PRUDENTIAL VARIABLE CONTRACT ACCOUNT 24, 497, 1997-05-08

PRUDENTIAL VARIABLE CONTRACT ACCOUNT 24
497, 1997-05-08

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PROSPECTUS
May 1, 1997

THE MEDLEY(SM) PROGRAM

GROUP VARIABLE ANNUITY CONTRACTS

issued through

THE PRUDENTIAL THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-10 VARIABLE CONTRACT ACCOUNT-11

THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-24

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

The Prudential Variable Contract Account-10 will invest primarily in equity
securities of major, established corporations that are selected with the
objective of long-term growth of capital. The Prudential Variable Contract
Account-11 will invest in money market instruments selected with the objective
of obtaining as high a level of current income as is consistent with the
preservation of capital and liquidity. An investment in The Prudential Variable
Contract Account-11 is neither insured nor guaranteed by the U.S.Government.

Each of the Subaccounts of The Prudential Variable Contract Account-24 will
invest in the corresponding Portfolio of The Prudential Series Fund, Inc. (the
"Fund"). The accompanying Prospectus for the Fund describes the investment
objectives of the seven Portfolios currently available to Participants: the
Diversified Bond Portfolio, the Government Income Portfolio, the Conservative
Balanced Portfolio, the Flexible Managed Portfolio, the Stock Index Portfolio,
the Equity Portfolio and the Global Portfolio.

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 35 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 Investments
30 Scranton Office Park
Scranton, PA 18507-1789
Telephone 1-800-458-6333

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

[LOGO] PRUDENTIAL
<PAGE>
CONTENTS

PAGE

DEFINITION OF SPECIAL TERMS USED IN THIS PROSPECTUS ........................ 1
FEE TABLES ................................................................. 2
SUMMARY .................................................................... 4
CONDENSED FINANCIAL INFORMATION-VCA-10 ..................................... 7
CONDENSED FINANCIAL INFORMATION-VCA-11 ..................................... 8
CONDENSED FINANCIAL INFORMATION-VCA-24 ..................................... 9
INTRODUCTION ............................................................... 10
THE PRUDENTIAL ............................................................. 10
THE ACCOUNTS ............................................................... 10
THE FUND ................................................................... 10
INVESTMENT PRACTICES ....................................................... 11
VCA-10's investment objective ......................................... 11
VCA-10's investment policies .......................................... 11
Financial Futures Contracts ........................................... 11
Options ............................................................... 11
Real estate-related securities ........................................ 12
Repurchase agreements ................................................. 12
Reverse repurchase agreements and dollar roll transactions ............ 12
When-Issued and Delayed Delivery Securities ........................... 12
Short Sales Against the Box ........................................... 13
Other investment techniques ........................................... 13
VCA-11's investment objective ......................................... 13
VCA-11's investment policies .......................................... 13
Determination of asset value .......................................... 15
MANAGEMENT ................................................................. 16
CHARGES .................................................................... 16
Deferred Sales Charge ................................................. 17
Limitations on Sales Charges .......................................... 17
Annual Account Charge ................................................. 17
Charge for Administrative Expenses and Investment Management Services . 18
Modification of Charges ............................................... 18
THE CONTRACTS .............................................................. 18
The Accumulation Period ............................................... 19
1. Contributions; Crediting Units; Enrollment Forms;
Deduction for Administrative Expenses ................... 19
2. Valuation of a Participant's Account ..................... 20
3. The Unit Value ........................................... 20
4. Withdrawal (Redemption) of Contributions ................. 20
5. Systematic Withdrawal Plan ............................... 21
6. Texas Optional Retirement Program ........................ 22
7. Death Benefits ........................................... 23
8. Discontinuance of Contributions .......................... 24
9. Transfer Payments ........................................ 24
10. Telephone Requests ....................................... 25
11. Exchange Offer into MEDLEY from VCA-2 .................... 25
12. Exchange Offer with the PMF Funds ........................ 25
13. Loans .................................................... 26
14. Modified Procedures ...................................... 27
The Annuity Period .................................................... 27
1. Electing the Annuity Date and the Form of Annuity ........ 27
2. Available Forms of Annuity ............................... 28
3. Purchasing the Annuity ................................... 28
Assignment ............................................................ 29
Changes in the Contracts .............................................. 29
Reports ............................................................... 29
Performance Information ............................................... 29
Participation in divisible surplus .................................... 30
FEDERAL TAX STATUS ......................................................... 30
VOTING RIGHTS .............................................................. 32
OTHER CONTRACTS ON A VARIABLE BASIS ........................................ 33
STATE REGULATION ........................................................... 33
LEGAL PROCEEDINGS .......................................................... 33
ADDITIONAL INFORMATION ..................................................... 34
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION ..................... 35
APPENDIX ................................................................... 36

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>
DEFINITION OF SPECIAL TERMS USED IN THIS PROSPECTUS

ACCUMULATION ACCOUNT--An account established for each Participant to record the
amount credited to the Participant under a Contract. Separate accounts are
maintained for each investment option.

ACCUMULATION PERIOD--The period, prior to the effecting of an annuity, during
which the amount credited to a Participant may vary with the investment
performance of VCA-10, VCA-11, any Subaccount of VCA -24, or the rate credited
under the companion contract, as selected.

COMPANION CONTRACT--A fixed-dollar group annuity contract issued by Prudential
under which contributions may be made for Participants in the MEDLEY Program.

CONTRACT-HOLDER--The employer, association or trust to which Prudential has
issued a Contract.

CONTRACTS--The group variable annuity contracts described in this Prospectus and
offered for use in connection with retirement arrangements that qualify for
federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal
Revenue Code and with non-qualified annuity arrangements.

FUND--The Prudential Series Fund, Inc., a mutual fund with separate Portfolios,
seven of which correspond to the seven Subaccounts of VCA-24.

MEDLEY PROGRAM--The contracts chosen by a Contract-holder from those described
in this Prospectus and any Companion Contract(s) comprise the Contract-holder's
MEDLEY Program. It is sometimes referred to in this Prospectus as the "Program."
MEDLEY is a registered service mark of The Prudential Insurance Company of
America.

NON-QUALIFIED COMBINATION CONTRACT--A group variable annuity contract issued in
connection with non-qualified arrangements that permits Participants within a
single Contract to direct contributions to VCA-10, VCA-11, VCA-24 or a general
account fixed rate option of Prudential. Separate Accumulation Accounts are
maintained for amounts credited to the Participant under each investment option
in this Contract.

PARTICIPANT--A person for whom contributions have been made and to whom amounts
invested under a Contract or Companion Contract remain credited.

QUALIFIED COMBINATION CONTRACT--A group variable annuity contract issued in
connection with qualified arrangements that permits Participants within a single
Contract to direct contributions to VCA-10, VCA-11, VCA-24 or a general account
fixed rate option of Prudential. Separate Accumulation Accounts are maintained
for amounts credited to the Participant under each investment option in this
Contract.

SUBACCOUNT--A division of VCA-24, the assets of which are invested in shares of
the corresponding Portfolio of the Fund. VCA-24 currently has seven Subaccounts:
Diversified Bond Subaccount, Government Income Subaccount, Conservative Balanced
Subaccount, Flexible Managed Subaccount, Stock Index Subaccount, Equity
Subaccount, and Global Subaccount.

UNIT AND UNIT VALUE--A Participant is credited with Units in each of VCA-10,
VCA-11, and the Subaccounts of VCA-24 in which he invests. The value of these
Units changes each day to reflect the investment results of, and deductions of
charges from, VCA-10, VCA-11 and the Subaccounts of VCA-24, and the expenses of
the Fund Portfolios in which the assets of the Subaccounts are invested. The
number of Units credited to a Participant in VCA-10, VCA-11 or any Subaccount of
VCA -24 is determined by dividing the amount of the contribution made on his
behalf to that Account or Subaccount by the applicable Unit Value for the
business day on which the contribution is received at the address shown on the
cover of this Prospectus.

VARIABLE CONTRACT ACCOUNT-10--A separate account of Prudential registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company, invested primarily in equity securities of major,
established corporations that are selected with the objective of long-term
growth of capital.

VARIABLE CONTRACT ACCOUNT-11--A separate account of Prudential registered under
the Investment Company Act of 1940 as an open-end, diversified, management
investment company, invested in money market instruments selected with the
objective of realizing as high a level of current income as is consistent with
the preservation of capital andliquidity.

VARIABLE CONTRACT ACCOUNT-24--A separate account of Prudential registered under
the Investment Company Act of 1940 as a unit investment trust, invested through
its Subaccounts in shares of the corresponding Fund Portfolios.

1
<PAGE>

The purpose of the tables on this page and on the following page is to assist
the Participant in understanding the various charges that a Participant in an
Account will bear, whether directly or indirectly. For more complete
descriptions of the various charges, see "Charges" page 16 of this Prospectus.

FEE TABLES--VCA-10 AND VCA-11

PARTICIPANT TRANSACTION EXPENSES

Sales Load Imposed on Purchases ........................................ None
Deferred Sales Load (as a percentage of contributions withdrawn):

MAXIMUM DEFERRED SALES CHARGE AS A
EARS OF PROGRAM PARTICIPATION PERCENTAGE OF CONTRIBUTIONS WITHDRAWN*
- ----------------------------- -------------------------------------
0-1 year ............................ 7%
1-2 years ........................... 6%
2-3 years ........................... 5%
3-4 years ........................... 4%
4-5 years ........................... 3%
5-6 years ........................... 2%
6-7 years ........................... 1%
After 7 years ....................... 0%
Maximum Annual Contract Fee ............................................ $30**

ANNUAL ACCOUNT EXPENSES
(as a percentage of average net assets)

VCA-10 VCA-11
------ ------

Investment Management Fee .............................. .25% .25%
Administrative Fee ..................................... .75% .75%
---- ----
Total Annual Expenses ................................ 1.00% 1.00%
==== ====
EXAMPLES

<TABLE>
<CAPTION>
A. You would pay the following
expenses on each $1000 invested
assuming (1) a 5% annual return and
(2) redemption at the end of each
time period: 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
VCA-10 ........................................ $80 $82 $86 $125
VCA-11 ........................................ 81 83 88 128

B. You would pay the following
expenses on the same investment
assuming (1) a 5% annual return and
(2) no redemption or you annuitize
at the end of the period:

VCA-10 ........................................ $10 $32 $56 $125
VCA-11 ........................................ 11 33 58 128
</TABLE>

The above examples are based on data for each Account's fiscal year ended
December 31, 1996. The examples should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than thoseshown.

- -----

* The deferred sales charge may be reduced under certain contracts. See
Modification of Charges, page 18.

** The annual contract fee is reflected in the above example upon the
assumption that it is deducted from each of the available investment
options, including the Companion Contract and fixed rate option, in the
same proportions as the aggregate annual contract fees are deducted from
each option. The actual expenses paid by each Participant will vary
depending upon the total amount credited to that Participant and how that
amount is allocated. For the way in which this fee is deducted, see Annual
Account Charge on page 17.

2
<PAGE>

FEE TABLE--VCA-24

PARTICIPANT TRANSACTION EXPENSES

Sales Load Imposed on Purchases ........................................ None
Deferred Sales Load (as a percentage of contributions withdrawn):

MAXIMUM DEFERRED SALES CHARGE AS A
YEARS OF PROGRAM PARTICIPATION PERCENTAGE OF CONTRIBUTIONS WITHDRAWN*
- ------------------------------ -------------------------------------
0-1 year .......................... 7%
1-2 years ......................... 6%
2-3 years ......................... 5%
3-4 years ......................... 4%
4-5 years ......................... 3%
5-6 years ......................... 2%
6-7 years ......................... 1%
After 7 years ..................... 0%
Maximum Annual Contract Fee ............................................ $30**

ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of average account value)

Administrative Fee ..................................................... 0.75%

ANNUAL PRUDENTIAL SERIES FUND PORTFOLIO EXPENSES
(as a percentage of each Portfolio's average net assets)

<TABLE>
<CAPTION>
DIVERSIFIED GOVERNMENT CONSERVATIVE FLEXIBLE STOCK
BOND INCOME BALANCED MANAGED INDEX EQUITY GLOBAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Management Fee ....... .40% .40% .55% .60% .35% .45% .75%
Other Expenses .................. .05% .06% .04% .04% .05% .05% .17%
Total Annual Prudential Series
--- --- --- --- --- --- ---
Fund Portfolio Expenses ....... .45% .46% .59% .64% .40% .50% .92%
=== === === === === === ===
</TABLE>

EXAMPLES
--------
<TABLE>
<CAPTION>
A. You would pay the following
expenses on each $1000 invested
assuming (1) 5% annual return and
(2) redemption at the end of each 1 Year 3 Years 5 Years 10 Years
time period: ------ ------- ------- --------
<S> <C> <C> <C> <C>
Diversified Bond .................... $82 $ 89 $ 97 $148
Government Income ................... 82 89 97 148
Conservative Balanced ............... 84 93 104 164
Flexible Managed .................... 84 94 107 168
Stock Index ......................... 82 87 94 141
Equity .............................. 83 90 100 153
Global .............................. 87 103 121 198

B. You would pay the following
expenses on the same investment,
assuming (1) a 5% annual return and
(2) no redemption or you annuitize
at the end of the period:
Diversified Bond .................... 12 39 67 148
Government Income ................... 12 39 67 148
Conservative Balanced ............... 14 43 74 164
Flexible Managed .................... 14 44 77 168
Stock Index ......................... 12 37 64 141
Equity .............................. 13 40 70 153
Global .............................. 17 53 91 198
</TABLE>
The above examples are based on data for the fiscal year ended December 31,
1996. The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.

- ----------

* The deferred sales charge may be reduced under certain Contracts. See
Modification of Charges, page 18.

3
<PAGE>

SUMMARY

Five Group Variable Annuity Contracts (the "Contracts") are described in this
Prospectus. They are offered by The Prudential Insurance Company of America
("Prudential") for use in connection with retirement arrangements that qualify
for federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal
Revenue Code of 1986 (the "Code" or "Internal Revenue Code") and with
non-qualified annuity arrangements. One of the Contracts provides for the
investment of contributions in The Prudential Variable Contract Account-10 ("VCA
- -10"). Another provides for the investment of contributions in The Prudential
Variable Contract Account-11 ("VCA-11"). The third provides for the investment
of contributions in one or more Subaccounts of The Prudential Variable Contract
Account-24 ("VCA-24"). VCA-10, VCA-11 and VCA-24 (the "Accounts") are separate
accounts of Prudential. VCA-10 and VCA-11 are registered as open-end,
diversified, management investment companies, and VCA-24 is registered as a unit
investment trust, under the Investment Company Act of 1940, as amended. The
fourth is a qualified Contract that provides for investment of contributions in
the Accounts and a fixed rate option provided by Prudential (the "Qualified
Combination Contract"). The fifth is a non-qualified Contract that provides for
investment of contributions in the Accounts and a fixed rate option provided by
Prudential (the "Non-Qualified Combination Contract").

The Contracts generally are issued to employers ("Contract-holders") who make
contributions under them on behalf of their employees. A person for whom
contributions have been made and to whom they remain credited under a Contract
is a "Participant." Contributions also may be made for Participants under a
companion fixed-dollar contract ("Companion Contract"). Those contracts that a
Contract-holder chooses from among the Contracts described in this Prospectus,
along with the Companion Contract, if any, make up the Contract-holder's MEDLEY
Program ("Program").

What follows is a summary of information about the Contracts and about VCA-10,
VCA-11 and VCA-24. Moredetailed information may be found in the referenced
portions of this Prospectus, as well as in the Statement ofAdditional
Information.

INTERESTS OF PARTICIPANTS
IN VCA-10, VCA-11 AND THE SUBACCOUNTS OF VCA-24

If the Program made available to a Participant includes all the variable
investment options described in this Prospectus, the Participant may choose to
have contributions made on his behalf invested in any one or more of VCA-10,
VCA-11 and the Subaccounts of VCA-24. The Participant may from time to time
change how those contributions are allocated, usually by notifying Prudential at
the address shown on the cover of this Prospectus. An Accumulation Account will
be established in the name of the Participant in each of VCA-10, VCA-11 and the
Subaccounts of VCA-24 in which the Participant invests. The value of a
Participant's Accumulation Account, expressed in Units of the Account or
Subaccount in which the investment is made, will vary with the investment
results of that Account or Subaccount. See "The Accumulation Period,"
pages 19-27.

INVESTMENT OBJECTIVES OF THE ACCOUNTS

VCA-11 will invest in money market instruments payable in U.S. dollars selected
with the objective of realizing as high a level of current income as is
consistent with the preservation of capital and liquidity. See "VCA -11's
investment objective and investment policies," page 13.

Each Subaccount of VCA-24 will invest in the corresponding Portfolio of the
Fund. The Diversified Bond Subaccount invests in the Diversified Bond Portfolio,
the Government Income Subaccount in the Government Income Portfolio, the
Conservative Balanced Subaccount in the Conservative Balanced Portfolio, the
Flexible Managed Subaccount in the Flexible Managed Portfolio, the Stock Index
Subaccount in the Stock Index Portfolio, the Equity Subaccount in the Equity
Portfolio, and the Global Subaccount in the Global Portfolio. Additional
Subaccounts and Fund Portfolios may be available in the future. The investment
objectives of each of these seven Fund Portfolios (see "The Investment
Objectives of the Fund Portfolios," page 14) and other information concerning
the management and operation of the Fund are contained in the accompanying Fund
Prospectus and the Fund's Statement of Additional Information.

There is no assurance that the investment objective of VCA-10, VCA-11 or any
Fund Portfolio will be attained. Nor is there any guarantee that the amount
available to a Participant will equal or exceed the total contributions made on
his behalf. The value of the investments held in VCA-10, VCA-11 and in each Fund
Portfolio may fluctuate daily and is subject to the risks of both changing
economic conditions and the selection of investments necessary to meet the
Account's or Portfolio's investment objective.

4
<PAGE>

INVESTMENT MANAGER AND PRINCIPAL UNDERWRITER

Prudential is the investment manager of VCA-10, VCA-11, and the Fund, and
Prudential Investment Management Services LLC ("PIMS"), a direct wholly-owned
subsidiary of Prudential, is the principal underwriter of the Contracts pursuant
to agreements between PIMS, Prudential, and each of VCA-10 and VCA-11
(collectively, the "Distribution Agreements"). See "The Prudential," page 10,
"Management," page 16, "The Fund," page 10, and the accompanying Fund
prospectus.

INVESTMENT REQUIREMENTS

Contributions to the Program made on behalf of a Participant may be made through
payroll deduction arrangements or similar agreements with the Contract-holder.
Any other contribution to the Program must be at least $500, except for
contributions to an Individual Retirement Annuity for a non-working spouse under
Section 408 of the Code (or working spouse who elects to be treated as a
non-working spouse), which must be at least $250. All contributions may be
divided among the Contracts and Companion Contract(s) that comprise the
Contract-holder's Program. See "The Accumulation Period," pages19-27. Checks
should be made payable to Prudential.

CHARGES

No sales charge is deducted from any contribution when made. However, a deferred
sales charge to cover sales expenses may be assessed when a contribution is
withdrawn from VCA-10, VCA-11 or any Subaccount of VCA-24. The deferred sales
charge is imposed only upon contributions withdrawn by a Participant during the
first 7 years of his participation in a Program. The maximum deferred sales
charge of seven percent (7%) applies to contributions withdrawn during the first
year that a Participant is in a Program. The charge is lower for contributions
withdrawn in subsequent years. Withdrawals are deemed to be made up of
contributions until all of a Participant's contributions to the Account have
been withdrawn. No deferred sales charge is imposed upon contributions withdrawn
to purchase an annuity under a Contract, to provide a death benefit, pursuant to
a systematic withdrawal plan, to provide a minimum distribution payment, or in
cases of financial hardship or disability retirement as determined pursuant to
provisions of the employer's retirement arrangement. Further, for all plans
other than IRAs, no deferred sales charge is imposed upon contributions
withdrawn due to resignation or retirement by the Participant or termination of
the Participant by the Contract-holder. Transfers of contributions among the
Accounts, the Subaccounts, the fixed rate option and the Companion Contract(s)
are treated as withdrawals of contributions from the Account, Subaccount, fixed
rate option or Companion Contract from which the transfer is made, but no
deferred sales charge is imposed upon them. They are, however, treated as
contributions to the Account, Subaccount, fixed rate option or Companion
Contract to which the transfer is made for the purpose of determining the sales
charge, if any, upon subsequent withdrawals from that Account, Subaccount, fixed
rate option or Companion Contract. See "Deferred Sales Charge," page 17, for
further explanation and illustration.

An annual account charge may be made against each Participant's Accumulation
Accounts under a Program. This charge will not exceed $30 for any calendar year
and may be divided among the Participant's Accumulation Accounts. See "Annual
Account Charge," page 17.

Prudential intends to decrease the deferred sales or annual account charges, or
both, applicable to a particular Contract if sales and administrative expenses
associated with that Contract are expected to be lower, or if fewer sales or
administrative services are expected to be required in connection with the
Contract. See "Modification of Charges," page 18.

Prudential makes a daily charge equal to an effective annual rate of 1.00% of
the net value of the assets in VCA-10 and VCA-11. This charge is made up of
0.25% (1 /4 of 1%) for investment management and 0.75% (3/4 of 1%) for
administrative expenses. Prudential makes a daily charge for administrative
expenses equal to an effective annual rate of 0.75% of the net asset value of
each Subaccount of VCA-24. See "Charge for Administrative Expenses and
Investment Management Services," page 18.

A daily charge against assets for investment management with respect to each
Fund Portfolio in which a Subaccount invests is made separately at an effective
annual rate of 0.35% (35/100 of 1%) of the net asset value of the Fund's Stock
Index Portfolio, 0.40% (40/100 of 1%) of the net asset value of the Fund's
Diversified Bond Portfolio and Government Income Portfolio, 0.45% (45/100 of 1%)
of the net asset value of the Fund's Equity Portfolio, 0.55% (55/100 of 1%) of
the net asset value of the Conservative Balanced Portfolio, 0.60% (60/100 of 1%)
of the net asset value of the Flexible Managed Portfolio, and 0.75% (75/100 of
1%) of the net asset value of the Global Portfolio. The Fund's Portfolios also
bear the costs of Portfolio transactions, legal and accounting expenses,
shareholder services, and custodial andtransfer agency fees. Further detail is
provided in the accompanying prospectus for the Fund and in its Statement of
Additional Information.

The deferred sales charge, the annual account charge, and the charges against
assets for administrative expenses may be changed by Prudential. See "Changes in
the Contracts," page 29.

5
<PAGE>

WITHDRAWALS AND TRANSFERS

Unless restricted by the retirement arrangement under which he is covered, or by
the withdrawal restrictions imposed by federal tax law on tax-deferred annuity
contracts subject to Section 403(b) of the Code and on interests in deferred
compensation plans under Section457 of the Code, a Participant may withdraw, at
any time, all or a part of his Accumulation Account in VCA-10, or VCA-11 or any
Subaccount of VCA-24. See "Withdrawal (Redemption) of Contributions," pages
20-21. Withdrawals may be subject to tax under the Internal Revenue Code,
including, under certain circumstances, a 10% penalty tax on premature
withdrawals. See "Federal Tax Status," pages 30-32. In addition, all or a part
of a Participant's Accumulation Account may be transferred among Accounts,
Subaccounts, fixed rate option and Companion Contract without charge or tax
liability. Prudential may limit the frequency of transfers and may under certain
Contracts prohibit or restrict transfers from the Companion Contract or fixed
rate option into non-equity investment options that are defined in the
Contract(s) as "competing" with the Companion Contract or the fixed rate option
with respect to investment characteristics. See "Transfer Payments," page 24.

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 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-10, VCA-11 and VCA-24 must be
sent to Prudential by one of the following three means: (1)By U.S. mail to:
Prudential Investments, 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 Investments, 30 Scranton
Office Park, Scranton, Pennsylvania 18507-1789; or (3)Fax to Prudential
Investments, 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 on pages21-24 of
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 27.

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.

6
<PAGE>
CONDENSED FINANCIAL INFORMATION

INCOME AND CAPITAL CHANGES PER VCA-10 UNIT*

(For a Unit outstanding throughout the year)

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

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Income ............................................ $ .0657 $ .0609 $ .0563 $ .0855 $ .0551 $ .0538
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
For investment management fee ............................... .0118 .0094 .0083 .0077 .0064 .0056
For administrative expenses not covered by the annual
account charge ............................................. .0354 .0282 .0251 .0230 .0192 .0169
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income ........................................ .0185 .0233 .0229 .0548 .0295 .0313
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Changes
Net realized gain (loss) on investments ..................... .5085 .3850 .1947 .2763 .2884 .1096
Net unrealized appreciation (depreciation) of investments ... .5682 .4744 (.2148) .2599 (.0823) .4478
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Unit Value ........................ 1.0952 .8827 .0028 .5910 .2356 .5887
- -----------------------------------------------------------------------------------------------------------------------------------
Unit Value
Beginning of year ........................................... 4.2431 3.3604 3.3576 2.7666 2.5310 1.9423
End of year ................................................. $ 5.3383 $4.2431 $3.3604 $3.3576 $2.7666 $2.5310
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets** .................... .9975% .9901% .9965% .9955% .9936% .9929%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets ......... .392% .6133% .6791% 1.7775% 1.1431% 1.3779%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate ...................................... 52% 45% 32% 45% 65% 72%
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Units outstanding for Participants at end of
year (000 omitted) .......................................... 91,532 81,817 79,189 73,569 62,592 58,699
- -----------------------------------------------------------------------------------------------------------------------------------
Average commission rate paid per share ....................... $ .0538 N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
YEAR ENDED
-------------------------------------------
12/31/90 12/31/89 12/31/88 12/31/87
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Investment Income ............................................ $ .0718 $ .0650 $ .0593 $ .0408
- -------------------------------------------------------------------------------------------------------------
Expenses
For investment management fee ............................... .0048 .0047 .0038 .0043
For administrative expenses not covered by the annual
account charge ............................................. .0144 .0141 .0115 .0129
- -------------------------------------------------------------------------------------------------------------
Net investment income ........................................ .0526 .0462 .0440 .0236
- -------------------------------------------------------------------------------------------------------------
Capital Changes
Net realized gain (loss) on investments ..................... .0791 .1451 (.3251) .2121
Net unrealized appreciation (depreciation) of investments ... (.2054) .2167 .5511 (.3913)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Unit Value ........................ (.0737) .4080 .2700 (.1556)
- -------------------------------------------------------------------------------------------------------------
Unit Value
Beginning of year ........................................... 2.0160 1.6080 1.3380 1.4936
End of year ................................................. $1.9423 $2.0160 $1.6080 $1.3380
- -------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets** .................... .9977% 1.0068% 1.0009% 1.0145%
- -------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets ......... 2.7403% 2.4684% 2.8773% 1.3851%
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate ...................................... 106% 64% 97% 96%
- -------------------------------------------------------------------------------------------------------------
Number of Units outstanding for Participants at end of
year (000 omitted) .......................................... 55,621 53,748 52,894 52,350
- -------------------------------------------------------------------------------------------------------------
Average commission rate paid per share ....................... N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
</TABLE>

* Calculation by accumulating the actual per Unit amounts daily.

** These calculations exclude Prudential's equity in VCA-10.

The above table does not reflect the annual account charge, which does not
affect the Unit Value of VCA-10. This charge is made by reducing Participants'
accounts by a number of Units equal in value to the charge.

7
<PAGE>

CONDENSED FINANCIAL INFORMATION

INCOME AND CAPITAL CHANGES PER VCA-11 UNIT*

(For a Unit outstanding throughout the year)

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income .................................................. $ .1281 $ .1313 $ .0912 $ .0682 $ .0812
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
For investment management fee .................................... .0056 .0054 .0052 .0050 .0049
For administrative expenses not covered by the annual
account charge .................................................. .0170 .0160 .0154 .0150 .0147
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income .............................................. .1055 .1099 .0706 .0482 .0616
- ------------------------------------------------------------------------------------------------------------------------------
Capital Changes
Net realized gain (loss) on investments .......................... -- -- -- -- --
Net unrealized appreciation (depreciation) of
investments ..................................................... -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Unit Value .............................. .1055 .1099 .0706 .0482 .0616
- ------------------------------------------------------------------------------------------------------------------------------
Unit Value
Beginning of year ................................................ 2.2155 2.1056 2.0350 1.9868 1.9252
End of year ...................................................... $2.3210 $2.2155 $2.1056 $2.0350 $1.9868
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets** .......................... .9832% .9912% .9966% .9942% .9999%
- ------------------------------------------------------------------------------------------------------------------------------
Average ratio for the year of net investment income to net assets .. 4.5731% 5.0835% 3.4176% 2.3997% 3.1433%
- ------------------------------------------------------------------------------------------------------------------------------
Number of Units outstanding for Participants at end of year
(000 omitted) ................................................... 38,315 34,136 35,448 29,421 27,518
- ------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
YEAR ENDED
-------------------------------------------------------
12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income .................................................. $ .1215 $ .1464 $ .1536 $ .1158 $ .0967
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
For investment management fee .................................... .0047 .0044 .0040 .0038 .0035
For administrative expenses not covered by the annual
account charge .................................................. .0142 .0131 .0122 .0113 .0106
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income .............................................. .1026 .1289 .1374 .1007 .0826
- ------------------------------------------------------------------------------------------------------------------------------
Capital Changes
Net realized gain (loss) on investments .......................... -- -- -- -- --
Net unrealized appreciation (depreciation) of
investments ..................................................... -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Unit Value .............................. .1026 .1289 .1374 .1007 .0826
- ------------------------------------------------------------------------------------------------------------------------------
Unit Value
Beginning of year ................................................ 1.8226 1.6937 1.5563 1.4556 1.3730
End of year ...................................................... $1.9252 $1.8226 $1.6937 $1.5563 $1.4556
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets** .......................... 1.0048% .9972% .9988% .9996% .9970%
- ------------------------------------------------------------------------------------------------------------------------------
Average ratio for the year of net investment income to net assets .. 5.4667% 7.3333% 8.4557% 6.6989% 5.8503%
- ------------------------------------------------------------------------------------------------------------------------------
Number of Units outstanding for Participants at end of year
(000 omitted) ................................................... 26,400 25,174 23,777 21,278 17,341
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Calculation by accumulating the actual per Unit amounts daily.

** These calculations exclude Prudential's equity in VCA-11.

The above table does not reflect the annual account charge, which does not
affect the Unit Value of VCA-11. This charge is made by reducing Participants'
accounts by a number of Units equal in value to the charge.

8
<PAGE>
CONDENSED FINANCIAL INFORMATION

ACCUMULATION UNIT VALUE INFORMATION PER VCA-24

<TABLE>
<CAPTION>
SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------
EQUITY
-----------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 06/01/87
TO TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ...... $2.6769 $2.0541 $2.0136 $1.6646 $1.4690 $1.1745 $1.2484 $0.9697 $0.8344 $1.0000
End of period (rounded) ............ $3.1487 $2.6769 $2.0541 $2.0136 $1.6646 $1.4690 $1.1745 $1.2484 $0.9697 $0.8344
Accumulation Units Outstanding
at end of period (000 omitted) .... 132,455 118,394 99,323 79,985 51,639 35,657 21,964 17,703 14,576 12,137

<CAPTION>
SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED BOND
-----------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 06/01/87
TO TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ...... $2.0065 $1.6746 $1.7435 $1.5950 $1.4992 $1.2973 $1.2075 $1.0720 $0.9977 $1.0000
End of period (rounded) ............ $2.0789 $2.0065 $1.6746 $1.7435 $1.5950 $1.4992 $1.2973 $1.2075 $1.0720 $0.9977
Accumulation Units Outstanding
at end of period (000 omitted) .... 20,280 16,898 14,575 14,481 10,103 7,928 5,824 4,122 2,344 1,488

<CAPTION>
SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------
FLEXIBLE MANAGED
------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 06/01/87
TO TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ...... $2.2038 $1.7886 $1.8609 $1.6223 $1.5189 $1.2201 $1.2056 $0.9976 $0.8909 $1.0000
End of period (rounded) ............ $2.4854 $2.2038 $1.7886 $1.8609 $1.6223 $1.5189 $1.2201 $1.2056 $0.9976 $0.8909
Accumulation Units Outstanding
at end of period (000 omitted) .... 59,681 51,419 44,729 36,035 23,410 16,859 12,229 10,015 7,850 5,568

SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------
CONSERVATIVE BALANCED
------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 06/01/87
TO TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ...... $1.9993 $1.7175 $1.7473 $1.5691 $1.4781 $1.2508 $1.1971 $1.0310 $0.9387 $1.0000
End of period (rounded) ............ $2.2364 $1.9993 $1.7175 $1.7473 $1.5691 $1.4781 $1.2508 $1.1971 $1.0310 $0.9387
Accumulation Units Outstanding
at end of period (000 omitted) .... 50,029 46,873 43,594 36,932 24,223 16,385 11,857 10,273 8,444 7,436

<CAPTION>
SUBACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------
STOCK INDEX
---------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 05/02/88
TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ...... $2.7378 $2.0123 $2.0072 $1.8440 $1.7342 $1.3469 $1.4086 $1.0843 $1.0000
End of period (rounded) ............ $3.3302 $2.7378 $2.0123 $2.0072 $1.8440 $1.7342 $1.3469 $1.4086 $1.0843
Accumulation Units Outstanding
at end of period (000 omitted) .... 80,572 51,701 40,522 32,178 20,554 10,724 4,232 1,285 189

<CAPTION>
SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL GOVERNMENT INCOME
-------------------------------------------- -----------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 05/01/91
TO TO TO TO TO TO TO TO TO TO TO
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
-------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period (rounded) ... $1.4975 $1.3020 $1.3791 $0.9707 $1.0127 $1.4730 $1.2421 $1.3196 $1.1811 $1.1242 $1.0000
End of period (rounded) ......... $1.7836 $1.4975 $1.3020 $1.3791 $0.9707 $1.4943 $1.4730 $1.2421 $1.3196 $1.1811 $1.1242
Accumulation Units Outstanding
at end of period (000 omitted) . 33,505 24,439 21,739 12,368 3,180 17,697 17,289 16,140 15,556 9,269 6,641
</TABLE>

9
<PAGE>
INTRODUCTION

The Contracts described in this Prospectus are offered for use in connection
with various retirement arrangements entitled to federal income tax benefits.
These are (a) individual retirement annuities ("IRAs") subject to Section 408 of
the Code, (b) tax-deferred annuities subject to Section 403(b) of the Code, for
use by public schools and certain tax-exempt organizations, (c) eligible
deferred compensation plans subject to Section 457 of the Code, (d) pension and
profit sharing plans qualified under Section 401 of the Code including those
plans that are established by self-employed individuals for themselves and their
employees, and (e)certain non-qualified annuity arrangements. A summary of the
tax benefits available to persons participating in these arrangements and their
beneficiaries is provided under "Federal Tax Status," pages 30-32.

When the Program made available to a Participant includes all variable
investment options, the Participant may have contributions made on his behalf
invested in one or more of VCA-10, VCA-11, and the Subaccounts of VCA-24. Some
Programs, however, may offer only some of the variable investment options, and
accordingly a Participant in those Programs may only have contributions made on
their behalf to the available Accounts and Subaccounts. An Accumulation Account
will be established for a Participant in each Account or Subaccount in which he
invests. The value of a Participant's Accumulation Account in VCA-10, VCA-11 or
any particular Subaccount of VCA-24 will vary with the investment results in
VCA-10, VCA-11 or any particular Subaccount of VCA-24, respectively. A
Participant may elect to have the value of his Accumulation Accounts distributed
to him in one sum, applied to the purchase of a fixed-dollar annuity, or both.
The Contracts do not provide for annuity payments that vary with the investment
results of VCA-10, VCA-11 or any Subaccount of VCA-24.

THE PRUDENTIAL

Prudential is a mutual life insurance company incorporated in 1873 under the
laws of the State of New Jersey. Its corporate office is located at Prudential
Plaza, Newark, New Jersey. It has been investing for pension funds since 1928.

Prudential serves as the investment manager for VCA-10, VCA-11, and the Fund and
is registered as an investment adviser under the Investment Advisers Act of
1940. PIMS performs certain sales and distribution functions regarding the
Contracts pursuant to agreements between PIMS, Prudential, and each of VCA-10
and VCA-11 (collectively, the "Distribution Agreements") and may be deemed to be
the Contracts' "principal underwriter" under the Investment Company Act of 1940
(the "1940 Act"). PIMS is registered as a broker-dealer under the Securities
Exchange Act of 1934.

Prudential is responsible for the administrative and recordkeeping functions of
VCA-10, VCA-11, VCA-24 and the Fund. Prudential's financial statements appear in
the Statement of Additional Information and should be considered only as bearing
upon Prudential's ability to meet its obligations under the Contracts.

THE ACCOUNTS

Prudential established VCA-10 and VCA-11 on March 1, 1982, and VCA-24 on April
29, 1987, under the insurance laws of the State of New Jersey. Each Account
meets the definition of a "separate account" under the federal securities laws.
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 Accounts are
credited to or charged against the Accounts without regard to other income,
gains, or losses of Prudential. The assets in the Accounts will always be equal
or greater in value than Prudential's liabilities under the Contracts. The
fixed-dollar annuities available under the Contracts are not funded through the
Accounts. The obligations arising underthe Contracts are general corporate
obligations of Prudential.

VCA-10, VCA-11 and the Fund are registered as open-end, diversified, management
investment companies, and VCA-24 as a unit investment trust, 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 of the Accounts or the Fund.

THE FUND

The Fund is registered under the 1940 Act as an open-end, diversified,
management investment company. Seven of the Portfolios of the Fund are available
for the investment of contributions made under the Contracts funded through
VCA-24. Investments in a Portfolio are made by purchasing shares of the series
of Fund capital stock representing interests in that Portfolio. Shares in the
Fund are currently sold at their net asset value to separate accounts
established by Prudential and certain other insurers that offer variable life
insurance contracts and variable annuity contracts.

As noted, shares of the Fund are sold to both variable life and variable annuity
separate accounts. It is conceivable that in the future it may become
disadvantageous for both variable life and variable annuity contract separate
accounts to invest in the same underlying fund. Although Prudential, Pruco Life,
Pruco Life Insurance Company of New Jersey, and the Fund do not currently
foresee any such disadvantage, the Fund's Board of Directors intends to monitor
events in order to identify any material conflict between variable annuity
contract owners and variable

10
<PAGE>

life contract owners and to determine what action, if any, should be taken in
response thereto. Material conflicts could result from such things as: (1)
changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any Portfolio of the Fund; or (4)
differences between voting instructions given by variable annuity contract
owners and Participants and those given by variable life insurance contract
owners.

INVESTMENT PRACTICES

A Participant should review the investment objectives and policies described
below for VCA-10, VCA-11 and each Fund Portfolio corresponding to each
Subaccount of VCA-24 before deciding how to have his contributions invested.
VCA-10, VCA-11 and the Fund Portfolios have for the most part different
investment objectives and policies. These differences will affect the return on
a Participant's investment and the market and financial risks to which that
investment will be exposed. There is no guarantee that the objectives of VCA-10,
VCA-11 or any Fund Portfolio will be met.

VCA-10'S INVESTMENT OBJECTIVE

VCA-10's investment objective is long-term growth of capital. VCA-10 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. This objective is a fundamental investment policy and may not be
changed without the approval of a majority vote (as defined in the 1940 Act) of
VCA-10 Participants. Certain additional investment restrictions applicable to
VCA-10 are set forth in the Statement of Additional information.

VCA-10'S INVESTMENT POLICIES

The investment policies of VCA-10 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-10 Committee without the approval
of VCA-10 Participants.

In attempting to achieve its objective, VCA-10 will invest in common stocks,
preferred stocks, warrants or convertible bonds issued by companies which, in
the opinion of VCA-10'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-10 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 usual of VCA-10's assets may be invested
in such debt instruments.

VCA-10 may also invest in American Depository Receipts (ADRs) which are U.S.
dollar-denominated certificates issued by a United States bank or trust company
and represent the right to receive securities of a foreign issuer deposited in a
domestic bank or foreign branch of a United States bank and traded on a United
States exchange or in an over-the-counter market. Investment in ADRs has certain
advantages over direct investment in the underlying foreign securities because
they are easily transferable, have readily available market quotations, and the
foreign issuers are usually subject to comparable auditing, accounting and
financial reporting standards as domestic issuers. Nevertheless, as foreign
securities, ADRs involve certain risks which should be considered fully by
investors. These risks include political or economic instability in the country
of the issuer, the difficulty or predicting international trade patterns, and
the fact that there may be less publicly available information about a foreign
company than about a domestic company.

DESCRIPTION OF VCA-10'S INVESTMENT TECHNIQUES

VCA-10 may use some of the following investment techniques designed to meet
VCA-10's objective.

Financial futures contracts. To the extent permitted by applicable regulations,
VCA-10 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-10 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-10 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-10, be "covered," which can be done in a
variety of ways, such as placing in a

11
<PAGE>

segregated account certain securities or cash designed to "cover" VCA-10's
obligation under the written option. Additional explanation about techniques
VCA-10 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-10'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-10's
options positions. VCA-10'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-10 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-10 purchases certain money market securities, it
may on occasion enter into a repurchase agreement with the seller wherein the
seller and VCA-10 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-10 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-10
will take possession of the securities underlying the agreement and will value
them daily to assure that this condition is met. The VCA-10 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-10 may incur a
loss in the market value of the collateral as well as disposition costs; and, if
a party with whom VCA-10 has entered into a repurchase agreement becomes
insolvent, VCA-10'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-10 will not enter into repurchase agreements with Prudential or its
affiliates, including Prudential Securities Incorporated. This will not affect
VCA-10's ability to maximize its opportunities to engage in repurchase
agreements.

Reverse repurchase agreements and dollar roll transactions. VCA-10 may enter
into reverse repurchase agreements and dollar roll transactions. Reverse
repurchase agreements involve the sale of securities held by VCA-10 with an
agreement by the Account to repurchase the same securities at an agreed upon
price and date. During the reverse repurchase period, VCA-10 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-10.

Dollar rolls involve sales by VCA-10 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-10 forgoes principal and interest paid on
the securities. VCA-10 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-10 will establish a segregated account with its custodian in which it will
maintain cash, U.S. Government securities or other liquid unencumbered assets
equal in value to its obligations in respect of reverse repurchase agreements
and dollar rolls.

Reverse repurchase agreements and dollar rolls involve the risk that the market
value of the securities retained by VCA-10 may decline below the price of the
securities VCA-10 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-10'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-10's obligation to
repurchasethe securities.

When-issued or delayed delivery securities. VCA-10 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

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<PAGE>

transaction. VCA-10 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-10 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-10 may make short sales of securities or
maintain a short position, provided that at all times when a short position is
open, VCA-10 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, U.S. Government securities or other liquid unencumbered assets 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-10 may also use forward foreign currency exchange contracts and interest
rate swaps. VCA-10 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.

VCA-11'S INVESTMENT OBJECTIVE

The investment objective of VCA-11 is to seek as high a level of current income
as is consistent with the preservation of capital and liquidity. This objective
is a fundamental investment policy and may not be changed without the approval
of a majority vote of persons having voting rights in respect of the Account.
Certain investment restrictions are applicable; they are set forth in the
Statement of Additional Information.

VCA-11'S INVESTMENT POLICIES

The investment policies of VCA-11 set forth below are adopted in an effort to
achieve the investment objectives and are not fundamental. Therefore, the
investment policies of VCA-11 may be changed by the Account's Committee without
participant approval.

The Account seeks to achieve its objective by investing in the following money
market instruments payable in U.S. dollars:

1. U.S. Treasury Bills and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. See "Appendix."

2. Obligations (including certificates of deposit and bankers' acceptances) of
any commercial bank, savings bank and savings and loan association
organized under the laws of the United States or any state thereof and any
commercial bank organized under the laws of any foreign nation, provided
that such bank or association has, at the time of the Account's investment,
total assetsof at least $1 billion or the equivalent. The term
"certificates of deposit" includes both Eurodollar certificates of deposit,
for which there is generally a market, and Eurodollar time deposits, for
which there is generally not a market. "Eurodollars" are dollars deposited
in foreign banks and foreign branches of United States banks outside the
United States.

An investment in Eurodollar instruments and in instruments of foreign
issuers generally involves risks that are different in some respects from
an investment in debt obligations of domestic issuers, including future
political and economic developments that might adversely affect the payment
of principal and interest on such instruments. In addition, there may be
less publicly available information about a foreign issuer than about a
domestic issuer, and such foreign issuers may not be subject to the same
accounting, auditing and financial standards and requirements as domestic
issuers. Finally, in the event of default, judgments against a foreign
issuer might be difficult to obtain or enforce. See "Appendix."

3. Commercial paper, variable amount demand master notes, bills, notes and
other obligations issued by a U.S. or foreign company, a foreign
government, its political subdivisions, agencies or instrumentalities,
maturing in 397 days or less, denominated in U.S. dollars, and, at the date
of investment, present minimal credit risk and are of "eligible quality,"
as determined by VCA-11's investment manager under the supervision of the
Committee members. "Eligible quality," means (i) a security (or issuer)
rated in one of the two highest rating categories by at least two
nationally recognized statistical rating organizations assigning a rating
to the security or issuer (or, if only one such rating organization
assigned a rating, that rating organization) or (ii) an unrated security
deemed of comparable quality by VCA-11's investment manager under the
supervision of the Committee members. See "Appendix."

VCA-11 also may purchase instruments of the types described above together
with the right to resell the instruments at an agreed-upon price or yield
within a specified period prior to the maturity date of the instruments.
Such a right to resell is commonly known as a "put" and the aggregate price
that VCA-11 pays for instruments with a put may be higher than the price
that otherwise would be paid for the instruments.

4. Commercial paper, variable amount demand master notes or other obligations
which are guaranteed or supported by a letter of credit issued by a bank,
provided such bank (including a

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<PAGE>

foreign bank) meets the requirements set forth in paragraph (2) above.
Commercial paper, variable amount demand master notes or other fixed income
obligations which are guaranteed or insured by an insurance company or
other non-bank entity, provided such insurance company or other non-bank
entity represents a credit of high quality, as determined by the Account's
Portfolio Manager under the supervision of the VCA-11 Committee.

5. "Floating rate" and "variable rate" obligations, the interest rates on
which fluctuate generally with changes in market interest rates.
Investments in floating rate or variable rate securities normally will
involve securities which provide that the rate of interest is set as a
spread to a designated base rate, such as rates on Treasury bills, and, in
some cases, that the purchaser can demand payment of the obligation at
specified intervals or after a specified notice period (in each case of
less than one year) at par plus accrued interest, which amount may be more
or less than the amount paid for them. Variable rate securities provide for
a specified periodic adjustment in the interest rate, while floating rate
securities have an interest rate which changes whenever there is a change
in the designated base interest rate.

DESCRIPTION OF VCA-11'S INVESTMENT TECHNIQUES

Repurchase Agreements. When VCA-11 purchases money market securities of the
types described above, it may on occasion enter into a repurchase agreement with
the seller wherein the seller and VCA-11 agree at the time of sale to a
repurchase of the security at a mutually agreed upon time and price. Repurchase
agreements are described in more detail under "Description of VCA-10's
Investment Techniques," page 11. VCA-11's use of repurchase agreements is
subject to the same standards as those described for VCA-10.

Illiquid securities. VCA-11 will not invest more than 10% of its net assets in
illiquid securities (including repurchase agreements and non-negotiable time
deposits maturing in more than seven days). Securities that have legal or
contractual restrictions on resale but have a readily available market are not
deemed illiquid for purposes of this limitation. The investment adviser will
monitor the liquidity of such restricted securities subject to the supervision
of the VCA-11 Committee. In reaching liquidity decisions, the investment adviser
will consider, among other things, the following factors: (1) the frequency of
trades and quotes for the security; (2) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (3)
dealer undertakings to make a market in the security and (4) the nature of the
security and the nature of the market place trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfers). Repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.

Other investment techniques. VCA-11 may purchase or sell securities on a
when-issued or delayed delivery basis. This technique is described under
"Description of VCA-10's Investment Techniques," page 11. In addition, as
explained in greater detail in the Statement of Additional Information, VCA-11
may lend its portfolio securities.

SEC standards. The VCA-11 Committee has adopted the following additional
policies for the Account to conform to the SEC's standards applicable to all
money market funds, including VCA-11: (1) VCA-11 will only purchase securities
that are United States dollar-denominated "eligible securities" (see "Appendix")
that the VCA-11 Committee has determined present minimal credit risks; (2) VCA
- -11 will not invest more than 5% of its assets in the securities of any one
issuer (except U.S. Government obligations); however, the Account may exceed the
5% limit with respect to the "first tier" securities (see "Appendix"), of one
issuer at a time, for up to three business days after the purchase is made; (3)
VCA-11 will not invest more than 5% of its total assets in "second tier"
securities (see "Appendix") nor more than the greater of one million dollars and
1% of its assets in the "second tier" securities of any one issuer; (4) If a
"first tier" security held by VCA-11 ceases to be so classified, or if
Prudential becomes aware that any "NRSRO" (see "Appendix") has rated any
security in the Account below the NRSRO's second highest rating, the Committee
will reassess promptly whether the security presents minimal credit risks and
shall cause the Account to take such action as the Committee determines is in
the best interests of VCA-11 and its Participants; (5) In the event of a default
with respect to a security held by VCA-11, or if a security held in the Account
ceases to be an "eligible security," or if it has been determined that a
security owned by VCA-11 no longer presents minimal credit risks, VCA-11 will
sell the security as soon as practicable unless the Committee makes a specific
finding that such action would not be in the best interest of the Account; and
(6) VCA-11's dollar-weighted average portfolio maturity will be no more than 90
days, and the Account will not acquire any instrument with a remaining maturity
greater than 397 calendar days. The VCA-11 Committee has adopted written
procedures delegating to the investment manager under certain guidelines the
responsibility to make the above-described determinations, including certain
credit quality determinations.

THE INVESTMENT OBJECTIVES OF THE FUND PORTFOLIOS

The investment objectives of the seven Fund Portfolios currently available for
investment through VCA-24 under the Contracts are:

Diversified Bond Portfolio. A high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that

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<PAGE>

provide attractive yields but do not involve substantial risk of loss of capital
through default.

Government Income Portfolio. A high level of income over the longer term
consistent with the preservation of capital through investment primarily in U.S.
Government securities, including intermediate and long-term U.S. Treasury
securities and debt obligations issued by agencies of or instrumentalities
established, sponsored or guaranteed by the U.S. Government. At least 65% of the
total assets of the portfolio will be invested in U.S. Government securities.
Conservative Balanced Portfolio. Achievement of a favorable total investment
return consistent with a portfolio having a conservatively managed mix of money
market instruments, fixed income securities, and common stocks of established
companies, in proportions believed by the investment manager to be appropriate
for an investor desiring diversification of investment who prefers a relatively
lower risk of loss than that associated with the Flexible Managed Portfolio
while recognizing that this reduces the chances of greater appreciation.

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

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

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

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

The investment policies, restrictions and risks associated with each of these
seven Fund Portfolios are described in the accompanying Prospectus for the Fund.
Certain restrictions are set forth in the Fund's Statement of Additional
Information.

The Conservative Balanced, Flexible Managed and Equity Portfolios may invest in
below investment grade fixed incomed securities. Medium to lower rated and
comparable non-rated securities tend to offer higher yields than higher rated
securities with the same maturities because the historical financial condition
of the issuers of such securities may not have been as strong as that of other
issuers. Since medium to lower rated securities generally involve greater risks
of loss of income and principal than higher rated securities, investors should
consider carefully the relative risks associated with investments in high
yield/high risk securities which carry medium to lower ratings and in comparable
non-rated securities. Investors should understand that such securities are not
generally meant for short-term investing. See the Fund's Prospectus and
Statement of Additional Information for a discussion of the risks associated
with investing in fixed income securities rated below investment grade.

DETERMINATION OF ASSET VALUE

The Unit Value for VCA-10 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 last 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 last reported 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.

Options on stock and stock indices traded on national securities exchanges are
valued at the mean of the bid and asked prices as of the close of the respective
exchange (which is currently 4:10 p.m. Eastern time).

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<PAGE>

Futures contracts and options thereon are valued at the last sale price at the
close of the applicable commodities exchange or board of trade (which is
currently 4:15 p.m. Eastern time) or, if there was no sale on the applicable
commodities exchange or board of trade on such day, at the mean between the most
recently quoted bid and asked prices on such exchange or board of trade.

Portfolio securities for which market quotations are not readily available will
be valued at fair value as determined in good faith under the direction of the
Committee.

The Unit Value for VCA-11 will be determined once daily as of 4:15 p.m. Eastern
time on each day that the NYSE is open for trading. With the exception of U.S.
Government securities held subject to repurchase agreements that may have
maturity dates in excess of one year from the date of delivery of the repurchase
agreement, securities held in VCA-11 consist primarily of debt obligations with
a remaining maturity of less than thirteen months. These securities will be
valued at amortized cost. If the net asset value of VCA-11 fluctuates by as much
as three-tenths of one percent because of the use of the amortized cost method
as opposed to the mark-to-market valuation, then the Committee will be promptly
notified so that corrective action may be taken to avoid the dilution of the
interests of Participants in investment companies. This corrective action may
entail selling portfolio instruments prior to maturity, redeeming shares in kind
or using market value. In determining the market value for securities held in
VCA-11, where the primary market for a security is an exchange, the market
quotations are obtained from that exchange. Securities which are not listed on
an exchange and for which market quotations are readily available are valued at
the market price as obtained from one or more of the major market makers. Other
investments and assets are valued at fair value as determined in good faith
under the direction of the Committee. Prudential supervises and retains
responsibility for such appraisals under the direction of the VCA-11 Committee.

The proceeds from sales of VCA-11's assets generally will vary inversely to
changes in interest rates. If interest rates increase after a security is
purchased, the security, if sold, may return less than its cost.

The procedures for computing the net asset value of Fund shares are described in
the accompanying Fund Prospectus.

MANAGEMENT

The operations of VCA-10 and VCA-11 are conducted under the general supervision
of each Account's Committee and in accordance with each Account's Rules and
Regulations. The members of each Account's Committee are elected for indefinite
terms by the Participants in that Account and by any other persons who may have
voting rights in respect of the Account. See "Voting Rights," page 32. A
majority of the Committee members are not "interested persons" of Prudential or
of the Accounts, as defined in the 1940 Act. Information about the Fund's Board
of Directors is provided in the accompanying Prospectus of the Fund and its
Statement of Additional Information.

Prudential serves as the investment manager of the Accounts and the Fund under
separate investment management agreements with each of them. Subject to
Prudential's supervision, all of the investment management services provided by
Prudential are furnished by its wholly-owned subsidiary, The Prudential
Investment Corporation ("PIC"). Prudential continues to have responsibility for
all investment advisory services under its investment management agreements with
the Accounts and the Fund. Pursuant to a service agreement between Prudential
and PIC, Prudential reimburses PIC for its costs and expenses. PIC is registered
as an investment adviser under the Investment Advisers Actof 1940.

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

Prudential is also responsible for the Accounts' administrative and
recordkeeping functions and pays the expenses associated with them. Information
about the administrative, recordkeeping and other expenses of the Fund appears
in the accompanying Fund prospectus, and in the Fund's Statement of Additional
Information.

An affiliated broker may be employed to execute brokerage transactions on behalf
of VCA-10 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 during a comparable period of time. For a more
complete description see the section "Portfolio brokerage and related practices"
in the Statement of Additional Information.

CHARGES

No deduction is made from contributions to VCA-10, VCA-11 or any Subaccount of
VCA-24 at the time they are made. Accordingly, one hundred percent (100%) of
those contributions is invested in the program. Certain charges, described
below, are imposed upon withdrawal of all or part of the contributions made on
behalf of Participants, or upon each Participant's Accumulation Account in the
Program.

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<PAGE>

Deferred Sales Charge

PIMS performs certain sales and distribution functions regarding the Contracts.
In consideration for these services, a deferred sales charge which is designed
to cover expenses relating to sales of the Contracts, including commissions, may
be imposed upon contributions withdrawn by a Participant. To the extent the
deferred sales charge does not repay these expenses, the difference will be made
up from Prudential's surplus held in its general account. The amount of the
deferred sales charge imposed upon any withdrawal depends upon the number of
years of a Participant's participation in a MEDLEY Program, the year in which
the withdrawal is made, and the kind of retirement arrangement that covers the
Participant.

Participation in a Program begins upon the date when the first contribution on
behalf of the Participant under a Contract described in this Prospectus, a
Companion Contract, the fixed rate option, mutual fund, or other investment
options made available by Prudential along with enrollment information in a form
satisfactory to Prudential, is received by Prudential in good order. Such
participation ends on the date when all of the Participant's Accumulation
Accounts under the Program are cancelled. In the event of such cancellation, and
a subsequent contribution, Prudential reserves the right to credit the
Participant as having participated in the Program for a limited time (currently
about one year) for the purposes of calculating any deferred sales charge on the
withdrawal of any future contributions.

The chart below describes the maximum amount of the deferred sales charge.

DEFERRED SALES
CHARGE, AS A
YEARS OF PERCENTAGE OF
PROGRAM CONTRIBUTIONS
PARTICIPATION WITHDRAWN
------------- -----------
up to 1 year ............................ 7%
1 year up to 2 years .................... 6%
2 years up to 3 years ................... 5%
3 years up to 4 years ................... 4%
4 years up to 5 years ................... 3%
5 years up to 6 years ................... 2%
6 years up to 7 years ................... 1%
7 years and after ....................... 0%

Although some Contracts may provide for higher sales charges, Prudential has
determined to limit sales charges on all Contracts to the above schedule. If a
Participant makes a withdrawal on an anniversary date of his Program
participation, any applicable deferred sales charge will be based on the longer
period of Program participation.

The proceeds received by a Participant upon any partial or full withdrawal will
be reduced by the amount of any deferred sales charge.

Lower deferred sales charges may be imposed under certain Contracts. See
"Modification of Charges," page 18.

Limitations on Sales Charges

No deferred sales charge is imposed upon contributions withdrawn to purchase an
annuity under a Contract, to provide a death benefit, pursuant to a systematic
withdrawal plan, to provide a minimum distribution payment, or in cases of
financial hardship or disability retirement as determined pursuant to provisions
of the employer's retirement arrangement. Further, for all plans other than
IRAs, no deferred sales charge is imposed upon contributions withdrawn due to
resignation or retirement by the Participant or termination of the Participant
by the Contract-holder. In addition, no deferred sales charge is imposed upon
contributions withdrawn for any reason after seven years of participation in a
Program.

Contributions transferred among VCA-10, VCA-11, the Subaccounts of VCA-24, a
Companion Contract, and the fixed rate option of a Combination Contract are
considered to be withdrawals from the Account or Subaccount from which the
transfer is made, but no deferred sales charge is imposed upon them. They will,
however, be considered as contributions to the receiving Account or Subaccount
for purposes of calculating any deferred sales charge imposed upon their
subsequent withdrawal from it.

Loans are considered to be withdrawals from the Account or Subaccount from which
the loan amount was deducted but are not considered a withdrawal from the
Program. Therefore, no deferred sales charge is imposed upon them. The principal
portion of any loan repayment, however, will be treated as a contribution to the
receiving Account or Subaccount for purposes of calculating any deferred sales
charge imposed upon any subsequent withdrawal. If the Participant defaults on
the loan by, for example, failing to make required payments, the outstanding
balance of the loan will be treated as a withdrawal for purposes of the deferred
sales charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount was
withdrawn. If sufficient funds do not remain in those Accumulation Accounts, the
deferred sales charge will be withdrawn from the Participant's other
Accumulation Accounts as well.

Withdrawals, transfers and loans from VCA-10, VCA-11 and each Subaccount of
VCA-24 are considered to be withdrawals of contributions until all of the
Participant's contributions to the Account or Subaccount have been withdrawn,
transferred or borrowed. No deferred sales charge is imposed upon withdrawals of
any amount in excess of contributions.

Annual Account Charge

An annual account charge for recordkeeping and other administrative services is
deducted from each Participant's Accumulation Account in the Program. This
annual

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<PAGE>

account charge is payable to Prudential and is made on the last business day of
each calendar year as long as the Participant still has an Accumulation Account
under the Program. The annual account charge will be pro rated for new
Participants for the first year of their participation, based on the number of
full months remaining in the calendar year after the first contribution is
received. If all of the Participant's Accumulation Accounts are cancelled before
the end of the year, the charge will be made on the date the last Accumulation
Account is cancelled (and the charge will not be pro rated if this occurs during
the year in which the first contribution is made to such Account). The annual
account charge will not be made, however, upon the cancellation of a
Participant's Accumulation Account to purchase an annuity under a Contract if
the annuity becomes effective on January 1 of any year. After a cancellation,
the Participant may again participate in the Program only as a new Participant
and will be subject to a new annual account charge. Also, the annual account
charge will not be made if the Participant's employer has chosen to pay the
charge.

The aggregate annual account charge with respect to a Participant's Accumulation
Accounts will not be greater than $30. The charge will first be made against a
Participant's Accumulation Account under a fixed-dollar Companion Contract or
fixed rate option of a Combination Contract. If the Participant has no
Accumulation Account under a Companion Contract or the fixed rate option, or if
that Accumulation Account is too small to pay the charge, the charge will be
made against the Participant's Accumulation Account in VCA-11. If the
Participant has no VCA-11 Accumulation Account, or if that Account is too small
to pay the charge, the charge will then be made against the Participant's VCA-10
Accumulation Account. If the Participant has no VCA-10 Accumulation Account, or
if it is too small to pay the charge, the charge will then be made against any
one or more of the Participant's Accumulation Accounts in VCA-24.

The cash positions of VCA-10, VCA-11 and the Subaccounts of VCA-24 are expected
to be sufficient to cover such part of the charge that is collected from them.
Accordingly, that collection should have no adverse financial effect on any
Account or Subaccount.

Charge for Administrative Expenses and
Investment Management Services

A daily charge is made which is equal to an effective annual rate of 1.00% of
the net asset value of VCA-10 and VCA-11. Three quarters of this charge (0.75%)
is for administrative expenses not covered by the annual account charge, and one
quarter (0.25%) is for investment management. A daily charge is also made which
is equal to an effective annual rate of 0.75% of the net asset value of each
Subaccount of VCA-24. All of this charge is for administrative expenses not
covered by the annual account charge. These charges are payable to Prudential
and are reflected in the computation of the value of the Units in each Account
and Subaccount. See "The Unit Value," page 20. It should be noted that because
the administrative charge of 0.75% is a charge based on a percentage of assets
in an Account, there is no necessary relationship between this administrative
charge and the amount of expenses attributable to a particular Contract or
Participant.

Prudential makes daily charges for providing investment management of the Fund
Portfolios at the following effective annual rates: 0.35% of the average daily
net assets of the Stock Index Portfolio, 0.40% of the average daily net assets
of the Diversified Bond Portfolio and Government Income Portfolio, 0.45% of the
average daily net assets of the Equity Portfolio, 0.55% of the average daily net
assets of the Conservative Balanced Portfolio, 0.60% of the average daily net
assets of the Flexible Managed Portfolio and 0.75% of the average daily net
assets of the Global Portfolio. Other expenses incurred by the Fund include
costs of Portfolio transactions, legal and accounting expenses, and the fees of
the Fund's custodian and transfer agent. Further detail is provided in the
accompanying Prospectus for the Fund and its Statement of Additional
Information.

Modification of Charges

Prudential may impose deferred sales charges and annual account charges lower
than those described above with respect to Participants under certain Contracts.
These lower charges will reflect Prudential's anticipation that lower sales or
administrative costs will be incurred, or less sales or administrative services
will be performed, with respect to such Contracts due to economies arising from
(1) the utilization of mass enrollment procedures or (2) the performance of
recordkeeping or sales functions, which Prudential would otherwise be required
to perform, by the Contract-holder, an employee organization, or by a third
party on their behalf or (3) an accumulated surplus of charges over expenses
under a particular Contract. Generally, the deferred sales charge is lowered or
waived depending on the amount of local service the Contract-holder requires. In
addition, the deferred sales charge may be lowered if required by state law. The
exact amount of the deferred sales charge and annual account charge applicable
to Participants under any given Contract will be stated in the Contract.

Prudential may change the deferred sales charge, the annual account charge and
the charge of 0.75% for administrative expenses. See "Changes in the Contracts,"
page 29.

THE CONTRACTS

Prudential generally issues the Contracts to employers whose employees may
become Participants. Under an IRA, a Participant's spouse may also become a
Participant. Sometimes a Contract is issued to an association

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that represents employers of employees who become Participants, sometimes to an
association whose members become Participants and sometimes to a trustee of a
trust with participating employers whose employees become Participants. Even
though an employer, an association or a trustee is the Contract-holder, the
Contract normally provides that Participants shall have the rights and interests
under them that are described in this Prospectus. But this is not always true.
For example, prior to 1996, Section 457 of the Internal Revenue Code required
that a Contract issued in connection with a plan under that section provide that
all rights under the Contract are owned by the employer to whom, or on whose
behalf, the Contract is issued. The Section also required that the Contract
provide that all amounts are payable to the employer and that the employee has
no rights or interests under the Contract, including any right or interest in
the Accumulation Account established in his name except as provided in the plan.
In 1996, however, Congress amended Section 457 to require that all plan assets
be held for the exclusive benefit of Participants and their beneficiaries. For
plans existing on the date of enactment in 1996, that new requirement need not
be implemented until January 1, 1999. Thus, Participants under 457 Contracts
should consult their employer's plan to determine what rights they have under
their particular plan. Certain Contracts issued in connection with non-qualified
arrangements may place all rights and interests in the employer, not the
employee.

Also, a particular plan, even if it is not a deferred compensation plan, may
limit a Participant's exercise of certain rights under a Contract. Participants
should check the provisions of their employer's plan or any agreements with the
employer to see if there are any such limitations and, if so, what they are.
Prudential may issue the Non-Qualified Combination Contract to cover individuals
who are not associated with a single employer or other organization.

THE ACCUMULATION PERIOD

1. Contributions; Crediting Units; Enrollment Forms; Deduction for
Administrative Expenses.

Contributions to a Program ordinarily will be made periodically
pursuant to a payroll deduction or similar agreement between the
Participant and his employer. Any contributions to an IRA must be in
an amount of no less than $500, except for contributions to an IRA for
a non-working spouse (or working spouse who elects to be treated as a
non-working spouse), which are limited to $250 per year.

A Participant designates what portion of the contributions made on his
behalf should be invested in VCA-10, VCA-11 and in any Subaccount of
VCA-24 (if all three Accounts are part of his employer's Program) or
under a fixed rate option or Companion Contract, if any. The
Participant may change this designation usually by notifying
Prudential at the address shown on the cover page of this Prospectus.
Under certain Contracts, an entity other than Prudential keeps certain
records, and Participants under those Contracts must contact the
record-keeper. See "Modified Procedures," page 27.

The full amount (100%) of each contribution designated for investment
in VCA-10, VCA-11 or any Subaccount of VCA-24 is credited to an
Accumulation Account maintained for the Participant in that Account or
Subaccount. An Accumulation Account in VCA-10 consists of VCA-10
Units; an Accumulation Account in VCA-11 consists of VCA-11 Units; an
Accumulation Account in a Subaccount of VCA-24 consists of Units of
that Subaccount. The number of Units credited to a Participant in an
Account or Subaccount is determined by dividing the amount of the
contribution made on his behalf to that Account or Subaccount by the
Account's or Subaccount's Unit Value for the business day on which the
contribution is received at the address shown on the cover page of
this Prospectus. A business day is 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-10, VCA-11, or a Subaccount of VCA-24 no later than two business
days after it is received by Prudential and identified as being for
investment in VCA-10, VCA-11, or a Subaccount of VCA-24, if it is
preceded or accompanied by satisfactory enrollment information (i.e.,
good order). 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 to a money market option upon receipt,
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 within the MEDLEY
Program, or purchases such contracts together with either a group
variable annuity contract issued through The Prudential Variable
Contract Account-2 or unaffiliated mutual funds, then contributions
that are not preceded or accompanied by satisfactory enrollment
information will be invested in the VCA-11 money market option. If the
Contract-holder purchases contracts that are within the MEDLEY Program
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

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<PAGE>

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. 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 VCA-10 Units, VCA-11 Units or Units of a particular
Subaccount of VCA-24 credited to a Participant will not be affected by
any subsequent change in the value of those Units, but the dollar
value of a Unit will vary from business day to business day depending
upon the investment experience of the Account or Subaccount. The
number of Units credited to a Participant in an Account or Subaccount
will be reduced as the result of the annual account charge. That
charge will be made by cancelling the number of Units that is equal to
the amount of the charge (see "Annual Account Charge," page 17)
divided by the Unit Value for the business day on which the charge is
made.

2. Valuation of a Participant's Account

The value of a Participant's Accumulation Account in VCA-10, VCA-11 or
in a Subaccount of VCA-24 on any particular day is determined by
multiplying the total number of Units then to the Participant's credit
in the Account or Subaccount by the Account's or Subaccount's Unit
Value on that day.

3. The Unit Value

On November 4, 1982, the date of the first Participant contribution to
VCA-10, the Unit Value for VCA-10 was set at $1.00. On November 8,
1982, the date of the first Participant contribution to VCA-11, the
Unit Value for VCA-11 was set at $1.00. The Unit Value for each
Subaccount of VCA-24 was set at $1.00 on the date of commencement of
operations of that Subaccount.

The Unit Value will be determined each business day by multiplying the
previous day's Unit Value by the gross change factor for the current
business day and reducing this amount by the daily equivalent of the
applicable investment management and administrative fees. The gross
change factor for VCA-10 and VCA-11 is determined by dividing the
current day's net assets, ignoring changes resulting from new purchase
payments and withdrawals, by the previous day's net assets. The gross
change factor for each Subaccount of VCA-24 is determined by dividing
the current day's net asset value per share of the applicable
Portfolio of the Fund by the previous day's net value per share.

4. Withdrawal (Redemption) of Contributions.

The Internal Revenue Code imposes restrictions on withdrawals from
tax-deferred annuities subject to Section 403(b) of the Code. Pursuant
to Section 403(b)(11) of the Code, amounts attributable to a
Participant's salary reduction contributions (including the earnings
thereon) that are made under a tax-deferred annuity after December 31,
1988 can only be withdrawn (redeemed) when the Participant attains age
591 @2, separates from service with his employer, dies or becomes
disabled (within the meaning of Section 72(m)(7) of the Code).
However, the Code permits the withdrawal at any time of amounts
attributable to tax-deferred annuity salary reduction contributions
(excluding the earnings thereon) that are made after December 31,
1988, in the case of a hardship. If the retirement arrangement under
which a Participant is covered contains a financial hardship
provision, withdrawals can be made in the event of the hardship.

Furthermore, subject to any restrictions upon withdrawals contained in
the tax-deferred annuity arrangement under which a Participant is
covered, a Participant can withdraw at any time all or part of his
interest in his Accumulation Account(s) as of December 31, 1988.
Amounts earned after December 31, 1988 on the December 31, 1988
balance in a Participant's Accumulation Account(s) 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 tax-deferred annuity arrangement under which a Participant is
covered, a Participant can continue to make transfers of all or part
of his interest in his Accumulation Account(s) among the available
investment options offered by the Prudential and can transfer directly
all or part of his interest in his Accumulation Account(s) to a
Section 403(b) tax-deferred annuity contract of another insurance
companyor to a mutual fund custodial account under Section 403(b)(7).
See "Transfer Payments," page 24.

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<PAGE>

Unless restricted by the tax-deferred annuity arrangement under which
he is covered, a Participant may withdraw at any time all or part of
his interest in his Accumulation Account(s) that is attributable to
employer contributions or after-tax Participant contributions, if any.

With respect to retirement arrangements other than tax-deferred
annuities subject to Section 403(b) of the Code (e.g., Code Section457
plans) a Participant's right to withdraw at any time all or part of
his interest in VCA-10, VCA-11 or any Subaccount of VCA-24 may be
restricted by the retirement arrangement under which he is covered.
For example, Code Section 457 plans typically permit withdrawals only
upon attainment of age 701/2, separation from service, or for
unforeseeable emergencies.

Withdrawal requests should be submitted to Prudential in the manner
set out in the Summary section of this prospectus or, if required by
the Contract, another entity providing record-keeping services. See
"Modified Procedures," page 27. Under certain Contracts, the amount
withdrawn from an Account or Subaccount as a minimum distribution
payment must be at least $250 or, if less, equal to the full value of
the Participant's interest in the Account or Subaccount. The amount
withdrawn will be reduced by any deferred sales charge that may apply.
See "Deferred Sales Charge," page 17. If a Participant withdraws the
value of all of his Accumulation Accounts under a Program, the full
annual account charge will be deducted at that time that would
otherwise have been deducted at the end of the calendar year and those
Accumulation Accounts will be cancelled. The resulting amount will be
paid within seven days after the request for the withdrawal has been
received in a manner prescribed by Prudential, except as deferment of
such payment may be permitted under the provisions of the 1940 Act in
effect from time to time. Currently, deferment is permissible only
when the New York Stock Exchange is closed or trading is restricted,
when an emergency exists as a result of which disposal of the
securities held in the Account or Subaccount involved is not
reasonably practicable or it is not reasonably practicable to
determine fairly the value of the Account's or Subaccount's assets, or
when the Securities and Exchange Commission has provided for such
deferment for the protection of Participants. As of the day a
withdrawal request is received by Prudential, the Participant's
Accumulation Account in VCA-10, VCA-11 or any Subaccount of VCA-24, as
the case may be, will be reduced by the lesser of the number of Units
obtained by dividing the amount of the Participant's withdrawal
request by the Unit Value for that day, or the number of Units
remaining in the Accumulation Account.

Under certain types of retirement arrangements, the Retirement Equity
Act of 1984 requires that in the case of a married Participant,
certain withdrawal requests 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.

Under certain Contracts, withdrawals may be made to pay expenses of
the plan.

Prudential may process a withdrawal from a Participant's Accumulation
Account if Prudential determines that the Participant's contributions
exceed the amount permitted by the Internal Revenue Code.

A withdrawal will generally have federal income tax consequences,
which can include tax penalties. See "Federal Tax Status," pages
30-32.

5. Systematic Withdrawal Plan

If permitted by the Internal Revenue Code and the retirement
arrangement 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(s). A Participant may arrange for systematic withdrawals only
if, at the time he elects to have such an arrangement, the sum of the
balance(s) in his Accumulation Account(s) 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.

Federal income tax provisions applicable to the retirement arrangement
under which a Participant is covered may significantly affect the
availability of systematic withdrawals, how they may be made, and the
consequences of making them. Withdrawals by Participants are generally
taxable and Participants who have not reached age 59 1/2 may incur
substantial tax penalties. Withdrawals made after a Participant has
attained age 70 1/2 (or, in the case of Participants in Section 403(b)
annuity plans and certain governmental or church plans who retire
after age 70 1/2, after the Participant has retired) and by
beneficiaries must satisfy certain minimum distribution rules. See
"Federal Tax Status," pages 30-32.

Systematic withdrawals may be arranged only pursuant to an election on
a form approved by Prudential. Under certain types of retirement
arrangements, an election to arrange for systematic withdrawals by a
married Participant must

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<PAGE>

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 shall 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 shall continue until the Participant has withdrawn all of
the balances in his Accumulation Account(s) or has instructed
Prudential in writing to terminate his systematic withdrawal
arrangement. The Participant may elect to make systematic withdrawals
in equal dollar amounts, 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 balances then
in the Participant's Accumulation Account(s) divided by the number of
systematic withdrawals remaining to be made during the withdrawal
period.

Systematic withdrawals shall be taken first out of the Participant's
Accumulation Account, if any, in the Companion Contract or the fixed
rate option until that Accumulation Account is exhausted. Thereafter,
systematic withdrawals will be takenin order from the Participant's
Accumulation Account(s) (until each is exhausted), in VCA-11, VCA-10,
the VCA-24 Equity Subaccount, the VCA-24 Diversified Bond Subaccount,
the VCA-24 Conservative Balanced Subaccount, the VCA-24 Flexible
Managed Subaccount, the VCA-24 Stock Index Subaccount, the VCA-24
Government Income Subaccount, and the VCA-24 Global Subaccount.
(Special exceptions may be made at the discretion of Prudential.)

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 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 again make them until the next calendar year and
may be subject to federal tax consequences as a result thereof.

An arrangement to make systematic withdrawals will not affect any of
the Participant's other rights under the Contracts, including the
right tomake withdrawals (redemptions) described on page20 of this
Prospectus, the right to make transfers described on page 24, and the
right to purchase a fixed dollar annuity described on page 28.

No deferred sales charge is imposed upon systematic withdrawals made
pursuant to an arrangement elected as described above; provided,
however, that Prudential reserves the right to apply a deferred sales
charge on systematic withdrawals where payments are made for less than
three years. Furthermore, a Participant who is receiving systematic
withdrawals and is over the age of 59 1/2 may make one additional,
non-systematic, withdrawal during each calendar year in an amount that
does not exceed 10% of the sum of the balances in his Accumulation
Account(s) and no deferred sales charge shall be imposed upon such
withdrawal. This additional withdrawal may be made from any of the
Participant's Accumulation Account(s), as the Participant may elect.
Different procedures may apply for Contracts under which an entity
other than Prudential provides record-keeping services. See "Modified
Procedures," page 27.

6. 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 will be credited to the Participant's individual
Accumulation Accounts. 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 Units
purchased for his account with Texas' contributions. If the
Participant does not commence his second year of Texas Program
participation, the value of those Units representing Texas'
contribution will be withdrawn and 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
benefits 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.

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<PAGE>

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.

7. Death Benefits

Upon receipt by Prudential of due proof of a Participant's death and a
claim and payment election submitted on a form approved by Prudential,
a death benefit made up of the balancein the Participant's
Accumulation Accounts(after deduction of the annual account charge and
calculated, insofar as Accumulation Accounts in VCA-10, VCA-11 and the
Subaccounts of VCA-24 are concerned, as the product of the Unit Value
for the business day on which Prudential receives due proof of the
Participant's death and other necessary forms multiplied by the number
of Units then credited to the Participant's Accumulation Account) will
be payable to his designated beneficiary. The appropriate address to
which a death benefit claim should be sent is set out in the Summary
section of this Prospectus. For certain Contracts a death benefit
claim should be sent to a designated record-keeper rather than
Prudential. See "Modified Procedures," page 27.

The death benefit will be paid in one sum as if it were a single
withdrawal, as systematic withdrawals, as an annuity, or a combination
of the three, as the Participant may have directed subject to the
minimum distribution rules of Code Section 401(a)(9) as described
below under "Federal Tax Status." If the Participant has not so
directed, the beneficiary may, within any time limit prescribed by or
for the retirement arrangement that covered the Participant, elect:

a. to receive a one-sum cash payment;

b. to have a fixed-dollar annuity purchased under the Contract on a
specified date, using the same annuity purchase rate basis that
would have applied if the Participant's account were being used
to purchase an 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)

Unless the Participant has elected otherwise, or it is prohibited
under the applicable retirement arrangement, the beneficiary may elect
(within one year after the Participant's death) to use at one time the
entire balance in any one or more of the Participant's Accumulation
Accounts to receive a one-sum cash payment. In such event, Prudential
will add to the death benefit, if necessary, so that with respect to
each Accumulation Account from which such cash payment is made, the
total made available to the beneficiary will not be less than the
contributions to such Accumulation Account minus any withdrawals or
transfers affecting such Accumulation Account and minus the annual
account charge, if any. Certain Contracts may provide a higher amount.

Under certain types of retirement arrangements, 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 retirement arrangement 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, contain the
signatures of the Participant and spouse and must be notarized or
witnessedby an authorized plan representative. Unless the spouse of a
Participant in a Plan which is subject to these requirements properly
consents to the waiver of the benefit, 50% of the balance in all of
the Participant's Accumulation Accounts will be paid to such spouse
even if the designated beneficiary is someone other than the spouse.
Under these circumstances, the remaining50% would be paid to
Participant's designated beneficiary.

Unless the retirement arrangement that covered the Participant
provides otherwise, a beneficiary who elects to have a fixed-dollar
annuity purchased for himself may choose from among the available
forms of annuity. See "Available Forms of Annuity," page28. The
beneficiary may elect to purchase an annuity immediately or at a
future date. If an election includes systematic withdrawals, the
beneficiary will have the right to terminate such withdrawals and
receive the remain-ing balance in the Participant's Accumulation
Accounts in cash (or effect an annuity with it), or to change the
frequency, size or duration of such withdrawals, subject to the
minimum distribution rules. (See "Federal Tax Status" on pages 30-32).
If the beneficiary fails to make any election within any time limit
prescribed by or for the retirement arrangement that covered the
Participant, within seven days after the expiration of that time
limit, a

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<PAGE>

one-sum cash payment will be made to the beneficiary, after deduction
of the annual account charge. A specific contract may provide that an
annuity is payable to the beneficiary if the beneficiary fails to make
an election.

Until a death benefit is paid that results in reducing to zero the
balance in all of the Participant's Accumulation Accounts under a
Program, those Accounts will be maintained for the beneficiary in the
same manner as they had been for the Participant, except (i) the
beneficiary may make no contributions (ii) no loans may be taken
and(iii) no deferred sales charge will be imposedupon withdrawals.

8. Discontinuance of Contributions

Contributions on behalf of all Participants under a Contract or for
all Participants of an employer covered under a Contract may be
discontinued upon notice by the Contract-holder to Prudential.
Contributions under the Contract will also be discontinued for all
Participants covered by a retirement arrangement that is terminated.

On at least 60 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 a Contract. (Some
Contracts require 90 days' advance notice.)

The discontinuance of contributions on a Participant's behalf does not
otherwise affect his rights under the Contracts. He may make
withdrawals from his Accumulation Account--for transfer, for the
purchase of an annuity or for any other purpose--just as if
contributions were still being made for him. However, if contributions
under a Program are not made for a Participant for a specified period
of time (24 months in certain states, 36 months in others) and the
total value of his Accumulation Accounts is at or below a specified
amount ($1,000 in certain states, $2,000 in others), Prudential may
elect to cancel those Accumulation Accounts unless prohibited by the
retirement arrangement, and pay the Participant their value (less the
annual account charge) as of the date of cancellation.

9. Transfer Payments

a. Unless restricted by the retirement arrangement under which a
Participant is covered, upon the receipt by Prudential of a duly
completed written transfer request form or properly authorized
telephone transfer request, all or a portion of the Participant's
Accumulation Account in VCA-10, VCA-11, or in any Subaccount of
VCA-24 will be transferred to another Account or Subaccount,
fixed rate option or to a Companion Contract that covers him.
There is no minimum transfer amount. As of the day the transfer
request is received, the Participant's Accumulation Account in
the Account or Subaccount from which the transfer is made will be
reduced by the number of Units obtained by dividing the amount to
be transferred by the Unit Value for that day. If the transfer is
made to another Account or Subaccount as of the same day, the
number of Units credited to the Participant in that Account or
Subaccount will be increased by means of a similar calculation.
Prudential reserves the right to limit the frequency of these
transfers. All transfers are subject to the terms and conditions
set forth in this Prospectus and in the Contract(s) covering a
Participant. For example, many Contracts may preclude transfers
from the Companion Contract or fixed rate option into non-equity
investment options that are defined in the Contract as
"competing" with the general account options in investment
characteristics. If such transfers are precluded, the Contract
will further require that amounts transferred from the Companion
Contract or fixed rate option into non-competing investment
options such as a stock fund may not for 90 days thereafter be
transferred into a "competing" option.

Different procedures may apply for Contracts under which an
entity other than Prudential provides record-keeping services.
See "Modified Procedures," page 27. Although there is presently
no charge for transfers, Prudential reserves the right to impose
such chargesin the future.

b. A Contract may include a provision that, upon discontinuance of
contributions for all Participants under the Contract or for all
Participants of an employer covered under a Contract (see
"Discontinuance of Contributions," above), the Contract-holder
may request Prudential to make transfer payments from VCA-10,
VCA-11 or any Subaccount of VCA-24 to a designated alternate
funding agency. If the Contract is used in connection with
certain non-qualified annuity arrangements, certain tax-deferred
annuities subject to Section 403(b) of the Code, or with IRAs,
Prudential will promptly notify each Participant and each
beneficiary of a deceased Participant for whom an Accumulation
Account remains in force under the Contract-holder's Program that
such a request has been received. Within thirty days of receipt
of such notice, each recipient may elect in writing on a form
approved by Prudential to have his Account in VCA-10, VCA-11 or
any Subaccount of VCA-24, transferred to the alternate funding
agency. If he does not so elect, his Accounts will continue in
force under the Contract. The

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<PAGE>

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.
The product ofthe Units in the Participant's Accumulation
Accounts immediately prior to cancellation and the appropriate
Unit Value on the transfer date, less the applicable deferred
sales and annual account charges, will be transferred to the
designated funding agency in cash, securities held in VCA-10 and
VCA-11, or both.

c. Contributions may be discontinued for all Participants under a
Contract or for all Participants of an employer covered under the
Contract used in connection with a deferred compensation plan
subject to Section 457 of the Code due to certain circumstances,
such as a change in any law or regulation, which would have an
adverse effect on Prudential in fulfilling the terms of the
Contract. If contributions are so discontinued, Prudential may
initiate transfer payments from VCA-10, VCA-11 or any Subaccount
of VCA-24 to an alternate funding agency. The transfer would be
made as described in paragraph b. above.

Under certain types of retirement arrangements, the Retirement
Equity Act of 1984 requires that in the case of a married
Participant, certain requests for transfer payments (other than
those described in paragraph a. above) must include the consent
of theParticipant and spouse and must benotarized or witnessed by
an authorized plan representative.

10. 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 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 personal identification number or other identifying
information. A written confirmation of a transfer will be sent to the
Participant. Neither the Accounts nor their 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 Accounts are designed to minimize unauthorized
exercise of these privileges. During times of extraordinary economic
or market changes, telephone privileges or telecopied instructions may
be difficult to implement.

11. Exchange Offer Into MEDLEY from VCA-2

Certain Contract-holders in The Prudential Variable Contract Account-2
("VCA-2") may be offered an opportunity to exchange their retirement
program's investment in VCA-2 for Units of VCA-10, VCA-11 or the
Subaccounts of VCA-24.

Participants in plans of VCA-2 Contract-holders that accept this
exchange offer have the option of exchanging their interests in VCA-2
for interests in VCA-10 and VCA-11 or any of the Subaccounts of
VCA-24. In such an exchange, any years of participation credited to
those VCA-2 Participants under VCA-2 contracts will be counted as
years of MEDLEY Program participation. In addition, no deferred sales
charge will be applied to withdrawals from VCA-10, VCA-11 or the
Subaccounts of VCA-24 until a Participant has withdrawn an amount of
contributions equal to the amount transferred from VCA-2.

12. 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 MEDLEY 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 elects 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 variable investment accounts (under VCA-10, VCA-11 or
VCA-24) for shares of the PMF Funds without the imposition of the
deferred sales charge that may otherwise be applicable to withdrawals
from those accounts under the MEDLEY Program (a "MEDLEY-to-PMF
Exchange"). In addition, Prudential may permit Participants to
exchange any or all amounts in their PMF Fund accounts to VCA-10,
VCA-11 or VCA-24 (a "PMF-to-MEDLEY Exchange"). No sales charge or
other transaction charge is imposed at the time of a MEDLEY-to-PMF
Exchange or a PMF-to-MEDLEY Exchange. No deferred sales load will be
imposed on the subsequent withdrawal of interests in VCA-10, VCA-11 or
VCA-24 acquired in a PMF-to-MEDLEY Exchange.

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Prudential will determine the time periods for which any exchange
offer will be available. Prudential may, for example, establish fixed
periods of time for exchanges under a particular Contract (an "open
window"). Prudential will advise each Contract-holder of the timing of
their particular open window, but all such open windows will be for at
least 60 days. Furthermore, any open-ended exchange offer will not be
terminated without 60 days prior notice to the Contract-holder. If a
Participant does not elect to exchange Units of an Account for PMF
Funds shares during an open window, the Participant may subsequently
transfer from an Account to PMF Funds only amounts that are not
subject to the deferred sales charge. This exchange offer is subject
to termination and its terms are subject to change.

If a Participant exchanges all the MEDLEY Program accounts for shares
of PMF Funds, the annual account charge, which is assessed at the end
of each calendar year, may be deducted from the Participant's PMF Fund
account(s).

Before deciding whether to exchange any or all of their existing
MEDLEY accounts 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,
such as a minimum death benefit or certain annuity-related provisions,
as they do under the MEDLEY Program.

In Prudential's opinion, there should be no adverse tax consequences
if a Participant in a qualified retirement arrangement, in a deferred
compensation plan under Section 457 or in an individual retirement
annuity under Section 408 of the Internal Revenue Code elects to
exchange amounts in the Participant's current MEDLEY account(s) for
shares of PMF Funds or vice versa.

Furthermore, for 403(b) plans, MEDLEY-to-PMF Exchanges will be
effected from a 403(b) annuity contract (Tax Deferred Annuity funds
under the MEDLEY Program) 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-MEDLEY 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, 403(b) Participants
should be aware that the Code may impose more restrictive rules on
early withdrawals from Section 403(b)(7) custodial accounts under the
PMF Funds than under the MEDLEY Program.

Prudential does not intend to extend this exchange offer out of MEDLEY
to Participants under any Non-Qualified Combination Contract issued to
a plan covering employees that share a common employer or are
otherwise associated. Any MEDLEY Contract that is held under a
non-qualified arrangement is subject to taxation as an annuity
Contract. Any permitted exchange of amounts under such MEDLEY Contract
to shares of PMF Funds may be treated for tax purposes as a taxable
withdrawal up to the amount of the investment income earned in the
MEDLEY Contract. In addition, the exchange may constitute a premature
withdrawal that is subject to a 10 percent tax penalty of the amount
exchanged which is includable in income (i.e., the investment earnings
exchanged). However, if the owner of the MEDLEY Contract is not a
natural person and the investment income on the Contract is currently
taxable each year to such owner, there will be no added tax incurred
if such an owner decides to exchange funds from the MEDLEY Contract to
shares of PMF Funds.

Contract-holders and Participants are encouraged to consult a
qualified tax advisor for complete tax information and advice.

13. Loans

The loans described in this Section are generally available to
Participants in 401(a) plans and 403(b) programs. Loans may also be
available to Participants in 457 plans. The interest rate and other
terms and conditions of the loan may vary from program to program. For
plans that are subject to ERISA it is the responsibility of the
program trustee or fiduciary to ensure that the interest rate and
other terms and conditions of the loan comply with all program
qualification requirements including the ERISA regulations. In
addition to the loans described in this section, Participants in
403(b) programs may also be able to obtain loans under their Companion
Contract and should consult their employer or Prudential.

The loans described in this section, which involve the variable
investment options, work as follows. The minimum loan amount is as
specified in the Participant's Program, or if not specified, as
determined by Prudential. The maximum loan amount is the lesser of (a)
$50,000, reduced by the highest outstanding balance of loans during
the one-year period immediately preceding the date of the loan or (b)
50% of the value of the Participant's vested interest in his or her
Accumulation Accounts. In the loan application, the Contract-holder
(or in certain cases, the Partici-

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pant) designates the Accumulation Account(s) from which the loan
amount is deducted. Borrowing, therefore, reduces a Participant's
Accumulation Accounts. To repay the loan, the Participant makes
periodic payments of interest plus a portion of principal. Those
payments are invested in the Accounts or Subaccounts chosen by the
Participant. The Participant's Program may specify the Accumulation
Accounts from which he may borrow and into which repayments may be
invested.

The maximum loan amount referred to above is imposed by federal tax
law. That limit, however, applies to all loans from any qualified
retirement plan of the employer. Since Prudential cannot monitor a
Participant's loan activity relating to other plans offered to
Participants, it is the Participant's responsibility to do so.
Provided that a Participant adheres to these limitations, the loan
will not be treated as a taxable distribution. If, however, the
Participant defaults on the loan by, for example, failing to make
required payments, the defaulted loan amount (as described in loan
disclosure information provided to a borrowing Participant) will be
treated as a taxable distribution and Prudential will send the
appropriate tax information to the Participant and the Internal
Revenue Service. For information as to how the deferred sales charge
applies to loans, see "Deferred Sales Charge," page 17.

Prudential charges a loan application fee of up to $75, which is
deducted from a Participant's Accumulation Accounts at the time the
loan is initiated. Prudential will not accept a personal check as
payment of the loan application fee. Prudential also charges up to $25
per year as a loan maintenance fee for recordkeeping and other
administrative services provided in connection with the loan. This
charge is guaranteed not to increase during the term of any loan. This
annualized loan maintenance charge will be prorated based on the
number of full months that the loan is outstanding and is generally
deducted quarterly. The Accumulation Account from which this charge is
deducted is determined in the same manner as with the annual account
charge. See "Annual Account Charge," page 17.

14. 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 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.

These contracts may have modified deferred sales charges and annual
account charges. See "Modification of Charges," page 18.

THE ANNUITY PERIOD

1. Electing the Annuity Date and the Form of Annuity

Subject to the restrictions on withdrawals from tax-deferred annuities
subject to Section 403(b) of the Code, (see "Withdrawal (Redemption)
of Contributions," page 20), and subject to the provisions of the
retirement arrangement that covers him, a Participant may elect at any
time to have all or a part of his interest in VCA-10, VCA-11 or any
Subaccount of VCA-24 used to purchase a fixed-dollar annuity under the
Contracts. The Contracts do not provide for annuities that vary with
the investment results of VCA-10, VCA-11 or any Subaccount of VCA-24.

Withdrawals from VCA-10, VCA-11 or any Subaccount of VCA-24 that are
used to purchase a fixed-dollar annuity under the Contracts become
part of Prudential's general account, which supports insurance and
annuity obligations. Similarly, amounts allocated to the Companion
Contract or the fixed rate option under a Combination Contract become
part of Prudential's general account. Because of exemptive and
exclusionary provisions, interests in the general account have not
been registered under the Securities Act of 1933 ("1933 Act") nor is
the general account registered as an investment company under the 1940
Act. Accordingly, neither the general account nor any interests
therein are generally subject to the provisions of the 1933 or 1940
Acts and we have been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosures in this
Prospectus which relate to the fixed-dollar annuity that may be
purchased under the Contracts. Disclosures regarding the fixed-dollar
annuity and the general account, however, may be subject to certain
generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of statements made in
prospectuses.

In electing to have an annuity purchased, the Participant may select
from the forms of annuity described below, unless the retirement
arrangement covering him provides otherwise. The annuity is purchased
on the first day of the month following receipt by Prudential of
proper written

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<PAGE>

notice on a form approved by Prudential that the Participant has
elected to have an annuity purchased, or on the first day of any
subsequent month that the Participant designates. The first monthly
annuity payment generally will be made within one month of the date on
which the annuity is purchased.

Under certain types of retirement arrangements, the Retirement Equity
Act of 1984 requires that in the case of a married Participant,
certain elections of payouts which are not qualified joint and
survivor annuities 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 continued after his death
to his spouse, if then living.

If the dollar amount of the first monthly annuity payment is less than
the minimum amount specified in the Contract, Prudential may, at its
option and in lieu of making any annuity payment whatsoever, pay the
person who would receive the annuity a one-sum cash payment in the
amount that would otherwise have been applied to purchase the annuity.

Once annuity payments begin, the annuitant cannot surrender his
annuity benefit and receive a one-sum payment in lieu thereof.

2. Available Forms of Annuity

Option 1--Life annuity with 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 60, 120, 180 or
240 months, as selected by the annuitant), they will be continued
during the remainder of the selected period to his beneficiary.

Option 2--Annuity-certain. This is an immediate annuity payable
monthly for a period-certain which may be 60, 120, 180 or 240 months,
as selected by the annuitant. If the annuitant dies during the
period-certain, payments in the same amount the annuitant was
receiving will be continued to his beneficiary, but no furtherpayments
are payable after the end of the period-certain.

Option 3--Joint and survivor annuity with 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. Until the selected number of
payments certain have been paid, payments made to the contingent
annuitant after the annuitant's death are the same as those the
annuitant was receiving. Thereafter, the payments continued to the
contingent annuitant will be a percentage of the monthly amount paid
to the annuitant such as 33%, 50%, 66% or 100% as selected by the
annuitant (the amounts of each payment made to the annuitant will be
lower as the percentage he selects to be paid to the contingent
annuitant is higher). If both the annuitant and the contingent
annuitant die during the period-certain (which may be 60, 120, 180 or
240 months, as selected by the annuitant), payments will be continued
during the remainder of the period-certain to the properly designated
beneficiary.

Other forms of annuity may be available under the Contracts. The
retirement arrangement under which the Participant is covered may
restrict the forms of annuity that a Participant may elect.

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

3. Purchasing the Annuity

No deferred sales charge is deducted from contributions withdrawn to
purchase an annuity. If, as a result of a withdrawal to purchase an
annuity, all of the Participant's Accumulation Accounts under the
Program are reduced to zero, the full annual account charge is
deducted, unless the annuity becomes effective on January 1 of any
year. The resulting amount, less any applicable taxes on annuity
considerations, is applied to the appropriate annuity purchase rate
determined in accordance with the schedule in the Contract at the time
the annuity is purchased. However, Prudential may determine monthly
payments from schedules of annuity purchase rates providing for larger
payments than the rates shown in the Contract.

The schedule of annuity purchase rates in a Contract is guaranteed by
Prudential for ten years from the date the Contract is issued. If at
any time after a Contract has been in effect for ten years, the
schedule of annuity purchase rates is modified, the modification is
also guaranteed for ten years. A change in the schedule of annuity
purchase rates used for an annuity-certain with 180 payments or less,
as described in Option 2, will apply only to amounts added to a
Participant's Accumulation Account after the date of change. A change
in any other schedule will apply to all amounts in a Participant's
Accumulation Account.

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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.

CHANGES IN THE CONTRACTS

Some Contracts provide that after it has been in effect for two years Prudential
may change the annual account charge and the table of deferred sales charges.
Any change in the table of deferred sales charges generally will apply only to
the withdrawal of those contributions made on or after the date the change takes
effect. For this purpose, contributions shall be deemed to be withdrawn on a
first-in, first-out basis.

Some Contracts also provide that after it has been in effect for five years
Prudential may change the deduction from assets of VCA-10, VCA-11 or any
Subaccount of VCA-24 for administrative expenses, the terms and conditions under
which a deferred sales charge is made, the minimum amount of any contribution to
VCA-10, VCA-11 or any Subaccount of VCA-24 that is made other than on a regular,
periodic basis and the terms and amount of any transfer or withdrawal, provided,
however, that any such change must be permissible under the provisions of the
1940 Act. The changes described in this paragraph will apply to all amounts in
Participants' Accumulation Accounts, whether credited before or after the change
is made.

The changes discussed in the preceding two paragraphs may not become effective
earlier than 90 days after notice of them has been sent to the Contract-holder
and to each person to whom the change applies who has an Accumulation Account
under the Contract, other than persons covered by a Contract used in connection
with deferred compensation plans under Section 457 of the Code and persons
covered by a Contract used in connection with non-qualified annuity
arrangements.

Some Contracts permit the periodic revision of annuity purchase rates. The
Contracts permit Prudential to change the Contract if Prudential deems it
appropriate to conform to the requirements of any law or regulation.

A Contract may be changed at any time by agreement between Prudential and the
Contract-holder; however, no change may be made that adversely affects rights
with respect to annuities purchased before the effective date of the change,
unless the consent of each affected annuitant is obtained.

Prudential reserves the right to substitute the shares of any other registered
investment company for the shares of the Fund held in any of the Subaccounts of
VCA-24. Current law requires approval by the Securities and Exchange Commission
and notification to the holders of the Contracts of any such substitution.
Prudential also reserves the right to operate VCA-24 as a different form of
registered investment company or as an unregistered entity, to transfer the
Contracts to a different separate account, or to discontinue any of the
Subaccounts of the Account, all to the extent permitted by applicablelaw.
Prudential may also amend any Contract to the extent necessary to comply with
any applicable law or regulation.

REPORTS

Participants will be sent, at least annually, reports showing as of a specified
date the number of Units credited to them in VCA-10, VCA-11 and in the
Subaccounts of VCA-24. Each Participant will also be sent semi-annual reports
showing the financial condition of the Accounts and the Subaccounts with their
corresponding Fund Portfolios, and the investments held in each.

If a single individual or company invests in the Fund through more than one
variable insurance contract, then the individual or company will receive only
one copy of each annual and semi-annual report issued by the Fund. However, if
such individual or company wishes to receive multiple copies of any such report,
a request may be made by calling the toll-free telephone number listed on the
cover page of this Prospectus.

PERFORMANCE INFORMATION

Performance information for VCA-10, VCA-11, and the Subaccounts of VCA-24 may
appear in advertising and reports to current and prospective Contract-holders
and Participants. Performance information is based on historical investment
experience of those investment options and does not indicate or represent future
performance.

Total returns are based on the overall dollar or percentage change in value of a
hypothetical investment. Total return quotations reflect changes in unit values
and the deduction of applicable charges.

A cumulative total return reflects performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the performance had
been constant over the entire period.

VCA-11 may also advertise its current and effective yield. Current yield
reflects the income generated by an investment in VCA-11 over a specified
seven-day period. Effective yield is calculated in a similar manner except that
income earned is assumed to be reinvested.

Comparative performance information may from time to time be included in reports
or advertising, including, but not limited to, data from Morningstar, Inc.,
Lipper Analytical Services, Inc., the Standard & Poor's 500 Composite Price
Index, Lehman Brothers indices and other commonly used indices or industry
publications.

See "Performance Information" in the Statement of Additional Information for
recent performance information.

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<PAGE>

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. Accordingly, a
Contract-holder of Prudential participates in the divisible surplus of
Prudential, according to the annual determination of Prudential's Board of
Directors as to the portion, if any, of the divisible surplus which has accrued
on the Contract. In the case of the Contracts described in this Prospectus, any
surplus determined to be payable as a dividend is credited to Participants. 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. There were no
payments of divisible surplus made under the Contracts in 1995 or 1994. In 1996,
payments of divisible surplus were made accordingly: VCA-10 $980,047, VCA-11
$89,828 and VCA-24 $789,747.

FEDERAL TAX STATUS

The following discussion is general in nature. It is not intended as tax advice.
Nor does it consider any applicable state or other tax laws. A qualified tax
adviser should be consulted for complete information and advice.

Taxes on Prudential. The Accounts are not considered separate taxpayers for
purposes of the Internal Revenue Code. As distinguished from most other
registered investment companies--which are separate taxpayers--the earnings of
the Accounts (and Subaccounts) are taxed as part of the income of Prudential. No
charge is being made currently to the Accounts or the Subaccounts for company
federal income taxes. Prudential will review periodically the question of a
charge to the Account or Subaccounts for company federal income taxes
attributable to the Contracts. Such a charge may be made in future years for any
federal income taxes attributable to the Contracts.

Qualified Retirement Arrangements Using the Contracts. The Contracts may be used
in connection with qualified pension and profit sharing plans, plans established
by self-employed persons ("Keogh plans"), simplified employee pension plans
("SEPs"), individual retirement plan accounts ("IRAs"), and retirement programs
for certain persons known as Section 403(b) annuity plans.

The provisions of the Code that apply to the retirement arrangements that may be
funded by the Contracts are complex and Participants are advised to consult a
qualified tax adviser. In general, however, assuming that the requirements and
limitations of the provisions of the Code applicable to the particular type of
plan are adhered to by Participants and employers, contributions made under a
retirement arrangement funded by a Contract are deductible (or not includible in
income) up to certain amounts each year. Further, under the retirement programs
with which the Contracts may be used, Federal income tax currently is not
imposed upon the investment income and realized gains earned by the Accounts and
Subaccounts in which the contributions have been invested until a distribution
or withdrawal is received. When a distribution or withdrawal is received, either
as a lump sum, an annuity or as regular payments in accordance with a systematic
withdrawal arrangement, all or a portion of the distribution or withdrawal is
normally taxable as ordinary income. In some cases, the tax on lump sum
distributions may be limited by a special income-averaging rule. The effect of
Federal income taxation depends largely upon the type of retirement plan and a
generalized description, beyond that given here, is not particularly useful.
Careful review of the provisionsof the Code applicable to the particular type of
planis necessary.

As noted above, withdrawals or distributions are taxable. Furthermore, premature
distributions or withdrawals may be subject to a penalty tax. Participants
contemplating a withdrawal should consult a qualified tax adviser. In addition,
Federal tax laws impose restrictions on withdrawals from Section 403(b)
annuities. See "Withdrawal (Redemption) of Contributions," page 20.
Distributions are subject to certain minimum distributionrequirements.

The Contracts may be used in connection with deferred compensation plans that
meet the requirements of Section 457 of the Code. The tax rules for such plans
involve, among other things, limitations on contributions and minimum
distribution requirements. Tax-exempt organizations or governmental employers
considering the use of the Contracts to fund or otherwise provide deferred
compensation to their employees should consult with a qualified tax adviser
concerning the applicability of Section 457 to their plans as well as the
specific requirements. Reference is also made to the discussion below of Section
72(u) of the Code which may be applicable in certain circumstances.

Subject to the exceptions discussed below with respect to Section 403(b) annuity
plans and certain governmental or church plans, distributions from IRAs,
qualified retirement arrangements and deferred compensation plans that meet the
requirements of Section 457 of the Code must begin by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2.
Distributions from a Section 403(b) annuity plan attributable to benefits
accruing after December 31, 1986 and distributions from certain governmental or
church plans and qualified retirement arrangements must begin by April 1 of the
calendar year following the later of (i) the calendar year in which the
Participant attains age 70 1/2 or (ii) the calendar year in which the
Participant retires. In any case, distributions that are made after this
required beginning date generally must be made in the form of an annuity for the
life of the Participant or the lives of the Participant and his designated
beneficiary, or over a period that is not longer than the life expectancy of the
Participant or the life expectancies of the Participant and his designated
beneficiary.

Distributions to beneficiaries are also subject to minimum distribution rules.
If a Participant dies before his entire

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<PAGE>

interest in his Accumulation Account(s) has been distributed, his remaining
interest must be distributed at least as rapidly as under the method of
distribution being usedas of the date of death. If the Participant dies before
distributions have begun (or are treated as having begun) the entire interest in
his Accumulation Accounts mustbe 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 dies and continuing for
the beneficiary's life or a period not exceeding the beneficiary's life
expectancy (except that with respect to distributions from a deferred
compensation plan subject to Section 457 of the Code, such period cannot exceed
15 years). Special rules apply to the spouse of a deceased Participant.

In addition to the above rules, with respect to a deferred compensation plan
subject to Section 457 of the Code, any distribution that is payable over a
period of more than one year can only be made in substantially non-increasing
amounts no less frequently than annually.

An excise tax applies to Participants or beneficiaries who fail to take the
minimum distribution in any calendar year.

Non-qualified Arrangements Using the Contracts. The Contracts constitute
variable annuity contracts. Accordingly, no tax should be payable by a
Participant as a result of any increase in the value of his share of the
investment income and realized gain earned by the Account or Subaccount in which
his accumulated premium payments are held. Generally, amounts are taxed when
received, either as an annuity or as a withdrawal before the annuity starting
date. For these purposes, loans against the Contracts or the pledging of the
Contracts are treated as withdrawals.

Amounts withdrawn before the annuity starting date are treated for tax purposes
first as being withdrawals of investment income, rather than withdrawals of
premium payments, until all investment income earned by a Participant's Account
or Subaccount has been withdrawn. Thus, a Participant will be taxed on the
amount he withdraws before he starts receiving annuity payments to the extent
that the cash value of his Contract, unreduced by the withdrawal charge, exceeds
his premiumpayments.

In addition to the ordinary income tax, the Code further provides that premature
withdrawals that are includible in income will be subject to a penalty tax. The
amount of the penalty is 10 percent of the amount withdrawn that is includable
in income. Some withdrawals will be exempt from the penalty. These include
withdrawals (1)made on or after the date on which the Participant reaches age591
@2, (2)made on or after the death of the Participant, (3)attributable to the
Participant becoming disabled (as defined in Code Section72(m)), (4)in the form
of level annuity payments under a lifetime annuity, or (5)in the form of
substantially equal periodic payments (made at least annually) for the life
expectancy of the Participant or the joint life expectancies of the Participant
and his designated beneficiary.

Different tax rules apply to the receipt of annuity payments or regular payments
in accordance with a systematic withdrawal arrangement by a Participant after
the annuity starting date. A portion of each payment he receives under a
Contract will be treated as a partial return of his post-tax premium payments,
if any, and will not be taxable. The remaining portion of the payment will be
taxed as ordinary income. Exactly how each payment is divided into taxable and
nontaxable portions depends upon (i) the period over which annuity payments are
expected to be received, which in turn is governed by the form of annuity
selected and, where a lifetime annuity is chosen, by the life expectancy of the
annuitant, payee or, in the case of a joint and survivor life annuity, payees,
or (ii) whether you elect to have regular payments made in accordance with a
systematic withdrawal plan over a fixed period of time or in fixed dollar
amounts. Once a Participant has recovered all his premium payments, the balance
of the annuity payments will be fully taxable.

Certain minimum distribution requirements apply in the case where the
Participant dies before the entire interest in his annuity has been distributed.
Further, certain transfers of an annuity for less than full compensation (e.g.,
certain gifts), will trigger tax on the gain in the Contract.

Special rules under Section 72(u) of the Code apply to the Contracts if held by
a person who is not a natural person and if not covered by one of several
exceptions. Under these rules, if a Contract is held by a corporation,
partnership, trust or similar nonnatural person, the income on the Contract each
year is treated as ordinary income received or accrued that year by the owner of
the Contract. Income on the contract is the excess of the sum of the net
surrender value of the Contract at the end of the taxable year plus any amounts
distributed for all years over the aggregate amount of premiums paid under the
Contract minus premiums paid and amounts received under the Contract that have
been included in income. Exceptions to these rules include contracts held by a
nonnatural person as an agent for a natural person, contracts acquired by an
estate by reason of the death of the decedent, contracts held under a qualified
pension or profit sharing plan, a Section 403(b) annuity plan or individual
retirement plan (see discussion above) or contracts which provide for immediate
annuities.

Withholding. Generally, under a nonqualified annuity arrangement, or individual
retirement account or individual retirement annuity, unless a Participant elects
to the contrary, any amounts that are received under his Contract that
Prudential reasonably believes are includable in gross income tax for tax
purposes will be subject to withholding to meet Federal income tax obligations.
In the absence of an election by a Participant that Prudential should not do so,
it will withhold from every withdrawal or

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<PAGE>

annuity payment the appropriate percentage of the amount of the payment that
Prudential reasonably believes is subject to withholding. In addition, certain
distributions from qualified plans under Section 401 or 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 ten years or more; or (c)distributions which are
required as minimum distributions. Accordingly, a Participant would be
well-advised to check the Contract-holder's retirement arrangement and consult
with appropriate tax advisers regarding the current state of the law before
making a withdrawal. Prudential will provide forms and instructions concerning
withholding. However, amounts that are received under a Contract used in
connection with a plan that is subject to Section 457 of the Code are treated as
wages for Federal income tax purposes and are, thus, subject to general
withholding requirements.

VOTING RIGHTS

Except for Participants and beneficiaries under certain Contracts used in
connection with certain non-qualified annuity arrangements and deferred
compensation plans established under Section 457 of the Internal Revenue Code,
each person who has an Accumulation Account in VCA-10 or VCA-11, as the case may
be, has the right to vote at meetings of Participants in that Account, and
Prudential will vote the shares of the Fund that it holds in any Subaccount of
VCA-24 in the manner directed by persons who have Accumulation Accounts in that
Subaccount. If the Participants under a Contract issued in connection with a 457
plan do not have voting rights, then the Contract-holder will have the voting
rights.

Persons having voting rights with respect to VCA-10 and VCA-11 are entitled to
vote in connection with the election of the members of an Account's Committee.
Committee members are not elected annually. 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 a Committee, rather than by persons having voting rights,
only hold their positions until the next meeting of persons having voting rights
in respect to such Account. At that next meeting, persons with voting rights
fill the vacancy by electing a member for an indefinite term.

In addition, persons having VCA-10 and VCA-11 voting rights are entitled to vote
in connection with:

a. any amendments of the investment management agreement between
Prudential and the Account and any such new agreements negotiated by
the Committee;

b. any changes in the fundamental investment policies of the Account; and

c. any other matter requiring a vote of VCA-10 and VCA-11 Participants.

Instructions to Prudential for the voting of Fund shares will involve the
following matters: (1) election of the Board of Directors of the Fund; (2)
ratification of the independent accountant for the Fund; (3) approval of the
investment advisory agreement for the Fund; (4) any change in the fundamental
investment policy of a Portfolio in which assets of a Subaccount of VCA-24 are
invested; and (5) any other matter requiring a vote of the shareholders of the
Fund. With respect to approval of the investment advisory agreement or any
change in a Portfolio's fundamental investment policy, Participants with
Accumulation Accounts in a Subaccount the assets of which are invested in such
Portfolio will vote with other holders of shares in such Portfolio on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.

The number of votes which a person may cast at meetings of Participants in
VCA-10 or VCA-11 is equal to the number of dollars in the Account and fractions
thereof credited to him, or, in the case of holders of Contracts used in
connection with deferred compensation plans under Section 457 of the Code where
the Contract-holder has the voting rights, the number of dollars and fractions
thereof that are credited to the Participants under that Contract, as of the
record date.

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
either VCA-10 or VCA-11 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.

Meetings of Participants are not required to be held annually. The Rules and
Regulations of both VCA-10 and VCA-11 provide that meetings of persons having
voting rights may be called by a majority of the Committee. An Account's
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 such 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 an
Account who are entitled to notice of and to vote at such meetings, the
Committee may fix, in

32
<PAGE>

advance, a record date which shall not be more than 70 nor less than 10 days
before the date of the meeting.

Votes may be cast either in person or by proxy. Persons entitled to vote will
receive all proxy materials.

Each person having an Accumulation Account in a Subaccount of VCA-24 may give
voting instructions to Prudential equal to the number of Fund shares represented
by the Subaccount Units in his Accumulation Account. Prudential will vote the
shares of the Fund that are attributable to assets of its own that it maintains
in the Subaccount, or to any shares as to which it has not received
instructions, in the same manner and proportion as the shares for which it has
received instructions.

The number of votes for which each person may give Prudential instructions will
be determined as of the record date for Fund shareholders chosen by the Board of
Directors of the Fund. Prudential will furnish Participants with proper forms
and proxies to enable them to give it these instructions.

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-10, VCA-11 or
the Fund 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, contributions under such other
contracts are not held in VCA-10, VCA-11 or any Subaccount of VCA-24 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 policyholders and contract-holders. This
regulation does not involve any supervision or control over the investment
policies of either Account or over the selection of investments for them, 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, 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 contracts accounts, in a form
promulgated by the National Association of Insurance Commissioners.

LEGAL PROCEEDINGS

On October 28, 1996, Prudential entered into a Stipulation of Settlement in a
multidistrict proceeding involving allegations of various claims relating to
Prudential's life insurance sales practices. (In re Prudential Insurance Company
of America Sales Practices Litigation, D.N.J., MDL No. 1061, Master Docket No.
95-4704 (AMW).) On March 7, 1997, the United States District Court for the
District of New Jersey approved the Stipulation of Settlement as fair,
reasonable and adequate.

Pursuant to the Settlement, Prudential has agreed to provide an alternative
dispute resolution process for class members who believe they were misled
concerning the sale or performance of their life insurance policies. The
Settlement also provides certain no-fault relief. The ultimate cost of the
Settlement will depend on a variety of factors, including the number of
policyowners who participate in the Settlement, the number of policyowners who
are afforded relief and the remediation option they select. The administrative
costs of implementing the Settlement are also subject to a number of complex
uncertainties. In light of the uncertainties attendant to these and other
factors, it is difficult at this time to estimate the ultimate cost of the
Settlement to Prudential.

In addition, a number of actions have been filed against Prudential by
policyowners who have excluded themselves from the settlement; Prudential
anticipates that additional suits may be filed by other policyowners.

33
<PAGE>

Also, on July 9, 1996, a Multi-State Life Insurance Task Force comprised of
insurance regulators from 29 states and the District of Columbia, released a
report on Prudential's activities. As of February 24, 1997, Prudential had
entered into consent orders or agreements with all 50 states and the District of
Columbia to implement a remediation plan, whose terms closely parallel the
Settlement approved in the MDL proceeding, and agreed to a series of payments
allocated to all 50 states and the District of Columbia amounting to a total of
approximately $65 million.

Litigation is subject to many uncertainties, and given the complexity and scope
of these suits, their outcome cannot be predicted.

Accordingly, management is unable to make a meaningful estimate of the amount or
range of loss that could result from an unfavorable outcome of all pending
litigation. It is possible that the results of operations or the cash flow of
Prudential, in particular quarterly or annual periods could be materially
affected by an ultimate unfavorable outcome of certain pending litigation and
regulatory matters. Management believes, however, that the ultimate outcome of
all pending litigation and regulatory matters referred to above should not have
a material adverse effect on Prudential's financial position.

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.

34
<PAGE>
ADDITIONAL INFORMATION

Registration statements under the Securities Act of 1933 have been filed with
the Securities and Exchange Commission with respect to the Contracts. This
Prospectus does not contain all the information set forth in the registration
statements, certain portions of which have been omitted pursuant to the rules
and regulations of the Commission. The omitted information may be obtained from
the Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.

For further information, you may also contact Prudential's office, the address
and telephone number of which are set forth on the cover of this Prospectus.

A copy of the Statement of Additional Information prepared by Prudential, which
provides more detailed information about the Contracts, may be obtained without
charge by calling Prudential at the number set forth on the cover of this
Prospectus. The Statement includes:

TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION

PAGE

INVESTMENT MANAGEMENT AND ADMINISTRATION OF VCA-10, VCA-11 AND VCA-24 ..... 2
Fundamental investment restrictions adopted by VCA-10 and VCA-11 ......... 3
Investment restrictions imposed by state law ............................. 4
Loans of portfolio securities ............................................ 10
Portfolio turnover rate .................................................. 10
Portfolio brokerage and related practices ................................ 10
Custody of securities .................................................... 11
Performance Information .................................................. 12
THE VCA-10 AND VCA-11 COMMITTEES .......................................... 14
Remuneration of Members of the Committees and Certain Affiliated Persons . 14
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA--DIRECTORS .................... 15
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA--PRINCIPAL OFFICERS ........... 17
SALE OF THE CONTRACTS ..................................................... 18
EXPERTS ................................................................... 18
FINANCIAL STATEMENTS OF VCA-10 ............................................ 20
FINANCIAL STATEMENTS OF VCA-11 ............................................ 29
FINANCIAL STATEMENTS OF VCA-24 ............................................ 36
FINANCIAL STATEMENTS OF THE PRUDENTIAL .................................... 44

35
<PAGE>

APPENDIX

Some of the terms used in this Prospectus to describe the investment objective
and policies of VCA-11 are further explained below.

The term "money market" refers to the marketplace composed of the financial
institutions which handle the purchase and sale of liquid, short-term,
high-grade debt instruments. The money market is not a single entity, but
consists of numerous separate markets, each of which deals in a different type
of short-term debt instrument. These include U.S. government obligations,
commercial paper, certificates of deposit and bankers' acceptances, which are
generally referred to as money market instruments.

"U.S. Government obligations" are debt securities (including bills, certificates
of indebtedness, notes, and bonds) issued by the U.S. Treasury or issued by an
agency or instrumentality of the U.S. government which is established under the
authority of an act of Congress. Such agencies or instrumentalities include, but
are not limited to, the Federal National Mortgage Association, the Federal Farm
Credit Bank, and the Federal Home Loan Bank. Although all obligations of
agencies and instrumentalities are not direct obligations of the U.S. Treasury,
payment of the interest and principal on these obligations is generally backed
directly or indirectly by the U.S. government. This support can range from the
backing of the full faith and credit of the United States, to U.S. Treasury
guarantees, or to the backing solely of the issuing instrumentality itself.

"Bank obligations" include (1) "Certificates of deposit" which are certificates
evidencing the indebtedness of a commercial bank to repay funds deposited with
it for a definite period of time (usually from 14 days to one year);(2)
"Bankers' acceptances" which are credit instruments evidencing the obligation of
a bank to pay a draft which has been drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay the
face amount of the instrument upon maturity; and (3) "Time deposits" which are
non-negotiable deposits in a bank for a fixed period of time.

"Commercial paper" consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued to finance current operations. Commercial paper ratings
are as follows:

A Prime rating is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Issuers rated Prime are further referred to
by use of numbers 1, 2 and 3 to denote relative strength within this highest
classification. Among the factors considered by Moody's in assigning ratings are
the following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.

Commercial paper rated A by Standard & Poor's Corporation ("S&P") has the
following characteristics as determined by S&P: Liquidity ratios are better than
the industry average; long-term senior debt rating is A or better (in some
cases, BBB credits may be acceptable); the issuer has access to at least two
additional channels of borrowing and basic earnings and cash flow have an upward
trend with allowances made for unusual circumstances. Typically, the issuer's
industry is well established, the issuer has a strong position within its
industry and the reliability and quality of management is unquestioned. Issuers
rated A are further referred to by use of numbers 1, 2 and 3 to denote relative
strength within this highest classification.

"Other corporate obligations" are bonds and notes, loan participations and other
debt obligations created by corporations, banks and other business
organizations, including business trusts. Corporate bond ratings are as follows:

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

Bonds rated AA by S&P are judged by S&P to be high-grade obligations and, in the
majority of instances, to differ only in small degree from issues rated AAA.
Bonds rated AAA are considered by S&P to be highest grade obligations and
possess the ultimate degree of protection as to principal and interest. As with
AAA bonds, prices of AA bonds move with the long-term money market.

An "NRSRO" is any nationally recognized statistical rating organization
designated by the SEC staff, including Moody's and S&P.

An "eligible security" is either (i) a short-term security that is rated, or has
been issued by an issuer that is rated with respect to comparable securities, in
one of the two highest rating categories for such securities or issuers by two

36
<PAGE>

NRSROs (or by only one NRSRO if it is the only NRSRO that has rated such
security or issuer), or (ii) an unrated short-term security of comparable
quality as determined by the VCA-11 Committee.

A "first tier" security is either (i) an "eligible security" that is rated, or
has been issued by an issuer that is rated with respect to comparable
securities, in the highest rating category for such securities or issuers by two
NRSROs (or by only one NRSRO if it is the only NRSRO that has rated such
security or issuer), or (ii) is an unrated short-term security of comparable
quality as determined by the VCA-11 Committee.

A "second tier" security is any "eligible security" other than a "first tier"
security.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997

THE MEDLEY(SM) PROGRAM

GROUP VARIABLE CONTRACTS
ISSUED THROUGH

THE PRUDENTIAL THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-10 VARIABLE CONTRACT ACCOUNT-11

THE PRUDENTIAL
VARIABLE CONTRACT ACCOUNT-24

These Contracts are designed for use in connection with retirement arrangements
that qualify for federal tax benefits under Sections 401, 403(b), 408 or 457 of
the Internal Revenue Code of 1986, as amended, and with non-qualified annuity
arrangements. Contributions made on behalf of Participants may be invested in
The Prudential Variable Contract Account-10, a separate account primarily
invested in common stocks, in The Prudential Variable Contract Account-11, a
separate account invested in money market instruments, or in one or more of the
seven Subaccounts of The Prudential Variable Contract Account-24. Each
Subaccount is invested in a corresponding Portfolio of The Prudential Series
Fund, Inc.

----------

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

TABLE OF CONTENTS

PAGE

INVESTMENT MANAGEMENT AND ADMINISTRATION OF VCA-10, VCA-11 AND VCA-24 ...... 2
Fundamental investment restrictions adopted by VCA-10 and VCA-11 .......... 3
Investment restrictions imposed by state law .............................. 4
Loans of portfolio securities ............................................. 10
Portfolio turnover rate ................................................... 10
Portfolio brokerage and related practices ................................. 10
Custody of securities ..................................................... 11
PERFORMANCE INFORMATION .................................................... 12
THE VCA-10 AND VCA-11 COMMITTEES ........................................... 14
Remuneration of Members of the Committees and Certain Affiliated Persons .. 14
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA--DIRECTORS ..................... 15
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA--PRINCIPAL OFFICERS ............ 15
SALE OF THE CONTRACTS ...................................................... 18
EXPERTS .................................................................... 18
FINANCIAL STATEMENTS OF VCA-10 ............................................. 20
FINANCIAL STATEMENTS OF VCA-11 ............................................. 29
FINANCIAL STATEMENTS OF VCA-24 ............................................. 36
FINANCIAL STATEMENTS OF THE PRUDENTIAL ..................................... 44

The Prudential Insurance Company of America
c/o Prudential Investments
30 Scranton Office Park
Scranton, PA 18507-1789
Telephone 1-800-458-6333
- ---------------------------====================================================
[LOGO] PRUDENTIAL
<PAGE>
INVESTMENT MANAGEMENT
AND ADMINISTRATION OF
VCA-10, VCA-11 AND VCA-24

Prudential acts as investment manager for The Prudential Variable Contract
Account-10 ("VCA-10") and The Prudential Variable Contract Account-11 ("VCA-11")
under separate investment management agreements with each of them. Each
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.

The assets of each Subaccount of VCA-24 are invested in a corresponding
portfolio of The Prudential Series Fund, Inc. (the "Fund"). The Prospectus and
the Statement of Additional Information of the Fund describe the investment
management and administration of the Fund and its various portfolios.

Subject to Prudential's supervision, 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 investment management agreement with each of VCA-10 and VCA-11 was
most recently renewed by unanimous vote of the Committees on November 22, 1996
and by the Participants in each Account on September 8, 1983. The Service
Agreement was submitted to and approved by Participants in VCA-10 and VCA-11 on
November 4, 1985 and its annual continuation was most recently approved by
unanimous vote of the VCA-10 and VCA-11 Committees on November 22, 1996. Each
Account's investment management agreement 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
each entire Committee or by a majority vote of persons entitled to vote in
respect of the Account. An Account's investment management agreement 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 each 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 Agreements for
Investment Management Services between Prudential and the Accounts. 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 an 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
Accounts. 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 an
Account, see "Voting Rights," page 32 of the Prospectus.

Prudential is responsible for the administrative and recordkeeping functions of
VCA-10, VCA-11 and VCA-24 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 1.00% of
the net value of the assets in VCA-10 and VCA-11. Three quarters of this charge
(0.75%) is for administrative expenses not covered by the annual account charge,
and one quarter (0.25%) isfor investment management. During 1996, 1995, and
1994, Prudential received $4,121,607, $3,023,169 and $2,608,950, respectively,
from VCA-10 and $804,528, $746,306, and $659,492, respectively, from VCA-11 for
administrative expenses and for providing management services.

A daily charge is made which is equal to an effective annual rate of 0.75% of
the net value of the assets in each Subaccount of VCA-24. All of this charge is
for administrative expenses not covered by the annual account charge. During
1996, 1995, and 1994, Prudential received $6,866,521, $4,741,003, and
$3,535,163, respectively, in daily charges for VCA-24.

Prior to May 1, 1997, an annual account charge for administrative expenses of
not greater than $20 was assessed against a Participant's Accumulation Account.
As of May 1, 1997, this charge was increased to not greater than $30. During
1996, 1995, and 1994, Prudential collected $81,929, $78,996 and $69,867
respectively, from VCA-10 and $40,724, $40,200, and $34,832, respectively, from
VCA-11 in annual account charges. During 1996, 1995, and 1994, Prudential
collected $143,977, $147,713 and $139,359, respectively, in annual account
charges from VCA-24.

2
<PAGE>

A deferred sales charge is also imposed on certain withdrawals from the Accounts
and Subaccounts. The deferred sales charges imposed on withdrawals from VCA-10
during 1996, 1995, and 1994, were $13,057, $146,870 and $24,016, respectively.
The deferred sales charges imposed on VCA-11 withdrawals during 1996, 1995, and
1994, were $8,659, $17,399 and $16,777, respectively. During 1996, 1995, and
1994 the deferred sales charges imposed on withdrawals from VCA-24 were $98,456,
$151,147 and $62,145, respectively.

FUNDAMENTAL INVESTMENT RESTRICTIONS ADOPTED BY VCA-10

In addition to the investment objective described in the prospectus, the
following investment restrictions are fundamental investment policies of VCA-10
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-10 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-10's total
assets, more than 5% of VCA-10'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-10's total assets (determined at the time of the investment)
would be invested in a single industry.

Investments in Real Estate-Related Securities. No purchase of or investment in
real estate will be made for the account of VCA-10 except that VCA-10 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-10 except that VCA-10 may purchase and
sell financial futures contracts and related options.

Loans. VCA-10 will not lend money, except that loans of up to 10% of the value
of VCA-10'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-10 in accordance with its investment objectives and policies.

Borrowing. VCA-10 will not issue senior securities, borrow money or pledge its
assets, except that VCA-10 may borrow from banks up to 331 @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-10 may pledge up to 331 @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-10 will not purchase securities on margin (but VCA-10 may obtain
such short-term credits as may be necessary for the clearance of transactions);
provided that the deposit or payment by VCA-10 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-10 will not underwrite the securities of other
issuers, except where VCA-10 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-10 is permitted to make.

Control or Management of Other Companies. No securities of any company will be
acquired for VCA-10 for the purpose of exercising control or management thereof.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS ADOPTED BY VCA-10

The VCA-10 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-10.

Investments in Other Investment Companies. Except as part of a merger,
consolidation, acquisition or reorganization, VCA-10 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-10 will not make short sales of securities or maintain a short
position, except that VCA-10 may make short sales against the box. Collateral
arrangements entered into with respect to options, futures contracts, forward
contracts and 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-10 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.

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FUNDAMENTAL INVESTMENT RESTRICTIONS ADOPTED BY VCA-11

In addition to the investment objective described in the prospectus, the
following investment restrictions are fundamental investment policies of VCA-11
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-11 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-11's total
assets, more than 5% of VCA-11'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-11's total assets (determined at the time of the investment)
would be invested in a single industry. Notwithstanding this restriction, there
is no limitation with respect to money market instruments of domestic banks,
U.S. branches of foreign banks that are subject to the same regulations as U.S.
banks, and foreign branches of domestic banks (provided that the domestic bank
is unconditionally liable in the event of the failure of the foreign branch to
make payment on its instruments for any reason).

Investments in Real Estate-Related Securities. No purchase of or investment in
real estate will be made for the account of VCA-11.

Investments in Financial Futures. No commodities or commodity contracts will be
purchased or sold for the account of VCA-11.

Loans. VCA-11 will not lend money, except that it may purchase debt obligations
in accordance with its investment objective and policies and may engage in
repurchase agreements.

Borrowing. VCA-11 will not issue senior securities, borrow money or pledge its
assets, except that VCA-11 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-11 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 is not
deemed to be a pledge of assets or the issuance of a senior security.

Margin. VCA-11 will not purchase securities on margin (but VCA-11 may obtain
such short-term credits as may be necessary for the clearance of transactions).

Underwriting of Securities. VCA-11 will not underwrite the securities of other
issuers, except where VCA-11 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-11 is permitted to make.

Control or Management of Other Companies. No securities of any company will be
acquired for VCA-11 for the purpose of exercising control or management thereof.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS ADOPTED BY VCA-11

The VCA-11 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-11.

Investments in Other Investment Companies. Except as part of a merger,
consolidation, acquisition or reorganization, VCA-11 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-11 will not make short sales of securities or maintain a short
position.

Restricted Securities. No more than 10% of the value of the net assets held in
VCA-11 will be invested in illiquid securities (including repurchase agreements
and non-negotiable time deposits maturing in more than seven days). Securities
that have legal or contractual restrictions on resale but have a readily
available market are not deemed illiquid for purposes of this limitation.

INVESTMENT RESTRICTIONS IMPOSED BY STATE LAW

In addition to the investment objectives, policies and restrictions that they
have adopted, VCA-10 and VCA-11 must limit their 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, each 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 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

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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.

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-10 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 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 Accounts.

ADDITIONAL INFORMATION ABOUT FINANCIAL FUTURES CONTRACTS

As described in the prospectus, VCA-10 may engage in certain transactions
involving financial futures contracts. This additional information on those
instruments should be read in conjunction with the prospectus.

VCA-10 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-10'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-10 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-10'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-10
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-10 from liquidating an unfavorable
position and VCA-10 would remain obligated to meet margin requirements and
continue to incur losses until the position is closed.

ADDITIONAL INFORMATION ABOUT OPTIONS

As described in the prospectus, VCA-10 may engage in certain transactions
involving options. This additional

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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-10
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-10 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-10 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-10 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-10 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-10 originally wrote the OTC option. There can be no assurance that
VCA-10 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-10 may
be unable to liquidate an OTC option.

Options on Equity Securities. VCA-10 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-10 will write only "covered" options on stocks. A call option is covered if:
(1) VCA-10 owns the security underlying the option; or (2) VCA-10 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-10 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-10 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-10 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-10 holds on a share-for-share basis a
put on the same security as the put written where the exercise price of the put
held is equal to or greater than the exercise price of the put written or less
than the exercise price if the difference is

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maintained by VCA-10 in cash, Treasury bills or other high grade short-term debt
obligations in a segregated account with its custodian.

VCA-10 may also purchase "protective puts" (i.e., put options acquired for the
purpose of protecting VCA-10 security from a decline in market value). The loss
to VCA-10 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-10 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-10 may also purchase putable and callable equity securities, which are
securities coupled with a put or call option provided by the issuer.

VCA-10 may purchase call options for hedging or investment purposes. VCA-10 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-10 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-10 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-10 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-10 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-10 will also segregate or deposit for the benefit of VCA-10'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-10's use of
straddles will be limited to 5% of VCA-10's net assets (meaning that the
securities used for cover or segregated as described above will not exceed 5% of
VCA-10's net assets at the time the straddle is written).

VCA-10 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-10 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-10 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-10 purchases a put option on an underlying security
it owns.

VCA-10 may also purchase call options on debt securities for hedging or
investment purposes. VCA-10 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-10 may also purchase putable and callable debt securities, which are
securities coupled with a put or call option provided by the issuer.

VCA-10 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-10 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. 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-10 will write only "covered" options on stock indices. A call option is
covered if VCA-10 follows the segregation requirements set forth in this
paragraph. When VCA-10 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

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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-10 has not written a stock call option and which has
not been hedged by VCA-10 by the sale of stock index futures. When VCA-10 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-10'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-10
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-10 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 unencumbered
assets 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-10'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-10 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-10 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-10 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-10 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-10 in cash, Treasury bills or other liquid unencumbered assets in a
segregated account with its custodian.

VCA-10 may purchase put and call options on stock indices for hedging or
investment purposes. VCA-10 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-10 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-10 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-10. Price movements in VCA-10'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-10 bears the risk that the price of the
securities held by VCA-10 may not increase as much as the index. In such event,
VCA-10 would bear a loss on the call which is not completely offset by movement
in the price of VCA-10's equity securities. It is also possible that the index
may rise when VCA-10's securities do not rise in value. If this occurred, VCA-10
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-10 has written a call, there is also
a risk that the market may decline between the time VCA-10 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-10 is able to sell stocks in its
portfolio. As with stock options, VCA-10 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-10 would be able to deliver the underlying securities in
settlement, VCA-10 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-10 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-10 will be required to pay the

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difference between the closing index value and the strike price of the option
(times the applicable multiplier) to the assigned writer. Although VCA-10 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-10 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-10'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-10 may enter into certain transactions
involving options on futures contracts. VCA-10 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-10 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-10 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-10 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-10.

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-10 may enter
into such contracts in anticipation of or to protect itself against fluctuations
in currency exchange rates.

VCA-10 generally will not enter into a forward contract with a term of greater
than 1 year. At the maturity of a forward contract, VCA-10 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-10'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 markets generally.

INTEREST RATE SWAP TRANSACTIONS

VCA-10 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-10
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-10 may enter into a swap
transaction to preserve a return or spread on a particular investment or a
portion of its

9
<PAGE>

portfolio or to protect against any increase in the price of securities the
Account anticipates purchasing at a later date. VCA-10 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-10'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-10
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-10 and VCA-11 may from time to time lend their 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-10 and VCA-11 will continue to receive the
interest and dividends, or amounts equivalent thereto, on the loaned securities
while receiving a fee from the borrower or earning interest on the investment of
the cash collateral. The right to terminate the loan will be given to either
party subject to appropriate notice. Upon termination of the loan, the borrower
will return to the lender securities identical to the loaned securities. VCA-10
will 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-10 and VCA-11 would be
unsecured creditors with respect to such shortage and might not be able to
recover all or any of it. However, this risk may be minimized by a careful
selection of borrowers and securities to be lent.

VCA-10 and VCA-11 will not lend their portfolio securities to broker-dealers
affiliated with Prudential, including Prudential Securities Incorporated. This
will not affect the Accounts' ability to maximize their securities lending
opportunities.

PORTFOLIO TURNOVER RATE

VCA-10 has no fixed policy with respect to portfolio turnover, which is an index
determined by dividing the lesser of the purchases and sales of portfolio
securities during the year by the monthly average of the aggregate value of the
portfolio securities owned during the year. VCA-10 seeks long term capital
growth 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. Higher
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs, which are borne directly by VCA-10. It is not
anticipated that under normal circumstances the annual portfolio turnover rate
would exceed 100%. During 1996 and 1995 the total portfolio turnover rate for
VCA-10 was 52% and 45%, respectively.

PORTFOLIO BROKERAGE AND RELATED PRACTICES

Prudential is responsible for decisions to buy and sell securities for VCA-10
and VCA-11, the selection of brokers and dealers to effect the transactions and
the negotiation of brokerage commissions, if any. Transactions on a stock
exchange in equity securities for VCA-10 will be executed primarily through
brokers who will receive a commission paid by the Account. Fixed income
securities, as well as securities traded in the over-the-counter market, on the
other hand, 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. On occasion, certain of these securities may be
purchased directly from an issuer, in which case neither commissions nor
discounts are paid.

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

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

10
<PAGE>

brokers of orders for equity securities and the commissions that were paid.

When selecting a broker or dealer in connection with a transaction for either
Account, consideration is given to whether the broker or dealer has furnished
Prudential or PIC with certain services that brokerage houses customarily supply
to institutional investors, provided this does not jeopardize the objective of
obtaining the best price and execution.

These services include statistical and economic data and research reports on
particular companies and industries. Prudential and PIC use these services in
connection with all of their investment activities, and some of the data or
services obtained in connection with the execution of transactions for an
Account may be used in managing 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 and services may be used in
providing investment management for one or both of the Accounts. Although
Prudential's present policy is not to permit higher spreads or commissions to be
paid on transactions for the Accounts in order to secure research and
statistical services from brokers or dealers, Prudential might in the future
authorize the payment of higher commissions (but not of higher spreads), with
the prior concurrence of an Account's Committee, if it is determined that the
higher commissions are necessary in order to secure desired research and are
reasonable in relation to all the services that the broker 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 securities
may be sold for another.

An affiliated broker may be employed to execute brokerage transactions on behalf
of the Accounts 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, the total dollar amount of commissions paid by VCA-10 to an affiliated
broker, Prudential Securities Incorporated, was $12,687, $-0- and $-0-,
respectively. The Accounts 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
the Accounts.

During 1996, 1995, and 1994, $548,304, $429,704 and $324,943, respectively, was
paid to various brokers in connection with securities transactions for VCA-10.
Of this amount, approximately 78.6%, 77.6% and 66.57%, respectively, was
allocated to brokers who provided research and statistical services to
Prudential.

CUSTODY OF SECURITIES

Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, is custodian of the assets of VCA-10 and VCA-11 and maintains certain
books and records in connection therewith.

11
<PAGE>
PERFORMANCE INFORMATION

The tables below provide performance information for each variable investment
option through December 31, 1996. The performance information is based on
historical experience and does not indicate or represent future performance.

ANNUAL AVERAGE TOTAL RETURN

Table 1 below shows the average annual rates of total return on hypothetical
investments of $1,000 for periods ended December 31, 1996 in VCA-10, VCA-11 and
the following subaccounts of VCA-24: Diversified Bond, Government Income,
Conservative Balanced, Flexible Managed, Stock Index, Equity and Global. These
figures assume withdrawal of the investments at the end of the period other than
to effect an annuity under the Contract. VCA-24 has been in existence since May
1, 1987. However, the applicable underlying Portfolios of the Fund existed as
funding vehicles for other Prudential products prior to that date. For
performance information purposes, the returns calculated below for periods prior
to inclusion in the MEDLEY Program reflect a hypothetical return as if those
portfolios were part of the MEDLEY Program at that time, using charges
applicable to the MEDLEY Program.

TABLE 1

AVERAGE ANNUAL TOTAL RETURN

<TABLE>
<CAPTION>
FROM DATE PORTFOLIO
ESTABLISHED THROUGH
ONE YEAR FIVE YEARS TEN YEARS 12/31/96 IF PORTFOLIO
DATE ENDED ENDED ENDED NOT IN EXISTENCE
ESTABLISHED 12/31/96 12/31/96 12/31/96 FOR TEN YEARS
----------- -------- ---------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
VCA-10 ................................... 8/25/82 18.72% 15.36% 13.42% --
VCA-11 ................................... 8/25/82 (2.28) 2.71 5.11 --
VCA-24:
Diversified Bond ........................ 5/13/83 (3.40) 5.80 7.08 --
Government Income ....................... 5/1/89 (5.56) 4.88 -- 7.59%
Conservative Balanced ................... 5/13/83 4.75 7.71 8.83 --
Flexible Managed ........................ 5/13/83 5.76 9.50 10.24 --
Stock Index ............................. 10/19/87 14.63 13.19 -- 15.39
Equity .................................. 5/13/83 10.55 15.75 14.09 --
Global .................................. 9/19/88 11.79 11.14 -- 9.26
</TABLE>
The average annual rates of total return shown above are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
the following formula: P(1+T)n = ERV. In the formula, P is a hypothetical
investment or contribution of $1,000; T is the average annual total return; n is
the number of years; and ERV is the withdrawal value at the end of the periods
shown. The annual account charge is prorated among the investment options
available under MEDLEY, including the Companion Contract, in the same
proportions as the aggregate annual contract fees are deducted from each option.
These figures assume deduction of the maximum deferred sales charge that may be
applicable to a particular period.

12
<PAGE>

NON-STANDARD TOTAL RETURN

Table 2 below shows the average annual rates of return as in Table 1, but
assumes that the contributions or investments are not withdrawn at the end of
the period or that the Participant annuitizes at the end of the period.

TABLE 2

AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL

TABLE 3

CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL

VCA-11 YIELD

The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical preexisting account having a balance of
one accumulation unit of VCA-11 at the beginning of the period, subtracting a
prorated portion of the annual account charge as explained above, and dividing
the difference by the value of the account at the beginning of the base period,
and then multiplying the base period by (365/7), with the resulting figure
carried to the nearest hundred of 1%.

The yield reflects the deduction of the 1% charge for administrative expenses
and investment management, but does not reflect the deferred sales charge.

The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to following formula: Effective Yield = [(base period return
+1)365/7]--1.

The yields on amount held in VCA-11 will fluctuate on a daily basis. Therefore,
the stated yields for any given period are not an indication of future yields.

13
<PAGE>

THE VCA-10 AND VCA-11 COMMITTEES

VCA-10 is managed by The Prudential Variable Contract Account-10 Committee
("VCA-10 Committee"). VCA-11 is managed by The Prudential Variable Contract
Account-11 Committee ("VCA-11 Committee"). The members of each Committee are
elected by the persons having voting rights in respect of each Account. The
affairs of each Account are conducted in accordance with the Rules and
Regulations of the Account. The members of each Account's Committee, the
Account's Secretary and the principal occupation of each during the past five
years are shown below.

VCA-10 AND VCA-11 COMMITTEES

MENDEL A. MELZER*, Chairman and Member of the Committee--Chief Investment
Officer, Prudential Mutual Funds and Annuities, Prudential Investments, since
1996. Senior Vice President --Vice President and Chief Financial Officer,
Prudential Preferred Financial Services (a unit of PAMCO from 1993 to 1995. Vice
President, Managing Director, Prudential Investment Corporation from 1991 to
1993. Address: 751 Broad Street, Newark, NJ 07102.

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

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

W. SCOTT MCDONALD, JR., Member of the Committee--Principal, Kaludis Consulting
Group since 1997; 1995 to 1996, Principal, Scott McDonald & Associates; prior to
4/95, Executive Vice President, Fairleigh Dickinson University; prior to 9/91,
Executive Vice President, Drew University. Address: 9 Zamrok Way, Morristown, NJ
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: 37 Beachmont Terrace, North Caldwell, NJ
07006.

THOMAS A. EARLY, Secretary to the Committee--Vice President and General Counsel,
Mutual Funds and Annuities, Prudential Investments since 1996; Vice President
and General Counsel, Prudential Retirement Services since 1994. Associate
General Counsel, Frank Russell Company from 1988 to 1994. Address: 100 Mulberry
Street, Gateway Center 3, Newark, NJ 07102.

EUGENE S. STARK, Comptroller, Treasurer, and Principal Financial Officer--Vice
President, Prudential Investments since 1996; prior thereto First Vice President
of Prudential Mutual Fund Management LLC. Address: 100 Mulberry Street, Gateway
Center 3, Newark, NJ 07102.

*These Members of the VCA-10 and VCA-11 Committees are interested persons of
Prudential, its affiliates or the Accounts, as defined in the Investment Company
Act of 1940 (the "1940 Act"). Certain actions of each Committee, including the
annual continuance of the Agreement for Investment Management Services between
each Account and Prudential, must be approved by a majority of the Members of
the Committee who are not interested persons of Prudential, its affiliates or
the Account. 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 manager of both Accounts. Messrs.
Fenster, McDonald, and Weber are not interested persons of Prudential, its
affiliates, or either Account. 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 COMMITTEES AND CERTAIN AFFILIATED PERSONS

No member of the Committee of either VCA-10 or VCA-11 nor any other person
(other than Prudential) receives remuneration from an Account. Prudential pays
certain of the expenses relating to the operation of VCA-10 and VCA-11,
including all compensation paid to members of each Committee, its Chairman, its
Secretary and Assistant Secretaries. No member of either Account's 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.

14
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

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 62. 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 61.
Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095.

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 54. 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 65. 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 52. 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 62.
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 55. 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 60. Address: 235 Moore Street, Suite 200, Hackensack, NJ 07601.

GLEN H. HINER, JR., Director since 1997. Chairman and Chief Executive Officer,
Owens Corning. Age 62. Address: One Owens Corning Parkway, Toledo, OH 43659.

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 55.
Address: 1775 Massachusetts Ave., N.W. Washington, D.C. 20036-2188.

GAYNOR N. KELLEY, Director.--Former Chairman and Chief Executive Officer, The
Perkins Elmer Corporation. Age 65. Address: 851 Broad Street, Newark, NJ
07102-3777.

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 64.
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 54. Address: 751 Broad
Street, Newark, NJ 07102-3777.

15
<PAGE>

IDA F.S. SCHMERTZ, Director. Principal, Investment Strategies International. Age
62. Address: 90 Riverside Drive, New York, NY 10024.

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 66. 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 65. 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 63. 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 56. 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 67. 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 63. 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 69. 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 63. Address: One Williams Center, Tulsa,
OK 74102.

16
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

PRINCIPAL OFFICERS

ARTHUR F. RYAN, Chairman, Chief Executive Officer, and President since 1994. Age
54.

E. MICHAEL CAULFIELD, Chief Executive Officer, Prudential Investments since
1996; Chief Executive Officer, Money Management Group since 1995; 1989-92
Managing Director. Age 50.

MICHELE S. DARLING, Executive Vice President, Human Resources. Age 43.

RODGER LAWSON, Executive Vice President, Marketing and Planning. Age 50.

MARK B. GRIER, Chief Financial Officer since 1995. Age 44.

JOHN V. SCICUTELLA, Executive Vice President, Operations and Systems, since
1995. Age 48.

WILLIAM F. YELVERTON, Chief Executive Officer, Individual Insurance Group since
1995. Age 55.

R. BROCK ARMSTRONG, Senior Vice President, Individual Insurance Development. Age
50.

MARTIN BERKOWITZ, Senior Vice President and Comptroller since 1995. Age 48.

WILLIAM M. BETHKE, President, Capital Markets Group, Senior Vice President since
1986. Age 49.

LEO J. CORBETT, Senior Vice President, Individual Insurance Marketing. Age 48.

MARK R. FETTING, President, Prudential Retirement Services. Age 42.

WILLIAM D. FRIEL, Senior Vice President and Chief Information Officer since
1993; 1988-92: Vice President. Age 57.

JAMES R. GILLEN, Senior Vice President and General Counsel since 1984. Age 59.

BRUCE J. GOODMAN, Chief Executive Officer, Prudential Service Company, Senior
Vice President since 1993. Age 55.

JONATHAN M. GREENE, President, Investment Management, Prudential Investments.
Age 53.

JEAN D. HAMILTON, President, Diversified Group. Age 50.

RONALD JOELSON, Senior Vice President, Guaranteed Products. Age 39.

IRA J. KLEINMAN, Executive Vice President, International Insurance Group; Senior
Vice President since 1992; 1978-92: Vice President. Age 49.

DONALD C. MANN, Senior Vice President, Community Resources; Senior Vice
President since 1990; 1985-90: Vice President. Age 54.

NEIL A. McGUINNESS, Senior Vice President, Marketing, Prudential Investments.
Age 50.

PRISCILLA A. MYERS, Senior Vice President, Audit, Compliance and Investigation
since 1995. Age 47.

RICHARD O. PAINTER, President, Prudential Insurance& Financial Services since
1995. Age 49.

KIYOFUMI SAKAGUCHI, President, International Insurance Group since 1995. Age 54.

GREGORY W. SCOTT, Chief Financial Officer, Prudential Healthcare Group since
1995. Age 43.

BRIAN M. STORMS, President, Mutual Funds and Annuities, Prudential Investments
since 1996. Age 42.

ROBERT J. SULLIVAN, Senior Vice President, Sales, Prudential Investments. Age
58.

SUSAN L. BLOUNT, Vice President and Secretary since 1995. Age 39.

C. EDWARD CHAPLIN, Vice President and Treasurer since 1995. Age 40.

17
<PAGE>

SALE OF THE 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 obtained in any jurisdiction where such clearances may be necessary. During
1996, 1995 and 1994, Prudential received $13,057, $146,870 and $24,016,
respectively, as deferred sales charges from VCA-10. $479,212, $305,297 and
$280,494, respectively, were credited to other broker-dealers for the same
periods in connection with sales of the contracts. During 1996, 1995, and 1994,
Prudential received $8,659, $17,399 and $16,777, respectively, from VCA-11 as
deferred sales charges and credited $112,654, $64,646 and $56,437, respectively,
to other broker-dealers in connection with sales of the contracts. During 1996,
1995, and 1994, Prudential received $98,456, $151,147 and $62,145 from VCA-24 as
deferred sales charges and credited $1,965,736, $1,128,432 and $1,053,343
respectively to other broker-dealers in connection with sales of the contracts.

EXPERTS

The financial statements for VCA-10, VCA-11 and VCA-24 included in this
Statement of Additional Information and the condensed financial information for
VCA-10, VCA-11 and VCA-24 in the Prospectus for the fiscal year 1996 have been
audited by Price Waterhouse LLP, independent accountants, as stated in their
reports appearing herein. The financial statements for VCA-10, VCA-11 and VCA-24
included in this Statement of Additional information and the condensed financial
information for VCA-10, VCA-11 and VCA-24 included in the Prospectus for all
years prior to 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein. The financial statements
have been included in reliance upon the reports of such firms given upon their
authority as experts in accounting and auditing. Price Waterhouse LLP's
principal business address is 1177 Avenue of the Americas, New York, New York
10036. Deloitte & Touche LLP's principal business address is Two Hilton Court,
Parsippany, New Jersey 07054-0319.

Financial Statements for VCA-10, VCA-11, VCA-24 and Prudential, all as of
December 31, 1996, are included in this Statement of Additional Information,
beginning at page 19.

18
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Committee and Participants
of The Prudential Variable Contract Account - 10
of The Prudential Insurance Company of America

In our opinion, the accompanying statement of net assets, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Prudential Variable Contract Account - 10 of The Prudential Insurance
Company of America (the "Account") at December 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1996 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provides a reasonable basis for the opinion expressed above.

Price Waterhouse LLP
New York, New York
February 14,1997

19
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Committee of and Persons Participating in
The Prudential Variable Contract Account-10
and the Board of Directors of
The Prudential Insurance Company of America
Newark, New Jersey

We have audited the accompanying statement of changes in net assets of The
Prudential Variable Contract Account-10 of The Prudential Insurance Company of
America for the year ended December 31, 1995. This financial statement and share
information are the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statement presents fairly, in all material
respects, the changes in net assets of The Prudential Variable Contract
Account-10, for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996

20
<PAGE>
FINANCIAL STATEMENTS OF VCA-10

STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1996
COMMON STOCK VALUE
INVESTMENTS SHARES [NOTE 2A]
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 2.0%
Gen Corp. 289,400 $ 5,245,375
Litton Industries, Inc.+ 100,000 4,762,500
------------
10,007,875
- --------------------------------------------------------------------------------
AUTOS & TRUCKS - 3.3%
A.O. Smith Corp. 211,700 6,324,537
Borg-Warner Automotive, Inc. 65,000 2,502,500
Custom Chrome+ 106,500 2,143,312
Lear Corp.+ 67,000 2,286,375
Stant Corp. 200,000 3,150,000
------------
16,406,724
- --------------------------------------------------------------------------------
CHEMICALS - 5.8%
Chemfirst, Inc.+ 129,000 2,983,125
Cytec Industries, Inc.+ 145,100 5,894,687
E.I. duPont de Nemours & Co. 38,400 3,624,000
Mississippi Chemical Corp. 228,286 5,478,872
Olin Corp. 106,400 4,003,300
Rohm & Haas Co. 32,500 2,652,812
Spartech Corp. 163,000 1,813,375
W.R. Grace & Co. 42,000 2,173,500
------------
28,623,671
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.3%
Oak Industries, Inc.+ 54,900 1,262,700
- --------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.3%
International Business
Machines Corp. 27,000 4,077,000
Seagate Technology, Inc.+ 182,000 7,189,000
------------
11,266,000
- --------------------------------------------------------------------------------
CONSUMER SERVICES - 1.1%
Whitman Corp. 231,500 5,295,562
- --------------------------------------------------------------------------------
CONTAINERS AND PACKAGING - 2.9%
ACX Technologies, Inc.+ 105,000 2,086,875
Alltrista Corp.+ 190,600 4,907,950
Aptargroup, Inc. 80,900 2,851,725
U.S. Can Corp.+ 259,600 4,380,750
------------
14,227,300
- --------------------------------------------------------------------------------
DRUGS & MEDICAL SUPPLIES - 0.5%
Zeneca Group PLC (ADR)
(United Kingdom) 29,600 2,486,400
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
Belden, Inc. 108,800 4,025,600
- --------------------------------------------------------------------------------
ELECTRONICS - 8.3%
Anixter International+ 200,000 3,225,000
Berg Electronics Corp.+ 83,100 2,441,062
Dallas Semiconductor Corp. 222,000 5,106,000
Marshall Industries+ 138,100 4,229,312
Methode Electronics, Inc. 357,500 7,239,375
Pioneer Standard Electronics 400,000 5,250,000
SGS-Thomson
Microelectronics N.V.+ 87,000 6,090,000
Sterling Electronics+ 299,250 4,002,469
Wyle Electronics 78,200 3,088,900
------------
40,672,118
- --------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 1.5%
Giant Cement Holding, Inc.+ 259,900 4,190,887
Gradall Industries, Inc.+ 268,900 3,327,638
------------
7,518,525
- --------------------------------------------------------------------------------
EXPLORATION & PRODUCTION - 5.5%
Cabot Oil & Gas Corp. 133,000 2,277,625
Enron Oil & Gas 34,000 858,500
Occidental Petroleum Corp. 120,500 2,816,687
Oryx Energy Co.+ 270,000 6,682,500
Parker & Parsley Petroleum Co. 100,000 3,675,000
Santa Fe Energy Resources+ 163,300 2,265,787
Seagull Energy Corp.+ 59,200 1,302,400
Union Pacific Resources Group 44,041 1,288,199
Vintage Petroleum, Inc. 80,300 2,770,350
Western Pacific Resources Group 79,800 1,536,150
Zeigler Coal Holding Co. 72,300 1,545,412
------------
27,018,610
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 5.8%
American States Financial+ 164,200 4,351,300
Associates First Capital Co.+ 20,700 913,388
Beneficial Corp. 43,000 2,725,125
Dean Witter Discover & Co. 104,100 6,896,625
Financial Security Assurance
Holdings Corp. 151,100 4,967,413
Finova Group, Inc. 57,900 3,720,075
Travelers Group, Inc. 113,333 5,142,485
------------
28,716,411
- --------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 1.2%
Tenet Healthcare+ 264,500 5,785,938
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.3%
Premark International, Inc. 58,000 1,290,500
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS

21
<PAGE>

FINANCIAL STATEMENTS OF VCA-10

STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1996

COMMON STOCK VALUE
INVESTMENTS SHARES [NOTE 2A]
- --------------------------------------------------------------------------------
HOUSING RELATED - 2.4%
Furniture Brands International, Inc.+ 290,500 $ 4,067,000
Mueller Industries, Inc.+ 87,100 3,353,350
Owens Corning Fiberglass Corp. 100,000 4,262,500
------------
11,682,850
- --------------------------------------------------------------------------------
INSURANCE - 7.9%
Allied Group, Inc. 130,200 4,247,775
Allamerica Financial Corp. 67,800 2,271,300
Equitable of Iowa Companies 129,400 5,936,225
ITT Hartford Group, Inc. 34,500 2,328,750
NAC Re Corp. 115,000 3,895,625
Reinsurance Group of America 149,300 7,035,763
TIG Holdings, Inc. 41,200 1,395,650
Trenwick Group, Inc. 84,600 3,912,750
Unionamerica Holdings, PLC
(ADR) (United Kingdom) 225,000 3,993,750
W.R. Berkley Corp. 71,700 3,638,775
------------
38,656,363
- --------------------------------------------------------------------------------
MACHINERY - 6.2%
Allied Products Corp. 183,000 5,444,250
Applied Power Co.
(Class 'A' Stock) 229,400 9,089,975
Hardinge, Inc. 102,700 2,734,388
Harnischfeger Industries 195,100 9,389,188
Pfeiffer Vacuum
Technology (ADR)
(Germany)+ 160,000 2,880,000
Robbins & Myers, Inc. 37,500 937,500
------------
30,475,301
- --------------------------------------------------------------------------------
MEDIA - 7.3%
Century Communications Corp.
(Class 'A' Stock)+ 414,800 2,359,175
Comcast Corp.
(Class 'A' Stock) 143,400 2,527,425
Comcast Corp.
(Class 'A' Stock) Special 232,295 4,137,755
Cox Communication, Inc.
(Class 'A' Stock)+ 121,213 2,803,051
E.W. Scripps Co.
(Class 'A' Stock) 60,000 2,100,000
Harcourt General, Inc. 93,000 4,289,625
Hollinger International, Inc.
(Class 'A' Stock) 150,300 1,728,450
Knight Ridder, Inc. 104,200 3,985,650
Lee Enterprises 85,000 1,976,250
Pulitzer Publishing Co. 41,333 1,916,818
Tele-Communications, Inc.
Liberty Media Group
(Series A)+ 83,600 2,387,825
Time Warner, Inc. 115,000 4,312,500
United International Holdings, Inc. 113,100 1,385,475
------------
(Class 'A' Stock)+ 35,909,999
- --------------------------------------------------------------------------------
MISCELLANEOUS-INDUSTRIAL - 12.8%
Clarcor, Inc. 58,100 1,285,463
Coltec Industries, Inc.+ 234,800 4,431,850
Crane Co. 111,300 3,227,700
Danaher Corp. 70,800 3,301,050
Donaldson, Inc. 100,000 3,350,000
Figgie International, Inc.
(Class 'A' Stock)+ 239,800 2,877,600
Global Industrial
Technologies, Inc.+ 317,900 7,033,538
Greenfields Industries, Inc. 168,000 5,145,000
Hanson PLC (ADR)
(United Kingdom) 227,500 1,535,625
Idex Corp. 85,000 3,389,375
Jason, Inc.+ 204,500 1,329,250
Lancaster Colony Corp. 21,100 ,970,600
Lydall, Inc.+ 134,600 3,028,500
Mark IV Industries, Inc. 154,943 3,505,585
Pentair, Inc. 138,800 4,476,300
Regal Beloit Corp. 160,000 3,140,000
United Dominion Industries 224,700 5,280,450
Varian Associates, Inc. 8,200 417,175
Wolverine Tube, Inc.+ 150,200 5,294,550
------------
63,019,611
- --------------------------------------------------------------------------------

SEE NOTES TO FINANCIAL STATEMENTS

22
<PAGE>

FINANCIAL STATEMENTS OF VCA-10

STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1996

COMMON STOCK VALUE
INVESTMENTS SHARES [NOTE 2A]
- --------------------------------------------------------------------------------
NON-FERROUS METALS - 1.7%
The Carbide/Graphite Group+ 275,000 $ 5,396,875
Ucar International, Inc.+ 75,000 2,821,875
------------
8,218,750
- --------------------------------------------------------------------------------
RAILROADS - 3.1%
Canadian Pacific Ltd. 89,300 2,366,450
Greenbrier Companies, Inc. 272,300 2,825,113
Illinois Central Corp. 110,400 3,532,800
Union Pacific Corp. 52,000 3,126,500
Varlen Corp. 153,552 3,157,413
------------
15,008,276
- --------------------------------------------------------------------------------
REGIONAL BANKS - 4.1%
Bank of Boston Corp. 85,500 5,493,375
Cullen Frost Bankers, Inc. 105,000 3,491,250
First Chicago NBD Corp. 70,272 3,777,120
Norwest Corp. 171,800 7,473,300
------------
20,235,045
- --------------------------------------------------------------------------------
RETAIL - 1.5%
Carson Pirie Scott & Co.+ 106,100 2,679,025
Haverty Furniture, Inc. 425,000 4,834,375
------------
7,513,400
- --------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 2.4%
Cambrex Corp. 105,000 3,438,750
Ferro Corp. 134,800 3,824,950
Lilly Industries, Inc. 106,500 1,943,625
OM Group, Inc. 93,000 2,511,000
------------
11,718,325
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 1.1%
AT&T Corp. 126,188 5,552,478
- --------------------------------------------------------------------------------
TRUCKING/SHIPPING - 1.4%
Consolidated Freightways, Inc. 93,600 2,082,600
Interpool, Inc. 109,200 2,552,550
Pittston Burlington Group 110,400 2,208,000
------------
6,843,150
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS INVESTMENTS - 93.5%
(Cost: $344,578,797) $459,437,482
- --------------------------------------------------------------------------------
PREFERRED STOCK INVESTMENTS
- --------------------------------------------------------------------------------
DRUGS & MEDICAL SUPPLIES
Fresenius Medical Care (ADR)+
(Germany)
(Cost: $4,163) 42,000 $5,460
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 6.1% PRINCIPAL
AMOUNT
(000)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 6.1%
Smith Barney, Inc., 6.25%
12/31/96 - 01/02/97, Amount Due -
$30,080,445 (collateralized by
$30,824,499 U.S. Treasury Bonds,
8.25%, Due 07/15/98)
(Cost: $30,070,000) $30,070 30,070,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.6%
(Cost: $374,652,960) $489,512,942
- --------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES
Cash 937
Dividends and Interest Receivable 406,747
Receivable for Pending Capital Transaction 791,329
Receivable for Investments Sold 2,213,122
Payable for Investments Purchased $ (1,422,476)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS
LESS LIABILITIES (0.4%) $ 1,989,659
- --------------------------------------------------------------------------------
NET ASSETS - 100% 491,502,601
- --------------------------------------------------------------------------------
NET ASSETS, REPRESENTING:
Equity of Participants
91,532,435 Accumulation Units at an
Accumulation Unit Value of
$5.3383 488,628,878
Equity of The Prudential Insurance
Company of America 2,873,723
------------
$491,502,601
================================================================================

The following abbreviations are used in portfolio descriptions;
ADR - American Depository Receipts
N.V. - Naamloze VennootSchap (Dutch Corporation)
PLC - Public Limited Company
+ No cash dividend was paid on these securities during the year ended December
31, 1996.

SEE NOTES TO FINANCIAL STATEMENTS

23
<PAGE>

FINANCIAL STATEMENTS OF VCA-10
STATEMENT OF OPERATIONS

- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME [NOTE 2B]
Dividends $ 4,790,830
Interest 1,007,254
- --------------------------------------------------------------------------------
TOTAL INCOME 5,798,084
- --------------------------------------------------------------------------------
EXPENSES [NOTE 3]
Fees Charged to Participants for Investment Management Fee 1,030,402
Fees Charged to Participants for Administrative Expenses 3,091,205
- --------------------------------------------------------------------------------
Total Expenses 4,121,607
- --------------------------------------------------------------------------------
INVESTMENT INCOME - NET 1,676,477
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - NET [NOTE 2B]
Realized Gain on Investments - Net 44,992,957
Increase in Unrealized Appreciation on Investments - Net 51,253,048
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 96,246,005
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $97,922,482
================================================================================

STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
OPERATIONS
Investment Income - Net $ 1,676,477 $ 1,824,418
Realized Gain on Investments - Net 44,992,957 30,814,449
Increase In Unrealized
Appreciation on Investments - Net 51,253,048 37,773,296
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 97,922,482 70,412,163
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS [NOTES 3 & 5]
Purchase Payments and Transfers In
[Note 9] 99,698,241 57,125,760
Withdrawals and Transfers Out [Note 9] (54,131,908) (45,844,459)
Annual Account Charges Deducted from
Participants' Accounts [Note 4] (81,929) (78,996)
Deferred Sales Charge [Note 5] (13,057) (146,870)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS 45,471,347 11,055,435
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
RESULTING FROM SURPLUS TRANSFERS
[NOTE 10] (980,047) 0
- --------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 142,413,782 81,467,598
NET ASSETS
Beginning of Year 349,088,819 267,621,221
- --------------------------------------------------------------------------------
End of Year $ 491,502,601 $ 349,088,819
================================================================================

SEE NOTES TO FINANCIAL STATEMENTS

24
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-10
- --------------------------------------------------------------------------------

NOTE 1: GENERAL

The Prudential Variable Contract Account-10 (VCA-10 or the Account) was
established on March 1, 1982 by The Prudential Insurance Company of
America (Prudential) under the laws of the State of New Jersey and is
registered as an open-end, diversified management investment company
under the Investment Company Act of 1940, as amended. VCA-10 has been
designed for use by employers (Contract-holders) in connection with
retirement arrangements made available to their employees
(Participants). Its investments are composed primarily of common stocks.
All contractual and other obligations arising under contracts
participating in VCA-10 are general corporate obligations of Prudential,
although Participants' payments from the Account will depend upon the
investment experience of the Account.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. SECURITIES VALUATION

EQUITY SECURITIES

Securities for which the primary market is on an exchange are generally
valued at the last sale price on such exchanges 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. Portfolio securities for
which market quotations are not readily available will be valued at fair
value as determined in good faith under the direction of the Account's
Pricing Committee.

FIXED INCOME SECURITIES

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

Short-term investments having maturities of sixty days or less are
valued at amortized cost, which 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.

25
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-10
- --------------------------------------------------------------------------------

B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME

Securities transactions are recorded on the trade date. Realized gains
and losses on sales of securities are calculated on the identified cost
basis. Effective January 1, 1996, VCA-10 changed its method of
accounting for realized gains and losses on investments from an average
cost basis to an identified cost basis. Dividend income is recorded on
the ex-dividend date and interest income is recorded on the accrual
basis. Income and realized and unrealized gains and losses are allocated
to the Participants and Prudential on a daily basis in proportion to
their respective ownership in VCA-10. Expenses are recorded on the
accrual basis which may require the use of certain estimates by
management.

C. REPURCHASE AGREEMENTS

Repurchase agreements may be considered loans of money to the seller of
the underlying security. VCA-10 will not enter into repurchase
agreements unless the agreement is fully collateralized, i.e., the value
of the underlying collateral securities is, and during the entire term
of the agreement remains, at least equal to the amount of the 'loan'
including accrued interest. VCA-10's custodian will take possession of
the collateral and will value it daily to assure that this condition is
met. In the event that a seller defaults on a repurchase agreement,
VCA-10 may incur a loss in the market value of the collateral as well as
disposition costs; and, if a party with whom VCA-10 had entered into a
repurchase agreement becomes insolvent, VCA-10'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.

D. TAXES

The operations of VCA-10 are part of, and are taxed with, the operations
of Prudential. Under the current provisions of the Internal Revenue
Code, Prudential does not expect to incur federal income taxes on
earnings of VCA-10 to the extent the earnings are credited under the
Contracts. As a result, the Unit Value of VCA-10 has not been reduced by
federal income taxes.

26
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-10
- --------------------------------------------------------------------------------

NOTE 3: CHARGES

A. Prudential acts as investment manager for VCA-10 under an agreement
for Investment Management Services. A daily charge, at an effective
annual rate of 1.00% of the current value of the Participant's equity in
VCA-10, is paid to Prudential. Three quarters of this charge (0.75%) is
for administrative expenses not provided by the annual account charge,
and one quarter (0.25%) is for investment management services.

B. An annual account charge of not more than $20 is deducted from the
account of each Participant, if applicable, at the time of withdrawal of
the value of all of the Participant's accounts or at the end of the
accounting year by canceling Units. The charge will first be made
against a Participant's account under a fixed dollar annuity companion
contract or fixed rate option of the non-qualified combination contract.
If the Participant has no account under a companion contract or the
fixed rate option, or if the amount under the companion contract or the
fixed rate option is too small to pay the charge, the charge will be
made against the Participant's account in VCA-11. If the Participant has
no VCA-11 account, or if the amount under that account is too small to
pay the charge, the charge will then be made against the Participant's
VCA-10 account. If the Participant has no VCA-10 account, or if it is
too small to pay the charge, the charge will then be made against any
one or more of the Participant's accounts in VCA-24.

C. A deferred sales charge is imposed upon that portion of certain
withdrawals which represents a return of contributions. The charge is
designed to compensate Prudential for sales and other marketing
expenses. The maximum deferred sales charge is 7% on contributions
withdrawn from an account during the first two years of participation,
6% on contributions withdrawn during the third through fifth years, 4%
on contributions withdrawn during the sixth through tenth years, and 3%
on contributions withdrawn during the eleventh through fifteenth years.
No deferred sales charge is imposed upon contributions withdrawn for any
reason after fifteen years of participation in the Program. In addition,
no deferred sales charge is imposed upon contributions withdrawn to
purchase an annuity under a Contract, to provide a death benefit,
pursuant to a systematic withdrawal plan, to provide a minimum
distribution payment, or in cases of financial hardship or disability
retirement as determined pursuant to provisions of the employer's
retirement arrangement. Further, for all plans other than IRAs, no
deferred sales charge is imposed upon contributions withdrawn due to
resignation or retirement by the Participant or termination of the
Participant by the Contract-holder. Contributions transferred among
VCA-10, VCA-11, the Subaccounts of VCA-24, a companion contract, and the
fixed rate option of the non-qualified combination contract are
considered to be withdrawals from the Account or Subaccount from which
the transfer is made, but no deferred sales charge is imposed upon them.
They will however, be considered as contributions to the receiving
Account or Subaccount for purposes of calculating any deferred sales
charge imposed upon their subsequent withdrawal from it.

27
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-10
- --------------------------------------------------------------------------------

NOTE 4: PURCHASES AND SALES OF PORTFOLIO SECURITIES

For the year ended December 31, 1996, the aggregate cost of purchases
and the proceeds from sales of securities, excluding short-term
investments, were $197,240,358 and $160,239,627 respectively.

NOTE 5: UNIT TRANSACTIONS

The number of Accumulation Units issued and redeemed for the years ended
December 31, 1996 and 1995 is as follows:

1996 1995
Units issued 21,434,824 15,057,016
Units redeemed 11,719,339 12,428,790

NOTE 6: NET DECREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS

The decrease in net assets resulting from surplus transfers represents
the net withdrawals from the equity of Prudential from VCA-10.

NOTE 7: RELATED PARTY TRANSACTIONS

For the year ended December 31, 1996, Prudential Securities
Incorporated, an indirect, wholly-owned subsidiary of Prudential, earned
$12,687 in brokerage commissions from portfolio transactions executed on
behalf of VCA-10. During the year ended December 31, 1996, Prudential
has advised the Account that it received $11,211 in loan origination
fees.

NOTE 8: PARTICIPANT LOANS

Loans are considered to be withdrawals from the Account from which the
loan amount was deducted; however no deferred sales charge is imposed
upon them. The principal portion of any loan repayment, however, will be
treated as a contribution to the receiving Account for purposes of
calculating any deferred sales charge imposed upon any subsequent
withdrawal. If the Participant defaults on the loan, for example by
failing to make required payments, the outstanding balance of the loan
will be treated as a withdrawal for purposes of the deferred sales
charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount
was withdrawn. If sufficient funds do not remain in those Accumulation
Accounts, the deferred sales charge will be withdrawn from the
Participant's other Accumulation Accounts as well.

Withdrawals, transfers and loans from VCA-10 are considered to be
withdrawals of contributions until all of the Participant's
contributions to the Account have been withdrawn, transferred or
borrowed. No deferred sales charge is imposed upon withdrawals of any
amount in excess of contributions.

For the year ended December 31, 1996, $1,531,937 in participant loans
were withdrawn from VCA-10 and $789,537 of principal and interest was
repaid to VCA-10. For the year ended December 31, 1995, $1,171,098 in
participant loans was withdrawn from VCA-10 and $327,958 of principal
and interest was repaid to VCA-10. Loan repayments are invested in
Participant's account(s) as chosen by the Participant, which may not
necessarily be VCA-10. The initial loan proceeds which are being repaid
may not necessarily have originated from VCA-10.

28
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Committee and Participants
of The Prudential Variable Contract Account - 11
of The Prudential Insurance Company of America

In our opinion, the accompanying statement of net assets, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Prudential Variable Contract Account - 11 of The Prudential Insurance
Company of America (the "Account") at December 31,1996, the results of its
operations, the changes in its net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1996 by correspondence with the custodian, provides a reasonable basis for
the opinion expressed above.

Price Waterhouse LLP
New York, New York
February 14, 1997

29
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Committee of and Persons Participating in
The Prudential Variable Contract Account-11
and the Board of Directors of
The Prudential Insurance Company of America
Newark, New Jersey

We have audited the accompanying statement of changes in net assets of The
Prudential Variable Contract Account-11 of The Prudential Insurance Company of
America for the year ended December 31, 1995. This financial statement and share
information are the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

In our opinion, such financial statement presents fairly, in all material
respects, the changes in net assets of The Prudential Variable Contract
Account-11, for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996

30
<PAGE>
FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1996

SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMERCIAL PAPER--U.S. - 21.0%
Associates Corp of North America, 7.253%
Due 01/02/97 $ 100,000 $ 100,000
BankAmerica Corp., 7.500%
Due 03/15/97 190,000 190,646
CXC, Inc., 5.472%
Due 01/23/97 4,400,000 4,366,153
Enterprise Funding Corp., 5.578%
Due 01/15/97 2,194,000 2,182,838
Finova Capital Corp., 5.497%
Due 01/31/97 275,000 272,627
Finova Capital Corp., 5.493%
Due 02/12/97 500,000 495,164
GE Capital Corp., 5.518%
Due 03/14/97 363,000 358,549
Household International, Inc., 5.442%
Due 03/04/97 2,200,000 2,170,793
ITT Financial Corp., 5.460%
Due 01/23/97 980,000 972,770
Johnson Controls Inc., 5.530%
Due 01/31/97 4,400,000 4,360,483
Union Pacific Resources, 5.631%
Due 01/21/97 3,653,000 3,633,111
----------- -----------
19,255,000 19,103,134
- --------------------------------------------------------------------------------
OTHER CORPORATE DEBT--U.S. - 37.8%
(MEDIUM TERM NOTES, CORPORATE BONDS)
Associates Corp. of North America,
7.050% Medium Term Note,
Due 06/30/97 1,000,000 1,005,105
Associates Corp. of North America,
5.875% Corporate Bond,
Due 08/15/97 1,300,000 1,298,493
Beneficial Corp., 7.250%
Medium Term Note,
Due 06/09/97 100,000 100,577
Beneficial Corp., 6.060%
Medium Term Note,
Due 09/23/97 175,000 175,476
Beneficial Corp., 9.320%
Medium Term Note,
Due 08/04/97 100,000 102,064
Caterpillar Financial Services,
7.910% Medium Term Note,
Due 03/03/97 2,000,000 2,007,817
Caterpillar Financial Services,
7.150% Medium Term Note,
Due 03/10/97 1,450,000 1,454,145
Dean Witter Discover, 5.747%
Medium Term Note,
Due 03/06/97# 1,250,000 1,249,977
Ford Motor Credit Corp., 5.900%
Medium Term Note,
Due 05/05/97# 3,360,000 3,364,039
Ford Motor Credit Corp., 9.630%
Medium Term Note,
Due 12/01/97 350,000 362,237
Ford Motor Credit Corp., 5.625%
Corporate Bond,
Due 03/03/97 285,000 284,895
Ford Motor Credit Corp., 5.650%
Medium Term Note,
Due 02/18/97# 450,000 450,081
General Electric Capital Corp.,
6.125% Medium Term Note,
Due 04/15/97 250,000 250,143
General Motors Acceptance Corp.,
7.750% Medium Term Note,
Due 01/23/97 150,000 150,153
General Motors Acceptance Corp.,
7.875% Medium Term Note,
Due 02/27/97 395,000 396,207
General Motors Acceptance Corp.,
5.520% Medium Term Note,
Due 02/21/98# 300,000 299,985
General Motors Acceptance Corp.,
5.743% Medium Term Note,
Due 03/18/97# 450,000 449,965
General Motors Acceptance Corp.,
7.400% Medium Term Note,
Due 01/14/97 490,000 490,261
General Motors Acceptance Corp.,
5.710% Medium Term Note,
Due 05/15/98# 2,670,000 2,669,026
Goldman Sachs Group L.P.,
5.719% Medium Term Note,
Due 6/4/01# 3,800,000 3,800,000
Household Finance Corp., 5.713%
Medium Term Note,
Due 01/13/98# 1,250,000 1,251,951
McDonalds Corp., 8.875%
Medium Term Note,
Due 02/28/96 3,000,000 3,015,299
Morgan Stanley Group, Inc.,
5.625% Corporate Bond,
Due 11/16/98# 2,000,000 2,000,000

SEE NOTES TO FINANCIAL STATEMENTS

31
<PAGE>

FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1996

SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
- --------------------------------------------------------------------------------
PHH Corporation, 8.000%
Medium Term Note,
Due 01/01/97 $ 3,620,000 $ 3,620,000
Sears Discover Credit Corp.,
7.810% Medium Term Note,
Due 03/18/97 3,600,000 3,612,824
Sears Roebuck Acceptance Corp.,
7.480% Medium Term Note,
Due 02/19/97 310,000 310,852
Sears Roebuck & Co., 6.660%
Medium Term Note,
Due 05/20/97 150,000 150,368
----------- -----------
34,255,000 34,321,940
- --------------------------------------------------------------------------------
OTHER BANK RELATED INSTRUMENTS--U.S. - 30.5%
(BANK NOTES, CERTIFICATES OF DEPOSIT)
American Express Centurion Bank,
5.575% Bank Note,
Due 6/10/97# 3,000,000 2,999,579
Bank One Columbus, 5.580%
Bank Note, Due 07/01/97# 200,000 199,845
Bank One Milwaukee, N.A.,
5.260% Bank Note,
Due 10/08/97# 4,000,000 3,997,885
Bankers Trust Company, 5.350%
Certificate of Deposit,
Due 02/20/97 1,000,000 999,747
FCC National Bank, 5.580%
Bank Note, Due 03/04/97# 4,000,000 3,999,280
Key Bank of New York, N.A.,
4.820% Bank Note,
Due 09/04/97# 2,900,000 2,897,869
NationsBank of Texas, 5.605%
Bank Note, Due 06/18/97# 100,000 100,002
NationsBank of Texas, 5.680%
Bank Note, Due 08/11/97# 1,000,000 999,614
PNC Bank of Pittsburgh, 5.565%
Bank Note, Due 02/20/97# 720,000 719,909
PNC Bank, N.A., 5.483%
Bank Note, Due 01/06/97# 3,400,000 3,399,915
Society National Bank Cleveland,
5.580% Bank Note,
Due 05/14/97# 1,200,000 1,199,193
Wachovia Bank, 5.450%
Bank Note, Due 02/03/97# 2,000,000 1,999,994
Wells Fargo & Company, 5.543%
Bank Note, Due 01/28/97# 4,200,000 4,200,113
----------- -----------
27,720,000 27,712,945
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - FOREIGN - 8.8%
Abbey National PLC, 5.420%
Certificate of Deposit,
Due 05/27/97 4,000,000 3,999,042
Bank of Montreal, 5.430%
Certificate of Deposit,
Due 01/27/97 2,000,000 2,000,000
Canadian Imperial Bank of
Commerce, 5.390%
Certificate of Deposit,
Due 01/27/97 1,500,000 1,500,000
Societe Generale, 5.494%
Certificate of Deposit,
Due 12/24/97# 500,000 499,560
----------- -----------
8,000,000 7,998,602
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS - 98.1%
(Cost: $89,136,621) 89,136,621
- --------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES
Overdraft (360)
Interest Receivable 813,173
Receivable for Pending
Capital Transactions 890,088
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS, LESS LIABILITIES - 1.9% 1,702,901
- --------------------------------------------------------------------------------
NET ASSETS (100%) 90,839,522
- --------------------------------------------------------------------------------
NET ASSETS, REPRESENTING:
Equity of Participants
38,315,464 Units at a Unit Value of
$2.3210 88,929,234
Equity of The Prudential Insurance
Company of America 1,910,288
-----------
$90,839,522
================================================================================

# Indicates a variable rate security. Rate shown is rate in effect at December
31, 1996.

SEE NOTES TO FINANCIAL STATEMENTS

32
<PAGE>

FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF OPERATIONS

STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,872,593 $ 3,907,691
- --------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Purchase Payments and Transfers In [Note 7] 97,217,613 64,383,901
Withdrawals and Transfers Out [Note 7] (87,648,372) (67,160,389)
Annual Account Charges Deducted from
Participants' Accounts [Note 4] (40,724) (40,200)
Deferred Sales Charge [Note 5] (8,659) (17,399)
- --------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS 9,519,858 (2,834,087)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM
SURPLUS TRANSFERS [NOTE 8] (89,828) 0
- --------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 13,302,623 1,073,604
NET ASSETS
Beginning of Year 77,536,899 76,463,295
- --------------------------------------------------------------------------------
End of Year $ 90,839,522 $ 77,536,899
================================================================================

SEE NOTES TO FINANCIAL STATEMENTS

33
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-11
- --------------------------------------------------------------------------------

NOTE 1: GENERAL

The Prudential Variable Contract Account-11 (VCA-11 or the Account) was
established on March 1, 1982 by The Prudential Insurance Company of
America (Prudential) under the laws of the State of New Jersey and is
registered as an open-end, diversified management investment company
under the Investment Company Act of 1940, as amended. VCA-11 has been
designed for use by employers (Contract-holders) in making retirement
arrangements on behalf of their employees (Participants). Its
investments are primarily composed of short-term securities. All
contractual and other obligations arising under contracts participating
in VCA-11 (the "Contracts") are general corporate obligations of
Prudential, although Participants' payments from the Account will depend
upon the investment experience of the Account.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. VALUATION OF SHORT-TERM INVESTMENTS

Pursuant to an exemptive order from the Securities and Exchange
Commission, securities having a remaining maturity of one year or less
are valued at amortized cost which approximates market value. Amortized
cost is computed using the cost on the date of purchase adjusted for
constant accretion of discount or amortization of premium to maturity.
The rate displayed is the effective yield from the date of purchase to
the date of maturity.

B. INCOME RECOGNITION

Security transactions are recorded on trade date. Interest income is
accrued daily. Income on investments is allocated to the Participants
and Prudential on a daily basis in proportion to their respective
equities in VCA-11. Expenses are recorded on the accrual basis which may
require the use of certain estimates by management.

C. TAXES

The operations of VCA-11 are part of, and are taxed with, the operations
of Prudential. Under the current provisions of the Internal Revenue
Code, Prudential does not expect to incur federal income taxes on
earnings of VCA-11 to the extent the earnings are credited under the
contracts. As a result, the Unit Value of VCA-11 has not been reduced by
federal income taxes.

NOTE 3: EXPENSES

Prudential acts as investment manager for VCA-11 under an agreement for
Investment Management Services. A daily charge, at an effective annual
rate of 1.00% of the current value of the Participants' equity in
VCA-11, is paid to Prudential. Three quarters of this charge (0.75%) is
for administrative expenses not provided by the annual account charge,
and one quarter (0.25%) is for investment management services.

34
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-11
- --------------------------------------------------------------------------------

NOTE 4: ANNUAL ACCOUNT CHARGE

An annual account charge of not more than $20 annually is deducted from
the account of each Participant, if applicable, at the time of
withdrawal of the value of all of the Participant's accounts or at the
end of the accounting year by canceling Units. The charge will first be
made against a Participant's account under a fixed dollar annuity
companion contract or fixed rate option of the non-qualified combination
contract. If the Participant has no account under a companion contract
or the fixed rate option, or if the amount under the companion contract
or the fixed rate option is too small to pay the charge, the charge will
be made against the Participant's account in VCA-11. If the Participant
has no VCA-11 account, or if the amount under that account is too small
to pay the charge, the charge will then be made against the
Participant's VCA-10 account. If the Participant has no VCA-10 account,
or if it is too small to pay the charge, the charge will then be made
against any one or more of the Participant's accounts in VCA-24.

NOTE 5: DEFERRED SALES CHARGE

A deferred sales charge is imposed upon that portion of certain
withdrawals which represents a return of contributions. The charge is
designed to compensate Prudential for sales and other marketing
expenses. The maximum deferred sales charge is 7% on contributions
withdrawn from an account during the first two years of participation,
6% on contributions withdrawn during the third through fifth years, 4%
on contributions withdrawn during the sixth through tenth years, and 3%
on contributions withdrawn during the eleventh through fifteenth years.
No deferred sales charge is imposed upon contributions withdrawn for any
reason after fifteen years of participation in the Program. In addition,
no deferred sales charge is imposed upon contributions withdrawn to
purchase an annuity under a Contract, to provide a death benefit,
pursuant to a systematic withdrawal plan, to provide a minimum
distribution payment, or in cases of financial hardship or disability
retirement as determined pursuant to provisions of the employer's
retirement arrangement. Further, for all plans other than IRAs, no
deferred sales charge is imposed upon contributions withdrawn due to
resignation or retirement by the Participant or termination of the
Participant by the Contract-holder. Contributions transferred among
VCA-10, VCA-11, the Subaccounts of VCA-24, a companion contract, and the
fixed rate option of the non-qualified combination contract are
considered to be withdrawals from the Account or Subaccount from which
the transfer is made, but no deferred sales charge is imposed upon them.
They will, however, be considered as contributions to the receiving
Account or Subaccount for purposes of calculating any deferred sales
charge imposed upon their subsequent withdrawal from it.

NOTE 6: UNIT TRANSACTIONS

The number of Units issued and redeemed for the years ended December 31,
1996 and 1995 is as follows:

1996 1995
-----------------------------------------------------
Units issued 42,970,959 29,949,209
-----------------------------------------------------
Units redeemed 38,791,430 31,261,514
-----------------------------------------------------

35
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-11
- --------------------------------------------------------------------------------

NOTE 7: PARTICIPANT LOANS

Loans are considered to be withdrawals from the Account from which the
loan amount was deducted, though they are not considered a withdrawal
from the Program. Therefore, no deferred sales charge is imposed upon
them. The principal portion of any loan repayment, however, will be
treated as a contribution to the receiving Account for purposes of
calculating any deferred sales charge imposed upon any subsequent
withdrawal. If the Participant defaults on the loan, for example, by
failing to make required payments, the outstanding balance of the loan
will be treated as a withdrawal for purposes of the deferred sales
charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount
was withdrawn. If sufficient funds do not remain in those Accumulation
Accounts, the deferred sales charge will be withdrawn from the
Participant's other Accumulation Accounts as well.

Withdrawals, transfers and loans from VCA-11 are considered to be
withdrawals of contributions until all of the Participant's
contributions to the Account have been withdrawn, transferred or
borrowed. No deferred sales charge is imposed upon withdrawals of any
amount in excess of contributions.

For the year ended December 31, 1996 $648,000 in participant loans was
withdrawn from VCA-11 and $225,936 of principal and interest was repaid
to VCA-11. For the year ended December 31, 1995, $578,756 in participant
loans was withdrawn from VCA-11 and $105,290 of principal and interest
was repaid. Loan repayments are invested in Participant's account(s) as
chosen by the Participant, which may not necessarily be VCA-11. The
initial loan proceeds which are being repaid may not necessarily have
originated solely from VCA-11. During the year ended December 31, 1996,
Prudential has advised the Account that it received $5,020 in loan
origination fees.

NOTE 8: NET DECREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS

The decrease in net assets from surplus represents the net withdrawals
from the Equity of Prudential to VCA-11.

36
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Contract Holders
of The Prudential Variable Contract Account - 24
and the Board of Directors of
The Prudential Insurance Company of America

In our opinion, the accompanying statements of net assets, and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of the Equity Subaccount, the
Diversified Bond Subaccount, the Flexible Managed Subaccount, the Conservative
Balanced Subaccount, the Stock Index Subaccount, the Global Subaccount and the
Government Income Subaccount, separately managed portfolios of The Prudential
Variable Contract Account - 24 of The Prudential Insurance Company of America
(the "Account") at December 31,1996, the results of each of their operations and
the changes in each of their net assets for the year then ended, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Account's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of shares owned in The Prudential Series
Fund, Inc. at December 31, 1996 with the transfer agent, provide a reasonable
basis for the opinion expressed above.

Price Waterhouse LLP
New York, New York
February 14,1997

37
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Committee of and Persons Participating in
The Prudential Variable Contract Account-24
and the Board of Directors of
The Prudential Insurance Company of America
Newark, New Jersey

We have audited the accompanying statement of changes in net assets of The
Prudential Variable Contract Account-24 of The Prudential Insurance Company of
America for the year ended December 31, 1995. This financial statement and share
information are the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

In our opinion, such financial statement presents fairly, in all material
respects, the changes in net assets of The Prudential Variable Contract
Account-24, for the year ended December 31, 1995 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996

38
<PAGE>

FINANCIAL STATEMENTS OF VCA-24

STATEMENTS OF NET ASSETS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------------------------------
DIVERSIFIED FLEXIBLE CONSERVATIVE GOVERNMENT
EQUITY BOND MANAGED BALANCED STOCK INDEX GLOBAL INCOME
------------ ------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment in Shares of
The Prudential Series Fund,
Inc. Portfolios at Net
Asset Value [Note 2] .......... $416,791,593 $ 42,378,191 $148,311,012 $112,001,783 $267,300,384 $ 60,112,923 $26,695,622

Receivable for Pending
Capital Transactions .......... 912,926 92,196 444,096 328,728 1,426,388 (239,970) 81,183
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET ASSETS ....................... $417,704,519 $ 42,470,387 $148,755,108 $112,330,511 $268,726,772 $ 59,872,953 $26,776,805
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET ASSETS REPRESENTING:
Equity of Participants ........ $417,060,175 $ 42,159,798 $148,332,294 $111,882,826 $268,321,793 $ 59,761,041 $26,443,949
Equity of The Prudential
Insurance Company of America 644,344 310,589 422,814 447,685 404,979 111,912 332,856
------------ ------------ ------------ ------------ ------------ ------------ -----------
$417,704,519 $ 42,470,387 $148,755,108 $112,330,511 $268,726,772 $ 59,872,953 $26,776,805
============ ============ ============ ============ ============ ============ ===========

STATEMENTS OF OPERATIONS
DECEMBER 31, 1996

SUBACCOUNTS
-----------------------------------------------------------------------------------------------
DIVERSIFIED FLEXIBLE CONSERVATIVE GOVERNMENT
EQUITY BOND MANAGED BALANCED STOCK INDEX GLOBAL INCOME
------------ ------------ ------------ ------------ ------------ ------------ -----------
INVESTMENT INCOME
Ordinary Dividend Distributions $ 9,298,422 $ 2,596,102 $ 4,202,929 $ 4,320,318 $ 4,142,165 $ 1,308,678 $ 1,670,294
Expense [Note 3]
Fees Charged to Participants
for Administrative Purposes 2,742,866 284,266 975,102 764,583 1,540,266 367,057 192,381
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET INVESTMENT INCOME ............ 6,555,556 2,311,836 3,227,827 3,555,735 2,601,899 941,621 1,477,913
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET REALIZED AND UNREALIZED
GAINS/(LOSSES) ON INVESTMENTS
Capital Gains Distributions
Received ....................... 36,574,172 0 13,778,567 6,811,215 2,989,951 913,390 0
Net Realized Gain/(loss)
on Investments ............... (156,751) (79,728) (78,517) (21,272) (87,461) 47,378 (114,113)

Net Increase/(Decrease) in Unrealized
Appreciation on Investments ... 17,385,687 (685,289) (958,043) 1,250,879 35,233,689 6,600,862 (980,950)
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET GAIN/(LOSS) ON INVESTMENTS ... 53,803,108 (765,017) 12,742,007 8,040,822 38,136,179 7,561,630 (1,095,063)
------------ ------------ ------------ ------------ ------------ ------------ -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .... $ 60,358,664 $ 1,546,819 $ 15,969,834 $ 11,596,557 $ 40,738,078 $ 8,503,251 $ 382,850
============ ============ ============ ============ ============ ============ ===========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

39
<PAGE>

FINANCIAL STATEMENTS OF VCA-24

STATEMENTS OF CHANGES IN
NET ASSETS

<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------------------------
DIVERSIFIED FLEXIBLE
EQUITY BOND MANAGED
----------------------------- ----------------------------- ----------------------------
FOR THE YEAR ENDED DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....... $ 60,358,664 $ 67,319,729 $ 1,546,819 $ 5,204,462 $ 15,969,834 $ 19,889,315
------------- ------------- ------------- ------------- ------------- -------------

ACCUMULATION UNIT TRANSACTIONS
Purchase Payments and
Transfers In [Note 8] ............ 107,762,703 78,369,879 16,922,821 10,872,319 35,973,030 25,939,820
Withdrawals and
Transfers Out [Note 8] ........... (67,865,025) (32,625,019) (10,193,617) (6,557,977) (16,883,257) (12,409,926)
Annual Account Charges Deducted
From Participants' Accumulation
Accounts [Note 4] ................ (72,051) (70,848) (6,607) (8,556) (22,032) (22,989)
Deferred Sales Charges [Note 5] .. (41,536) (68,298) (1,904) (11,081) (13,233) (19,532)
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM ACCUMULATION
UNIT TRANSACTIONS ................ 39,784,091 45,605,714 6,720,693 4,294,705 19,054,508 13,487,373
------------- ------------- ------------- ------------- ------------- -------------

NET INCREASE/(DECREASE) IN NET ASSETS
FROM SURPLUS TRANSFERS [NOTE 9] .. 38,568 0 82,046 0 49,378 0
------------- ------------- ------------- ------------- ------------- -------------
TOTAL INCREASE/(DECREASE) IN
NET ASSETS ....................... 100,181,323 112,925,443 8,349,558 9,499,167 35,073,720 33,376,688
NET ASSETS
Beginning of Year ................ 317,523,196 204,597,753 34,120,829 24,621,662 113,681,388 80,304,700
------------- ------------- ------------- ------------- ------------- -------------
End of Year ...................... $ 417,704,519 $ 317,523,196 $ 42,470,387 $ 34,120,829 $ 148,755,108 $ 113,681,388
============= ============= ============= ============= ============= =============
</TABLE>

SUBACCOUNTS
-----------------------------
CONSERVATIVE
BALANCED
-----------------------------
FOR THE YEAR ENDED DEC. 31, 1996 DEC. 31, 1995
------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....... $ 11,596,557 $ 12,618,099
------------- -------------

ACCUMULATION UNIT TRANSACTIONS
Purchase Payments and
Transfers In [Note 8] ............ 23,331,996 19,428,383
Withdrawals and
Transfers Out [Note 8] ........... (16,708,605) (13,140,949
Annual Account Charges Deducted
From Participants' Accumulation
Accounts [Note 4] ................ (22,848) (26,993)
Deferred Sales Charges [Note 5] .. (18,558) (22,291)
------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM ACCUMULATION
UNIT TRANSACTIONS ................ 6,581,985 6,238,150
------------- -------------

NET INCREASE/(DECREASE) IN NET ASSETS
FROM SURPLUS TRANSFERS [NOTE 9] .. 105,299 0
------------- -------------
TOTAL INCREASE/(DECREASE) IN
NET ASSETS ....................... 18,283,841 18,856,249
NET ASSETS
Beginning of Year ................ 94,046,670 75,190,421
------------- -------------
End of Year ...................... $ 112,330,511 $ 94,046,670
============= =============

SEE NOTES TO FINANCIAL STATEMENTS

40
<PAGE>

FINANCIAL STATEMENTS OF VCA-24

STATEMENTS OF CHANGES IN
NET ASSETS (CONTINUED)

<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------------------------
STOCK GOVERNMENT
INDEX GLOBAL INCOME
---------------------------- ----------------------------- -----------------------------
FOR THE YEAR ENDED DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...... $ 40,738,078 $ 32,601,394 $ 8,503,251 $ 4,359,966 $ 382,850 $ 3,805,656
------------- ------------- ------------- ------------- ------------- -------------
ACCUMULATION UNIT TRANSACTIONS
Purchase Payments and
Transfers In [Note 8] ............ 115,280,494 41,360,803 33,765,226 21,219,027 6,801,398 5,878,622
Withdrawals and
Transfers Out [Note 8] ........... (29,386,854) (14,006,587) (19,175,405) (17,369,898) (6,189,358) (4,231,878)
Annual Account Charges Deducted
From Participants' Accumulation
Accounts [Note 4] ................ (16,784) (13,183) (1,664) (2,527) (1,991) (2,617)
Deferred Sales Charges [Note 5] .. (11,937) (14,549) (7,142) (7,245) (4,146) (8,151)
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM ACCUMULATION
UNIT TRANSACTIONS ................ 85,864,919 27,326,484 14,581,015 3,839,357 605,903 1,635,976
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE/(DECREASE) IN NET
ASSETS FROM SURPLUS TRANSFERS
[NOTE 9] ....................... 284,992 0 143,785 0 85,679 0
------------- ------------- ------------- ------------- ------------- -------------
TOTAL INCREASE/(DECREASE) IN
NET ASSETS ..................... 126,887,989 59,927,878 23,228,051 8,199,323 1,074,432 5,441,632
NET ASSETS
Beginning of Year .............. 141,838,783 81,910,905 36,644,902 28,445,579 25,702,373 20,260,741
------------- ------------- ------------- ------------- ------------- -------------
End of Year .................... $ 268,726,772 $ 141,838,783 $ 59,872,953 $ 36,644,902 $ 26,776,805 $ 25,702,373
============= ============= ============= ============= ============= =============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

41
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-24
- --------------------------------------------------------------------------------

NOTE 1: GENERAL

The Prudential Variable Contract Account-24 (VCA-24 or the Account) was
established on April 29, 1987 by The Prudential Insurance Company of
America (Prudential) under the laws of the State of New Jersey and is
registered as a unit investment trust under the Investment Company Act
of 1940, as amended. VCA-24 has been designed for use by employers
(Contract-holders) in making retirement arrangements on behalf of their
employees (Participants).

The Account is comprised of seven Subaccounts. Each of the Subaccounts
invests in a corresponding portfolio of The Prudential Series Fund, Inc.
(the Fund). The Equity Subaccount invests in the Equity Portfolio, the
Diversified Bond Subaccount in the Diversified Bond Portfolio, the
Flexible Managed Subaccount in the Flexible Managed Portfolio, the
Conservative Balanced Subaccount in the Conservative Balanced Portfolio,
the Stock Index Subaccount in the Stock Index Portfolio, the Global
Subaccount in the Global Portfolio, and the Government Income Subaccount
in the Government Income Portfolio. All contractual and other
obligations arising under contracts participating in VCA-24 (the
"Contracts") are general corporate obligations of Prudential, although
Participants' payments from the Account will depend upon the investment
experience of the Account.

NOTE 2: INVESTMENT INFORMATION

The number of shares of each portfolio of the Fund, the Net Asset Value
(NAV) per share for each portfolio held by the Subaccounts of VCA-24,
and the aggregate cost of investments in such shares as of December 31,
1996 are as follows:

<TABLE>
<CAPTION>
DIVERSIFIED FLEXIBLE CONSERVATIVE STOCK GOVERNMENT
EQUITY BOND MANAGED BALANCED INDEX GLOBAL INCOME
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Shares 15,456,825 3,829,793 8,337,874 7,217,958 11,257,260 3,366,784 2,379,058
- --------------------------------------------------------------------------------------------------------------------------------
NAV per Share $ 26.9649 $ 11.0654 $ 17.7876 $ 15.5171 $ 23.7447 $ 17.8547 $ 11.2211
- --------------------------------------------------------------------------------------------------------------------------------
Cost at 12-31-96 $336,094,701 $ 41,308,607 $138,245,474 $105,000,177 $196,727,611 $ 48,395,797 $ 26,406,627
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 3: EXPENSES

A daily charge at an effective annual rate of 0.75% of the Net Asset
Value of each Subaccount of VCA-24 is paid to Prudential for
administrative expenses not provided by the annual account charge.

NOTE 4: ANNUAL ACCOUNT CHARGE

An annual account charge is deducted from the account of each
Participant, if applicable, at the time of withdrawal of the value of
all of the Participant's accounts or at the end of the accounting year
by canceling Units. The charge will first be made against a
Participant's account under a fixed dollar annuity companion contract or
fixed rate option of the non-qualified combination contract. If the
Participant has no account under a fixed contract, or if the amount
under a fixed contract is too small to pay the charge, the charge will
be made against the Participant's account in VCA-11. If the Participant
has no VCA-11 account or if the amount under that account is too small
to pay the charge, the charge will then be made against the
Participant's VCA-10 account. If the Participant has no VCA-10 account,
or if it is too small to pay the charge, the charge will then be made
against any one or more of the Participant's accounts in VCA-24. The
annual account charge will not exceed $20 and is paid to Prudential.

42
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-24
- --------------------------------------------------------------------------------

NOTE 5: DEFERRED SALES CHARGE

A deferred sales charge is imposed upon the withdrawal of certain
purchase payments to compensate Prudential for sales and other marketing
expenses. The maximum deferred sales charge is 7% on contributions
withdrawn during the first two years of participation, 6% on
contributions withdrawn during the third through fifth years, 4% on
contributions withdrawn during the sixth through tenth years, and 3% on
contributions withdrawn during the eleventh through fifteenth years. No
deferred sales charge is imposed upon contributions withdrawn for any
reason after fifteen years of participation in a Program. In addition,
no deferred sales charge is imposed upon contributions withdrawn to
purchase an annuity under a Contract, to provide a death benefit,
pursuant to a systematic withdrawal plan, to provide a minimum
distribution payment, or in cases of financial hardship or disability
retirement as determined pursuant to provisions of the employer's
retirement arrangement. Further, for all plans other than IRAs, no
deferred sales charge is imposed upon contributions withdrawn due to
resignation or retirement by the Participant or termination of the
Participant by the Contract-holder. Contributions transferred among
VCA-10, VCA-11, the Subaccounts of VCA-24, the companion contract, and
the fixed rate option of the non-qualified combination contract are
considered to be withdrawals from the Account or Subaccount from which
the transfer is made, but no deferred sales charge is imposed upon them.
They will, however, be considered as contributions to the receiving
Account or Subaccount for purposes of calculating any deferred sales
charge imposed upon their subsequent withdrawal from it.

NOTE 6: TAXES

The operations of VCA-24 are part of, and are taxed with, the operations
of Prudential. Under the current provisions of the Internal Revenue
Code, Prudential does not expect to incur federal income taxes on
earnings of VCA-24 to the extent the earnings are credited under the
Contracts. As a result, the Unit Value of VCA-24 has not been reduced by
federal income taxes.

NOTE 7: UNIT TRANSACTIONS

The number of units issued and redeemed during the year ended December
31, 1996 is as follows:

1996

<TABLE>
<CAPTION>
DIVERSIFIED FLEXIBLE CONSERVATIVE STOCK GOVERNMENT
EQUITY BOND MANAGED BALANCED INDEX GLOBAL INCOME
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units issued 38,166,239 8,526,394 15,805,415 11,333,358 38,820,747 20,934,314 4,744,681
- ------------------------------------------------------------------------------------------------------------------
Units redeemed 24,107,858 5,157,724 7,545,387 8,176,690 9,951,304 11,868,491 4,337,932
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The number of units issued and redeemed during the year ended December
31, 1995 is as follows:

1995

<TABLE>
<CAPTION>
DIVERSIFIED FLEXIBLE CONSERVATIVE STOCK GOVERNMENT
EQUITY BOND MANAGED BALANCED INDEX GLOBAL INCOME
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units issued 32,947,670 5,949,077 13,134,875 10,521,644 17,141,772 15,333,041 4,320,684
- ------------------------------------------------------------------------------------------------------------------
Units redeemed 13,876,916 3,626,392 6,444,519 7,242,876 5,962,523 12,632,811 3,171,341
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

43
<PAGE>

NOTES TO FINANCIAL STATEMENTS OF VCA-24
- --------------------------------------------------------------------------------

NOTE 8: PARTICIPANT LOANS

Loans are considered to be withdrawals from the Subaccount from which
the loan amount was deducted, however, no deferred sales charge is
imposed upon them. The principal portion of any loan repayment, however,
will be treated as a contribution to the receiving Subaccount for
purposes of calculating any deferred sales charge imposed upon any
subsequent withdrawal. If the Participant defaults on the loan by, for
example failing to make required payments, the outstanding balance of
the loan will be treated as a withdrawal for purposes of the deferred
sales charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount
was withdrawn. If sufficient funds do not remain in those Accumulation
Accounts, the deferred sales charge will be withdrawn from the
Participant's other Accumulation Accounts as well.

Withdrawals, transfers and loans from each Subaccount of VCA-24 are
considered to be withdrawals of contributions until all of the
Participant's contributions to the Subaccount have been withdrawn,
transferred or borrowed. No deferred sales charge is imposed upon
withdrawals of any amount in excess of contributions.

For the year ended December 31, 1996, the amount of participant loans
that was withdrawn from the Subaccounts and the amount of principal and
interest that was repaid to the Subaccounts is as follows:

1996
<TABLE>
<CAPTION>
DIVERSIFIED FLEXIBLE CONSERVATIVE STOCK GOVERNMENT
EQUITY BOND MANAGED BALANCED INDEX GLOBAL INCOME
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loans $1,610,377 $ 281,245 $ 1,024,086 $ 525,796 $ 907,097 $ 385,925 $ 133,569
- ------------------------------------------------------------------------------------------------------------------
Repayments $ 984,613 $ 106,832 $ 462,771 $ 235,430 $ 503,734 $ 195,908 $ 49,505
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

For the year ended December 31, 1995, the amount of participant loans
that was withdrawn from the Subaccounts and the amount of principal that
was repaid to the Subaccounts was as follows:

1995
<TABLE>
<CAPTION>
DIVERSIFIED FLEXIBLE CONSERVATIVE STOCK GOVERNMENT
EQUITY BOND MANAGED BALANCED INDEX GLOBAL INCOME
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loans $1,164,299 $ 183,629 $ 657,487 $ 392,252 $ 557,493 $ 223,882 $ 138,935
- ------------------------------------------------------------------------------------------------------------------
Repayments $ 279,845 $ 41,590 $ 145,416 $ 174,803 $ 145,250 $ 90,455 $ 13,393
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Loan repayments are invested in Participant's account(s) as chosen by
the Participant, which may not necessarily be the Subaccount from which
the loan amount was deducted. The initial loan proceeds which are being
repaid may not necessarily have originated solely from the Subaccounts
of VCA-24.

NOTE 9: NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS

The increase (decrease) in net assets resulting from surplus transfers
represents the net contributions to the Equity of Prudential to VCA-24.
The decrease in net assets resulting from surplus transfers represents
the net withdrawals from the Equity of Prudential from VCA-24.

<PAGE>

<TABLE>
<CAPTION>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND SURPLUS (STATUTORY BASIS)
- ------------------------------------------------------------------------------------------------------------------------------------

DECEMBER 31,
1996 1995
-------- --------
(In Millions)
<S> <C> <C>
ASSETS
Bonds ............................................................................ $ 75,006 $ 77,494
Preferred stock .................................................................. 239 396
Common stock ..................................................................... 7,076 6,133
Mortgage loans on real estate .................................................... 17,039 20,280
Real estate ...................................................................... 2,094 2,488
Policy loans and premium notes ................................................... 6,023 6,208
Cash and short-term investments .................................................. 5,982 4,803
Other invested assets ............................................................ 2,591 3,304
-------- --------

TOTAL CASH AND INVESTED ASSETS ................................................... 116,050 121,106

Premiums due and deferred ........................................................ 1,925 1,917
Accrued investment income ........................................................ 1,640 1,688
Other assets ..................................................................... 1,208 1,120
Assets held in separate accounts ................................................. 57,797 53,903
-------- --------

TOTAL ASSETS ..................................................................... $178,620 $179,734
======== ========

LIABILITIES AND SURPLUS

LIABILITIES

Policy liabilities and insurance reserves:
Future policy benefits and claims ............................................ $ 87,582 $ 93,346
Unearned premiums ............................................................ 619 624
Policy dividends ............................................................. 1,878 1,893
Policyholder account balances ................................................ 7,968 7,966
Notes payable and other borrowings ............................................... 763 807
Asset valuation reserve .......................................................... 2,682 2,705
Federal income tax payable ....................................................... 729 1,278
Other liabilities ................................................................ 9,588 9,191
Liabilities related to separate accounts ......................................... 57,436 53,256
-------- --------

TOTAL LIABILITIES ................................................................ 169,245 171,066
-------- --------

CONTINGENCIES (NOTE 11)

SURPLUS

Capital notes .................................................................... 985 984
Special surplus fund ............................................................. 1,268 1,274
Unassigned surplus ............................................................... 7,122 6,410
-------- --------

TOTAL SURPLUS .................................................................... 9,375 8,668
-------- --------

TOTAL LIABILITIES AND SURPLUS .................................................... $178,620 $179,734
======== ========
</TABLE>

SEE NOTES TO STATUTORY FINANCIAL STATEMENTS
<PAGE>

<TABLE>
<CAPTION>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

STATEMENTS OF OPERATIONS AND CHANGES IN SURPLUS (STATUTORY BASIS)
- ------------------------------------------------------------------------------------------------------------------------------------

YEARS ENDED DECEMBER 31,
1996 1995 1994
(In Millions)

<S> <C> <C> <C>
REVENUE

Premiums and annuity considerations .................................... $ 20,674 $ 21,088 $ 23,612
Net investment income .................................................. 8,677 8,637 7,387
Other income ........................................................... 571 363 367
-------- -------- --------

TOTAL REVENUE .......................................................... 29,922 30,088 31,366
-------- -------- --------

BENEFITS AND EXPENSES

Death benefits ......................................................... 2,943 2,858 2,798
Annuity benefits ....................................................... 3,582 3,495 3,354
Disability benefits .................................................... 5,630 5,765 5,201
Other benefits ......................................................... 806 853 845
Surrender benefits and fund withdrawals ................................ 11,844 12,538 11,714
Net (decrease) increase in reserves .................................... (1,572) (2,178) 1,251
Commissions ............................................................ 477 535 610
Other expenses ......................................................... 2,690 2,650 3,727
-------- -------- --------

TOTAL BENEFITS AND EXPENSES ............................................ 26,400 26,516 29,500
-------- -------- --------

Operating income before dividends and income taxes ..................... 3,522 3,572 1,866
Dividends to policyholders ............................................. 2,526 2,464 2,290
-------- -------- --------

Operating income (loss) before income taxes ............................ 996 1,108 (424)
Income tax provision ................................................... 51 590 453
-------- -------- --------

INCOME (LOSS) FROM OPERATIONS .......................................... 945 518 (877)

NET REALIZED CAPITAL GAINS (LOSSES) .................................... 457 (183) (24)
-------- -------- --------

NET INCOME (LOSS) ..................................................... $ 1,402 $ 335 $ (901)
======== ======== ========

SURPLUS

SURPLUS, BEGINNING OF YEAR ............................................. 8,668 7,449 8,004

Net income (loss) ...................................................... 1,402 335 (901)
Change in net unrealized capital gains (losses) ........................ 191 661 (51)
Change in non-admitted assets .......................................... (206) 717 82
Change in asset valuation reserve ...................................... 11 (694) 653
Other changes, net ..................................................... (691) 200 (338)
-------- -------- --------

SURPLUS, END OF YEAR ................................................... $ 9,375 $ 8,668 $ 7,449
======== ======== ========
</TABLE>

SEE NOTES TO STATUTORY FINANCIAL STATEMENTS

- 1 -
<PAGE>

<TABLE>
<CAPTION>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

STATEMENTS OF CASH FLOWS (STATUTORY BASIS)
- ------------------------------------------------------------------------------------------------------------------------------------

YEARS ENDED DECEMBER 31,
1996 1995 1994
--------- --------- ---------
(In Millions)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums and annuity considerations ...................................... $ 20,669 $ 21,030 $ 23,635
Net investment income .................................................... 8,629 8,511 7,261
Other income received .................................................... 599 479 502
Separate account transfers ............................................... 1,183 1,002 (494)
Benefits and claims paid ................................................. (24,952) (25,524) (24,403)
Policyholders' dividends paid ............................................ (2,453) (2,393) (2,594)
Federal income taxes (paid) received ..................................... (230) (847) 179
Other operating expenses ................................................. (4,224) (3,738) (3,636)
--------- --------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ...................... (779) (1,480) 450
--------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from investments sold, matured, or repaid
Bonds ............................................................... 119,195 93,178 80,668
Stocks .............................................................. 4,328 2,985 4,263
Mortgage loans on real estate ....................................... 3,140 4,997 4,205
Real estate ......................................................... 537 573 935
Net gains (losses) on cash and short-term investments ............... 13 (9) (5)
Miscellaneous proceeds .............................................. 2,128 3,707 2,671
Payments for investments acquired
Bonds ............................................................... (118,009) (101,018) (81,677)
Stocks .............................................................. (6,029) (2,199) (2,312)
Mortgage loans on real estate ....................................... (1,841) (2,810) (3,282)
Real estate ......................................................... (120) (425) (194)
Miscellaneous applications .......................................... (718) (1,213) (1,275)
Net (tax) benefit on capital gains and losses ............................ (622) 107 (275)
--------- --------- ---------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ...................... 2,002 (2,127) 3,722
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES

Net (repayments of) proceeds from borrowed money ......................... (44) 123 1
Net proceeds from the issuance of capital notes .......................... 0 686 0
--------- --------- ---------

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ..................... (44) 809 1
--------- --------- ---------

NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS ............... 1,179 (2,798) 4,173
Cash and short-term investments, beginning of year ....................... 4,803 7,601 3,428
--------- --------- ---------

CASH AND SHORT-TERM INVESTMENTS, END OF YEAR ............................. $ 5,982 $ 4,803 $ 7,601
========= ========= =========
</TABLE>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest payments of $253 million, $144 million and $85 million were made during
1996, 1995 and 1994, respectively.

SEE NOTES TO STATUTORY FINANCIAL STATEMENTS

- 2 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

1. ACCOUNTING POLICIES AND PRINCIPLES

A. Business and basis of presentation - The statutory financial
statements include the accounts of The Prudential Insurance Company of
America ("the Company"), a mutual life insurance company. The
activities of the Company include a broad range of financial services,
including life and health insurance, asset management, and investment
advisory services.

These financial statements were prepared on an unconsolidated
statutory basis of accounting, which differs from the 1995 and 1994
financial statements prepared for general distribution on a
consolidated statutory basis of accounting, both of which differ from
generally accepted accounting principles ("GAAP"). The financial
statements for 1995 and 1994 have been restated on an unconsolidated
statutory basis of accounting adopted in 1996 for purposes of general
distribution. Certain reclassifications have been made to the 1995 and
1994 financial statement amounts to conform to the 1996 presentation.

The Company, domiciled in the State of New Jersey, prepares its
statutory financial statements in accordance with accounting practices
prescribed or permitted by the New Jersey Department of Banking and
Insurance ("the Department"). Prescribed statutory accounting
practices include publications of the National Association of
Insurance Commissioners ("NAIC"), state laws, regulations, and general
administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The financial
statements are substantially the same as those included in the
Statutory Annual Statement except for certain reclassifications and
adjustments. These financial statements differ from those filed with
the Department in that changes to estimated income and premium taxes
applicable to prior periods, which are recorded as direct charges or
credits to surplus in the Annual Statement, have been included in the
"Income tax provision" and "Other expenses" in the Statements of
Operations and Changes in Surplus. This item has the net effect of
increasing (decreasing) net income by $396 million, ($143) million and
$6 million in 1996, 1995 and 1994, respectively.

Pursuant to the Financial Accounting Standards Board Interpretation
No. 40 "Applicability of Generally Accepted Accounting Principles to
Mutual Life Insurance and Other Enterprises," as amended, which is
effective for 1996 financial statements, statutory accounting
practices ("SAP") are no longer considered GAAP for mutual life
insurance companies. SAP differs from GAAP primarily as follows:

(a) the Commissioner's Reserve Valuation Method ("CRVM") is used for the
majority of individual insurance reserves under SAP, whereas for
individual insurance, policyholder liabilities are generally
established using the net level premium method under GAAP. Policy
assumptions used in the estimation of policyholder liabilities are
generally prescribed under SAP, but are based upon actual company
experience under GAAP;

(b) for investment-type contracts that do not contain mortality or
morbidity risk and universal life-type contracts, cash receipts are
recorded as premiums and reserves are established using prescribed
reserving methods under SAP. Under GAAP, premium from investment-type
and universal life-type contracts are generally recognized as
deposits. Revenues from these contracts represent amounts assessed
against policyholders and are reported in the period of assessment;

(c) policy acquisition costs are expensed when incurred under SAP rather
than being deferred and charged against earnings over the periods
covered by the related policies;

(d) deferred income taxes are not recorded for the tax effect of temporary
differences between book and tax basis of assets and liabilities under
SAP;

(e) certain "non-admitted assets" must be excluded under SAP through a
charge against surplus, e.g. fixed assets, prepaid pensions and
impaired investments;

(f) investments in the common stock of the Company's wholly-owned
subsidiaries are accounted for using the equity method under SAP
rather than consolidated;

(g) bonds are carried at amortized cost under SAP rather than categorized
as "held to maturity", "available for sale", or "trading". Under GAAP,
bonds classified as "available for sale" and "trading" are carried at
market value;

(h) certain reclassifications would be required with respect to the
balance sheet and statement of cash flows under SAP;

(i) the Asset Valuation Reserve ("AVR") and Interest Maintenance Reserve
("IMR") are required for life insurance companies under SAP.

The following is a summary of accounting practices permitted by the
state of New Jersey and reflected in these financial statements:

o Prescribed statutory accounting practices require Department
approval of each and every interest payment at the time of
payment in order to classify the Company's Capital Notes as a
component of surplus. Otherwise, such notes are required to be
classified as a liability. Interest payments on $300 million in
Capital Notes issued in 1993 are pre-approved by the Department,
and permitted to be classified in surplus.

o The Company sells synthetic guaranteed interest contracts
("GICs") containing minimum investment related guarantees on
qualified pension plan assets. The assets are owned by the
trustees of such plans, who invest the assets

- 3 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

under the terms of investment guidelines agreed to with the
Company. The investment related guarantees may include a minimum
rate of return on the underlying assets and/or a guarantee of
liquidity to meet plan cash flow requirements. The Company, with
the approval of the Department, reports both the plan liabilities
associated with the synthetic GICs and the trust assets
supporting this potential liability. In addition, the Company
files detailed schedules of trust assets and related statements
with the Department. Currently, prescribed statutory accounting
practices do not address accounting for synthetic GICs.

o The Company establishes guaranty fund liabilities for the
insolvencies of certain life insurance companies. The liabilities
are established net of estimated premium tax credits and federal
income tax. Prescribed statutory accounting practices do not
address the establishment of liabilities for guaranty fund
assessments.

B. Divestiture - On July 31, 1996, Prudential sold a substantial portion
of its Canadian Branch business to the London Life Insurance Company
("London Life"). The transaction was structured as an assumption
reinsurance transaction, whereby London Life assumed total liabilities
of the Canadian Branch equal to $3,146 million as well as a related
amount of total assets equal to $3,040 million. A net gain of $138
million was recorded for this transaction.

C. Use of estimates - The preparation of financial statements in
conformity with SAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reported period. Actual results could differ from those
estimates.

D. Investments - Bonds, which consist of long-term bonds, are stated
primarily at amortized cost.

Preferred stock is generally valued at amortized cost.

Common Stock is carried at fair value. Investments in subsidiaries,
which are included in "Common stock", are accounted for using the
equity method. The subsidiaries' change in net assets, excluding
capital contributions and distributions, is included in "Net
investment income." The subsidiaries are engaged principally in the
businesses of life and health insurance, property and casualty
insurance, group health care, securities brokerage, asset management,
investment advisory services, retail banking and real estate and
brokerage.

Mortgage loans on real estate are stated primarily at unpaid principal
balances.

Real estate, except for real estate acquired in satisfaction of debt,
is carried at cost less accumulated straight-line depreciation,
encumbrances and permanent impairments in value. Properties acquired
in satisfaction of debt are valued at lower of depreciated cost or
fair value less disposition costs.

Policy loans and premium notes are stated at unpaid principal
balances.

Cash includes cash on hand, amounts due from banks and money market
instruments. Short term investments, including highly liquid debt
instruments purchased with an original maturity of twelve months or
less, are stated at amortized cost, which approximates fair value.

Other invested assets primarily include the Company's investment in
joint ventures and other forms of partnerships. These investments are
accounted for using the equity method where the Company has the
ability to exercise significant influence over the operating and
financial policies of the entity. The cost method is used for all
other assets.

Derivatives used in asset/liability risk management activities, which
support life and health insurance and annuity contracts, are recorded
at either fair value or statement value, depending upon the underlying
instrument, with unrealized gains and losses recorded in "Change in
net unrealized capital gains (losses)." Upon termination of
derivatives, the interest-related gains and losses are amortized
through the IMR.

E. Separate accounts - These assets and liabilities, reported at
estimated fair value, represent segregated funds invested for pension
and other clients. Investment risks associated with fair value changes
are generally borne by the clients, except to the extent of minimum
guarantees made by the Company with respect to certain accounts.

F. Revenue recognition of insurance income and related expenses - Life
premiums are recognized as income over the premium paying period of
the related policies. Annuity considerations are recognized as revenue
when received. Health premiums are earned ratably over the terms of
the related insurance and reinsurance contracts or policies. Expenses
incurred in connection with acquiring new insurance business,
including such acquisition costs as sales commissions, are charged to
operations as incurred.

- 4 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

G. Policyholder dividends - Substantially all of the policies issued by
the Company are participating. The amount of dividends to be paid to
policyholders is determined annually by the Company's Board of
Directors. The aggregate amount of policyholders' dividends is related
to actual interest, mortality, morbidity, and expense experience for
the year and judgment as to the appropriate level of statutory surplus
to be retained by the Company. Dividends declared by the Board of
Directors which have not been paid are included in "Policy dividends".

2. POLICY LIABILITIES AND INSURANCE RESERVES

A. For life insurance and annuities, future policy benefits and claims
include estimates of benefits and associated settlement expenses on
reported claims and those which are incurred but not reported.

Activity in the liability for unpaid claims and claim adjustment
expenses for accident and health business, which is included in
"Future policy benefits and claims", is as follows:

1996 1995 1994
------- ------- -------
(In Millions)

Balance at January 1 $ 2,636 $ 2,440 $ 2,416
Less reinsurance recoverables 15 23 15
------- ------- -------

Net balance at January 1 2,621 2,417 2,401
------- ------- -------

Incurred related to:
Current year 5,734 5,759 5,398
Prior years (87) 42 (87)
------- ------- -------

Total incurred 5,647 5,801 5,311
------- ------- -------

Paid related to:
Current year 4,135 4,028 3,856
Prior years 1,467 1,569 1,439
------- ------- -------

Total paid 5,602 5,597 5,295
------- ------- -------

Net balance at December 31 2,666 2,621 2,417
Plus reinsurance recoverables 10 15 23
------- ------- -------

Balance at December 31 $ 2,676 $ 2,636 $ 2,440
======= ======= =======

As a result of changes in reserve estimates for insured events of
prior years, the provision for claims and claim adjustment expenses
changed by ($87) million and $42 million in 1996 and 1995,
respectively, due to changes in claim cost trends and changed by ($87)
million in 1994 because of faster-than-expected shrinkage in the
indemnity health business.

B. Reserves for individual life insurance are calculated using various
methods, interest rates and mortality tables, which produce reserves
that meet the aggregate requirements of state laws and regulations.
Approximately 39% of individual life insurance reserves are determined
using the net level premium method, or by using the greater of the net
level premium reserve or the policy cash value. About 52% of
individual life insurance reserves are calculated according to CRVM
or methods which compare CRVM to policy cash values. The remaining
reserves include universal life reserves which are equal to the
greater of the policyholder account value less the unamortized expense
allowance and the policy cash value, or are for supplementary benefits
whose reserves are calculated using methods, interest rates and tables
appropriate for the benefit provided.

For group life insurance, about 56% of the reserves are associated
with extended death benefits. These reserves are primarily calculated
using modified group tables at various interest rates. The remainder
are unearned premium reserves (calculated using the 1960
Commissioner's Standard Group Table), reserves for group life fund
accumulations and other miscellaneous reserves.

Reserves for deferred individual annuity contracts are determined
using the Commissioner's Annuity Reserve Valuation Method. These
account for 72% of the individual annuity reserves. The remaining
reserves are equal to the present value of future payments with the
annuity mortality table and interest rates based on the date of issue
or maturity as appropriate.

Reserves for other deposit funds or other liabilities with life
contingencies reflect the contract deposit account or experience
accumulation for the contract and any purchased annuity reserves.

Accident and health reserves represent the present value of the future
potential payments, adjusted for contingencies and interest. The
remaining material reserves for active life reserves and unearned
premiums are valued using the preliminary term method, gross premium
valuation method, or a pro rata portion of gross premiums. Reserves
are also held for amounts not yet due on hospital benefits and other
coverages.

- 5 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

The reserve for guaranteed interest contracts, deposit funds and other
liabilities without life contingencies equal either the present value
of future payments discounted at the guaranteed rate or the fund
value.

Policyholders, at their discretion, may withdraw funds from their
annuity policies. At December 31, 1996 and 1995, approximately 55% of
total annuity actuarial reserves and deposit liabilities of $92,536
million and $95,092 million, respectively, were not subject to
discretionary withdrawal.

3. INCOME TAXES

The Company and its domestic subsidiaries file a consolidated federal income
tax return. The Internal Revenue Code (the "Code") taxes the Company on its
operating income after dividends to policyholders. In calculating this tax,
the Code requires the capitalization and amortization of policy acquisition
expenses.

The Code also imposes an "equity tax" on mutual life insurance companies
which, in effect, imposes an additional amount of taxable income to the
Company. "Income tax provision" includes an estimate for the total equity tax
to be paid with respect to the year. Income from sources outside the United
States is taxed under applicable foreign statutes.

The Internal Revenue Service (the "Service") has completed an examination of
the consolidated federal income tax return through 1989. The Service is
examining the years 1990 through 1992. Discussions are being held with the
Service with respect to proposed adjustments. However, management believes
there are adequate defenses against, or sufficient reserves to provide for,
such adjustments.

4. INVESTED ASSETS

A. Bonds and stocks - The Company invests in both investment grade and
non-investment grade public and private bonds. The Securities
Valuation Office of the NAIC rates the bonds held by insurers for
regulatory purposes and classifies investments into six categories
ranging from highest quality bonds to those in or near default. The
lowest three NAIC categories represent primarily high-yield securities
and are defined by the NAIC as including any security with a public
agency rating equivalent to B+ or B1 or less. Securities in these
lowest three categories approximated 2.8% and 1.0%, of the Company's
bonds at December 31, 1996, 1995, respectively.

The following tables provide additional information relating to bonds
and preferred stock as of December 31:

<TABLE>
<CAPTION>
1996
-------------------------------------------------------
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
AMOUNT GAINS LOSSES VALUE
------- ------- ------ -------
Bonds (In Millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 9,504 $ 353 $ 74 $ 9,783

Obligations of U.S. states and their
political subdivisions 206 7 6 207

Foreign government bonds 2,420 133 11 2,542

Corporate securities 57,282 2,625 323 59,584

Mortgage-backed securities 5,594 131 15 5,710
------- ------- ------- -------

Total $75,006 $ 3,249 $ 429 $77,826
======= ======= ======= =======

Preferred Stock
Redeemable $ 142 $ 3 $ 6 $ 139

Non-redeemable 97 23 0 120
------- ------- ------- -------

Total $ 239 $ 26 $ 6 $ 259
======= ======= ======= =======

</TABLE>

- 6 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
1995
--------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
AMOUNT GAINS LOSSES VALUE
------- ------- ------- -------
Bonds (In Millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $15,715 $ 1,392 $ 1 $17,106

Obligations of U.S. states and their
political subdivisions 214 22 1 235

Foreign government bonds 3,196 260 1 3,455

Corporate securities 54,411 4,609 97 58,923

Mortgage-backed securities 3,958 241 8 4,191
------- ------- ------- -------

Total $77,494 $ 6,524 $ 108 $83,910
======= ======= ======= =======

Preferred Stock
Redeemable $ 304 $ 16 $ 4 $ 316

Non-redeemable 92 2 0 94
------- ------- ------- -------

Total $ 396 $ 18 $ 4 $ 410
======= ======= ======= =======

</TABLE>

The carrying amount and estimated fair value of bonds at December 31,
1996, categorized by contractual maturity, are shown below. Actual
maturities may differ from contractual maturities because borrowers
may prepay obligations with or without call or prepayment penalties.

CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
(In Millions)

Due in one year or less $ 1,999 $ 2,012
Due after one year through five years 19,125 19,445
Due after five years through ten years 19,406 20,081
Due after ten years 28,882 30,578
------- -------
69,412 72,116
------- -------

Mortgage-backed securities 5,594 5,710
------- -------

Total $75,006 $77,826
======= =======

Proceeds from the sale and maturity of bonds during 1996, 1995 and
1994 were $119,195 million, $93,178 million and $80,668 million,
respectively. Gross gains of $1,516 million, $1,913 million and $618
million and gross losses of $988 million, $782 million and $1,841
million were realized on such sales during 1996, 1995 and 1994,
respectively. Realized gains and losses are determined using the
specific identification method.

B. Mortgage loans on real estate - Mortgage loans on real estate at
December 31 are as follows:

1996 1995
------------------ ------------------
CARRYING PERCENT CARRYING PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL
------ -------- ------ --------
(In Millions)
Commercial and agricultural loans:
In good standing $15,546 91.3% $17,649 87.0%
In good standing
with structured terms 809 4.7% 966 4.8%
Past due 90 days or more 229 1.3% 144 0.7%
In process of foreclosure 68 0.4% 157 0.8%

Residential loans 387 2.3% 1,364 6.7%
------- ----- ------- -----

Total $17,039 100.0% $20,280 100.0%
======= ===== ======= =====

At December 31, 1996, the Company's mortgage loans on real estate were
collateralized by the following property types: office buildings
(34%), retail stores (22%), residential properties (2%), apartment
complexes (18%), industrial buildings (11%), agricultural properties
(9%) and other commercial properties (4%). The maximum percentage of
any one loan to the value of collateral at the time of the loan,
exclusive of insured, guaranteed, purchase money mortgages or
mortgages supported by high credit leases is 80%. The mortgage loans
are geographically dispersed throughout the United States and

- 7 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

Canada with the largest concentrations in California (26%) and New
York (8%). Included in these balances are mortgage loans with
affiliated joint ventures of $560 million and $653 million at December
31, 1996 and 1995, respectively.

C. Real estate - Real estate at December 31 was as follows:

1996 1995
------ ------
(In Millions)

Investment real estate $1,201 $1,484
Properties occupied by the Company 525 533
Properties acquired in
satisfaction of debt 368 471
------ ------

Total $2,094 $2,488
====== ======

Accumulated depreciation on real estate was $808 million and $853
million at December 31, 1996 and 1995, respectively.

D. Other invested assets - Other invested assets of $2,591 million and
and $3,304 million as of December 31, 1996 and 1995, respectively,
principally include the Company's net equity in joint ventures and
other forms of partnerships. The Company's share of net income from
other invested assets was $283 million, $240 million and $348 million
for 1996, 1995 and 1994, respectively.

E. Investment in subsidiaries - Included in "Common stock" is the
Company's investment in subsidiaries of $4,610 million and $4,328
million at December 31, 1996 and 1995, respectively. Included in "Net
investment income" for 1996, 1995 and 1994 is $370 million, $143
million and $(936) million, respectively, attributable to
undistributed income (loss) of subsidiaries.

In October 1995, the Company completed the sale of Prudential
Reinsurance Holdings, Inc., through an initial public offering of
common stock. As a result of the sale, an after-tax gain of $72
million was recorded in 1995.

In March 1995, the Company announced its intention to sell its
mortgage banking unit. On January 26, 1996, the Company entered into a
definitive agreement to sell substantially all the assets of
Prudential Home Mortgage Company, Inc. ("PHMC") and it also
liquidated certain mortgage-backed securities and extended warehouse
loans. In 1995, PHMC recorded an after-tax loss of $98 million which
includes operating gains and losses, asset write downs, and other
costs directly related to the sale. The Company continues to have
discussions with prospective buyers for the sale of the remaining
assets.

F. Net unrealized capital gains (losses) - Changes in net unrealized
capital gains (losses), which result principally from changes in the
differences between cost and carrying amounts of invested assets, were
$191 million and $661 million for the years ended December 31, 1996
and 1995, respectively, and are reflected in "Unassigned surplus."

G. Asset valuation reserve and interest maintenance reserve - These
reserves are required for life insurance companies under NAIC
requirements. The AVR is calculated based on a statutory formula and
is designed to mitigate the effect of valuation and credit-related
losses on unassigned surplus. The IMR captures realized capital gains
and losses, net of tax, resulting from changes in the general level of
interest rates. These gains and losses are amortized into net
investment income utilizing grouped amortization schedules over the
expected remaining life of the investments sold. At December 31, 1996,
AVR is comprised of 68% for bonds, stocks, and short-term investments;
17% for mortgage loans on real estate; and 15% for real estate and
other invested assets. The IMR balance at December 31, 1996 and 1995
was $1,365 million and $1,163 million, respectively, and is recorded
in "Other liabilities". During 1996, 1995 and 1994, $327 million, $766
million and ($910) million, respectively, of net realized capital
gains (losses) were deferred and $126 million, $82 million and $102
million, respectively, was amortized and included in income.

H. Restricted assets and special deposits - Assets in the amounts of $941
million and $5,072 million at December 31, 1996 and 1995,
respectively, were on deposit with governmental authorities or
trustees as required by law. Assets valued at $2,994 million and
$3,121 million at December 31, 1996 and 1995, respectively, were
maintained as compensating balances or pledged as collateral for bank
loans and other financing agreements. Letter stock or other securities
restricted as to sale amounted to $720 million in 1996 and $354
million in 1995.

I. Loan backed and structured securities - A retrospective method is
employed to recalculate the values of the loan backed and structured
securities holdings with the exception of interest only bonds. Each
acquisition lot was reviewed to recalculate the effective yield. The
recalculated effective yield was used to derive a book value as if the
new yield were applied at the time of acquisition. Outstanding
principal

- 8 -
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

factors from the time of acquisition to adjustment date were used to
calculate the prepayment history for all applicable securities.
Conditional prepayment rates, computed with life to date factor
histories and weighted average maturities, were used to affect the
calculation of projected payments for pass through, interest only and
principal only security types. Interest only bond adjustments are
developed on a prospective basis with adjustments made for permanent
impairments if needed.

J. Securities lending is a program whereby the Company loans securities
to third parties, primarily major brokerage firms. As of December 31,
1996 and 1995, the estimated fair values of loaned securities were
$6,362 million and $5,939 million respectively. Company and NAIC
policies require a minimum of 102% and 105% of the fair value of the
domestic and foreign loaned securities, respectively, to be separately
maintained as collateral for the loans. Cash collateral received is
invested in short-term investments. The offsetting collateral
liability as of December 31, 1996 and 1995 is $4,813 million and
$3,625 million, respectively. Non-cash collateral is not reflected in
the Statements of Admitted Assets, Liabilities and Surplus.

5. EMPLOYEE BENEFIT PLANS

A. Pension plans - The Company has several defined benefit pension plans,
which cover substantially all of its employees. Benefits are generally
based on career average earnings and credited length of service. The
Company's funding policy for U.S. plans is to contribute annually the
amount necessary to satisfy the Internal Revenue Service contribution
guidelines.

Employee pension benefit plan status is as follows:

1996 1995
------- -------
(In Millions)
Actuarial present value of benefit obligation:

Vested benefit obligation $(3,878) $(3,270)
======= =======

Accumulated benefit obligation $(4,174) $(3,572)
======= =======

Projected benefit obligation $(4,989) $(4,330)

Plan assets at fair value 7,326 6,688
------- -------

Plan assets in excess of projected
benefit obligation 2,337 2,358

Unrecognized transition amount (769) (904)

Unrecognized prior service cost 356 199

Unrecognized net gain (916) (753)
------- -------

Prepaid pension cost $ 1,008 $ 900
======= =======
Plan assets consist primarily of equity securities, bonds, real estate
and short-term investments, of which $5,668 million and $4,788 million
are included in separate account assets and liabilities at December
31, 1996 and 1995, respectively.

The components of the net periodic pension benefit for 1996, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(In Millions)
<S> <C> <C> <C>
Service cost $ 119 $ 110 $ 141
Interest cost 336 371 293
Actual return on assets (720) (1,249) 62
Net amortization and deferral 57 604 (633)
Net curtailment gains and special termination benefits 63 0 156
------ ------ ------

Net periodic pension benefit $ (145) $ (164) $ 19
====== ====== ======
</TABLE>
The net increase to surplus relating to the Company's pension plans is
$37 million, $30 million and $0 million in 1996, 1995 and 1994,
respectively, which considers the changes in the non-admitted prepaid
pension asset of $108 million, $134 million and ($19) million,
respectively.

The accounting assumptions used by the Company were:

AS OF SEPTEMBER 30,
------------------------
1996 1995 1994
------ ------ ------

Discount rate 7.75% 7.50% 8.50%
Rate of increase in compensation levels 4.50% 4.50% 5.50%
Expected long-term rate of return on assets 9.50% 9.00% 9.00%

The Company maintains non-qualified supplemental retirement plans
providing benefits that may not be paid from the Company's two
qualified plans since qualified plans have limits imposed by Section
415 and 401(a)(17) of the Code. One of these plans also provides
certain participants with a subsidized early retirement benefit.

- 9 -
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

B. Postretirement benefits - The Company provides certain life insurance
and health care benefits for its retired employees. Substantially all
of the Company's employees may become eligible to receive these
benefits if they retire after age 55 with at least 10 years of
service.

Postretirement benefits are accounted for in accordance with
prescribed NAIC policy. The Company has elected to amortize its
transition obligation over 20 years. During 1996, 1995 and 1994,
funding of its postretirement benefit obligations totaled $35 million,
$47 million and $31 million, respectively.

The postretirement benefit plan status is as follows:

SEPTEMBER 30,
------------------
1996 1995
---- ----
(In Millions)

Accumulated postretirement benefit obligation for:
Retirees $(1,418) $(1,465)
Fully eligible active plan participants (35) (103)
Plan assets at fair value 1,341 1,309
------- -------
Funded status (112) (259)
Unrecognized transition amount 355 378
Unrecognized net gain (177) (19)
------- -------
Prepaid postretirement benefit cost $ 66 $ 100
======= =======

Plan assets consist of group and individual variable life insurance
policies, group life and health contracts and short-term investments,
of which $1,003 million and $990 million are included in the separate
account assets and liabilities at December 31, 1996 and 1995,
respectively.

Net periodic postretirement benefit cost for 1996, 1995 and 1994
includes the following components:

1996 1995 1994
----- ----- -----
(In Millions)

Service cost $ 24 $ 30 $ 36
Interest cost 115 117 107
Actual return on plan assets (104) (144) (98)
Amortization of transition obligation 22 22 23
Other 12 49 52
----- ----- -----
Net periodic postretirement benefit cost $ 69 $ 74 $ 120
===== ===== =====

The net reduction to surplus relating to the Company's postretirement
benefit plans is $35 million, $46 million, and $30 million in 1996,
1995 and 1994, respectively, which considers the changes in the
prepaid postretirement benefit cost of $34 million, $28 million and
$90 million in 1996 , 1995 and 1994, respectively.

The assumptions used for the postretirement benefit plan were:

AS OF SEPTEMBER 30,
---------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.75% 7.50% 8.50%
Expected long-term rate of return on plan assets 9.00% 8.00% 9.00%
Rate of increase in compensation levels 4.50% 4.50% 5.50%
Health care cost trend rates 8.50-12.50% 8.90-13.30% 9.10-13.90%
Ultimate health care cost trend rate at 2006 5.00% 5.00% 6.00%
</TABLE>

A 1% increase in health care cost trend rates would increase the
September 30, 1996 accumulated postretirement benefit obligation and
service/interest costs by $115 million and $12 million, respectively.

C. Postemployment benefits - The Company accrues for postemployment
benefits primarily for life and health benefits provided to former or
inactive employees who are not retirees. The net accumulated liability
for these benefits at December 31, 1996 and 1995 was $99 million and
$96 million, respectively.

- 10 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

6. NOTES PAYABLE AND OTHER BORROWINGS

Notes payable and other borrowings consisted of the following at December
31:

Short-term: 1996 1995
---- ----
(In Millions)
Notes payable to affiliate $ 99 $ 0
Current portion of long term
notes payable 11 128
---- ----
$110 $128

Long-Term: 1996 1995
---- ----

8.173% note due 2002 $249 $249
7.501% note due 1999 248 248
5.0819% note due 2004 56 66
12.00% note due 1999 0 16
Secured demand note
due 1998 100 100
---- ----
653 679
---- ----
Total principal repayments and accrued interest $763 $807
==== ====

Scheduled principal repayments as of December 31, 1996, are as
follows: $110 million in 1997, $100 million in 1998, $239 million in
1999, $0 in 2000, $0 in 2001 and $294 million thereafter.

7. SURPLUS

A. Capital notes - The Company issues Capital Notes that are subordinate
in right of payment to policy claims, prior claims and senior
indebtedness. A summary of the outstanding Capital Notes as of
December 31, 1996 is as follows:

PRINCIPAL CARRYING INTEREST MATURITY
ISSUE DATE (PAR) AMOUNT RATE DATE
- ---------- --------- -------- -------- --------
(In Millions)
April 28, 1993 $ 300 $ 299 6.875% April 15, 2003
July 1, 1995 350 340 8.300% July 1, 2025
July 1, 1995 250 246 7.650% July 1, 2007
July 15, 1995 100 100 8.100% July 15, 2015
------- -----
Total $ 1,000 $ 985
======= =====

B. Special surplus fund - In accordance with the requirements of various
states, a special surplus fund has been established for contingency
reserves of $1,268 million and $1,274 million as of December 31, 1996
and 1995, respectively.

C. Non-admitted assets - Non-admitted assets were $1,367 million and
$1,167 million as of December 31, 1996 and 1995, respectively.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values presented below have been determined using available
information and reasonable valuation methodologies. Considerable judgment
is applied in interpreting data to develop the estimates of fair value.
Accordingly, such estimates presented may not be realized in a current
market exchange. The use of different market assumptions and/or estimation
methodologies could have a material effect on the estimated fair values.
The following methods and assumptions were used in calculating the fair
values. (For all other financial instruments, the carrying value is a
reasonable estimate of fair value.)

Bonds and preferred stock - Fair values for bonds and preferred stock,
other than private placement securities, are based on quoted market
prices or estimates from independent pricing services. Fair values for
private placement securities are estimated using a discounted cash
flow model which considers the current market spreads between the U.S.
Treasury yield curve and corporate bond yield curve, adjusted for the
type of issue, its current credit quality and its remaining average
life. The fair value of certain non-performing private placement
securities is based on amounts provided by state regulatory
authorities.

Common stock - Fair value of unaffiliated common stock is based on
quoted market prices, where available, or prices provided by state
regulatory authorities.

- 11 -
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

Mortgage loans on real estate - The fair value of residential
mortgages is based on recent market trades or quotes, adjusted where
necessary for differences in risk characteristics. The fair value of
the commercial mortgage and agricultural loan portfolio is primarily
based upon the present value of the scheduled cash flows discounted at
the appropriate U.S. Treasury rate, adjusted for the current market
spread for a similar quality mortgage. For certain non-performing and
other loans, fair value is based upon the value of the underlying
collateral.

Policy loans and premium notes - The estimated fair value of policy
loans is calculated using a discounted cash flow model based upon
current U.S. Treasury rates and historical loan repayments.

Derivative financial instruments - The fair value of swap agreements
is estimated based on the present value of future cash flows under the
agreements discounted at the applicable zero coupon U.S. Treasury rate
and swap spread. The fair value of forwards, futures and options is
estimated based on market quotes for a transaction with similar terms.
The fair value of loan commitments is derived by comparing the
contractual future stream of fees with such fee streams adjusted to
reflect current market rates that would be applicable to instruments
of similar type, maturity and credit standing.

Investment-type insurance contract liabilities - Fair values for the
Company's investment-type insurance contract liabilities are estimated
using a discounted cash flow model, based on interest rates currently
being offered for similar contracts. Carrying amounts are included in
"Future policy benefits and claims."

Notes payable and other borrowings - The estimated fair value of notes
payable is derived using discount rates based on the borrowing rates
currently available to the Company for debt with similar terms and
remaining maturities.

The following table discloses the carrying amounts and estimated fair
values of the Company's financial instruments at December 31:

<TABLE>
<CAPTION>
1996 1995
---- ----
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------ ---------- ------ ----------
(In Millions)
FINANCIAL ASSETS:

<S> <C> <C> <C> <C>
Bonds $75,006 $77,826 $77,494 $83,910
Preferred stock 239 259 396 410
Common stock * 2,466 2,466 1,805 1,805
Mortgage loans on real estate 17,039 17,364 20,280 20,839
Policy loans and premium notes 6,023 5,942 6,208 6,452
Short-term investments 5,817 5,817 4,633 4,633
Cash 165 165 170 170
Assets held in separate accounts 57,797 57,797 53,903 53,903
Derivative financial instruments 9 16 15 64

FINANCIAL LIABILITIES:

Investment-type insurance
contracts 30,194 30,328 34,799 35,720
Notes payable and other borrowings 763 794 807 829
Liabilities related to separate accounts 57,436 57,436 53,256 53,256
Derivative financial instruments 60 63 94 108
</TABLE>

* Excludes investments in subsidiaries of $4,610 million and $4,328 million
at December 31, 1996 and 1995, respectively.

- 12 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

9. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS

A. Derivative financial instruments - Derivatives include swaps,
forwards, futures, options and fixed-rate loan commitments subject to
market risk, all of which are used by the Company in the normal course
of business in activities other than trading. The Company does not
issue or hold derivatives for trading purposes. This classification is
based on management's intent at the time of contract inception and
throughout the life of the contract. The Company uses derivatives
primarily for asset/liability risk management and to reduce exposure
to interest rate, currency and other market risks. Of those
derivatives held at December 31,1996, 35% of the notional amounts
consisted of interest rate derivatives and 65% consisted of foreign
currency derivatives.

The tables below summarize the Company's outstanding positions on a
gross basis before netting pursuant to rights of offset, qualifying
master netting agreements with counterparties or collateral
arrangements at December 31:

<TABLE>
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS
1996 1995
---- ----
(In Millions)
CARRYING ESTIMATED CARRYING ESTIMATED
NOTIONAL AMOUNT FAIR VALUE NOTIONAL AMOUNT FAIR VALUE
-------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Swaps:
Assets $ 159 $ 1 $ 6 $ 418 $ (1) $ 32
Liabilities 479 50 53 371 76 79

Forwards:
Assets 453 8 8 235 13 17
Liabilities 980 9 9 1,074 13 13

Futures:
Assets 0 0 0 683 5 5
Liabilities 399 1 1 864 5 7

Options:
Assets 175 0 0 195 0 0
Liabilities 0 0 0 3 0 0

Loan Commitments:
Assets 164 0 2 122 (2) 10
Liabilities 9 0 0 532 0 9
------ ------ ------ ------ ------ ------

Total:
Assets $ 951 $ 9 $ 16 $1,653 $ 15 $ 64
====== ====== ====== ====== ====== ======

Liabilities $1,867 $ 60 $ 63 $2,844 $ 94 $ 108
====== ====== ====== ====== ====== ======
</TABLE>

B. Off-balance sheet credit-related instruments - During the normal
course of its business, the Company utilizes financial instruments
with off-balance sheet credit risk such as commitments, financial
guarantees and letters of credit. Commitments include variable rate
commitments to purchase and sell mortgage loans and the unfunded
portion of commitments to fund investments in private placement
securities. The Company also provides financial guarantees incidental
to other transactions and letters of credit that guarantee the
performance of customers to third parties. These credit-related
financial instruments have off-balance sheet credit risk because only
their origination fees, if any, and accruals for probable losses, if
any, are recognized until the obligation under the instrument is
fulfilled or expires. These instruments can extend for several years
and expirations are not concentrated in any period. The Company seeks
to control credit risk associated with these instruments by limiting
credit, maintaining collateral where customary and appropriate, and
performing other monitoring procedures.

The notional amount of these instruments, which represents the
Company's maximum exposure to credit loss from other parties'
non-performance, was $785 million and $1,254 million at December 31,
1996 and 1995, respectively. Because many of these amounts expire
without being advanced in whole or in part, the notional amounts do
not represent future cash flows.

The estimated fair value of these instruments, which represents the
Company's current exposure to credit loss from other parties'
non-performance, was $8 million and $56 million at December 31, 1996
and 1995, respectively.

10. RELATED PARTY TRANSACTIONS

A. Service agreements - The Company has entered into service agreements
with various subsidiaries. Under these agreements, the Company
furnishes services of officers and employees and provides supplies,
use of equipment, office space, and makes payment to

- 13 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

third parties for general expenses, state and local taxes. The
agreements obligate the subsidiaries to reimburse the Company for the
approximate cost of providing such services. The amounts receivable
from subsidiaries, reported in "Other assets" at December 31, 1996 and
1995, were $490 million and $509 million, respectively. The
subsidiaries also furnish similar services to the Company in
connection with such agreements. The amount payable to subsidiaries,
reported in "Other liabilities" at December 31, 1996 was $87 million.
There was no outstanding balance at December 31, 1995.

Certain of the Company's group health care subsidiaries provide health
insurance to certain employees of the Company. Enrollment contract
costs reported in "Other expenses" were $126 million, $111 million and
$104 million for the years ended December 31, 1996, 1995 and 1994,
respectively.

The Company purchases corporate owned life insurance policies from one
of its life insurance subsidiaries for certain employees. The premium
charged for these policies reported in "Other expenses" was $3
million, $12 million and $12 million for the years ended December 31,
1996, 1995 and 1994, respectively. The cash value associated with
these policies was $118 million and $102 million at December 31,
1996 and 1995, respectively.

Certain of the Company's subsidiaries perform services for the Company
in connection with the Company's obligations under investment advisory
or subadvisory agreements. The costs incurred in connection with
performing such services, primarily reported in "Other expenses," were
$145 million, $327 million and $342 million for the years ended
December 31, 1996, 1995 and 1994, respectively. The Company also
provides these services to subsidiaries in connection with such
agreements. The investment advisory fees received from affiliates by
the Company, reported in "Other income" were $161 million, $92 million
and $110 million for the years ended December 31, 1996, 1995 and 1994,
respectively.

The Company borrows short-term funds from Prudential Funding
Corporation ("Funding"), a wholly owned subsidiary. The interest
expense for these borrowings was $131 million, $66 million and $21
million for the years ended December 31, 1996, 1995 and 1994,
respectively. The outstanding balance at December 31, 1996 was $99
million. There was no outstanding balance at December 31, 1995.

B. Net worth maintenance agreement - The Company has entered into a
support agreement with Funding under which it agrees to maintain
Funding's tangible net worth, including subordinated debt, at not less
than $1.00. As of December 31, 1996, the tangible net worth of Funding
was $44 million. Since the inception of the agreement, no support
payments have been required.

11. CONTINGENCIES

The Company is reviewing its obligations under certain managed care
arrangements for possible failure to comply with contractual and regulatory
requirements. It is the opinion of management that appropriate reserves
have been established in accordance with applicable accounting standards to
provide for appropriate reimbursements to customers.

Various lawsuits against the Company have arisen in the course of the
Company's business. In certain of these matters, large and/or indeterminate
amounts are sought.

Twenty-six purported class actions and over 280 individual actions are
pending against the Company on behalf of those persons who purchased life
insurance policies allegedly because of deceptive sales practices engaged
in by the Company and its insurance agents in violation of state and
federal laws. The Company anticipates additional suits may be filed by
individuals who opted out of the class action settlement described below.
The sales practices alleged to have occurred are contrary to Company
policy. Some of these cases seek very substantial damages while others seek
unspecified compensatory, punitive and treble damages. The Company intends
to defend these cases vigorously.

A Multi-State Life Insurance Task Force (the "Task Force"), comprised of
insurance regulators from 29 states and the District of Columbia, was
created to conduct a review of sales and marketing practices throughout the
life insurance industry. As the largest life insurance company in the
United States, the Company was the initial focus of the Task Force
examination. On July 9, 1996, the Task Force released its report on the
Company's activities. In it, the Task Force found that some sales of life
insurance policies made by the Company were improper. The report criticizes
the Company's training, oversight, discipline and compliance programs
related to insurance sales. Based on these findings, the Task Force
recommended, and the Company agreed to, a series of fines allocated to all
50 states and the District of Columbia amounting to a total of $35 million.
In addition, the Task Force recommended a remediation program pursuant to
which the Company would offer relief to policyowners who purchased 10.7
million whole life insurance policies in the United States from the Company
from 1982 through 1995. In subsequent negotiations with several states, the
Company agreed to pay additional amounts aggregating approximately $30
million by way of fine, reimbursement of investigation expenses and costs
associated with outreach to residents of Florida and California.

On October 28, 1996, the Company entered into a Stipulation of Settlement
with attorneys for the plaintiffs in the class actions consolidated in a
Multi-District Litigation involving alleged improprieties in connection
with the Company's sale of whole life

- 14 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

insurance policies from 1982 through 1995. Pursuant to the proposed
settlement, the Company has agreed to provide certain enhancements and
changes to the remediation program previously accepted by the Multi-State
Task Force, including some additional remedies. In addition, the Company
agreed that a minimum cost of $410 million (which was recorded in the
Statement of Operations and Changes in Surplus) would be incurred in
providing remedies to policyowners under the program, and agreed to certain
other payments and guarantees. Under the terms of the guarantees, the
Company has agreed that the average cost per remedy will not be less than
$2,364 for up to 330,000 claims remedied. For claims remedied in excess of
330,000, the Company has not guaranteed an average cost per remedy. The
Company has also agreed to provide additional compensation to be
distributed by formula that will range in an aggregate amount from $50
million to $300 million depending on the total number of claims remedied.
The Company cannot predict how many claims ultimately will be remedied. The
Company has also recorded in the Statement of Operations and Changes in
Surplus, its estimate of the minimum administrative costs related to the
remediation program. As of March 5, 1997, all 50 states and the District of
Columbia have directed the Company to offer a remediation plan based on the
program accepted by the Task Force and containing many of the enhancements
of the class action settlement.

Also on October 28, 1996, the U.S. District Court of the District of New
Jersey, in which the Multi-District Litigation is pending, conditionally
certified a class for settlement purposes and scheduled a hearing on the
fairness, reasonableness and adequacy of the proposed settlement. This
hearing was held on February 24, 1997. On March 7, 1997, the Court
rendered its decision approving the settlement. The owners of approximately
23,000 policies have taken steps to exclude themselves from the class
action and are not bound by the settlement.

To date, the Company has mailed packages to 8.5 million policyowners
eligible for the remediation program, informing policyowners in all 50
states and the District of Columbia of their rights under the program. The
deadline for electing to participate in the Alternative Dispute Resolution
Process ("ADR") or Basic Claim Relief is June 1, 1997. Policyowners who
believe that they were misled can file a claim through the ADR.
Policyowners who do not believe they were misled, or who do not wish to
file a claim under the ADR, may choose from several options available under
Basic Claim Relief, such as preferred rate premium loans, or the purchase
of enhanced annuities, mutual fund shares or life insurance policies.

It is not possible on any reliable basis to estimate how many policyowners
will participate in the settlement. The cost of the settlement is dependent
upon complex and varying factors, including the number of policyowners that
participate in the settlement, the relief options chosen and the ultimate
dollar value of the settlement. The administrative costs to the Company of
remediation of policyowner claims are also subject to a number of complex
uncertainties in addition to the unknown quantity and cost of policyowner
claims. In light of the uncertainties attendant to these and other factors,
management is unable to make a reasonable estimate of the ultimate cost of
the remediation program to the Company.

A purported class action was brought against the Company and certain
subsidiaries alleging common law fraud, negligent misrepresentation and
violations of the New Jersey RICO statute arising out of the plaintiffs'
purchase of certain subordinated mortgage pass-through securities and
seeking compensatory and punitive damages and injunctive relief. The
Company will deny the substantive allegations of the complaint in its
answer and will vigorously defend the suit. The case is at a preliminary
stage, and management is not now in a position to predict the outcome or
effect of the litigation.

Litigation is subject to many uncertainties, and given the complexity and
scope of these suits, their outcome cannot be predicted. It is also not
possible to predict the likely results of any regulatory inquiries or their
effect on litigation which might be initiated in response to widespread
media coverage of these matters. Accordingly, management is unable to make
a meaningful estimate of the amount or range of loss that could result from
an unfavorable outcome of all pending litigation and the regulatory
inquiries. It is possible that the results of operations or the cash flow
of the Company, in particular quarterly or annual periods, could be
materially affected by an ultimate unfavorable outcome of certain pending
litigation and regulatory matters. Management believes, however, that the
ultimate outcome of all pending litigation and regulatory matters referred
to above should not have a material adverse effect on the Company's
financial position, after consideration of applicable reserves.

In 1993, Prudential Securities, Inc. ("PSI"), a subsidiary of Prudential,
entered into an agreement with the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc., and state securities
commissions whereby PSI agreed to pay $330 million into a settlement fund
to pay eligible claims on certain limited partnership matters. Under this
agreement, if partnership matter claims exceed the established settlement
fund, PSI is obligated to pay such additional claims. The agreement also
required PSI to take measures to enhance the adequacy of its sales
practices compliance controls.

In October 1994, the United States Attorney for the Southern District of
New York (the "U.S. Attorney") filed a complaint against PSI in connection
with its sale of certain limited partnerships. Simultaneously, PSI entered
into an agreement to comply with certain conditions for a period of three
years, and to pay an additional $330 million into the settlement fund. At
the end of the three year period, assuming PSI has fully complied with the
terms of the agreement, the U.S. Attorney will institute no further action.
In the opinion of management, PSI is in compliance with all provisions of
the aforementioned agreements.

- 15 -
<PAGE>

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

NOTES TO STATUTORY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

The Company has entered into a reinsurance agreement with The Prudential
Life Insurance Company, Ltd., a wholly owned subsidiary, under which it has
agreed to reinsure certain individual life insurance policies through a
yearly renewable term contract. The reinsurance assumed premiums and
reserves for 1996 were $27 million and $17 million, respectively.

The Company as a result of the sale of Prudential Reinsurance Inc. (a PRUCO
Inc. subsidiary), agreed to guarantee up to $775 million of Gibraltar
Casualty Company (a Prudential subsidiary) obligations with respect to a
Stop Loss Agreement and PRUCO Inc.'s (a Prudential subsidiary) payment
obligations under an Indemnity Agreement, subject to maximum aggregate
payments of $400 million. The maximum aggregate payments under the
Prudential Guarantee of the Gibraltar Casualty Company obligations will be
reduced in certain circumstances to take account of payments made and
collateral provided in respect of the guaranteed obligations. The Stop Loss
Agreement is intended to mitigate the impact on Prudential Reinsurance Inc.
of adverse development of loss reserves, as of June 30, 1995, of up to $375
million of the first $400 million of adverse development. The Company has
recorded a loss reserve of $175 million as of December 31, 1996.

Gibraltar Casualty Company and other property and casualty insurance
subsidiaries receive claims under expired contracts which assert alleged
injuries and/or damages relating to or resulting from toxic torts, toxic
waste and other hazardous substances. The liabilities for such claims
cannot be estimated by traditional reserving techniques. As a result of
judicial decisions and legislative actions, the coverage afforded under
these contracts may be expanded beyond their original terms. Extensive
litigation between insurers and insureds over these issues continues and
the outcome is not predictable. In establishing the unpaid claim reserves
for these losses, management considered the available information and
established these reserves in accordance with applicable accounting
standards. However, given the expansion of coverage and liability by the
courts and legislatures in the past, and potential for other unfavorable
trends in the future, the ultimate cost of these claims could increase from
the levels currently established.

The Company and a number of other insurers (the "Consortium") entered into
a Reinsurance and Participation Agreement ("the Agreement") with MBL Life
Assurance Corporation ("MBLLAC") and others, under which the Company and
the other insurers agreed to reinsure certain payments to be made to
contractholders by MBLLAC in connection with the plan of rehabilitation of
Mutual Benefit Life Insurance Company. Under the Agreement, the Consortium,
subject to certain terms and conditions, will indemnify MBLLAC for the
ultimate net loss sustained by MBLLAC on each contract subject to the
Agreement. The ultimate net loss represents the amount by which the
aggregate required payments exceed the fair market value of the assets
supporting the covered contracts at the time such payments are due. The
Company's share of any net loss is 30.55%. The Company has determined that
it does not expect to make any payments to MBLLAC under the agreement. The
Company concluded this after testing a wide range of potentially adverse
scenarios during the rehabilitation period for MBLLAC.

******

- 16 -
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Policyholders of
The Prudential Insurance Company of America

We have audited the accompanying statement of admitted assets, liabilities and
surplus (statutory basis) of The Prudential Insurance Company of America as of
December 31, 1996, and the related statements of operations and changes in
surplus (statutory basis), and of cash flows (statutory basis) for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

As described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the New Jersey Department
of Insurance, which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matters referred to in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of The Prudential Insurance Company of America at December
31, 1996, and the results of its operations and its cash flows for the year then
ended.

Also, in our opinion, the financial statements referred to above present fairly,
in all material respects, the admitted assets, liabilities and surplus of The
Prudential Insurance Company of America at December 31, 1996, and the results of
its operations and its cash flows for the year then ended, on the basis of
accounting described in Note 1.

/s/ PRICE WATERHOUSE, LLP
New York, New York

March 10, 1997

- 17 -

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
The Prudential Insurance Company of America
Newark, New Jersey

We have audited the accompanying statement of admitted assets, liabilities and
surplus--statutory basis of The Prudential Insurance Company of America as of
December 31, 1995, and the related statements of operations and changes in
surplus--statutory basis, and cash flows--statutory basis for each of the two
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our report dated March 1, 1996, we expressed an opinion that the 1995 and
1994 financial statements, prepared using accounting practices prescribed and
permitted by the New Jersey Department of Insurance, presented fairly, in all
material respects, the financial position of The Prudential Insurance Company of
America as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles. As described in Note 1 to these financial statements,
pursuant to the pronouncements of the Financial Accounting Standards Board, the
1995 and 1994 financial statements of The Prudential Insurance Company of
America, prepared using accounting practices prescribed or permitted by
insurance regulators (statutory financial statements) are no longer considered
presentations in conformity with generally accepted accounting principles. The
effects on the financial statements of the differences between the statutory
basis of accounting and generally accepted accounting principles are material
and are also described in Note 1. Accordingly, our present opinion on the
presentation of the 1995 and 1994 financial statements in accordance with
generally accepted accounting principles, as presented herein, is different from
that expressed in our previous report.

In our opinion, because of the effects of the matter discussed in the third
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the admitted assets,
liabilities and surplus of the Company as of December 31, 1995, and its
operations, changes in surplus and its cash flows for each of the two years in
the period ended December 31, 1995.

However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the admitted assets, liabilities and surplus
of The Prudential Insurance Company of America as of December 31, 1995, and the
results of its operations, changes in surplus and its cash flows for each of the
two years in the period then ended, on the basis of accounting described in Note
1.

Also, as described in Note 1 to the financial statements, these financial
statements were prepared on an unconsolidated statutory basis of accounting,
which differs from the 1995 and 1994 financial statements prepared for general
distribution on a consolidated statutory basis of accounting, both of which
differ from generally accepted accounting principles. The financial statements
for 1995 and 1994 have been restated on an unconsolidated statutory basis of
accounting adopted in 1996 for purposes of general distribution. Further, these
financial statements differ from the previously issued unconsolidated statutory
financial statements because certain permitted financial statement presentation
practices are no longer being used.

/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey

March 1, 1996, except for Note 1A,
as to which the date is March 10, 1997

- 18 -