higher-rated bonds.
Prudential high yield portfolio managers and analysts meet face-to-face with
almost every bond issuer in the High Yield Fund's portfolio annually, and have
additional telephone contact throughout the year.

Prudential's portfolio managers are supported by a large and sophisticated
research organization. Fourteen investment grade bond analysts monitor the
financial viability of approximately 1,750 different bond issuers in the
investment grade corporate and municipal bond markets--from IBM to small
municipalities, such as Rockaway Township, New Jersey. These analysts consider
among other things sinking fund provisions and interest coverage ratios.

Prudential's portfolio managers and analysts receive research services from
almost 200 brokers and market service vendors. They also receive nearly 100
trade publications and newspapers--from PULP AND PAPER FORECASTEr to WOMEN'S
WEAr DAILY--to keep them informed of the industries they follow.

Prudential Mutual Funds' traders scan over 100 computer monitors to collect
detailed information on which to trade. From natural gas prices in the Rocky
Mountains to the results of local municipal elections, a Prudential portfolio
manager or trader is able to monitor it if it's important to a Prudential mutual
fund.

Prudential Mutual Funds trade approximately $31 billion in U.S. and foreign
government securities a year. PIC seeks information from government policy
makers. In 1995, Prudential's portfolio managers met with several senior U.S.
and foreign government officials, on issues ranging from economic conditions in
foreign countries to the viability of index-linked securities in the United
States.

Prudential Mutual Funds' portfolio managers and analysts met with over 1,200
companies in 1995, often with the Chief Executive Officer (CEO) or Chief
Financial Officer (CFO). They also attended over 250 industry conferences.

Prudential Mutual Funds' global equity managers conducted many of their
visits overseas, often holding private meetings with a company in a foreign
language (our global equity managers speak 7 different languages, including
Mandarin Chinese).

TRADING DATA.(4) On an average day, Prudential Mutual Funds' U.S. and
foreign equity trading desks traded $77 million in securities representing over
3.8 million shares with nearly 200 different firms. Prudential Mutual Funds'
bond trading desks traded $157 million in government and corporate bonds on an
average day. That represents more in daily trading than most bond funds tracked
by Lipper even have in assets(5). Prudential Mutual Funds' money market desk
traded $3.2 billion in money market securities on an average day, or over $800
billion a year. They made a trade every 3 minutes of every trading day. In 1994,
the Prudential Mutual Funds effected more than 40,000 trades in money market
securities and held on average $20 billion of money market securities.(6)

- --------------------
(3) As of December 31, 1995. The number of bonds and the size of the Fund are
subject to change.

(4) Trading data represents average daily transactions for portfolios of the
Prudential Mutual Funds for which PIC serves as the subadviser, portfolios
of the Prudential Series Fund and institutional and non-US accounts managed
by Prudential Mutual Fund Investment Management LLC, a division of PIC, for
the year ended December 31, 1995.

(5) Based on 669 funds in Lipper Analytical Services categories of Short U.S.
Treasury, Short U.S. Government, Intermediate U.S. Treasury, Intermediate
U.S. Government, Short Investment Grade Debt, Intermediate Investment Grade
Debt, General U.S. Treasury, General U.S. Government and Mortgage funds.

(6) As of December 31, 1994.

IV-2
<PAGE>
Based on complex-wide data, on an average day, over 7,250 shareholders
telephoned Prudential Mutual Fund Services, Inc., the Transfer Agent of the
Prudential Mutual Funds, on the Prudential Mutual Funds' toll-free number. On an
annual basis, that represents approximately 1.8 million telephone calls
answered.

INFORMATION ABOUT PRUDENTIAL SECURITIES

Prudential Securities is the fifth largest retail brokerage firm in the
United States with approximately 6,000 financial advisors. It offers to its
clients a wide range of products, including Prudential Mutual Funds and
annuities. As of December 31, 1997, assets held by Prudential Securities for its
clients approximated $235 billion.

During 1997, approximately 29,000 new customer accounts were opened each
month at Prudential Securities.(7)

Prudential Securities has a two-year Financial Advisor training program plus
advanced education programs, including Prudential Securities "university," which
provides advanced education in a wide array of investment areas. Prudential
Securities is the only Wall Street firm to have its own in-house Certified
Financial Planner (CFP) program. In the December 1995 issue of Registered Rep,
an industry publication, Prudential Securities Financial Advisor training
programs received a grade of A- (compared to an industry average of B+).

In 1995, Prudential Securities' equity research team ranked 8th in
INSTITUTIONAL INVESTOR magazine's 1995 "All America Research Team" survey. Five
Prudential Securities analysts were ranked as first-team finishers.(8)

In addition to training, Prudential Securities provides its financial
advisors with access to firm economists and market analysts. It has also
developed proprietary tools for use by financial advisors, including the
Financial Architect[SM], a state-of-the-art asset allocation software program
which helps Financial Advisors to evaluate a client's objectives and overall
financial plan, and a comprehensive mutual fund information and analysis system
that compares different mutual funds.

Standard & Poor's rates Prudential Securities Incorporated BBB+, with a
"Stable Outlook."

For more complete information about any of the Prudential Mutual Funds,
including charges and expenses, call your Prudential Securities financial
advisor or Pruco/Prudential representative for a free prospectus. Read it
carefully before you invest or send money.

- ---------------------------
(7) As of December 31, 1997.

(8) In 1995, INSTITUTIONAL INVESTOR magazine surveyed more than 700
institutional money managers, chief investment officers and research
directors, asking them to evaluate analysts in approximately 80 industry
sectors. Scores were produced by taking the number of votes awarded to an
individual analyst and weighting them based on the size of the voting
institution. In total, the magazine sent its survey to more than 2,000
institutions, including a group of European and Asian institutions. This
survey is conducted annually.

IV-3

<PAGE>

PART C

OTHER INFORMATION

ITEM 23. EXHIBITS.

(a). (i) Restated Articles of Incorporation. Incorporated by reference to
Exhibit 1 to Post-Effective Amendment No. 17 to the Registration
Statement on Form N-1A (File No. 2-89725) filed via EDGAR on January
3, 1995.

(ii) Articles Supplementary dated December 27, 1995.*

(iii) Articles Supplementary dated June 20, 1996. Incorporated by
reference to Exhibit 1(b) to Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on June 24, 1996.

(iv) Amendment to Articles of Incorporation. Incorporated by reference
to Exhibit 1(c) to Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 24,
1996.

(v) Articles Supplementary dated November 18, 1999.*

(b). Amended and Restated By-Laws of the Registrant, incorporated by
reference to Exhibit 2 to Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on May 6, 1994.

(c). (i) Specimen Certificate for shares of Common Stock of the Registrant
for Class A Shares. Incorporated by reference to Exhibit 4(a) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(ii) Specimen Certificate for shares of Common Stock of the Registrant
for Class B Shares. Incorporated by reference to Exhibit 4(b) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(iii) Specimen Certificate for shares of Common Stock of the
Registrant for Class C Shares. Incorporated by reference to Exhibit
4(c) to Post-Effective Amendment No. 23 to the Registration Statement
on Form N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(iv) Specimen Certificate for shares of Common Stock of the Registrant
for Class Z Shares. Incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(v) Instruments defining rights of shareholders. Incorporated by
reference to Exhibit 4(e) to Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on January 7, 1998.

(d). (i) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc. with respect to the Global Series of the
Registrant. Incorporated by reference to Exhibit 5(a) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(ii) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation with respect to the
Global Series of the Registrant. Incorporated by reference to Exhibit
5(b) to Post-Effective Amendment No. 23 to the Registration Statement
on Form N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(iii) Management Agreement between Registrant and Prudential Mutual
Fund Management, Inc. with respect to the International Stock Series
of the Registrant, incorporated by reference to Exhibit 5(c) to
Post-Effective Amendment No. 22 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 14, 1997.

(iv) Subadvisory Agreement between Mercator Asset Management, L.P. and
Prudential Mutual Fund Management, Inc. with respect to the
International Stock Series of the Registrant, incorporated by
reference to Exhibit 5(d) to Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on January 14, 1997.

(v) Subadvisory Agreement between the Prudential Investment
Corporation and Prudential Mutual Fund Management, Inc. with respect
to the International Stock Series of the Registrant, incorporated by
reference to Exhibit 5(e) to Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on January 14, 1997.

C-1
<PAGE>

(vi) Management Agreement between Registrant and Prudential
Investments Fund Management LLC with respect to the Prudential
Jennison International Growth Fund series of the Registrant.*

(vii) Subadvisory Agreement between Jennison Associates LLC and
Prudential Investments Fund Management LLC with respect to the
Jennison International Growth Fund series of the Registrant.*

(e). (i) Restated Distribution Agreement for Shares of the Registrant dated
November 18, 1999.*

(ii) Form of Dealer Agreement.*

(f). Not applicable.

(g). (i) Custodian Agreement between the Registrant and State Street Bank
and Trust Company. Incorporated by reference to Exhibit 6 to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(ii) Form of Amendment to Custodian Agreement, incorporated by
reference to Exhibit No. 8(b) to Post-Effective Amendment No. 18 to
the Registration Statement on Form N-1A (File No. 2-89725) filed via
EDGAR on November 1, 1995.

(h). Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc. Incorporated by reference to
Exhibit 9 to Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A (File No. 2-89725) filed via EDGAR on January
7, 1998.

(i). Opinion of Sullivan & Cromwell. Incorporated by reference to Exhibit
10 to Post-Effective Amendment No. 23 to the Registration Statement on
Form N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(j). Consent of Independent Accountants.

(k). Not applicable.

(l). Purchase Agreement dated November 18, 1999.*

(m). (i) Amended and Restated Distribution and Service Plan for Class A
shares of Global Series of the Registrant; dated July 1, 1993.
Incorporated by reference to Exhibit 15(a) to Post-Effective Amendment
No. 24 to the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on January 7, 1998.

(ii) Amended and Restated Distribution and Service Plan for Class B
shares of Global Series of the Registrant; dated July 1, 1993.
Incorporated by reference to Exhibit 15(b) to Post-Effective Amendment
No. 24 to the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on January 7, 1998.

(iii) Distribution and Service Plan for Class A shares of Global
Series of the Registrant; incorporated by reference to Exhibit 6(c) to
Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 3, 1995.

(iv) Distribution and Service Plan for Class B shares of Global Series
of the Registrant; incorporated by reference to Exhibit 6(d) to
Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 3, 1995.

(v) Distribution and Service Plan for Class C shares of Global Series
of the Registrant; incorporated by reference to Exhibit 6(e) to
Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 3, 1995.

(vi) Distribution and Service Plan for Class A shares of International
Stock Series of the Registrant, incorporated by reference to Exhibit
15(f) to Post-Effective Amendment No. 21 to the Registration Statement
on Form N-1A (File No. 2-89725) filed via EDGAR on September 19, 1996.

(vii) Distribution and Service Plan for Class B shares of
International Stock Series of the Registrant, incorporated by
reference to Exhibit 15(g) to Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on September 19, 1996.

(viii) Distribution and Service Plan for Class C shares of
International Stock Series of the Registrant, incorporated by
reference to Exhibit 15(h) to Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on September 19, 1996.

(ix) Amended and Restated Distribution and Service Plan for Class A
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(ix) to Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on November 2, 1998.

C-2
<PAGE>

(x) Amended and Restated Distribution and Service Plan for Class B
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(x) to Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on November 2, 1998.

(xi) Amended and Restated Distribution and Service Plan for Class C
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(xi) to Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on November 2, 1998.

(xii) Amended and Restated Distribution and Service Plan for Class A
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xii) to Post-Effective Amendment No. 24
to the Registration Statement on Form N-1A (File No. 2-89725) filed
via EDGAR on November 2, 1998.

(xiii) Amended and Restated Distribution and Service Plan for Class B
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xiii) to Post-Effective Amendment No. 24
to the Registration Statement on Form N-1A (File No. 2-89725) filed
via EDGAR on November 2, 1998.

(xiv) Amended and Restated Distribution and Service Plan for Class C
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xiv) to Post-Effective Amendment No. 24
to the Registration Statement on Form N-1A (File No. 2-89725) filed
via EDGAR on November 2, 1998.

(xv) Distribution and Service Plan for Class A shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(xvi) Distribution and Service Plan for Class B shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(xvii) Distribution and Service Plan for Class C shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(n). Amended and Restated Rule 18f-3 Plan dated November 18, 1999.*

- ----------

* To be filed by post-effective amendment.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

ITEM 25. INDEMNIFICATION

As permitted by Section 17(h) and (i) of the Investment Company Act of 1940,
as amended (the 1940 Act), and pursuant to Article VII of the Fund's By-Laws
(Exhibit (b) to the Registration Statement), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any stockholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of the Distribution Agreement (Exhibit (e) to
the Registration Statement), the Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (Securities Act), may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1940 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1940 Act and will be governed by the final
adjudication of such issue.

C-3
<PAGE>

The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.

Section 9 of the Management Agreements for the Registrant's Global Series
and International Stock Series and Section 8 of the Management Agreement for the
Registrant's Prudential Jennison International Growth Fund (Exhibits (d)(i),
(iii) and (vi) to the Registration Statement) and Section 4 of the Subadvisory
Agreements (Exhibits (d)(ii), (iv), (v) and (vii) to the Registration Statement)
limit the liability of Prudential Investments Fund Management LLC (PIFM),
Mercator Asset Management, L.P. (Mercator) or Jennison Associates LLC
(Jennison), respectively, to liabilities arising from willful misfeasance, bad
faith or gross negligence in the performance of their respective duties or from
reckless disregard by them of their respective obligations and duties under the
agreements.

The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Section 17(h) and 17(i) of such Act remains
in effect and is consistently applied.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

(a) Prudential Investments Fund Management LLC (PIFM)

See "How the Series is Managed--Manager" in the Prospectus constituting Part
A of this Post-Effective Amendment to the Registration Statement and "Investment
Advisory and Other Services--Investment Advisers" in the Statement of Additional
Information constituting Part B of this Post-Effective Amendment to the
Registration Statement.

The business and other connections of the officers of PIFM are listed in
Schedules A and D of Form ADV of PIFM as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-3110, filed on March 30, 1994).

The business and other connections of PIFM's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.
<TABLE>
<CAPTION>

NAME AND ADDRESS POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- ---------------- ------------------ ---------------------
<S> <C> <C>
William V. Healey Executive Vice Executive Vice President, Secretary and Chief
President, Secretary Legal Officer, PIFM
and Chief Legal Officer

Robert F. Gunia Executive Vice Vice President, Prudential Investments; Executive
President and Treasurer Vice President and Treasurer, PIFM; Senior Vice
President, Prudential Securities

John V. Scicutella Officer-in-Charge, Acting President, PMF&A; Officer-in-Charge,
Acting President, Acting President, Chief Executive Officer and
Chief Executive Chief Operating Officer, PIFM
Officer and Chief
Operating Officer

</TABLE>

(b) The Prudential Investment Corporation (PIC)

The business and other connections of PIC's directors and executive officers
are as set forth below. Except as otherwise indicated, the address of each
person is Prudential Plaza, Newark, NJ 07101 4077.

C-4
<PAGE>

NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ---------------- ------------------ ---------------------
<S> <C> <C>

Mendel A. Melzer, CFA Senior Vice President Chief Investment Officer of Prudential Investments
Gateway Center Two and Director
100 Mulberry Street
Newark, NJ 07102

John R. Strangfeld, Jr. Chairman of Board, Senior Vice President, Prudential; Chief
President and Chief Executive Officer Prudential Global Asset
Executive Officer Management; Chairman of the Board, President
and Director and Chief Executive Officer and Director, PIC

Bernard B. Winograd Senior Vice President Chief Executive Officer of Prudential Real Estate
and Director Investors (PRFI); Senior Vice President and
Director, PIC
</TABLE>

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Prudential Investment Management Services LLC is distributor for Cash
Accumulation Trust Command Government Fund, Command Money Fund, Command Tax-Free
Fund, Prudential Government Securities Trust, Prudential MoneyMart Assets, Inc.,
Prudential Institutional Liquidity Portfolio, Inc., Prudential Special Money
Market Fund, Inc., Prudential Tax-Free Money Fund, Inc., The Target Portfolio
Trust, Prudential Balanced Fund, Prudential California Municipal Fund,
Prudential Developing Markets Fund, Prudential Diversified Bond Fund, Inc.,
Prudential Distressed Securities Fund, Inc., Prudential Index Series Fund,
Prudential Emerging Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential
Equity Income Fund, Prudential Europe Growth Fund, Inc., Prudential World Fund,
Inc., Prudential Global Genesis Fund, Inc., Prudential Global Limited Maturity
Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential Government
Income Fund, Inc., Prudential High Yield Fund, Inc., Prudential High Yield Total
Return Fund, Inc., Prudential International Bond Fund, Inc., Prudential
Intermediate Global Income Fund, Inc., Prudential Mid-Cap Value Fund, Prudential
Mortgage Income Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential National Municipals Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential Real Estate Securities Fund, Prudential Small-Cap
Quantum Fund, Inc., Prudential Small Company Value Fund, Inc., Prudential
Structured Maturity Fund, Inc., Prudential Utility Fund, Inc., Prudential 20/20
Focus Fund, The Global Total Return Fund, Inc., Global Utility Fund, Inc., and
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund).

(b) Information concerning the directors and officers of Prudential
Investment Management Services LLC is set forth below.
<TABLE>
<CAPTION>

POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(1) UNDERWRITER REGISTRANT
- ------- ------------- --------------
<S> <C> <C>
Robert F. Gunia ............. President Vice President and Director
John R. Strangfeld, Jr ...... Executive Vice President President and Director
William V. Healey ........... Senior Vice President, Secretary and Chief Legal Officer None
Kevin Frawley ............... Senior Vice President and Chief Compliance Officer None
Margaret Deverell ........... Vice President and Chief Financial Officer None
Brian Henderson ............. Senior Vice President and Chief Operating Officer None
</TABLE>

(1) Registrant has no principal underwriter who is not an affiliated person
of the Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at the
offices of State Street Bank and Trust Company, 1776 Heritage Drive, North
Quincy, Massachusetts, The Prudential Investment Corporation, Prudential Plaza,
751 Broad Street, Newark, New Jersey 07102, the Registrant, Gateway Center
Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, and Prudential Mutual
Fund Services LLC, Raritan Plaza One, Edison, New Jersey 08837. Documents
required by Rules 31a-1(b) (4), (5), (6), (7), (9), (10) and (11) and 31a-1 (d)
and (f) will be kept at Gateway Center Three, Newark, New Jersey 07102-4077, and
the remaining accounts, books and other documents required by such other
pertinent provisions of Section 31(a) and the Rules promulgated thereunder will
be kept by State Street Bank and Trust Company and Prudential Mutual Fund
Services LLC.

C-5
<PAGE>

ITEM 29. MANAGEMENT SERVICES

Other than as set forth under the captions "How the Series is
Managed--Manager" and "How the Series is Managed--Distributor" in the Prospectus
and the captions "Investment Advisory and Other Services--Investment Advisers"
and "Investment Advisory and Other Services--Distributor and Rule 12b-1 Plans"
in the Statement of Additional Information, constituting Parts A and B,
respectively, of this Registration Statement, Registrant is not a party to any
management-related service contract.

ITEM 30. UNDERTAKINGS

None.

C-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Newark, and
State of New Jersey, on the 18th day of November, 1999.

PRUDENTIAL WORLD FUND, INC.

/s/ JOHN R. STRANGFELD, JR.
------------------------------------
(JOHN R. STRANGFELD, JR., PRESIDENT)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

SIGNATURE TITLE DATE
--------- ----- ----

/s/ DELAYNE D. GOLD Director November 18, 1999
- -------------------------
DELAYNE D. GOLD

/s/ ROBERT F. GUNIA Vice President and Director November 18, 1999
- --------------------------
ROBERT F. GUNIA

/s/ ROBERT E. LABLANC Director November 18, 1999
- --------------------------
ROBERT E. LABLANC

/s/ DAVID R. ODENATH Director November 18, 1999
- --------------------------
DAVID R. ODENATH

/s/ ROBIN B. SMITH Director November 18, 1999
- --------------------------
ROBIN B. SMITH

/s/ STEPHEN STONEBURN Director November 18, 1999
- --------------------------
STEPHEN STONEBURN

/s/ JOHN R. STRANGFELD, JR. Director, President and November 18, 1999
- -------------------------- Chief Executive Officer
JOHN R. STRANGFELD, JR.

/s/ NANCY H. TEETERS Director November 18, 1999
- --------------------------
NANCY H. TEETERS

/s/ CLAY T. WHITEHEAD Director November 18, 1999
- --------------------------
CLAY T. WHITEHEAD

/s/ GRACE C. TORRES Treasurer and Principal
- -------------------------- Financial and November 18 1999
GRACE C. TORRES Accounting Officer

</TABLE>

<PAGE>

EXHIBIT INDEX

(a) (i) Restated Articles of Incorporation. Incorporated by reference to
Exhibit 1 to Post-Effective Amendment No. 17 to the Registration
Statement filed on Form N-1A via EDGAR on January 3, 1995 (File No.
2-89725)

(ii) Articles Supplementary dated December 27, 1995.*

(v) Articles Supplementary dated November 18, 1999.*

(b) Amended and Restated By-Laws of the Registrant, incorporated by
reference to Exhibit 2 to Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on May 6, 1994.

(c) (i) Specimen Certificate for shares of Common Stock of the Registrant
for Class A Shares. Incorporated by reference to Exhibit 4(a) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(iii) Specimen Certificate for Shares of Common Stock of the
Registrant for Class C Shares. Incorporated by reference to Exhibit
4(c) to Post-Effective Amendment No. 23 to the Registration Statement
on Form N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(iv) Specimen Certificate for Shares of Common Stock of the Registrant
for Class Z Shares. Incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(d) (i) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc. with respect to the Global Series of the
Registrant, Incorporated by reference to Exhibit 5(a) to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-A (file No. 2-89725) filed via EDGAR on January 7, 1998.

(ii) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation with respect to the
Global Series of the Registrant, Incorporated by reference to Exhibit
5(b) to Post-Effective Amendment No. 23 to the Registration Statement
on Form N-1A (file No. 2-89725) filed via EDGAR on January 7, 1998.

(v) Subadvisory Agreement between The Prudential Investment
Corporation and Prudential Mutual Fund Management Inc. with respect to
the International Stock Series of the Registrant, incorporated by
reference to Exhibit 5(e) to Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR
on January 14, 1997.

(vi) Management Agreement between Registrant and Prudential
Investments Fund Management LLC with respect to the Prudential
Jennison International Growth Fund series of the Registrant.*

(vii) Subadvisory Agreement between Jennison Associates LLC and
Prudential Investments Fund Management LLC with respect to the
Jennison International Growth Fund series of the Registrant.*

<PAGE>

(e) (i) Restated Distribution Agreement for Shares of the Registrant dated
November 18, 1999.*

(ii) Form of Dealer Agreement.*

(f). Not applicable.

(g) (i) Custodian Agreement between the Registrant and State Street Bank
and Trust Company. Incorporated by reference to Exhibit 8 to
Post-Effective Amendment No. 23 to the Registration Statement on Form
N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(h) Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc. Incorporated by reference to
Exhibit 9 to Post-Effective Amendment No. 23 to the Registration
Statement on Form N-1A (File No. 2-89725) filed via EDGAR on January
7, 1998.

(i) Opinion of Sullivan & Cromwell. Incorporated by reference to Exhibit
10 to Post-Effective Amendment No. 23 to the Registration Statement on
Form N-1A (File No. 2-89725) filed via EDGAR on January 7, 1998.

(j). Not applicable.

(k). Not applicable.

(l). Purchase Agreement dated November 18, 1999.*

(m) (i) Amended and Restated Distribution and Service Plan for Class A
shares of Global Series of the Registrant; dated July 1, 1993.
Incorporated by reference to Exhibit 15(a) to Post-Effective Amendment
No. 23 to the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on January 7, 1998.

(ii) Amended and Restated Distribution and Service Plan for Class B
shares of Global Series of the Registrant; dated July 1, 1993.
Incorporated by reference to Exhibit 15(b) to Post-Effective Amendment
No. 23 to the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on January 7, 1998.

(iii) Distribution and Service Plan for Class A shares of Global
Series of the Registrant; Incorporated by reference to Exhibit 6(c) to
Post-Effective Amendment No. 17 to the Registration Statement filed on
Form N-1A via EDGAR on January 3, 1995 (File No. 2-89725)

(iv) Distribution and Service Plan for Class B shares of Global Series
of the Registrant; incorporated by reference to Exhibit 6(d) to
Post-Effective Amendment No. 17 to the Registration Statement filed on
Form N-1A via EDGAR on January 3, 1995 (File No. 2-89725)

(v) Distribution and Service Plan for Class C shares of Global Series
of the Registrant; incorporated by reference to Exhibit 6(e) to
Post-Effective Amendment No. 17 to the Registration Statement filed on
Form N-1A via EDGAR on January 3, 1995 (File No. 2-89725)

(vi) Distribution and Service Plan for Class A Shares of International
Stock Series of the Registrant; incorporated by reference to Exhibit
15(f) to Post-Effective Amendment No. 21 to the Registration Statement
filed on Form N-1A via EDGAR on September 19, 1996 (File No. 2-89725)

(vii) Distribution and Service Plan for Class B Shares of
International Stock Series of the Registrant; incorporated by
reference to Exhibit 15(g) to Post-Effective Amendment No. 21 to the
Registration Statement filed on Form N-1A via EDGAR on September 19,
1996 (File No. 2-89725)

(viii) Distribution and Service Plan for Class C Shares of
International Stock Series of the Registrant; incorporated by
reference to Exhibit 15(h) to Post-Effective Amendment No. 21 to the
Registration Statement filed on Form N-1A via EDGAR on September 19,
1996 (File No. 2-89725)

(ix) Amended and Restated Distribution and Service Plan for Class A
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(ix) to Post-Effective Amendment No. 24 filed on Form
N-1A filed via EDGAR on November 2, 1998 (File No. 2-89725)

(x) Amended and Restated Distribution and Service Plan for Class B
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(x) to Post-Effective Amendment No. 24 on Form N-1A
(File No. 2-89725) filed via EDGAR on November 2, 1998.

(xi) Amended and Restated Distribution and Service Plan for Class C
shares of Global Series of the Registrant. Incorporated by reference
to Exhibit 99.m(xi) to Post-Effective Amendment No. 24 on Form N-1A
(File No. 2-89725) filed via EDGAR on November 2, 1998.

<PAGE>

(xii) Amended and Restated Distribution and Service Plan for Class A
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xii) to Post-Effective Amendment No. 24
on Form N-1A (File No. 2-89725) filed via EDGAR on November 2, 1998.

(xiii) Amended and Restated Distribution and Service Plan for Class B
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xiii) to Post-Effective Amendment No. 24
on Form N-1A (File No. 2-89725) filed via EDGAR on November 2, 1998.

(xiv) Amended and Restated Distribution and Service Plan for Class C
shares of International Stock Series of the Registrant. Incorporated
by reference to Exhibit 99.m(xiv) to Post-Effective Amendment No. 24
on Form N-1A (File No. 2-89725) filed via EDGAR on November 2, 1998.

(xv) Distribution and Service Plan for Class A shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(xvi) Distribution and Service Plan for Class B shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(xvii) Distribution and Service Plan for Class C shares of the
Prudential Jennison International Growth Fund series of the
Registrant.*

(n) Amended and Restated Rule 18f-3 Plan dated November 18, 1999.*

- ----------

* To be filed by post-effective amendment.