PRUDENTIAL VARIABLE CONTRACT ACCOUNT 2, 485APOS, 1997-02-28

PRUDENTIAL VARIABLE CONTRACT ACCOUNT 2
485APOS, 1997-02-28

Previous: PRUDENTIAL VARIABLE CONTRACT ACCOUNT 2, 24F-2NT, 1997-02-28

Next: PRUDENTIALS ANNUITY PLAN ACCOUNT, NSAR-U, 1997-02-28

Registration No. 2-28316

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------

Form N-3

REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 50
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 27

---------

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
(Exact Name of Registrant)

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(Name of Insurance Company)

Prudential Plaza
Newark, New Jersey 07102-3777
(201) 802-8781
(Address and telephone number of Insurance Company's
principal executive offices)

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

C. CHRISTOPHER SPRAGUE
Assistant General Counsel
The Prudential Insurance Company of America
213 Washington Street
2nd Floor
Newark, N.J. 07102
(Name and address of agent for service)

Copy to:
Jeffrey C. Martin
Christopher E. Palmer
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036

-----------

Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940. The 24f-2 notice for fiscal year
1996 was filed on February 28, 1997.

It is proposed that this filing will become effective (Check appropriate space):

___ immediately upon filing pursuant to paragraph (b) of Rule 485

___ on ___________ pursuant to paragraph (b) of Rule 485
(date)

___ 60 days after filing pursuant to paragraph (a)(i) of Rule 485

X on May 1, 1997 pursuant to paragraph (a)(i) of the Rule 485
- --- -----------
(date)

___ 75 days after filing pursuant (a)(ii) of Rule 485

___ on ___________ pursuant to paragraph (a)(ii) of Rule 485
(date)

If appropriate, check the following box:

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

<PAGE>

<TABLE>

CROSS REFERENCE SHEET

Pursuant to Rule 495(a) under the Securities Act of 1933 indicating the location
in the Prospectus and Statement of Additional Information called for by the
Items of Parts A and B of Form N-3.

Heading in Prospectus or Statement
Item Number and Caption of Additional Information
----------------------- -------------------------
<S> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Glossary of Terms Used in this Prospectus
3. Synopsis or Highlights................................... Summary of Prospectus Information
4. Condensed Financial Information.......................... Condensed Financial Information
5. General Description of Registrant
and Insurance Company................................... Description of The Prudential and VCA-2
6. Management............................................... Description of The Prudential and VCA-2
7. Deductions and Expenses.................................. Fee Tables; Charges; The Group Variable Annuity Contracts
8. General Description of
Variable Annuity Contracts.............................. Summary of Prospectus Information; The Group Variable Annuity
Contracts, The Accumulation Period; Voting Rights
9. Annuity Period........................................... The Group Variable Annuity Contracts, The Annuity Period
10. Death Benefit............................................ The Group Variable Annuity Contracts, Death Benefits before an
Annuity is Effected
11. Purchases and Contract Value............................. Description of The Prudential and VCA-2; Investment Practices
of VCA-2, Determination of Asset Value; The Group Variable
Annuity Contracts, The Accumulation Period
12. Redemptions.............................................. The Group Variable Annuity Contracts, Withdrawal (Redemption)
of Purchase Payments Prior to Death, Systematic Withdrawal
Plan, Texas Optional Retirement Program
13. Taxes.................................................... Federal Tax Status
14. Legal Proceedings........................................ Legal Proceedings
15. Table of Contents of the Statement
of Additional Information............................... Table of Contents -- Statement of Additional Information
16. Cover Page............................................... Cover Page
17. Table of Contents........................................ Table of Contents
18. General Information and History.......................... Not Applicable
19. Investment Objectives and Policies....................... Investment Management and Administration of VCA-2
20. Management............................................... The VCA-2 Committee

</TABLE>

<PAGE>

<TABLE>

<S> <C>
21. Investment Advisory and Other Services................... Investment Management and Administration of VCA-2
22. Brokerage Allocation..................................... Investment Management and Administration of VCA-2, Portfolio
Brokerage and Related Practices
23. Purchase and Pricing of Securities
Being Offered........................................... Not Applicable
24. Underwriters............................................. Investment Management and Administration of VCA-2; Sale of
Group Variable Annuity Contracts
25. Calculation of Performance Data.......................... Not Applicable
26. Annuity Payments......................................... The Group Variable Annuity Contracts, The Annuity Period
27. Financial Statements..................................... Financial Statements of VCA-2; Financial Statements of
The Prudential
</TABLE>

<PAGE>

PROSPECTUS
DATED MAY 1, 1997

GROUP TAX-DEFERRED VARIABLE ANNUITY CONTRACTS

issued through

THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-2

For Persons Eligible For Such Annuities
In accordance with Section 403(b) of the Internal Revenue Code

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

The Prudential Variable Contract Account-2 will invest primarily in equity
securities of major, established corporations that are selected with the
objective of long-term growth of capital.

This Prospectus provides information a prospective investor should know before
investing. Additional information about the Contracts has been filed with the
Securities and Exchange Commission in a Statement of Additional Information,
dated May 1, 1997, which information is incorporated herein by reference, and is
available without charge upon written or oral request directed to the address or
telephone number shown below. The Table of Contents of the Statement of
Additional Information appears on page 23 of this Prospectus.

PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.

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

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

The Prudential Insurance Company of America

c/o Prudential Retirement Services
30 Scranton Office Park
Moosic, PA 18507-1789
Telephone 1-800-458-6333

- -------------------============================================================

[LOGO]

<PAGE>

TABLE OF CONTENTS

PAGE

GLOSSARY OF TERMS USED IN THIS PROSPECTUS ................................. 1
FEE TABLE ................................................................. 2
SUMMARY OF PROSPECTUS INFORMATION ......................................... 3
CONDENSED FINANCIAL INFORMATION ........................................... 5
DESCRIPTION OF THE PRUDENTIAL AND VCA-2 ................................... 6
INVESTMENT PRACTICES OF VCA-2 ............................................. 7
AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES .............................. 9
CHARGES ................................................................... 10
THE GROUP VARIABLE ANNUITY CONTRACTS ...................................... 11
A. The Accumulation Period .............................................. 11
1. Crediting Accumulation Units; Deduction for Sales
and Administrative Expenses .................................... 12
2. Valuation of a Participant's Individual Accumulation Account ... 12
3. The Accumulation Unit Value .................................... 12
4. Discontinuance of Purchase Payments ............................ 12
5. Continuance Under Group Contract After Being Employed
by New Employer ................................................ 12
6. Withdrawal (Redemption) of Purchase Payments Prior to Death .... 12
7. Systematic Withdrawal Plan ..................................... 13
8. Texas Optional Retirement Program .............................. 14
9. Death Benefits Before an Annuity is Effected ................... 14
10. Transfer Payments .............................................. 15
11. Telephone Requests ............................................. 16
12. Modified Procedures ............................................ 16
13. Exchange Offer with the PMF Funds .............................. 17

B. The Annuity Period ................................................... 16
1. Variable Annuity Payments ...................................... 16
2. Electing the Annuity Date and the Form of Annuity .............. 16
3. Deductions for Taxes on Annuity Considerations ................. 17
4. Available Forms of Variable Annuity ............................ 17
5. The Annuity Unit ............................................... 18
6. The Annuity Unit Value ......................................... 18
7. The Annuity Unit Change Factor for Any Month ................... 18
8. Assumed Investment Result ...................................... 18
9. Schedule of Variable Annuity Purchase Rates .................... 19
C. Assignment ........................................................... 19
D. Changes in the Group Variable Annuity Contract ....................... 19
E. Periodic Reports ..................................................... 20
F. Participation in Divisible Surplus ................................... 20
FEDERAL TAX STATUS ........................................................ 20
VOTING RIGHTS ............................................................. 21
OTHER CONTRACTS ON A VARIABLE BASIS ....................................... 22
STATE REGULATION .......................................................... 22
LEGAL PROCEEDINGS ......................................................... 22
ADDITIONAL INFORMATION .................................................... 22
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION .................... 23

NOTE: All masculine references in this Prospectus are intended to include the
feminine gender. The singular context also includes the plural and vice
versa where necessary.

<PAGE>

GLOSSARY OF TERMS USED IN THIS PROSPECTUS

ACCUMULATION PERIOD: the period from the date a Participant's VCA-2 account is
opened to the date it is applied to provide an annuity or otherwise withdrawn
(see page 10).

ACCUMULATION UNIT: a measure used to determine the value of a Participant's
VCA-2 account (see page 11).

ACCUMULATION UNIT VALUE: the dollar value of one Accumulation Unit (see page
11).

ANNUITY: a series of payments made each month as long as a person, called the
annuitant, is living. In some forms of annuity, payments may continue after the
annuitant's death (see page 16).

ANNUITY-CERTAIN: a series of payments for a definite period, not dependent on
the length of a person's life (see page 17).

ANNUITY UNIT: a measure used to determine the value of a variable annuity
payment (see page 18).

ANNUITY UNIT VALUE: the dollar value of one Annuity Unit (see page 18).

ASSUMED INVESTMENT RESULT: the annual rate of investment result assumed for the
purpose of establishing the initial payment under a variable annuity and which
is used in determining Annuity Unit Values (see page 18).

CONTRACT: the Group Variable Annuity Contract described in this Prospectus which
is a written agreement between Prudential and the Contract-holder which sets
forth the rights, duties, and privileges of all parties (see page 10).

CONTRACT-HOLDER: ordinarily the employer of the Participants, but may also be an
association representing them or their employers (see page 10).

MORTALITY AND EXPENSE RISKS: the risks Prudential assumes because the amount of
variable annuity payments will not be affected by losses Prudential may incur if
annuitants live longer than expected, or if actual expenses are higher than
expected (see page 10).

PARTICIPANT: a person for whom purchase payments have been made to credit
Accumulation Units which remain in his account or have been applied to provide a
variable annuity for him (see page 10).

PARTICIPANT'S ACCOUNT, INDIVIDUAL ACCUMULATION ACCOUNT: a record of the number
of Accumulation Units credited to a Participant (see page 11).

"PROGRAM"--PRUDENTIAL'S GROUP TAX-DEFERRED ANNUITY PROGRAM: a Contract-holder's
program providing for purchase payments under the Contract, a companion
fixed-dollar annuity contract or a combination of the two (see page 4).

PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2 ("VCA-2" OR THE "ACCOUNT"): the separate
account in which the Contracts participate (see page 4).

PURCHASE PAYMENT: money paid under a contract on behalf of a Participant (see
pages 10 and 11).

TAX-DEFERRED ANNUITY: an arrangement for deferring Federal income tax on the
portion of a person's income which is applied by his employer to the purchase of
an annuity, until annuity payments commence (see page 4).

VARIABLE ANNUITY: an annuity whose payments vary with the investment results of
VCA-2 (see page 16).

<PAGE>

FEE TABLE

The purpose of this table is to assist the Participant in understanding the
various charges that a Participant in the Account will bear, whether directly or
indirectly. For a more complete description of the various charges, see
"Charges" on pages 9 and 10.

PARTICIPANT TRANSACTION EXPENSES

Sales Load Imposed on Purchases (as a percentage of purchase payments): 2.5%
Maximum Annual Contract Fee* ...................................... $30

ANNUAL ACCOUNT OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Investment Management Fee ......................................... .125%
Mortality and Expense* ............................................ .375%
-----
Total Annual Expenses ............................................. .500%

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

You would pay the following
expenses on each $1,000
invested assuming a 5% annual
return. You would pay the same
expenses whether you withdraw
from VCA-2, remain as a
Participant in the Account, or
annuitize, at the end of each
time period.

The above example is based on data for the Account's fiscal year ended December
31, 1996. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.

The example is intended to illustrate the dollar amount of the aggregate of all
the expenses, fees and charges shown above, on a cumulative basis over the
periods shown, that would be incurred on each $1000 invested. The annual
contract fee reflected in the above example is based upon the assumption that
the fee is deducted from the VCA-2 contract in the same proportion as the
aggregate annual contract fees are deducted from the fixed-dollar or VCA-2
contracts. The actual expenses paid by each Participant will vary depending upon
the total amount credited to that Participant and how that amount is allocated.

- -----------
*During a participant's annuity period, the annual contract fee is not charged
and the mortality and expense charges are not made. See "The Annuity Period" on
pages 16 through 19 for further information.

<PAGE>
SUMMARY OF PROSPECTUS INFORMATION

The Group Variable Annuity Contracts (the "Contracts" or the "Variable
Contracts") described in this Prospectus are offered for use by public school
systems and certain tax-exempt organizations pursuant to Section 403(b) of the
Internal Revenue Code of 1986 (the "Code" or "Internal Revenue Code"). The
Contracts, together with fixed-dollar annuity contracts offered for the same
use, but which are not described in this Prospectus, comprise Prudential's Group
Tax-Deferred Annuity Program (the "Program"). A person for whom purchase
payments have been made under a Contract which remain credited to his account or
which have been applied to provide a variable annuity for him is referred to as
a "Participant." The following is a summary of information about the Contracts
and the rights of Participants. More detailed information can be found in the
referenced portions of this Prospectus. A glossary of certain terms used in this
Prospectus can be found on page 2.

REGISTRANT

The Prudential Variable Contract Account-2 ("VCA-2" or the "Account") is an
open-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). See "Description of
The Prudential and VCA-2," page 7.

The Prudential Insurance Company of America ("Prudential") is the investment
manager of VCA-2, and Prudential Investment Management Services LLC ("PIMS"), a
direct wholly-owned subsidiary of Prudential, is the principal underwriter of
the Contracts pursuant to an agreement between Prudential, VCA-2, and PIMS (the
"Distribution Agreement"). Prudential is a mutual life insurance company
incorporated in 1873 under the laws of the State of New Jersey. See "Description
of The Prudential and VCA-2," page __.

INVESTMENT OBJECTIVE

VCA-2's investment objective is long-term growth of capital. VCA-2 will seek to
achieve this objective by investing primarily in equity securities of major,
established corporations. Current income, if any, is incidental to this
objective. There is no assurance that this investment objective will be
attained. There is no guarantee that the amount available to a person for whom
purchase payments have been made will equal or exceed the total purchase
payments made on his behalf. The value of the investments held in the Account
fluctuates daily and is subject to the risks of changing economic conditions and
risks inherent in the selection of investments necessary to meet the Account's
objective. See "Investment Practices of VCA-2," page __, and see "Investment
Management and Administration of VCA-2" in the Statement of Additional
Information.

CONTRACTS OFFERED

The Contracts are generally offered pursuant to agreements between certain
eligible employers and their employees. Annuities issued pursuant to such
agreements are commonly called "tax-deferred annuities," because the
Participants enjoy certain federal income tax benefits provided by Section
403(b) of the Internal Revenue Code. A Participant is afforded an opportunity to
have his employer set aside funds for the purpose of providing retirement income
for him, with federal income tax upon those amounts deferred until the annuity
payments commence. The Contracts provide for variable annuity payments to each
Participant commencing on a date selected by him. The amounts of these annuity
payments will vary with the investment performance of VCA-2. The annuity
payments will reflect the investment performance of the Account not only during
the period in which the Participant is receiving annuity payments, but also from
the time he first becomes a Participant under the Contract until the
commencement of those payments. Certain of the rights provided by the Contracts
are granted to Participants, while other rights are exercisable by the
Contract-holder, usually the employer. See "The Group Variable Annuity
Contracts," pages 10 through 20.

CHARGES

A deduction of 2.5% (2.56% of the amount invested) for sales and marketing
expenses is made from each Participant's purchase payments. An annual
administration charge is made against each Participant's accumulation account in
an amount which varies with each Contract, but which is not more than $30 for
any accounting year. The sales and administration charges may be reduced in
connection with a particular Contract if Prudential estimates that its sales and
administrative expenses will be lower or that it will perform fewer sales or
administrative services in connection with the Contract. A daily charge is made
against each Participant's accumulation account, computed at an effective annual
rate of 0.5% (1/2 of 1%), consisting of 0.125% (1/8 of 1%) for investment
management services, 0.125% (1/8 of 1%) for assuming mortality risks and 0.250%
(1/4 of 1%) for assuming expense risks, and corresponding charges are made in
computing monthly annuity payments. See "Charges," pages 9 and 10.

All these charges, except those for investment management services, may be
changed by Prudential without the prior approval of Participants, except as
described under "Changes in the Group Variable Annuity Contract," pages 19 and
20.

<PAGE>

REDEMPTION AND TRANSFER

Federal tax law imposes restrictions on withdrawals from Section 403(b)
annuities. In addition, an employer may adopt a plan that limits the right of
Participants to obtain cash withdrawals upon request. In cases where such
restrictions or limitations do not apply, a Participant upon written request on
a form approved by Prudential, is entitled to withdraw all or a portion of the
amount then credited to his accumulation account. See "Withdrawal (Redemption)
of Purchase Payments Prior to Death," pages 12 and 13. Telephone redemptions
also may be allowed. A Participant may transfer all or a portion of his
individual accumulation account from the Contract to a fixed-dollar annuity
contract. Prudential may limit the frequency of such transfers. A Participant
who changes employers may also transfer all of his individual accumulation
account to a similar group annuity contract issued by Prudential which covers
employees of his new employer. See "Transfer Payments," pages 15 and 16.
Prudential may impose a redemption charge on any withdrawal or transfer payment
provided by the Contract. See "Changes in the Group Variable Annuity Contract,"
pages 19 and 20.

CONTACTING PRUDENTIAL

All written requests, notices and transfer requests required by the Contracts
(other than withdrawal requests and death benefit claims), should be sent to
Prudential at the address shown on the cover page of this Prospectus. Any
written inquiries also should be sent to Prudential at that address. A
Participant may effect the telephone transactions that are permitted by his
Program by calling Prudential at 1-800-458-6333. All written withdrawal requests
or death benefit claims relating to a Participant's interest in VCA-2 must be
sent to Prudential by one of the following three means: 1) By U.S. mail to:
Prudential Retirement Services, P.O. Box 5410, Scranton, Pennsylvania
18505-5410; 2) Delivery service other than the U.S. mail (e.g., Federal Express,
etc.) sent to our office at the following address: Prudential Retirement
Services, 30 Scranton Office Park, Moosic, Pennsylvania 18507-1789; or 3)Fax to
Prudential Retirement Services, Attention: Client Payments at: (717) 340-4328. A
withdrawal request or death benefit claim will be deemed received in good order
by Prudential as of the end of the valuation period within which all the
properly completed forms and other information required by Prudential to pay
such a request or claim (e.g., due proof of death) are received as specified
above. Receipt of a withdrawal request or death benefit claim in good order is
required by Prudential to process the transaction in the manner explained below
in this Prospectus. Under certain Contracts, the Contract-holder or a third
party acting on their behalf provides record-keeping services that would
otherwise be performed by Prudential. See "Modified Procedures," page 16.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.

<PAGE>

CONDENSED FINANCIAL INFORMATION

INCOME AND CAPITAL CHANGES PER ACCUMULATION UNIT
(For an Accumulation Unit outstanding throughout the year)
(Covered by the Independent Auditors' Report
in the Statement of Additional Information)

1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------ ------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income ...................... $.2000 $.1896 $.2823 $.1635 $.1629 $.2278 $.2061 $.1574 $.1983

Expenses
for investment management fee ........ .0170 .0151 .0138 .0111 .0094 .0079 .0078 .0064 .0064
for assuming mortality and
expense risks ...................... .0511 .0453 .0412 .0335 .0285 .0239 .0234 .0193 .0193

Net investment
income ............................... .1319 .1292 .2273 .1189 .1250 .1960 .1749 .1317 .1726

Capital changes
Net realized gain on investments ..... 1.5228 1.0028 1.1147 1.2862 .6231 .1523 .8364 .5383 .4257
Net unrealized appreciation
(depreciation) of investments ...... 1.7558 (1.2955) .9803 (.2121) 1.4671 (.5709) .1931 .4303 (.4720)

Net increase (decrease) in
Accumulation Unit Value .............. 3.4105 (.1635) 2.3223 1.1930 2.2152 (.2226) 1.2044 1.1003 .1263

Accumulation Unit Value
Beginning of year .................... 11.9932 12.1567 9.8344 8.6414 6.4262 6.6488 5.4444 4.3441 4.2178
End of year .......................... $15.4037 $11.9932 $12.1567 $9.8344 $8.6414 $6.4262 $6.6488 $5.4444 $4.3441

Sum of average ratios for the year of
(a) charge for investment management
fee to net assets* and (b)charge for
assuming mortality and expense risks
to net assets* ........................ .4959% .4991% .4984% .4975% .4970% .4999% .5009% .5016% .5068%

Average ratio for the year of net
investment income to net assets ...... .9602% 1.0664% 2.056% 1.3253% 1.6372% 3.0779% 2.8084% 2.5657% 3.4026%

Portfolio turnover rate ................ 42.21% 36.85% 46.91% 73.24% 78.94% 107.56% 70.52% 30.51% 29.36%

Number of Accumulation Units out-
standing for Participants at end of
year (000 omitted) ................... 31,600 32,624 32,968 33,147 34,228 35,218 37,813 41,638 47,239
</TABLE>

- -----------
*These calculations exclude Prudential's equity in VCA-2.

The above table does not reflect the annual administration charge, which does
not affect the Accumulation Unit Value. This charge, which is described on page
10, is made by reducing Participants' Accumulation Accounts by a number of
Accumulation Units equal in value to the charge.

While both income and capital changes are shown above, the distinction between
these sources of change in VCA-2 is not particularly significant to
Participants. There is no distinction between income and realized and unrealized
gains and losses on investments in determining the amount of the Participant's
benefits and the taxes payable by the Participant on them.

<PAGE>
PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
GROUP VARIABLE ANNUITY CONTRACTS SOLD BY
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

DESCRIPTION OF THE PRUDENTIAL
AND VCA-2

Prudential is a mutual life insurance company incorporated in 1873 under the
laws of the State of New Jersey. It is authorized to transact business in all
states of the United States, the District of Columbia, the Territory of Guam,
the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Canada
and United States military installations in foreign countries. Its corporate
office is located at Prudential Plaza, Newark, New Jersey 07102.

Prudential conducts a conventional life insurance business. Assets derived from
such business are invested in the manner permitted by applicable state laws. The
financial statements of Prudential contained in the Statement of Additional
Information should be considered by Participants only to the extent they may
bear upon the ability of Prudential to meet its obligations under the Contracts.

On January 9, 1968, the Board of Directors of Prudential established VCA-2 in
accordance with certain provisions of the insurance statutes of the State of New
Jersey. The Account meets the definition of a "separate account" under the
federal securities laws. VCA-2 is empowered to hold only assets derived from
contributions under variable contracts issued by Prudential, assets that
Prudential may deem prudent to place in the Account for the purpose of
maintaining a surplus to support the obligations under the Contracts, and assets
derived from the dividends, interest and gains produced by the foregoing. The
portion of the assets in the Account equal to the reserve liability required by
law will be held for the sole benefit of Participants and persons entitled to
payment under the Contracts described herein and under other contracts which may
be offered by Prudential in the future and designated as participating in the
Account. The assets in the Accounts are the property of Prudential, but are
legally segregated from all other assets of Prudential and may not be charged
with liabilities arising out of any of Prudential's other business. All income,
gains and losses, whether or not realized, from assets allocated to the Account
are credited to or charged against the Account without regard to other income,
gains, or losses of Prudential. The obligations arising under the Contracts are
general corporate obligations of Prudential.

The Account is registered as an open-end, diversified management investment
company with the Securities and Exchange Commission (the "Commission") under the
1940 Act. This registration does not involve supervision by the Commission of
Prudential or of the management or investment practices or policies of the
Account.

Prudential acts as investment manager for VCA-2. The operation of the Account is
supervised by The Prudential Variable Contract Account-2 Committee (the "VCA-2
Committee" or the "Committee"). Beginning in June 1989, all Committee members
elected by persons having voting rights are elected for indefinite terms.
Vacancies may be filled by a majority vote of all the remaining Committee
members, provided that immediately after filling any such vacancy, at least
two-thirds of the members then holding office shall have been elected by persons
having voting rights. Members elected by the Committee, rather than by persons
having voting rights, hold their positions only until the next meeting of
persons having voting rights in respect to the Account. At that next meeting,
persons with voting rights fill the vacancy by electing a member for an
indefinite term. See "Voting Rights," pages 21 and 22. A majority of the members
of the VCA-2 Committee are not affiliated with Prudential (nor are they
"interested persons" within the meaning of the 1940 Act). In addition,
Prudential acts as investment manager to several other investment companies
registered under the 1940 Act. Prudential also manages assets for certain
pension fund customers on a discretionary basis.

Prudential has entered into a Service Agreement with its wholly-owned
subsidiary, The Prudential Investment Corporation ("PIC"), pursuant to which PIC
provides such services as Prudential may require in connection with its
obligations as the Account's investment manager. See "Agreement for Investment
Management Services," page 9.

PIMS acts as principal underwriter for VCA-2 and is responsible for sales and
administrative functions relative to the Contracts and VCA-2 pursuant to an
Agreement for the Sale of Contracts between PIMS, Prudential, and VCA-2. This
Agreement was approved by the unanimous vote of the Committee on November 22,
1996. Under this Agreement, PIMS offers the Contracts through its agents and
independent brokers.

Prudential's administrative responsibilities include receiving and allocating
contributions in accordance with the Contracts, making annuity payments as they
become due, preparing and filing all reports required to be filed by VCA-2,
recordkeeping, and expenses associated with these activities. Administrative
expenses include, but are not limited to, salaries, rent, postage, telephone,
travel, office equipment, stationery, and fees for legal, actuarial and
accountants' services.
6

<PAGE>

For purposes of the Contracts, payments, notices and other communications such
as withdrawal and transfer requests will be deemed to have been received by
Prudential only if delivered to Prudential in the manner described in the
"Contacting Prudential" section of the summary of this Prospectus. Certain
alternative procedures apply if the Contract-holder or a third party provides
record-keeping services. See "Modified Procedures," page 16.

INVESTMENT PRACTICES OF VCA-2

A. INVESTMENT OBJECTIVE AND POLICIES

The investment policies of VCA-2 set forth below are adopted in an effort to
achieve the investment objective and are not fundamental. Therefore, these
investment policies may be changed by the VCA-2 Committee without the approval
of VCA-2 Participants.

In attempting to achieve its objective, VCA-2 will invest in common stocks,
preferred stocks, warrants or convertible bonds which, in the opinion of VCA-2's
investment adviser, are believed to be in sound financial condition and have
prospects for price appreciation greater than broadly based stock indices. Under
normal market conditions, VCA-2 may also invest up to 20% of its assets in
investment grade short-term, intermediate term, or long-term debt instruments.
At times when economic conditions or general levels of common stock prices are
such that the investment adviser deems it prudent to adopt a defensive position
by reducing or curtailing investments in equities, a larger proportion than
usualof VCA-2's assets may be invested in such debt instruments.

B. DESCRIPTION OF INVESTMENT TECHNIQUES

VCA-2 may use some of the following investment techniques designed to meet
VCA-2's objective.

Financial futures contracts. To the extent permitted by applicable regulations,
VCA-2 may purchase and sell financial futures contracts, including stock index
futures contracts, futures contracts on interest-bearing securities (such as
U.S. Treasury bonds and notes) or rate indices, and futures contracts on foreign
currencies or groups of foreign currencies. VCA-2 will use futures contracts
solely for the purpose of hedging the Account's positions with respect to
securities, interest rates, and foreign securities.

A financial futures contract generally provides for the future sale by one party
and purchase by the other party of a specified amount of a particular financial
instrument or currency at a specified price on a designated date. A stock index
futures contract is an agreement in which the seller of the contract agrees to
deliver to the buyer an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of the underlying stocks in the index is made.

Further information about futures contracts, including risks and investment
techniques, is provided in the Statement of Additional Information.

Options. VCA-2 may purchase and sell (i.e., write) put and call options on
equity securities, debt securities, securities indices, foreign currencies, and
financial futures contracts. An option gives the owner the right to buy or sell
securities at a predetermined exercise price for a given period of time.
Currently, the 1940 Act is interpreted to require that any options written by
investment companies, such as VCA-2, be "covered," which can be done in a
variety of ways, such as placing in a segregated account certain securities or
cash designed to "cover" VCA-2's obligation under the written option. Additional
explanation about techniques VCA-2 will use in connection with options is
provided in the Statement of Additional Information.

Although options will be primarily used to reduce fluctuations in the value of
VCA-2's investments (i.e., hedge) or to generate additional premium income, they
do involve certain risks. The investment adviser may not correctly anticipate
movements in the relevant markets, thus causing losses on VCA-2's options
positions. VCA-2's use of options is subject to other special risks, information
about which is provided in the Statement of Additional Information.

Real estate-related securities. VCA-2 may invest in securities secured by real
estate or shares of real estate investment trusts that are listed on a stock
exchange or reported on the National Association of Securities Dealers, Inc.
automated quotation system ("NASDAQ"). Such securities may be sensitive to
factors such as real estate values and property taxes, interest rates, cash flow
of underlying real estate assets, overbuilding, and the management skill and
creditworthiness of the issuer. They may also be affected by tax and regulatory
requirements, such as those relating to the environment.

Repurchase agreements. When VCA-2 purchases certain money market securities, it
may on occasion enter into a repurchase agreement with the seller wherein the

<PAGE>

seller and VCA-2 agree at the time of sale to a repurchase of the security at a
mutually agreed upon time and price. The period of maturity is usually quite
short, possibly overnight or a few days, although it may extend over a number of
months. The resale price is in excess of the purchase price, reflecting an
agreed-upon market rate of interest effective for the period of time the
Account's money is invested in the security, and is not related to the coupon
rate of the purchased security. Repurchase agreements may be considered loans of
money to the seller of the underlying security, which are collateralized by the
securities underlying the repurchase agreement. VCA-2 will not enter into
repurchase agreements unless the agreement is "fully collateralized," i.e., the
value of the securities is, and during the entire term of the agreement remains,
at least equal to the amount of the "loan" including accrued interest. VCA-2
will take possession of the securities underlying the agreement and will value
them daily to assure that this condition is met. The VCA-2 Committee has adopted
standards for the parties with whom it will enter into repurchase agreements
which it believes are reasonably designed to assure that such a party presents
no serious risk of becoming involved in bankruptcy or insolvency proceedings
within the time frame contemplated by the repurchase agreement. In the event
that a seller defaults on a repurchase agreement, VCA-2 may incur a loss in the
market value of the collateral as well as disposition costs; and, if a party
with whom VCA-2 had entered into a repurchase agreement becomes insolvent,
VCA-2's ability to realize on the collateral may be limited or delayed and a
loss may be incurred if the collateral securing the repurchase agreement
declines in value during the insolvency proceedings.

VCA-2 will not enter into repurchase agreements with Prudential or its
affiliates, including Prudential Securities Incorporated. This will not affect
VCA-2's ability to maximize its opportunities to engage in repurchase
agreements.

Reverse repurchase agreements and dollar roll transactions. VCA-2 may enter into
reverse repurchase agreements and dollar roll transactions. Reverse repurchase
agreements involve the sale of securities held by VCA-2 with an agreement by the
Account to repurchase the same securities at an agreed upon price and date.
During the reverse repurchase period, VCA-2 often continues to receive principal
and interest payments on the sold securities. The terms of each agreement
reflect a rate of interest for use of the funds for the period, and thus these
agreements have some of the characteristics of borrowing by VCA-2.

Dollar rolls involve sales by VCA-2 of securities for delivery in the current
month with a simultaneous contract to repurchase substantially similar
securities (same type and coupon) from the same party at an agreed upon price
and date. During the roll period, VCA-2 forgoes principal and interest paid on
the securities. VCA-2 is compensated by the difference between the current sales
price and the forward price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the initial
sale. A "covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures on
or before the forward settlement date of the dollar roll transaction. VCA-2 will
establish a segregated account with its custodian in which it will maintain
cash, U.S. Government securities or other liquid high-grade debt obligations
equal in value to its obligations in respect of reverse repurchase agreements
and dollar rolls.

Reverse repurchase agreements and dollar rolls involve the risk that the market
value of the securities retained by VCA-2 may decline below the price of the
securities VCA-2 has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities under a reverse repurchase agreement or dollar
roll files for bankruptcy or becomes insolvent, VCA-2's use of the proceeds of
the agreement may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce VCA-2's obligation to repurchase the
securities.

When-issued or delayed delivery securities. VCA-2 may, from time to time and in
the ordinary course of business, purchase or sell securities on a when-issued or
delayed delivery basis, that is, delivery and payment can take place a month or
more after the date of the transaction. VCA-2 will make commitments for such
when-issued or delayed delivery transactions only with the intention of
acquiring the securities. The Account's custodian will maintain in a separate
account portfolio securities having a value equal to or greater than any such
commitments. If VCA-2 were to dispose of the right to acquire a security it
could, as with the disposition of any security, incur a gain or loss due to
market fluctuations.

Short sales against the box. VCA-2 may make short sales of securities or
maintain a short position, provided that at all times when a short position is
open, VCA-2 owns an equal amount of the securities sold short or securities
convertible into or exchangeable, with or without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short (a "short sale against the box"); provided, that if
further consideration is required in connection with the conversion or exchange,
cash or U.S. Government securities in an amount equal to such consideration must
be put in a segregated account.

Other investment techniques. To the extent permitted by applicable regulations,
VCA-2 may also use forward foreign currency exchange contracts and interest rate
swaps. VCA-2 may also lend its portfolio securities from time to time.
Information about these investment techniques, including certain risks
associated with their use, is provided in the Statement of Additional
Information.

<PAGE>

C. DETERMINATION OF ASSET VALUE

The Accumulation Unit Value for VCA-2 will be determined once daily as of 4:15
p.m. Eastern time on each day that the New York Stock Exchange ("NYSE") is open
for trading. The NYSE is normally open for trading Monday through Friday except
for the days on which the following holidays are observed: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Any security for which the primary market
is on an exchange is generally valued at the last sale price on such exchange as
of the close of the NYSE (which is currently 4:00 p.m. Eastern time) or, in the
absence of recorded sales, at the mean between the most recently quoted bid and
asked prices. NASDAQ National Market System equity securities are valued at the
last sale price or, if there was no sale on such day, at the mean between the
most recently quoted bid and asked prices. Other over-the-counter equity
securities are valued at the mean between the most recently quoted bid and asked
prices.

Fixed income securities will be valued utilizing an independent pricing service
to determine valuations for normal institutional size trading units of
securities. The pricing service considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at securities valuations. Convertible debt securities
that are actively traded in the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, are
valued at the mean between the most recently quoted bid and asked prices
provided by an independent pricing service. Short-term investments having
maturities of sixty days or less are valued at amortized cost which, with
accrued interest, approximates market value. Amortized cost is computed using
the cost on the date of purchase, adjusted for constant accrual of discount or
amortization of premium to maturity. Portfolio securities for which market
quotations are not readily available will be valued at fair valueas determined
in good faith under the direction ofthe Committee.

AGREEMENT FOR INVESTMENT
MANAGEMENT SERVICES

Prudential acts as investment manager for VCA-2 pursuant to the Agreement for
Investment Management Services between Prudential and VCA-2 which was approved
initially by the Participants at their meeting on May 29, 1969, and most
recently renewed by unanimous vote of the Committee on November 22, 1996.

Subject to Prudential's supervision, substantially all of the services required
to be provided by Prudential under the Agreement for Investment Management
Services are furnished by PIC pursuant to a Service Agreement between them. This
Service Agreement was most recently renewed by unanimous vote of the Committee
at its meeting on November 22, 1996 and by the Participants on July 25, 1985.
PIC is registered as an investment adviser under the Investment Advisers Act of
1940.

Prudential continues to have responsibility for all investment advisory
services under its investment management agreement with the Account. Pursuant to
the service agreement between Prudential and PIC, Prudential reimburses PIC for
its costs and expenses.

The Agreement for Investment Management Services between Prudential and VCA-2:

A. must be specifically approved, at least annually, by the affirmative vote
of the VCA-2 Committee, cast in person at a meeting called for the purpose
of voting on such approval, which affirmative vote shall include the votes
of a majority of the members of the Committee who are not "interested
persons" of Prudential, its affiliates or VCA-2, within the meaning of the
1940 Act; and

B. may not be amended to increase the compensation paid to Prudential
thereunder without prior approval by a majority vote of persons having
voting rights in respect of VCA-2 (as defined by the 1940 Act), and by the
affirmative vote of the Committee cast and constituted as described in a.
above; and

C. will continue in effect from year to year unless it is terminated, without
payment of any penalty, on sixty days' written notice to Prudential, either
by the Committee or by a majority vote of persons having voting rights in
respect of VCA-2 (as defined by the 1940 Act), or unless it is terminated
by Prudential on ninety days' written notice to the Committee. It will also
terminate automatically in the event of its assignment. Termination of the
Agreement does not terminate Prudential's obligations to the
Contract-holders or the Participants under the Contracts.

The Service Agreement between Prudential and PIC:

A. will continue in effect as to VCA-2 for a period of more than two years
from its execution, only so long as such continuance is specifically
approved at least annually in the same manner as the Agreement for
Investment Management Services between Prudential and VCA-2.

B. may be terminated by either party upon not less than thirty days prior
written notice to the other party, will terminate automatically in the
event of its assignment and will terminate automatically as to VCA-2 in the
event of the assignment or termination of the Agreement for Investment
Management Services between Prudential and VCA-2.

<PAGE>

C. does not relieve Prudential of its responsibility for all investment
advisory services under the Agreement for Investment Management Services
between Prudential and VCA-2.

D. provides for Prudential to reimburse PIC for its costs and expenses
incurred in furnishing investment advisory services.

CHARGES

The purchase payments payable on behalf of a Participant will generally be set
forth in a salary-annuity agreement with his employer. Since the charges
discussed below may be a significant percentage of the purchase payments, a
person who is not reasonably certain of both his intention and ability to
continue as a Participant would be well-advised to refrain from participation
under the Contract.

Prudential and PIMS will be compensated for sales and administrative services in
the following manner:

First, ninety-seven and one-half percent (97.5%) of each purchase payment under
a Contract made on the Participant's behalf will be credited to his individual
accumulation account in the form of Accumulation Units. The remaining two and
one-half percent (2.5%), will be retained and used primarily for sales and other
marketing expenses. These maximum sales charges may be changed by Prudential on
90 days' notice (see Section D on pages 19 and 20).

Second, an annual administration charge will be deducted from each Participant's
individual accumulation account for recordkeeping and other administrative
expenses. Any such charge will be made on the last business day of the
accounting year if the Participant's account is still open. If the account is
cancelled before the end of the accounting year, any such charge will be made on
the date of cancellation. After such cancellation, a Participant may participate
again only as a new Participant and will be subject to a new annual
administration charge. The annual administration charge will be pro rated for
new Participants for the first year of their participation, based on the number
of full months in the accounting year remaining after the first contribution is
received. If the Participant's account is cancelled prior to the end of that
accounting year, however, this initial charge will not be pro rated.

The annual administration charge will not be greater than $30 annually, to be
divided between the Variable Contract and a fixed-dollar annuity contract (if
the Participant is enrolled under such a contract) as determined by Prudential.
This maximum charge may be changed by Prudential on 90 days' notice (see Section
D on pages 19 and 20).

The sales and annual administration charges described above may be reduced or
eliminated in connection with a particular Contract or Program, but only to the
extent that Prudential and PIMS estimate that they will incur lower sales or
administrative expenses or perform fewer sales or administrative services due to
economies arising from (1) the utilization of mass enrollment procedures or (2)
the performance of recordkeeping or sales functions by the Contract-holder or an
employee organization which Prudential and PIMS would otherwise be required to
perform or (3) an accumulated surplus of charges over expenses under the
Contract. The exact amount of the sales and annual administration charges
applicable to any Contract will be stated in the Contract.

Third, a daily deduction will be made from the value of a Participant's account
in an amount equal to a stated percentage of the current value of the account.
This is done in connection with the daily determination of the Accumulation Unit
Value (see page 11). A corresponding charge is made in computing monthly annuity
payments (see pages 16 through 19). This deduction (which will be in addition to
the investment management fee described below) will be equal to a percentage,
computed at an effective annual rate of 0.375% (3/8 of 1%), of the current
value of the Participant's account. Of this charge, 0.125% (1/8 of 1%) is for
assuming the mortality risks and 0.250% (1/4 of 1%) for assuming the expense
risks described below. This deduction may be changed by Prudential on 90 days'
notice except as described in Section D on pages 19 and 20.

Prudential is compensated for investment management services through deductions
from the value of the units of a Participant's accumulation account and from the
value of the Annuity Units payable monthly to an annuitant. Deductions are
computed daily at an effective annual rate of 0.125% (1/8 of 1%) of the current
value of an accumulation account and an equivalent charge is made monthly in
determining the amount of annuity payments.

Although variable annuity payments will vary in accordance with the investment
performance of VCA-2, they will not be affected by adverse mortality experience
or by an increase in Prudential's expenses (to an amount in excess of the
expense deductions provided for in the Contract). Prudential assumes the risk
(i) that annuitants as a class may live longer than had been estimated, so that
payments will continue for longer than had been anticipated, and (ii) that
deductions for sales and administrative expenses may be insufficient to cover
the actual costs of these items. In either case, the loss would

<PAGE>

fall on Prudential. On the other hand, the deductions that will be made for
sales, investment management and administrative expenses and for assuming
mortality and expense risks may exceed the cost that Prudential will ultimately
incur over the life of the Contract. As the actual experience under these
Contracts is realized, the amount of any excess will become known, and if it is
greater than the amount which must prudently be retained to fulfill Prudential's
contractual obligations, the balance becomes part of the divisible surplus of
Prudential (see "Participation in Divisible Surplus," page 20).

THE GROUP VARIABLE ANNUITY
CONTRACTS

Prudential will issue a Contract to the Contract-holder, which will ordinarily
be the employer of the Participants but may also be an association or trustee of
a trust representing them or their employers. Prudential will also issue a
certificate to the Contract-holder for delivery to each annuitant under the
Contract on the date his first annuity payment is made. The certificate will
describe the variable annuity benefits to which the annuitant is entitled under
the Contract. If any applicable law so requires, Prudential will issue a similar
certificate to the Contract-holder for delivery to each Participant for whom an
annuity has not yet been effected.

A. THE ACCUMULATION PERIOD

1. Crediting Accumulation Units; Deduction for Sales and Administrative
Expenses

When a person first becomes a Participant under the Contract, he must designate,
if there is a companion fixed-dollar annuity contract, what portion of the
purchase payments on his behalf is to be invested under the Variable Contract
and what portion is to be invested in the companion fixed-dollar annuity
contract. This designation may be changed from time to time.

During the accumulation period--the period before the commencement of annuity
payments--ninety-seven and one-half percent (97.5%) (see "Charges," pages 9 and
10) of each purchase payment allocated to the Variable Contract on behalf of the
Participant will be credited to an individual accumulation account maintained
for him in the form of Accumulation Units. The number of Accumulation Units
credited is determined by dividing ninety-seven and one-half percent (97.5%) of
the amount allocated, by the Accumulation Unit Value for the business day on
which the purchase payment is received by Prudential. The term "business day"
means a day on which the New York Stock Exchange is open for trading.

The initial contribution made for a Participant will be invested in VCA-2 no
later than two business days after it is received by Prudential and identified
as being for investment in VCA-2, if it is preceded or accompanied by enrollment
information in a form satisfactory to Prudential. If the Contract-holder submits
an initial contribution on behalf of one or more new Participants that is not
preceded or accompanied by satisfactory enrollment information, then Prudential
will allocate such contribution upon receipt to a money market option (which is
available contractually to the Contract-holder), and also will send a notice to
the Contract-holder that requests allocation information for each such
Participant. If the Contract-holder purchases only contracts that are issued
through VCA-2, or purchases such contracts together with either a group variable
annuity contract issued through Prudential's MEDLEY Program or unaffiliated
mutual funds, then contributions that are not preceded or accompanied by
satisfactory enrollment information will be invested in The Prudential Variable
Contract Account-11 ("VCA-11") within Prudential's MEDLEY Program. If the
Contract-holder purchases contracts that are issued through VCA-2 as well as
shares of a money market fund, then contributions that are not preceded or
accompanied by satisfactory enrollment information will be invested in the money
market fund. If the necessary enrollment information is not received in response
to its initial notice to the Contract-holder, Prudential will deliver up to
three additional notices to the Contract-holder at monthly intervals that
request such allocation information. After 105 days have passed from the time
that Units of VCA-11 (or, as the case may be, shares of the money market fund)
were purchased on behalf of Participants who failed to provide the necessary
enrollment information, Prudential will redeem the relevant VCA-11 Units (or
shares of the money market fund) and pay the proceeds (including earnings
thereon) to the Contract-holder. Any proceeds paid to the Contract-holder under
this procedure may be considered a prohibited and taxable reversion to the
Contract-holder under current provisions of the Internal Revenue Code of 1986,
as amended. Similarly, returning proceeds may cause the Contract-holder to
violate a requirement under the Employee Retirement Income Security Act of 1974,
as amended, to hold all plan assets in trust. Both problems may be avoided if
the Contract-holder arranges to have the proceeds paid into a qualified trust or
annuity contract.

The number of Accumulation Units credited to a Participant will not be affected
by any subsequent change in the value of an Accumulation Unit, but the dollar
value of an Accumulation Unit will vary from business day to business day
depending upon the investment experience of VCA-2. The number of Accumulation
Units will be reduced, however, as the result of the annual administration
charge, which will be made by cancelling that number of Accumulation Units which
is equal to the amount of the charge (see "Charges," pages 9 and 10) divided by
the Accumulation Unit Value for the business day on which the charge is made.
The annual administration charge is usually made on the last business day of
each accounting year. However, in certain circumstances (described below), such
charge will be made without reduction for

<PAGE>

the unexpired portion of the year, on the date a Participant's individual
accumulation account is cancelled, either because a variable annuity is effected
or otherwise.

2. Valuation of a Participant's Individual Accumulation Account

The value of a Participant's individual accumulation account on any day prior to
the commencement of annuity payments to him can be determined by multiplying the
total number of Accumulation Units credited to his account by the Accumulation
Unit Value for that day. Each Participant will be advised at least once during
the second and each subsequent accounting year of the number of Accumulation
Units credited to his account as of the end of the preceding accounting year and
of the Accumulation Unit Value at that time (see "Periodic Reports," page 20).

3. The Accumulation Unit Value

The Accumulation Unit Value on July 1, 1968, the inception of VCA-2, was
approximately $1.0102. The Accumulation Unit Value will be determined each
business day and represents the value of VCA-2's assets minus its outstanding
liabilities (including accrued fees and expenses) divided by the number of
outstanding Accumulation Units. Accumulation Unit values are determined before
giving effect to the day's allocations and withdrawals from VCA-2.

4. Discontinuance of Purchase Payments

Purchase payments on behalf of all Participants under any Contract may be
discontinued upon notice by the Contract-holder to Prudential. In addition, any
Participant may cause purchase payments on his behalf to be discontinued.

On 90 days' advance notice to the Contract-holder, Prudential may elect not to
accept any new Participant, or not to accept further contributions for existing
Participants under certain Contracts.

A Participant on whose behalf purchase payments have been discontinued may
either leave his individual accumulation account in force or exercise any of the
applicable options outlined below under the headings "Withdrawal (Redemption) of
Purchase Payments Prior to Death," below and on page 13, and "Transfer
Payments," pages 15 and 16.

5. Continuance Under Group Contract After Being Employed by New Employer

A Participant who becomes employed by a new employer which is eligible to
provide for tax-deferred annuities may enter into an agreement with such new
employer under which purchase payments can be continued under the Contract by
the new employer on behalf of the Participant.

6. Withdrawal (Redemption) of Purchase Payments Prior to Death

The Internal Revenue Code imposes restrictions on withdrawals from the Contract.
Pursuant to Section 403(b)(11) of the Code, amounts in the Participant's
accumulation account attributable to salary reduction contributions (including
the earnings thereon) that are made under the Contract after December 31, 1988
can only be withdrawn when the Participant attains age 59 1/2, separates from
service with his employer, dies or becomes disabled (within the meaning of
Section72(m)(7) of the Code). However, the Code permits the withdrawal at any
time of amounts attributable to salary reduction contributions (excluding the
earnings thereon) that are made after December 31, 1988, in the case of a
hardship. If the plan adopted by an employer under which a Participant is
covered contains a financial hardship provision, cash withdrawals from the
Contract can be made in the event of hardship.

Subject to any restrictions upon withdrawals contained in the plan adopted by an
employer under which a Participant is covered, a Participant can withdraw at any
time any amount up to the dollar value of his accumulation account as of
December 31, 1988. Post December 31, 1988 earnings on accumulations attributable
to salary reduction contributions are, however, subject to the Section
403(b)(11) withdrawal restrictions discussed above.

Subject to any conditions or limitations regarding transfers contained in the
plan adopted by an employer under which a Participant is covered, a Participant
can continue to make transfers of all or part of his accumulation account among
the available investment options offered by Prudential and can transfer directly
all or part of his interest in his accumulation account to a Section 403(b)
tax-deferred annuity contract of another insurance company or to a mutual fund
custodial account under Section 403(b)(7). (See "Transfer Payments," pages 15
and 16).

Furthermore, unless a plan adopted by an employer provides otherwise, the
Contract will provide that upon written request by any Participant, a single sum
cash payment will be made to him in any amount requested which is equal to or
less than the dollar value of his individual accumulation account attributable
to employer contributions or after tax Participant Contributions, if any, as of
the day Prudential receives notice of his request.

Withdrawal requests must be made on a form approved by Prudential (or may be
effected by telephone if the Program permits). If a Participant's account is
cancelled, the amount of this payment will be computed after deducting the full
annual administration charge that would otherwise be deducted at the end of the
accounting year. Such payment will be made within seven days after

<PAGE>

written notice of the Participant's request has been received, except as
deferment of such payment may be permitted under the provisions of the 1940 Act
as may be in effect from time to time. Currently, deferment is permissible only
when the New York Stock Exchange is closed or trading thereon is restricted,
when an emergency exists as a result of which disposal of the securities held in
VCA-2 is not reasonably practicable or it is not reasonably practicable for the
value of its assets to be fairly determined, or when the Securities and Exchange
Commission has provided for such deferment for the protection of Participants.
As of the day Prudential receives notice of the Participant's request, his
account will be reduced by the number of Accumulation Units obtained by dividing
the payment due by the Accumulation Unit Value for that day. The appropriate
address to which a written withdrawal request should be sent is set out in the
Summary of this Prospectus. Under certain Contracts, an entity other than
Prudential keeps certain records, and Participants under those Contracts must
contact the record-keeper with regard to withdrawals. See "Modified Procedures,"
page 16.

A Participant would be well-advised to obtain information about the federal
income tax consequences of any withdrawal and to check with a tax adviser
regarding the current state of the law before making a withdrawal. Generally, a
Participant who exercises his withdrawal rights will be taxed at ordinary income
rates on the amount withdrawn. In addition, withdrawals prior to age 59 1/2 will
generally be subject to a 10% premature distribution penalty tax. Certain
exceptions apply, however, and it is suggested that Participants consult a tax
adviser for additional information about this penalty tax before a withdrawal is
made. (See "Federal Tax Status," pages 20 and 21.) Prudential may process a
withdrawal from a Participant's individual accumulation account if Prudential
determines that the Participant's contributions exceed the amount permitted by
the Internal Revenue Code.

An employer may adopt a plan that limits the right of Participants to obtain
cash withdrawals upon request. Participants should ascertain whether their
employer has adopted such a plan and, if so, whether it includes withdrawal
limitations and what they are. Contracts issued to employers who have adopted
such plans will provide that requests for cash withdrawals for the benefit of
the Participants may be made by the Contract-holder, with the concurrence of the
Participant, and that payment of the amount requested, less any applicable
annual administration charge, will be made within seven days after Prudential
has received notice of the request.

Under certain types of Section 403(b) annuities, the Retirement Equity Act of
1984 requires that in the case of a married Participant, a withdrawal request
include the consent of the Participant's spouse. This consent must contain the
signatures of the Participant and spouse and must be notarized or witnessed by
an authorized Plan representative.

7. Systematic Withdrawal Plan

Subject to any restrictions upon withdrawals contained in the plan adopted by an
employer under which a Participant is covered, and subject to the restrictions
and limitations set forth below, a Participant may arrange for systematic
withdrawals to be made from his accumulation account. A Participant may arrange
for systematic withdrawals only if, at the time he elects to have such an
arrangement, the balance in his accumulation account is at least $5,000. A
Participant who has not reached age 59 1/2, however, may not elect a systematic
withdrawal arrangement unless he has first separated from service with his
employer. In addition, the $5,000 minimum balance does not apply to systematic
withdrawals made for the purpose of satisfying minimum distribution rules.

Generally, amounts withdrawn will be taxable at ordinary income tax rates. In
addition, withdrawals by Participants who have not reached age 59 1/2 will
generally be subject to a 10% premature distribution penalty tax. Withdrawals
made after the later of (i) a Participant's attaining age 70 1/2 and (ii) a
Participant's retirement, and certain withdrawals by beneficiaries must satisfy
certain minimum distribution rules. (See "Federal Tax Status," pages __ , and
"Death Benefits Before an Annuity is Effected, " pages __ .)

Systematic withdrawals may be arranged pursuant to an election on a form
approved by Prudential. Under certain types of Section 403(b) annuities, an
election to arrange for systematic withdrawals by a married Participant must be
consented to in writing by the Participant's spouse, with signatures notarized
or witnessed by an authorized plan representative. The election must specify
that the systematic withdrawals shall be made on a monthly, quarterly,
semi-annual, or annual basis.

All systematic withdrawals will be effected as of the day of the month specified
by the Contract-holder, or, if such day is not a business day, then on the next
succeeding business day. Systematic withdrawals will continue until the
Participant either has withdrawn all of the balance in his accumulation account
or has instructed Prudential in writing to terminate his systematic withdrawal
arrangement. The Participant may elect to make systematic withdrawals in equal
dollar amounts (in which case each withdrawal must be at least $250, unless it
is made to satisfy minimum distribution rules) or over a specified period of
time (at least three years). Where the Participant elects to make systematic
withdrawals over a specified period of time, the amount of each
withdrawal--which will vary, reflecting investment experience during the
withdrawal period--will be equal to the sum of the balance then in the
Participant's accumulation amount divided by the number of systematic
withdrawals remaining to be made during the withdrawal period.

A Participant may change the frequency, amount or duration of his systematic
withdrawals by submitting a form to Prudential that Prudential will provide to
him upon

<PAGE>

request. A Participant may make such a change only once during each calendar
year.

A Participant may at any time instruct Prudential to terminate the Participant's
systematic withdrawal arrangement, and no systematic withdrawals will be made
for him after Prudential has received his instruction. A Participant who chooses
to stop making systematic withdrawals may not make them again until the next
calendar year and may be subject to federal tax consequences.

An arrangement to make systematic withdrawals will not affect any of the
Participant's other rights under the Contracts, including the right to make
withdrawals (redemptions) as described on pages 12 and 13 of this Prospectus,
the right to make transfers as described on pages 15 and 16, and the right to
effect an annuity as described on pages 16 and 17.

Participants who have elected a systematic withdrawal may also continue to make
additional purchase payments. Purchase payments are generally reduced for sales
charges. See "Charges," pages 9 and 10. Participants should carefully review the
election of this option if they intend to continue making purchase payments and
consider the effect of sales charge expenses while making payments and
withdrawals at the same time. Different procedures may apply for Contracts under
which an entity other than Prudential provides record-keeping services. See
"Modified Procedures," page 16.

8. Texas Optional Retirement Program

Special rules apply with respect to Contracts covering persons participating in
the Texas Optional Retirement Program ("Texas Program") in order to comply with
the provisions of Texas law relating to the Texas Program.

Under the terms of the Texas Program, Texas will contribute an amount somewhat
larger than a Participant's contribution. Texas' contributions, less the sales
charge described on pages 9 and 10, will be credited to the Participant's
individual accumulation account. Until the Participant begins his second year of
participation in the Texas Program as a "faculty member" as defined in Section
31.001(8) of Title 110B of the Texas Revised Civil Statutes, Prudential will
have the right to withdraw the value of the Accumulation Units purchased for his
account with Texas' contributions. If the Participant does not commence his
second year of the Texas Program participation, the value of those Units will be
withdrawn and Texas' contributions returned to the state.

Pursuant to Section 36.105 of Title 110B of the Texas Revised Civil Statutes and
a ruling of the State Attorney General, withdrawal rights of Contracts issued
under the Texas Program are available only in the event of a Participant's
death, retirement or termination of employment in all institutions of higher
education as defined in Section 61.003 of the Texas Education Code. Participants
will not, therefore, be entitled to exercise the right of withdrawal in order to
receive in cash the values credited to them under the Contract unless one of the
foregoing conditions has been satisfied. The value of a Participant's interests
under the Contract may, however, be transferred to another Prudential contract
or contracts of other carriers approved under the Texas Program during the
period of the Participant's Texas Program participation. For certain Contracts,
a death benefit claim should be sent to a designated record-keeper rather than
to Prudential. See "Modified Procedures," page 16.

9. Death Benefits Before an Annuity is Effected

When a Participant dies, subject to receipt by Prudential of due proof of death
and to the submission of a claim for benefits on a form approved by Prudential,
his individual accumulation account balance (after deduction of the full annual
administration charge) will be used to provide a death benefit for his
beneficiary. The appropriate address to which a death benefit claim should be
sent is set out in the Summary section of this Prospectus.

Unless the Participant has directed otherwise, any beneficiary may elect to
apply the Participant's accumulation account balance (after deduction of the
full annual administration charge):

A. to receive a single sum cash payment of the dollar value of the
Participant's account as of the date such election is made and such proof
of death is received by Prudential. If a single sum payment is elected
within one year after the Participant's death, an additional payment will
be made, if necessary, so that the total paid is equal to the purchase
payments paid in, minus any withdrawals or transfers paid out;

B. to have a variable annuity effected for himself on a specified date on the
basis of the Participant's account, using the same annuity purchase rate
basis that would have applied if the account had been used to effect a
variable annuity for the Participant;

C. to receive regular payments in accordance with the systematic withdrawal
plan; or

D. a combination of all or any two of (a), (b) and (c).

The beneficiary must make his election in writing before the first anniversary
of the Participant's death or at any time before the expiration of two months
after Prudential receives due proof of such death, whichever is later. With
respect to benefits accruing after December 31, 1986, IRS Regulations under
Section 401(a)(9) of the Internal Revenue Code provide that a designated
beneficiary must begin to receive payments no later than the earlier of
(1) December 31 of the calendar year which contains the fifth anniversary of the
Participant's date of death or (2) December 31 of the calendar year in which
annuity

<PAGE>

payments would be required to begin to satisfy the minimum distribution
requirements described below. As of such date the election must be irrevocable
and must apply to all subsequent years.

However, if the election includes systematic withdrawals, the beneficiary will
have the right to terminate them and receive the remaining balance in cash (or
effect an annuity with it), or to change their frequency, size or duration,
subject to the limitations described below.

Under certain types of Section 403(b) annuities, the Retirement Equity Act of
1984 requires that, in the case of a married Participant, a death benefit be
payable to the Participant's spouse in the form of a "qualified pre-retirement
survivor annuity." A "qualified pre-retirement survivor annuity" is an annuity
for the lifetime of the Participant's spouse in an amount which can be purchased
with no less than 50% of the balance in the Participant's account as of his date
of death. Under the Retirement Equity Act, the spouse of a Participant in a
Section 403(b) annuity which is subject to these rules may consent to waive the
pre-retirement survivor annuity benefit. Such consent must acknowledge the
effect of waiving the coverage and contain the signatures of the Participant and
spouse and must be notarized or witnessed by an authorized Plan representative.
Unless the spouse of a Participant in a Plan which is subject to these
requirements properly waives the benefit, 50% of the Participant's account
balance will be paid to such spouse even if the designated beneficiary is
someone other than the spouse. Under these circumstances, the remaining 50% of
the Participant's account balance would be paid to the designated beneficiary.

With respect to benefits accrued before January 1, 1987, a beneficiary who
elects to have an annuity purchased for himself may choose from among the forms
of annuity described on pages 17 and 18. The beneficiary may elect to have an
annuity effected immediately or at a future date (but not later than his 70th
birthday, or, if later, two months after the date of his election to have an
annuity effected).

Benefits accruing after December 31, 1986 under a Section 403(b) annuity
contract are subject to required minimum distribution rules which specify the
time when payment of benefits must begin and the minimum amount which must be
paid annually. Generally, when a Participant dies before payment of benefits has
begun, the death benefit must be paid out entirely by December 31 of the
calendar year containing the fifth anniversary of the Participant's date of
death. Alternatively, a designated beneficiary may elect an annuity from among
Options 1, 2, or 4 described on page 17, with payments required to begin by
December 31 of the calendar year immediately following the calendar year in
which the Participant died or, if the Participant's spouse is the designated
beneficiary, December 31 of the calendar year in which the Participant would
have attained age 70 1/2, if later. Options 3 and 5 may not be chosen. In
addition, the duration of any period certain payments may not exceed the
beneficiary's life expectancy as determined under IRS Tables. If the amount
distributed to a beneficiary for a calendar year is less than the minimum
required amount, a federal excise tax is imposed equal to 50% of the amount of
the underpayment.

The requirements described above concerning the effecting of annuities or
annuity payments apply also to the commencement of a systematic withdrawal plan
and to withdrawals under it.

If the beneficiary elects to receive a single sum cash payment, such payment
will be made within seven days after the date of his election and receipt of due
proof of death, except in certain emergency situations when payment may be
deferred (see "Withdrawal (Redemption) of Purchase Payments Prior to Death,"
pages 12 and 13). A beneficiary who elects to have a variable annuity effected
for himself will have the right to cancel such election by so notifying
Prudential in writing at least 15 days prior to the date on which such annuity
would otherwise be effected, and, within seven days after receipt of such
notice, a single sum cash payment will be made to the beneficiary in the amount
of the dollar value of the Participant's account (after deducting the full
annual administration charge) as of the date the notice is received.

10. Transfer Payments

A. Unless restricted by the retirement arrangement under which a Participant
is covered, upon the written request or properly authorized telephone
transfer request of a Participant who is also covered by a group
fixed-dollar annuity contract, all or a portion of the Participant's
accumulation account will be transferred from the Variable Contract to the
fixed-dollar contract. As of the date Prudential receives such a request,
the portion of the Participant's accumulation account specified in his
request will be cancelled and, within seven days after such date, a
transfer payment of the dollar value of such amount will be made. There is
no minimum transfer amount. Prudential reserves the right to limit the
frequency of such transfer payments to the fixed-dollar contract.
Different procedures may apply for Contracts under which an entity other
than Prudential provides record-keeping services. See "Modified
Procedures," page 16.

B. Transfer payments may be made to a Participant's individual accumulation
account under the Variable Contract from either the group fixed-dollar
annuity contract, if any, or from a similar group annuity contract issued
by Prudential to another employer. All such transfer payments will be
treated as purchase payments made to VCA-2 on the business day on which
the transfer payment is

<PAGE>

made, except that no transfer payment will count as a purchase for
purposes of calculating sales charges. Prudential reserves the right to
limit the frequency of such transfer payments.

If a Participant who is also covered by a group fixed-dollar annuity
contract transfers an amount to the Participant's accumulation account,
the applicable contracts or the terms of the Participant's retirement
arrangement may provide that amounts transferred may not for 90 days
thereafter be transferred into an investment option deemed to be
"competing" with the fixed-dollar contract with respect to investment
characteristics.

C. If a Participant ceases to be employed by a Contract-holder and becomes
an employee of another employer whose employees are covered under a
similar group annuity contract issued by Prudential, the Participant may
request on a form approved by Prudential that Prudential make a transfer
payment from his individual accumulation account to such similar contract,
in an amount equal to the dollar value of the Participant's account as of
the date Prudential receives his request. The transfer payment described
in this paragraph will be made without charge within seven days after
Prudential receives the Participant's transfer request, and the
Participant's account will be cancelled accordingly. If such a transfer is
made, the provisions of the substituted contract will be applicable to
him.

D. The Contract provides that upon discontinuance of purchase payments for
all Participants thereunder (see "Discontinuance of Purchase Payments,"
page 12) the Contract-holder may on a form approved by Prudential request
Prudential to make transfer payments from VCA-2 to a designated alternate
funding agency. Each Participant and each beneficiary of a deceased
Participant for whom an individual accumulation account remains in force
under the Contract will be notified promptly that such a request has been
received. Each recipient of such a notice may within thirty days of such
receipt elect in writing on a form approved by Prudential to have his
account transferred to the alternate funding agency. If he does not so
elect, his account will continue in force under the Contract. The
accumulation account of any Participant or beneficiary who does so elect
will be cancelled as of a "transfer date," which is the business day
specified in the Contract-holder's request or 90 days after Prudential
receives the request, whichever is later. A single liquidation account for
the Contract will be established equal to the sum of the individual
accumulation accounts so cancelled (after deducting the full annual
administration charge from each such account). Beginning on the transfer
date and each month thereafter until the liquidation account is exhausted,
an allocation will be made from the liquidation account of not less than
the number of Accumulation Units equal in value to two million dollars or
3% of the number of Accumulation Units in such account on the transfer
date, whichever is greater (or the total amount of Accumulation Units in
the liquidation account, if less). Upon each such allocation, the number
of allocated Accumulation Units will be cancelled and a transfer payment
will be made which is equal to 100% of the product of (i) the number of
Accumulation Units so allocated, and (ii) the Accumulation Unit Value for
the date of allocation. Each transfer payment will be made to the
designated alternate funding agency within seven days of the date of
allocation.

Under certain types of Section 403(b) annuities, the Retirement Equity Act of
1984 provides that, in the case of a married Participant, a request for transfer
payments (other than to the group fixed dollar annuity contract) must include
the consent and signatures of the Participant and spouse and must be notarized
or witnessed by an authorized Plan representative.

11. Telephone Requests.

Certain Programs may allow Participants to effect transfers and other Account
transactions by telephone and telecopy. If the Program offers telephone
privileges, each Program Participant will automatically receive such privileges
unless he or she declines those privileges on a form that will be supplied by
the Contract-holder or Prudential. For the Participant's protection and to
prevent unauthorized exchanges, telephone calls will be recorded and the
Participant will be asked to provide his or her personal identification number
or other identifying information. A written confirmation of a transfer will be
sent to the Participant. Neither the Account 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. Telephone
privileges are available only if the Contract-holder has so elected and only in
states where these privileges may legally be offered. The safeguards discussed
above that are employed by the Account are designed to minimize unauthorized
exercise of these privileges. During times of extraordinary economic or market
changes, telephone or telecopy instructions may be difficult to implement.

12. Modified Procedures

Under certain Contracts, the Contract-holder or a third party acting on their
behalf provides record-keeping services that would otherwise be performed by
Prudential. Such Contracts may require procedures somewhat different than those
set forth in this Prospectus. For example, such Contracts may require that
contribution allocation requests, withdrawal requests, and/or transfer requests
be directed to the Contract's record-keeper

<PAGE>

rather than Prudential. The record-keeper is the Contract-holder's agent, not
Prudential's agent. Accordingly, transactions will be processed and priced as of
the end of the valuation period in which Prudential receives appropriate
instructions and/or funds from the record-keeper. Any such different procedures
will be set forth in the Contract.

13. EXCHANGE OFFER WITH THE PMF FUNDS

PRUDENTIAL MAY OFFER CERTAIN OPEN-END MANAGEMENT INVESTMENT COMPANIES-GENERALLY
REFERRED TO AS MUTUAL FUNDS-AS AN ALTERNATIVE INVESTMENT VEHICLE FOR EXISTING
VCA-2 CONTRACT-HOLDERS. THESE FUNDS ARE MANAGED BY PRUDENTIAL MUTUAL FUND
MANAGEMENT, LLC, AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF PRUDENTIAL
(COLLECTIVELY, THE "PMF FUNDS"). IF THE CONTRACT-HOLDER ELECTES TO MAKE ONE OR
MORE OF THE PMF FUNDS AVAILABLE TO ITS PARTICIPANTS, PARTICIPANTS WILL BE GIVEN
THE OPPORTUNITY TO DIRECT NEW CONTRIBUTIONS TO THOSE PMF FUNDS.

PRUDENTIAL MAY PERMIT PARTICIPANTS TO EXCHANGE ANY OR ALL AMOUNTS IN THEIR
CURRENT INDIVIDUAL ACCUMULATION ACCOUNTS FOR SHARES OF THE PMF FUNDS WITHOUT THE
IMPOSITION OF ANY SALES LOAD OR OTHER FEE (A "VCA-2 TO PMF EXCHANGE"). IN
ADDITION, PRUDENTIAL MAY PERMIT PARTICIPANTS TO EXCHANGE ANY OR ALL AMOUNTS IN
THEIR PMF FUNDS TO VCA-2 (A "PMF-TO-VCA-2 EXCHANGE") WITHOUT THE
IMPOSITION OF ANY SALES LOAD OR OTHER FEE.)

PRUDENTIAL WILL DETERMINE THE TIME PERIODS FOR WHICH ANY EXCHANGE OFFER WILL BE
AVAILABLE AND THE OTHER TERMS OF THE OFFER. PRUDENTIAL MAY, FOR EXAMPLE,
ESTABLISH FIXED PERIODS OF TIME FOR EXCHANGES UNDER A PARTICULAR CONTRACT (AN
"OPEN WINDOW'). THIS EXCHANGE OFFER IS SUBJECT TO TERMINATION AND ITS TERMS ARE
SUBJECT TO CHANGE.

IF A PARTICIPANT EXCHANGES ALL OF THE AMOUNT IN HIS VCA-2 INDIVIDUAL
ACCUMULATION ACCOUNT FOR SHARES OF PMF FUNDS, THE ANNUAL ADMINISTRATIVE CHARGE,
WHICH IS ASSESSED AT THE END OF EACH ADMINISTRATION YEAR, MAY BE DEDUCTED FROM
THE PARTICIPANT'S PMF FUND ACCOUNT(S).

BEFORE DECIDING WHETHER TO EXCHANGE ANY OR ALL OF THEIR EXISTING VCA-2
ACCUMULATION UNITS FOR SHARES OF ANY PMF FUND, PARTICIPANTS SHOULD CAREFULLY
READ THE RELEVANT PMF FUND PROSPECTUS. PARTICIPANTS SHOULD UNDERSTAND THAT THE
PMF FUNDS ARE REGISTERED MANAGEMENT INVESTMENT COMPANIES (I.E. MUTUAL FUNDS)
OFFERED DIRECTLY TO QUALIFIED PLANS, CERTAIN INSTITUTIONAL INVESTORS AND
OTHERS'. THEY ARE NOT FUNDING VEHICLES FOR VARIABLE ANNUITY CONTRACTS. THUS,
PARTICIPANTS INVESTING IN THE PMF FUNDS WILL NOT HAVE THE FEATURES OF AN ANNUITY
CONTRACT OR CERTAIN ANNUITY-RELATED PROVISIONS, AS THEY DO UNDER THE VCA-2
PROGRAM.

IN PRUDENTIAL'S OPINION, THERE SHOULD BE NO ADVERSE TAX CONSEQUENCES IF A
PARTICIPANT IN A QUALIFIED RETIREMENT ARRANGEMENT ELECTS TO EXCHANGE AMOUNTS IN
THE PARTICIPANT'S CURRENT VCA-2 INDIVIDUAL ACCUMULATION ACCOUNT(S) FOR SHARES OF
PMF FUNDS OR VICE VERSA.

VCA-2-TO-PMF EXCHANGES WILL BE EFFECTED FROM A 403(B) ANNUITY CONTRACT TO A
SECTION 403(B)(7) CUSTODIAL ACCOUNT (TAX DEFERRED ANNUITY FUNDS UNDER THE PMF
FUNDS) SO THAT SUCH TRANSACTIONS WILL NOT CONSTITUTE TAXABLE DISTRIBUTIONS.
CONVERSELY, PMF-TO-VCA-2 EXCHANGES WILL BE EFFECTED FROM A 403(B)(7) CUSTODIAL
ACCOUNT TO A 403(B) ANNUITY CONTRACT SO THAT SUCH TRANSACTIONS WILL NOT
CONSTITUTE TAXABLE DISTRIBUTIONS. HOWEVER, PARTICIPANTS SHOULD BE AWARE THAT
THERE MAY BE MORE RESTRICTIVE RULES ON EARLY WITHDRAWALS FROM SECTION 403(B)(7)
CUSTODIAL ACCOUNTS UNDER THE PMF FUNDS THAN UNDER THE VCA-2 PROGRAM.

Prudential also may make available to VCA-2 Contract-holders certain mutual
funds that are not affiliated with Prudential. If such mutual funds are made
available, Prudential may permit Participants to exchange any or all amounts
in their current individual accumulation accounts for shares of such
unaffiliated mutual funds (and also may permit exchanges from those mutual
funds into VCA-2). Any such exchanges would be effected without the imposition
of any sales load or other fee, and may be conducted in accordance with such
other terms and conditions as Prudential may determine. The tax consequences
associated with these exchanges involving unaffiliated mutual funds are
comparable to those discussed above in connection with exchanges involving the
PMF Funds. With respect to unaffiliated fund exchanges, VCA-2-to-PMF
Exchanges, and PMF-to-VCA-2 Exchanges, Contract-holders and Participants are
encouraged to consult a qualified tax advisor for complete tax information and
advice.

B. THE ANNUITY PERIOD

1. Variable Annuity Payments

Variable annuity payments are determined on the basis of (i) the value of the
Participant's accumulation account on the date it is applied to effect an
annuity, reflecting the investment performance of VCA-2 to that date, (ii) any
taxes on annuity considerations applicable when the annuity is effected, (iii) a
schedule of annuity rates specified in the Contract (see "Schedule of Variable
Annuity Purchase Rates," page 19), and (iv) the investment performance of VCA-2
after the annuity has been effected. The amount of the variable annuity payments
will not be affected by adverse mortality experience or by an increase in
Prudential's expenses in excess of the expense deductions provided for in the
Contract. The annuitant will receive the value of a fixed number of Annuity
Units each month. Changes in the value of such Units, and thus the amounts of
the monthly annuity payments, will reflect investment gains and losses and
investment income occurring after the date on which annuity payments commence.

2. Electing the Annuity Date and the Form of Annuity

Subject to the withdrawal restrictions discussed above (See "Withdrawal
(Redemption) of Purchase Payments Prior to Death," pages 12 and 13), a
Participant may at any time elect to have a variable annuity effected for him
under the Contract. A beneficiary may make a similar election (see "Death
Benefits Before an Annuity is Effected," pages 14 and 15). It may also be
possible to effect a fixed-dollar annuity if there is a companion fixed-dollar
contract to which a transfer payment may be made (see "Transfer Payments," pages
15 and 16).

In electing to have a variable annuity effected, the Participant may select from
the available forms of annuity described below. With respect to benefits
accruing after December 31, 1986, the duration of any period certain payments
may not exceed the life expectancy of the Participant or, if there is a
designated beneficiary, the joint life and last survivor expectancy of the
Participant and his designated beneficiary as determined under IRS Tables. In
addition, IRS Proposed Regulations under Section 401(a)(9) of the Internal
Revenue Code specify the maximum permissible duration of any period certain
payments and the maximum survivor benefit payable under a joint and survivor
annuity (expressed as a percentage of the benefit originally payable). The
annuity is effected on the first day of the second month following receipt by
Prudential of written notice that the Participant or beneficiary has elected to
have an annuity effected or on the first day of any subsequent month designated
by the Participant or beneficiary. Any such notice must be on a form approved by
Prudential and should include all the information Prudential requires to effect
the annuity. The first monthly annuity payment will be made to an annuitant on
the date an annuity is effected for him.

Under certain types of Section 403(b) annuities, the Retirement Equity Act of
1984 provides that, in the case of a married Participant, the election of a
payout which is not a qualified joint and survivor annuity must include the
consent and signatures of the Participant and spouse and must be notarized or
witnessed by an authorized Plan representative. A "qualified joint and survivor
annuity" is an annuity for the Participant's lifetime with at least 50% of the
amount payable to the Participant during his lifetime payable to his spouse, if
living at the Participant's death.

If the dollar amount of the first monthly payment of an annuity effected under
the Contract would be less than the minimum amount specified in the Contract,
Prudential at its option may, in lieu of making any annuity payment whatsoever,
consider that the person who would receive the annuity had requested a
withdrawal of the individual accumulation account that would otherwise have been
applied to effect the annuity, as of the date the annuity was to begin.

Once annuity payments have commenced to an annuitant under Options 1, 2, 3 or 5
described below, the annuitant cannot surrender his annuity benefit and receive
a single sum payment in lieu thereof. An annuitant under Option 4 may, by
written request, surrender his annuity benefit and receive the commuted value of
the unpaid payments-certain. Under Options 2, 4 or 5, the annuitant's
beneficiary may, by a written request made after the death of the annuitant,
surrender his annuity benefit and receive the commuted value of the unpaid
payments-certain due him. The annuitant's beneficiary may also receive a lump
sum payment under certain circumstances as described below.

3. Deductions for Taxes on Annuity Considerations

Some states impose a premium tax with respect to annuity contracts. The tax
rates in those jurisdictions that impose a tax generally range from 0.5% to 5%.
When an annuity is effected, any applicable taxes on annuity considerations will
be deducted from the amount applied.

4. Available Forms of Variable Annuity

Option 1--variable life annuity. This is an immediate annuity payable monthly
during the lifetime of the annuitant and terminating with the last monthly
payment preceding his death. This option offers a higher level of

<PAGE>

monthly payments than Option 2, Option 3 or Option 5 because no further payments
are payable after the death of the annuitant. It would be possible under this
option for the annuitant to receive only one annuity payment if he died (in an
automobile accident, for example) within the first month after the annuity was
effected. Therefore, a life annuity under this option is generally appropriate
only for someone who has no dependents and wants higher income during his
lifetime.

Option 2--variable life annuity with 120 or 180 payments certain. This is an
immediate annuity payable monthly during the lifetime of the annuitant with the
guarantee that if, at the death of the annuitant, payments have been made for
less than the period-certain (which may be 120 or 180 months, as selected by the
annuitant), they will be continued during the remainder of the selected period
to his beneficiary.

Option 3--variable joint and survivor annuity. This is an immediate annuity
payable monthly during the lifetime of the annuitant with payments continued
after his death to his contingent annuitant, if surviving, for the latter's
lifetime. The payments continued to the contingent annuitant may be based on
100% of the Annuity Units originally payable each month, or a lower percentage
such as 50%, if the annuitant so elects.

Option 4--variable annuity-certain. This is an immediate annuity payable monthly
for a period-certain of 120 months. If the annuitant dies during the
period-certain, payments will be continued to his beneficiary, but no further
payments are payable after the end of the period-certain. Since Prudential
assumes no mortality risks under Option 4, it makes no mortality risk charges in
determining annuity purchase rates for this option.

Option 5--variable joint and survivor annuity with 120 payments certain. This is
an immediate annuity payable monthly during the lifetime of the annuitant with
payments continued after his death to his contingent annuitant, if surviving,
for the latter's lifetime. The payments to the contingent annuitant prior to the
expiration of the period-certain will be based on 100% of the Annuity Units
originally payable each month. Thereafter, they will be based on the same
percentage or a lower percentage such as 50%, if the annuitant so elects. If
both the annuitant and the contingent annuitant die before 120 payments have
been made, payments will be continued during the remainder of the 120-month
period to the properly designated beneficiary.

If the dollar amount of the first monthly payment to a beneficiary is less than
the minimum amount specified in the Contract or if in Options 2, 4 and 5, the
beneficiary is other than a natural person receiving payments in his own right
or is an estate, Prudential may elect to pay the commuted value of the unpaid
payments-certain in one sum.

5. The Annuity Unit

On the date a variable annuity is effected for any Participant or his
beneficiary, his accumulation account is cancelled and the full annual
administration charge withdrawn. The aggregate value of the remaining
Accumulation Units in the Participant's accumulation account is determined. This
value, less any applicable taxes on annuity considerations, is then applied to
provide an annuity under which each payment will be the value of a specified
number of Annuity Units. The Annuity Unit Value is discussed in the following
section. The determination of each payment is discussed under "Schedule of
Variable Annuity Purchase Rates," page 19.

6. The Annuity Unit Value

The Annuity Unit Value for the month of June, 1968 was approximately $1.0102.
The Annuity Unit Value for any subsequent month is determined as of the end of
the month by multiplying the Annuity Unit Change Factor for the month (see
below) by the Annuity Unit Value for the preceding month. The Annuity Unit Value
applicable to annuity payments due during any month is the Annuity Unit Value
for the second preceding month. The Annuity Unit Value differs from and is
necessarily smaller than the Accumulation Unit Value since the Annuity Unit
Value must be reduced by the Assumed Investment Result as discussed in the
following sections.

7. The Annuity Unit Change Factor for Any Month

The Annuity Unit Change Factor for any month is obtained by (a) adding to 1.00
the rates of investment income earned, if any, after applicable taxes (currently
none--see "Federal Tax Status," pages 20 and 21), and of asset value changes in
VCA-2 during the period from the end of the preceding month to the end of the
current month, (b) deducting from such sum the rate of investment management fee
for the number of days in the current month, computed at an effective annual
rate of 0.125% (1/8 of 1%), and (c) dividing such difference by the sum of 1.00
and the rate of interest for one-twelfth of a year, computed at the effective
annual rate specified in the Contract as the Assumed Investment Result (see
below). The result of this division is the Annuity Unit Change Factor for the
month. (Items (a) and (b) for a given month are equivalent to items (a) and (b)
used during such month to derive Accumulation Unit Change Factors. See page 11).

8. Assumed Investment Result

In order to convert the value of an accumulation account into an annuity and to
determine the initial payment, it is necessary to use an appropriate annuity
purchase rate (as discussed below and on page 19) which is based on, among other
things, an interest rate. The greater the assumed interest rate, the greater the
initial annuity payment provided by a given amount applied, since the

<PAGE>

annuity payments are supported by the amount applied and the investment result
on that amount.

Where the annuity is a variable annuity, the payments remain level only if the
actual investment results each month thereafter are at the assumed rate. If, for
any month, the actual rate is greater, the payments increase. If the actual rate
is less, the payments decrease. For the variable annuities under the Contract,
the selection of the Assumed Investment Result is not made by Prudential but by
the Contract-holder who may choose, for example, 4 1/2% as the annual rate.
Rates of 3 1/2%, 4%, 5% and 5 1/2% may also be selected. Annuity purchase rates
appropriate for the Assumed Investment Result selected by the Contract-holder
will be inserted in the Contract.

The selection should reflect the Contract-holder's conservative estimate of the
average investment result that may be obtained from a diversified portfolio of
common stocks in a relatively stable economy. If a Contract-holder selects a
high Assumed Investment Result, the dollar amount of the first variable annuity
payment to each annuitant under that Contract will be greater than if the
Contract-holder has selected a lower Assumed Investment Result. For example, for
a given amount applied, a 4 1/2% assumption produces a first monthly payment (in
dollars) higher by about 8 or 9% than a 3 1/2% assumption. The offset to this
higher initial payment is that, in reflecting the investment results of VCA-2,
the variable annuity payments resulting from the 3 1/2% assumption will increase
at a faster rate or decrease at a slower rate than the variable annuity payments
resulting from the 4 1/2% assumption. The lower Assumed Investment Result
produces greater income later in life than does a higher assumption, and it may
be that in later years a retired person will have the greatest need for more
dollars of income.

As may be seen from the description of the Annuity Unit Change Factor in the
preceding section, the change each month in the Annuity Unit Value depends on
the extent to which the actual investment results of VCA-2, including investment
income and market value changes, differ from the Assumed Investment Result
selected by the Contract-holder. If the actual results are at a rate greater
than the monthly equivalent of the assumed result, the Annuity Unit Value
increases, thereby increasing the dollar amount of the monthly variable annuity
payment. If the actual investment results are at a rate lower than the Assumed
Investment Result, the Annuity Unit Value decreases, thereby decreasing the
dollar amount of the monthly payment.

Once the Assumed Investment Result is fixed under a Contract, it applies to all
annuitants covered by that Contract. However, the Contract may be amended with
respect to all annuities effected after the amendment.

9. Schedule of Variable Annuity Purchase Rates

The annuity rates contained in the schedules of the Contract show how much
annuity is provided by the application of a given amount.

On July 6, 1983 the Supreme Court of the United States rendered a decision that
prohibits employers from providing for periodic retirement payments that vary in
amount depending upon the sex of the employee, to the extent that those payments
are derived from contributions made on or after August 1, 1983. While the
decision by its terms applies only to employers subject to the provisions of
Title VII of the Civil Rights Act of 1964, namely those with 15 or more
employees, it may be applicable to employers with fewer than 15 employees. To
facilitate employer compliance with the decision, Prudential has amended its
Group Tax-Deferred Variable Annuity Contracts issued through The Prudential
Variable Contract Account-2. The amendment provides for annuity purchase rates
that do not vary with the sex of the annuitant with respect to purchase payments
made under the Contracts on and after August 1, 1983. Thus, as a result of this
amendment, if a Participant's Annuity Units include Annuity Units derived from
purchase payments made before August 1, 1983, those Annuity Units are applied to
effect a variable annuity using schedules which take into account the date on
which the annuity is effected, the form of annuity selected, and the date of
birth and sex of the annuitant and of the contingent annuitant, if any. Any
remaining Annuity Units are applied using schedules which take into account the
form of annuity selected, the effective date and the relevant dates of birth,
but not the sex of any person. If a Participant's Annuity Units are derived
solely from purchase payments made either before August 1, 1983 or on and after
August 1, 1983, only one schedule of annuity rates is used. The dollar amount of
each monthly payment of the variable annuity will be equal to the number of
Annuity Units in each portion of the variable annuity payment, multiplied by the
Annuity Unit Value applicable to annuity payments due in the month.

Here are a few sample rates for an Assumed Investment Result of 4 1/2% from the
schedules in use for variable annuities effected in 1996 under Contracts entered
into on or after May 1, 1980. (More favorable results would be obtained for
variable annuities effected in 1996 under Contracts entered into prior to May 1,
1980). They show the number of Annuity Units payable each month resulting from
an accumulation, after reduction by the full annual administration charge and
applicable taxes on considerations, equivalent in value to 10,000 Annuity Units,
being applied to purchase the annuity.

Post--7/31/83 Pre--8/1/83
Annuity Units Annuity Units
------------- -------------
Type of Annuity Annuitant Age 65 Male 65 Female 65
Life Annuity with 120
Payments Certain 56.61 63.03 54.26
Life Annuity with 180
Payments Certain 54.14 58.71 52.41

<PAGE>

The interest rate used in constructing the schedules of annuity rates equals the
Assumed Investment Result less 0.375% (3/8 of 1%), which corresponds to the
daily deductions from accumulation accounts, also at an effective annual rate of
0.375% (3/8 of 1%), for assuming mortality and expense risks. The mortality
rates are based on the Prudential 1950 Group Annuity Valuation Table, with
adjustments to allow for improvements in mortality. In the case of the schedules
applicable to the variable annuity-certain option (the fourth option listed
under "Available Forms of Variable Annuity," pages 17 and 18), the interest rate
used is equal to the Assumed Investment Result less 0.25% (1/4% of 1%), to
reflect the absence of any charge for the mortality risk. The annuity purchase
rates may be changed by Prudential, except as described in section D following.
While the Contract, in keeping with the preceding discussion, expresses the
schedule of annuity purchase rates in terms of annuity units, it may be helpful
to describe the application of these schedules in terms of the dollar amount of
the monthly annuity payment due one month after the date on which an annuity is
effected. For each $1,000 applied on the effective date, the dollar amount of
this monthly payment is shown in the following table.

Post--7/31/83 Pre--8/1/83
Annuity Units Annuity Units
------------- -------------
Type of Annuity Annuitant Age 65 Male 65 Female 65
Life Annuity with 120
Payments Certain $5.651 $6.303 $5.426
Life Annuity with 180
Payments Certain $5.414 $5.871 $5.241

Subsequent payments will be more or less depending upon the investment results
of the Account.

C. ASSIGNMENT

Unless contrary to applicable law, the right to any payment under the Contract
is neither assignable nor subject to the claim of any creditor.

D. CHANGES IN THE GROUP VARIABLE ANNUITY CONTRACT

The Contract provides that Prudential may limit the frequency of transfers to or
from the companion fixed-dollar contract, if any. The Contract also reserves to
Prudential the right to change the annual administration charge, uniformly
applicable to all accumulation accounts, and the percentage deducted from each
future purchase payment for sales expenses.

The Contract also provides that Prudential may change the annuity purchase
rates, may change the 0.375% (3/8 of 1%) charge described on page 10, and may
impose a redemption charge on any withdrawal or transfer payment provided by the
Contract. Any such change will apply only to Accumulation Units credited after
such change becomes effective, except that the initial basis will continue to
apply to all Accumulation Units credited before the fifth Contract anniversary
to any person who was a Participant before such change became effective, or
credited before such Participant makes a withdrawal, if sooner.

Changes discussed in this section become effective 90 days after notice thereof
has been given to the Contract-holder. Each person to whom the change is
applicable will also be notified.

It should be realized that the initial schedules of annuity purchase rates
remain in effect indefinitely with respect to all purchase payments made before
a change in rates. Since purchase payments on behalf of a Participant may be
made long before any annuity is effected for him and since his annuity payments
may continue long after that date, this risk assumed by Prudential extends many
years into the future.

Although the Contract may be changed at any time by agreement between Prudential
and the Contract-holder, no such change may adversely affect rights with respect
to Accumulation Units credited or variable annuities effected prior to the
effective date of the change (unless the change is made to comply with a law or
government regulation or the consent of each Participant is obtained).

The Contract provides that if at any time an investment manager other than
Prudential is selected for VCA-2, Prudential may determine that no new
Participants will become covered under the Contract.

E. PERIODIC REPORTS

Participants will be sent semi-annual reports showing the financial condition of
VCA-2 including the investments held in the account. Each Participant will also
be sent, at least annually, a statement of the number of Accumulation Units
credited to his account as of the end of the preceding accounting year.

F. PARTICIPATION IN DIVISIBLE SURPLUS

A mutual life insurance company differs from a stock life insurance company in
that it has no stockholders who are the owners of the enterprise.

A contract-holder of Prudential participates in the divisible surplus of
Prudential, according to the annual determination of the Board of Directors as
to the portion, if any, of the divisible surplus of Prudential which has accrued
on the contract. In the case of Contracts described herein, any surplus
determined to be payable as a dividend is credited to the persons participating
under such Contracts.

No assurance can be given as to the amount of divisible surplus, if any, that
will be available for distribution under these Contracts in the future. The
determination of such surplus is within the sole discretion of Prudential's
Board

<PAGE>

of Directors. When any payments of divisible surplus are made, they may take the
form of additional payments to annuitants and additions to the accounts of other
Participants and beneficiaries. The only payments of divisible surplus made to
date have taken the form of additional payments to annuitants.

Such payments amounted to $_____ during 1996. This amount represented __% of the
total amount of annuity payments from VCA-2 in 1996. The increase in the amount
received by individual annuitants varied from the __%, depending on their age,
sex and form of annuity. The equivalent figures for 1995 were $12,650 and .42%
and for 1994 were $13,605 and .5%.

FEDERAL TAX STATUS

In the opinion of counsel, under the Internal Revenue Code, the operations of
VCA-2 form a part of and are taxed with the operations of Prudential. A ruling
to this effect has been received from the Internal Revenue Service. The effect
of this basis of taxation is that the Accumulation and Annuity Unit Values are
not reduced by federal income taxes under current law.

In the opinion of counsel, the Contract meets the requirements of Section 403(b)
of the Internal Revenue Code. Contributions on behalf of a Participant under
such a Contract are excludable from the Participant's gross income to the extent
the contributions do not exceed the "exclusion allowance" specified in the Code.
A further limit of $9,500 generally applies to salary reduction contributions.
Section 415 of the Code also imposes an overall limit on the maximum annual
contribution which can be made to the Contract by or on behalf of a Participant.
Generally, this limit on annual contributions is the lesser of $30,000 or 25% of
his compensation. Increases in the Accumulation and Annuity Unit Values are not
includable in the Participant's gross income in the year credited. Amounts
distributed to a Participant in the form of an annuity or otherwise are
includable in the Participant's gross income when received and are taxed at
ordinary income rates. However, an exclusion from federal income tax is provided
for distributions attributable to contributions which were includable in the
Participant's gross income when they were originally made.

In general, a death benefit consisting of amounts paid to a Participant's
beneficiary is includable in the Participant's estate for federal estate tax
purposes.

Benefits accruing after December 31, 1986 under Section 403(b) annuity contracts
are subject to required minimum distribution rules which specify the time when
payment of benefits must begin and the minimum amount which must be paid
annually. These rules apply to Participants and to beneficiaries. Generally,
payment of benefits to Participants must begin no later than April 1st of the
calendar year following the later of (i) the year the employee retires, or (ii)
the year in which the Participant attains age 70 1/2. If the Participant dies
before the entire interest in the contract has been distributed, the remaining
interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of death. If the Participant dies before
payment of benefits has begun (or is treated as having begun) the entire
interest must be distributed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death. Alternatively, if there is a
designated beneficiary, the designated beneficiary may elect to receive payments
beginning no later than December 31 of the calendar year immediately following
the year in which the Participant died and continuing for the beneficiary's life
or a period not exceeding the beneficiary's life expectancy. If the
Participant's spouse is the designated beneficiary, payments can be deferred
until December 31 of the year in which the Participant would have attained age
70 1/2. An excise tax applies to Participants or beneficiaries who reach the
date when distributions are required to begin and fail to take the required
minimum distribution in any calendar year.

Payers of pension distributions (including insurance companies) are required to
withhold taxes on pension and annuity payments. This applies to payments made
under a tax-deferred annuity program (including total or partial withdrawals).

Certain distributions from qualified plans under Section 403(b) of the Code,
which are not directly rolled over or transferred to another eligible qualified
plan, are subject to a mandatory 20% withholding for federal income tax. The 20%
withholding requirement does not apply to: (a) distributions for the life or
life expectancy of the Participant or joint and last survivor expectancy of the
Participant and a designated beneficiary; or (b) distributions for a specified
period of 10 years or more; or (c) distributions which are required as minimum
distributions. A recipient of a distribution which is not subject to mandatory
withholding may elect not to have any taxes withheld from his distribution.
Participants must be notified annually of their right to change their
withholding elections. Payers of taxable pension payments must report such
payments to the Internal Revenue Service.

If a transfer is made from a Participant's accumulation account under this
Contract to another tax-deferred annuity program, no tax will be withheld from
the amount transferred.

A premature distribution penalty tax generally applies to withdrawals made prior
to age 59 1/2. Certain exceptions do, however, apply. In addition, Federal tax
law imposes restrictions on Withdrawals from Section 403(b) annuities (See
Withdrawal (Redemption) of Purchase Payments Prior to Death," pages 12 and 13).
Therefore, persons contemplating participation in a Section 403(b) annuity
should consult a tax advisor concerning the tax consequences of a withdrawal
under the Contract.

<PAGE>

The above description of certain federal income and estate tax rules that may
apply to a Participant is not exhaustive. A Participant should consult with
appropriate tax advisers concerning the applicability of the rules to the
Participant's personal tax circumstances.

VOTING RIGHTS

In addition to Prudential, each person who has an individual accumulation
account or a variable annuity as to which values or payments depend upon the
investment results of VCA-2 has the right to vote at meetings of such persons.
They are entitled to vote to:

A. approve any amendments of the Agreement for Investment Management Services
and approve any such new agreements negotiated by the Committee;

B. approve any recommendations made by the Committee regarding changes in the
fundamental investment policies of the Account; and

C. any matters requiring a vote of persons having voting rights with respect
to VCA-2.

Meetings of persons having voting rights are not required to be held annually.
The Rules and Regulations of VCA-2 provide that meetings of persons having
voting rights may be called by a majority of the Committee. The Committee is
required to call a meeting of persons having voting rights in the event that at
any time less than a majority of the members of the Committee holding office at
that time were elected by persons having voting rights. Such meeting must be
held within 60 days unless the Securities and Exchange Commission by order
extends such period. In addition, the Committee is required to call meetings of
persons with voting rights in order to submit for a vote matters on which such
persons are entitled to vote (as listed above).

For the purpose of determining the persons having voting rights in respect of
VCA-2 who are entitled to notice of and to vote at meetings, the Committee may
fix, in advance, a date as the record date which shall not be more than 70 nor
less than 10 days before the date of such meeting.

The number of votes which each person may cast at a meeting of persons having
voting rights in VCA-2 is equal to the number of dollars and fractions thereof
in his accumulation account as of the record date or, if he is an annuitant, the
number of dollars and fractions thereof equal in value to the portion of the
assets in VCA-2 held to meet the annuity obligations to him on such date. This
number decreases as annuity payments are made. Votes may be cast either in
person or by proxy and persons entitled to vote receive all proxy materials.

Prudential is entitled to vote the number of votes and fractions thereof equal
to the number of dollars and fractions thereof of its own funds invested in
VCA-2 as of the record date. Prudential will cast its votes in the same
proportions as all other votes represented at the meeting, in person or by
proxy.

As defined by the 1940 Act and as referred to elsewhere in this Prospectus, a
majority vote of persons having voting rights in respect of VCA-2 means (a) 67%
or more of the votes of such persons present at a meeting if more than 50% of
all votes entitled to be cast are held by persons present in person or
represented by proxy at such meeting, or (b) more than 50% of all votes entitled
to be cast, whichever is less.

OTHER CONTRACTS ON A
VARIABLE BASIS

In addition to the Contracts, Prudential currently issues other forms of
contracts on a variable basis. At present, purchase payments under such other
contracts are not held in VCA-2 but are held in other separate accounts.

STATE REGULATION

Prudential is subject to regulation by the Department of Insurance of the State
of New Jersey as well as by the insurance departments of all the other states
and jurisdictions in which it does business. Prudential must file an annual
statement in a form promulgated by the National Association of Insurance
Commissioners. This annual statement is reviewed and analyzed by the New Jersey
Department, which makes an independent computation of Prudential's legal reserve
liabilities and statutory apportionments under its outstanding contracts. New
Jersey law requires a quinquennial examination of Prudential to be made.
Examination involves extensive audit including, but not limited to, an inventory
check of assets, sampling techniques to check the performance by Prudential of
its contracts and an examination of the manner in which divisible surplus has
been apportioned and distributed to policy and contract-holders. This regulation
does not involve any supervision or control over the investment policy of VCA-2
or over the selection of investments therefor except for verification of the
compliance of Prudential's investment portfolio with New Jersey law. See
"Investment restrictions imposed by state law" in the Statement of Additional
Information.

The laws of New Jersey also contain special provisions which relate to the
issuance and regulation of contracts on a variable basis. These laws set forth a
number of mandatory provisions which must be included in contracts on a variable
basis and prohibit such contracts from containing other specified provisions. No
variable contract may be issued for delivery in New Jersey prior to the written
acknowledgement by the Department of Insurance of its filing. The Department may
initially disapprove or subsequently withdraw approval of any contract if it
contains provisions which are "unjust, unfair, inequitable,

<PAGE>

ambiguous, misleading, likely to result in misrepresentation or contrary to
law." Approval can also be withheld or withdrawn if sales are solicited by
communications which involve misleading or inadequate descriptions of the
provisions of the contract.

In addition to the annual statement referred to above, Prudential is required to
file with New Jersey and other states a separate statement with respect to the
operations of all its variable contract accounts, in a form promulgated by the
National Association of Insurance Commissioners.

Persons engaged in the negotiation or sale of a variable annuity contract in New
Jersey are not subject to the provisions of the laws of New Jersey governing the
sale of securities. Such persons and such contracts may be subject to similar
laws (commonly known as "Blue-Sky Laws") in other states where such contracts
are sold.

LEGAL PROCEEDINGS

Several actions have been brought against Prudential on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, certain insurance companies affiliated with Prudential
and agents appointed by Prudential and such companies.

Prudential is engaged in routine litigation of various kinds which in its
judgment is not of material importance in relation to its total assets.

There is no litigation pending the outcome of which might have a material effect
on the operations of VCA-2.

ADDITIONAL INFORMATION

This Prospectus does not contain all the information set forth in the
registration statement, certain portions of which have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. The omitted
information may be obtained from the Commission's principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission.
Participants may also receive further information about the Contracts at the
address and phone number set forth on the cover page of this Prospectus.

<PAGE>

TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION

PAGE

INVESTMENT MANAGEMENT AND ADMINISTRATION OF VCA-2 ..................... 2
Investment restrictions adopted by VCA-2 .......................... 2
Investment restrictions imposed by state law ...................... 3
Loans of portfolio securities ..................................... 4
Portfolio turnover rate ........................................... 4
Portfolio brokerage and related practices ......................... 4
Custody of securities ............................................. 5
THE VCA-2 COMMITTEE ................................................... 6
Remuneration of members of the committee and certain
affiliated persons ................................................ 6
DIRECTORS AND OFFICERS OF PRUDENTIAL .................................. 7
SALE OF GROUP VARIABLE ANNUITY CONTRACTS .............................. 10
EXPERTS ............................................................... 10
FINANCIAL STATEMENTS OF VCA-2 ......................................... 11
FINANCIAL STATEMENTS OF THE PRUDENTIAL ................................ 20

<PAGE>

BULK RATE
U.S. POSTAGE
PAID
PERMIT No. 2145
NEWARK, N.J.

The Prudential Insurance Company of America
c/o Prudential Retirement Services
30 Scranton Office Park
Moosic, Pennsylvania 18507-1789

ADDRESS CORRECTION REQUESTED

FORWARDING AND

RETURN POSTAGE GUARANTEED

GP-28 ED. 5/96

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997

GROUP TAX-DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED THROUGH

THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-2

These Contracts are designed for use in connection with retirement arrangements
that qualify for federal tax benefits under Section 403(b) of the Internal
Revenue Code of 1986. Contributions made on behalf of Participants are invested
in The Prudential Variable Contract Account-2, a separate account primarily
invested in common stocks.

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

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus, dated May1, 1997, which is available without
charge upon written request to The Prudential Insurance Company of America, c/o
Prudential Retirement Services, 30 Scranton Office Park, Moosic, Pennsylvania
18507-1789, or by telephoning 1-800-458-6333.

TABLE OF CONTENTS

PAGE
INVESTMENT MANAGEMENT AND ADMINISTRATION OF VCA-2 ......................... 2
Investment restrictions adopted by VCA-2 ................................. 2
Investment restrictions imposed by state law ............................. 3
Loans of portfolio securities ............................................ 4
Portfolio turnover rate .................................................. 4
Portfolio brokerage and related practices ................................ 4
Custody of securities .................................................... 5
THE VCA-2 COMMITTEE ....................................................... 6
Remuneration of members of the committee and certain affiliated persons .. 6
DIRECTORS AND OFFICERS OF PRUDENTIAL ...................................... 7
SALE OF GROUP VARIABLE ANNUITY CONTRACTS .................................. 10
EXPERTS ................................................................... 10
FINANCIAL STATEMENTS OF VCA-2 ............................................. 11
FINANCIAL STATEMENTS OF THE PRUDENTIAL .................................... 20

The Prudential Insurance Company of America
c/o Prudential Retirement Services
30 Scranton Office Park
Moosic, PA 18507-1789
Telephone 1-800-458-6333

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

[LOGO]

<PAGE>

INVESTMENT MANAGEMENT AND ADMINISTRATION OF VCA-2

Prudential acts as investment manager for VCA-2 under an Agreement for
Investment Management Services. The Account's assets are invested and reinvested
in accordance with its investment objective and policies, subject to the general
supervision and authorization of the Account's Committee.

Subject to Prudential's supervision, substantially all of the investment
management services provided by Prudential are furnished by its wholly-owned
subsidiary, The Prudential Investment Corporation ("PIC"), pursuant to the
service agreement between Prudential and PIC (the "Service Agreement") which
provides that Prudential will reimburse PIC for its costs and expenses. PIC is
registered as an investment adviser under the Investment Advisers Act of 1940.

Prudential continues to have responsibility for all investment advisory services
under its advisory or subadvisory agreements with respect to its clients.
Prudential's Agreement for Investment Management Services with VCA-2 was
approved initially by the Participants at their meeting on May 29, 1969 and was
most recently renewed by unanimous vote of the Committee on November 22, 1996.
The Service Agreement was approved by participants in VCA-2 on July 25, 1985 and
its annual continuation was most recently approved by unanimous vote of the
VCA-2 Committee on November 22, 1996. The Account's Agreement for Investment
Management Services and the Service Agreement will continue in effect as long as
approved at least once a year by a majority of the non-interested members of the
Account's Committee and either by a majority of the entire Committee or by a
majority vote of persons entitled to vote in respect of the Account. The
Account's Agreement for Investment Management Services will terminate
automatically in the event of assignment, and may be terminated without penalty
on 60 days' notice by the Account's Committee or by the majority vote of persons
having voting rights in respect of the Account, or on 90 days' notice by
Prudential.

The Service Agreement will continue in effect as to the Account for a period of
more than two years from its execution only so long as such continuance is
specifically approved at least annually in the same manner as the Agreement for
Investment Management Services between Prudential and the Account. The Service
Agreement may be terminated by either party upon not less than thirty days'
prior written notice to the other party, will terminate automatically in the
event of its assignment and will terminate automatically as to the Account in
the event of the assignment or termination of the Agreement for Investment
Management Services between Prudential and the Account. Prudential is not
relieved of its responsibility for all investment advisory services under the
Agreement for Investment Management Services between Prudential and the Account.
The Service Agreement provides for Prudential to reimburse PIC for its costs and
expenses incurred in furnishing investment advisory services. For the meaning of
a majority vote of persons having voting rights with respect to the Account, see
"Voting Rights," page 21 and 22 of the Prospectus.

Prudential is responsible for the administrative and recordkeeping functions of
VCA-2 and pays the expenses associated with them. These functions include
enrolling Participants, receiving and allocating contributions, maintaining
Participants' Accumulation Accounts, preparing and distributing confirmations,
statements, and reports. The administrative and recordkeeping expenses borne by
Prudential include salaries, rent, postage, telephone, travel, legal, actuarial
and accounting fees, office equipment, stationery and maintenance of computer
and other systems.

A daily charge is made which is equal to an effective annual rate of 0.5% of the
net value of the assets of VCA-2. One-half (0.25%) of this charge is for
assuming expense risks; 1 @4 (0.125%) of this charge is for assuming mortality
risks; and 1 @4 (0.125%) is for investment management services. During 1996,
1995 and 1994 Prudential received $_________, $2,195,986 and $2,085,191
respectively from VCA-2 for assuming mortality and expense risks and for
providing investment management services.

There is also an annual administration charge made against each Participant's
accumulation account in an amount which varies with each Contract but which is
not more than $30 for any accounting year. During 1996, 1995 and 1994 Prudential
collected $_________, $34,067 and $42,008 respectively from VCA-2 in those
annual account charges.

A sales charge is also imposed on certain purchase payments made under a
Contract on behalf of a Participant. The sales charges imposed on purchase
payments to VCA-2 during 1996, 1995 and 1994 were $___________, $180,356 and
$108,110 respectively.

FUNDAMENTAL INVESTMENT RESTRICTIONS ADOPTED
BY VCA-2

In addition to the investment objective described in the prospectus, the
following investment restrictions are fundamental investment policies of VCA-2
and may not be changed without the approval of a majority vote of persons having
voting rights in respect of the Account.

Concentration in Particular Industries. VCA-2 will not 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 VCA-2's total
assets, more than 5% of VCA-2's total assets (determined at the time of
investment) would then be invested in securities of a single issuer, or (ii) 25%
or more of VCA-2's total assets (determined at the time of the investment) would
be invested in a single industry.

<PAGE>

Investments in Real Estate-Related Securities. No purchase of or investment in
real estate will be made for the account of VCA-2 except that VCA-2 may buy and
sell securities that are secured by real estate or shares of real estate
investment trusts listed on stock exchanges or reported on the National
Association of Securities Dealers, Inc. automated quotation system ("NASDAQ").

Investments in Financial Futures. No commodities or commodity contracts will be
purchased or sold for the account of VCA-2 except that VCA-2 may purchase and
sell financial futures contracts and related options.

Loans. VCA-2 will not lend money, except that loans of up to 10% of the value of
VCA-2's total assets may be made through the purchase of privately placed bonds,
debentures, notes, and other evidences of indebtedness of a character
customarily acquired by institutional investors that may or may not be
convertible into stock or accompanied by warrants or rights to acquire stock.
Repurchase agreements and the purchase of publicly traded debt obligations are
not considered to be "loans" for this purpose and may be entered into or
purchased by VCA-2 in accordance with its investment objectives and policies.

Borrowing. VCA-2 will not issue senior securities, borrow money or pledge its
assets, except that VCA-2 may borrow from banks up to 33-1/3 percent of the
value of its total assets (calculated when the loan is made) for temporary,
extraordinary or emergency purposes, for the clearance of transactions or for
investment purposes. VCA-2 may pledge up to 33-1/3 percent of the value of its
total assets to secure such borrowing. For purposes of this restriction, the
purchase or sale of securities on a when-issued or delayed delivery basis,
forward foreign currency exchange contracts and collateral arrangements relating
thereto, and collateral arrangements with respect to interest rate swap
transactions, reverse repurchase agreements, dollar roll transactions, options,
futures contracts, and options thereon are not deemed to be a pledge of assets
or the issuance of a senior security.

Margin. VCA-2 will not purchase securities on margin (but VCA-2 may obtain such
short-term credits as may be necessary for the clearance of transactions);
provided that the deposit or payment by VCA-2 of initial or maintenance margin
in connection with futures or options is not considered the purchase of a
security on margin.

Underwriting of Securities. VCA-2 will not underwrite the securities of other
issuers, except where VCA-2 may be deemed to be an underwriter for purposes of
certain federal securities laws in connection with the disposition of portfolio
securities and with loans that VCA-2 is permitted to make.

Control or Management of Other Companies. No securities of any company will be
acquired for VCA-2 for the purpose of exercising control or management thereof.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
ADOPTED BY VCA-2

The VCA-2 Committee has also adopted the following additional investment
restrictions as non-fundamental operating policies. The Committee can change
these restrictions without the approval of the persons having voting rights in
respect of VCA-2.

Investments in Other Investment Companies. Except as part of a merger,
consolidation, acquisition or reorganization, VCA-2 will not invest in the
securities of other investment companies in excess of the limits stipulated by
the Investment Company Act of 1940 as amended, and the rules and regulations
thereunder.

Short Sales. VCA-2 will not make short sales of securities or maintain a short
position, except that VCA-2 may make short sales against the box. Collateral
arrangements entered into with respect to options, futures contracts and forward
contracts are not deemed to be short sales. Collateral arrangements entered into
with respect to interest rate swap agreements are not deemed to be short sales.

Restricted Securities. No more than 15% of the value of the net assets held in
VCA-2 will be invested in securities (including repurchase agreements and
non-negotiable time deposits maturing in more than seven days) that are subject
to legal or contractual restrictions on resale or for which no readily available
market exists.

INVESTMENT RESTRICTIONS IMPOSED BY STATE LAW

In addition to the investment objectives, policies and restrictions that VCA-2
has adopted, the Account must limit its investments to those authorized for
variable contract accounts of life insurance companies by the laws of the State
of New Jersey. In the event of future amendments of the applicable New Jersey
statutes, the Account will comply, without the approval of Participants or
others having voting rights in respect of the Account, with the statutory
requirements as so modified. The pertinent provisions of New Jersey law as they
currently read are, in summary form, as follows:

1. An account may not purchase any evidence of indebtedness issued, assumed
or guaranteed by any institution created or existing under the laws of the
U.S., any U.S. state or territory, District of Columbia, Puerto Rico,
Canada or any Canadian province, if such evidence of indebtedness is in
default as to interest. "Institution" includes any corporation, joint
stock association, business trust, business joint venture, business
partnership, savings and loan association, credit union or other mutual
savings institution.

2. The stock of a corporation may not be purchased unless (i) the corporation
has paid a cash dividend

<PAGE>

on the class of stock during each of the past five years preceding the
time of purchase, or (ii) during the five-year period the corporation had
aggregate earnings available for dividends on such class of stock
sufficient to pay average dividends of 4% per annum computed upon the par
value of such stock, or upon stated value if the stock has no par value.
This limitation does not apply to any class of stock which is preferred as
to dividends over a class of stock whose purchase is not prohibited.

3. Any common stock purchased must be (i) listed or admitted to trading on a
securities exchange in the United States or Canada; or (ii) included in
the National Association of Securities Dealers' national price listings of
"over-the-counter" securities; or (iii) determined by the Commissioner of
Insurance of New Jersey to be publicly held and traded and as to which
market quotations are available. As of the date of this Prospectus no such
determination has been made.

4. Any security of a corporation may not be purchased if after the purchase
more than 10% of the market value of the assets of an Account would be
invested in the securities of such corporation.

The currently applicable requirements of New Jersey law impose substantial
limitations on the ability of VCA-2 to invest in the stock of companies whose
securities are not publicly traded or who have not recorded a five-year history
of dividend payments or earnings sufficient to support such payments. This means
that the Account will not generally invest in the stock of newly organized
corporations. Nonetheless, an investment not otherwise eligible under paragraph
1 or 2 above may be made if, after giving effect to the investment, the total
cost of all such non-eligible investments does not exceed 5% of the aggregate
market value of the assets of the Account.

Investment limitations may also arise under the insurance laws and regulations
of the other states where the Contracts are sold. Although compliance with the
requirements of New Jersey law set forth above will ordinarily result in
compliance with any applicable laws of other states, under some circumstances
the laws of other states could impose additional restrictions on the portfolios
of the Account.

ADDITIONAL INFORMATION ABOUT FINANCIAL FUTURES
CONTRACTS

As described in the prospectus, VCA-2 may engage in certain transactions
involving financial futures contracts. This additional information on those
instruments should be read in conjunction with the prospectus.

VCA-2 will only enter into futures contracts that are standardized and traded on
a U.S. exchange or board of trade. When a financial futures contract is entered
into, each party deposits with a broker or in a segregated custodial account
approximately 5% of the contract amount, called the "initial margin." Subsequent
payments to and from the broker, called the "variation margin," are made on a
daily basis as the underlying security, index, or rate fluctuates, making the
long and short positions in the futures contracts more or less valuable, a
process known as "marking to the market."

There are several risks associated with the use of futures contracts for hedging
purposes. While VCA-2's hedging transactions may protect it against adverse
movements in the general level of interest rates or other economic conditions,
such transactions could also preclude VCA-2 from the opportunity to benefit from
favorable movements in the level of interest rates or other economic conditions.
There can be no guarantee that there will be correlation between price movements
in the hedging vehicle and in the securities or other assets being hedged. An
incorrect correlation could result in a loss on both the hedged assets and the
hedging vehicle so that VCA-2's return might have been better if hedging had not
been attempted. The degree of imperfection of correlation depends on
circumstances such as variations in speculative market demand for futures and
futures options, including technical influences in futures trading and futures
options, and differences between the financial instruments being hedged and the
instruments underlying the standard contracts available for trading in such
respects as interest rate levels, maturities, and creditworthiness of issuers. A
decision as to whether, when, and how to hedge involves the exercise of skill
and judgment and even a well-conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected market trends.

There can be no assurance that a liquid market will exist at a time when VCA-2
seeks to close out a futures contract or a futures option position. Most futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single day; once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain of these instruments are relatively new
and without a significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist. The daily
limit governs only price movements during a particular trading day and therefore
does not limit potential losses because the limit may work to prevent the
liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses. Lack of a
liquid market for any reason may prevent VCA-2 from liquidating an unfavorable
position and VCA-2 would remain obligated to meet margin requirements and
continue to incur losses until the position is closed.

<PAGE>

ADDITIONAL INFORMATION ABOUT OPTIONS

As described in the prospectus, VCA-2 may engage in certain transactions
involving options. This additional information on those instruments should be
read in conjunction with the prospectus.

In addition to those described in the prospectus, options have other risks,
primarily related to liquidity. A position in an exchange-traded option 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 VCA-2
will generally purchase or write only those exchange-traded 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 closing
transactions in particular options, with the result that VCA-2 would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of such options and upon the subsequent
disposition of underlying securities acquired through the exercise of call
options or upon the purchase of underlying securities for the exercise of put
options. If VCA-2 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.

Reasons for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain options;
(ii) restrictions 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 or underlying
securities; (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 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 purchase and sale of over-the-counter ("OTC") options will also be subject
to certain risks. Unlike exchange-traded options, OTC options generally do not
have a continuous liquid market. Consequently, VCA-2 will generally be able to
realize the value of an OTC option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when VCA-2 writes an OTC
option, it generally will be able to close out the OTC option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which VCA-2 originally wrote the OTC option. There can be no assurance that
VCA-2 will be able to liquidate an OTC option at a favorable price at any time
prior to expiration. In the event of insolvency of the other party, VCA-2 may be
unable to liquidate an OTC option.

Options on Equity Securities. VCA-2 may purchase and write (i.e., sell) put and
call options on equity securities that are traded on U.S. securities exchanges,
are listed on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), or that result from privately negotiated transactions with
broker-dealers ("OTC options"). A call option is a short-term contract pursuant
to which the purchaser or holder, in return for a premium paid, has the right to
buy the security underlying the option at a specified exercise price at any time
during the term of the option. The writer of the call option, who receives the
premium, has the obligation, upon exercise of the option, to deliver the
underlying security against payment of the exercise price. A put option is a
similar contract which gives the purchaser or holder, in return for a premium,
the right to sell the underlying security at a specified price during the term
of the option. The writer of the put, who receives the premium, has the
obligation to buy the underlying security at the exercise price upon exercise by
the holder of the put.

VCA-2 will write only "covered" options on stocks. A call option is covered if:
(1) VCA-2 owns the security underlying the option; or (2) VCA-2 has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities it holds;
or(3) VCA-2 holds on a share-for-share basis a call on the same security as the
call written where the exercise price of the call held is equal to or less than
the exercise price of the call written or greater than the exercise price of the
call written if the difference is maintained by VCA-2 in cash, Treasury bills or
other high grade short-term debt obligations in a segregated account with its
custodian. A put option is covered if: (1) VCA-2 deposits and maintains with its
custodian in a segregated account cash, U.S. Government securities or other
liquid high-grade debt obligations having a value equal to or greater than the
exercise price of the option; or (2) VCA-2 holds on a share-for-share basis a
put on the same security as the put written where the exercise price of the put
held is equal to or greater than the exercise price of the put

<PAGE>

written or less than the exercise price if the difference is maintained by VCA-2
in cash, Treasury bills or other high grade short-term debt obligations in a
segregated account with its custodian.

VCA-2 may also purchase "protective puts" (i.e., put options acquired for the
purpose of protecting VCA-2 security from a decline in market value). The loss
to VCA-2 is limited to the premium paid for, and transaction costs in connection
with, the put plus the initial excess, if any, of the market price of the
underlying security over the exercise price. However, if the market price of the
security underlying the put rises, the profit VCA-2 realizes on the sale of the
security will be reduced by the premium paid for the put option less any amount
(net of transaction costs) for which the put may be sold.

VCA-2 may also purchase putable and callable equity securities, which are
securities coupled with a put or call option provided by the issuer.

VCA-2 may purchase call options for hedging or investment purposes. VCA-2 does
not intend to invest more than 5% of its net assets at any one time in the
purchase of call options on stocks.

If the writer of an exchange-traded option wishes to terminate the obligation,
he or she may effect a "closing purchase transaction" by buying an option of the
same series as the option previously written. Similarly, the holder of an option
may liquidate his or her position by exercise of the option or by effecting a
"closing sale transaction" by selling an option of the same series as the option
previously purchased. There is no guarantee that closing purchase or closing
sale transactions can be effected.

Options on Debt Securities. VCA-2 may purchase and write exchange-traded and OTC
put and call options on debt securities. Options on debt securities are similar
to options on stock, except that the option holder has the right to take or make
delivery of a debt security, rather than stock.

VCA-2 will write only "covered" options. Options on debt securities are covered
in the same manner as options on stocks, discussed above, except that, in the
case of call options on U.S. Treasury Bills, VCA-2 might own U.S. Treasury Bills
of a different series from those underlying the call option, but with a
principal amount and value corresponding to the option contract amount and a
maturity date no later than that of the securities deliverable under the call
option.

VCA-2 may also write straddles (i.e., a combination of a call and a put written
on the same security at the same strike price where the same issue of the
security is considered as the cover for both the put and the call). In such
cases, VCA-2 will also segregate or deposit for the benefit of VCA-2's broker
cash or liquid high-grade debt obligations equivalent to the amount, if any, by
which the put is "in the money." It is contemplated that VCA-2's use of
straddles will be limited to 5% of VCA-2's net assets (meaning that the
securities used for cover or segregated as described above will not exceed 5% of
VCA-2's net assets at the time the straddle is written).

VCA-2 may purchase "protective puts" in an effort to protect the value of a
security that it owns against a substantial decline in market value. Protective
puts on debt securities operate in the same manner as protective puts on equity
securities, described above. VCA-2 may wish to protect certain securities
against a decline in market value at a time when put options on those particular
securities are not available for purchase. VCA-2 may therefore purchase a put
option on securities it does not hold. While changes in the value of the put
should generally offset changes in the value of the securities being hedged, the
correlation between the two values may not be as close in these transactions as
in transactions in which VCA-2 purchases a put option on an underlying security
it owns.

VCA-2 may also purchase call options on debt securities for hedging or
investment purposes. VCA-2 does not intend to invest more than 5% of its net
assets at any one time in the purchase of call options on debt securities.

VCA-2 may also purchase putable and callable debt securities, which are
securities coupled with a put or call option provided by the issuer.

VCA-2 may enter into closing purchase or sale transactions in a manner similar
to that discussed above in connection with options on equity securities.

Options on Stock Indices. VCA-2 may purchase and sell put and call options on
stock indices traded on national securities exchanges, listed on NASDAQ or that
result from privately negotiated transactions with broker-dealers ("OTC
options"). Options on stock indices are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than in the case of a call, or less than, in the
case of a put, the strike price of the option. This amount of cash is equal to
such difference between the closing price of the index and the strike price of
the option times a specified multiple (the "multiplier"). If the option is
exercised, the writer is obligated, in return for the premium received, to make
delivery of this amount. Unlike stock options, all settlements are in cash, and
gain or loss depends on price movements in the stock market generally (or in a
particular industry or segment of the market) rather than price movements in
individual stocks.

VCA-2 will write only "covered" options on stock indices. A call option is
covered if VCA-2 follows the segregation requirements set forth in this
paragraph. When VCA-2 writes a call option on a broadly based stock market
index, it will segregate or put into escrow with its custodian or pledge to a
broker as collateral for the

<PAGE>

option, cash, Treasury bills or other liquid high-grade short-term debt
obligations, or "qualified securities" (defined below) with a market value at
the time the option is written of not less than 100% of the current index value
times the multiplier times the number of contracts. A "qualified security" is an
equity security which is listed on a national securities exchange or listed on
NASDAQ against which VCA-2 has not written a stock call option and which has not
been hedged by VCA-2 by the sale of stock index futures. When VCA-2 writes a
call option on an industry or market segment index, it will segregate or put
into escrow with its custodian or pledge to a broker as collateral for the
option, cash, Treasury bills or other liquid high-grade short-term debt
obligations, or at least five qualified securities, all of which are stocks of
issuers in such industry or market segment, with a market value at the time the
option is written of not less than 100% of the current index value times the
multiplier times the number of contracts. Such stocks will include stocks which
represent at least 50% of the weighting of the industry or market segment index
and will represent at least 50% of VCA-2's holdings in that industry or market
segment. No individual security will represent more than 15% of the amount so
segregated, pledged or escrowed in the case of broadly based stock market stock
options or 25% of such amount in the case of industry or market segment index
options. If at the close of business on any day the market value of such
qualified securities so segregated, escrowed, or pledged falls below 100% of the
current index value times the multiplier times the number of contracts, VCA-2
will so segregate, escrow, or pledge an amount in cash, Treasury bills, or other
liquid high-grade short-term debt obligations equal in value to the difference.
In addition, when VCA-2 writes a call on an index which is in-the-money at the
time the call is written, it will segregate with its custodian or pledge to the
broker as collateral, cash or U.S. government or other liquid high-grade
short-term obligations equal in value to the amount by which the call is
in-the-money times the multiplier times the number of contracts. Any amount
segregated pursuant to the foregoing sentence may be applied to VCA-2's
obligation to segregate additional amounts in the event that the market value of
the qualified securities falls below 100% of the current index value times the
multiplier times the number of contracts.

A call option is also covered if VCA-2 holds a call on the same index as the
call written where the strike price of the call held is equal to or less than
the strike price of the call written or greater than the strike price of the
call written if the difference is maintained by VCA-2 in cash, Treasury bills or
other high-grade short-term obligations in a segregated account with its
custodian.

A put option is covered if: (1) VCA-2 holds in a segregated account cash,
Treasury bills or other high-grade short-term debt obligations of a value equal
to the strike price times the multiplier times the number of contracts; or (2)
VCA-2 holds a put on the same index as the put written where the strike price of
the put held is equal to or greater than the strike price of the put written or
less than the strike price of the put written if the difference is maintained by
VCA-2 in cash, Treasury bills or other high-grade short-term debt obligations in
a segregated account with its custodian.

VCA-2 may purchase put and call options on stock indices for hedging or
investment purposes. VCA-2 does not intend to invest more than 5% of its net
assets at any one time in the purchase of puts and calls on stock indices. VCA-2
may effect closing sale and purchase transactions involving options on stock
indices, as described above in connection with stock options.

The distinctive characteristics of options on stock indices create certain risks
that are not present with stock options. 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, VCA-2 would not be able to close out options which it had
purchased or written and, if restrictions on exercise were imposed, might be
unable to exercise an option it holds, which could result in substantial losses
to VCA-2. Price movements in VCA-2's equity security holdings probably will not
correlate precisely with movements in the level of the index and, therefore, in
writing a call on a stock index VCA-2 bears the risk that the price of the
securities held by VCA-2 may not increase as much as the index. In such event,
VCA-2 would bear a loss on the call which is not completely offset by movement
in the price of VCA-2's equity securities. It is also possible that the index
may rise when VCA-2's securities do not rise in value. If this occurred, VCA-2
would experience a loss on the call which is not offset by an increase in the
value of its securities holdings and might also experience a loss in its
securities holdings. In addition, when VCA-2 has written a call, there is also a
risk that the market may decline between the time VCA-2 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 VCA-2 is able to sell stocks in its
portfolio. As with stock options, VCA-2 will not learn that an index option has
been exercised until the day following the exercise date but, unlike a call on
stock where VCA-2 would be able to deliver the underlying securities in
settlement, VCA-2 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 options in stock indices than with stock
options.

There are also certain special risks involved in purchasing put and call options
on stock indices. If VCA-2 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 exercise option to fall out of-the-money, VCA-2 will be required to pay the
difference between the closing index value and the strike

7
<PAGE>

price of the option (times the applicable multiplier) to the assigned writer.
Although VCA-2 may be able to minimize the risk by withholding exercise
instructions until just before the daily cutoff 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 cutoff 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.

Options on Foreign Currencies. VCA-2 may purchase and write put and call options
on foreign currencies traded on U.S. or foreign securities exchanges or boards
of trade. Options on foreign currencies are similar to options on stock, except
that the option holder has the right to take or make delivery of a specified
amount of foreign currency, rather than stock. VCA-2's successful use of options
on foreign currencies depends upon the investment adviser's ability to predict
the direction of the currency exchange markets and political conditions, which
requires different skills and techniques than predicting changes in the
securities markets generally. In addition, the correlation between movements in
the price of options and the price of currencies being hedged is imperfect.

Options on Futures Contracts. VCA-2 may enter into certain transactions
involving options on futures contracts. VCA-2 will utilize these types of
options for the same purpose that it uses the underlying futures contract. An
option on a futures contract gives the purchaser or holder the right, but not
the obligation, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
price at any time during the option exercise period. The writer of the option is
required upon exercise to assume an offsetting futures position (a short
position if the option is a call and long position if the option is a put). Upon
exercise of the option, the assumption of offsetting futures positions by the
writer and holder of the option will be accomplished by delivery of the
accumulated balance in the writer's futures margin account which represents the
amount by which the market price of the futures contract, at exercise, exceeds,
in the case of a call, or is less than, in the case of a put, the exercise price
of the option on the futures contract. As an alternative to exercise, the holder
or writer of an option may terminate a position by selling or purchasing an
option of the same series. There is no guarantee that such closing transactions
can be effected. VCA-2 intends to utilize options on futures contracts for the
same purposes that it uses the underlying futures contracts.

Options on futures contracts are subject to risks similar to those described
above with respect to options on securities, options on stock indices, and
futures contracts. These risks include the risk that the investment adviser may
not correctly predict changes in the market, the risk of imperfect correlation
between the option and the securities being hedged, and the risk that there
might not be a liquid secondary market for the option. There is also the risk of
imperfect correlation between the option and the underlying futures contract. If
there were no liquid secondary market for a particular option on a futures
contract, VCA-2 might have to exercise an option it held in order to realize any
profit and might continue to be obligated under an option it had written until
the option expired or was exercised. If VCA-2 were unable to close out an option
it had written on a futures contract, it would continue to be required to
maintain initial margin and make variation margin payments with respect to the
option position until the option expired or was exercised against VCA-2.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

A forward foreign currency exchange contract is a contract obligating one party
to purchase and the other party to sell one currency for another currency at a
future date and price. When investing in foreign securities, VCA-2 may enter
into such contracts in anticipation of or to protect itself against fluctuations
in currency exchange rates.

VCA-2 generally will not enter into a forward contract with a term of greater
than 1 year. At the maturity of a forward contract, VCA-2 may either sell the
security and make delivery of the foreign currency or it may retain the security
and terminate its contractual obligation to deliver the foreign currency by
purchasing an "offsetting" contract with the same currency trader obligating it
to purchase, on the same maturity date, the same amount of the foreign currency.

VCA-2's successful use of forward contracts depends upon the investment
adviser's ability to predict the direction of currency exchange markets and
political conditions, which requires different skills and techniques than
predicting changes in the securities marketsgenerally.

INTEREST RATE SWAP TRANSACTIONS

VCA-2 may enter into interest rate swap transactions. Interest rate swaps, in
their most basic form, involve the exchange by one party with another party of
their respective commitments to pay or receive interest. For example, VCA-2
might exchange its right to receive certain floating rate payments in exchange
for another party's right to receive fixed rate payments. Interest rate swaps
can take a variety of other forms, such as agreements to pay the net differences
between two different indices or rates, even if the parties do not own the
underlying instruments. Despite their differences in form, the function of
interest rate swaps is generally the same -- to increase or decrease exposure to
long- or short-term interest rates. For example, VCA-2 may enter into a swap
transaction to preserve a return or spread on a particular investment or a
portion of its portfolio or to protect against any increase in the price of
securities the

8
<PAGE>

Account anticipates purchasing at a later date. VCA-2 will maintain appropriate
liquid assets in a segregated custodial account to cover its obligations under
swap agreements.

The use of swap agreements is subject to certain risks. As with options and
futures, if the investment adviser's prediction of interest rate movements is
incorrect, VCA-2's total return will be less than if the Account had not used
swaps. In addition, if the counterparty's creditworthiness declines, the value
of the swap would likely decline. Moreover, there is no guarantee that VCA-2
could eliminate its exposure under an outstanding swap agreement by entering
into an offsetting swap agreement with the same or another party.

LOANS OF PORTFOLIO SECURITIES

VCA-2 may from time to time lend its portfolio securities to broker-dealers,
provided that such loans are made pursuant to written agreements and are
continuously secured by collateral in the form of cash, U.S. Government
securities or irrevocable standby letters of credit in an amount equal to at
least the market value at all times of the loaned securities. During the time
portfolio securities are on loan, VCA-2 continues to receive the interest and
dividends, or amounts equivalent thereto, on the loaned securities while
receiving a fee from the borrower or earning interest on the investment of the
cash collateral. The right to terminate the loan is given to either party
subject to appropriate notice. Upon termination of the loan, the borrower
returns to the lender securities identical to the loaned securities. VCA-2 does
not have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to the
investment. The primary risk in lending securities is that the borrower may
become insolvent on a day on which the loaned security is rapidly advancing in
price. In such event, if the borrower fails to return the loaned securities, the
existing collateral might be insufficient to purchase back the full amount of
stock loaned, and the borrower would be unable to furnish additional collateral.
The borrower would be liable for any shortage but VCA-2 would be an unsecured
creditor as to such shortage and might not be able to recover all or any of it.
However, this risk may be minimized by a careful selection of borrowers and
securities to be lent.

VCA-2 will not lend its portfolio securities to broker-dealers affiliated with
Prudential, including Prudential Securities Incorporated. This will not affect
VCA-2's ability to maximize its securities lending opportunities.

PORTFOLIO TURNOVER RATE

VCA-2 has no fixed policy with respect to portfolio turnover, which is an index
determined by dividing the lesser of the purchases or sales of portfolio
securities during the year by the monthly average of the aggregate value of the
portfolio securities owned during the year. VCA-2 seeks long term growth of
capital rather than short-term trading profits. However, during any period when
changing economic or market conditions are anticipated, successful management
requires an aggressive response to such changes which may result in portfolio
shifts that may significantly increase the rate of portfolio turnover. The rate
of portfolio activity will normally affect the brokerage expenses of VCA-2. The
annual portfolio turnover rate was % in 1996, 42.21% in 1995, and 36.85% in
1994.

PORTFOLIO BROKERAGE AND RELATED PRACTICES

In connection with decisions to buy and sell securities for VCA-2, brokers and
dealers to effect the transactions must be selected and brokerage commissions,
if any, negotiated. Transactions on a stock exchange in equity securities will
be executed primarily through brokers that will receive a commission paid by
VCA-2. Fixed income securities, on the other hand, as well as equity securities
traded in the over-the-counter market, will not normally incur any brokerage
commissions. These securities are generally traded on a "net" basis with dealers
acting as principals for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price that includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. Certain of these securities may also be
purchased directly from an issuer, in which case neither commissions nor
discounts are paid.

In placing orders of securities transactions, primary consideration is given to
obtaining the most favorable price and efficient execution. An attempt is made
to effect each transaction at a price and commission, if any, that provides the
most favorable total cost or proceeds reasonably attainable in the
circumstances. However, a higher commission than would otherwise be necessary
for a particular transaction may be paid when to do so would appear to further
the goal of obtaining the best available execution.

In connection with any securities transaction that involves a commission
payment, the commission is negotiated with the broker on the basis of the
quality and quantity of execution services that the broker provides, in light of
generally prevailing commission rates. Periodically, Prudential and PIC review
the allocation among brokers of orders for equity securities and the commissions
that were paid.

When selecting a broker or dealer in connection with a transaction for VCA-2,
consideration is given to whether the broker or dealer has furnished PIC with
certain services, provided this does not jeopardize the objective of obtaining
the best price and execution. These services, which include statistical and
economic data and research reports on particular companies and industries, are
services that brokerage houses customarily provide

9
<PAGE>

to institutional investors. PIC uses these services in connection with all of
its investment activities, and some of the data or services obtained in
connection with the execution of transactions for VCA-2 may be used in
connection with the execution of transactions for other investment accounts.
Conversely, brokers and dealers furnishing such services may be selected for the
execution of transactions of such other accounts, while the data or service may
be used in connection with investment management for VCA-2. Although
Prudential's present policy is not to permit higher commissions to be paid for
transactions for VCA-2 in order to secure research and statistical services from
brokers or dealers, Prudential might in the future authorize the payment of
higher commissions, but only with the prior concurrence of the VCA-2 Committee,
if it is determined that the higher commissions are necessary in order to secure
desired research and are reasonable in relation to all of the services that the
broker or dealer provides.

When investment opportunities arise that may be appropriate for more than one
entity for which Prudential serves as investment manager or adviser, one entity
will not be favored over another and allocations of investments among them will
be made in an impartial manner believed to be equitable to each entity involved.
The allocations will be based on each entity's investment objectives and its
current cash and investment positions. Because the various entities for which
Prudential acts as investment manager or adviser have different investment
objectives and positions, from time to time a particular security may be
purchased for one or more such entities while, at the same time, such security
may be sold for another.

An affiliated broker may be employed to execute brokerage transactions on behalf
of VCA-2 as long as the commissions are reasonable and fair compared to the
commissions received by other brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities exchange
during a comparable period of time. During 1996, 1995 and 1994, $______, 0, and
$5,861, respectively, was paid to Prudential Securities Incorporated, an
affiliated broker. For 1996, the commissions paid to this affiliated broker
constitutes __% of the total commissions paid by VCA-2 for that year, and the
transactions through this affiliated broker accounted for __% of the aggregate
dollar amount of transactions for VCA-2 involving the payment of commissions.
VCA-2 may not engage in any transactions in which Prudential or its affiliates,
including Prudential Securities Incorporated, acts as principal, including
over-the-counter purchases and negotiated trades in which such a party acts as a
principal.

Prudential or PIC may enter into business transactions with brokers or dealers
for purposes other than the execution of portfolio securities transactions for
accounts Prudential manages. These other transactions will not affect the
selection of brokers or dealers in connection with portfolio transactions for
VCA-2.

During the calendar year 1996, $_____ was paid to various brokers in connection
with securities transactions for VCA-2. Of this amount, approximately __% was
allocated to brokers who provided research and statistical services to
Prudential. The equivalent figures for 1995 were $655,211 and 76.62% and for
1994 were $516,567 and 71.03%.

CUSTODY OF SECURITIES

Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is custodian of VCA-2's assets and maintains certain books and records in
connection therewith.

<PAGE>

THE VCA-2 COMMITTEE

VCA-2 is managed by The Prudential Variable Contract Account-2 Committee ("VCA-2
Committee"). The members of the Committee are elected by the persons having
voting rights in respect of the VCA-2 Account. The affairs of the Account are
conducted in accordance with the Rules and Regulations of the Account. The
members of the Account's Committee, the Account's Secretary and Assistant
Secretaries and the principal occupation of each during the past five years are
shown below.

VCA-2 COMMITTEE

MENDEL A. MELZER*, Chairman and Member of the Committee -- Chief Investment
Officer (since 11/96), Prudential mutual funds and annuities (business unit of
Prudential). Senior Vice-President and Chief Financial Officer, Prudential
Preferred Financial Services (a unit of PAMCO from 19/93 to 19/95.
Vice-President, Managing Director, Prudential Investment Corporation from 1991
to 1993. to 1993. Address: 751 Broad Street, Newark, N.J. 07102.

SAUL K. FENSTER, Member of the Committee -- President, New Jersey Institute of
Technology (education). Address: 323 Martin Luther King Jr. Boulevard, Newark,
New Jersey 07102.

JONATHAN M. GREENE*, President and Member of the Committee -- President of
Investment Management (since 3/96), Prudential Investment. Vice President and
Portfolio Manager, T. Rowe Price Associates, Inc. from 6/74 to 3/96. Address:
751 Broad Street, Newark, N.J. 07102.

W. SCOTT McDONALD, JR., Member of the Committee -- Principal, Scott McDonald &
Associates since 4/95; prior to 4/95, Executive Vice President, Fairleigh
Dickinson University; prior to 9/91, Executive Vice President, Drew University.
Address: 9 Zamrok Way, Morristown, New Jersey 07960.

JOSEPH WEBER, Member of the Committee -- Vice President, Interclass
(International corporate learning) since 10/90. President, Alliance for Learning
from 3/88 to 10/90. Consultant since 3/87. Address: 37Beachmont Terrace, North
Caldwell, New Jersey 07006.

THOMAS A. EARLY, Secretary to the Committee -- Vice President and General
Counsel, Prudential Retirement Services since 4/94. Associate General Counsel,
Frank Russell Company from 1988 to 1994. Address: 100 Mulberry Street, Gateway
Center 2 Newark, NJ 07102.

C. CHRISTOPHER SPRAGUE, Assistant Secretary to the Committee -- Assistant
General Counsel, The Prudential since 12/94. Staff Attorney and Senior Counsel,
U.S. Securities and Exchange Commission from 9/88 to 11/94.
Address: 213 Washington Street.

MICHAEL G. WILLIAMSON, Assistant Secretary to the Committee -- Director and
Assistant Comptroller, Prudential Defined Contribution Services since 11/93;
Manager, Prudential Defined Contribution Services from 10/88 to 11/93. Address:
30 Scranton Office Park, Moosic, Pennsylvania 18507.

*These Members of the Committee are interested persons of Prudential, its
affiliates or VCA-2, as defined in the Investment Company Act of 1940 (the "1940
Act"). Certain actions of the Committee, including the annual continuance of the
Agreement for Investment Management Services between VCA-2 and Prudential, must
be approved by a majority of the Members of the Committee who are not interested
persons of Prudential, its affiliates or VCA-2. Messrs. Melzer and Greene,
Members of the Committee, are interested persons of Prudential, as that term is
defined in the 1940 Act, because they are officers of Prudential, the investment
adviser of VCA-2. Messrs. Fenster, McDonald, and Weber are not interested
persons of Prudential, its affiliates, or VCA-2. However, Mr. Fenster is
President of the New Jersey Institute of Technology. Prudential has issued a
group annuity contract to the Institute and provides group life and group health
insurance to its employees.

REMUNERATION OF MEMBERS OF THE COMMITTEE AND CERTAIN AFFILIATED PERSONS

No member of the VCA-2 Committee nor any other person (other than Prudential)
receives remuneration from the Account. Prudential pays certain of the expenses
relating to the operation of, including all compensation paid to members of the
Committee, its Chairman, its Secretary and Assistant Secretaries. No member of
the VCA-2 Committee, its Chairman, its Secretary or Assistant Secretaries who is
also an officer, Director or employee of Prudential or an affiliate of
Prudential is entitled to any fee for his services as a member or officer of the
Committee.

DIRECTORS AND OFFICERS OF PRUDENTIAL

The names of all Directors and certain officers of Prudential and the positions
and offices and principal occupation of each during the past five years are
shown below. The Contract-holder under each Contract will be entitled to one
vote for the election of Prudential Directors. Participants will not be entitled
to vote.

11
<PAGE>

DIRECTORS

FRANKLIN E. AGNEW, Director since 1994 (current term expires April, 2000).
Member, Committee on Dividends; Member, Finance Committee. Business consultant
since 1987. Senior Vice President H.J. Heinz from 1971 to 1986. Mr.Agnew is also
a director of Bausch & Lomb Inc. and John Wiley & Sons, Inc. Age 61. Address:
One Mellon Bank Center, Suite 2120, Pittsburgh, PA 15219.

FREDERICK K. BECKER, Director since 1994 (current term expires April, 1999).
Member, Auditing Committee, Member, Committee on Business Ethics. President,
Wilentz Goldman and Spitzer (law firm) since 1989, with firm since 1960. Age 60.
Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095.

WILLIAM W. BOESCHENSTEIN, Director since 1982 (current term expires April,
1997). Chairman, Executive Committee; Member, Auditing Committee. Retired since
1990. Chairman of the Board and Chief Executive Officer, Owens-Corning Fiberglas
Corporation from 1981 to 1990. Mr. Boeschenstein is also a director of FMC Corp.
Age 70. Address: One Seagate, Suite 1530, Toledo, OH 43604.

LISLE C. CARTER, JR., Director since 1987 (current term expires April, 1997).
Chairman, Committee on Nominations; Member Executive Committee; Member Finance
Committee. Retired since 1991. Senior Vice President and General Counsel, United
Way of America from 1988 to 1991. Age 70. Address: 1307 Fourth Street, S.W.,
Washington, DC 20024.

JAMES G. CULLEN, Director since 1994 (current term expires April, 2001). Member,
Compensation Committee; Member, Committee on Business Ethics. Vice Chairman,
Bell Atlantic Corporation. President, Bell Atlantic Corporation from 1993 to
1995. President New Jersey Bell 1989 to 1993. Mr. Cullen is also a director of
Johnson& Johnson. Age 53. Address: 1310 North Court House Road, 11th Floor,
Alexandria, VA 22201.

CAROLYNE K. DAVIS, Director since 1989 (current term expires April, 1997).
Member, Finance Committee; Member Committee on Business Ethics; Member,
Compensation Committee. National and International Health Care Advisor, Ernst &
Young since 1985. Dr. Davis is also a director of Merck & Co., Inc., Beckman
Instruments, Inc., Pharmaceutical Marketing Services, Inc. and Science
Applications International Corporation. Age 64. Address: 1225
Connecticut Avenue, N.W., Washington, DC 20036.

ROGER A. ENRICO, Director since 1994 (current term expires April, 1998). Member,
Committee on Nominations; Member, Compensation Committee. CEO PepsiCo, Inc.
since 1996. Vice Chairman, PepsiCo, Inc. from 1993 to 1996. Chairman and CEO,
Pepsi Co. Worldwide Food, from 1991 to 1993. President and CEO, Pepsi Co.
Worldwide Beverage from 1986-1991. Mr. Enrico is also a director of Dayton
Hudson Corporation and A.H.Belo Corporation. Age 51. Address: 14841 North Dallas
Parkway, Dallas, TX, 75240.

ALLAN D. GILMOUR, Director since 1995 (current term expires April, 1999).
Retired since 1995. Vice Chairman, Ford Motor Company, from 1993 to 1995. Mr.
Gilmour originally joined Ford in 1960. Mr. Gilmour is also a director of
USWest, Inc., Whirlpool Corporation and The Dow Chemical Company. Age 61.
Address: 751 Broad Street, Newark, NJ 07102.

WILLIAM H. GRAY, III, Director since 1991 (current term expires April, 2000).
Member, Finance Committee; Member, Committee on Nominations. President and Chief
Executive Officer, The College Fund/UNCF since 1991. Mr.Gray served in Congress
from 1979 to 1991. Mr.Gray is also a director of Warner-Lambert Co., Chase
Manhattan Corp., Municipal Bond Investors Assurance Corp., Westinghouse Electric
Corp., Union Pacific Corp., Lotus Development Corp., and Rockwell International
Corp. Age 54. Address: 8260 Willow Oaks Corp. Drive, Fairfax, VA 22031.

JON F. HANSON, Director since 1991 (current term expires April, 1997). Member,
Finance Committee; Member, Committee on Dividends. Chairman, Hampshire
Management Co. since 1976. Mr. Hanson is also a director of United Water
Resources. Age 59. Address: 235 Moore Street, Suite 200, Hackensack,
NJ 07601.

CONSTANCE J. HORNER, Director since 1994 (current term expires April, 1998).
Member, Auditing Committee; Member, Committee on Nominations. Guest Scholar, The
Brookings Institution since 1993. Assistant to the President and Director of
Presidential Personnel, U.S. Government, 1991-1992. Deputy Secretary, Department
of Health & Human Services from 1989 to 1991. Ms. Horner is also a director of
Pfizer, Inc., Ingersoll-Rand Company and Foster Wheeler Corporation. Age 54.
Address: 1775 Massachusetts Ave., N.W. Washington, D.C. 20036-2188.

ALLEN F. JACOBSON, Director since 1992 (current term expires April, 1997).
Member, Auditing Committee; Member Compensation Committee. Retired since 1991.
Chairman of the Board and Chief Executive Officer, Minnesota Mining &
Manufacturing Co. from 1986 to 1991. Mr. Jacobson is also a director of Abbott
Laboratories, Deluxe Corp., Northern States Power Co., Silicon Graphics, Inc.,
Valmont Industries, 3M, Mobil Corporation, U.S. West, Inc., Sara Lee Corporation
and Potlatch Corporation. Age 69: Address: 3050 Minnesota World Trade Center,
St. Paul, MN 55101.

GARNETT L. KEITH, JR., Director since 1984 (current term expires April, 1999).
Vice Chairman of Prudential since 1984. Mr. Keith is also a director of Super
Valu Stores, Inc., AEA Investors, Inc. and Pan-Holding, Societe Anonyme. Age 60.
Address: 751 Broad Street, Newark, NJ 07102-3777.

12
<PAGE>

BURTON G. MALKIEL, Director since 1978 (current term expires April, 1998).
Chairman, Finance Committee; Member, Executive Committee; Member, Committee on
Nominations. Professor, Princeton University, since 1988. Dr. Malkiel is also a
director of The Jeffrey Co., Vanguard Group, Inc., Amdahl Corporation, Baker
Fentress & Company, and Southern New England Telecommunications Co. Age 63.
Address: 110 Fisher Hall, Prospect Avenue, Princeton University, Princeton, NJ
08544-1021.

ARTHUR F. RYAN, Chairman of the Board, President and Chief Executive Officer of
Prudential since 1994. President and Chief Operating Officer, Chase Manhattan
Corp. from 1990 to 1994, with Chase since 1972. Age 53. Address: 751 Broad
Street, Newark, NJ 07102-3777.

CHARLES R. SITTER, Director since 1995 (current term expires April, 1999).
Member, Committee on Dividends. President, Exxon Corporation from 1993 to 1996.
Mr. Sitter began his career with Exxon in 1957; he is currently a director of
Exxon. Age 65. Address: 5959 Las Colinas Boulevard, Irving, TX
75039.

DONALD L. STAHELI, Director since 1995 (current term expires April, 1999).
Member, Compensation Committee. Chairman and Chief Executive Officer,
Continental Grain Company since 1994. Mr. Staheli was Chairman of Continental
Grain from 1988 to 1994. Age 64. Address: 277 Park Avenue, New York, NY 10172.

RICHARD M. THOMSON, Director since 1976 (current term expires April, 2000).
Chairman, Compensation Committee; Member, Committee on Nominations, Member,
Executive Committee. Chairman of the Board and Chief Executive Officer, The
Toronto-Dominion Bank since 1978. Mr. Thomson is also a director of CGC, Inc.,
Eaton's of Canada, Ltd., INCO, Ltd., The Thomson Corp. National Retail Credit
Services Limited, TEC Leaseholds Limited, Thomglen Corporation and S.C. Johnson
& Son, Ltd. Age 62. Address: P.O. Box 1, Toronto-Dominion Centre, Toronto,
Ontario, M5K 1A2, Canada.

JAMES A. UNRUH, Director since 1996 (current term expires April, 2000). Chairman
and Chief Executive Officer of Unisys Corporation since 1990. Mr. Unruh is also
a director of Ameritech Corporation. Age 55. Address: Township Line& Union
Meeting Roads, Blue Bell, PA 19424.

P. ROY VAGELOS, M.D., Director since 1989 (current term expires April, 1997).
Chairman, Auditing Committee; Member, Committee on Dividends; Member, Executive
Committee. Chairman, Regeneron Pharmaceuticals since 1995. Chairman and Chief
Executive Officer, Merck & Co., Inc. from 1986 to 1994. Dr. Vagelos is also a
director of Pepsi Co., Inc., The Estee Lauder Companies Inc. and McDonnell
Douglas Corp. Age 66. Address: One Crossroads Drive, Bedminster, NJ 07921.

STANLEY C. VAN NESS, Director since 1990 (current term expires April, 2002).
Chairman, Committee on Business Ethics; Member, Auditing Committee; Member,
Executive Committee. Attorney, Picco Herbert Kennedy (law firm) from 1990.
Partner of Jamieson, Moore, Peskin & Spicer from 1984 to 1990. Mr. Van Ness is
also a director of Jersey Central Power & Light Company. Age 62. Address: One
State Street Square, Suite 1000, Trenton, NJ 08607-1388.

PAUL A. VOLCKER, Director since 1988 (current term expires April, 2000). Member,
Committee on Dividends; Member, Committee on Nominations. Chairman, James D.
Wolfensohn, Inc. since 1988; Chief Executive Officer, James D. Wolfensohn, Inc.
since 1995. Chairman, J. Rothschild, Wolfensohn & Co. from 1992 to 1995. Mr
Volcker is also a director of Fuji-Wolfensohn International, Nestle, S.A., UAL
Corp. and the Board of Governors, American Stock Exchange. Age 68. Address: 599
Lexington Avenue, New York, NY 10022.

JOSEPH H. WILLIAMS, Director since 1994 (current term expires April, 1998).
Member, Auditing Committee; Member, Committee on Dividends. Chairman of the
Board, The Williams Companies since 1994. Chairman & Chief Executive Officer,
The Williams Companies 1979-1993. Mr.Williams is also a director of Flint
Industries and The Orvis Company. Age 62. Address: One Williams Center, Tulsa,
OK 74102.

<PAGE>

EXECUTIVE OFFICERS OF PRUDENTIAL

ARTHUR F. RYAN, Chairman, Chief Executive Officer, and President since 1994.
Age 53.

GARNETT L. KEITH, JR., Vice Chairman since 1984. Age 60.

E. MICHAEL CAULFIELD, Chief Executive Officer, Money Management Group since
1995; 1989-92 Managing Director. Age 49.

MARK B. GRIER, Chief Financial Officer since 1995. Age 43.

WILLIAM P. LINK, President and Chief Executive Officer, Prudential HealthCare
Group since 1995; 1987-90: Senior Vice President. Age 49.

JOHN V. SCICUTELLA, Operations and Systems Executive Officer since 1995. Age 47.

ERIC A. SIMONSON, President, Private Asset Management Group since 1995;
1989-94 Senior Managing Director.Age 50.

WILLIAM F. YELVERTON, Chief Executive Officer, Individual Insurance Group
since 1995. Age 54.

MARTIN BERKOWITZ, Senior Vice President and Comptroller since 1995. Age 47.

WILLIAM M. BETHKE, Senior Vice President since 1986. Age 48.

STEPHEN R. BRASWELL, Senior Vice President since 1983. Age 54.

ROBERT M. CHMELY, Senior Vice President since 1988. Age 61.

WILLIAM D. FRIEL, Senior Vice President since 1993; 1988-92: Vice President. Age
56.

JAMES R. GILLEN, Senior Vice President and General Counsel since 1984. Age 58.

BRUCE J. GOODMAN, Senior Vice President since 1993. Age 54.

SAMUEL H. HAVENS, Senior Vice President since 1989; 1985-89: Vice President. Age
52.

IRA J. KLEINMAN, Senior Vice President since 1992; 1978-92: Vice President. Age
48.

DONALD C. MANN, Senior Vice President since 1990; 1985-90: Vice President. Age
53.

PRISCILLA A. MYERS, Senior Vice President and Auditor since 1995. Age 46.

RICHARD O. PAINTER, President, Prudential Insurance& Financial Services since
1995. Age 48.

I. EDWARD PRICE, Senior Vice President since 1993; 1990-93; Senior Vice
President and Company Actuary. 1986-90: Senior Vice President. Age 53.

KIYOFUMI SAKAGUCHI, President, Prudential International Insurance since 1995.
Age 53.

GREGORY W. SCOTT, Chief Financial Officer, Prudential Healthcare Group since
1995. Age 42.

C. EDWARD CHAPLIN, Vice President and Treasurer since 1995. Age 39.

SUSAN L. BLOUNT, Vice President and Secretary since 1995. Age 38.

14
<PAGE>

SALE OF GROUP VARIABLE ANNUITY CONTRACTS

Prudential offers the Contracts on a continuous basis through Corporate Office,
regional home office and group sales office employees in those states in which
the Contracts may be lawfully sold. It may also offer the Contracts through
licensed insurance brokers and agents, or through appropriately registered
direct or indirect subsidiary(ies) of Prudential, provided clearances to do so
are secured in any jurisdiction where such clearances may be necessary or
desirable. During 1996, 1995 and 1994 Prudential received $_______, $180,356,
and $108,110 respectively, as sales charges in connection with the sale of these
contracts. Prudential credited $______, $100,063 and $93,325 respectively to
other broker-dealers in connection with such sales.

EXPERTS

The financial statements included in this Statement of Additional Information
and the condensed financial information in the Prospectus have been audited by
Price Waterhouse LLP, independent auditors, as stated in their report appearing
herein, and the financial statements have been included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing. The Committee approves the accountant's employment annually. Price
Waterhouse's business address is 1177 Avenue of the Americas, New York, N.Y.
10036.

Financial statements for VCA-2 and Prudential, as of December31, 1996, are
included in this Statement of Additional Information, beginning at page 11.

15
<PAGE>

Item 28. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements [to be added by amendment]

(1) Financial Statements of The Prudential Variable Contract
Account-2 (Registrant) consisting of the Statement of Net
Assets, as of December 31, 1996; the Statement of Operations
for the period ended December 31, 1996; the Statements of
Changes in Net Assets for the periods ended December 31,
1996 and 1995; and the Notes relating thereto appear in the
statement of additional information (Part B of the
Registration Statement).

(2) Consolidated Financial Statements of The Prudential
Insurance Company of America (Depositor) and subsidiaries
consisting of the Consolidated Statements of Financial
Position as of December 31, 1996 and 1995; the Consolidated
Statements of Operations and Changes in Surplus and Asset
Valuation Reserve (AVR) and the Consolidated Statements of
Cash Flows for the years ended; and the Notes relating
thereto appear in the statement of additional information
(Part B of the Registration Statement).

<TABLE>

(b) Exhibits
<S> <C>
(1) Resolution of the Board of Directors Incorporated by reference to
of The Prudential Insurance Exhibit 1 to this Registrant's Form
Company of America establishing N-8B-1 Registration Statement, File
The Prudential Variable Contract No.811-1612
Account-2 (filed herewith)

(2) Rules and Regulations of The Incorporated by reference to
Prudential Variable Contract Exhibit (2) to Post-Effective
Account-2 Amendment No. 41 to this
Registration Statement
(To be filed via EDGAR)

(3) (i) Custodian Agreement with Incorporated by reference to
Morgan Guaranty Trust Company Exhibit (8)(i) to Post-Effective
of New York Amendment No. 25 to this
Registration Statement
(To be filed via EDGAR)

(ii) Custodian Agreement with Incorporated by reference to
Manufacturers Hanover Trust Exhibit (8) (ii) to Post-Effective
Company Amendment No. 25 to this
Registration Statement
(To be filed via EDGAR)

(4) (i) Agreement for Investment Incorporated by reference to
Management Services between Exhibit 5 to Registrant's
Prudential and The Prudential Form N-8B-1 Registration Statement,
Variable Contract Account-2 File No. 811-1612
(To be filed via EDGAR)

(ii) Amendment No. 1 to Agreement Incorporated by reference to
for Investment Management Services Exhibit 1 (5)(b) to Post-Effective
between Prudential and The Amendment No. 8 to this
Prudential Variable Contract Registration Statement
Account-2 (To be filed via EDGAR)
</TABLE>

C-1
<PAGE>

<TABLE>

<CAPTION>
<S> <C>
(5) (i) Agreement Relating to the Sale Incorporated by reference to
of Group Variable Annuity Contracts Exhibit 6 to this Registrant's
between Prudential and The Form N-8B-1 Registration Statement,
Prudential Variable Contract File No.811-1612
Account-2 (To be filed via EDGAR)

(ii) Amendment to Agreement Incorporated by reference to
Relating to the Sale of Group Exhibit 6(ii) to Post-Effective
Variable Annuity Contracts between Amendment No. 25 to this
Prudential and The Prudential Registration Statement
Variable Contract Account-2 (To be filed via EDGAR)

(iii) Dealer Agreement between Incorporated by reference to
Prudential, The Prudential Variable Exhibit 6(iii) to Post-Effective
Contract Account-2 and Prudential- Amendment No. 34 to this
Bache Securities Inc. Registration Statement
(To be filed via EDGAR)

(iv) Agreement for the Sale of VCA-2 Incorporate by reference to
Contracts between Prudential, The Exhibit 5(iv) to Post-Effective
Prudential Variable Contract Amendment No. 46 to this
Account-2 and Prudential Retirement Registration Statement
Services, Inc. (To be filed via EDGAR)

(v) Agreement for the Sale of VCA- Filed with this Registration
Contracts between Prudential, The Statement.
Prudential Variable Contract
Account-2 and Prudential Investment
Management Services LLC

(6) (i) Specimen copy of group variable Incorporated by reference to
annuity contract Form GVA-120, with Exhibit (4) to Post-Effective
State modifications Amendment No. 32 to this
Registration Statement
(To be filed via EDGAR)

(ii) Specimen copy of Group Annuity Incorporated by reference to
Amendment Form GAA-7764 for Exhibit (6)(ii) to Post-Effective
tax-deferred annuities Amendment No 42 to this
Registration Statement
(To be filed via EDGAR)

(iii) Specimen copy of Group Incorporated by reference to
Annuity Amendment Form GAA-7852 Exhibit (6)(iii) to Post-Effective
for tax-deferred annuities Amendment No. 45 to this
Registration Statement
(To be filed via EDGAR)

(7) Application form Incorporated by reference to
Exhibit (4) of Post-Effective
Amendment No. 32 to this
Registration Statement
(To be filed via EDGAR)

(8) (i) Amended Charter of Prudential Incorporated by reference to
and the Adoption and Ratification of Exhibit (8)(i) to Post-Effective
a New Amended charter of such Amendment No. 27 to the
Corporation Registration Statement of The
Prudential Variable Contract
Account-10, Registration
No.2-76580, filed April , 1996
</TABLE>

C-2

<S> <C>
(ii) Copy of the By-Laws of Incorporated by reference to
Prudential, as amended Exhibit 99.2 to Post-Effective
August 8, 1995 Amendment No. 27 to the Registration
Statement of The Prudential Variable
Contract Account-10, Registration
No. 2-76580, filed April , 1996

(11) (i) Service Agreement between Incorporated by reference to
Prudential and The Prudential Exhibit (10)(i) to Post-Effective
Investment Corporation Amendment No. 34 to this
Registration Statement
(To be filed via EDGAR)

(ii) Service Agreement between Incorporated by reference to
Prudential and The Prudential Asset Exhibit (10)(ii) to Post-Effective
Management Company, Inc. Amendment No. 34 to this
Registration Statement
(To be filed via EDGAR)

(13) (i) Consent of independent auditors Filed with this Amendment
(ii) Powers of Attorney
(a) Members of the Registrant's Incorporated by reference to
Committee Messrs. Fenster, Exhibit 13(ii)(a) to Post-Effective
Weber McDonald, Melzer and Greene Amendment No. 26 to the
Registration Statement of The
Prudential Variable Contract
Account-10, Registration
No. 2-76580, filed April 28, 1995

Mr. McDonald Incorporated by reference to Exhibit
13(ii)(a) to Post-Effective
Amendment No. 26 to the
Registration Statement of The
Prudential Variable Contract
Account-11, Registration No. 2-
76581, filed April 28 ,1995

(b) Directors and Officers Incorporated by reference to Post-
of Prudential Effective Amendment No.15 to the
Registration Statement of The
F. Agnew, F Becker, Prudential Variable Appreciable
W. Boeschenstein, Account, Registration No 33-20000,
L. Carter, J. Cullen, filed May 1,1995
C. Davis, R. Enrico,
A. Gilmour, W. Gray,
J. Hanson, C. Horner,
A. Jacobson, G. Keith,
B. Malkiel, A. Ryan, C. Sitter,
D. Staheli, R. Thomson
R. Vagelos, S. Van Ness
P. Volcker, J. Williams
M. Grier Incorporated by reference to the
Registration Statement of The
Prudential Variable Appreciable
Account, Registration No. 33-61079,
filed July 17, 1995

J. Unruh To be filed

(17) Financial Data Schedule Incorporated by reference to Form
N-SAR of The Prudential Variable
Contract Account-2, filed February
29, 1996
</TABLE>

C-3

<PAGE>

Item 29. DIRECTORS AND OFFICERS OF PRUDENTIAL

Information about Prudential's Directors and Executive Officers appears under
the heading "Directors and Officers of Prudential" in the Statement of
Additional Information (Part B of this Registration Statement).

Item 30. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Registrant is a separate account of The Prudential Insurance Company of America,
a mutual life insurance company organized under the laws of the State of New
Jersey. The subsidiaries of Prudential are shown on the Organization Chart on
the following pages.

In addition to the subsidiaries shown on the Organization Chart, Prudential
holds all of the voting securities of Prudential's Gibraltar Fund, a Delaware
corporation, in three of its separate accounts. Prudential also holds directly
and in three of its other separate accounts, shares of The Prudential Series
Fund, Inc., a Maryland corporation. The balance are held in separate accounts of
Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey,
wholly-owned subsidiaries of Prudential. All of the separate accounts referred
to above are unit investment trusts registered under the Investment Company Act
of 1940. Prudential's Gibraltar Fund and The Prudential Series Fund, Inc. are
registered as open-end, diversified management investment companies under the
Investment Company Act of 1940. The shares of these investment companies are
voted in accordance with the instructions of persons having interests in the
unit investment trusts, and Prudential, Pruco Life Insurance Company and Pruco
Life Insurance Company of New Jersey vote the shares they hold directly in the
same manner that they vote the shares that they hold in their separate accounts.

Registrant may also be deemed to be under common control with The Prudential
Variable Contract Account-10 and The Prudential Variable Contract Account-11,
separate accounts of Prudential registered as open-end, diversified management
investment companies under the Investment Company Act of 1940, and with The
Prudential Variable Contract Account-24, a separate account of Prudential
registered as a unit investment trust.

The Prudential is a mutual insurance company. Its financial statements include
the consolidated accounts of Prudential, its wholly-owned life insurance
subsidiary, Pruco Life Insurance Company, and its non-insurance subsidiaries on
a fully consolidated basis. The financial statements have been prepared in
conformity with generally accepted accounting principles, which as to The
Prudential and its insurance subsidiaries include statutory accounting practices
prescribed or permitted by state regulatory authorities for insurance companies.

C-4

<PAGE>

<TABLE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND ITS SUBSIDIARIES

The Prudential Insurance Company of America
<S> <C> <C>
Fine Homes, L.P. (1) (see page 2 for Direct and Indirect subs)
Gibraltar Casualty Company
Health Ventures Partner, Inc.
HSG Health Systems Group Limited
Industrial Trust Company
Jennison Associates Capital Corp. JACC Services Corp.
PGR Advisors I, Inc.

Clive Discount Company Limited Clivco Nominees Limited
Clive Agency Bond Broking Limited

Clivwell Securities Limited
PRICOA Capital Group Limited
PRICOA Funding Limited PRICOA Investment Company
PRICOA Property Investment Management Northern Retail Properties (General
Limited Partner) Limited
PIC Holdings Limited PRICOA P.I.M. (Regulated) Limited
TransEuropean Properties
(General Partner) Limited
TransEuropean Properties
(General Partner) II Limited
Varsity Fund (General Partner) Limited

PRICOA Realty Group Limited
PIC Realty Canada Limited
PREMISYS Real Estate Services, Inc. PREMISYS Real Estate Services, Inc. of
Colorado (2)

PRICOA Vida, Sociedad Anonima de Seguros y PRICOA Invest, Sociedad Anonima, S.G.C.
Reaseguros (3)
PRICOA, Vita S.p.A.
PRUCO, Inc. (see pages 3-6 for Direct and Indirect subs)
Pruco Life Insurance Company Pruco Life Insurance Company of New Jersey
The Prudential Life Insurance Company of
Arizona
Prudential Direct Advisers, Inc.
Prudential Direct Distributors, Inc.
Prudential Fund Management Canada Limited
Prudential Global Funding, Inc. Prudential-Bache Capital Funding (Swaps)
Limited
Prudential Homes Corporation Prudential Texas Residential Services
Corporation
Prudential Mortgage Asset Corporation
Prudential Mortgage Asset Corporation II
Prudential Mutual Fund Management, Inc. (4)
Prudential of America General Insurance OTIP/RAEO Insurance Company, Inc. (5)
Company (Canada)
Prudential of America Life Insurance Company
(Canada) (6)
Prudential Private Placement Investors, Inc.
Prudential Realty Securities II, Inc. (7)
Prudential Select Holdings, Inc. Prudential Select Life Insurance Company
of America
Prudential Service Bureau, Inc.
PruLease, Inc.
PruServicos Participacoes, S.A. (8)
Residential Services Corporation of America (see page 2 for Direct and Indirect subs)
Prudential HealthCare and Life Insurance
Company of America
The Prudential Investment Corporation (see page 7 for Direct and Indirect subs)
The Prudential Life Insurance Company of
Korea, Ltd.
The Prudential Life Insurance Company, Ltd.
The Prudential Real Estate Affiliates, Inc. (see page 2 for Direct and Indirect subs)
U.S. High Yield Management Company

- ------------------
</TABLE>

(1) Fine Homes, L.P. is a partnership which owns subsidiaries.

(2) PREMISYS Real Estate Services, Inc. of Colorado is 80% owned by PREMISYS
Real Estate Services, Inc. and 20% owned by Peter Coakley.

(3) PRUCO, Inc. owns 26 shares ([less-than]1%) of PRICOA Vida, Sociedad Anonima
de Seguros y Reaseguros.

(4) Prudential Mutual Fund Management, Inc. is 85% owned by Prudential
Securities Incorporated and 15% owned by The Prudential.

(5) OTIP/RAEO Insurance Company, Inc. is 95% owned by Prudential of America
General Insurance Company (Canada) and 5% owned by OTIP Insurance Brokers,
Inc.

(6) Prudential of America Life Insurance Company (Canada) is 75% owned by The
Prudential and 25% owned by PPI Financial Group, Ltd.

(7) Prudential Realty Securities II, Inc. is 87% owned by The Prudential and
13% owned by PRUCO, Inc.

(8) PRUCO, Inc. owns 1 share ([less-than]1%) of PruServicos Participacoes, S.A.

6/30/95
C-5
<PAGE>

<TABLE>

The Prudential Insurance Company of America

<S> <C> <C>
Major Escrow Corp.
ML/MSB Acquisition, Inc.
PRICOA Relocation Management, Ltd.
PRS Escrow Services, Inc.
Fine Homes, L.P. Prudential Community Interaction Consulting, Inc.
(from p. 1) Prudential New York Homes Corporation
Prudential Oklahoma Homes Corporation
Prudential Relocation Mangagement Company of
Canada Ltd.
Prudential Resources Management Asia, Limited
The Relocation Funding Corporation of America
Residential Lender's Service, Inc. Lender's Service Title Agency, Inc.
Services Private Label Mortgage Services Corporation
Corporation Residential Information Services, Inc.
of America Securitized Asset Sales, Inc.
(from p. 1) Securitized Asset Services Corporation
The Prudential Home Mortgage Company, Inc. The Prudential Home Mortgage Securities
Company, Inc.
The Prudential Prudential Referral Services, Inc.
Real Estate The Prudential Real Estate Financial Services of The Prudential Real Estate Financial Services of
Affiliates, Inc. America, Inc. Long Island, Inc.
(from p. 1)

</TABLE>

C-6
<PAGE>

The Prudential Insurance Company of America

<TABLE>

<S> <C> <C> <C>
Capital Agricultural Property Services, Inc.
Flor-Ag Corporation
GIB Laboratories, Inc.
P.G. Realty, Inc.
PIC Realty Corporation
Pruco Securities Corporation
Prudential Agricultural Credit, Inc.
Prudential Capital and Investment Services, Inc. (See Pages 4-6 for Direct and
Prudential Dental Maintenance Indirect subs)
Organization, Inc.
Prudential Direct, Inc.
Prudential Equity Investors, Inc.
Prudential Funding Corporation
Prudential Health Care Plan, Inc.
Prudential Health Care Plan of California, Inc.
Prudential Health Care Plan of Connecticut, Inc.
Prudential Health Care Plan of Georgia, Inc.
Prudential Health Care Plan of New York, Inc.
PRUCO, Prudential Holdings, Inc.
Inc. (1) Prudential Institutional Fund Management, Inc.
(from p. 1) Prudential Commercial Insurance Company
Prudential Property and Casualty Insurance Prudential General Insurance Company
Company Prudential Insurance Brokerage, Inc.
The Prudential Lloyds (3)
The Prudential Property and Casualty
General Agency, Inc.
The Prudential Property and Casualty
Insurance Company of New Jersey
Prudential Realty Partnerships, Inc.
Prudential Realty Securities, Inc.
Prudential Realty Securities II, Inc. (2)
Prudential Reinsurance Holdings, Inc. Prudential Reinsurance Company Le Rocher Reinsurance, Ltd.
Prudential National Insurance
Company
Prudential Retirement Services, Inc.
Prudential Trust Company PTC Services, Inc.
Prudential Uniformed Services
Administrators, Inc.
The Prudential Bank and Trust Company PBT Mortgage Corporation
The Prudential Savings Bank, F.S.B.
</TABLE>

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

(1) PRUCO, Inc. owns 1 share ([less-than]1%) of PruServicos Participacoes,
S.A.

(2) Prudential Realty Securities II, Inc. is 87% owned by The Prudential and
13% owned by PRUCO, Inc.

(3) The Prudential Lloyds is controlled by Prudential Property and Casualty
Insurance Company by virtue of a trust agreement with each underwriter.

C-7

<PAGE>

The Prudential Insurance Company of America

PRUCO, Inc.

Prudential Capital and Investment Services, Inc. (from p.3)

<S> <C> <C> <C>
Lapine Holding Lapine Technology Corporation
Company (1)

Bache Insurance Agency of Arkansas, Inc.
Bache Insurance Agency of Louisiana, Prudential-Bache Securities
Inc. (Germany) Inc.
BraeLoch Successor Corporation (See page 5 for Direct and
Indirect subs)
PB Bullion Company, Inc.
PB Services (U.K.)
PGR Advisors, Inc.
Prudential-Bache Agriculture Inc.
Prudential-Bache Capital Funding
(Australia) Limited
Prudential-Bache Capital Funding BV Audley Finance BV
Prudential-Bache Energy Corp.
Prudential-Bache Energy Production Inc.
Prudential-Bache Holdings Inc. Prudential-Bache Partners Inc.
Prudential-Bache International Bank S.A.
Prudential-Bache International (U.K.) (See page 6 for Direct and
Limited Indirect subs)
Prudential-Bache Investor Services Inc.
Prudential-Bache Investor Services II, Inc.
Prudential Prudential-Bache Leasing Inc.
Securities Prudential-Bache Minerals Inc.
Group Inc. Prudential-Bache Program Services Inc.
Prudential-Bache Properties, Inc.
Prudential-Bache Real Estate, Inc.
Prudential-Bache Securities (Australia) (See page 5 for Direct Subs)
Limited
Prudential-Bache Trade Services Inc. PB Trade Ltd.
Prudential-Bache Forex (Hong
Kong) Limited
Prudential-Bache Forex (USA) Prudential-Bache Forex (U.K.)
Inc. Limited
Prudential-Bache Transfer Agent
Services, Inc.

Prudential Securities Incorporated (See page 6 for Direct and
Indirect subs)
Prudential Securities Lease Holding Inc.
Prudential Securities Municipal
Derivatives, Inc.
Prudential Securities Realty Funding
Corporation
Prudential Securities Secured Financing
Corporation
Prudential Securities Structured Assets, P-B Finance Ltd.
Inc.
R&D Funding Corp.
Seaport Futures Management, Inc.
Special Situations Management Inc.
- -----------------
</TABLE>

(1) Lapine Holding Company is 66.7% owned by Prudential Capital and Investment
Services, Inc., 28.3% owned by Kyocera Corp. and 5% owned by Kyocera (Hong
Kong) Ltd.

C-8
<PAGE>

<TABLE>

The Prudential Insurance Company of America

PRUCO, Inc.

Prudential Capital and Investment Services, Inc.

<S> <C> <C> <C>
BraeLoch
Successor
Corporation
(from p. 4) BraeLoch Holdings, Inc.

Prudential Prudential-Bache Bache Nominees, Ltd.
Securities Securities Corcarr Funds Management
Group, Inc. (Australia) Limited
Limited Corcarr Management Pty
(from p. 4) Limited
Corcarr Nominees Pty Limited
Corcarr Superannuation Pty
Limited
Divsplit Nominees Pty Limited
PruBache Nominees Pty
Limited

Graham Graham Depository Company II
Resources, Inc. Graham Energy, Ltd.
Graham Exploration, Ltd.
Graham Royalty, Ltd. Graham Production Company
Graham Securities Corporation

</TABLE>

C-9

<PAGE>

The Prudential Insurance Company of America

PRUCO, Inc.

Prudential Capital and Investment Services, Inc.

Prudential Securities Group, Inc.

Prudential-Bache International Clive Discount Holdings International Limited
(U.K.) Limited (from p. 4) Page & Gwyther Holdings Limited
Page & Gwyther Limited
Prudential-Bache Capital Funding (Equities)
Limited Circle (Nominees) Limited
Prudential-Bache Capital Funding (Gilts) Limited
Prudential-Bache Capital Funding (Money
Brokers) Limited
Prudential-Bache (Futures) Limited

Prudential Securities Bache & Co. (Lebanon) S.A.L.
Incorporated (from p. 4) Bache & Co. S.A. de C.V. (Mexico)
Bache Halsey Stuart Shields (Antilles) N.V.
Bache Insurance Agency, Incorporated
Bache Insurance of Arizona Inc.
Bache Insurance of Kentucky, Inc.
Bache Shields Securities Corporation
Banom Corporation
Gelfand, Quinn & Associates, Inc.
P-B Holding Japan Inc. Prudential Securities (Japan) Limited
Prudential-Bache Futures Asia Pacific Ltd.
Prudential-Bache Futures (Hong Kong) Limited
Prudential-Bache Nominees (Hong Kong) Limited
Prudential-Bache Securities Asia Pacific Ltd.
Prudential-Bache Securities (Belgium) Inc.
Prudential-Bache Securities (Espana) S.A.
Prudential-Bache Securities (France) S.A.
Prudential-Bache Securities (Holland) Inc. Prudential-Bache Securities
(Holland) N.V.
Prudential-Bache Securities (Hong Kong) Limited
Prudential-Bache Securities (Luxembourg) Inc.
Prudential-Bache Securities (Monaco) Inc.
Prudential-Bache Securities (Switzerland) Inc.
Prudential-Bache Securities (U.K.) Inc. Shields Model Roland Company
Prudential Mutual Fund Management, Inc. (1) Prudential Mutual Fund
Distributors, Inc.
Prudential Mutual Fund Services, Inc.
Prudential Securities (Chile) Inc.
Prudential Securities CMO Issuer Inc.
Prudential Securities Futures Management, Inc.
Prudential Securities (South America) Incorporated Prudential Securities (Argentina)
Incorporated
Prudential Securities (Uruguay) S.A.
Shields Model Roland Securities Incorporated
Wexford Clearing Services Corporation
</TABLE>

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

(1) Prudential Mutual Fund Management, Inc. is 85% owned by Prudential
Securities Incorporated and 15% owned by The Prudential.

C-10

<PAGE>

The Prudential Insurance Company of America

The Prudential Investment Corporation (from p. 1)

<TABLE>
<CAPTION>
<S> <C>
Gateway Holdings, S.A. Amicus Investment Company
Global Income Fund Management
Company, S.A.
Global Series Fund II Management
Company, S.A.
Jennison Long Bond Management Company
PAEC Management Company
Prudential Asset Sales and Syndications, Inc.
Prudential Home Building Investors, Inc.
PruSupply, Inc. PruSupply Capital Assets, Inc.
CSI Asset Management, Inc.
Enhanced Investment Technologies, Inc.
Mercator Asset Management, Inc.
PCM International, Inc.
Prudential Asset Management Company, Inc. Prudential Asia Investments Limited (1)
Prudential Asset Management Company
Securities Corporation
Prudential Timber Investments, Inc. (2)
The Prudential Investment Advisory Company, Ltd.
The Prudential Property Company, Inc.
The Prudential Realty Advisors, Inc.
TRGOAG Company, Inc.
</TABLE>

<TABLE>
<S> <C> <C> <C>
PAMA (Indonesia) Limited (4)
PAMA (Singapore) Private Limited
PruAsia DBS Limited (3) Prudential Asset Management
Asia Hong Kong Limited
P.T. PAMA Ventura Indonesia (5)

Prudential Asset Management
Asia Limited (BVI)

S.J. Bedding B.V. Simmons Bedding & Furniture (HK) Simmons Asia Simmons (Southeast Asia)
Ltd. (6) Limited (7) Private Limited
Prudential Asia Fund Management Limited (BVI) Simmons Co., Limited
Prudential Asia Fund
Management Limited
Prudential Asia Fund
Managers (HK) Limited
</TABLE>

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

(1) The Prudential Asset Management Company, Inc. and Prudential Securities
Group, Inc. each own 50% of preferred stock and The Prudential Asset
Management Company, Inc. owns 100% common stock.

(2) The Prudential owns 6 shares (100%) of preferred stock in Prudential Timber
Investments, Inc.

(3) PruAsia DBS Limited is 50% owned by Prudential Asia Investments Limited and
50% owned by DBS, Inc.

(4) PAMA (Indonesia) Limited is 75% owned by Prudential Asset Management Asia
Limited (BVI), 15% owned by BDNI and 10% by IFC.

(5) P.T. PAMA Ventura Indonesia is 65% owned by Prudential Asset Management
Asia Limited (BVI), 20% owned by BDNI and 15% by IFC.

(6) Simmons Co. Limited and Simmons Bedding & Furniture (HK) Ltd. are 66.24%
owned by S.J. Bedding B.V. and 6.8% owned by Simmons U.S.A., 15% owned by
others and 12% by management.

(7) Simmons Asia Limited is 90% owned by Simmons Bedding & Furniture (HK) Ltd.
and 10% owned by Simmons U.S.A.

C-11

<PAGE>

06/30/95

SHORT DESCRIPTION OF EACH SUBSIDIARY

A. SUBSIDIARIES OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

1. FINE HOMES, L.P. (A Limited Partnership) (99% owned by Prudential, the
limited partner, and 1% owned by Prudential Homes Corporation, the general
partner) (See Section C for direct and indirect subsidiaries)

A limited partnership to hold real estate related subsidiaries.

2. GIBRALTAR CASUALTY COMPANY (Incorporated in Delaware) (100%)

Previously wrote unusual and non-standard property and casualty risks on a
Surplus Line basis. The company is currently servicing policies that it had
issued, but is not actively seeking new business.

3. HEALTH VENTURES PARTNER, INC. (Incorporated in Illinois) (100%)

Operates as a general partner of the joint venture Rush Prudential Health
Plans.

4. HSG HEALTH SYSTEMS GROUP LIMITED (Incorporated in Canada) (100%)

Provides consulting and administrative services to corporate fitness
facilities and wellness programs in Canada.

5. INDUSTRIAL TRUST COMPANY (Incorporated in Prince Edward Island, Canada)
(100%)

Holds a permit to operate as a trust and loan company in Prince Edward
Island. Currently inactive.

6. JENNISON ASSOCIATES CAPITAL CORP. (Incorporated in New York) (100%)

Provides institutional clients (employee benefit plans, endowments,
foundations, etc.) with discretionary management of portfolios investing in
stocks and bonds and acts as an advisor to The Prudential Institutional
Fund.

6a. JACC SERVICES CORP. (Incorporated in New York) (Owned by Jennison
Associates Capital Corp.) (100%)

Provides computer and accounting support necessary to handle portfolio
accounting and reporting.

7. PGR ADVISORS I, INC. (Incorporated in Delaware) (100%)

A general partner which provides management, advisory, and administrative
services to Global Realty Advisors, a Bermudian partnership that acts as
investment manager to the Prudential Global Real Estate Investment
Programme. Also owns Global Realty Advisors (Bermuda) Limited, a Bermuda
limited liability company which acts as an investment manager to The South
East Asia Property Company Limited and to Seaprime Investments Pte Ltd. (an
unaffiliated entity).

C-12
<PAGE>

8. PIC HOLDINGS LIMITED (Incorporated in U.K.) (100%) (See section B for
direct and indirect subsidiaries)

Acts as a holding company to house the operating entities of Clive Discount
Company Limited., Clivco Nominees Limited, Clive Agency Bond Broking
Limited, Clivwell Securities Limited, PRICOA Capital Group Limited, PRICOA
Funding Limited, PRICOA Investment Company, PRICOA Property Investment
Management Limited., PRICOA P.I.M. (Regulated) Limited, TransEuropean
Properties (General Partner) Limited, Northern Retail Properties (General
Partner) Limited, TransEuropean Properties (General Partner) II Limited,
Varsity Fund (General Partner) Limited and PRICOA Realty Group Limited

9. PIC REALTY CANADA LIMITED (Incorporated in Canada) (100%)

Owns, develops, operates, manages and leases real estate in Canada.

10. PREMISYS REAL ESTATE SERVICES, INC. (Incorporated in Pennsylvania) (100%)

Provides real estate properties/facilities management for The Prudential
and third parties and advisory services with respect to activities of this
type.

10a. PREMISYS REAL ESTATE SERVICES INC. OF COLORADO (Incorporated in Colorado)
(Owned by Premisys Real Estate Services, Inc.) (80%)

Provides real estate management and related services to unrelated third
parties in Colorado.

11. PRICOA VIDA, SOCIEDAD ANONIMA DE SEGUROS Y REASEGUROS (Incorporated in
Spain) (Less than 1% owned by PRUCO, Inc. and The Prudential Investment
Corporation. The remainder is owned by The Prudential)

Conducts individual life, group pension and group life business in Spain.

11a. PRICOA INVEST, SOCIEDAD ANONIMA, S.G.C. (Incorporated in Spain) (100% owned
by PRICOA Vida Sociedad Anonima de Seguros y Reaseguros)

Licensed to engage in third party investment management and actuarial
consulting in Spain.

12. PRICOA VITA S.P.A. (Incorporated in Italy) (100%)

Organized to sell life insurance and related financial products within
Italy.

13. PRUCO, INC. (Incorporated in New Jersey) (100%) (See Section F for direct
and indirect subsidiaries)

A holding company for other subsidiaries.

14. PRUCO LIFE INSURANCE COMPANY (Incorporated in Arizona) (100%)

Conducts individual life insurance and single pay deferred annuity business
in all states except New York. In addition, the Company markets individual
life insurance through it's branch office in Taiwan.

14a. PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (Incorporated in New Jersey)
(Owned by Pruco Life Insurance Company) (100%)

Issues a product line corresponding to that of Pruco Life Insurance Company
in the states of New Jersey and New York.

C-13
<PAGE>

14b. THE PRUDENTIAL LIFE INSURANCE COMPANY OF ARIZONA (Incorporated in Arizona)
(Owned by Pruco Life Insurance Company) (100%)

A company licensed to sell life insurance in the state of Arizona.

15. PRUDENTIAL DIRECT ADVISERS, INC. (Incorporated in New Jersey) (100%)

Acts as the general partner and manages the affairs of the Prudential
Direct Advisers, L.P.

16. PRUDENTIAL DIRECT DISTRIBUTORS, INC. (Incorporated in New Jersey) (100%)

Serves as the distributor of mutual funds and related no-load products
managed or advised by the Prudential Direct Advisers, L.P.

17. PRUDENTIAL FUND MANAGEMENT CANADA LIMITED (Incorporated in Canada) (100%)

Manages and distributes mutual funds in Canada.

18. PRUDENTIAL GLOBAL FUNDING, INC. (Incorporated in Delaware) (100%)

Provides interest rate and currency swaps and other derivative products.

19. PRUDENTIAL-BACHE CAPITAL FUNDING (SWAPS) LIMITED (Incorporated in Canada)
(Owned by Prudential Global Funding, Inc.) (100%)

In liquidation.

20. PRUDENTIAL HOMES CORPORATION (Incorporated in New York) (100%)

Acts as the sole general partner of Fine Homes, L.P. and Prudential
Residential Services, Limited Partnership. It also acts as one of the two
general partners of The Prudential Relocation Management, Limited
Partnership.

20a. PRUDENTIAL TEXAS RESIDENTIAL SERVICES CORPORATION (Incorporated in Texas)
(Owned by Prudential Homes Corporation) (100%)

Acts as one of the two general partners of The Prudential Relocation
Management, Limited Partnership.

21. PRUDENTIAL MORTGAGE ASSET CORPORATION (Incorporated in Delaware) (100%)

Involved in the purchase and sale of mortgage related assets, mortgage
loans and mortgage pass-through certificates.

22. PRUDENTIAL MORTGAGE ASSET CORPORATION II (Incorporated in Delaware) (50%)

Inactive.

23. PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. (Incorporated in Delaware) (15%
owned by The Prudential and 85% owned by Prudential Securities
Incorporated)

Mutual fund management company.

24. PRUDENTIAL OF AMERICA GENERAL INSURANCE COMPANY (CANADA) (Incorporated in
Canada) (100%)

Provides automobile and homeowner insurance in Canada.

C-14
<PAGE>

24a. OTIP/RAEO INSURANCE COMPANY, INC. (Incorporated in Canada) (95% owned by
Prudential of America General Insurance Company [Canada])

Provides automobile and homeowner insurance in Canada. This company markets
its products to those employed in the education sector.

25. PRUDENTIAL OF AMERICA LIFE INSURANCE COMPANY (CANADA) (Incorporated in
Canada) (75%)

Markets specialized life insurance products to the upper income segment of
the Canadian market place.

26. PRUDENTIAL PRIVATE PLACEMENT INVESTORS, INC. (Incorporated in New Jersey)
(100%)

Serves as General Partner to a newly formed partnership, Prudential Private
Placement Investors, L.P. ("PPPI, LP"), a Delaware Limited Partnership. It
is anticipated that PPPI, LP will provide investment advisory services to
pension plans and other institutional investors.

27. PRUDENTIAL REALTY SECURITIES II, INC. (Incorporated in Delaware) (87% owned
by The Prudential and 13% owned by PRUCO, Inc.)

Issues bonds secured by real estate mortgages.

28. PRUDENTIAL SELECT HOLDINGS, INC. (Incorporated in Delaware) (100%)

A holding company for the Prudential Select Life Insurance Company of
America.

29. PRUDENTIAL SELECT LIFE INSURANCE COMPANY OF AMERICA (Incorporated in
Minnesota) (Owned by Prudential Select Holdings, Inc.) (100%)

Intends to sell universal life insurance products to upper income and high
net worth individuals and corporations in all states except New York.

30. PRUDENTIAL SERVICE BUREAU, INC. (Incorporated in Kentucky) (100%)

Provides administrative services for employee benefits packages (i.e. COBRA
and FLEX) and pays medical and dental claims.

31. PRULEASE, INC. (Incorporated in Delaware) (100%)

Has an investment portfolio of loans, leases, and other forms of financing.

32. PRUSERVICOS PARTICIPACOES, S.A. (Incorporated in Brazil) (Less than 1%
owned by PRUCO, Inc. The remainder owned by The Prudential Insurance
Company of America.)

A holding company owning preferred shares, having certain limited voting
rights, representing 49 percent of the share capital of
Atlantica-Prudential Participacoes S.A., which in turn owns approximately
95 percent of the share capital of Prudential-Atlantica Companhia
Brasileria de Seguros, a Brazilian property and casualty insurer.

33. RESIDENTIAL SERVICES CORPORATION OF AMERICA (Incorporated in Delaware)
(100%) (See Section D for direct and indirect subsidiaries)

A company which engages in the activities of its direct wholly owned
subsidiaries: Lender's Service, Inc., Private Label Mortgage Services
Corporation, Securitized Asset Sales, Inc., Securitized Asset Services
Corporation, The Prudential Home Mortgage Company, Inc., Residential
Information Services, Inc. and their subsidiaries.

C-15
<PAGE>

34. PRUDENTIAL HEALTHCARE AND LIFE INSURANCE COMPANY OF AMERICA (Incorporated
in New Jersey) (100%)

A life insurance company which presently is qualified only in New Jersey.
It has not yet commenced as an insurance business.

35. THE PRUDENTIAL INVESTMENT CORPORATION (Incorporated in New Jersey) (100%)
(See Section H for direct and indirect subsidiaries)

Has responsibility for the investment business of The Prudential. It in
turn owns all the outstanding stock of Gateway Holdings, S.A., Prudential
Asset Sales and Syndications, Inc., Prudential Home Building Investors,
Inc., PruSupply, Inc., The Prudential Asset Management Company, Inc.,
Prudential Investment Advisory Company, Ltd., TRGOAG Company, Inc., The
Prudential Property Company, Inc., and The Prudential Realty Advisors, Inc.

36. THE PRUDENTIAL LIFE INSURANCE COMPANY OF KOREA, LTD. (Incorporated in
Korea) (100%)

Organized to sell life insurance products within Korea.

37. THE PRUDENTIAL LIFE INSURANCE COMPANY, LTD. (Incorporated in Japan) (100%)

Organized to sell traditional and variable life insurance products within
Japan.

38. THE PRUDENTIAL REAL ESTATE AFFILIATES, INC. (Incorporated in Delaware)
(100%) (See Section E for direct and indirect subsidiaries)

Offers franchises to independently owned residential real estate brokers.

39. U.S. HIGH YIELD MANAGEMENT COMPANY (Incorporated in New Jersey) (100%)

Provides management services (through the Capital Markets Group) to the
U.S. High Yield Fund, a high yield corporate bond fund organized in
Luxembourg.

B. SUBSIDIARIES OF PIC HOLDINGS LIMITED

1. CLIVE DISCOUNT COMPANY LIMITED (Incorporated in U.K.) (Owned by PIC
Holdings Limited) (100%)

Operates as a discount house in the London market.

1a. CLIVCO NOMINEES LIMITED (Incorporated in the U.K.) (Owned by Clive Discount
Company Limited) (100%)

Inactive.

1b. CLIVE AGENCY BOND BROKING LIMITED (Incorporated in U.K.) (Owned by Clive
Discount Company Limited) (100%)

Identifies attractive investment opportunities in the business of brokering
Government Bonds in the United Kingdom and continental Europe.

C-16
<PAGE>

2. CLIVWELL SECURITIES LIMITED (Incorporated in U.K.) (Owned by PIC Holdings
Limited) (100%)

An investment company which consists of Mithras Investment Trust holdings
and an 8.5% interest in a real estate investment trust which holds a
leasehold interest in a 12 story commercial building in London, England.

3. PRICOA CAPITAL GROUP LIMITED (Incorporated in U.K.) (Owned by PIC Holdings
Limited) (100%)

Identifies attractive investment opportunities in the United Kingdom and
continental Europe.

4. PRICOA FUNDING LIMITED (Incorporated in U.K.) (Owned by PIC Holdings
Limited) (100%)

A finance company borrowing capital from The Prudential, and lending the
capital to its subsidiary company PRICOA Investment Company to fund its
investment activities.

4a. PRICOA INVESTMENT COMPANY (Incorporated in U.K.) (Owned by PRICOA Funding
Limited) (100%)

To identify attractive investment opportunities in the United Kingdom and
continental Europe for sale to, or managed on behalf of, third party
clients.

5. PRICOA PROPERTY INVESTMENT MANAGEMENT LIMITED (Incorporated in U.K.) (Owned
by PIC Holdings Limited) (100%)

Provides investment management and investment advisory services to
international institutional clients who invest in U.K. and continental
European real estate.

5a. NORTHERN RETAIL PROPERTIES (GENERAL PARTNER) LIMITED (Incorporated in U.K.)
(Owned by PRICOA Property Investment Management Limited) (100%)

Serves as general partner to Northern Retail Property Ltd. Partnership. A
U.K. limited partnership whose principle activity is investment in three
retail units in northern Britain.

5b. PRICOA P. I. M. (REGULATED) LIMITED (Incorporated in the U.K.) (Owned by
PRICOA Property Investment Management Limited) (100%)

Provides investment management and investment advisory services to
international institutional clients who invest in U.K. and continental
European real estate.

5c. TRANSEUROPEAN PROPERTIES (GENERAL PARTNER) LIMITED (Incorporated in the
U.K.) (Owned by PRICOA Property Investment Management Limited) (100%)

Serves as general partner to TransEuropean Property Limited Partnership, a
U.K. limited partnership. The principal activity of TransEuropean Property
Limited Partnership is investment in European property.

5d. TRANSEUROPEAN PROPERTIES (GENERAL PARTNER) II LIMITED (Incorporated in the
U.K.) (Owned by PRICOA Property Investment Management Limited) (100%)

Will serve as the general partner to TransEuropean Property Limited
Partnership II, a partnership formed to invest in European real estate.

C-17
<PAGE>

5e. VARSITY FUND (GENERAL PARTNER) LIMITED (Incorporated in the U.K.) (100%
owned by PRICOA Property Investment Management Limited)

Formed to serve as general partner of a limited partnership investing in
U.K. college and university student accommodations. The plans for this fund
changed, and this entity is currently "on the shelf" and not being used.

6. PRICOA REALTY GROUP LIMITED (Incorporated in U.K.) (Owned by PIC Holdings
Limited) (100%)

Provides international real estate services to PGR Advisors I, Inc. in
connection with the Prudential Global Real Estate Programme, and provides
The Prudential with a presence in London to monitor developments and
identify attractive investment opportunities in European property markets,
well as identifying investment opportunities in other international
markets.

C. SUBSIDIARIES OF FINE HOMES, L.P.

Subsidiaries C.1 through C.9 are 100% owned by Prudential Residential
Services, Limited Partnership ("PRS LP").

1. MAJOR ESCROW CORP. (Incorporated in California) (100%)

Inactive.

2. ML/MSB ACQUISITION, INC. (Incorporated in Delaware) (100%)

Acts as the general partner of Moran, Stahl & Boyer, L.P.

3. PRICOA RELOCATION MANAGEMENT, LTD. (Incorporated in U.K.) (100%)

Involved in the relocation consulting business.

4. PRS ESCROW SERVICES, INC. (Incorporated in California) (100%)

Inactive.

5. PRUDENTIAL COMMUNITY INTERACTION CONSULTING, INC. (Incorporated in
Delaware) (100%)

Consulting activities involving community relations for Prudential
Resources Management's corporate clients with facilities which have had or
might have an adverse environmental impact on surrounding communities.

6. PRUDENTIAL NEW YORK HOMES CORPORATION (Incorporated in New York) (100%)

General partner of Moran, Stahl & Boyer, a New York general partnership and
Prudential Relocation Management, a New York general partnership.

7. PRUDENTIAL OKLAHOMA HOMES CORPORATION (Incorporated in Oklahoma) (100%)

Inactive.

8. PRUDENTIAL RELOCATION MANAGEMENT COMPANY OF CANADA LTD. (Incorporated in
Ontario, Canada) (100%)

Involved in the relocation business.

C-18
<PAGE>

9. PRUDENTIAL RESOURCES MANAGEMENT ASIA, LIMITED (Incorporated in Hong Kong)
(100%)

Provides relocation services in Asia -- on-site center for Goldman Sachs in
Hong Kong.

10. THE RELOCATION FUNDING CORPORATION OF AMERICA (Incorporated in California)
(100%)

Involved in the relocation business.

D. SUBSIDIARIES OF RESIDENTIAL SERVICES CORPORATION OF AMERICA

1. LENDER'S SERVICE, INC. (Incorporated in Delaware) (100%)

Obtains residential mortgage appraisals on behalf of mortgage lenders,
provides title agency services, and manages the provision of closing
services.

1a. LENDER'S SERVICE TITLE AGENCY, INC. (Incorporated in Ohio) (Owned by
Lender's Service, Inc.) (100%)

Acts as a title agent in the state of Ohio.

2. PRIVATE LABEL MORTGAGE SERVICES CORPORATION (Incorporated in Delaware)
(100%)

Provides residential mortgage loan underwriting and origination services to
other companies for a fee.

3. RESIDENTIAL INFORMATION SERVICES, INC. (Incorporated in Delaware) (100%)

Serves as the sole general partner of Residential Information Services
Limited Partnership, which provides technology and information services to
mortgage banking industry.

4. SECURITIZED ASSET SALES, INC. (Incorporated in Delaware) (100%)

Registrant of new rent-a-shelf business and sells public and private
mortgage-backed securities.

5. SECURITIZED ASSET SERVICES CORPORATION (Incorporated in New Jersey) (100%)

Services and administers mortgage loans and related real property and
provides security administration services.

6. THE PRUDENTIAL HOME MORTGAGE COMPANY, INC. (Incorporated in New Jersey)
(100%)

Finances residential mortgage loans, through direct origination and
purchases, services and sells residential mortgage loans, and engages in
other residential mortgage banking activities.

6a. THE PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY, INC. (Incorporated in
Delaware) (Owned by The Prudential Home Mortgage Company, Inc.) (100%)

Issues public and private mortgage-backed securities.

C-19
<PAGE>

E. SUBSIDIARIES OF THE PRUDENTIAL REAL ESTATE AFFILIATES, INC.

1. PRUDENTIAL REFERRAL SERVICES, INC. (Incorporated in Delaware) (100%)

Operates a residential real estate referral network.

2. THE PRUDENTIAL REAL ESTATE FINANCIAL SERVICES OF AMERICA, INC.
(Incorporated in California) (100%)

Inactive.

2a. THE PRUDENTIAL REAL ESTATE FINANCIAL SERVICES OF LONG ISLAND, INC.
(Incorporated in California) (Owned by The Prudential Real Estate Financial
Services of America, Inc.) (100%)

Inactive.

F. SUBSIDIARIES OF PRUCO, INC.

1. CAPITAL AGRICULTURAL PROPERTY SERVICES, INC. (Incorporated in Delaware)
(100%)

Provides management and real estate brokerage services for agricultural
properties of The Prudential and others.

2. FLOR-AG CORPORATION (Incorporated in Florida) (100%)

Engages primarily in the purchase, development, operation, lease and sale
of farmland in Florida.

3. GIB LABORATORIES, INC. (Incorporated in New Jersey) (100%)

Provides clinical bioanalytical services to The Prudential, as well as to
other insurance companies and industries in the United States and Canada.

4. P.G. REALTY, INC. (Incorporated in Nebraska) (100%)

Engages primarily in the purchase, development, operation, lease and sale
of farmland in Nebraska.

5. PIC REALTY CORPORATION (Incorporated in Delaware) (100%)

Engages in the business of owning, developing, operating, managing, and
leasing real estate property in the United States either directly or
through participation in joint venture partnerships.

6. PRUCO SECURITIES CORPORATION (Incorporated in New Jersey) (100%)

Acts as a registered securities broker-dealer, licensed in every state,
Washington D.C. and Guam. Serves primarily as the medium through which
registered agents of The Prudential sell Prudential Securities Incorporated
mutual funds and offer variable products from Pruco Life and The
Prudential.

7. PRUDENTIAL AGRICULTURAL CREDIT, INC. (Incorporated in Tennessee) (100%)

Provides a broad range of financial services to agriculture, including farm
real estate mortgages, short term financing and equipment leasing.

C-20
<PAGE>

8. PRUDENTIAL CAPITAL AND INVESTMENT SERVICES, INC. (Incorporated in Delaware)
(100%) (See Section G for direct and indirect subsidiaries)

A holding company for other subsidiaries.

9. PRUDENTIAL DENTAL MAINTENANCE ORGANIZATION, INC. (Incorporated in Texas)
(100%)

A Dental Maintenance Organization which serves the state of Texas.

10. PRUDENTIAL DIRECT, INC. (Incorporated in Georgia) (100%)

Provides direct response and direct marketing services to The Prudential
and its subsidiaries.

11. PRUDENTIAL EQUITY INVESTORS, INC. (Incorporated in New York) (100%)

As a registered investment advisor, it makes private equity investments
through Limited Partnerships comprised of institutional investors including
The Prudential.

12. PRUDENTIAL FUNDING CORPORATION (Incorporated in New Jersey) (100%)

Serves as a financing company for The Prudential and its subsidiaries.
Funds are obtained primarily through the issuance of commercial paper,
private placement medium term notes, Eurobonds, Eurocommercial paper,
Euro-medium term notes and master notes.

13. PRUDENTIAL HEALTH CARE PLAN, INC. (Incorporated in Texas) (100%)

A federally-qualified Health Maintenance Organization which serves the New
Jersey; Houston, Dallas, San Antonio, Austin and El Paso, Texas; Nashville
and Memphis, Tennessee; Chicago, Illinois; Jacksonville, Tampa, Orlando and
South Florida, Florida; Richmond, Virginia; St. Louis and Kansas City,
Missouri; Columbus, Cleveland and Cincinnati, Ohio; Charlotte, and
Raleigh/Durham/Chapel Hill, North Carolina; Denver, Colorado; Oklahoma City
and Tulsa, Oklahoma; Baltimore, Maryland; Washington, D.C.; Philadelphia,
Pennsylvania; Kansas City, Kansas; Little Rock, Arkansas; Massachusetts and
Indiana areas.

14. PRUDENTIAL HEALTH CARE PLAN OF CALIFORNIA, INC. (Incorporated in
California) (100%)

A Health Maintenance Organization which serves the California area.

15. PRUDENTIAL HEALTH CARE PLAN OF CONNECTICUT, INC. (Incorporated in
Connecticut) (100%)

A Health Maintenance Organization which serves the Connecticut area.

16. PRUDENTIAL HEALTH CARE PLAN OF GEORGIA, INC. (Incorporated in Georgia)
(100%)

A Health Maintenance Organization which serves the Georgia area.

17. PRUDENTIAL HEALTH CARE PLAN OF NEW YORK, INC. (Incorporated in New York)
(100%)

A Health Maintenance Organization which serves the New York area.

18. PRUDENTIAL HOLDINGS, INC. (Incorporated in Delaware) (100%)

A holding company that does not currently hold any other companies.

C-21
<PAGE>

19. PRUDENTIAL INSTITUTIONAL FUND MANAGEMENT, INC. (Incorporated in
Pennsylvania) (100%)

A registered investment advisor which manages a series of mutual funds. The
funds are offered to institutional investors, principally
employer-sponsored defined contribution plans.

20. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY (Incorporated in
Indiana) (100%)

Provides dwelling, fire, automobile, homeowners or personal catastrophe
insurance for all states except New Jersey.

20a. PRUDENTIAL COMMERCIAL INSURANCE COMPANY (Incorporated in Delaware) (Owned
by Prudential Property and Casualty Insurance Company) (100%)

Writes automobile insurance and various commercial coverage in many states.
The company's contract as a servicing carrier, for the New Jersey
Automobile Full Insurance Underwriting Association, expired in March, 1989.
The company will continue to service claims during the run-off period.

20b. PRUDENTIAL GENERAL INSURANCE COMPANY (Incorporated in Delaware) (Owned by
Prudential Property and Casualty Insurance Company) (100%)

Provides coverage for preferred homeowners and private passenger
automobiles in many states.

20c. PRUDENTIAL INSURANCE BROKERAGE, INC. (Incorporated in Arizona) (Owned by
Prudential Property and Casualty Insurance Company) (100%)

Acts as an insurance broker and agency in many states.

20d. THE PRUDENTIAL LLOYDS (Incorporated in Texas) (100% owned by Prudential
Property and Casualty Insurance Company by virtue of a trust agreement with
each underwriter.)

A Lloyds insurer authorized to transact fire and casualty insurance
business within the State of Texas.

20e. THE PRUDENTIAL PROPERTY AND CASUALTY GENERAL AGENCY, INC. (Incorporated in
Texas) (Owned by Prudential Property and Casualty Insurance Company) (100%)

Acts as Managing General Agency in the state of Texas.

21. THE PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY OF NEW JERSEY
(Incorporated in New Jersey) (100%)

Writes automobile, homeowner and personal catastrophe liability lines of
business in the state of New Jersey.

22. PRUDENTIAL REALTY PARTNERSHIPS, INC. (Incorporated in Delaware) (100%)

Acts as a general partner in limited partnerships which own real estate.

23. PRUDENTIAL REALTY SECURITIES, INC. (Incorporated in Delaware) (100%)

Issues zero coupon bonds secured by residential mortgages.

C-22
<PAGE>

24. PRUDENTIAL REALTY SECURITIES II, INC. (Incorporated in Delaware) (87% owned
by The Prudential and 13% owned by PRUCO, Inc.)

Issues bonds secured by real estate mortgages.

25. PRUDENTIAL REINSURANCE HOLDINGS, INC. (Incorporated in Delaware) (100%)

A holding company which is the sole owner of Prudential Reinsurance
Company.

25a. PRUDENTIAL REINSURANCE COMPANY (Incorporated in Delaware) (Owned by
Prudential Reinsurance Holdings, Inc.) (100%)

Writes substantially all types of property and casualty reinsurance.

25b. LE ROCHER REINSURANCE LTD. (Incorporated in U.K.) (Owned by Prudential
Reinsurance Company) (100%)

Engages in the property and casualty reinsurance business, principally in
Europe.

25c. PRUDENTIAL NATIONAL INSURANCE COMPANY (Incorporated in Arizona) (Owned by
Prudential Reinsurance Company) (100%)

Writes commercial property and casualty insurance in the alternative risk
market.

26. PRUDENTIAL RETIREMENT SERVICES, INC. (Incorporated in New Jersey) (100%)

Acts as the broker-dealer which distributes securities on behalf of
Prudential Defined Contribution Services. These securities consist of
shares of the Prudential Institutional Fund and four registered separate
accounts of The Prudential.

27. PRUDENTIAL TRUST COMPANY (Incorporated in Pennsylvania) (100%)

Responsible for the management of assets in trust of certain employee
benefit trusts and other tax exempt trusts.

27a. PTC SERVICES, INC. (Incorporated in New Jersey) (Owned by Prudential Trust
Company) (100%)

Oversees the activities of investment advisers who manage certain assets
held in trust by Prudential Trust Company.

28. PRUDENTIAL UNIFORMED SERVICES ADMINISTRATORS, INC. (Incorporated in
Oklahoma) (100%)

Established to administer CHAMPUS (Civilian Health and Medical Program of
Uniformed Service) Insurance for all CHAMPUS eligibles in the states of
Texas, Oklahoma, Arkansas and Louisiana. Currently inactive.

29. THE PRUDENTIAL BANK AND TRUST COMPANY (Incorporated in Georgia) (100%)

Operates as a Georgia chartered commercial bank, it issues credit cards,
and provides commercial, home equity and consumer loans and deposit
products (other than demand deposits) on a national basis, and trust
services in selected states.

29a. PBT MORTGAGE CORPORATION (Incorporated in Georgia) (Owned by The Prudential
Bank and Trust Company) (100%)

As a wholly-owned subsidiary of The Prudential Bank and Trust Company, it
holds home equity loans in various states.

C-23
<PAGE>

30. THE PRUDENTIAL SAVINGS BANK, F.S.B. (Incorporated in Georgia) (100%)

Operating as a federal savings bank, it provides commercial and consumer
loans and deposit products in the state of Georgia. It also originates home
equity loans and offers deposit products on a national basis.

G. SUBSIDIARIES OF PRUDENTIAL CAPITAL AND INVESTMENT SERVICES, INC.

1. LAPINE HOLDING COMPANY (Incorporated in Delaware) (67%)

Holding company for Lapine Technology Corporation.

2. LAPINE TECHNOLOGY CORPORATION (Incorporated in California) (Owned by Lapine
Holding Company) (100%)

Inactive.

3. PRUDENTIAL SECURITIES GROUP INC. (Incorporated in Delaware) (PRUCO, Inc.
owns 100% Series B common stock and Prudential Capital & Investment
Services, Inc. owns 100% Series A common stock.)

A holding company.

4. BACHE INSURANCE AGENCY OF ARKANSAS, INC. (Incorporated in Arkansas) (Owned
by Prudential Securities Group Inc.) (100%)

Insurance agent in the state of Arkansas.

5. BACHE INSURANCE AGENCY OF LOUISIANA, INC. (Incorporated in Louisiana)
(Owned by Prudential Securities Group Inc.) (100%)

Insurance agent in the state of Louisiana. Holding company for
Prudential-Bache Securities (Germany) Inc.

6. PRUDENTIAL-BACHE SECURITIES (GERMANY) INC. (Incorporated in Delaware)
(Owned by Bache Insurance Agency of Louisiana, Inc.) (100%)

Correspondent of Prudential Securities Incorporated in Germany.

7. BRAELOCH SUCCESSOR CORPORATION (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Owns Braeloch Holdings Inc. which is an oil and gas company engaged in
partnership management, oil and gas property management, and gas marketing
and transportation.

8. BRAELOCH HOLDINGS INC. (Incorporated in Delaware) (Owned by BraeLoch
Successor Corporation) (100%)

Holding company.

9. GRAHAM RESOURCES, INC. (Incorporated in Delaware) (Owned by BraeLoch
Holdings Inc. ) (100%)

Holding company for all partnership management and administration
activities.

C-24
<PAGE>

10. GRAHAM DEPOSITORY COMPANY II (Incorporated in Delaware) (Owned by Graham
Resources, Inc.) (100%)

Growth Fund depository company.

11. GRAHAM ENERGY, LTD. (Incorporated in Louisiana) (Owned by Graham Resources,
Inc.) (100%)

General Partner in Growth Fund and related products involved primarily in
the investment in oil and gas related companies and assets.

12. GRAHAM EXPLORATION, LTD. (Incorporated in Louisiana) (Owned by Graham
Resources, Inc.) (100%)

General Partner in various limited and general partnerships involved in
exploratory oil and gas operations.

13. GRAHAM ROYALTY, LTD. (Incorporated in Louisiana) (Owned by Graham
Resources, Inc.) (100%)

General Partner of Prudential-Bache Energy Income Funds. Named operator of
oil and gas properties.

14. GRAHAM PRODUCTION COMPANY (Incorporated in Delaware) (Owned by Graham
Royalty, Ltd.) (100%)

Inactive.

15. GRAHAM SECURITIES CORPORATION (Incorporated in Delaware) (Owned by Graham
Resources, Inc.) (100%)

In liquidation.

16. PB BULLION COMPANY, INC. (Incorporated in Delaware) (Owned by Prudential
Securities Group Inc.) (100%)

Purchases metals for resale to processors, fabricators, and other dealers.

17. PB SERVICES (U.K.) (Incorporated in U.K.) (Owned by Prudential Securities
Group Inc.) (100%)

Holds unsecured subordinated loan stock for Prudential-Bache International
(U.K.) Limited.

18. PGR ADVISORS, INC. (Incorporated in Delaware) (Owned by Prudential
Securities Group Inc.) (100%)

Vehicle utilized in home office relocation.

19. PRUDENTIAL-BACHE AGRICULTURE INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Inactive.

20. PRUDENTIAL-BACHE CAPITAL FUNDING (AUSTRALIA) LIMITED (Incorporated in
Australia) (Owned by Prudential Securities Group Inc.) (100%)

Dealer in fixed interest securities.

C-25
<PAGE>

21. PRUDENTIAL-BACHE CAPITAL FUNDING BV (Incorporated in The Netherlands)
(Owned by Prudential Securities Group Inc.) (100%)

Management company for special purpose vehicle (Audley Finance BV).

21a. AUDLEY FINANCE BV (Incorporated in Haarlem, The Netherlands) (Owned by
Prudential-Bache Capital Funding BV) (100%)

Investment vehicle.

22. PRUDENTIAL-BACHE ENERGY CORP. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Inactive.

23. PRUDENTIAL-BACHE ENERGY PRODUCTION INC. (Incorporated in Delaware) (Owned
by Prudential Securities Group Inc.) (100%)

Inactive.

24. PRUDENTIAL-BACHE HOLDINGS INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Holding company for Prudential-Bache Partners Inc.

25. PRUDENTIAL-BACHE PARTNERS INC. (Incorporated in Nevada) (Owned by
Prudential-Bache Holdings Inc.) (100%)

Insurance agent in the State of Nevada; general partner to employee
investment partnership.

26. PRUDENTIAL-BACHE INTERNATIONAL BANK S.A. (Incorporated in Luxembourg)
(Owned by Prudential Securities Group Inc.) (100%)

Private banking institution providing secured loan and deposit facilities
and investment services brokerage for retail and institutional clients.

27. PRUDENTIAL-BACHE INTERNATIONAL (UK) LIMITED (Incorporated in U.K.) (Owned
by Prudential Securities Group Inc.) (100%)

Holding & service company for U.K. subsidiaries.

28. CLIVE DISCOUNT HOLDINGS INTERNATIONAL LIMITED (Incorporated in U.K.) (Owned
by Prudential-Bache International [UK] Limited) (100%)

Inactive.

29. PAGE & GWYTHER HOLDINGS LIMITED (Incorporated in U.K.) (Owned by
Prudential-Bache International [UK] Limited) (100%)

Inactive.

30. PAGE & GWYTHER LIMITED (Incorporated in U.K.) (Owned by Prudential-Bache
International [U.K.] Limited) (100%)

Inactive.

C-26
<PAGE>

31. PRUDENTIAL-BACHE CAPITAL FUNDING (EQUITIES) LIMITED (Incorporated in U.K.)
(Owned by Prudential-Bache International (UK) Limited) (100%)

London Stock Exchange broker and group custodian services.

32. CIRCLE (NOMINEES) LIMITED (Incorporated in U.K.) (Owned by Prudential-Bache
Capital Funding [Equities] Limited) (100%)

To hold stock for Prudential Capital Funding (Equities) Limited and
Prudential Securities' customers in nominee name.

33. PRUDENTIAL-BACHE CAPITAL FUNDING (GILTS) LIMITED (Incorporated in U.K.)
(Owned by Prudential-Bache International [UK] Limited) (100%)

Inactive.

34. PRUDENTIAL-BACHE CAPITAL FUNDING (MONEY BROKERS) LIMITED (Incorporated in
U.K.) (Owned by Prudential-Bache International [UK] Limited) (100%)

London Stock Exchange money broker.

35. PRUDENTIAL-BACHE (FUTURES) LIMITED (Incorporated in England) (Owned by
Prudential-Bache International [U.K.] Limited) (100%)

Broker/trader in financial futures and commodities.

36. PRUDENTIAL-BACHE INVESTOR SERVICES INC. (Incorporated in Delaware) (Owned
by Prudential Securities Group Inc.) (100%)

Serves as assignor limited partner for public deals offered by the
Specialty Finance Department.

37. PRUDENTIAL-BACHE INVESTOR SERVICES II, INC. (Incorporated in Delaware)
(Owned by Prudential Securities Group Inc.) (100%)

Serves as an assignor limited partner for public deals offered by the
Specialty Finance Department.

38. PRUDENTIAL-BACHE LEASING INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Inactive.

39. PRUDENTIAL-BACHE MINERALS INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Acts as co-general partner in the Prudential Securities/Barrick Gold
Acquisition Fund (a limited partnership).

40. PRUDENTIAL-BACHE PROGRAM SERVICES INC. (Incorporated in New York) (Owned by
Prudential Securities Group Inc.) (100%)

Issuer of puts in municipal bond offerings underwritten by Prudential
Securities Incorporated.

41. PRUDENTIAL-BACHE PROPERTIES, INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Monitors syndicated private placements of investments in real estate and
acts as general partner for real estate and other limited partnerships.

C-27
<PAGE>

42. PRUDENTIAL-BACHE REAL ESTATE, INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Inactive.

43. PRUDENTIAL-BACHE SECURITIES (AUSTRALIA) LIMITED (Incorporated in Australia)
(Owned by Prudential Securities Group Inc.) (100%)

Stock brokerage.

44. BACHE NOMINEES LTD. (Incorporated in Australia) (Owned by Prudential-Bache
Securities [Australia] Limited) (100%)

Nominee company for the fixed income department.

45. CORCARR FUNDS MANAGEMENT LIMITED (Incorporated in Australia) (Owned by
Prudential-Bache Securities [Australia] Limited) (100%)

Inactive.

46. CORCARR MANAGEMENT PTY LIMITED (Incorporated in Australia) (Owned by
Prudential-Bache Securities [Australia] Limited) (100%)

Inactive.

47. CORCARR NOMINEES PTY LIMITED (Incorporated in Australia) (Owned by
Prudential-Bache Securities [Australia] Limited) (100%)

Nominee company for the safe custody of clients' scrip.

48. CORCARR SUPERANNUATION PTY LIMITED (Incorporated in Australia) (Owned by
Prudential-Bache Securities [Australia] Limited) (100%)

Inactive.

49. DIVSPLIT NOMINEES PTY LIMITED (Incorporated in Australia) (Owned by
Prudential-Bache Securities [Australia] Limited) (100%)

Nominee company for the protection of client dividends, new issues and
takeovers.

50. PRUBACHE NOMINEES PTY. LTD. (Incorporated in Australia) (50% Owned by
Prudential-Bache Securities [Australia] Limited and 50% owned by Corcarr
Nominees Pty. Limited, as trustee for Prudential-Bache Securities
(Australia) Limited)

Nominee/custodian for clients of Prudential-Bache Securities (Australia)
Limited and Prudential Securities Incorporated.

51. PRUDENTIAL-BACHE TRADE SERVICES INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Holding company for PB Trade Ltd., and Prudential-Bache Forex (USA) Inc.

52. PB TRADE LTD. (Incorporated in U.K.) (Owned by Prudential-Bache Trade
Services Inc.) (100%)

Inactive.

C-28
<PAGE>

53. PRUDENTIAL-BACHE FOREX (USA) INC. (Incorporated in Delaware) (Owned by
Prudential-Bache Trade Services Inc.) (100%)

To engage in the foreign exchange business; holding company for
Prudential-Bache Forex (Hong Kong) Limited and Prudential-Bache Forex
(U.K.) Limited.

54. PRUDENTIAL-BACHE FOREX (HONG KONG) LIMITED (Incorporated in Hong Kong)
(Owned by Prudential-Bache Forex [USA] Inc.) (100%)

Foreign exchange.

55. PRUDENTIAL-BACHE FOREX (U.K.) LIMITED (Incorporated in U.K.) (Owned by
Prudential-Bache Forex [USA] Inc.) (100%)

Foreign exchange.

56. PRUDENTIAL-BACHE TRANSFER AGENT SERVICES, INC. (Incorporated in New York)
(Owned by Prudential Securities Group Inc.) (100%)

Acts as a transfer agent for limited partnerships sponsored by Prudential
Securities Group Inc. or sold by Prudential Securities Incorporated.

57. PRUDENTIAL SECURITIES INCORPORATED (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Securities and commodity broker-dealer, underwriter.

58. BACHE & CO. (LEBANON) S.A.L. (Incorporated in Lebanon) (Owned by Prudential
Securities Incorporated) (100%)

Inactive.

59. BACHE & CO. S.A. DE C.V. (MEXICO) (Incorporated in Mexico) (96% owned by
Prudential Securities Incorporated 4% owned by other individuals)

Inactive.

60. BACHE HALSEY STUART SHIELDS (ANTILLES) N.V. (Incorporated in The
Netherlands Antilles) (Prudential Securities Incorporated) (100%)

Inactive.

61. BACHE INSURANCE AGENCY, INCORPORATED (Incorporated in Massachusetts) (Owned
by Prudential Securities Incorporated) (100%)

Insurance agent in Massachusetts.

62. BACHE INSURANCE OF ARIZONA INC. (Incorporated in Arizona) (Owned by
Prudential Securities Incorporated) (100%)

Inactive.

63. BACHE INSURANCE OF KENTUCKY, INC. (Incorporated in Kentucky) (Owned by
Prudential Securities Incorporated) (100%)

Insurance agent in Kentucky.

C-29
<PAGE>

64. BACHE SHIELDS SECURITIES CORPORATION (Incorporated in Delaware) (Owned by
Prudential Securities Incorporated) (100%)

Inactive.

65. BANOM CORPORATION (Incorporated in New York) (Owned by Prudential
Securities Incorporated) (100%)

Inactive.

66. GELFAND, QUINN & ASSOCIATES INC. (Incorporated in Ohio) (Owned by
Prudential Securities Incorporated) (100%)

Inactive.

67. P-B HOLDING JAPAN INC. (Incorporated in Delaware) (Owned by Prudential
Securities Incorporated) (100%)

Holding company of Prudential Securities (Japan) Ltd.

68. PRUDENTIAL SECURITIES (JAPAN) LIMITED (Incorporated in Delaware) (Owned by
P-B Holding Japan Inc.) (100%)

Service affiliate of Prudential Securities Incorporated; registered
broker-dealer.

69. PRUDENTIAL-BACHE FUTURES ASIA PACIFIC LTD. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

To introduce customers to Prudential Securities for futures transactions on
U.S. Exchanges and execute futures orders on the behalf of Prudential
Securities on SIMEX.

70. PRUDENTIAL-BACHE FUTURES (HONG KONG) LIMITED (Incorporated in Hong Kong)
(Owned by Prudential Securities Incorporated) (100%)

Non-active clearing member of the Hong Kong Futures Exchange.

71. PRUDENTIAL-BACHE NOMINEES (HONG KONG) LIMITED (Incorporated in Hong Kong)
(Owned by Prudential Securities Incorporated) (100%)

Acting as a nominee company for Hong Kong equities.

72. PRUDENTIAL-BACHE SECURITIES ASIA PACIFIC LTD. (Incorporated in New York)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Singapore.

73. PRUDENTIAL-BACHE SECURITIES (BELGIUM) INC. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Belgium.

74. PRUDENTIAL-BACHE SECURITIES (ESPANA) S.A. (Incorporated in Spain) (Owned by
Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Spain.

75. PRUDENTIAL-BACHE SECURITIES (FRANCE) S.A. (Incorporated in France) (Owned
by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in France.

C-30
<PAGE>

76. PRUDENTIAL-BACHE SECURITIES (HOLLAND) INC. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Holland.

77. PRUDENTIAL-BACHE SECURITIES (HOLLAND) N.V. (Incorporated in Holland) (Owned
by Prudential-Bache Securities [Holland] Inc.) (100%)

Inactive.

78. PRUDENTIAL-BACHE SECURITIES (HONG KONG) LIMITED (Incorporated in Hong Kong)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Hong Kong.

79. PRUDENTIAL-BACHE SECURITIES (LUXEMBOURG) INC. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Luxembourg.

80. PRUDENTIAL-BACHE SECURITIES (MONACO) INC. (Incorporated in New York) (Owned
by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Monaco.

81. PRUDENTIAL-BACHE SECURITIES (SWITZERLAND) INC. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Switzerland.

82. PRUDENTIAL-BACHE SECURITIES (U.K.) INC. (Incorporated in Delaware) (Owned
by Prudential Securities Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in the U.K.

82a. SHIELDS MODEL ROLAND COMPANY (Incorporated in U.K.) (Owned by
Prudential-Bache Securities (U.K.) Inc.) (100%)

Inactive.

83. PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. (Incorporated in Delaware) (15%
owned by The Prudential and 85% owned by Prudential Securities
Incorporated)

Mutual fund management company.

84. PRUDENTIAL MUTUAL FUND DISTRIBUTORS, INC. (Incorporated in Delaware) (Owned
by Prudential Mutual Fund Management, Inc.) (100%)

Principal underwriter and distributor of mutual funds.

85. PRUDENTIAL MUTUAL FUND SERVICES, INC. (Incorporated in New Jersey) (Owned
by Prudential Mutual Fund Management, Inc.) (100%)

Mutual fund transfer agent and shareholder services company.

86. PRUDENTIAL SECURITIES (CHILE) INC. (Incorporated in Delaware) (Owned by
Prudential Securities Incorporated) (100%)

Inactive.

C-31
<PAGE>

87. PRUDENTIAL SECURITIES CMO ISSUER INC. (Incorporated in Delaware) (Owned by
Prudential Securities Incorporated) (100%)

Ownership of Delaware Business Trust utilized by Mortgage Finance Unit to
facilitate CALI Transaction.

88. PRUDENTIAL SECURITIES FUTURES MANAGEMENT INC. (Incorporated in Delaware)
(Owned by Prudential Securities Incorporated) (100%)

1) General partner of a limited partnership with assets invested in
commodities, futures contracts and commodity-related products and 2)
Commodities and futures contract business.

89. PRUDENTIAL SECURITIES (SOUTH AMERICA) INCORPORATED (Incorporated in
Delaware) (Owned by Prudential Securities Incorporated) (100%)

Holding company for Prudential Securities (Argentina) Incorporated and
Prudential Securities (Uruguay) S.A.

90. PRUDENTIAL SECURITIES (ARGENTINA) INCORPORATED (Incorporated in Delaware)
(Owned by Prudential Securities [South America] Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Argentina.

91. PRUDENTIAL SECURITIES (URUGUAY) S.A. (Incorporated in Uruguay) (Owned by
Prudential Securities [South America] Incorporated) (100%)

Service affiliate of Prudential Securities Incorporated in Uruguay.

92. SHIELDS MODEL ROLAND SECURITIES INCORPORATED (Incorporated in New York)
(Owned by Prudential Securities Incorporated) (100%)

Inactive.

93. WEXFORD CLEARING SERVICES CORPORATION (Incorporated in Delaware) (Owned by
Prudential Securities Incorporated) (100%)

Inactive.

94. PRUDENTIAL SECURITIES LEASE HOLDING INC. (Incorporated in New York) (Owned
by Prudential Securities Group Inc.) (100%)

Owns IBM computers and leases them to Prudential Securities Incorporated.

95. PRUDENTIAL SECURITIES MUNICIPAL DERIVATIVES, INC. (Incorporated in
Delaware) (Owned by Prudential Securities Group Inc.) (100%)

Serves as a general partner in a limited partnership structure providing
floating rate & inverse floating rate municipal securities.

96. PRUDENTIAL SECURITIES REALTY FUNDING CORPORATION (Incorporated in Delaware)
(Owned by Prudential Securities Group Inc.) (100%)

Purchase and sale of residential first mortgage whole loans, including
purchase and sales under repurchase agreements. Sales may be in whole loan,
participation certificates, agency or securitized format.

C-32
<PAGE>

97. PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION (Incorporated in
Delaware) (Owned by Prudential Securities Group Inc.) (100%)

Purchase and securitization of mortgages and other assets.

98. PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC. (Incorporated in Ohio) (Owned
by Prudential Securities Group Inc.) (100%)

Inactive.

99. P-B FINANCE LTD. (Incorporated in The Cayman Islands) (Owned by Prudential
Securities Structured Assets, Inc) (100%)

Finances commodity margin calls, both original and variation, and does
other financing transactions for a select group of international and
domestic customers.

100. R&D FUNDING CORP. (Incorporated in Delaware) (Owned by Prudential
Securities Group Inc.) (100%)

Acts as a general partner in research and development partnerships.

101. SEAPORT FUTURES MANAGEMENT, INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

1) General partner of limited partnership with assets invested in
commodities, futures contracts and commodity-related products, 2)
Commodities and futures contracts business.

102. SPECIAL SITUATIONS MANAGEMENT INC. (Incorporated in Delaware) (Owned by
Prudential Securities Group Inc.) (100%)

Inactive.

H. SUBSIDIARIES OF THE PRUDENTIAL INVESTMENT CORPORATION

1. GATEWAY HOLDINGS, S.A. (Incorporated in Luxembourg) (100%)

A financial holding company which owns Luxembourg registered investment
management companies. Gateway Holdings, S.A. is the parent of Amicus
Investment Company, Global Income Fund Management Company, S.A., Global
Series Fund II Management Company, S.A., Jennison Long Bond Management
Company and PAEC Management Company.

2. AMICUS INVESTMENT COMPANY (Incorporated in the Cayman Islands) (Owned by
Gateway Holdings, S.A.) (100%)

Provides promotion and sponsorship functions for the Amicus Equity Fund, an
open-ended investment trust established under the jurisdiction of the
Cayman Islands.

3. GLOBAL INCOME FUND MANAGEMENT COMPANY, S.A. (Incorporated in Luxembourg)
(Owned by Gateway Holdings, S.A.) (100%)

Acts as the management company for Global Income Fund, an investment fund
organized in Luxembourg.

C-33
<PAGE>

4. GLOBAL SERIES FUND II MANAGEMENT COMPANY, S.A. (Incorporated in Luxembourg)
(Owned by Gateway Holdings, S.A.) (100%)

Acts as the management company for Global Series Fund II, an investment
fund organized in Luxembourg.

5. JENNISON LONG BOND MANAGEMENT COMPANY (Incorporated in Luxembourg) (Owned
by Gateway Holdings, S.A.) (100%)

Acts as the management company for Jennison Long Bond Fund, an investment
fund organized in Luxembourg. The Fund invests in a diversified portfolio
of securities issued or guaranteed by the U.S. Government of which units of
the fund are offered privately to Japanese institutional investors through
PIC's Japan representative office in Tokyo.

6. PAEC MANAGEMENT COMPANY (Incorporated in Luxembourg) (Owned by Gateway
Holdings, S.A.) (100%)

Inactive.

7. PRUDENTIAL ASSET SALES AND SYNDICATIONS, INC. (Incorporated in Delaware)
(100%)

Registered broker/dealer which engages in the investment banking business.
Also responsible for the syndication or sale of Prudential originated
private placement deals.

8. PRUDENTIAL HOME BUILDING INVESTORS, INC. (Incorporated in New Jersey)
(100%)

Acts as the general partner of a limited partnership, Prudential Home
Building Advisors, L.P. Through this partnership it provides investment
advisory services in a portfolio of residential land improvement and/or
single family home construction projects.

9. PRUSUPPLY, INC. (Incorporated in Delaware) (100%)

Serves as an inventory facility, holding investments pending sale for
Prudential Asset Sales and Syndications, Inc. Enters into contracts for the
supply of fossil fuel and other inventory.

10. PRUSUPPLY CAPITAL ASSETS, INC. (Incorporated in New Jersey) (Owned by
PruSupply, Inc.) (100%)

Serves as a capital base for the syndication activity of Prudential Asset
Sales and Syndications, Inc. It will hold, invest, and reinvest stocks,
bonds, etc. to support the borrowing capacity of PruSupply, Inc.

11. THE PRUDENTIAL ASSET MANAGEMENT COMPANY, INC. (Incorporated in New Jersey)
(100%)

Provides various record keeping, benefit payment, and plan consulting
services to The Prudential and its clients. It also acts as a solicitor on
behalf of affiliates who are investment advisors.

12. CSI ASSET MANAGEMENT, INC. (Incorporated in Delaware) (Owned by The
Prudential Asset Management Company, Inc.) (100%)

Provides institutional clients (primarily state and municipal employee
benefit plans) with discretionary management of portfolios investing in
U.S. stocks and bonds.

C-34
<PAGE>

13. ENHANCED INVESTMENT TECHNOLOGIES, INC. (Incorporated in New Jersey) (Owned
by The Prudential Asset Management Company, Inc.) (100%)

Provides investment advisory services to institutional clients using
domestic index portfolios.

14. MERCATOR ASSET MANAGEMENT, INC. (Incorporated in Florida) (Owned by The
Prudential Asset Management Company, Inc.) (100%)

Serves as an investment advisor with a focus on global and international
investing for institutional clients.

15. PCM INTERNATIONAL, INC. (Incorporated in New Jersey) (Owned by The
Prudential Asset Management Company, Inc.) (100%)

Serves as an investment advisor with a focus on global and international
investing for institutional clients.

16. PRUDENTIAL ASIA INVESTMENTS LIMITED (Incorporated in the British Virgin
Islands) (Common stock 100% owned by The Prudential Asset Management
Company, Inc. and preferred stock 50% owned by The Prudential Asset
Management Company, Inc. and 50% owned by Prudential Securities Group Inc.)

A holding company for subsidiaries engaged in investment management,
merchant banking, portfolio management and direct investment activities in
the Far East.

17. PRUASIA DBS LIMITED (Incorporated in Hong Kong) (Owned by Prudential Asia
Investments Limited) (50%)

Provides corporate finance services in the Far East.

18. PRUDENTIAL ASIA FUND MANAGEMENT LIMITED (BVI) (Incorporated in the British
Virgin Islands) (Owned by Prudential Asia Investments Limited) (100%)

A holding company for Prudential Asia Fund Management Limited and
Prudential Asia Fund Managers (HK) Limited and engages in portfolio
investment management and advisory services with a concentration on
publicly traded securities.

19. PRUDENTIAL ASIA FUND MANAGEMENT LIMITED (Incorporated in Hong Kong) (Owned
by Prudential Asia Fund Management Limited [BVI]) (100%)

Provides investment advisory activities in the United States.

20. PRUDENTIAL ASIA FUND MANAGERS (HK) LIMITED (Incorporated in Hong Kong)
(Owned by Prudential Asia Fund Management Limited [BVI]) (100%)

Provides investment advisory activities in Hong Kong.

21. PRUDENTIAL ASSET MANAGEMENT ASIA LIMITED (BVI) (Incorporated in the British
Virgin Islands) (Owned by Prudential Asia Investments Limited) (100%)

Makes direct investments and provides investment advisory services in
China, Taiwan, Korea, Japan, Australia and New Zealand.

22. PAMA (INDONESIA) LIMITED (Incorporated in the British Virgin Islands)
(Owned by Prudential Asset Management Asia Limited (BVI)) (75%)

Engaged in the management and operation of PT PAMA Indonesia, an Indonesian
Venture Capital Company, and a unit trust which makes direct investments in
Indonesian companies.

C-35
<PAGE>

23. PAMA (SINGAPORE) PRIVATE LIMITED (Incorporated in Singapore) (Owned by
Prudential Asset Management Asia Limited [BVI]) (100%)

Engaged in direct investments, corporate finance and portfolio management
activities in Singapore.

24. PRUDENTIAL ASSET MANAGEMENT ASIA HONG KONG LIMITED (Incorporated in Hong
Kong) (Owned by Prudential Asset Management Asia Limited [BVI]) (100%)

Engaged in direct investments and portfolio management activities in Hong
Kong.

25. P.T. PAMA VENTURA INDONESIA (Incorporated in Indonesia) (Owned by
Prudential Asset Management Asia Limited [BVI]) (65%)

An Indonesian Venture Capital Company which invests directly in Indonesian
companies or in a trust that invests in Indonesian companies.

26. SJ BEDDING B.V. (Incorporated in the Netherlands) (Owned by Prudential Asia
Investments Limited) (100%)

A holding company for Prudential Asia Investments Limited's investment in
the shares of Simmons Co., Limited.

27. SIMMONS BEDDING AND FURNITURE (HK) LIMITED (Incorporated in Hong Kong)
(Owned by SJ Bedding BV) (66.24%)

Collectively with its affiliates engages in the manufacturing, sales and
distribution of bedding products, furniture and accessories in Japan, Hong
Kong, Singapore and Macau.

28. SIMMONS ASIA LIMITED (Incorporated in the British Virgin Islands) (Owned by
Simmons Bedding & Furniture [HK] Limited) (90%)

Engages in the business of licensing Simmons related trademarks and
technology in Asia Pacific countries other than those covered by Simmons
Co., Limited.

29. SIMMONS (SOUTHEAST ASIA) PRIVATE LIMITED (Incorporated in Singapore) (Owned
by Simmons Asia Limited) (100%)

Carries out manufacturing and distribution activities of the bedding
products, furniture and accessories in Singapore.

30. SIMMONS CO., LIMITED (Incorporated in Japan) (Owned by SJ Bedding B.V.)
(66.24%)

A holding company for Simmons Bedding and Furniture (HK) Limited.

31. PRUDENTIAL ASSET MANAGEMENT COMPANY SECURITIES CORPORATION (Incorporated in
Delaware) (Owned by The Prudential Asset Management Company, Inc.) (100%)

Markets to institutional clients investment products developed by other
Prudential affiliates that must be sold by an SEC registered broker-dealer
with a membership in the NASD.

32. PRUDENTIAL TIMBER INVESTMENTS, INC. (Incorporated in New Jersey) (100% of
common stock owned by The Prudential Asset Management Company, Inc.) (100%
of preferred stock owned by The Prudential Insurance Company of America.)

Provides timber investment management services to institutional clients.
Acquires and manages commercial timber properties with the goal of
generating competitive returns.

C-36
<PAGE>

33. THE PRUDENTIAL INVESTMENT ADVISORY COMPANY, LTD. (Incorporated in Japan)
(100%)

Provides investment management services to Japanese institutional investors
and for Prudential's General Account with respect to Japanese and global
securities.

34. THE PRUDENTIAL PROPERTY COMPANY, INC. (Incorporated in New Jersey) (100%)

Inactive.

35. THE PRUDENTIAL REALTY ADVISORS, INC. (Incorporated in New Jersey) (100%)

Provides advice and administrative services to others with respect to the
ownership, sale, and management of real property.

36. TRGOAG COMPANY, INC. (Incorporated in Delaware) (100%)

Organized to own interests in oil and gas properties.

C-37

<PAGE>

Item 31. NUMBER OF CONTRACTOWNERS

As of February 28, 1997, the number of contractowners of qualified contracts
offered by Registrant was 666. and the number of contractowners of non-qualifed
contracts offered by Registrant was _.

Item 32. INDEMNIFICATION

The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Insurance Program, purchased by The Prudential from Aetna Casualty & Surety
Company, CNA Insurance Companies, Lloyds of London, Great American Insurance
Company, Reliance Insurance Company, Corporate Officers & Directors Assurance
Ltd., A.C.E. Insurance Company, Ltd., XL Insurance Company, Ltd., and
Zurich-American Insurance Company, provides reimbursement for "Loss" (as defined
in the policies) which the Company pays as indemnification to its directors or
officers resulting from any claim for any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties in their capacities as directors or officers of
The Prudential, any of its subsidiaries, or certain investment companies
affiliated with The Prudential. Coverage is also provided to the individual
directors or officers for such Loss, for which they shall not be indemnified.
Loss essentially is the legal liability on claims against a director or officer,
including adjudicated damages, settlements and reasonable and necessary legal
fees and expenses incurred in defense of adjudicatory proceedings and appeals
therefrom. Loss does not include punitive or exemplary damages or the multiplied
portion of any multiplied damage award, criminal or civil fines or penalties
imposed by law, taxes or wages, or matters which are uninsurable under the law
pursuant to which the policies are construed.

There are a number of exclusions from coverage. Among the matters excluded are
Losses arising as the result of (1) claims brought about or contributed to by
the criminal or fraudulent acts or omissions or the willful violation of any law
by a director or officer, (2) claims based on or attributable to directors or
officers gaining personal profit or advantage to which they were not legally
entitled, and (3) claims arising from actual or alleged performance of, or
failure to perform, services as, or in any capacity similar to, an investment
adviser, investment banker, underwriter, broker or dealer, as those terms are
defined in the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Advisers Act of 1940, the Investment Company Act of 1940, any rules
or regulations thereunder, or any similar federal, state or local statute, rule
or regulation.

The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $150,000,000. The retention for corporate
reimbursement coverage is $10,000,000 per loss.

The relevant provisions of New Jersey Law permitting or requiring
indemnification, New Jersey being the state of organization of The Prudential,
can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text
of The Prudential's by-law 26, which relates to indemnification of officers and
directors, is incorporated by reference to Exhibit 8(ii) to this Registration
Statement.

Insofar as indemnification for liability arising under the Securities Act of
1933 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 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 the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities 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 Act and will be governed by the final adjudication of
such issue.

Item 33. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Prudential does have other business of a substantial nature besides activities
relating to the assets of the registrant. Prudential is involved in insurance,
securities, pension services, real estate and banking.

The Prudential Investment Corporation (PIC) is an investment unit of Prudential
and is actively engaged in the business of giving investment advice. The
officers and directors of Prudential and PIC who are engaged directly or
indirectly in activities relating to the registrant have no other business,
profession, vocation, or employment of a substantial nature, and have not had
such other connections during the past two years.

The business and other connections, including principal business address, of
Prudential's Directors are listed under "Directors and Officers of Prudential"
in the Statement of Additional Information (Part B of this Registration
Statement).

C-38

<PAGE>

Item 34. PRINCIPAL UNDERWRITER

(a) PIMS, a direct wholly-owned subsidiary of Prudential acts as the
principal underwriter and Prudential acts as the investment adviser for The
Prudential Variable Contract Account-10, The Prudential Variable Contract
Account-11 and for the Registrant, all registered as open-end management
investment companies under the Investment Company Act of 1940.

(b) (1) (2) (3)
Name and Principal Position and Offices Positions and Offices
Business Address with Underwriter with Registrant
--------------------- --------------------- ---------------------

Mark R. Fetting Chairman, President, Chairman, The Prudential
751 Broad Street Director Variable Contract Account-2
Newark, NJ 07102-3777 Committee

Nancy Lindgren Vice President, None
Comptroller, Director

Robert E. Lee Vice President None

C. Edward Chaplin Treasurer None

Thomas A. Early Vice President, Secretary
Secretary

Walter E. Watkins, Jr. Vice President None

Michael G. Williamson Assistant Comptroller Assistant Secretary, The
Prudential Variable Contract
Account-2 Committee

Jeffrey Hiller Assistant Secretary None

(c) Reference is made to the Section entitled "Description of The Prudential
and VCA-2" on page 7 of the prospectus and "Charges" on page 9 of the
prospectus (Part A of this Registration Statement) and "Investment
Management and Administration of VCA-2" on page 2 of the Statement of
Additional Information (Part B of this Registration Statement).

C-39

<PAGE>

Item 35. LOCATION OF ACCOUNTS AND RECORDS

The names and addresses of the persons who maintain physical possession of the
accounts, books and documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules thereunder are:

The Prudential Insurance Company of America
and The Prudential Investment Corporation
Prudential Plaza
Newark, New Jersey 07102-3777

The Prudential Insurance Company of America
and The Prudential Investment Corporation
Gateway Three Building and Gateway Four Building
100 Mulberry Street
Newark, New Jersey 07102

The Prudential Insurance Company of America
and The Prudential Investment Corporation
56 North Livingston Avenue
Roseland, New Jersey 07068

The Prudential Insurance Company of America
c/o The Prudential Asset Management Company, Inc.
71 Hanover Road
Florham Park, New Jersey 07932

The Prudential Insurance Company of America
c/o The Prudential Asset Management Company, Inc.
30 Scranton Office Park
Moosic, Pennsylvania 18507-1789

Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105

Item 36. MANAGEMENT SERVICES

Not Applicable

Item 37. UNDERTAKINGS

The Prudential Insurance Company of America ("Prudential") represents that the
fees and charges deducted under the Contract in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by Prudential.

Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section. Registrant also undertakes (1) to file a post-effective
amendment to this registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement are never
more than 16 months old as long as payment under the contracts may be accepted;
(2) to affix to the prospectus a postcard that the applicant can remove to send
for a Statement of Additional Information or to include as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information; and (3) to
deliver any Statement of Additional Information promptly upon written or oral
request.

C-40

<PAGE>

Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the Chief of
the Office of Insurance Products and Legal Compliance of the Securities and
Exchange Commission to the American Council of Life Insurance on November 28,
1988.

REPRESENTATION PURSUANT TO RULE 6c-7

Registrant represents that it is relying upon Rule 6c-7 under the Investment
Company Act of 1940 in connection with the sale of its group variable contracts
to participants in the Texas Optional Retirement Program. Registrant also
represents that it has complied with the provisions of paragraphs (a) - (d) of
the Rule.

C-41

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has 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 ____ day
of _____, 1997.

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

By: /s/ MENDEL A. MELZER
--------------------------------
Mendel A. Melzer
Chairman

C-42

<PAGE>

SIGNATURES

As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

Signature Title Date
- --------- ----- ----

*MENDEL A. MELZER Member and Chairman, The )
- ------------------------ Prudential Variable Contract ) February 28, 1997
Mendel A. Melzer Account-2 Committee )
)
)
*SAUL K. FENSTER Member, The Prudential )
- ------------------------ Variable Contract Account-2 )
Saul K. Fenster Committee )
)
)
*W. SCOTT McDONALD, JR. Member, The Prudential )
- ------------------------ Variable Contract Account-2 )
W. Scott McDonald, Jr. Committee )
)
)
*JONATHAN GREENE Member, The Prudential )
- ------------------------ Variable Contract Account-2 )
Jonathan Greene Committee )
)
)
*JOSEPH WEBER Member, The Prudential )
- ------------------------ Variable Contract Account-2 )
Joseph Weber Committee )

*By: /s/ C. CHRISTOPHER SPRAGUE
--------------------------------
C. Christopher Sprague
(Attorney-in-Fact)

C-43

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, The Prudential Insurance Company of America has caused this 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 ____ day of _____, 1997.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: /s/ MENDEL A. MELZER
---------------------------------
Mendel A. Melzer
Vice President

As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following Directors and
Officers of The Prudential Insurance Company of America in the capacities and on
the date indicated.

Signature Title Date
- --------- ----- ----

*ARTHUR F. RYAN Chairman of the Board, )
- ------------------------ Chief Executive Officer ) February 28, 1997
Arthur F. Ryan and President )

*By: /s/ C. CHRISTOPHER SPRAGUE
--------------------------------
C. Christopher Sprague
(Attorney-in-Fact)

C-44

<PAGE>

Signature Title Date
- --------- ----- ----

*MARK B. GRIER Senior Vice President )
- ------------------------ and Comptroller and ) February 28, 1997
Mark B. Grier Principal Financial Officer )
)
)
*FRANKLIN E. AGNEW )
- ------------------------ Director )
Franklin E. Agnew )
)
)
*FREDERIC K. BECKER )
- ------------------------ Director )
Frederic K. Becker )
)
)
*WILLIAM W. BOESCHENSTEIN )
- ------------------------ Director )
William W. Boeschenstein )
)
)
*LISLE C. CARTER, JR. )
- ------------------------ Director )
Lisle C. Carter, Jr. )
)
)
*JAMES G. CULLEN )
- ------------------------ Director )
James G. Cullen )
)
)
*CAROLYNE K. DAVIS )
- ------------------------ Director )
Carolyne K. Davis )
)
)
*ROGER A. ENRICO )
- ------------------------ Director )
Roger A. Enrico )
)
)
*ALLAN D. GILMOUR )
- ------------------------ Director )
Allan D. Gilmour )
)
)
*WILLIAM H. GRAY, III )
- ------------------------ Director )
William H. Gray, III )
)
)
*JON F. HANSON )
- ------------------------ Director )
Jon F. Hanson )

*By: /s/ C. CHRISTOPHER SPRAGUE
--------------------------------
C. Christopher Sprague
(Attorney-in-Fact)

C-45

<PAGE>

Signature Title Date
- --------- ----- ----

*CONSTANCE J. HORNER )
- ------------------------ Director ) February 28, 1997
Constance J. Horner )
)
)
*ALLEN F. JACOBSON )
- ------------------------ Director )
Allen F. Jacobson )
)
)
*BURTON G. MALKIEL )
- ------------------------ Director )
Burton G. Malkiel )
)
)
*CHARLES R. SITTER )
- ------------------------ Director )
Charles R. Sitter )
)
)
*DONALD L. STAHELI )
- ------------------------ Director )
Donald L. Staheli )
)
)
*RICHARD M. THOMSON )
- ------------------------ Director )
Richard M. Thomson )
)
)
*P. ROY VAGELOS, M.D. )
- ------------------------ Director )
P. Roy Vagelos, M.D. )
)
)
*STANLEY C. VAN NESS )
- ------------------------ Director )
Stanley C. Van Ness )
)
)
*PAUL A. VOLCKER )
- ------------------------ Director )
Paul A. Volcker )
)
)
*JOSEPH H. WILLIAMS )
- ------------------------ Director )
Joseph H. Williams )

*By: /s/ C. CHRISTOPHER SPRAGUE
--------------------------------
C. Christopher Sprague
(Attorney-in-Fact)

C-46

<PAGE>

EXHIBIT INDEX

<TABLE>

C-47

<PAGE>

<TABLE>

(5) (i) Agreement Relating to the Sale Incorporated by reference to
of Group Variable Annuity Contracts Exhibit 6 to this Registrant's
between Prudential and The Form N-8B-1 Registration Statement,
Prudential Variable Contract File No.811-1612
Account-2 (To be filed via EDGAR)

(7) Application form Incorporated by reference to
Exhibit (4) of Post-Effective
Amendment No. 32 to this
Registration Statement
(To be filed via EDGAR)

C-48

<S> <C>

(ii) Copy of the By-Laws of Incorporated by reference to
Prudential, as amended Exhibit 99.2 to Post-Effective
August 8, 1995 Amendment No. 27 to the Registration
Statement of The Prudential Variable
Contract Account-10, Registration
No. 2-76580, filed April , 1996

(13) (i) Consent of independent auditors Filed with this Amendment
(ii) Powers of Attorney
(a) Members of the Registrant's Incorporated by reference to
Committee Messrs. Fenster, Fetting, Exhibit 13(ii)(a) to Post-Effective
Weber and Scott Amendment No. 26 to the
Registration Statement of The
Prudential Variable Contract
Account-10, Registration
No. 2-76580, filed April 28, 1995

J. Unruh To be filed

(17) Financial Data Schedule Incorporated by reference to Form
N-SAR of The Prudential Variable
Contract Account-2, filed February
29, 1996
</TABLE>

C-49

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Certified Copy of Resolutions Adopted
BY THE BOARD OF DIRECTORS ON JANUARY 9, 1968

I, W.D. Freeston, Secretary of The Prudential Insurance Company of America,
do hereby certify that the following is a true copy of the resolutions duly
adopted by the Board of Directors of The Prudential Insurance Company of America
at a regular meeting of said Board held on January 9, 1968, and that these
resolutions have not been altered or rescinded

RESOLVED, that, subject to the approval of the Commissioner of Banking
and Insurance of the State of New Jersey, the Company hereby establishes,
pursuant to Section 17:35A-6 of the Revised Statutes of New Jersey, a
variable contract account, to be designated "The Prudential Variable
Contract Account-2;" and it is further

RESOLVED, that the use of said account shall be limited to providing a
funding medium for such contracts on a variable basis issued and
administered by the Company as the Company shall elect to designate as
participating therein, and in furtherance thereof such account shall:

(a) receive, hold, invest, and reinvest only the amounts arising from
(i) contributions made pursuant to contracts on a variable basis
issued and administered by the Company which have been designated
by it as participating in said account, (ii) such assets of the
Company as it shall deem prudent and appropriate to have invested
in the same manner as the assets applicable to its reserve
liability under such variable contracts, and (iii) the dividends,
interest and gains producted by the foregoing;

(b) to the extent required by the Investment Company Act of 1940,
register under such Act and make application for exemption from
such of the provisions thereof as may appear to be necessary or
desirable

(c) to the extent required by the Securities Act of 1933, file one or
more registration statements thereunder, including any documents
required as a part thereof;

(d) provide for investment management services;

(e) provide for the sale of contracts on a variable basis issued and
administered by the Company to the extent they include
participating interests in said account;

<PAGE>
-2-

(f) select an independent public accountant to audit the books and
records of said account; and

(g) perform such further functions as may be required to comply with
the Investment Company Act of 1940 or as may from time to time be
authorized by further resolution of this Board; and it is further

RESOLVED, that the said account, as authorized by Section
17:35A-9(b) of the Revised Statutes of New Jersey, shall be managed by a
Committee consisting of not less than three nor more than nine persons to
be designated "The Prudential Variable Contract Account-2 Committee"
("VCA-2 Committee"): and it is further

RESOLVED, that the VCA-2 Committee shall initially be composed of five
members, to be selected by the President of the Company with the approval
of the Executive Committee, each of whom shall serve until the first annual
meeting of persons having voting rights in respect of said account as
provided for by its Rules and Regulations or until his successor shall
qualify, and thereafter the members of the VCA-2 Committee shall be elected
by a majority of the votes cast by such persons having voting rights in
respect of said account; and it is further

RESOLVED, that subject to the qualifications contained in By-Law 26,
as amended, the Company shall, because of its interest in said account, and
in consideration of each member's agreement to serve as such, indemnify
each member of the VCA-2 Committee, or the legal representative of such
member, against reasonable costs, expenses (exclusive of any amount paid to
said account or to the Company in settlement) and counsel fees paid or
incurred in connection with any action, suit or proceeding, to which such
member, or his legal representative, may be made a party either during his
term of office or thereafter by reason of his being or having been such
member, provided that, unless and until renewed by resolution of this
board, such indemnification shall be in respect of action taken or omitted
only during the period ending with the first meeting of persons having
voting rights in respect of said account; and it is further

RESOLVED, that the Rules and Regulations, in the form submitted to
this meeting, be and the same are hereby adopted as the Rules and
Regulations of said account: and it is further

RESOLVED, that the Company shall offer to provide such account with
such services relating to investment management and sales as the VCA-2
Committee shall require, at rates of compensation for said services as
shall be approved by the President or by any Vice President designated by
him; and the President or any such Vice President is hereby authorized and
directed to execute on behalf of the Company such agreements with respect
thereto as may be necessary or appropriate, which agreements shall include
whatever provisions may be necessary to satisfy the requirements of the
Investment Company Act of 1940 and the regulations issued thereunder: and
it is further
<PAGE>

-3-

RESOLVED, that the proper officers of the Company are authorized and
directed to sign and file, or cause to be filed, in cooperation with the
VCA-2 Committee, a registration statement with the Securities and Exchange
Commission, including the financial statements and schedules, exhibits and
form of prospectus required as a part thereof, for the registration of
group variable annuity contracts under the Securities Act of 1933, which
registration statement shall be substantially in the form presented to this
meeting with such changes therein as may be approved by the President or by
any Vice-President designated by him; and to pay the registration fees
required in connection therewith; and it is further

RESOLVED, that the proper officers of the Company are authorized and
directed to sign and file, or cause to be filed, in cooperation with the
VCA-2 Committee, such amendment or amendments of the registration statement
as they may find necessary or advisable from time to time, and it is
further

RESOLVED, that the signature of any director or officer required by
law to affix his signature to the foregoing registration statement, or to
any amendment thereof, may be affixed by said director or officer
personally, or by any attorney in fact duly constituted in writing by said
director or officer to sign his name thereto; and it is further

RESOLVED, that the Secretary of the Company is appointed agent of the
Company to receive any and all notices and communications from the
Securities and Exchange Commission relating to such registration statement
and any and all amendments thereof; and it is further

RESOLVED, that the proper officers of the Company are authorized and
directed to sign and file, or cause to be filed, in cooperation with the
VCA-2 Committee, an application for an order under Section 6(c) of the
Investment Company Act of 1940 for such exemptions from the provisions of
that Act as may be necessary or desirable; and it is further

RESOLVED, that the proper officers of the Company shall take such
steps as may be required to cause the Company to comply with the Securities
Exchange Act of 1934 in connection with the sale of contracts on a variable
basis and the enrollment of participants thereunder, including, without
limitation, registration as a broker or dealer pursuant to Section 15 of
said Act, and application for such exemptions from the provisions and
regulations of said Act as may be necessary or desirable; and it is further

RESOLVED, that the proper officers of the Company are authorized and
directed to take whatever steps may be necessary or desirable to comply
with State statutes or regulations to the extent they may be applicable to
contracts on a variable basis issued by the Company pursuant to which
contributions may be made to The Prudential Variable Contract Account-2;
and it is further
<PAGE>

-4-

RESOLVED, that the proper officers of the Company be and they hereby
are from time to time authorized, empowered and directed to do all acts and
things from time to time necessary, desirable or appropriate to be done in
order to effectuate the purposes of the foregoing resolutions or any of
them.

/s/ W. D. Freeston
-----------------------------------------------
William D. Freeston, Secretary
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

February 16, 1968

Newark, New Jersey

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

VARIABLE CONTRACT ACCOUNT-2

RULES AND REGULATIONS

AS AMENDED THROUGH JUNE 19, 1989

ARTICLE I

GENERAL

SECTION 1. NAME. The name of this account shall be The Prudential Variable
Contract Account-2 ("VCA-2").

SECTION 2. PURPOSE. VCA-2 is a variable contract account established pursuant
to the provisions of Chapter 35A of Title 17 of the Revised Statutes of New
Jersey, as amended. Its purpose is to provide a funding medium for such
contracts on a variable basis issued and administered by The Prudential
Insurance Company of America ("Prudential") as Prudential shall elect to
designate as participating therein.

ARTICLE II

MEETINGS OF PERSONS HAVING VOTING RIGHTS IN VCA-2

SECTION 1. MEETINGS. Meetings of the persons having voting rights in respect of
VCA-2 under Section 6 of this Article may be called by a majority of the
Committee referred to in Article III hereof. The notice of the meeting shall
state the purpose or purposes of the meeting. All such meetings shall be held

6/19/89

<PAGE>

- 2 -

at the Corporate Home Office of Prudential or at such other place as may be
determined by the Committee, at the time and place stated in the notice of the
meeting.

SECTION 2. REQUIRED MEETINGS. (a) In the event that at any time less than a
majority of members of the Committee holding office at that time were elected by
persons having voting rights in respect of VCA-2, the Committee shall forthwith
cause to be held as promptly as possible, and in any event within 60 days, a
meeting of such persons for the purpose of electing Committee members to fill
any existing vacancies, unless the United States Securities and Exchange
Commission shall by order extend such period. (b) The Committee shall call a
meeting of the persons having voting rights in respect of VCA-2 for the purpose
of submitting the selection of an independent public accountant for
ratification or rejection if the Committee selects an accountant other than the
accountant whose selection was most recently ratified by persons having voting
rights in respect of VCA-2.

SECTION 3. NOTICE OF MEETING. A written or printed notice stating the place, day
and hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be given by mail, postage prepaid, to each person having voting
rights in respect of VCA-2 as of the date of such meeting, at his address as
carried on the records of VCA-2. Such notice shall be placed in the mail not
less than 25 days prior to the date of the meeting.

6/19/89

<PAGE>

- 3 -

SECTION 4. QUORUM. Persons entitled to cast more than thirty-five percent of the
votes which may be cast in accordance with Section 6 of this Article II,
represented either in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting provided for by this Article, except
insofar as a higher quorum for the transaction of any particular item of
business may be required by applicable law. If a quorum shall not be present,
persons entitled to cast more than fifty percent of the votes represented in
person or by proxy at the meeting may adjourn the meeting to some later time.
When a quorum is present, the vote of more than fifty percent of the votes
represented in person or by proxy shall determine any question except as may
be otherwise provided by these Rules and Regulations or by law.

SECTION 5. PROXIES. A vote may be cast either in person or by proxy duly
executed in writing. A proxy for any meeting shall be valid for any adjournment
of such meeting.

SECTION 6. VOTING. (a) For the purpose of determining the persons having voting
rights in respect of VCA-2 who are entitled to notice of and to vote at any
meeting of such persons or any adjournment thereof, or to express consent to
or dissent from any proposal without a meeting, or for the purpose of any other
action, the Committee may fix, in advance, a date as the record date for any
such determination of such persons. Such date shall not be more than 70 nor
less than 10 days before the date of such meeting, nor more than 70 days prior
to any other action.

6/19/89

<PAGE>

- 4 -

(b) The following persons shall have voting rights in respect of VCA-2 as of the
date of any meeting provided for by this Article:

(1) each person who had an individual accumulation account in VCA-2 as of
the record date fixed in accordance with paragraph (a) of this
Section; and

(2) each other person for whom a reserve liability was held in VCA-2 as of
the record date so fixed.

(c) The number of votes which each such person described in Paragraph (b)(1) of
this Section may cast at a meeting provided for by this Article shall be equal
to the number of dollars and fractions thereof in his individual accumulation
account in VCA-2 as of the record date fixed in accordance with Paragraph (a) of
this Section. The number of votes which each such person described in Paragraph
(b)(2) of this Section may cast at a meeting provided for by this Article shall
be equal to the number of dollars and fractions thereof of reserve liability
applicable to him as of the record date so fixed.

SECTION 7. ORDER OF BUSINESS. The order of business at the meetings provided for
in this Article shall be determined by the presiding officer.

SECTION 8. INSPECTORS. At each meeting of persons having voting rights in
respect of VCA-2 the polls shall be opened and closed, the proxies and ballots
shall be received and be taken in charge, and all questions touching the
qualification of voters, the validity of proxies or the acceptance or rejection
of votes shall be decided by three inspectors. Such inspectors, who need not be

6/14/79

<PAGE>
- 5 -

persons having voting rights in respect of VCA-2, shall be appointed by the
Committee before the meeting, or if no such appointment shall have been made,
then by the presiding officer of the meeting. In the event of failure, refusal
or inability of any inspector previously appointed to serve, the presiding
officer may appoint any person to fill such vacancy.

ARTICLE III

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2 COMMITTEE

SECTION 1. COMPOSITION. The Prudential Variable Contract Account-2 Committee
("Committee") shall consist of not less than three nor more than nine members.
The initial Committee, which shall consist of five members, shall be appointed
by the Chairman of the Board and Chief Executive Officer, the President or the
Vice Chairman of Prudential. The Committee shall, prior to giving notice of
each meeting at which members of the Committee are to be elected, fix the
number of members that shall constitute the Committee until the next such
meeting. The members of the Committee elected at the June 1989 meeting of
persons having voting rights in respect of VCA-2 shall serve indefinite terms.
Any vacancy may be filled either by vote of the Committee pursuant to Section 9
of this Article or by a ballot at a meeting of persons having voting rights in
respect of VCA-2. Members elected to the Committee pursuant to Section 9 of
this Article shall serve until the next meeting of persons having voting rights
in respect of VCA-2. Members elected by vote of persons having voting rights in
respect of VCA-2 shall serve indefinite terms. Members of the Committee need
not have voting rights in respect of VCA-2.

6/19/89

<PAGE>

- 6 -

SECTION 2. POWERS. The Committee shall have the following powers:
(a) to negotiate and approve agreements, required by the Investment
Company Act of 1940, entered into by VCA-2 providing for services
relating to investment management and to the sale of contracts on a
variable basis issued and administered by Prudential to the extent
they include participating interests in VCA-2 and to submit any
agreement for investment management services to the persons having
voting rights in respect of VCA-2 for their approval;
(b) to determine the initial fundamental investment policy of VCA-2 and
review investments made for VCA-2 to determine that they conform to
such policy;
(c) to consider changes in the fundamental investment policy of VCA-2 and
submit any recommendations with respect thereto to the persons having
voting rights in respect of VCA-2 for their approval;
(d) to select an independent public accountant for VCA-2 and submit such
selection to the persons having voting rights in respect of VCA-2 for
their approval;
(e) to authorize the filing of all registration statements and
applications for exemptions, and related reports and documents to be
filed by VCA-2 with the Securities and Exchange Commission under the
Investment Company Act of 1940 and the Securities Act of 1933 and the
rules and regulations thereunder; and

6/14/79

<PAGE>

- 7 -

(f) to perform such additional acts for VCA-2 as may be required to comply
with the Investment Company Act of 1940 or as may be necessary to
carry out the functions of VCA-2 as provided for by resolution of the
Board of Directors of Prudential.

SECTION 3. SUBCOMMITTEES. The Committee may elect by vote of a majority thereof,
which majority shall include a majority of the members who are not affiliated
persons of Prudential, two or more of its members to constitute an Executive
Subcommittee, which subcommittee shall have, and may exercise when the
Committee is not in session, any or all powers of the Committee.

The Committee by a majority thereof may appoint from among its members
other subcommittees from time to time, and may determine the number of members
(not less than two) composing such subcommittees, and their functions.

Each subcommittee may make rules for the notice and conduct of its meetings
and the keeping of the records thereof. The term of any member of any
subcommittee shall be fixed by the Committee but no member of a subcommittee
shall hold office after the first meeting of the Committee following a meeting
of the persons having voting rights in VCA-2 at which one or more members of the
Committee is elected, unless reappointed.

SECTION 4. MEETINGS. Regular meetings of the Committee shall be held at such
places and at such times as the Committee, by majority vote, may determine from
time to time, and if so determined, no call or notice thereof need be given
except that at least two days' notice shall be given of the first regular
meeting following a change in the date of regular meetings. Special meetings of

6/19/89

<PAGE>

- 8 -

the Committee may be held at any time or place, whenever called by the Chairman
of the Committee, or two or more members of the Committee. Notice thereof shall
be given to each member by the Secretary or any Assistant Secretary to the
Committee, unless all members are present or unless those not present shall have
waived notice thereof in writing, which waivers shall be filed with the records
of the meeting. Notice of special meetings stating the time and place thereof
shall be given by mail to each member at his residence or business address at
least two days before the meeting, or by delivering or telephoning the same to
him personally or by telephoning the same to him at his residence or business
address at least one day before the meeting; provided, that the Chairman of the
Committee may prescribe a shorter notice to be given personally or by telephone
or telegraph to each member at his residence or business address. The Chairman
of the Committee shall preside at all meetings of the Committee at which he is
present.

SECTION 5. QUORUM. A majority of the members of the Committee shall constitute a
quorum for the transaction of business. When a quorum is present at any meeting,
a majority of the members present shall decide any question brought before such
meeting except as otherwise provided by law, or by these Rules and Regulations.

SECTION 6. ACTION OTHER THAN AT MEETINGS. Any action which may validly be taken
by the Committee at a regular or special meeting thereof may also be taken
without a meeting, provided that unanimous approval of such action has been
obtained either by telephonic communication with or in writing from each member

3/21/80

<PAGE>

- 9 -

of the Committee. A record of any such action shall be maintained as part of the
minutes of the meetings of the Committee.

SECTION 7. OFFICERS. At the first meeting of the Committee and at the first
meeting following each meeting of persons having voting rights in respect of
VCA-2 at which one or more members of the Committee is elected, the Committee
shall elect one of its members to act as Chairman of the Committee and he shall
hold office until his successor is elected and qualified.

The Committee shall appoint a Secretary to the Committee and such other
officers and assistant officers as it may deem advisable. With the exception of
the Chairman, none of the officers or assistant officers need be members of the
Committee. The Secretary and any Assistant Secretary shall have the power to
certify the minutes of the meetings, or any portion thereof, of the persons
having voting rights in respect of VCA-2 and of the Committee, shall perform the
duties customarily associated with the Secretary of a corporation, and shall
perform such other duties and have such other powers as the Committee shall
designate from time to time. All other officers and assistant officers shall
perform such duties and have such powers as the Committee shall designate from
time to time.

SECTION 8. RESIGNATIONS. Any member of the Committee, the Chairman, the
Secretary or any other officer or assistant officer may resign his membership or
office at any time by mailing or delivering his resignation in writing to the
Chairman or to a meeting of the Committee. Any such resignation shall take

6/19/89

<PAGE>

- 10 -

effect at the time specified therein or, if the time be not specified, upon
acceptance thereof by the Committee.

SECTION 9. VACANCIES. (a) Vacancies occurring by reason of death, resignation or
otherwise of members of the Committee may be filled by a majority vote of all
the remaining members, provided that, immediately after filling any such vacancy
at least two-thirds of the members then holding office shall have been elected
to such office by persons having voting rights in respect to VCA-2 Members
elected pursuant to this Section shall serve until the next meeting of the
persons having voting rights in respect of VCA-2. (b) The Committee shall have
and may exercise all its powers notwithstanding the existence of one or more
vacancies in its number, provided there are at least three members in office. If
the office of any member of any subcommittee, or the Chairman of the Committee,
the Secretary or any other officer or assistant officer becomes vacant, the
Committee may elect a successor by vote of a majority of the members then in
office. Each successor shall hold office until his successor shall be duly
elected or appointed and qualified.

SECTION 10. REMOVAL. Any member of the Committee, the Chairman, the Secretary or
any other officer or assistant officer may be removed from office by a vote of
three-fifths of the Committee members then in office.

No person shall serve as a member of the Committee after the persons having
two-thirds or more of the voting rights in respect of VCA-2 have declared,
either in a writing filed with Prudential or by votes cast in person or by proxy

6/19/89

<PAGE>
- 11 -

at a meeting, called for such purpose, of persons having voting rights in
respect of VCA-2, that such person should be removed as a Committee member.

The Committee shall promptly call a meeting of persons with voting rights
in respect of VCA-2 to vote on the removal of any Committee member when asked to
do so by persons having 10% or more of the voting rights in respect of VCA-2.

Whenever ten or more persons having voting rights in respect of VCA-2 who
hold, in the aggregate, interests in VCA-2 having a net asset value of at least
$25,000 or 1% of the voting rights in respect of VCA-2, whichever is less, shall
advise the Committee in writing that they wish to communicate with other persons
having voting rights in respect of VCA-2 with a view to a request for a meeting
for the purpose of removing any member or members of the Committee from office,
and such advice is accompanied by a form of communication and request which they
wish to transmit, the Committee shall within five business days after receiving
such advice either afford such persons access to a list of the names and
addresses of persons having voting rights in respect of VCA-2 or inform them as
to the approximate number of persons having voting rights in respect of VCA-2
and the approximate cost of mailing the proposed form of communication and
request.

If the Committee elects to provide the information regarding the
approximate number of persons having voting rights in respect of VCA-2 and the
approximate cost of mailing to them the proposed communication and form of
request, the Committee, upon the written request of those desiring such a
mailing, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, shall, with reasonable promptness, mail such
material to all persons having voting rights in respect of VCA-2 at their

6/19/89

<PAGE>

- 12 -

addresses of record, unless within five business days after such tender the
Committee shall mail to the persons requesting the mailing and file with the
United States Securities and Exchange Commission, together with a copy of the
material to be mailed, a written statement signed by at least a majority of the
members of the Committee to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts necessary to
make the statements contained therein not misleading, or would be in violation
of applicable law, and specifying the basis of such opinion.

The Committee shall mail copies of such material to all persons having
voting rights in respect of VCA-2 with reasonable promptness after the entry of
an order by the United States Securities and Exchange Commission so providing
and the renewal of such tender.

ARTICLE IV

COMPENSATION

The members of the Committee who are affiliated with Prudential shall not
receive any additional compensation for services which they may perform for or
on behalf of VCA-2. Members of the Committee who are not so affiliated shall be
compensated by Prudential. The Secretary and other officers or assistant
officers shall serve without additional compensation.

ARTICLE V

CHANGE OF CLASSIFICATION OF VCA-2

Any plan of reorganization pursuant to which the classification of VCA-2 is

6/19/89

<PAGE>

- 13 -

changed from a management company to a unit investment trust, as defined in
Section 4(2) of the Investment Company Act of 1940, must be submitted to the
persons holding voting rights in respect of VCA-2 and approved by a majority of
the votes cast by such persons.

3/21/80

CUSTODY AGREEMENT

AGREEMENT dated April 15, 1980 between THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2 ("VCA-2"), a separate account of The Prudential Insurance Company of
America ("Prudential") registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a banking corporation organized under the laws of the
State of New York ("Custodian").

W I T N E S S E T H:

WHEREAS, VCA-2 desires to employ Custodian as a custodian of the securities
and property of VCA-2, and Custodian desires to accept such employment, on the
terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual agreements herein made,
VCA-2 and Custodian hereby agree as follows:

1. RECEIPT AND DISBURSEMENT OF CASH

A. Custodian shall open and maintain a custody account (the "Account")
in the name of VCA-2, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in the Account all
cash received by it from or for the account of VCA-2.

B. Custodian shall make payments of cash for the account of VCA-2 only
(i) for the purchase of securities for the portfolio of VCA-2 upon the delivery
of such securities to Custodian, either registered in the name of VCA-2, or in
bearer form or proper form for transfer, or by Federal Reserve book-entry
delivery to Custodian's account for the benefit of VCA-2;

<PAGE>

- 2 -

(ii) to another Prudential bank account for the purpose of making payments to
VCA-2 participants or beneficiaries of participants in accordance with their
respective contracts as a result of the withdrawal of all or a portion of an
accumulation account, an election to effect a variable annuity or the payment of
a death benefit provided for under the contract; (iii) to Prudential, as a
result of the election by a VCA-2 participant to transfer all or a portion of
his accumulation account to a companion fixed-dollar contract account or to
cause a fixed-dollar annuity to be effected; (iv) to Prudential, upon withdrawal
by Prudential of all or part of the proportionate interest in VCA-2 then held by
it; (v) for the payment of interest, dividends, taxes, advisory, management or
supervisory fees or operating expenses (including, without limitation, fees
payable to Prudential and fees for legal, accounting and auditing services),
(vi) for payments in connection with the conversion, exchange or surrender of
securities owned or subscribed to by VCA-2 held by or to be delivered to
Custodian, (vii) to any other custodian of the securities or property of VCA-2;
or (viii) for other proper account purposes. Before making any such payment,
Custodian shall receive (and may rely upon) an officers' certificate requesting
such payment and stating that it is for a purpose permitted under the terms of
items (i) thru (vii) of this subsection B, and also, in respect of Item (viii),
upon receipt of an officers' certificate and a certified copy of a resolution of
the VCA-2 Committee specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose and naming the person or persons to whom such payment
is to be made.

<PAGE>

- 3 -

C. Custodian is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received by Custodian for the account
of VCA-2

2. RECEIPT OF SECURITIES

Custodian shall hold in the Account, pursuant to the provisions of this
Agreement, all securities received by it for the account of VCA-2. All such
securities shall be held or disposed by Custodian for, and subject to at all
times to the instructions of, VCA-2 pursuant to the provisions of this
Agreement. Custodian shall be authorized to utilize the Federal Reserve
book-entry system for such of the securities of VCA-2 as are eligible therefor.
Any securities held in the Federal Reserve book-entry system shall be
represented in one or more accounts in the name of Custodian which do not
include any of Custodian's assets other than assets held as fiduciary, custodian
or otherwise for customers. All of VCA-2 securities which are not held in the
Federal Reserve book-entry system shall be physically segregated at all times
from the securities of any other persons, firms, or corporations. Custodian
shall have no power or authority to lend, assign, hypothecate, pledge or
otherwise dispose of any such securities and investments, except pursuant to the
directive of VCA-2 and only for the account of VCA-2 as set forth in Section 3
below.

3. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES

Custodian shall have sole power to release or deliver any securities of
VCA-2 held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange, or deliver securities held

<PAGE>

- 4 -

by it hereunder only (a) for sales of such securities for the account of VCA-2
upon receipt of Custodian of payment therefor, (b) when such securities are
called, redeemed or retired or otherwise become payable, (c) for examination by
any broker selling any such securities in accordance with "street delivery"
custom, (d) in exchange for or upon conversion into other securities alone or
other securities and cash whether pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment, or otherwise, (e) upon
conversion of such securities pursuant to their terms into other securities, (f)
upon exercise of subscription, purchase or other similar rights represented by
such securities, (g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities, or (h) for other proper account purposes.
As to any deliveries made by Custodian pursuant to items (b), (d), (e), (f), and
(g), securities or cash receivable in exchange therefor shall be deliverable to
Custodian. Before making any transfer, exchange or delivery under the terms of
Items (a), (b), (c), (d), (e), (f), or (g) of this Section 3, the Custodian
shall receive an officers' certificate authorizing such transfer, exchange or
delivery and stating that it is for a purpose permitted by such Items and also,
in respect of Item (h), upon receipt of an officers' certificate and a certified
copy of a resolution of the VCA-2 Committee specifying the securities to be
delivered, setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper account purpose, and naming

<PAGE>

- 5 -

the person or persons to whom delivery of such securities shall be made.

4. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS

Unless and until Custodian Receives an officers' certificate to the
contrary, Custodian shall: (a) Present for payment all coupons and other income
items held by it for the account of VCA-2 which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of VCA-2, (b) Collect interest received, with notice to VCA-2, for the account
of VCA-2, provided that interest on securities held in the Account, either in
book-entry form or otherwise, shall be credit automatically to the account on
the payable date whether or not actually collected by Custodian on that date;
and (c) execute as agent on behalf of VCA-2 all necessary ownership certificates
required by the Internal Revenue Code or the Income Tax Regulations of the
United States Treasury Department or under the laws of any State now or
hereafter in effect, inserting VCA-2's name on such certificate as the owner of
the securities covered thereby, to the extent it may lawfully do so.

5. TAXES

Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under Agreement as may be required under the
provisions of the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, or under the laws of any State, to exempt from
taxation any exemptable transfers and/or deliveries of any such securities.

<PAGE>

- 6 -

6. FEES AND EXPENSES

Custodian shall be compensated for its services pursuant to this Agreement
by fee and/or balance arrangements agreed upon by the parties from time to time.
Expenses incurred for postage, insurance, exchange, correspondent and similar
charges in connection with transactions under this Agreement may not be deducted
from sales proceeds or charged against the Account or any other Prudential
account without specific authorization.

7. MATTERS RELATING TO LIABILITY OF CUSTODIAN

B. Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of the
VCA-2 Committee, and may rely on the genuiness of any such document which it may
in good faith believe to have been validly executed. Custodian shall not be
liable for executing, failing to execute, or any mistake in the execution of,
telephonic, facsimile or other non-written instructions from VCA-2 with respect
to the Account prior to confirmation thereof in writing, except in case of the
negligence or willful misconduct of Custodian and/or its employees.

<PAGE>

- 7 -

C. Custodian shall not deliver any cash, securities or other property
from the Account to or for the account of any natural person, other than a
natural person acting in his official capacity on behalf of an instrumentality
of the Federal government or of any state government.

8. MATTERS RELATING TO USE OF FEDERAL RESERVE BOOK-ENTRY SYSTEM

A. Custodian shall promptly send or cause to be sent to VCA-2 a
confirmation of all transfers to or from the account, clearly distinguishing
between securities held in the Federal Reserve book-entry system and those not
so held. Transaction statements shall be furnished to VCA-2 on a daily basis.

B. With regard to securities held in the Federal Reserve book-entry
system, Custodian shall also, by book-entry or otherwise, identify as belonging
to VCA-2 a quantity of securities in a fungible bulk of securities held in
accounts in the name of Custodian in the Federal Reserve book-entry system.

C. Custodian shall promptly send to VCA-2 (i) all reports which it
receives from the Federal Reserve book-entry system on its system of internal
accounting control, and (ii) such reports on the system of internal accounting
control of Custodian as VCA-2 may reasonably request from time to time.

9. REPORTS AND OTHER DOCUMENTS; INSPECTION

A. Custodian shall furnish VCA-2 with such reports as VCA-2 shall
reasonably request with respect to the securities and property of VCA-2 held in
the Account.

<PAGE>

- 8 -

B. Custodian shall maintain records sufficient to determine and verify
information relating to the securities and property in the Account that may be
reported in Prudential's Annual Statement and supporting Schedules as filed with
various regulatory authorities and in connection with the audit of the financial
statements of VCA-2.

C. Custodian shall provide, upon request, affidavits for the Account
in the form of Attachments B and D to Circular Letter #2 (1977) of the New York
State Insurance Department or such other form as may be acceptable to Custodian,
Prudential and the New York State Insurance Department in order for the
securities and property in the Account to be recognized by the New York State
Insurance Department as admitted assets of Prudential, and to provide similar
affidavits for submission to the Insurance Departments of other states, if
requested by Prudential.

D. The books and records of Custodian pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times by
officers, employees and independent auditors employed by VCA-2, and by any
representative of an appropriate regulatory body; provided, however, that
written instructions to that effect are furnished to Custodian by the Chairman
or Secretary of VCA-2 or by the Treasurer, the Comptroller, any assistant
treasurer or any assistant comptroller of Prudential.

10. OFFICERS' CERTIFICATES

As used herein, "officers' certificate" shall mean a request or
direction or certification signed and countersigned on behalf of VCA-2 in
accordance with the provisions of the By-Laws

<PAGE>

- 9 -

of Prudential and related resolutions of the Finance Committee of the Board of
Directors of Prudential which form part of Prudential's Booklet of Authorized
Signatures furnished to Custodian, as such Booklet may be revised from time to
time. Any requirement in this Agreement that an officers' certificate be
furnished to Custodian shall be satisfied if telephonic, facsimile or other
non-written instructions to Custodian are confirmed promptly by the delivery to
Custodian of an officers' certificate in accordance with the first sentence of
this Section.

11. TERMINATION; ASSIGNMENT

A. This Agreement may be terminated by VCA-2, or by Custodian, on 60
days' notice, given in writing and sent by registered mail to the following
addresses:

(i) If to VCA-2, to Prudential Plaza, Newark, New Jersey 07101, Attention:
Meyer Melnikoff, with a copy to Irving Patrick Fox; and

(ii) If to Custodian, to 23 Wall Street, New York, New York 10015.

Upon any termination of this Agreement, pending (i) appointment of a successor
to Custodian or (ii) a determination by the VCA-2 Committee to hold its cash,
securities and other property in its own custody, Custodian shall not deliver
cash, securities or other property of VCA-2 to VCA-2, but may deliver them to a
bank or trust company in the City of New York of its own selection, having an
aggregate capital, surplus and undivided profits, as shown by its last published
report of not less than five hundred thousand dollars ($500,000) as a temporary
Custodian for VCA-2 to be held under terms similar to those of this Agreement;
provided, however, that Custodian shall not be required to make any such
delivery or

<PAGE>

- 10 -

payment until full payment shall have been made by VCA-2 of all liabilities
constituting a charge on or against the properties then held by Custodian or on
or against Custodian, and until full payment shall have been made to Custodian
of all its fees, compensation, costs and expenses, subject to the provisions of
Section 8 of this Agreement.

B. This Agreement may not be assigned by Custodian without the consent
of VCA-2, authorized by a resolution of the VCA-2 Committee.

12. MISCELLANEOUS

A. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.

B. This Agreement cannot be amended or terminated orally.

C. This Agreement shall be governed by and construed in accordance
with the law of the State of New York.

D. This Agreement may be executed in several counterparts.

<PAGE>

- 11 -

E. Headings herein are for reference purposes only and shall not be
deemed to have any substantive effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2

By: /s/ Meyer Melnikoff
--------------------------------
Meyer Melnikoff, Chairman

MORGAN GUARANTY TRUST COMPANY OF NEW YORK

By: /s/
--------------------------------
Vice President

CUSTODY AGREEMENT

AGREEMENT dated April 15, 1980 between THE PRUDENTIAL VARIABLE
CONTRACT ACCOUNT-2 ("VCA-2"), a separate account of The Prudential Insurance
Company of America ("Prudential") registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, and
MANUFACTURERS HANOVER TRUST COMPANY, a banking corporation organized under the
laws of the State of New York ("Custodian").

W I T N E S S E T H:

WHEREAS, VCA-2 desires to employ Custodian as a custodian of the
securities and property of VCA-2, and Custodian desires to accept such
employment, on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual agreements herein made,
VCA-2 and Custodian hereby agree as follows:

1. RECEIPT AND DISBURSEMENT OF CASH

B. Custodian shall make payments of cash for the account of VCA-2 only
(i) for the purchase of securities for the portfolio of VCA-2 upon the delivery
of such securities to Custodian, either registered in the name of VCA-2 or
Custodian's nominee referred to in Section 2 below,or in bearer form or proper
form for transfer,or by book-entry delivery to Custodian's account

<PAGE>

- 2 -

in the Depository Trust Company ("DTC") for the benefit of VCA-2; (ii) to
another bank for the purpose of making payments to VCA-2 participants or
beneficiaries of participants in accordance with their respective contracts as a
result of the withdrawal of all or a portion of an accumulation account, an
election to effect a variable annuity or the payment of a death benefit provided
for under the contract; (iii) to Prudential, as a result of the election by a
VCA-2 participant to transfer all or a portion of his accumulation account to a
companion fixed-dollar contract account or to cause a fixed-dollar annuity to be
effected; (iv) to Prudential, upon withdrawal by Prudential of all or part of
the proportionate interest in VCA-2 then held by it; (v) for the payment of
interest, dividends, taxes, advisory, management or supervisory fees or
operating expenses (including, without limitation, fees payable to Prudential
and fees for legal, accounting and auditing services), (vi) for payments in
connection with the conversion, exchange or surrender of securities owned or
subscribed to by VCA-2 held by or to be delivered to Custodian; (vii) to any
other custodian of the securities or property of VCA-2; or (viii) for other
proper account purposes. Before making any such payment, Custodian shall receive
(and may rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (i) thru (vii) of
this subsection B, and also, in respect of Item (viii), upon receipt of an
officers' certificate and a certified copy of a resolution of the VCA-2
Committee specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose and naming the person or persons to whom such payment is to be
made.

<PAGE>

- 3 -

C. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of VCA-2.

2. RECEIPT OF SECURITIES

Custodian shall hold in the Account, pursuant to the provisions of
this Agreement, all securities received by it for the account of VCA-2. All such
securities shall be held or disposed by Custodian for, and subject to at all
times to the instructions of, VCA-2 pursuant to the provisions of this
Agreement. Custodian shall be authorized to redeposit in DTC and the Federal
Reserve book-entry system such of the securities of VCA-2 as are eligible for
such redeposit. Any securities so redeposited shall be represented in one or
more accounts in the name of Custodian which do not include any of Custodian's
assets other than assets held as fiduciary, custodian or otherwise for
customers. Securities held by Custodian in definitive form, i.e., not so
redeposited, shall be registered in the name of Custodian's nominee Gibco, which
shall be used only for registration of securities owned by or in portfolios
managed by Prudential. Any of VCA-2's securities which are registered in the
name of Gibco shall be physically segregated at all times from the securities of
any other persons, firms, or corporations, including, without limitation, any
other securities registered in the name of Gibco. Custodian shall have no power
or authority to lend, assign, hypothecate, pledge or otherwise dispose of any
such securities and investments, except pursuant to the directive of VCA-2 and
only for the account of VCA-2 as set forth in Section 3 below.

<PAGE>

- 4 -

3. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES

Custodian shall have sole power to release or deliver any securities
of VCA-2 held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange, or deliver securities held by it hereunder only (a) for sales of such
securities for the account of VCA-2 upon receipt of Custodian of payment
therefor, (b) when such securities are called, redeemed or retired or otherwise
become payable, (c) for examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or upon conversion
into other securities alone or other securities and cash whether pursuant to any
plan or merger, consolidation, reorganization, recapitalization or readjustment,
or otherwise, (e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription, purchase or other
similar rights represented by such securities, (g) for the purpose of exchanging
interim receipts or temporary securities for definitive securities, or (h) for
other proper account purposes. As to any deliveries made by Custodian pursuant
to items (b), (d), (e), (f), and (g), securities or cash receivable in exchange
therefor shall be deliverable to Custodian. Before making any transfer, exchange
or delivery under the terms of Items (a), (b), (c), (d), (e), (f), or (g) of
this Section 3, the Custodian shall receive an officers' certificate authorizing
such transfer, exchange or delivery and stating that it is for a purpose
permitted by such Items and also, in respect of Item (h), upon receipt of an
officers' certificate and a certified copy of a resolution of the VCA-2
Committee specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
account purpose, and naming

<PAGE>

- 5 -

the person or persons to whom delivery of such securities shall be
made.

4. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS

Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) Present for payment all coupons and other income
items held by it for the account of VCA-2 which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of VCA-2; (b) Collect interest and cash dividends received, with notice to
VCA-2, for the account of VCA-2, provided that cash dividends and interest on
securities held in the Account, either in book-entry form or in Custodian's
nominee name, shall be credited automatically to the Account on the payable date
whether or not actually collected by Custodian on that date; (c) Hold for the
account of VCA-2 hereunder all stock dividends, rights and similar securities
issued with respect to any securities held by it hereunder; (d) execute as agent
on behalf of VCA-2 all necessary ownership certificates required by the Internal
Revenue Code or the Income Tax Regulations of the United States Treasury
Department or under the laws of any State now or hereafter in effect, inserting
VCA-2's name on such certificate as the owner of the securities covered thereby,
to the extent it may lawfully do so.

5. VOTING AND OTHER ACTION

Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of VCA-2, except in accordance
with the instructions contained in an officers' certificate. Custodian shall
promptly deliver, or cause to be executed and delivered, to VCA-2 all notices,
proxies and proxy soliciting materials relating to such securities, such proxies
to be executed by the registered holder of such securities, but

<PAGE>

- 6 -

without indicating the manner in which such proxies are to be voted.

Custodian shall transmit promptly to VCA-2 all written information
(including, without limitation, financial statements and reports and pendency of
calls and maturities of securities and expirations of rights in connection
therewith) received by Custodian directly or indirectly from issuers of the
securities being held for VCA-2. With respect to tender or exchange offers,
Custodian shall transmit promptly to VCA-2 all written information received by
the Custodian directly or indirectly from issuers of the securities whose tender
or exchange is sought and from the party (or his agent) making the tender or
exchange offer.

6. TAXES

VCA-2 assumes the duty of filing any and all tax reports and returns
as well as full responsibility for the payment of all taxes due on the income
Custodian collects for VCA-2 and on any transactions which Custodian may handle
pursuant to this Agreement.

7. FEES AND EXPENSES

Custodian shall be compensated for its services pursuant to this
Agreement by fee and/or balance arrangements agreed upon by the parties from
time to time. Expenses incurred for postage, insurance, exchange, correspondent
and similar charges in connection with transactions under this Agreement may not
be deducted from sales proceeds or charged against the Account or

<PAGE>

- 7 -

any other Prudential account without specific authorization.

8. MATTERS RELATING TO LIABILITY OF CUSTODIAN

A. Custodian shall maintain detailed records of all securities and
property held in the Account. All securities and property held by Custodian in
the Account shall be kept with the care exercised by Custodian with respect to
its own securities. Custodian assumes the entire responsibility for any loss, to
the extent of the market value thereof at the date of the discovery of such
loss; provided that Custodian shall be relieved of such responsibility to the
extent that such loss was occasioned by other than the negligence of, or
robbery, burglary or theft by, its employees. Custodian represents and warrants
to VCA-2 that it presently has in force, and will maintain in force during the
term of this Agreement, Bankers Blanket Bond insurance coverage under Form No.
24 in an amount which Custodian deems to be appropriate, together with a
"Central Handling of Securities - Discovery Form" Rider thereto. Although
Custodian carries Bankers Blanket Bond insurance coverage to insure itself
against loss from any cause, it is understood that Custodian shall be under no
obligation to insure for the direct benefit of VCA-2. Custodian's responsibility
for all securities and property held under this Agreement shall be not less than
that of a bailee for hire under the statutory and case law of the State of New
York.

B. Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of the
VCA-2 Committee, and may rely on the genuiness of any such document which it may
in good faith believe to have been validly executed. Custodian shall not be
liable for executing, failing to execute, or any mistake in the execution of,
oral instructions from VCA-2 with respect to the Account prior to

<PAGE>

- 8 -

confirmation thereof in writing, except in case of the negligence or willful
misconduct of Custodian and/or its employees.

C. In consideration of Custodian's registration of any securities in
the name of its nominee, VCA-2 agrees to indemnify and hold harmless Custodian
and its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee by reason of such registration, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or wilful misconduct.
Custodian is authorized to charge any account of VCA-2 for such items.

D. Custodian shall not deliver any cash, securities, or other property
from the Account to or for the account of any natural person, other than a
natural person acting in his official capacity on behalf of an instrumentality
of the Federal government or of any state government.

9. MATTERS RELATING TO USE OF BOOK-ENTRY SECURITIES SYSTEMS

A. Custodian shall promptly send or cause to be sent to VCA-2 a
confirmation of all transfers to or from the account, clearly distinguishing
between securities deposited in DTC or the Federal Reserve book-entry system and
those not so redeposited. Transaction statements shall be furnished to VCA-2 on
a daily basis.

B. With regard to securities redeposited in DTC or the Federal Reserve
book-entry system, Custodian shall also, by book-entry or otherwise, identify as
belonging to VCA-2 a quantity of securities in a fungible bulk of securities
either (i) held in accounts in the name of Custodian in DTC or the Federal
Reserve book-entry system, or (ii) registered in the name of Gibco.

<PAGE>

- 9 -

C. Custodian shall promptly send to VCA-2 (i) all reports which it
receives from DTC and the Federal Reserve book-entry system on their respective
systems of internal accounting control, and (ii) such reports on the system of
internal accounting control of Custodian as VCA-2 may reasonably request from
time to time.

10. REPORTS AND OTHER DOCUMENTS; INSPECTION

A. Custodian shall furnish VCA-2 with such reports as VCA-2 shall
reasonably request with respect to the securities and property of VCA-2 held in
the Account.

C. Custodian shall provide, upon request, affidavits for the Account
in the form of Attachments B, C and D to Circular Letter #2 (1977) of the New
York State Insurance Department or such other form as may be acceptable to
Custodian, Prudential and the New York State Insurance Department in order for
the securities and property in the Account to be recognized by the New York
State Insurance Department as admitted assets of Prudential, and to provide
similar affidavits for submission to the Insurance Departments of other states,
if requested by Prudential.

<PAGE>

- 10 -

appropriate regulatory body; provided, however, that written instructions to
that effect are furnished to Custodian by the Chairman or Secretary of VCA-2 or
by the Treasurer, the Comptroller, any assistant treasurer or any assistant
comptroller of Prudential.

11. OFFICERS' CERTIFICATES

As used herein, "officers' certificate" shall mean a request or
direction or certification signed and countersigned on behalf of VCA-2 in
accordance with the provisions of the By-Laws of Prudential and related
resolutions of the Finance Committee of the Board of Directors of Prudential
which form part of Prudential's Booklet of Authorized Signatures furnished to
Custodian, as such Booklet may be revised from time to time. Any requirement in
this Agreement that an officers' certificate be furnished to Custodian shall be
satisfied if telephonic, facsimile or other non-written instructions to
Custodian are confirmed promptly by the delivery to Custodian of an officers'
certificate in accordance with the first sentence of this Section.

12. TERMINATION; ASSIGNMENT

A. This Agreement may be terminated by VCA-2, or by Custodian, on 60
days' notice, given in writing and sent by registered mail to the following
addresses:

(i) If to VCA-2, to Prudential Plaza, Newark, New Jersey 07101, Attention:
Meyer Melnikoff, with a copy to Irving Patrick Fox; and

(ii) If to Custodian, to 40 Wall Street, New York, New York 10015.

<PAGE>

- 11 -

in the City of New York of its own selection, having an aggregate capital,
surplus and undivided profits, as shown by its last published report of not less
than five hundred thousand dollars ($500,000) as a temporary Custodian for VCA-2
to be held under terms similar to those of this Agreement; provided, however,
that Custodian shall not be required to make any such delivery or payment until
full payment shall have been made by VCA-2 of all liabilities constituting a
charge on or against the properties then held by Custodian or on or against
Custodian, and until full payment shall have been made to Custodian of all its
fees, compensation, costs and expenses, subject to the provisions of Section 8
of this Agreement.

B. This Agreement may not be assigned by Custodian without the consent
of VCA-2, authorized by a resolution of the VCA-2 Committee.

13. MISCELLANEOUS

A. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.

B. This Agreement cannot be amended or terminated orally.

C. This Agreement shall be governed by and construed in accordance
with the law of the State of New York.

D. This Agreement may be executed in several counterparts.

E. Headings herein are for reference purposes only and shall not be
deemed to have any substantive effect.

<PAGE>

- 12 -

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2

By /s/ Meyer Melnikoff
--------------------------------
Meyer Melnikoff, Chairman

MANUFACTURERS HANOVER TRUST COMPANY

By: /s/ Louis V. Segadini
--------------------------------
LOUIS V. SEGADINI Vice President
Vice President

AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES

STATEMENT OF FACTS

A. On January 9, 1968, the Board of Directors of The Prudential Insurance
Company of America ("Prudential") adopted a resolution establishing The
Prudential Variable Contract Account-2 ("VCA-2") as a funding medium for such
contracts on a variable basis sold and administered by Prudential as may be
designated by it as participating therein.

B. Pursuant to the requirements of the Investment Company Act of 1940
("1940 Act") VCA-2 will be registered thereunder as an investment company.

C. The 1940 Act forbids any person from acting as investment adviser to a
registered investment company except pursuant to a written contract and
Prudential may be regarded as the investment adviser of VCA-2.

AGREEMENT

NOW, THEREFORE, Prudential and VCA-2 do agree as follows:

1. Prudential shall manage the investment and reinvestment of the assets
held in VCA-2 in a manner consistent with the investment policy as set forth in
the registration statement of VCA-2, as from time to time amended, under the
1940 Act.

2. Prudential shall determine what securities shall be purchased or sold
for VCA-2 and shall arrange for the necessary placement of orders and execution
of transactions. All brokers' commissions, taxes or governmental fees
attributable to transactions for VCA-2, and all other applicable
taxes arising out of the investment operations of VCA-2, including income and
capital gains taxes, if any, shall be charged against VCA-2.

<PAGE>

-2-

3. At least once each month Prudential shall furnish to The Prudential
Variable Contract Account-2 Committee ("Committee") a schedule of the
investments held in VCA-2 and shall include therein a statement of all purchases
and sales made on behalf of VCA-2 during the period since the preceding report.

4. For the services performed hereunder, Prudential will, in determining
unit values under the contracts participating in VCA-2 and in the manner
specified in such contracts, deduct an investment management fee at the
effective annual rate of one-eighth of one per cent (0.125 per cent).

5. This agreement shall remain in force until June 1, 1969, and from year
to year thereafter, but only so long as such continuance is approved at least
annually by the affirmative vote of the Committee, including the specific
approval of a majority of the members of the Committee who are not persons
affiliated with Prudential, or by a majority of the votes cast by those persons
having voting rights in respect of VCA-2, as provided for by the Rules and
Regulations of VCA-2.

6. This agreement shall automatically terminate in the event it shall not
be approved by a majority of the votes cast by those persons having voting
rights in respect of VCA-2 at their first meeting, or at any subsequent meeting
at which the question of the renewal or continuance of this agreement shall be
voted upon. This agreement shall also terminate automatically in the event of
its assignment by Prudential.

7. This agreement may be terminated at any time, and without payment of any
penalty, by the Committee or by a majority of the votes cast by those persons
having voting rights in respect of VCA-2, on 60

<PAGE>

-3-

days' written notice to Prudential. This agreement may be terminated By
Prudential on 90 days' written notice to the Committee.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 16th day of February, 1968.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Attest:

/s/ W.D. Freeston By /s/
- ------------------------ -------------------------------
W.D. Freeston, Secretary Executive Vice President

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
Witnessed:

/s/ By /s/ Meyer Melnikoff
- ------------------------ -------------------------------
Secretary to the Committee Chairman of the Committee

AMENDMENT NO. 1 to

AGREEMENT FOR INVESTMENT MANAGEMENT SERVICES

Amendment No. 1 dated as of the 1st day of January, 1972 to AGREEMENT dated
the 16th day of February, 1968 (herein referred to as the "Agreement") by and
between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (herein referred to as
"Prudential"), and THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2 (herein referred
to as the "VCA-2").

WHEREAS, Pruco Securities Corporation (herein referred to as "Pruco
Securities"), is a broker-dealer affiliated with Prudential, and is a member of
the Philadelphia-Baltimore-Washington-Stock Exchange, and enjoys preferential
status on the Pacific Coast and Boston Stock Exchanges; and

WHEREAS, Prudential and VCA-2 desire to provide for the use of Pruco
Securities as broker on certain of the portfolio transactions of the Fund; and

WHEREAS, Prudential and VCA-2 desire to conform the terms of the Agreement
to recently enacted provisions of the Investment Company Act of 1940;

NOW, THEREFORE, Prudential and VCA-2 hereby agree as follows:

1. Pruco Securities shall be used as broker on such of the portfolio
transactions of VCA-2 as Prudential in its discretion determines can be
executed advantageously on any stock exchange of which Pruco Securities is a
member or as to which it enjoys a preferential status. Pruco Securities shall be
paid the appropriate broker's commission for such transactions.

2. With respect to the calendar year 1972 and subsequent years, the amount
of the investment advisory fee payable to Prudential by VCA-2

<PAGE>

pursuant to the Agreement shall be reduced by an amount equal to the portion of
the "net profits after taxes" of Pruco Securities allocable in accordance
with generally accepted accounting principles to the transactions it has
executed on behalf of VCA-2. "Net profits after taxes" shall be determined by
subtracting from the gross brokerage commissions received by Pruco Securities
all its expenses attributable to the earning of such commissions (including
capital charges), and by calculating taxes as those that would be payable if
Pruco Securities were to file a separate tax return, whether or not it does so.
The reduction of the advisory fee described herein shall be determined promptly
at the end of each calendar year and shall be credited against the amount of the
fourth quarterly instalment of the advisory fee then payable.

3. Notwithstanding the provisions of Paragraph 5 of the Agreement, it
shall continue in effect from year to year only so long as such continuance is
approved at least annually by the Board of Directors at a meeting held in person
for the purpose, such approval to include the specific approval of a majority of
the Directors who are not interested persons of Prudential.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
on their behalf by their duly authorized officers as of the date first
hereinabove mentioned.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Attest:

/s/ Isabelle L. Kirchner By /s/ Edgar F. Bunce Jr.
- ------------------------ -------------------------------
Secretary Vice President

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

/s/ By /s/ Meyer Melnikoff
- ------------------------ -------------------------------

Secretary Chairman

AGREEMENT RELATING TO THE SALE OF
CONTRACTS ON A VARIABLE BASIS

STATEMENT OF FACTS

B. Prudential will perform all administrative functions in connection with
the contracts on a variable basis which it may issue, including receiving
contributions from or on behalf of contract holders or participants thereunder,
allocating such contributions in accordance with the provisions of such
contracts and making variable annuity payments as they become due. More
particularly, Prudential will:

(a) maintain such books of account and records of all transactions
relating to VCA-2 as may be necessary to reflect clearly the assets
and liabilities attributable to VCA-2, and in that connection all
investments and liabilities attributable to VCA-2, at all times, shall
be identifiable and distinguishable from the other investments and
liabilities of Prudential;

(b) have custody of and keep safely at all times the assets held in VCA-2.
Such assets shall always be physically segregated from the other
assets of Prudential. Access to such assets shall be permitted only in
accordance with the applicable provisions of the Investment Company
Act of 1940 ("1940 Act"), the regulations thereunder, and such
exemptions

<PAGE>

-2-

therefrom as may be granted by the Securities and Exchange Commission.
All persons having access to such assets shall be covered by a bond
that meets the requirements of said Act and regulations. Securities
included among the assets held in VCA-2 shall be registered in the
name of VCA-2;

(c) prepare and transmit to the VCA-2 Committee for its approval all
proxies, proxy statements and periodic reports that are required to
be, or may be, transmitted to persons having voting rights in respect
of VCA-2, as provided for by the Rules and Regulations of VCA-2, and
upon the Committee's approval transmit the same to such persons;

(d) prepare and file all reports required by law to be filed with any
state or federal regulatory agency; and

(e) pay all costs, taxes and expenses attributable to the operations of
VCA-2. Such payment shall not result in any reduction of the value or
number of Accumulation Units credited to persons who hold
participating interests in VCA-2 or in the amounts which they are
entitled to receive under contracts on a variable basis issued by
Prudential other than in a manner set forth in each such contract.
Each such contract will set forth, either in terms of dollars or of
a percentage by which the value of the amounts credited to persons
holding participating interests in VCA-2 will be reduced, the charge
that will be made in order to provide funds intended to defray the
expenses of administering the contracts and to create a surplus to
be used, if necessary, to meet the mortality and expense guarantees
made by Prudential.

C. Prudential will sell its contracts on a variable basis through agents
employed by it and through independent brokers and will pay certain sales
commissions in that connection as well as other expenses attributable to the
marketing and sale of such contracts.

<PAGE>

-3-

D. Pursuant to the requirements of the 1940 Act VCA-2 will be registered
thereunder as an investment company.

E. The 1940 Act forbids any person from acting as principal underwriter
to a registered investment company except pursuant to a written contract and
Prudential may be regarded as the principal underwriter of VCA-2.

AGREEMENT

NOW, THEREFORE, Prudential and VCA-2 agree as follows:

1. Prudential will sell contracts on a variable basis that include
participating interests in VCA-2.

2. Each contract on a variable basis participating in VCA-2 sold by
Prudential shall set forth explicitly the percentage of each contribution made
by or on behalf of every person covered thereunder that will be credited to an
account maintained for such person. The remaining portion of each such
contribution will be retained by Prudential and may be used by it, to the extent
necessary, for the payment of commissions to persons instrumental in the sale of
such contract and for payment of other expenses incurred in connection with the
marketing and sale of such contract.

3. Promptly after it issues a contract on a variable basis that includes
participating interests in VCA-2 Prudential shall advise the Prudential Variable
Contract Account-2 Committee ("Committee") of the percentage of each
contribution that the contract provides will be credited to the accounts of
participants thereunder. Prudential shall also promptly advise the Committee of
any change in the contract that increases or decreases such percentage.

<PAGE>

-4-

4. It is understood that the compensation to Prudential, resulting from
the fact that less than 100 per cent of the contribution made by participants
under contracts on a variable basis is credited to the accounts maintained for
such persons, is separate and apart from the additional compensation, more fully
described in a separate contract between the parties also executed as of this
date, providing for the performance of investment management services, and is
also separate from and additional to the charge or charges made, as described
in Paragraph B, subparagraph (e), of the Statement of Facts preceding this
Agreement, for the purpose of providing funds to defray the expenses of
administering the contracts.

5. This agreement shall remain in force until June 1, 1969 and from
year to year thereafter, but only so long as such continuance is approved
at least annually by the affirmative vote of the Committee, including the
specific approval of a majority of the members of the Committee who are not
persons affiliated with Prudential, or by a majority of the votes cast by
those persons having voting rights in respect of VCA-2, as provided for by
the Rules and Regulations of VCA-2.

6. This agreement shall automatically terminate in the event of its
assignment by Prudential.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 19th day of February, 1968.

Attest: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

/s/ W.D. Freeston By /s/
- ------------------------- -----------------------------------------
W.D. Freeston, Secretary Executive Vice President

Witnessed: THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

/s/ By /s/ Meyer Melnikoff
- ------------------------- -----------------------------------------
Secretary to the Committee Chairman of the Committee

AMENDMENT NO. 1 TO AGREEMENT
RELATING TO THE SALE OF CONTRACTS ON A VARIABLE BASIS

Amendment No. l dated as of the 15 day April, 1980 to AGREEMENT dated the
19th day of February, 1968 (herein referred to as the "Agreement") by and
between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (herein referred to as
"Prudential"), and THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2 (herein referred
to as "VCA-2").

WHEREAS, the Statement of Facts set forth in the Agreement provides that
Prudential will perform all administrative functions in connection with the
contracts on a variable basis which it may issue; and

WHEREAS, it is desired that normal charges payable under certain contracts
be reduced in recognition of the fact that some of these administrative
functions under such contracts may be performed by persons other than
Prudential; and

WHEREAS, Prudential and VCA-2 have by letter dated June 14, 1979, reached
an understanding concerning the holding of VCA-2 portfolio securities, in the
custody of certain banks; and

WHEREAS, Prudential and VCA-2 desire to conform the terms of the Agreement
to these new arrangements;

NOW, THEREFORE, Prudential and VCA-2 hereby agree to amend Paragraph B of
the Agreement as follows:

l. The first sentence of Paragraph B of the Statement of Facts should
read:

"B. Prudential will arrange for the performance of all administrative
functions in connection with the contracts on a variable basis which it may
issue, including receiving contributions from or on behalf of the
contractholders or participants

<PAGE>

- 2 -

thereunder, allocating such contributions in accordance with the provisions of
such contracts and making variable annuity payments as they become due."

2. Subparagraph (b) of Paragraph B of the Statement of Facts is deleted,
and subparagraphs (c), (d) and (e) are relettered (b), (c) and (d),
respectively.

3. The reference in Section 4 of the Agreement to subparagraph (e) of
Paragraph B of the Statement of Facts is changed to subparagraph (d).

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
on their behalf by their duly authorized officers as of the date first
hereinabove mentioned.

THE PRUDENTIAL INSURANCE COMPANY
Attest: OF AMERICA

/s/ By /s/
- ----------------------- -----------------------------
Secretary Vice President, Accounting

Attest: THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2

/s/ By /s/ Meyer Melnikoff
- ----------------------- -----------------------------
Secretary to the Committee Chairman of the Committee

THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2

Agreement Pursuant to Rule 11a2-2(T)
of the Securities Exchange Act of 1934

This Agreement is made on the 6th day of June, 1984, by and among The
Prudential Insurance Company of America ("Prudential"), The Prudential Variable
Contract Account-2 (the "Account"), and Prudential-Bache Securities, Inc.
("Prudential-Bache"), a member corporation of the New York Stock Exchange.

Witnesseth:

Whereas, Prudential and the Account have agreed that Prudential will manage
the investments of and serve as investment advisor to the Account;

Whereas, Prudential may, from time to time, employ Prudential-Bache, an
indirect wholly-owned subsidiary of Prudential, to effect transactions for the
Account, and the Account desires to pay commissions to Prudential-Bache in
connection therewith;

Whereas, Rule 11a2-2(T) under the Securities Exchange Act of 1934 (the
"1934 Act") provides, among other things, that in the case of a transaction
effected for an account with respect to which the initiating member of a
national securities exchange or an associated person thereof exercises
investment discretion, the initiating member or associated person thereof may
retain compensation in connection with effecting the transaction only to the
extent that the person or persons authorized to transact business for the
account have expressly provided by written contract, executed on or after March
15, 1978, referring to Section 11(a) of the 1934 Act and Rule 11a2-2(T); and

Whereas, Prudential exercises investment discretion with respect to the
Account and is an associated person of Prudential-Bache, and Prudential and the
Account are the persons authorized to transact business for the Account within
the meaning of Rule 11a2-2(T);

NOW, THEREFORE, Prudential, Prudential-Bache and the Account agree as
follows:

1. Prudential will employ Prudential-Bache from time to time to effect
securities transactions for the Account in accordance with Rule 11a2-2(T), which
has been adopted pursuant to Section 11(a) of the 1934 Act.

2. Prudential and the Account hereby expressly authorize Prudential-Bache
to retain any compensation received by Prudential-Bache in connection with
effecting such transactions.

II-30

<PAGE>

3. Prudential-Bache agrees to comply with the provisions of Rule 11a2-2(T)
in effecting such transactions.

4. Prudential-Bache agrees to furnish at least annually to Prudential and
the Account a statement setting forth the total amount of all compensation
retained by it in connection with effecting such transactions during the period
covered by the statement, which amount shall be exclusive of all amounts paid to
others during that period for services rendered in effecting such transactions.

THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2

By: /s/ James H. Gately
-----------------------------

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA

By: /s/ Edward D. Zinbarg
-----------------------------

PRUDENTIAL-BACHE SECURITIES, INC.

By: /s/
-----------------------------

II-31

AGREEMENT FOR THE SALE OF VCA-2 CONTRACTS

AGREEMENT dated as of May 1, 1993, among THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA ("Prudential"), a New Jersey corporation, THE PRUDENTIAL VARIABLE
CONTRACT ACCOUNT-2 ("VCA-2"), a separate account of Prudential registered as an
open-end, diversified management investment company under the Investment Company
Act of 1940, and PRUDENTIAL RETIREMENT SERVICES, INC. ("PRSI"), a wholly-owned
indirect subsidiary of Prudential registered as a broker-dealer under the
Securities Exchange Act of 1934.

WHEREAS, VCA-2 serves as the funding medium for such variable contracts
issued by Prudential as may be designated by Prudential as participating therein
(the "Contracts"); and

WHEREAS, Prudential and VCA-2 desire that PRSI provide sales and
distribution services for the Contracts;

NOW, THEREFORE, in consideration of the promises and mutual considerations
provided here, and intending to be legally bound hereby, the parties hereto
agree as follows:

1. PRSI will provide sales and distribution services (the "Services") for
the Contracts.

2. In exchange for the Services, Prudential shall compensate PRSI in an
amount equal to the commissions and other expenses incurred by PRSI in
connection with the Services. PRSI shall itemize such commissions and expenses
at Prudential's request.

3. Amounts retained by Prudential from the payment of the deferred sales
charge under the Contracts shall be applied to the payments to be made by
Prudential to PRSI for the Services. The deferred sales charge shall be as
described in the prospectus for the sale of the Contracts. To the extent that
the deferred sales charge does not cover the payments to be made by Prudential
to PRSI for the services, the difference will be made up from Prudential's
surplus.

4. This agreement shall be approved by the affirmative vote of the VCA-2
Committee, including the specific approval of a majority of the members of the
Committee who are not persons affiliated with Prudential, or by a majority of
the votes cast by those persons having voting rights in respect of VCA-2, as
provided for by the Rules and Regulations of VCA-2. This agreement shall remain
in force only so long as its continuance is approved at least annually by such
vote of the Committee or persons with VCA-2 voting rights described in the
previous sentence.

C-29

<PAGE>

-2-

5. This agreement shall automatically terminate in the event of its
assignment by Prudential or PRSI.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA

By: /s/ Dorothy K. Light
-----------------------------
Vice President

THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2

By: /s/ Bruce F. Vane
-----------------------------
Chairman of the Committee

PRUDENTIAL RETIREMENT SERVICES, INC.

By: /s/ Mark R. Fetting
-----------------------------
President

C-30

Special Modifications for Illinois Contracts
5-80

(b) If an Annual Administration Charge is
being made against such Participant's
Account under the Companion Contract for
such Accounting Year, the amount of the
total Annual Administration Charge under
both contracts will be the appropriate
Charge set forth below, and the portion
of such Charge made under each contract
will be determined by the Prudential.

Initial Charge $20.00
Regular Charge 15.00

Address for Communications The Prudential Insurance Company of America
Group Pension Office
Hanover Road
Florham Park, New Jersey 07932

Corporate Office of the Prudential The Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07101

Modification of Section 3.8 Anything contained in section 3.8 to the
Entitled "Certificates" contrary not withstanding, any certificate
issued by the Prudential with Prudential's
name in the space provided for execution
thereof shall be considered as having been
certified by the Prudential as fully as if
the signature of an officer of the Prudential
appeared in such space.

GVA-120 2
Serial 210 (as modified by Form GAA-7256)

<PAGE>

Special Modifications for Now York Contracts
5-80

Provision VlI. CHANGES:

7.1 CHANGES BY PRUDENTIAL:

The Prudential reserves the right to determine that no new Participants
shall become covered hereunder, if the Prudential shall have ceased to be
the investment manager of VCA-2 under the Agreement for Investment
Management Services.

The Prudential reserves the right to change the limitation on the frequency
of transfer payments described in section 9.2 and to change the basis for
determining and making the Annual Administration Charge. Any change in
accordance with this paragraph will apply to all such transfer payments and
all such Charges made on or after the effective date of such change and
before any subsequent change in accordance with this paragraph.

The Prudential reserves the right to change the Account Percentage. Any
change in accordance with this paragraph will apply to all contributions
received on or after the effective date of such change and before any
subsequent change in accordance with this paragraph.

The Prudential reserves the right to change the portions of this contract
described in any or all of the items listed below. Any change in accordance
with this paragraph will apply only to Accumulation Units and Variable
Annuities arising from contributions received on or after the effective
date of such change and before any subsequent change in accordance with
this paragraph. However, no change in accordance with this paragraph will
apply to Accumulation Units and Variable Annuities arising from
contributions received on account of any person who was a Participant on
the effective date of such change, before the earlier of the fifth Contract
Anniversary and the date of any withdrawal by such Participant, or be
effective less than a year after any previous change.

(a) the schedules of rates of Variable Annuity,

(b) the effective annual rate set forth in the third paragraph of section
3.3, and

Any change in accordance with this section will be made by giving notice to
the Contract-Holder not less than 90 days before the date on which the
change is to take effect. The Prudential will simultaneously give notice of
such change to all Participants affected thereby.

7.2 CHANGES BY AGREEMENT:

This contract may also be changed in any respect at any time or times by
agreement between the Contract-Holder and the Prudential. However, no such
change will adversely affect the rights of any Participant with respect to
Accumulation Units credited or Variable Annuities effected before the
effective date of such change unless:

(a) such change is made for the purpose of securing an opinion from any
governmental agency that the requirements of a law or regulation
administered by such agency are met, or

(b) the consent of each person having a beneficial interest is obtained.

GVA-120
Serial 700 (as modified by Form GAA-7256) N.Y.
7.1-7.2

<PAGE>

Special Modifications for Texas Contracts

Anything in this contract to the contrary notwithstanding, the following items
numbered 1 through 9 shall govern, and any portion of this contract in conflict
with any such item is hereby modified.

1. This contract is issued subject to the laws of the State of Texas and is
subject also to the rules and regulations of the State Board of Insurance,
including the application of such laws and regulations and requirements to
the contract and to the interpretation of its provisions; except, however,
in the circumstance and only to the extent the application of this
provision to any persons or circumstance is expressly contrary to and
excluded by superior law or valid statute having and determined to have
supremacy in the circumstance.

2. The Prudential may from time to time transfer cash between VCA-2 and its
other investment accounts for the purpose of making adjustments
necessitated by this contract, including adjustment for any surplus or
deficit which may arise in VCA-2 by virtue of mortality experience or
otherwise, or required by governmental authorities having jurisdiction over
the Prudential. Transfers may be made between VCA-2 and Prudential's other
investment accounts, or between divisions of VCA-2 and its other separate
accounts, if such transfers satisfy the requirements of the Texas Rules and
Regulations that relate to intra-company transactions.

3. VCA-2 is divisible for various purposes in respect of regulation and
compliance with law, including divisibility as it is applicable to any
functions arising from the provisions of the contract or provisions of law
and regulation.

4. This contract is subject to endorsement from time to time as may be
necessary to comply with valid and appropriate rules and regulations
adopted by regulatory authorities, or as a court of final jurisdication
shall determine, and is executed subject to that condition.

5. No transfer which is made in accordance with the provisions of section
1.1(b) of the contract shall be made, and the Prudential does not obligate
itself to make any such transfer, if such transfer would result in an
impairment of the statutory reserves of the Prudential, and section l.l(b)
of the contract is modified accordingly.

6. Variable annuity benefits of this contract are funded solely from the
assets of VCA-2 and, except to the extent of the expense and mortality
guarantees under the contract, shall have no claim against any other asset
of the Prudential.

7. Variations in charges for expenses and taxes will be made to meet the
requirements of law or regulation.

8. The Prudential will mail to the Contract-Holder such reports and
information periodically as the law and regulation of Texas shall require
(irrespective of any provision of this contract which may be contrary to
such law or regulation).

9. Reserves, in an amount determined by the State of Texas to be applicable,
will be held for that portion of any amount payable to the Beneficiary in a
single sum within one year after the death of the Participant which is in
excess of the Dollar Value of the Participant's Accumulation Account. The
consideration required for such excess amount is not, as of the Effective
Date of this contract, greater than l-l/2% of each contribution made for
the Participant.

GVA-120
Serial 220 Texas 2

<PAGE>

Provision Vll. CHANGES: 5-80

7.1 CHANGES BY PRUDENTIAL:

The Prudential reserves the right to determine that no new Participants
shall become covered hereunder, if the Prudential shall have ceased to be
the Investment manager of VCA-2 under the Agreement for Investment
Management Services.

The Prudential reserves the right to change the limitation on the frequency
of transfer payments described In section 9.2 and to change the basis for
determining and making the Annual Administration Charge. Any change In
accordance with this paragraph will apply to all such transfer payments and
all such Charges made on or after the effective date of such change and
before any subsequent change in accordance with this paragraph.

The Prudential reserves the right to change the portions of this contract
described In any or all of the items listed below. Any change in accordance
with this paragraph will apply only to Accumulation Units and Variable
Annuities arising from contributions received on or after the effective
date of such change and before any subsequent change in accordance with
this paragraph. However, no change in accordance with this paragraph will
apply to Accumulation Units and Variable Annuities arising from
contributions received on account of any person who was a Participant on
the effective date of such change, before the earlier of the fifth Contract
Anniversary and the date of any withdrawal by such Participant, or be
effective less than a year after any previous change.

(a) the schedules of rates of Variable Annuity,

(b) the effective annual rate set forth in the third paragraph of section
3.3, and

7.2 CHANGES BY AGREEMENT:

(a) such change is made for the purpose of securing an opinion from any
governmental agency that the requirements of a law or regulation
administered by such agency are met, or

(b) the consent of each person having a beneficial interest is obtained.

GVA-120
Serial 700 (as modified by Form GAA-7256) PA
7.1-7.2

<PAGE>

5-80

Initial Charge $ 20.00
Regular Charge 15.00

Address for Communications The Prudential Insurance Company of America
Group Pension Office
Hanover Road
Florham Park, New Jersey 07932

Corporate Office of the Prudential The Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07101

GVA-120 2
Serial 210 (as modified by Form GAA-7256)

<PAGE>

5-80

Provision VlI. CHANGES:

7.1 CHANGES BY PRUDENTIAL:

(a) the schedules of rates of Variable Annuity,

(b) the effective annual rate set forth in the third paragraph of section
3.3, and

7.2 CHANGES BY AGREEMENT:

(a) such change is made for the purpose of securing an opinion from any
governmental agency that the requirements of a law or regulation
administered by such agency are met, or

(b) the consent of each person having a beneficial interest is obtained.

GVA-120
Serial 700 (as modified by Form GAA-7256) N.Y.
7.1-7.2

<PAGE>

Special Modifications for Texas Contracts

Anything in this contract to the contrary notwithstanding, the following items
numbered 1 through 9 shall govern, and any portion of this contract in conflict
with any such item is hereby modified.

7. Variations in charges for expenses and taxes will be made to meet the
requirements of law or regulation.

GVA-120
Serial 220 Texas 2

<PAGE>

Special Modifications for Pennsylvania Contracts
Provision VII. CHANGES: 5-80

7.1 CHANGES BY PRUDENTIAL:

The Prudential reserves the right to change the limitation on the frequency
of transfer payments described In section 9.2 and to change the basis for
determining and making the Annual Administration Charge. Any change in
accordance with this paragraph will apply to all such transfer payments and
all such Charges made on or after the effective date of such change and
before any subsequent change in accordance with this paragraph.

(a) the schedules of rates of Variable Annuity,

(b) the effective annual rate set forth in the third paragraph of section
3.3, and

7.2 CHANGES BY AGREEMENT:

(a) such change is made for the purpose of securing an opinion from any
governmental agency that the requirements of a law or regulation
administered by such agency are met, or

(b) the consent of each person having a beneficial interest is obtained.

GVA-120
Serial 700 (as modified by Form GAA-7256) PA
7.1-7.2

The Prudential [LOGO] December 31, 1989

AMENDMENT TO BE ATTACHED TO AND MADE A PART OF
GROUP ANNUITY CONTRACTS

(the "Contracts")
ISSUED TO THE CONTRACT-HOLDER
BY

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(the "Prudential")

The Group Annuity Contracts provide that the Contracts may be amended by
Prudential to satisfy the requirements of any law or regulation administered by
a governmental agency. Therefore, as a result of changes made to the Federal
Internal Revenue Code by the Tax Reform Act of 1986, the Contracts are hereby
amended in the following respects:

1. REGULAR CONTRIBUTIONS: Effective January 1, 1987, contributions made pursuant
to a Salary-Annuity Agreement may not exceed $9,500 for the taxable year of
the Participant or such other amount as prescribed by the Internal Revenue
Service under Section 402(g)(4) of the Internal Revenue Code of 1986, as
amended (the "Code"). This limitation shall not preclude any special
increases applicable under section 402(g)(8) of the Code. If the limitation
described in this paragraph is exceeded in any taxable year, the Participant
may, not later than the March 1 following the close of such taxable year,
notify the Prudential, in writing, of such excess and request that all or a
portion of such excess and the income or loss allocable thereto, be paid to
him from the Contracts before the April 15 following the close of the
Participant's taxable year. Income or loss allocable to a Participant's
excess contributions shall be determined in accordance with any applicable
Regulations issued by the Internal Revenue Service. Any distribution made
pursuant to this paragraph shall be made without regard to any restrictions
or charges otherwise applicable to withdrawals under the Contracts.

2. TRANSFER CONTRIBUTIONS: Effective December 31, 1989, the following amounts
may be transferred to and paid as a contribution under the Contracts for a
Participant:

(a) an amount which qualifies as a rollover contribution pursuant to the
Code;

(b) an amount which arises from an exchange of annuity contracts pursuant to
the Code;

GAA-7764
C-55
19080

<PAGE>

(d) an amount which arises from a Participant's interest in another Group
Annuity Contract issued to the Contract-Holder by Prudential.

Any amount transferred to the Contracts pursuant to this item 2. will be
treated as a Salary-Annuity Agreement contribution made after December 31,
1988 for purposes of the limitations on withdrawals under the Contracts.
However, if any portion of such transferred amount was not subject to the
limitations of Code Section 403(b)(11) or Code Section 403(b)(7)(A)(ii) prior
to transfer, then such portion will be treated as a contribution made prior
to December 31, 1988 for withdrawal purposes, if the following conditions are
met:

(1) a record of the amount of contributions, and any income thereon, which
was not subject to the limitations of Code Section 403(b)(11) or Code
Section 403(b)(7)(A)(ii) prior to transfer must be furnished to
Prudential in a form satisfactory to it at the time such transfer is
made, and

(2) evidence that such amount was not subject to the limitations of Code
Section 403(b)(ii) or Code Section 403(b)(7)(A)(ii) prior to transfer
must be furnished to Prudential in a form satisfactory to it at the time
such transfer is made.

The Prudential may require proof that all amounts transferred to the
Contracts meet the requirements of the Code and any applicable Rulings or
Regulations issued by the Internal Revenue Service.

3. WITHDRAWALS: Effective January 1, 1989, withdrawals attributable to (i)
Salary-Annuity Agreement contributions made on or after January 1, 1989, and
(ii) income credited on or after January 1, 1989 to any Salary-Annuity
Agreement contributions, may not be made prior to the Participant's
attainment of age 59 1/2, except upon the occurrence of one of the following
events:

- separation from service with the employer sponsoring the Plan or
Salary-Annuity Agreement arrangement under the Contracts;

- Disability Retirement, in accordance with Code Section 72(m)(7) or in
accordance with the terms of the Plan, if any; or

- Financial Hardship, in accordance with the terms of the Plan, if any, or
on a basis mutually agreed upon between the Contract-Holder and Prudential
which will be uniformly applicable to all Participants similarly situated.

Prudential may require proof, in a form satisfactory to it, that one of the
preceding events has occurred before honoring any request for a withdrawal
described in the preceding paragraph.

Withdrawals attributable to Salary-Annuity Agreement contributions made on or
before December 31, 1988 and any income credited to such contributions as of
December 31, 1988, will not be subject to the provisions of the preceding two
paragraphs.

GAA-7764
-2-

C-56

<PAGE>

Effective January 1, 1989, income attributable to Salary-Annuity Agreement
contributions made on and after January 1, 1989 may not be withdrawn in the
case of Financial Hardship.

4. DEATH PAYMENTS: Effective January 1, 1987, death benefits payable under the
Contracts to a Participant's Beneficiary prior to the date (i) on which an
annuity has been purchased for the Participant or (ii) on which minimum
distributions have commenced to the Participant pursuant to Code Section
401(a)(9) will be paid as set forth in this item 4. Death benefits payable
under the Contracts to a Participant's Beneficiary on or after the date on
which an annuity has been purchased for the Participant or on which minimum
distributions have commenced to the Participant pursuant to Code Section
401(a)(9) will be paid as set forth in item 6. below.

The Beneficiary may elect payment in any of the following forms, unless the
Participant has directed otherwise or unless the Plan, if any, provides
otherwise:

(a) a lump sum;

(b) an annuity form described in the Contracts, other than one which
provides for payment after the death of the Annuitant to a Contingent
Annuitant;

(c) any other settlement method to which Prudential consents and which is
not contrary to the terms of the Plan, if any; or

(d) a combination of all or any two of (a), (b) and (c) above.

Any lump sum payment to a Beneficiary will be subject to the following:

- If the lump sum is payable to the Participant's spouse, payment of such
lump sum will be made no later than the later of (i) the December 31 of
the calendar year following the one in which the Participant's death
occurred or (ii) the December 31 of the calendar year in which the
Participant would have attained age 70 1/2.

- If the lump sum is payable to a Beneficiary who is other than the
Participant's Spouse, payment of such lump sum will be made no later than
the December 31 of the calendar year in which the fifth anniversary of the
Participant's death occurs.

If payments are to be made to a Beneficiary in a form other than a lump sum,
such payments will be subject to the following:

- If the Beneficiary is the Participant's spouse, payments must commence no
later than the later of (i) the December 31 of the calendar year following
the one in which the Participant's death occurred or (ii) the December 31
of the calendar year in which the Participant would have attained age 70
1/2. Such payments must be paid over the life of the spouse or over a
period not exceeding the life expectancy of the spouse.

GAA-7764
-3-

C-57

<PAGE>

- If the Beneficiary is other than the Participant's spouse, payments must
commence no later than the December 31 of the calendar year following the
one in which the death of the Participant occurred. Such payments must be
paid over the life of the Beneficiary or over period not exceeding the
life expectancy of the Beneficiary.

If:

(1) the Beneficiary does not elect a method of distribution; and

(2) the Participant has not directed that a specific method of distribution
be provided for his Beneficiary; and

(3) the Plan, if any, does not provide for an automatic method of
distribution,

then any death benefits becoming payable under the Contracts shall be paid in
a lump sum commencing no later than the December 31 of the calendar year in
which the fifth anniversary of the Participant's death occurs.

Anything herein to the contrary notwithstanding, if any portion of the
Participant's Account(s), which become payable to a Beneficiary, consists of
(i) contributions made under the Contracts by or on behalf of the Participant
on or before December 31, 1986 and (ii) income credited to such contributions
as of December 31, 1986, then distribution of such portion may be deferred
until the Beneficiary attains age 70, if the Beneficiary so elects and
provided such election does not contravene any prior direction from the
Participant or any provision of the Plan, if any.

All death benefits pursuant to this item 4. shall be made at the time and in
the manner prescribed in Code Section 401(a)(9) and the Regulations issued
thereunder.

5. TRANSFERS TO ANOTHER FINANCIAL INSTITUTION: Effective December 31, 1989, a
Participant may elect to have a portion of his Account(s) transferred to
another financial institution if such transfer is permitted by the terms of
the Plan, if any. Such transfer will be permitted on the same basis as
partial transfers are permitted between Related Contracts (i.e., companion
contracts) under the Contracts, except that any charges otherwise applicable
to withdrawals under the Contracts will apply to the amount elected for
transfer.

6. DISTRIBUTIONS: Effective January 1, 1987, a Participant may, subject to the
provisions of item 3. above, and in accordance with the terms of the Plan, if
any, elect to receive a distribution of his Account(s) under the Contracts in
any of the following forms:

(a) a lump sum;

(b) any annuity form described in the Contracts;

(c) any other settlement method to which Prudential consents and which is
not contrary to the terms of the Plan, if any; or

GAA-7764
-4-

C-58

<PAGE>

(d) a combination of all or any two of (a), (b) and (c) above.

Any portion of a Participant's Account(s) which is paid to him as a lump sum
will be subject to the withdrawal provisions under the Contracts.

Any payments becoming due to the Beneficiary of a Participant who began
receiving a distribution pursuant to paragraph (c) may, unless the
Participant has directed otherwise or the Plan, if any, provides otherwise,
be paid in any of the forms described in this item 6., as elected by the
Beneficiary, except for an annuity which provides for payment after the death
of the Annuitant to a Contingent Annuitant.

Any payments becoming due to the Beneficiary of a Participant who began
receiving an annuity pursuant to paragraph (b) will, unless the Participant
has directed otherwise, be paid as provided under the terms of the annuity as
described in the Contracts.

Anything in the Contracts to the contrary notwithstanding, any payments made
to a Beneficiary in accordance with the two preceding paragraphs will meet
the requirements of Code Section 401(a)(9) and the Regulations issued
thereunder.

7. REQUIRED DISTRIBUTION DATE: Effective January 1, 1987 distributions are
required to commence to the Participant as of his Required Distribution Date.
A Participant's Required Distribution Date is defined below:

(a) with respect to the portion of a Participant's Account(s) under the
Contracts consisting of (i) contributions made by or on behalf of the
Participant on or before December 31, 1986 and (ii) income credited to
such contributions as of December 31, 1986, a Participant's Required
Distribution Date is the last day of the year in which the Participant
attains age 75, regardless of whether or not such Participant has
terminated his employment with the employer sponsoring the Plan or
Salary-Annuity Agreement arrangement under the Contracts.

(b) with respect to the remaining portion of a Participant's Account(s)
under the Contracts, a Participant's Required Distribution Date is:

(i) with respect to any Participant who attained age 70 1/2 before
January 1, 1988, the April 1 of the calendar year following the
one in which the later of (A) the Participant's termination of
employment with the employer sponsoring the Plan or
Salary-Annuity Agreement arrangement under the Contracts or (B)
the Participant's attainment of age 70 1/2 occurs;

(ii) with respect to any Participant who attained age 70 1/2 during
1988 and who had not terminated his employment with the employer
sponsoring the Plan or Salary-Annuity Agreement arrangement under
the Contracts as of January 1, 1989, April 1, 1990; and

GAA-7764
-5-
C-59

<PAGE>

(iii) with respect to all other Participants, April 1 of the calendar
year following the one in which the Participant attains age 70
1/2 regardless of whether or not such Participant has terminated
his employment with the employer sponsoring the Plan or
Salary-Annuity Agreement arrangement under the Contracts.

If the Plan funded under the Contracts is a church or governmental plan
as defined in the Code, the Required Distribution Date for a Participant
covered under such plan with respect to the portion of his Account(s)
defined in paragraph (b) above is the Required Distribution Date set
forth in subparagraph (b)(i).

If the Participant's Account includes a transfer contribution made
pursuant to item 2. above, the Required Distribution Date applicable to
such transfer contribution will be determined in accordance with
paragraph (b) above, except as provided in the following paragraph.

If any portion of the Participant's transfer contribution consists of
(i) contributions made by or on behalf of the Participant on or before
December 31, 1986 and (ii) income credited to such contributions as of
December 31, 1986, the Required Distribution Date applicable to such
portion will be the Required Distribution Date applicable under the
403(b) program from which such transfer was made, if the following
conditions are met:

(1) a record of the amount of contributions made on or before
December 31, 1986 and income credited to such contributions as of
December 31, 1986, must be furnished to Prudential in a form
satisfactory to it at the time such transfer is made, and

(2) evidence of the Required Distribution Date under the 403(b) program from
which the transfer was made must be furnished to Prudential in a form
satisfactory to it at the time such transfer is made.

8. MINIMUM REQUIRED DISTRIBUTION: Effective January 1, 1987, Prudential will
notify a Participant, prior to such Participant's Required Distribution Date,
as determined from the records of Prudential on the basis of information
furnished to Prudential, that he may be required to receive a minimum
distribution from his Account(s) under the Contracts in accordance with Code
Section 401(a)(9) and the Regulations issued thereunder. Such notice will
include information so as to assist the Participant in computing the amount
of his required minimum distribution. Following such notice, a Participant
may request that the required minimum distribution be paid to him from the
Contracts by his Required Distribution Date.

If the Participant does not request a distribution of any portion of his
Account(s) under the Contracts pursuant to this item 8., Prudential shall be
under no obligation to make such distribution.

9. ANNUITIES: Effective January 1, 1987, all annuities purchased under the
Contracts will meet the requirements of Code Section 401(a)(9) and, to the
extent applicable, Code Sections 401(a)(11)and 417, and the Regulations
issued thereunder.

GAA-7764
-6-

C-60

<PAGE>

10. BENEFICIARY: Effective as of the Effective Date of the Contracts, any
spousal consent requirements of applicable Federal law (as it relates to
employee benefit plans) will apply in designating a Beneficiary and to any
changes made to a previous Beneficiary designation.

11. LIMIT ON ASSIGNMENT: Effective as of the Effective Date of the Contracts,
to the extent applicable law requires, the interests in and payments from
the Contracts are not assignable or subject to the claims of any creditor.
For this purpose, compliance with the terms of a Qualified Domestic
Relations Order as defined in Code Section 414(p) will not be considered
an assignment of benefits.

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA

VICE PRESIDENT, CONTRACTS

GAA-7764
-7-

c-61

THE PRUDENTIAL Exhibit (6) (iii)
The Prudential [LOGO] INSURANCE COMPANY
OF AMERICA

AMENDMENT TO BE ATTACHED TO AND MADE A PART OF
GROUP ANNUITY CONTRACT NO. GV-0000

Effective August 1, 1983, The Contract, as constituted immediately prior to the
execution of this amendment, is amended in the following respect:

For Variable Annuities effected with that part of a Participant's Accumulation
Account arising from contributions made prior to August 1, 1983, the schedules
of Variable Annuity rates B-D of the Contract as constituted immediately prior
to the execution of this amendment shall apply. For Variable Annuities effected
with that part of a Participant's Accumulation Account arising from
contributions made on and after August 1, 1983, the applicable schedules of
Variable Annuity rates will be those set forth on the attached schedules B-D.

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA

Moosic, PA, ________ ,19 By:
-----------------------------------
Title:

GAA-7852

C-28
19080

<PAGE>

8-83

SCHEDULE B

RATES OF IMMEDIATE VARIABLE LIFE ANNUITY

Monthly amount, in Annuity Units, of Immediate Variable Life Annuity effected by
allocation of 10,000 Annuity Units, first payment to the Annuitant on the Due
Date of allocation. Subsequent monthly payments are payable to the Annuitant on
each Due Date thereafter, terminating with the last monthly Payment before his
death.

Age on Date of Allocation
-------------------------
If Date of Allocation is in: Monthly Number of Annuity Units
-------------------------------
1983 1994 2005 Unisex
---- ---- ---- ------

The rates shown in this Schedule are to be used without adjustment only when the
date of allocation occurs in a calendar year shown above and coincides with the
anniversary of the Annuitant's date of birth. Rates for combinations of ages and
dates of allocation not shown in this Schedule will be determined by the
Prudential on a basis consistent with that upon which the above rates were
determined, and will be furnished upon request.

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule B
Serial B-100 3.5 AIR - .9850 Life Annuity

C-29

<PAGE>

8-83
SCHEDULE B

RATES OF IMMEDIATE VARIABLE LIFE ANNUITY

Age on Date of Allocation
-------------------------
If Date of Allocation is in: Monthly Number of Annuity Units
-------------------------------
1983 1994 2005 Unisex
---- ---- ---- ------

<C> <C> <C> <S>
45 46 47 39.83
50 51 52 42.82
55 56 57 46.83
60 61 62 52.08
65 66 67 58.98
70 71 72 68.50

</TABLE>

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule B
Serial B-100 4.0 AIR - .9850 Life Annuity

C-30

<PAGE>

8-83

SCHEDULE B
RATES OF IMMEDIATE VARIABLE LIFE ANNUITY

Age on Date of Allocation
-------------------------
If Date of Allocation is in: Monthly Number of Annuity Units
-------------------------------

1983 1994 2005 Unisex
---- ---- ---- ------

<C> <C> <C> <S>
45 46 47 42.90
50 51 52 45.83
55 56 57 49.81
60 61 62 55.04
65 66 67 61.94
70 71 72 71.46

</TABLE>

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule B
Serial B-100 4.5 AIR - .9850 Life Annuity

C-31

<PAGE>

8-83

SCHEDULE C

RATES OF IMMEDIATE VARIABLE LIFE ANNUITY-CERTAIN

Monthly amount, in Annuity Units, of Immediate Variable Life Annuity-Certain
effected by allocation of 10,000 Annuity Units, first payment to the Annuitant
on the Due Date of allocation. Subsequent monthly payments are payable to the
Annuitant on each Due Date thereafter, terminating with the last monthly payment
before his death. Upon receipt by the Prudential of due proof that the death of
the Annuitant occurred before he received the specified number of
payments-certain, the Prudential will continue monthly payments to the
Beneficiary until a total of the specified number of payments in all has been
made to the Annuitant and the Beneficiary.

Age on Date of Allocation 120 Monthly Payments-Certain
------------------------- ----------------------------
If Date of Allocation is in: Monthly Number of Annuity Units
-------------------------------

1983 1994 2005 Unisex
---- ---- ---- ------
<S> <C> <C> <C>
45 46 47 37.26
50 51 52 40.32
55 56 57 44.24
60 61 62 49.12
65 66 67 55.21
70 71 72 62.65

</TABLE>

The rates shown in this Schedule are to be used without adjustment only when the
specified number of monthly payments-certain is 120, and the date of allocation
occurs in a calendar year shown above and coincides with the anniversary of the
Annuitant's date of birth. Rates for 180 monthly payments-certain and for
combinations of ages and dates of allocation not shown in this Schedule will be
determined by the Prudential on a basis consistent with that upon which the
above rates were determined, and will be furnished upon request.

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule C
Serial C-100 3.5 AIR - .9850 LAC

C-32

<PAGE>

8-83

SCHEDULE C

RATES of IMMEDIATE VARIABLE LIFE ANNUITY-CERTAIN

<S> <C> <C> <C>
45 46 47 40.23
50 51 52 43.23
55 56 57 47.09
60 61 62 51.93
65 66 67 57.95
70 71 72 65.31

</TABLE>

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule C
Serial C-100 4.0 AIR - .9850 LAC

C-33

<PAGE>

8-83

SCHEDULE C

RATES OF IMMEDIATE VARIABLE LIFE ANNUITY-CERTAIN

1983 1994 2005 Unisex
---- ---- ---- ------

<C> <C> <C> <S>
45 46 47 43.26
50 51 52 46.22
55 56 57 50.02
60 61 62 54.79
65 66 67 60.74
70 71 72 68.00

</TABLE>

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule C
Serial C-100 4.5 AIR - .9850 LAC

C-34

<PAGE>

8-83

SCHEDULE D

RATES OF IMMEDIATE VARIABLE JOINT AND SURVIVOR ANNUITY

Monthly amount, in Annuity Units, of Immediate Variable Joint and Survivor
Annuity effected by allocation of 10,000 Annuity Units, first payment to the
Annuitant on the Due Date of allocation. Subsequent monthly payments are payable
to the Annuitant on each Due Date thereafter, terminating with the last monthly
payment before his death. After the Annuitant's death, a specified percentage of
such number of Annuity Units will be payable monthly to the Contingent
Annuitant, if living, at the death of the Annuitant. The first monthly payment
to the Contingent Annuitant will be made on the Due Date following the Due Date
of last payment to the Annuitant. Subsequent monthly payments are payable to the
Contingent Annuitant on each Due Date thereafter, terminating with the last
monthly payment before the Contingent Annuitant's death.

Monthly Number of Annuity
Units to Annuitant
--------------------------------------
If Annuitant and Contingent Annuitant
have same date of birth, Annuitant is
Age on Date of Allocation male, Contingent Annuitant is female,
------------------------- and specified percentage to Contingent
If Date of Allocation is in: Annuitant is:
--------------------------------------

1983 1994 2005 100% 50%
---- ---- ----

<S> <C> <C> <C> <C>
60 61 62 42.54 48.98
65 66 67 47.58 55.95
70 71 72 55.50 66.20

</TABLE>

The rates shown in this Schedule are to be used without adjustment only when the
percentage to the Contingent Annuitant is either 100% or 50%, and the date of
allocation occurs in a calendar year shown above and coincides with the
anniversary of the Annuitant's date of birth. Rates for combinations of
percentages, ages, sex, and dates of allocation not shown in this Schedule will
be determined by the Prudential on a basis consistent with that upon which the
above rates were determined, and will be furnished upon request.

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule D
Serial D-100 3.5 AIR - .9850 J&S

C-35

<PAGE>

8-83

SCHEDULE D

RATES OF IMMEDIATE VARIABLE JOINT AND SURVIVOR ANNUITY

<TABLE>
<CAPTION>
Monthly Number of Annuity
Units to Annuitant
--------------------------------------
If Annuitant and Contingent Annuitant
have same date of birth, Annuitant is
Age on Date of Allocation male, Contingent Annuitant is female,
------------------------- and specified percentage to Contingent
If Date of Allocation is in: Annuitant is:
--------------------------------------

1983 1994 2005 100% 50%
---- ---- ----
<S> <C> <C> <C> <C>
60 61 62 45.32 51.87
65 66 67 50.31 58.82
70 71 72 58.20 69.10

</TABLE>

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule D
Serial D-100 4.0 AIR - .9850 J&S

C-36

<PAGE>

8-83

SCHEDULE D
RATES OF IMMEDIATE VARIABLE JOINT AND SURVIVOR ANNUITY

Monthly Number of Annuity
Units to Annuitant
-------------------------------------
Age on Date of Allocation If Annuitant and Contingent Annuitant
- ------------------------- have same date of birth, and specified
If Date of Allocation is in: percentage to Contingent Annuitant is:
--------------------------------------

1983 1994 2005 100% 50%
---- ---- ----
<S> <C> <C> <C> <C>
60 61 62 48.16 54.82
65 66 67 53.09 61.76
70 71 72 60.94 72.01

</TABLE>
The rates shown in this Schedule are to be used without adjustment only when the
percentage to the Contingent Annuitant is either 100% or 50%, and the date of
allocation occurs in a calendar year shown above and coincides with the
anniversary of the Annuitant's date of birth. Rates for combinations of
percentages, ages, sex, and dates of allocation not shown in this Schedule will
be determined by the Prudential on a basis consistent with that upon which the
above rates were determined, and will be furnished upon request.

NOTE: The above rates are based on an interest rate equal to the Assumed
Investment Result specified in Provision II less the percentage
0.375%.

GVA-120 Schedule D
Serial D-100 4.5 AIR - .9850 J&S

C-37

PLEASE USE BALL POINT PEN AND APPLY HEAVY PRESSURE TO INSURE LEGIBLE COPIES.
AFTER FORM HAS BEEN SIGNED BY YOU, RETAIN THE LAST COPY FOR YOUR RECORDS.

REQUEST FOR ENROLLMENT
GROUP TAX-DEFERRED ANNUITY PROGRAM
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

GROUP ANNUITY CONTRACTS
GA-
GV-

EMPLOYER NAME

EMPLOYER NO.

SOCIAL SECURITY NO.

FIRST NAME INITIAL LAST NAME

SEX Male Female

DATE OF BIRTH (For Jan. Use 01, For Feb. Use 02 Etc. to For Dec. Use 12)

Month Day Year

HOME ADDRESS (NUMBER AND STREET)

2ND LINE OF HOME ADDRESS (IF NECESSARY)

CITY STATE ZIP CODE

EMPLOYMENT WITH CURRENT EMPLOYER DATE APPPOINTED

Month Day Year

ARE YOU A U.S. CITIZEN? Yes No IF NO, SHOW NATIONALITY _________

Annual Salary (Contract Salary Before Reduction) $ (Dollars Only)

Salary is Paid Over
1. 10 Months
2. 12 Months
3. Months

Frequency Employer Will Remit Amounts
1. Weekly (52)
2. Monthly (12)
3. Semi-monthly (24)
4. Bi-weekly (26)
5. ( ) No. per Year

Total Periodic Amounts To Be Remitted (Show $ or % As Applicable)
Dollars
Cents
or
%

Reduction To Begin With Salary Payment Due

Month Day Year

I Elect to Apply To The Variable Account The Following Percentage Of Each
Contribution Made In My Behalf

To the Variable Account -->

% Not Over 100%

As a result of employment with another employer, have you previously been
covered under this Program? Yes No

If yes, name of previous employer_______________________________________________

So that I may obtain the benefits of Section 403(b) of the Internal Revenue Code
of 1954, as amended, I hereby request, subject to the General Enrollment
Provisions on the reverse, that I be enrolled for participation under the Group
Tax-Deferred Annuity Program of my Employer (identified above) and provided
under the above-numbered group annuity contract(s) issued by The Prudential
Insurance Company of America (the Prudential). I authorize the Prudential to
use the personal data furnished in this request in establishing accounts for me
under said contract(s).

I have completed a Salary-Annuity Agreement, as defined in item 1 of the General
Enrollment Provisions on the reverse, which authorizes my Employer (a) to reduce
my salary as indicated above until further notice, and (b) to remit such amounts
to the Prudential as a contribution for the purchase of an annuity under the
above-mentioned group annuity contract(s), the terms of which confer upon me
non-forfeitable rights to the benefits provided by such contributions. Upon
receipt of each contribution on my behalf hereafter and until further notice,
the Prudential may apply such contribution appropriately to my accounts in
accordance with my election as indicated above. Unless I subsequently elect an
earlier settlement date and/or form of settlement, the Prudential is to apply my
account(s) at my 75th birthday to provide monthly payments to me for my
lifetime and, if I have a spouse on my 75th birthday, thereafter to such
spouse, if living at the time of my death, the first 120 monthly payments
being guaranteed.

If any benefit becomes payable under the Contract(s) as a result of my death
before a Beneficiary Designation has been filed in an acceptable manner, the
Prudential is hereby directed to pay such benefit to my spouse if I am married
at the time of my death, otherwise, subject to the terms of the Contract(s), to
my Estate. If I am eligible for coverage under a companion Variable Annuity
Contract, I hereby acknowledge that I have received a prospectus describing
group tax-deferred variable annuity contracts issued by the Prudential and that
I have been given no written material describing such contracts other than
printed documents bearing Prudential's name.

_________________________________________
Date

_________________________________________
Signature of Enrollee

1st Init. 2nd Init. Last Name

Enrolling Representative (Please Print)

Title Code Number Office

_________________________________________
Signature of Enrolling Representative

1st Init. 2nd Init. Last Name

Program Representative (Please Print)

Title Code Number Office
_________________________________________
Signature of Program Representative

_________________________________________
Program Sponsor

_________________________________________
Account Established

<PAGE>

PERSONAL AND FINANCIAL DATA

Marital Status

No. of Dependents

Ages of Dependents

Earnings Last Year

Other Income Last Year

Sources of Other Income

Life Insurance

Total Savings Account

Market Value of Securities Held

Total Outstanding Debt

If You Decline to Furnish Any Data Please Sign Here ____________________________

BENEFICIARY DESIGNATION

In accordance with the Instructions Concerning Beneficiary Designations on the
reverse which are hereby made a part of this designation, I hereby request that
the following Beneficiary(ies) shall receive any payment in accordance with the
Group Annuity Contract(s) becoming due after my death. This designation
includes, and is subject to, the General Beneficiary Provisions below.

PLEASE PRINT IN INK. INITIAL AND DATE ANY CHANGES YOU MAKE ON YOUR DESIGNATION.

Name (IF MARRIED WOMAN, SHOW HER FIRST NAME, Relationship to me
MAIDEN NAME, HUSBAND'S LAST NAME).

_______________________________________________ My____________________________
First Initial Last

SIGNATURE OF EMPLOYEE/DO NOT PRINT Date

Month Day Year

GENERAL BENEFICIARY PROVISIONS

A. The terms of the Group Annuity Contract(s) govern the payment of any
benefit.

B. A Beneficiary shall receive payment only if he is living at the time the
benefit first becomes payable and no other Beneficiary(ies) then living
has a preceding right to the benefit.

C. If no Beneficiary(ies) designated is alive when payment is otherwise
payable to the Beneficiary, payment will be made in accordance with the
Group Annuity Contract(s) and, if applicable, the Plan.

D. The terms of the Group Annuity Contract(s) and, if applicable, the Plan,
shall govern the use of any affidavit or other satisfactory written
evidence in determining the existence, identity, ages or any other facts
concerning any Beneficiaries.

E. Once an annuity has begun, any settlement of any amount thereafter payable
shall be governed by the terms of such annuity.

F. If the Beneficiary Designation names a Trustee as Beneficiary, any payment
to such Trustee will be made as if such Trustee is acting in such
fiduciary capacity until written notice to the contrary is received.

G. Payment shall be made to the Trustee(s) named under a Last Will and
Testament only if the following conditions are satisfied. Such Last Will
and Testament is admitted to probate and appoints a Trustee(s) to receive
such payment. Such Trustee(s) qualifies as such and makes written claim
for such payment within 12 months after the death of the Employee.

If the above conditions are not satisfied, such payment shall be payable
according to the terms of the Group Annuity Contract(s) and, if applicable,
the Plan.

H. The Beneficiary may be changed, but only in a manner prescribed in the
Group Annuity Contract(s) and, if applicable, the Plan.

KEEP THIS FORM IN A SAFE PLACE

When properly approved this form acknowledges The Prudential's acceptance and
recording of the requested beneficiary settlement.

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Date _____________________________ Approved___________________________________

GIA-134-A Ed. 12-79 Printed in U.S.A

SERVICE AGREEMENT

This Agreement made as of the 31st day of December, 1984, by and between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), a New Jersey
corporation and THE PRUDENTIAL INVESTMENT CORPORATION (the "Company"), a New
Jersey corporation,

WITNESSETH

In consideration of the mutual promises of the parties hereto as
hereinafter set forth, the parties hereby agree as follows:

1. The Company shall furnish to Prudential such services as Prudential
may require in connection with Prudential's performance of its
obligations under its advisory or subadvisory agreements relating to
its clients which are registered investment companies ("Clients").

2. Prudential will continue to have responsibility for all investment
advisory services under its advisory or subadvisory agreements with
respect to its Clients.

3. Prudential shall reimburse the Company for costs and expenses incurred
by the Company, determined in a manner acceptable to Prudential, in
furnishing the services described in paragraph 1 above.

4. This Agreement may be terminated by either party at any time upon not
less than thirty (30) days prior written notice to the other party,
but will terminate automatically in the event of its assignment. No
such termination will affect the terms of the

<PAGE>

- 2 -

advisory or subadvisory agreement relating to any Client. In the event
of the assignment or termination of Prudential's advisory or
subadvisory contract with respect to a particular Client, this
Agreement will terminate automatically as to such Client.

5. This Agreement shall continue in effect as to a particular Client 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 of 1940
applicable to continuation of advisory contracts.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their duly authorized officers and attested by their respective
secretaries or assistant secretaries under their respective seals, all as of the
date first written above.

(SEAL) (SEAL)

THE PRUDENTIAL INSURANCE THE PRUDENTIAL INVESTMENT
COMPANY OF AMERICA CORPORATION

By /s/ William M. Bethke By /s/ Garnett L. Keith
---------------------- -------------------------

Attest: Attest:

By /s/ Arthur J. Dunn By /s/ Kenneth E. Giles
---------------------- -------------------------
Asst. Secretary Asst. Secretary

SERVICE AGREEMENT

This Agreement made as of the 30th day of July, 1984 by and between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), a New Jersey
Corporation, and THE PRUDENTIAL ASSET MANAGEMENT COMPANY, INC. ("Company"), a
New Jersey corporation.

WITNESSETH:

WHEREAS, on July 30, 1984 Company became a wholly-owned subsidiary of The
Prudential Insurance Company of America; and

WHEREAS, concurrently with the said acquisition of Company, certain
employees of Prudential who were performing professional and administrative
services (a) with respect to Group Pension Contracts, Funding Agreements and
Annuity Contracts issued by Prudential from time to time to institutional
clients and (b) pursuant to other contracts issued by Prudential from time to
time to institutional clients whereunder Prudential agreed only to provide
certain such services (all such contracts and agreements being hereinafter
referred to as "Prudential Contracts") were transferred to Company; and

WHEREAS, Company and Prudential agreed that the said employees should
continue to provide the said services to Prudential and, in fact, the said
services have been provided; and

WHEREAS, Company and Prudential desire that their understandings with
respect to the said services be memorialized: and

WHEREAS, Prudential may request from time to time that Company provide
other services with respect to Prudential Contracts and Company may agree to
provide such services;

NOW, THEREFORE, in consideration of the premises and the mutual promises of
the parties recited below, the parties hereby agree as follows:

1. Subject to Prudential's requirements from time to time, Company agrees
to furnish to Prudential hereunder such professional and
administrative services with respect to Prudential Contracts as were
being performed prior to July 30, 1984 by Prudential employees who
were transferred to Company on said date.

2. Company agrees to furnish to Prudential hereunder such other services
with respect to Prudential Contracts as Prudential may require from
time to time and as Company is able to perform.

3. All services provided by Company hereunder shall be in conformity with
applicable federal and state statutes and with rules and regulations
thereunder. Without limiting the generality of this undertaking,

a) Company agrees that with respect to all registered investment
companies established as funding mediums for Prudential Contracts
(1) it will maintain and keep current all records required by

<PAGE>

Rule 31a-1 under Section 31 of the Investment Company Act of 1940
(the "Act"); (2) it will preserve records in accordance with the
requirements of Rule 31a-2 under Section 31,of the Act; and (3)
all records required to be so maintained and preserved are the
property of the registered investment company and will be
surrendered promptly on request; and

b) Company agrees that all books and records of Prudential
maintained by Company hereunder (1) will be prepared and
maintained in conformity with the requirements of Section 17a of
the Securities Act of 1934 and with the requirements of such
other provisions of the federal securities laws as Prudential may
advise Company are applicable to its business as well as with
rules and regulations thereunder; (2) will be the property of
Prudential and will be surrendered promptly on request of
Prudential; and (3) may be examined at any time or from time to
time during business hours by representatives or designees of the
Securities and Exchange Commission, who will be promptly
furnished with true, correct, complete and current hard copy of
any or all or any part thereof.

4. Prudential shall reimburse Company for costs and expenses incurred by
Company in furnishing services hereunder, such costs and expenses to
be determined in accordance with general accounting practices and cost
allocation procedures implemented from time to time by Company. Bills
shall be rendered by Company at least quarterly and shall be paid by
Prudential within thirty (30) days after receipt thereof.

5. This Agreement may be terminated by either party at any time upon not
less than fifteen (15) days prior written notice to the other party.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.

THE PRUDENTIAL INSURANCE COMPANY THE PRUDENTIAL ASSET MANAGEMENT
OF AMERICA COMPANY, INC.

By /s/ Garnett L. Keith By /s/ Robert E. Riley
------------------------- -----------------------
By Vice Chairman President

<PAGE>

RESOLVED, that subject to the approval of the Commissioner of Insurance of the
State of New Jersey and to such conditions as said Commissioner may impose, the
Company hereby establishes, pursuant to Section 17B:28-7 of the Revised Statutes
of New Jersey, a separate account, to be suitably designated, for contracts
under which values or payments, or a portion thereof, vary to reflect the
investment results of said account, and for other investment accounts managed by
Prudential that may participate in said account, which is to be invested
primarily in common stocks, and it is further

RESOLVED, that the use of said account shall be limited to providing a funding
medium for such variable contracts issued and administered by the Company as the
Company shall elect to designate as participating therein, and in furtherance
thereof such account shall:

(a) receive, hold, invest, and reinvest only the amounts arising from (i)
contributions made pursuant to such variable contracts, (ii) such assets of
the Company as it shall deem prudent and appropriate to have invested in
the same manner as the assets applicable to its reserve liability under
such variable contracts, and (iii) the dividends, interest and gains
produced by the foregoing;

(b) to the extent required by the Investment Company Act of 1940, register
under such Act and make application for exemption from such of the
provisions thereof as may appear to be necessary or desirable;

(c) to the extent required by the Securities Act of 1933, file one or more
registration statements thereunder, including any documents required as a
part thereof;

(d) provide for investment management services;

(e) provide for the sale of variable contracts issued and administered by the
Company to the extent they include participating interests in said account;

(f) select an independent public accountant to audit the books and records of
said account; and

(g) perform such further functions as may be required to comply with the
Investment Company Act of 1940 or as may from time to time be authorized by
further resolution of this Board; and it is further

<PAGE>

RESOLVED, that the said account, as authorized by Section 17B:28-9(b) (ii) of
the Revised Statutes of New Jersey, shall be managed by a Committee consisting
of not less than three nor more than nine persons ("Committee"); and it is
further

RESOLVED, that the Committee shall initially be composed of five members to be
selected by the Chairman of the Board and Chief Executive Officer, the President
or the Vice Chairman, each of which members shall serve until the first annual
meeting of persons having voting rights in respect of said account or until his
successor shall qualify, and that thereafter the members of the Committee shall
be elected by a majority of the votes cast by such persons having voting rights
in respect of said account; and it is further

RESOLVED, that the proper officers of the Company are authorized and directed to
take whatever steps may be necessary or desirable to comply with State statutes
or regulations to the extent they may be applicable to variable contracts issued
by the Company pursuant to which contributions may be made to said account; and
it is further

RESOLVED, that the proper officers of the Company be and they hereby are from
time to time authorized, empowered and directed to do all acts and things from
time to time necessary, desirable or appropriate to be done in order to
effectuate the purposes of the foregoing resolutions or any of them.

APPROVED BY
BOARD OF DIRECTORS
JAN 12 1982

/s/ Isabelle L. Kirchner
---------------------------------
SECRETARY
ISABELLE L. KIRCHNER

AGREEMENT FOR THE SALE OF THE VCA-2 CONTRACTS

AGREEMENT dated as of January 1, 1997, among THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ("Prudential"), a New Jersey corporation, THE PRUDENTIAL VARIABLE
CONTRACT ACCOUNT-2 ("VCA-2"), a separate account of Prudential registered as an
open-end, diversified management investment company under the Investment Company
Act of 1940, and PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC ("PIMS"), a
wholly-owned direct subsidiary of Prudential registered as a broker-dealer under
the Securities Exchange Act of 1934.

WHEREAS, VCA-2 serves as the funding medium for such variable contracts
issued by Prudential as may be designated by Prudential as participating therein
(the "Contracts"); and

WHEREAS, Prudential and VCA-2 desire that PIMS provide sales and
distribution services for the Contracts;

NOW, THEREFORE, in consideration of the promises and mutual considerations
provided here, and intending to be legally bound hereby, the parties hereto
agree as follows:

1. PIMS will provide sales and distribution services (the "Services") for
the Contracts.

2. In exchange for the Services, Prudential shall compensate PIMS in an
amount equal to the commissions and other expenses incurred by PIMS in
connection with the Services.

3. Amounts retained by Prudential from the payment of the front-end sales
charge under the Contracts shall be applied to the payments to be made by
Prudential to PIMS for the Services. The front-end sales charge shall be
described in the prospectus for the sale of the Contracts. To the extent that
the front-end sales charge does not cover the payments to be made by Prudential
to PIMS for the Services, the difference will be made up from Prudential's
surplus.

4. This agreement shall be approved by the affirmative vote of the VCR-2
Committee, including the specific approval of a majority of the members of the
Committee who are not persons affiliated with VCA-2, or by a majority of the
votes cast by those persons having voting rights in respect of VCA-2, as
provided for by the Rules and Regulations of VCA-2. This agreement shall
continue in effect for a period of more than two years from the date of its
execution only so long as its continuance is approved at least annually by such

<PAGE>

vote of the Committee or persons with VCA-2 voting rights described in the
previous sentence.

5. This agreement shall automatically terminate in the event of its
assignment by Prudential or PIMS.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.

THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA

By: _____________________________
Vice President

THE PRUDENTIAL VARIABLE
CONTRACT ACCOUNT-2

By: _____________________________
Chairman of the Committee

PRUDENTIAL INVESTMENT
MANAGEMENT SERVICES LLC

By: _____________________________
President

[LOGO--THE PRUDENTIAL] THE PRUDENTIAL
INSURANCE COMPANY
OF AMERICA

AMENDMENT TO BE ATTACHED TO AND MADE A
PART OF GROUP ANNUITY CONTRACT NO. GA-XXXX

Effective November 1, 19XX, the contract is hereby modified as follows:

I. The second paragraph of Section 1.1(b) of the contract is amended by adding
the following after the third sentence:

1.1 Nature of Contract and Variable Contract Account-2--The Committee:

(b) NATURE OF ACCOUNT:

Such assets are not chargeable with liability arising out of any other
business conducted by Prudential.

II. The third paragraph of Section 3.3 is hereby inoperative and the third
sentence of the second paragraph of Section 3.3 of the contract is replaced
by the following:

3.3 VCA-2 Accumulation Unit and Accumulation Unit Value:

The Accumulation Unit Value for any subsequent Business Day is determined
as of the end of such day by subtracting from the value of all securities,
cash and other assets in VCA-2, the amount of its liabilities (including
investment management fee, other accrued expenses and dividends payable),
and dividing the result by the number of outstanding Accumulation Units.

THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA

By: _____________________________
Title:

Date: January 1, 199XX
---------------------------

GAA-8052 104750/440g

POWER OF ATTORNEY

Know all men by these presents:

That I, MENDEL A. MELZER, of Newark, New Jersey, an officer of THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-2, THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-10 AND THE
PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11, (the "Accounts"), do hereby make,
constitute and appoint as my true and lawful attorneys in fact THOMAS A. EARLY
and CHRISTOPHER SPRAGUE or either of them for me and in my name, place and stead
to sign registration statements and any and all amendments thereto executed on
behalf of any or all of the Accounts, and filed with the Securities and Exchange
Commission, as follows:

Registration Statement on Form N-3 for the registration under the
Securities Act of 1993 and the Investment Company Act of 1940 of the Accounts.

IN WITNESS WHEREOF, I have hereunto set my hand this 27TH day of FEBRUARY,
1997.

/s/ MENDEL A. MELZER
-------------------------------
Mendel A. Melzer

State of New Jersey )
) SS
County of Essex )

On this 27TH day of FEBRUARY, 1997, before me personally appeared JONATHAN
M. GREENE, to me known and known to me to be the person mentioned and described
in and who executed the foregoing instruments and he duly acknowledged to me
that he executed

/s/ CLEMENTINA FERRIGNO
-----------------------------
Clementina Ferrigno
Notary Public

My commission expires: March 31, 1998
[Notary Seal]

<PAGE>

x POWER OF ATTORNEY

Know all men by these presents:

That I, JONATHAN M. GREENE, of Newark, New Jersey, an officer of THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-2, THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-10 AND THE
PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11, (the "Accounts"), do hereby make,
constitute and appoint as my true and lawful attorneys in fact THOMAS A. EARLY
and CHRISTOPHER SPRAGUE or either of them for me and in my name, place and stead
to sign registration statements and any and all amendments thereto executed on
behalf of any or all of the Accounts, and filed with the Securities and Exchange
Commission, as follows:

Registration Statement on Form N-3 for the registration under the
Securities Act of 1993 and the Investment Company Act of 1940 of the Accounts.

IN WITNESS WHEREOF, I have hereunto set my hand this 27TH day of FEBRUARY,
1997.

/s/ JONATHAN M. GREENE
-------------------------------
Jonathan M. Greene

State of New Jersey )
) SS
County of Essex )

/s/ CLEMENTINA FERRIGNO
-----------------------------
Clementina Ferrigno
Notary Public

My commission expires: March 31, 1998
[Notary Seal]