As filed with the Securities and Exchange Commission on December 29, 2005

Registration No. 2-80896

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933 o

Pre-Effective Amendment No. o

Post-Effective Amendment No. 53 ý

and

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940 o

Amendment No. 56 ý

(Check appropriate box or boxes)

THE PRUDENTIAL SERIES FUND

(Exact Name of Registrant)

GATEWAY CENTER THREE

100 MULBERRY STREET

NEWARK, NEW JERSEY 07102

(800) 778-2255

(Address and telephone number of principal executive offices)

Debroah A. Docs, Secretary

The Prudential Series Fund

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

(Name and Address of Agent for Service)

Copy to:

Christopher E. Palmer, Esq.

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

Approximate date of proposed public offering: As soon as practicable after the effective date of the Registration Statement.

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

o immediately upon filing pursuant to paragraph (b)

ý on January 2, 2006 pursuant to paragraph (b)

o 60 days after filing pursuant to paragraph (a)(1)

o on (date) pursuant to paragraph (a)(1)

o 75 days after filing pursuant to paragraph (a)(2)

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

If appropriate, check the following box:

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

Shares of Beneficial Interest of the Various Series of The Prudential Series Fund

(Title of Securities Being Registered)

THE PRUDENTIAL SERIES FUND

Supplement dated January 2, 2006 to Prospectus dated May 1, 2005

This Supplement sets forth certain additional financial information for the Prospectus of The Prudential Series Fund formerly named The Prudential Series Fund, Inc. (the “Fund”), dated May 1, 2005. The following should be read in conjunction with your Prospectus and should be retained for future reference.

Change in Federal Income Tax Status and Related Reorganization

Each Portfolio of the Fund recently changed its federal income tax status from a regulated investment company to a partnership. In effecting that conversion, the Fund was reorganized from a Maryland corporation to a Delaware statutory trust. The conversion and the reorganization together are referred to as the “Transactions.”

The investment objectives, policies, restrictions, net asset values per share, service providers, fiscal years, and investment portfolios of the Portfolios did not change as a result of the Transactions. In addition, the Fund obtained opinions of counsel that the Transactions had no adverse federal income tax consequences for the Portfolios or Contract owners. All fees and expenses incurred in connection with the completion of the Transactions were borne by Prudential Investments LLC (the “Manager”) and its affiliates. Additionally, the Manager and its affiliates bore all transitional costs and will bear any ongoing incremental increases in Portfolio fees and expenses that are charged to the Fund by its service providers and that are directly attributable to the Transactions.

The Transactions were effected on or about January 1, 2006. The Transactions have not changed each Portfolio’s practice of distributing its net income and capital gains to its shareholders of record (that is, the insurance company separate accounts) as described in the “Taxation of the Fund” section of the SAI.

All references relating to the Portfolios’ status as regulated investment companies and their compliance with related requirements are hereby deleted.

The Fund has been re-named “The Prudential Series Fund.”

The Prudential Series Fund, a Delaware trust, hereby expressly adopts the registration statement of The Prudential Series Fund, Inc., a Maryland corporation.

FINANCIAL HIGHLIGHTS

The financial highlights which follow will help you evaluate the financial performance of each Portfolio available under your Contract. The total return in each chart represents the rate that a shareholder earned on an investment in that share class of the Portfolio, assuming reinvestment of all dividends and other distributions. The charts do not reflect any charges under any variable contract. Because Contract Charges are not included, the actual return that you will receive will be lower than the total return. The information is for Class I shares for the periods indicated, unless otherwise indicated.

The financial highlights for the year ended December 31, 2004 were part of the financial statements audited by KPMG LLP, the Fund’s independent registered public accounting firm, whose reports on these financial statements were unqualified. The financial highlights for the years presented through December 31, 2003 were part of financial statements audited by another independent registered public accounting firm, whose opinion was unqualified. The reports of the independent registered public accounting firms for the year ended December 31, 2003 and for the year ended December 31, 2004 are included in each Portfolio’s Annual Report to shareholders for the year in question, which reports are available upon request. The financial highlights for the six-month period ended June 30, 2005 are unaudited and are included in each Portfolio’s Semi-Annual Report to shareholders, which is available upon request.

Financial Highlights

	Conservative Balanced Portfolio
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	15.10		$	14.34		$	12.43		$	13.69		$	14.63		$	15.36
Income From Investment Operations:
Net investment income	0.18			0.34			0.28			0.34			0.44			0.59
Net realized and unrealized gains (losses) on investments	(0.15		)	0.78			1.99			(1.57		)	(0.75		)	(0.65		)
Total from investment operations	0.03			1.12			2.27			(1.23		)	(0.31		)	(0.06		)
Less Distributions:
Dividends from net investment income	(0.35		)	(0.28		)	(0.36		)	—			(0.48		)	(0.56		)
Distributions from net realized gains	(0.15		)	(0.08		)	—			(0.03		)	(0.15		)	(0.11		)
Distributions in excess of net realized gains	—			—			—			—			—			—
Total distributions	(0.50		)	(0.36		)	(0.36		)	(0.03		)	(0.63		)	(0.67		)
Net Asset Value, end of period	$	14.63		$	15.10		$	14.34		$	12.43		$	13.69		$	14.63
Total Investment Return(a)	0.28		%	8.04		%	18.77		%	(8.98		)%	(2.02		)%	(0.48		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	2,791.9		$	2,893.6		$	2,895.0		$	2,660.3		$	3,259.7		$	3,714.3
Ratios to average net assets:
Expenses	0.59		%(b)	0.59		%	0.58		%	0.58		%	0.58		%	0.60		%
Net investment income	2.39		%(b)	2.27		%	2.02		%	2.49		%	3.05		%	3.79		%
Portfolio turnover rate	56		%(c)	153		%	248		%	260		%	239		%	85		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.

(b) Annualized.

	Diversified Bond Portfolio
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.28		$	11.17		$	10.82		$	11.36		$	11.28		$	10.95
Income From Investment Operations:
Net investment income	0.28			0.52			0.45			0.57			0.67			0.77
Net realized and unrealized gains on investments	0.04			0.09			0.35			0.17			0.12			0.26
Total from investment operations	0.32			0.61			0.80			0.74			0.79			1.03
Less Dividends and Distributions:
Dividends from net investment income	(0.31		)	(0.50		)	(0.45		)	(1.27		)	(0.71		)	(0.70		)
Distributions from net realized gains	(0.08		)	—			—			—			—			—		(b)
Tax return of capital distributions	—			—			—			(0.01		)	—			—
Total dividends and distributions	(0.39		)	(0.50		)	(0.45		)	(1.28		)	(0.71		)	(0.70		)
Net Asset Value, end of period	$	11.21		$	11.28		$	11.17		$	10.82		$	11.36		$	11.28
Total Investment Return(a)	2.92		%	5.59		%	7.49		%	7.07		%	6.98		%	9.72		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,192.8		$	1,283.7		$	1,418.0		$	1,370.3		$	1,400.7		$	1,269.8
Ratios to average net assets:
Expenses	0.45		%(c)	0.45		%	0.44		%	0.44		%	0.44		%	0.45		%
Net investment income	4.85		%(c)	4.57		%	4.02		%	5.25		%	6.35		%	6.83		%
Portfolio turnover rate	145		%(d)	382		%	706		%	595		%	257		%	139		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total Returns for periods of less than one full year are not annualized.

(b) Less than $0.005 per share.

(d) Not annualized.

Financial Highlights

	Equity Portfolio Class I
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	22.31		$	20.55		$	15.75		$	20.49		$	24.50		$	28.90
Income From Investment Operations:
Net investment income	0.11			0.28			0.17			0.17			0.18			0.51
Net realized and unrealized gains (losses) on investments	(0.07		)	1.75			4.81			(4.75		)	(2.83		)	0.26
Total from investment operations	0.04			2.03			4.98			(4.58		)	(2.65		)	0.77
Less Distributions:
Dividends from net investment income	(0.01		)	(0.27		)	(0.18		)	(0.16		)	(0.18		)	(0.51		)
Distributions in excess of net investment income	—			—			—			—			—			(0.02		)
Distributions from net realized gains	—			—			—			—			(1.18		)	(4.64		)
Total dividends and distributions	(0.01		)	(0.27		)	(0.18		)	(0.16		)	(1.36		)	(5.17		)
Net Asset Value, end of period	$	22.34		$	22.31		$	20.55		$	15.75		$	20.49		$	24.50
Total Investment Return(a)	0.11		%	9.93		%	31.65		%	(22.34		)%	(11.18		)%	3.28		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	4,000.8		$	4,135.7		$	4,012.3		$	3,273.6		$	4,615.9		$	652.7
Ratios to average net assets:
Expenses	0.49		%(b)	0.48		%	0.49		%	0.48		%	0.49		%	0.49		%
Net investment income	1.01		%(b)	1.29		%	0.96		%	0.88		%	0.84		%	1.75		%
Portfolio turnover rate	35		%(c)	50		%	54		%	54		%	153		%	78		%

(b) Annualized.

	Equity Portfolio Class II

	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	22.34		$	20.58		$	15.76		$	20.49		$	24.51		$	28.92
Income From Investment Operations:
Net investment income	0.06			0.20			0.08			0.09			0.09			0.39
Net realized and unrealized gains (losses) on investments	(0.07		)	1.74			4.83			(4.72		)	(2.83		)	0.26
Total from investment operations	(0.01		)	1.94			4.91			(4.63		)	(2.74		)	0.65
Less Distributions:
Dividends from net investment income	—			(0.18		)	(0.09		)	(0.10		)	(0.10		)	(0.40		)
Distributions in excess of net investment income	—			—			—			—			—			(0.02		)
Distributions from net realized gains	—			—			—			—			(1.18		)	(4.64		)
Total dividends and distributions	—			(0.18		)	(0.09		)	(0.10		)	(1.28		)	(5.06		)
Net Asset Value, end of period	$	22.33		$	22.34		$	20.58		$	15.76		$	20.49		$	24.51
Total Investment Return(a)	(0.04		)%	9.51		%	31.11		%	(22.62		)%	(11.57		)%	2.83		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1.4		$	1.1		$	0.8		$	0.4		$	1.1		$	1.8
Ratios to average net assets:
Expenses	0.89		%(b)	0.88		%	0.89		%	0.88		%	0.89		%	0.91		%
Net investment income	0.61		%(b)	0.91		%	0.54		%	0.46		%	0.45		%	1.26		%
Portfolio turnover rate	35		%(c)	50		%	54		%	54		%	153		%	78		%

(b) Annualized.

Financial Highlights

	Flexible Managed Portfolio
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	16.58		$	15.19		$	12.55		$	14.79		$	16.53		$	17.64
Income From Investment Operations:
Net investment income	0.18			0.29			0.22			0.27			0.42			0.61
Net realized and unrealized gains (losses) on investments	(0.13		)	1.32			2.70			(2.10		)	(1.35		)	(0.86		)
Total from investment operations	0.05			1.61			2.92			(1.83		)	(0.93		)	(0.25		)
Less Dividends and Distributions:
Dividends from net investment income	(0.32		)	(0.22		)	(0.28		)	(0.41		)	(0.58		)	(0.62		)
Distributions from net realized gains	—			—			—			—			(0.23		)	(0.24		)
Total dividends and distributions	(0.32		)	(0.22		)	(0.28		)	(0.41		)	(0.81		)	(0.86		)
Net Asset Value, end of period	$	16.31		$	16.58		$	15.19		$	12.55		$	14.79		$	16.53
Total Investment Return(a)	0.34		%	10.74		%	23.76		%	(12.74		)%	(5.68		)%	(1.44		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	3,515.9		$	3,883.5		$	3,693.6		$	3,181.0		$	3,896.6		$	4,463.8
Ratios to average net assets:
Expenses	0.63		%(b)	0.62		%	0.62		%	0.63		%	0.64		%	0.64		%
Net investment income	1.84		%(b)	1.83		%	1.55		%	1.92		%	2.61		%	3.22		%
Portfolio turnover rate	65		%(c)	150		%	204		%	238		%	236		%	132		%

(b) Annualized.

	Global Portfolio
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	16.43		$	15.14		$	11.35		$	15.29		$	23.61		$	30.98
Income From Investment Operations:
Net investment income	0.09			0.11			0.10			0.07			0.09			0.07
Net realized and unrealized gains (losses) on investments	(0.24		)	1.33			3.74			(3.87		)	(3.58		)	(5.30		)
Total from investment operations	(0.15		)	1.44			3.84			(3.80		)	(3.49		)	(5.23		)
Less Dividends and Distributions:
Dividends from net investment income	(0.10		)	(0.15		)	(0.05		)	(0.14		)	(0.06		)	(0.07		)
Distributions in excess of net investment income	—			—			—			—			—			(0.13		)
Distributions from net realized gains	—			—			—			—			(4.77		)	(1.94		)
Total dividends and distributions	(0.10		)	(0.15		)	(0.05		)	(0.14		)	(4.83		)	(2.14		)
Net Asset Value, end of period	$	16.18		$	16.43		$	15.14		$	11.35		$	15.29		$	23.61
Total Investment Return(a)	(.90		)%	9.59		%	34.07		%	(25.14		)%	(17.64		)%	(17.68		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	712.2		$	691.1		$	665.6		$	514.9		$	885.0		$	1,182.1
Ratios to average net assets:
Expenses	0.83		%(b)	0.84		%	0.87		%	0.82		%	0.84		%	0.85		%
Net investment income	1.15		%(b)	0.67		%	0.78		%	0.47		%	0.58		%	0.25		%
Portfolio turnover rate	36		%(c)	128		%	88		%	75		%	67		%	95		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

Financial Highlights

	Government Income Portfolio
	Six Months			Year Ended December 31,
	Ended
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.65		$	11.92		$	12.50		$	12.26		$	12.02		$	11.55
Income From Investment Operations:
Net investment income	0.24			0.49			0.46			0.38			0.65			0.89
Net realized and unrealized gain (losses) on investment	0.08			(0.13		)	(0.15		)	1.00			0.31			0.52
Total from investment operations	0.32			0.36			0.31			1.38			0.96			1.41
Less Dividends and Distributions:
Dividends from net investment income	(0.29		)	(0.44		)	(0.46		)	(1.06		)	(0.72		)	(0.91		)
Distributions from net realized gains	—			(0.19		)	(0.43		)	(0.08		)	—			(0.03		)
Total dividends and distributions	(0.29		)	(0.63		)	(0.89		)	(1.14		)	(0.72		)	(0.94		)
Net Asset Value, end of period	$	11.68		$	11.65		$	11.92		$	12.50		$	12.26		$	12.02
Total Investment Return(a)	2.82		%	3.12		%	2.46		%	12.05		%	8.06		%	12.78		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	404.1		$	420.2		$	461.5		$	484.3		$	311.0		$	291.5
Ratios to average net assets:
Expenses	0.45		%(b)	0.47		%	0.46		%	0.44		%	0.47		%	0.47		%
Net investment income	4.09		%(b)	4.07		%	3.76		%	4.29		%	5.53		%	6.03		%
Portfolio turnover rate	271		%(c)	617		%	695		%	508		%	361		%	184		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

	High Yield Bond Portfolio
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	5.42		$	5.29		$	4.59		$	5.40		$	6.14		$	7.52
Income From Investment Operations:
Net investment income	0.19			0.39			0.41			0.29			0.58			0.74
Net realized and unrealized gains (losses) on investments	(0.13		)	0.13			0.71			(0.21		)	(0.62		)	(1.30		)
Total from investment operations	0.06			0.52			1.12			0.08			(0.04		)	(0.56		)
Less Dividends:
Dividends from net investment income	(0.18		)	(0.39		)	(0.42		)	(0.89		)	(0.70		)	(0.82		)
Net Asset Value, end of period	$	5.30		$	5.42		$	5.29		$	4.59		$	5.40		$	6.14
Total Investment Return(a)	1.15		%	10.30		%	25.04		%	1.50		%	(0.44		)%	(7.91		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,620.0		$	1,595.7		$	1,466.7		$	1,128.6		$	655.8		$	661.3
Ratios to average net assets:
Expenses	0.59		%(b)	0.59		%	0.60		%	0.58		%	0.60		%	0.60		%
Net investment income	7.12		%(c)	7.42		%	8.11		%	9.36		%	10.93		%	10.47		%
Portfolio turnover rate	22		%	65		%	93		%	77		%	84		%	76		%

(b) Annualized.

Financial Highlights

	Jennison Portfolio
	Class I
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	18.14		$	16.62		$	12.79		$	18.57		$	22.97		$	32.39
Income From Investment Operations:
Net investment income	0.02			0.08			0.04			0.03			0.04			0.01
Net realized and unrealized gains (losses) on investments	0.08			1.52			3.83			(5.78		)	(4.22		)	(5.61		)
Total from investment operations	0.10			1.60			3.87			(5.75		)	(4.18		)	(5.60		)
Less Dividends and Distributions:
Dividends from net investment income	—		(b)	(0.08		)	(0.04		)	(0.03		)	(0.03		)	—		(b)
Distributions from net realized gains	—			—			—			—			(0.19		)	(3.82		)
Total dividends and distributions	—			(0.08		)	(0.04		)	(0.03		)	(0.22		)	(3.82		)
Net Asset Value, end of period	$	18.24		$	18.14		$	16.62		$	12.79		$	18.57		$	22.97
Total Investment Return(a)	0.57		%	9.63		%	30.25		%	(30.95		)%	(18.25		)%	(17.38		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	2,029.6		$	2,044.1		$	1,772.4		$	1,388.8		$	2,186.9		$	2,892.7
Ratios to average net assets:
Expenses	0.63		%(c)	0.64		%	0.64		%	0.61		%	0.64		%	0.64		%
Net investment income	0.21		%(c)	0.50		%	0.28		%	0.21		%	0.18		%	0.02		%
Portfolio turnover rate	31		%(d)	74		%	69		%	74		%	86		%	89		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Less than $0.005 per share.

(d) Not annualized.

	Jennison Portfolio
	Class II
	Six Months
	Ended			Year Ended December 31,												February 10, 2000(e)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	17.97		$	16.46		$	12.70		$	18.45		$	22.88		$	34.25
Income From Investment Operations:
Net investment income (loss)	(0.02		)	0.02			(0.01		)	(0.02		)	0.01			(0.03		)
Net realized and unrealized gains (losses) on investments	0.09			1.50			3.77			(5.73		)	(4.25		)	(7.54		)
Total from investment operations	0.07			1.52			3.76			(5.75		)	(4.24		)	(7.57		)
Less Distributions:
Dividends from net investment income	—			(0.01		)	—			—			—		(d)	—		(d)
Distributions from net realized gains	—			—			—			—			(0.19		)	(3.80		)
Total distributions	—			(0.01		)	—			—			(0.19		)	(3.80		)
Net Asset Value, end of period	$	18.04		$	17.97		$	16.46		$	12.70		$	18.45		$	22.88
Total Investment Return(a)	0.39		%	9.22		%	29.61		%	(31.17		)%	(18.60		)%	(22.19		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	79.9		$	84.9		$	74.3		$	48.1		$	59.6		$	13.3
Ratios to average net assets:
Expenses	1.03		%(b)	1.04		%	1.04		%	1.01		%	1.04		%	1.04		%(b)
Net investment income (loss)	(0.19		)%(b)	0.11		%	(0.13		)%	(0.19		)%	(0.19		)%	(0.39		)%(b)
Portfolio turnover rate	31		%(c)	74		%	69		%	74		%	86		%	89		%(c)

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

(d) Less than $0.005 per share.

(e) Commencement of offering of Class II Shares.

Financial Highlights

	Money Market Portfolio
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.00		$	10.00		$	10.00		$	10.00		$	10.00		$	10.00
Income From Investment Operations:
Net investment income and realized and unrealized gains	0.01			0.01			0.08			0.15			0.41			0.60
Dividend and distributions	(0.01		)	(0.01		)	(0.08		)	(0.15		)	(0.41		)	(0.60		)
Net Asset Value, end of period	$	10.00		$	10.00		$	10.00		$	10.00		$	10.00		$	10.00
Total Investment Return(a)	1.18		%	1.01		%	0.84		%	1.52		%	4.22		%	6.20		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	914.4		$	885.4		$	933.7		$	1,366.6		$	1,501.9		$	1,238.2
Ratios to average net assets:
Expenses	0.45		%(b)	0.45		%	0.44		%	0.43		%	0.43		%	0.44		%
Net investment income	2.36		%(b)	1.01		%	0.84		%	1.52		%	3.86		%	6.03		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

	Natural Resources Portfolio
	Class I
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	31.88		$	27.49		$	22.35		$	19.11		$	23.59		$	17.38
Income From Investment Operations:
Net investment income	0.18			0.19			0.25			0.09			0.43			0.13
Net realized and unrealized gains (losses) on investments	5.16			6.28			7.38			3.52			(2.89		)	6.36
Total from investment operations	5.34			6.47			7.63			3.61			(2.46		)	6.49
Less Distributions:
Dividends from net investment income	0.00		(b)	(1.00		)	(0.98		)	(0.12		)	(0.55		)	(0.16		)
Distributions in excess of net investment income	0.00			0.00			0.00			—			—			(0.09		)
Distributions from net realized gains	(3.02		)	(1.08		)	(1.51		)	(0.25		)	(1.47		)	(0.03		)
Total dividends and distributions	(3.02		)	(2.08		)	(2.49		)	(0.37		)	(2.02		)	(0.28		)
Net Asset Value, end of period	$	34.20		$	31.88		$	27.49		$	22.35		$	19.11		$	23.59
Total Investment Return(a)	17.32		%	25.17		%	39.00		%	18.92		%	(10.08		)%	37.66		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	741.8		$	622.6		$	498.7		$	379.2		$	336.1		$	393.2
Ratios to average net assets:
Expenses	0.50		%(c)	0.51		%	0.51		%	0.50		%	0.52		%	0.58		%
Net investment income	0.66		%(c)	0.49		%	0.80		%	0.47		%	1.94		%	0.67		%
Portfolio turnover rate	37		%(d)	24		%	24		%	37		%	23		%	30		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Amount is less than $0.01 per share.

(d) Not annualized.

Financial Highlights

	Natural Resources Portfolio
	Class II
	April 28, 2005(d)
	through
	June 30, 2005
	(Unaudited)
Per Share Operating Performance:
Net Asset Value, beginning of period	$	30.10
Income From Investment Operations:
Net investment income	0.01
Net realized and unrealized gains on investments	4.06
Total from investment operations	4.07
Net Asset Value, end of period	$	34.17
Total Investment Return(a)	13.52		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	0.3
Ratios to average net assets:
Expenses	0.87		%(b)
Net investment income	0.39		%(b)
Portfolio turnover rate	37		%(c)

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

(d) Commencement of offering of Class II shares.

	Small Capitalization Stock Portfolio
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	21.33		$	17.64		$	12.91		$	15.48		$	17.11		$	16.25
Income From Investment Operations:
Net investment income	0.06			0.12			0.07			0.06			0.06			0.07
Net realized and unrealized gains (losses) on investments	0.24			3.75			4.82			(2.31		)	0.67			1.81
Total from investment operations	0.30			3.87			4.89			(2.25		)	0.73			1.88
Less Distributions:
Dividends from net investment income	(0.01		)	(0.11		)	(0.07		)	(0.13		)	(0.08		)	(0.08		)
Distributions from net realized gains	(1.25		)	(0.07		)	(0.09		)	(0.19		)	(2.28		)	(0.94		)
Total distributions	(1.26		)	(0.18		)	(0.16		)	(0.32		)	(2.36		)	(1.02		)
Net Asset Value, end of period	$	20.37		$	21.33		$	17.64		$	12.91		$	15.48		$	17.11
Total Investment Return(a)	1.62		%	22.04		%	38.27		%	(14.92		)%	5.53		%	12.81		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	722.1		$	743.2		$	619.9		$	467.4		$	611.1		$	568.3
Ratios to average net assets:
Expenses	0.47		%(b)	0.47		%	0.48		%	0.46		%	0.48		%	0.48		%
Net investment income	0.63		%(b)	0.62		%	0.47		%	0.40		%	0.52		%	0.59		%
Portfolio turnover rate	7		%(c)	18		%	15		%	17		%	23		%	29		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.

(b) Annualized.

Financial Highlights

	Stock Index Portfolio
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	31.29		$	29.29		$	24.09		$	31.64		$	38.66		$	44.45
Income (Loss) From Investment Operations:
Net investment income	0.22			0.50			0.36			0.37			0.36			0.36
Net realized and unrealized gains (losses) on investments	(0.55		)	2.50			6.14			(7.34		)	(5.05		)	(4.37		)
Total from investment operations	(0.33		)	3.00			6.50			(6.97		)	(4.69		)	(4.01		)
Less Dividends & Distributions:
Dividends from net investment income	(0.02		)	(0.49		)	(0.37		)	(0.36		)	(0.35		)	(0.37		)
Distributions from net realized gains	(0.77		)	(0.51		)	(0.93		)	(0.22		)	(1.98		)	(1.41		)
Total distributions	(0.79		)	(1.00		)	(1.30		)	(0.58		)	(2.33		)	(1.78		)
Net Asset Value, end of period	$	30.17		$	31.29		$	29.29		$	24.09		$	31.64		$	38.66
Total Investment Return(a)	(1.01		)%	10.45		%	28.18		%	(22.19		)%	(12.05		)%	(9.03		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	3,165.7		$	3,094.7		$	2,940.9		$	2,352.3		$	3,394.1		$	4,186.0
Ratios to average net assets:
Expenses	0.38		%(b)	0.38		%	0.37		%	0.37		%	0.39		%	0.39		%
Net investment income	1.48		%(b)	1.64		%	1.42		%	1.25		%	1.02		%	0.83		%
Portfolio turnover rate	2		%(c)	3		%	2		%	4		%	3		%	7		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

	Value Portfolio
	Class I
	Six Months
	Ended			Year Ended December 31,
	June 30,
	2005
	(Unaudited)			2004(d)			2003			2002(d)			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	19.93		$	17.36		$	13.75		$	17.91		$	20.46		$	19.52
Income From Investment Operations:
Net investment income	0.14			0.28			0.23			0.22			0.25			0.46
Net realized and unrealized gains (losses) on investments	0.71			2.55			3.62			(4.15		)	(0.69		)	2.45
Total from investment operations	0.85			2.83			3.85			(3.93		)	(0.44		)	2.91
Less Distributions:
Dividends from net investment income	(0.02		)	(0.26		)	(0.24		)	(0.23		)	(0.30		)	(0.44		)
Distributions from net realized gains	—			—			—			—			(1.81		)	(1.53		)
Tax return of capital distributions	—			—			—		(e)	—			—			—
Total distributions	(0.02		)	(0.26		)	(0.24		)	(0.23		)	(2.11		)	(1.97		)
Net asset value, end of period	$	20.76		$	19.93		$	17.36		$	13.75		$	17.91		$	20.46
Total Investment Return(a)	4.27		%	16.31		%	28.07		%	(21.97		)%	(2.08		)%	15.59		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,611.2		$	1,595.6		$	1,456.1		$	1,247.0		$	1,801.4		$	1,975.3
Ratios to average net assets:
Expenses	0.43		%(b)	0.44		%	0.44		%	0.43		%	0.44		%	0.45		%
Net investment income	1.37		%(b)	1.48		%	1.49		%	1.39		%	1.32		%	2.31		%
Portfolio turnover rate	29		%(c)	52		%	72		%	94		%	175		%	85		%

(b) Annualized

(d) Calculated based upon weighted average shares outstanding during the year.

(e) Less than .005 per share.

Financial Highlights

	Value Portfolio Class II
	Six Months
	Ended			Year Ended December 31,									May 14, 2001(d)
	June 30,												through
	2005												December 31,
	(Unaudited)			2004			2003(e)			2002(e)			2001
Per Share Operating Performance:
Net Asset Value, beginning of period	$	19.94		$	17.37		$	13.75		$	17.91		$	19.79
Income From Investment Operations:
Net investment income	0.09			0.20			0.16			0.16			0.12
Net realized and unrealized gains (losses) on investments	0.72			2.55			3.62			(4.15		)	(1.01		)
Total from investment operations	0.81			2.75			3.78			(3.99		)	(0.89		)
Less Distributions:
Dividends from net investment income	—			(0.18		)	(0.16		)	(0.17		)	(0.14		)
Distributions from net realized gains	—			—			—			—			(0.85		)
Tax return of capital distributions	—			—			—		(f)	—			—
Total distributions	—			(0.18		)	(0.16		)	(0.17		)	(0.99		)
Net Asset Value, end of period	$	20.75		$	19.94		$	17.37		$	13.75		$	17.91
Total Investment Return(a)	4.06		%	15.83		%	27.63		%	(22.35		)%	(4.34		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	3.1		$	3.0		$	2.9		$	1.5		$	1.1
Ratios to average net assets:
Expenses	0.83		%(b)	0.84		%	0.84		%	0.83		%	0.84		%(b)
Net investment income	0.97		%(b)	1.08		%	1.10		%	1.04		%	0.94		%(b)
Portfolio turnover rate	29		%(c)	52		%	72		%	94		%	175		%(c)

(a)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.
(b)	Annualized.
(c)	Not annualized.
(d)	Commencement of offering of Class II shares.
(e)	Calculated based upon weighted average shares outstanding during the year.
(f)	Less than .005 per share.

	Zero Coupon Bond Portfolio 2005
	Six Months			Year Ended December 31,
	Ended
	2005
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	12.59		$	13.38		$	13.73		$	13.77		$	13.38		$	12.68
Income From Investment Operations:
Net investment income	0.27			0.55			0.60			0.59			0.65			0.65
Net realized and unrealized gains (losses) on investments	(0.18		)	(0.47		)	(0.34		)	0.75			0.42			1.02
Total from investment operations	0.09			0.08			0.26			1.34			1.07			1.67
Less Dividends and Distributions:
Dividends from net investment income	(0.26		)	(0.55		)	(0.60		)	(1.25		)	(0.64		)	(0.67		)
Distributions from net realized gains	(0.08		)	(0.32		)	(0.01		)	(0.13		)	(0.04		)	(0.30		)
Total dividends and distributions	(0.34		)	(0.87		)	(0.61		)	(1.38		)	(0.68		)	(0.97		)
Net Asset Value, end of period	$	12.34		$	12.59		$	13.38		$	13.73		$	13.77		$	13.38
Total Investment Return(a)	0.78		%	0.57		%	1.90		%	10.40		%	8.11		%	13.76		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	58.3		$	60.6		$	63.9		$	66.8		$	55.0		$	49.8
Ratios to average net assets:
Expenses	0.65		%(b)	0.63		%	0.66		%	0.63		%	0.63		%	0.65		%
Net investment income	4.38		%(b)	4.19		%	4.33		%	4.64		%	5.05		%	5.26		%
Portfolio turnover rate	0		%(c)	9		%	8		%	1		%	10		%	67		%

(a)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.
(b)	Annualized
(c)	Not annualized.

Financial Highlights

	SP Aggressive Growth Asset Allocation Portfolio
	Six Months Ended June 30,			Year Ended December 31,												September 22, 2000(a) through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	8.98		$	7.83		$	5.90		$	7.58		$	9.33		$	10.00
Income From Investment Operations:
Net investment income	0.20			0.02			0.01			—		(e)	0.02			0.01
Net realized and unrealized gains (losses) on investments	(0.16		)	1.13			1.92			(1.68		)	(1.69		)	(0.67		)
Total from investment operations	0.04			1.15			1.93			(1.68		)	(1.67		)	(0.66		)
Less Distributions:
Dividends from net investment income	(0.02		)	—		(e)	—		(e)	—			(0.02		)	(0.01		)
Distributions from net realized gains	(0.35		)	—			—			—			(0.06		)	—
Total distributions	(0.37		)	—			—			—			(0.08		)	(0.01		)
Net Asset Value, end of period	$	8.65		$	8.98		$	7.83		$	5.90		$	7.58		$	9.33
Total Investment Return(b)	0.60		%	14.76		%	32.77		%	(22.16		)%	(17.92		)%	(6.65		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	154.4		$	136.9		$	60.6		$	15.1		$	7.5		$	2.1
Ratios to average net assets:
Expenses	0.05		%(c)	0.05		%	0.05		%	0.05		%	0.05		%	0.05		%(c)
Net investment income	5.02		%(c)	0.27		%	0.16		%	0.06		%	0.39		%	0.36		%(c)
Portfolio turnover rate	5		%(d)	60		%	22		%	26		%	62		%	6		%(d)

(a)	Commencement of operations.
(b)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for years of less than one full year are not annualized.
(c)	Annualized.
(d)	Not annualized.
(e)	Less than $0.005 per share.

	SP AIM Core Equity Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	7.36		$	6.80		$	5.52		$	6.51		$	8.41		$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	0.04			0.08			0.04			0.02			—		(f)	0.01
Net realized and unrealized gain (loss) on investments	(0.10		)	0.51			1.26			(1.01		)	(1.90		)	(1.59		)
Total from investment operations	(0.06		)	0.59			1.30			(0.99		)	(1.90		)	(1.58		)
Less Dividends:
Dividends from net investment income	(0.08		)	(0.03		)	(0.02		)	—			—			(0.01		)
Net Asset Value, end of period	$	7.22		$	7.36		$	6.80		$	5.52		$	6.51		$	8.41
Total Investment Return(b)	(0.86		)%	8.79		%	23.69		%	(15.21		)%	(22.68		)%	(15.74		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	33.6		$	31.8		$	22.8		$	13.9		$	10.2		$	4.3
Ratios to average net assets(d):
Expenses	1.00		%(c)	1.00		%	1.00		%	1.00		%	1.00		%	1.00		%(c)
Net investment income (loss)	1.09		%(c)	1.27		%	0.70		%	0.45		%	(0.02		)%	0.26		%(c)
Portfolio turnover rate	36		%(e)	68		%	37		%	116		%	65		%	15		%(e)

(a)	Commencement of operations.
(b)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)	Annualized.
(d)	Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.32% and 0.76%, respectively, for the six months ended June 30, 2005, 1.48% and 0.79%, respectively, for the year ended December 31, 2004, and 1.72% and (0.02)%, respectively for the year ended December 31, 2003, 1.79% and (0.34)%, respectively, for the year ended December 31, 2002, 2.55% and (1.57)%, respectively for the year ended December 31, 2001 and 5.53% and (4.27)%, respectively, for the period ended December 31, 2000.
(e)	Not annualized.
(f)	Less than $0.005 per share.

Financial Highlights

	SP T. Rowe Price Large Cap Growth Portfolio (formerly SP Alliance Bernstein Large Cap Growth Portfolio)
	Six Months															September 22, 2000
	Ended			Year Ended December 31,												(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.61		$	6.23		$	5.03		$	7.31		$	8.55		$	10.00
Income From Investment Operations:
Net investment income (loss)	(0.01		)	(0.01		)	0.00		(f)	(0.01		)	(0.01		)	0.01
Net realized and unrealized gains (losses) on investments	(0.04		)	0.39			1.20			(2.27		)	(1.23		)	(1.45		)
Total from investment operations	(0.05		)	0.38			1.20			(2.28		)	(1.24		)	(1.44		)
Less Distributions:
Dividends from net investment income	—			—			—			—			—			(0.01		)
Tax return of capital distributions	—			—			—			—			—		(f)	—
Total distributions	—			—			—			—			—		(f)	(0.01		)
Net Asset Value, end of period	$	6.56		$	6.61		$	6.23		$	5.03		$	7.31		$	8.55
Total Investment Return(b)	(0.76		)%	6.10		%	23.86		%	(31.19		)%	(14.47		)%	(14.44		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	64.9		$	65.7		$	146.5		$	57.7		$	35.9		$	7.1
Ratios to average net assets:
Expenses	1.10		%(c)(d)	1.08		%	1.06		%	1.10		%(d)	1.10		%(d)	1.10		%(c)(d)
Net investment income (loss)	(0.31		)%(c)(d)	(0.14		)%	(0.11		)%	(0.27		)%(d)	(0.08		)%(d)	0.44		%(c)(d)
Portfolio turnover rate	40		%(e)	122		%	38		%	34		%	47		%	10		%(e)

(a)	Commencement of operations.
(b)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)	Annualized.
(d)	Net of expense subsidy. If the investment advisor had not subsidized expenses, the expense and net investment loss ratios would have been 1.16% and (0.36)%, respectively, for the six months ended June 30, 2005, 1.19% and (0.35)%, respectively, for the year ended December 31, 2002, 1.57% and (0.55)%, respectively, for the year ended December 31, 2001 and 4.26% and (2.72)%, respectively, for the year ended December 31, 2000.
(e)	Not annualized.
(f)	Less than $0.005 per share.

	SP Balanced Asset Allocation Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.63		$	9.66		$	7.96		$	9.02		$	9.80		$	10.00
Income (Loss) from Investment Operations:
Net investment income	0.24			0.09			0.09			0.11			0.14			0.06
Net realized and unrealized gain (loss) on investments	(0.12		)	0.97			1.71			(1.16		)	(0.73		)	(0.20		)
Total from investment operations	0.12			1.06			1.80			(1.05		)	(0.59		)	(0.14		)
Less Distributions:
Dividends from net investment income	(0.10		)	(0.08		)	(0.10		)	—			(0.14		)	(0.06		)
Distributions from net realized gains	(0.37		)	(0.01		)	—			(0.01		)	(0.05		)	—
Total distributions	(0.47		)	(0.09		)	(0.10		)	(0.01		)	(0.19		)	(0.06		)
Net asset value, end of period	$	10.28		$	10.63		$	9.66		$	7.96		$	9.02		$	9.80
Total Investment Return(b)	1.30		%	11.09		%	22.87		%	(11.67		)%	(5.99		)%	(1.42		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,028.4		$	837.0		$	449.8		$	147.3		$	66.1		$	3.7
Ratios to average net assets:
Expenses	0.05		%(c)	0.05		%	0.05		%	0.05		%	0.05		%	0.05		%(c)
Net investment income	5.49		%(c)	1.37		%	1.83		%	1.96		%	3.26		%	4.89		%(c)
Portfolio turnover rate	4		%(d)	48		%	12		%	22		%	35		%	4		%(d)

(a)	Commencement of operations.
(b)	Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for years of less than one full year are not annualized.
(c)	Annualized.
(d)	Not annualized.

Financial Highlights

	SP Conservative Asset Allocation Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.20		$	10.48		$	9.16		$	9.77		$	10.00		$	10.00
Income From Investment Operations:
Net investment income	0.27			0.14			0.16			0.16			0.21			0.08
Net realized and unrealized gains (losses) on investments	(0.10		)	0.77			1.33			(0.73		)	(0.24		)	—		(c)
Total from investment operations	0.17			0.91			1.49			(0.57		)	(0.03		)	0.08
Less Distributions:
Dividends from net investment income	(0.16		)	(0.16		)	(0.16		)	(0.03		)	(0.16		)	(0.08		)
Distributions from net realized gains	(0.39		)	(0.03		)	(0.01		)	(0.01		)	(0.04		)	—		(c)
Total distributions	(0.55		)	(0.19		)	(0.17		)	(0.04		)	(0.20		)	(0.08		)
Net Asset Value, end of period	$	10.82		$	11.20		$	10.48		$	9.16		$	9.77		$	10.00
Total Investment Return(b)	1.59		%	8.89		%	16.49		%	(5.88		)%	(0.23		)%	0.84		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	533.2		$	459.9		$	281.2		$	117.5		$	47.9		$	1.9
Ratios to average net assets:
Expenses	0.05		%(d)	0.05		%	0.05		%	0.05		%	0.05		%	0.05		%(d)
Net investment income	5.73		%(d)	1.86		%	2.60		%	2.79		%	4.76		%	8.07		%(d)
Portfolio turnover rate	4		%(e)	47		%	22		%	25		%	29		%	4		%(e)

(a) Commencement of operations.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(d) Annualized.

(e) Not annualized.

	SP Davis Value Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.98		$	9.80		$	7.62		$	9.04		$	10.15		$	10.00
Income From Investment Operations:
Net investment income	0.04			0.10			0.05			0.05			0.05			0.02
Net realized and unrealized gains (losses) on investments and foreign currencies	0.05			1.12			2.18			(1.47		)	(1.11		)	0.15
Total from investment operations	0.09			1.22			2.23			(1.42		)	(1.06		)	0.17
Less Dividends:
Dividends from net investment income	(0.10		)	(0.04		)	(0.05		)	—		(f)	(0.05		)	(0.02		)
Distributions from net realized capital gains	(1.11		)	—			—			—			—			—
	(1.21		)	(0.04		)	(0.05		)	—			(0.05		)	(0.02		)
Net Asset Value, end of period	$	9.86		$	10.98		$	9.80		$	7.62		$	9.04		$	10.15
Total Investment Return(b)	1.11		%	12.53		%	29.40		%	(15.70		)%	(10.46		)%	1.69		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	292.9		$	285.5		$	391.2		$	165.0		$	94.4		$	12.8
Ratios to average net assets:
Expenses	0.82		%(c)	0.83		%	0.82		%	0.83		%(e)	0.83		%(e)	0.83		%(c)(e)
Net investment income	0.94		%(c)	0.89		%	0.80		%	0.82		%(e)	0.64		%(e)	1.48		%(c)(e)
Portfolio turnover rate	2		%(d)	34		%	7		%	22		%	17		%	3		%(d)

(a) Commencement of operations.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.

(d) Not annualized.

(e) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income (loss) ratios would have been 0.87% and 0.78%, respectively, for the year ended December 31, 2002, 1.03% and 0.43%, respectively, for the year ended December 31, 2001, and 3.16% and (0.85)%, respectively, for the period ended December 31, 2000.

(f) Less than $0.005 per share.

Financial Highlights

	SP Small Cap Value Portfolio (formerly SP Goldman Sachs Small Cap Value Portfolio)
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	15.51		$	12.88		$	9.68		$	11.36		$	11.13		$	10.00
Income From Investment Operations:
Net investment income	0.02			0.08			0.02			0.05			0.08			0.03
Net realized and unrealized gains (losses) on Investments	(0.14		)	2.57			3.18			(1.68		)	0.26			1.10
Total from investment operations	(0.12		)	2.65			3.20			(1.63		)	0.34			1.13
Less Dividends:
Dividends from net investment income	(0.08		)	(0.02		)	—		(b)	(0.05		)	(0.11		)	—		(b)
Distributions from net realized gains	(1.75		)	—		(b)	—			—			—			—
Total distributions	(1.83		)	(0.02		)	0.00			(0.05		)	(0.11		)	0.00
Net Asset Value, end of year	$	13.56		$	15.51		$	12.88		$	9.68		$	11.36		$	11.13
Total Investment Return(c)	(.31		)%	20.69		%	33.11		%	(14.38		)%	3.11		%	11.33		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	437.7		$	393.3		$	250.6		$	99.2		$	47.4		$	6.1
Ratios to average net assets:
Expenses	0.95		%(d)	0.96		%	1.04		%	1.05		%(e)	1.05		%(e)	1.05		%(d)(e)
Net investment income	0.40		%(d)	0.69		%	0.37		%	0.69		%(e)	1.08		%(e)	1.79		%(d)(e)
Portfolio turnover rate	25		%(f)	127		%	90		%	116		%	89		%	18		%(f)

(a)		Commencement of operations.
(b)		Less than $0.005 per share.
(c)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.
(d)		Annualized.
(e)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 1.10% and 0.64%, respectively, for the year ended December 31, 2002, 1.56% and 0.57%, respectively, for the year ended December 31, 2001 and 4.84% and (2.00)%, respectively, for the period ended December 31, 2000.
(f)		Not annualized.

	SP Growth Asset Allocation Portfolio
	Six Months
	Ended			Year Ended June 30,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	9.80		$	8.71		$	6.84		$	8.27		$	9.52		$	10.00
Income (Loss) from Investment Operations:
Net investment income	0.20			0.06			0.04			0.06			0.09			0.03
Net realized and unrealized gains (losses) on investments	(0.12		)	1.07			1.88			(1.49		)	(1.21		)	(0.49		)
Total from investment operations	0.08			1.13			1.92			(1.43		)	(1.12		)	(0.46		)
Less Dividends & Distributions:
Dividends from net investment income	(0.06		)	(0.04		)	(0.05		)	—			(0.08		)	(0.02		)
Distributions from net realized gains	(0.36		)	—			—			—		(e)	(0.05		)	—
Total dividends & distributions	(0.42		)	(0.04		)	(0.05		)	—			(0.13		)	(0.02		)
Net Asset Value, end of period	$	9 46		$	9.80		$	8.71		$	6.84		$	8.27		$	9.52
Total Investment Return(b)	1.01		%	13.05		%	28.27		%	(17.26		)%	(11.77		)%	(4.56		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	848.9		$	662.7		$	326.7		$	96.4		$	46.8		$	3.9
Ratios to average net assets:
Expenses	0.05		%(c)	0.05		%	0.05		%	0.05		%	0.05		%	0.05		%(c)
Net investment income	5.15		%(c)	0.94		%	1.10		%	1.12		%	1.71		%	2.95		%(c)
Portfolio turnover rate	3		%(d)	53		%	18		%	24		%	43		%	39		%(d)

(a) Commencement of operations.

(d) Not annualized.

(e) Less than $0.005 per share.

Financial Highlights

	SP Large Cap Value Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.56		$	9.90		$	7.81		$	9.44		$	10.44		$	10.00
Income From Investment Operations:
Net investment income	0.06			0.16			0 09			0 08			0.09			0.04
Net realized and unrealized gains (losses) on investments	0.22			1.58			2 00			(1 62		)	(0.99		)	0.44
Total from investment operations	0.28			1.74			2.09			(1 54		)	(0.90		)	0.48
Less Dividends and Distributions:
Dividends from net investment income	(0.10		)	(0.08		)	—			(0 09		)	(0.10		)	(0.04		)
Distributions from net realized gains	(0.30		)	—			—			—			—			—
Distributions in excess of net investment income	—			—			—			—			—			—		(e)
Tax Return of Capital	—			—			—			—		(e)	—			—
Total dividends and distributions	(0.40		)	(0.08		)	—			(0 09		)	(0.10		)	(0.04		)
Net Asset Value, end of period	$	11.44		$	11.56		$	9.90		$	7.81		$	9.44		$	10.44
Total Investment Return(b)	2.52		%	17.75		%	26.76		%	(16 37		)%	(8.65		)%	4.82		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	727.7		$	601.4		$	72.9		$	38.3		$	23.7		$	3.9
Ratios to average net assets:
Expenses	0.83		%(c)	0.86		%	0.90		%(d)	0 90		%(d)	0.90		%(d)	0.90		%(c)(d)
Net investment income	1.38		%(c)	1.53		%	1.32		%(d)	1 22		%(d)	1.18		%(d)	1.60		%(c)(d)
Portfolio turnover rate	28		%(f)	77		%	73		%	96		%	61		%	13		%(f)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income (loss) ratios would have been 1.11% and 1.11%, respectively, for the year ended December 31, 2003 and 1.31% and 0.81%, respectively, for the year ended December 31, 2002, 1.98% and 0.10%, respectively, for the year ended December 31, 2001 and 5.47% and (2.97)%, respectively, for the period ended December 31, 2000.
(e)		Less than $0.005 per share.
(f)		Not annualized.

	SP LSV International Value Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005(f)															December 31,
	(Unaudited)			2004			2003(f)			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	8.84		$	7.67		$	6.08		$	7.35		$	9.44		$	10.00
Income From Investment Operations:
Net investment income	0.13			0.04			0.06			0.04			0.05			0.01
Net realized and unrealized gains (losses) on investments	(0.10		)	1.17			1.58			(1.31		)	(2.09		)	(0.57		)
Total from investment operations	0.03			1.21			1.64			(1.27		)	(2.04		)	(0.56		)
Less Dividends:
Dividends from net investment income	(0.04		)	(0.04		)	(0.05		)	—			(0.05		)	—
Distributions from net realized gains	(0.83		)	—			—			—			—			—
Total distributions	(0.87		)	(0.04		)	(0.05		)	—			(0.05		)	—
Net Asset Value, end of period	$	8.00		$	8.84		$	7.67		$	6.08		$	7.35		$	9.44
Total Investment Return(b)	0.24		%	15.80		%	27.37		%	(17.17		)%	(22.07		)%	(5.20		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	285.5		$	240.7		$	119.9		$	46.4		$	24.7		$	7.8
Ratios to average net assets:
Expenses	1.09		%(c)	1.10		%(e)	1.10		%(e)	1.10		%(e)	1.10		%(e)	1.10		%(c)(e)
Net investment income	3.24		%(c)	0.69		%(e)	0.89		%(e)	0.55		%(e)	0.61		%(e)	0.55		%(c)(e)
Portfolio turnover rate	3		%(d)	159		%	87		%	141		%	155		%	51		%(d)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Not annualized.
(e)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.23% and 0.55%, respectively, for the year ended December 31, 2004, 1.30% and 0.69%, respectively, for the year ended December 31, 2003, 1.77% and (0.12)%, respectively, for the year ended December 31, 2002, 3.27% and (1.56)%, respectively, for the year ended December 31, 2001, and 4.21% and (2.56)%, respectively, for the period ended December 31, 2000.
(f)		Calculated based upon weighted average shares outstanding during the period.

Financial Highlights

	SP Mid-Cap Growth Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.85		$	5.73		$	4.09		$	7.62		$	9.69		$	10.00
Income From Investment Operations:
Net investment income (loss)	(0.02		)	(0.03		)	(0.02		)	(0.02		)	(0.01		)	0.02
Net realized and unrealized gain (loss) on investments	(0.28		)	1.15			1.66			(3.51		)	(2.01		)	(0.25		)
Total from investment operations	(0.30		)	1.12			1.64			(3.53		)	(2.02		)	(0.23		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			—			(0.01		)	(0.02		)
Distributions from net realized gains	—			—			—			—			(0.04		)	(0.06		)
Total dividends and distributions	—			—			—			—			(0.05		)	(0.08		)
Net Asset Value, end of period	$	6.55		$	6.85		$	5.73		$	4.09		$	7.62		$	9.69
Total Investment Return(b)	(4.38		)%	19.55		%	40.10		%	(46.33		)%	(20.93		)%	(2.26		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	142.0		$	107.5		$	58.9		$	18.3		$	15.9		$	5.6
Ratios to average net assets(d):
Expenses	1.00		%(c)	1.00		%	1.00		%	1.00		%	1.00		%	1.00		%(c)
Net investment income (loss)	(0.59		)%(c)	(0.68		)%	(0.73		)%	(0.59		)%	(0.20		)%	1.16		%(c)
Portfolio turnover rate	51		%(e)	79		%	73		%	255		%	93		%	27		%(e)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.15% and (0.74)%, respectively, for the six months ended June 30, 2005, 1.07% and (0.75)%, respectively, for the year ended December 31, 2004, 1.34% and (1.07)%, respectively, for the year ended December 31, 2003, 1.68% and (1.27)%, respectively, for the year ended December 31, 2002, 2.11% and (1.31)%, respectively, for the year ended December 31, 2001 and 4.59% and (2.43)%, respectively, for the period ended December 31, 2000.
(e)		Not annualized.

	SP PIMCO High Yield Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.67		$	10.53		$	9.17		$	9.81		$	10.02		$	10.00
Income From Investment Operations:
Net investment income	0.33			0.69			0.65			0.64			0.59			0.17
Net realized and unrealized gains (losses) on investments	(0.11		)	0.25			1.36			(0.64		)	(0.21		)	0.02
Total from investment operations	22			94			2.01			—			0.38			0.19
Less Dividends and Distributions:
Dividends from net investment income	(0.34		)	(0.70		)	(0.65		)	(0.64		)	(0.59		)	(0.16		)
Distributions from net realized gains	(0.15		)	(0.10		)	—			—			—			(0.01		)
Distributions in excess of net realized capital gains	—			—			—			—			—			—		(d)
Total dividends and distributions	(0.49		)	(0.80		)	(0.65		)	(0.64		)	(0.59		)	(0.17		)
Net Asset Value, end of period	$	10.40		$	10.67		$	10.53		$	9.17		$	9.81		$	10.02
Total Investment Return(b)	2.13		%	9.32		%	22.41		%	0.15		%	3.97		%	1.94		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	346.8		$	312.5		$	248.2		$	112.2		$	52.0		$	8.0
Ratios to average net assets:
Expenses	0.67		%(c)	0.68		%	0.72		%	0.82		%	0.82		%(e)	0.82		%(c)(e)
Net investment income	6.52		%(c)	6.68		%	6.97		%	7.79		%	7.44		%(e)	7.78		%(c)(e)
Portfolio turnover rate	26		%(f)	53		%	74		%	108		%	105		%	88		%(f)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Less than $0.005 per share.
(e)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 1.08% and 7.18%, respectively, for the year ended December 31, 2001 and 3.42% and 5.18%, respectively, for the period ended December 31, 2000.
(f)		Not annualized.

Financial Highlights

	SP PIMCO Total Return Portfolio
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.68		$	11.54		$	11.41		$	10.70		$	10.40		$	10.00
Income From Investment Operations:
Net investment income	0.15			0.22			0.23			0.28			0.32			0.13
Net realized and unrealized gains on investments	0.13			0.36			0.43			0.71			0.57			0.39
Total from investment operations	0.28			0.58			0.66			0.99			0.89			0.52
Less Dividends and Distributions:
Dividends from net investment income	(0.28		)	(0.23		)	(0.28		)	(0.28		)	(0.34		)	(0.11		)
Distributions from net realized gains	(0.20		)	(0.21		)	(0.25		)	—		(f)	(0.25		)	(0.01		)
Total dividends and distributions	(0.48		)	(0.44		)	(0.53		)	(0.28		)	(0.59		)	(0.12		)
Net Asset Value, end of period	$	11.48		$	11.68		$	11.54		$	11.41		$	10.70		$	10.40
Total Investment Return(b)	2.48		%	5.28		%	5.85		%	9.39		%	8.66		%	5.18		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,354.0		$	1,099.0		$	839.1		$	471.7		$	147.0		$	10.7
Ratios to average net assets:
Expenses	0.64		%(c)	0.65		%	0.65		%	0.67		%	0.76		%(d)	0.76		%(c)(d)
Net investment income	3.09		%(c)	2.01		%	2.19		%	3.02		%	3.69		%(d)	5.94		%(c)(d)
Portfolio turnover rate	292		%(e)	590		%	656		%	574		%	718		%	239		%(e)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense ratios would have been 0.82% and 3.63%, respectively, for the year ended December 31, 2001 and 2.73% and 3.97%, respectively, for the period ended December 31, 2000.
(e)		Not annualized.
(f)		Less than $0.005 per share.

	SP Prudential U. S Emerging Growth Portfolio
	Class I
	Six Months
	Ended			Year Ended December 31,												September 22, 2000(a)
	June 30,															through
	2005															December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	8.07		$	6.65		$	4.68		$	6.89		$	8.38		$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.01		)	(0.05		)	(0.02		)	(0.02		)	(0.01		)	0.01
Net realized and unrealized gains (losses) on investments	(0.02		)	1.47			1.99			(2.19		)	(1.48		)	(1.62		)
Total from investment operations	(0.03		)	1.42			1.97			(2.21		)	(1.49		)	(1.61		)
Less Dividends and Distributions:
Dividends from net investment income	—		(f)	—			—			—			—			(0.01		)
Distributions from net realized gains	(1.34		)	—		(f)	—			—			—			—
Total distributions	(1.34		)	—		(f)	—			—			—			(0.01		)
Net Asset Value, end of period	$	6.70		$	8.07		$	6.65		$	4.68		$	6.89		$	8.38
Total Investment Return(b)	26		%	21.39		%	42.09		%	(32.08		)%	(17.78		)%	(16.11		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	160.5		$	128.3		$	170.0		$	51.0		$	31.2		$	6.4
Ratios to average net assets:
Expenses	0.90		%(c)	0.78		%	0.80		%	0.90		%(d)	0.90		%(d)	0.90		%(c)(d)
Net investment income (loss)	(0.50		)%(c)	(0.53		)%	(0.56		)%	(0.48		)%(d)	(0.37		)%(d)	0.49		%(c)(d)
Portfolio turnover rate	87		%(e)	212		%	213		%	299		%	258		%	82		%(e)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have 0.98% and (0.56)%, respectively, for the year ended December 31, 2002, 1.41% and (0.88)%, respectively, for the year ended December 31, 2001 and 4.26% and (2.87)%, respectively, for the period ended December 31, 2000.
(e)		Not annualized.
(f)		Less than $0.005 per share

Financial Highlights

	SP Prudential U.S. Emerging Growth Portfolio
	Class II
	Six Months Ended June 30, 2005			Year Ended December 31,									July 9, 2001(a) through December 31,
	(Unaudited)			2004			2003			2002			2001
Per Share Operating Performance:
Net Asset Value, beginning of period	$	7.96		$	6.58		$	4.65		$	6.88		$	7.56
Income (Loss) From Investment Operations:
Net investment loss	(0.03		)	(0.07		)	(0.05		)	(0.05		)	(0.01		)
Net realized and unrealized gains (losses) on investments	(0.01		)	1.45			1.98			(2.18		)	(0.67		)
Total from investment operations	(0.04		)	1.38			1.93			(2.23		)	(0.68		)
Less Distributions:
Distributions from net realized gains	(1.34		)	—		(f)	—			—			—
Total distributions	(1.34		)	—		(f)	—			—			—
Net Asset Value, end of period	$	6.58		$	7.96		$	6.58		$	4.65		$	6.88
Total Investment Return(b)	.13		%	21.01		%	41.51		%	(32.41		)%	(8.99		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	0.3		$	0.4		$	0.3		$	0.2		$	0.2
Ratios to average net assets:
Expenses	1.30		%(d)	1.18		%	1.20		%	1.30		%(c)	1.30		%(c)(d)
Net investment loss	(0.90		)%(d)	(0.94		)%	(0.97		)%	(0.89		)%(c)	(0.87		)%(c)(d)
Portfolio turnover rate	87		%(e)	212		%	213		%	299		%	258		%(e)

(a)		Commencement of offering of Class II shares.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.
(c)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.38% and (0.95)%, respectively, for the year ended December 31, 2002, 1.81% and (1.38)%, respectively, for the period ended December 31, 2001.
(d)		Annualized.
(e)		Not annualized.
(f)		Less than $0.005 per share

	SP Small Cap Growth Portfolio
	Six Months Ended June 30, 2005			Year Ended December 31,												September 22, 2000(a) through December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.46		$	6.52		$	4.84		$	6.94		$	8.38		$	10.00
Income From Investment Operations:
Net investment loss	(0.01		)	(0.03		)	(0.03		)	(0.03		)	(0.02		)	—		(f)
Net realized and unrealized gains (losses) on investments	(0.17		)	(0.03		)	1.71			(2.07		)	(1.42		)	(1.62		)
Total from investment operations	(0.18		)	(0.06		)	1.68			(2.10		)	(1.44		)	(1.62		)
Net Asset Value, end of period	$	6.28		$	6.46		$	6.52		$	4.84		$	6.94		$	8.38
Total Investment Return(b)	(2.79		)%	(.92		)%	34.71		%	(30.26		)%	(17.18		)%	(16.20		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	216.3		$	184.1		$	35.0		$	12.5		$	8.4		$	5.5
Ratios to average net assets:
Expenses	1.04		%(c)	1.09		%	1.15		%(d)	1.15		%(d)	1.15		%(d)	1.15		%(c)(d)
Net investment loss	(.50		)%(c)	(.82		)%	(0.72		)%(d)	(0.73		)%(d)	(0.28		)%(d)	(0.10		)%(c)(d)
Portfolio turnover rate	98		%(e)	240		%	122		%	109		%	83		%	29		%(e)

(a)		Commencement of operations.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.78% and (1.35)%, respectively for the year ended December 31, 2003, 2.30% and (1.89)%, respectively, for the year ended December 31, 2002, 2.84% and (1.97)%, respectively, for the year ended December 31, 2001 and 4.00% and (2.95)% respectively, for the period ended December 31, 2000.
(e)		Not annualized.
(f)		Less than $0.005 per share.

Financial Highlights

	SP Strategic Partners Focused Growth Portfolio
	Class I
	Six Months Ended June 30, 2005			Year Ended December 31,												September 22, 2000(a) through December 31,
	(Unaudited)			2004			2003			2002			2001(g)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	7.00		$	6.33		$	5.03		$	6.73		$	7.94		$	10.00
Income From Investment Operations:
Net investment income (loss)	(0.01		)	—		(f)	(0.01		)	(0.01		)	(0.01		)	—		(f)
Net realized and unrealized gains (losses) on investments	(0.01		)	0.67			1.31			(1.69		)	(1.20		)	(2.06		)
Total from investment operations	(0.02		)	0.67			1.30			(1.70		)	(1.21		)	(2.06		)
Net Asset Value, end of period	$	6.98		$	7.00		$	6.33		$	5.03		$	6.73		$	7.94
Total Investment Return(b)	(0.29		)%	10.58		%	25.84		%	(25.26		)%	(15.32		)%	(20.47		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	31.6		$	30.1		$	21.6		$	10.8		$	7.7		$	5.9
Ratios to average net assets(d):
Expenses	1.01		%(c)	1.01		%	1.01		%	1.01		%	1.01		%	1.01		%(c)
Net investment income (loss)	(0.19		)%(c)	(0.01		)%	(0.28		)%	(0.30		)%	(0.16		)%	0.18		%(c)
Portfolio turnover rate	58		%(e)	84		%	93		%	62		%	116		%	37		%(e)

(a)		Commencement of offering of Class I shares.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.16% and (0.33)%, respectively, for the six months ended June 30, 2005, 1.28% and (0.28)%, respectively, for the year ended December 31, 2004, 1.65% and (0.92)%, respectively, for the year ended December 31, 2003, 1.98% and (1.28)%, respectively for the year ended December 31, 2002, 2.61% and (1.76)%, respectively, for the year ended December 31, 2001 and 3.88% and (2.69)%, respectively, for the period ended December 31, 2000.
(e)		Not annualized.
(f)		Less than $0.005 per share
(g)		Calculated based upon weighted average shares outstanding during the year.

	SP Strategic Partners Focused Growth Portfolio
	Class II
	Six Months Ended June 30, 2005			Year Ended December 31,									January 12, 2001(a) through December 31,
	(Unaudited)			2004			2003			2002			2001(f)
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.88		$	6.26		$	4.99		$	6.70		$	8.43
Income From Investment Operations:
Net investment loss	(0.02		)	(0.01		)	(0.03		)	(0.02		)	(0.03		)
Net realized and unrealized gains (losses) on investments	(0.01		)	0.63			1.30			(1.69		)	(1.70		)
Total from investment operations	(0.03		)	0.62			1.27			(1.71		)	(1.73		)
Net Asset Value, end of period	$	6.85		$	6.88		$	6.26		$	4.99		$	6.70
Total Investment Return(b)	(0.44		)%	9.90		%	25.45		%	(25.52		)%	(20.80		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	36.2		$	32.1		$	14.3		$	6.6		$	2.0
Ratios to average net assets(d):
Expenses	1.41		%(c)	1.41		%	1.41		%	1.41		%	1.41		%(c)
Net investment loss	(0.59		)%(c)	(0.34		)%	(0.68		)%	(0.68		)%	(0.58		)%(c)
Portfolio turnover rate	58		%(e)	84		%	93		%	62		%	116		%(e)

(a)		Commencement of offering of Class II shares.
(b)		Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.
(c)		Annualized.
(d)		Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.56% and (0.74)%, respectively, for the six months ended June 30, 2005, 1.68% and (0.61)%, respectively, for the year ended December 31, 2004, 2.05% and (1.32)%, respectively, for the year ended December 31, 2003, 2.34% and (1.61)%, respectively, for the year ended December 31, 2002 and 3.01% and (2.18)%, respectively, for the period ended December 31, 2001.
(e)		Not annualized.
(f)		Calculated based upon weighted average shares outstanding during the period.

Financial Highlights

	SP William Blair International Growth Portfolio
	Class I
	Six Months Ended June 30, 2005			Year Ended December 31,												September 22, 2000(a) through December 31,
	(Unaudited)			2004			2003			2002			2001(f)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.85		$	5.89		$	4.22		$	5.45		$	8.50		$	10.00
Income From Investment Operations:
Net investment income	0.04			0.02			0.01			0.01			0.02			0.01
Net realized and unrealized gains (losses) on investments	(0.11		)	0.95			1.66			(1.24		)	(3.05		)	(1.51		)
Total from investment operations	(0.07		)	0.97			1.67			(1.23		)	(3.03		)	(1.50		)
Less Distributions:
Dividends from net investment income	(0.04		)	(0.01		)	—			—			—			—
Tax return of capital distributions	(0.31		)	—			—			—			(0.02		)	—
Total distributions	(0.35		)	(0.01		)	—			—			(0.02		)	—
Net Asset Value, end of period	$	6.43		$	6.85		$	5.89		$	4.22		$	5.45		$	8.50
Total Investment Return(b)	(.88		)%	16.54		%	39.57		%	(22.57		)%	(35.64		)%	(15.00		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	294.0		$	249.1		$	105.6		$	34.9		$	19.9		$	7.6
Ratios to average net assets:
Expenses	0.98		%(c)	1.02		%	1.15		%	1.24		%(d)	1.24		%(d)	1.24		%(c)(d)
Net investment income	1.46		%(c)	0.50		%	0.56		%	0.26		%(d)(g)	0.31		%(d)(g)	0.51		%(c)(d)
Portfolio turnover rate	39		%(e)	137		%	121		%	108		%	86		%	12		%(e)

(a) Commencement of offering of Class I shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contracts charges. Total returns for periods of less than one full year are not annualized.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 1.40% and 0.10%, respectively, for the year ended December 31, 2002 and 1.86% and (0.30)%, respectively, for the year ended December 31, 2001 and 3.44% and (1.69)%, respectively, for the year ended December 31, 2000.

(e) Not annualized.

(f) Calculated based upon weighted average shares outstanding during the year.

(g) Includes custody fee credits of 0.02% and 0.12% for the years ended December 31, 2002 and 2001, respectively. If the Portfolio had not earned custodian fee credits, the annual net investment income would have been 0.24% and 0.19%, respectively for the years ended December 31, 2002 and 2001.

Financial Highlights

	SP William Blair International Growth Portfolio
	Class II
	Six Months Ended June 30, 2005			Year Ended December 31,												October 4, 2000(a) through December 31,
	(Unaudited)			2004			2003			2002			2001(g)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.77		$	5.83		$	4.19		$	5.43		$	8.48		$	9.79
Income From Investment Operations:
Net investment income	0.03			0.01			0.01			—		(f)	—		(f)	—		(f)
Net realized and unrealized gains (losses) on investments	(0.11		)	0.93			1.63			(1.24		)	(3.04		)	(1.31		)
Total from investment operations	(0.08		)	0.94			1.64			(1.24		)	(3.04		)	(1.31		)
Less Distributions:
Dividends from net investment income	(0.02		)	—			—			—			—			—
Tax return of capital distributions	(0.31		)	—			—			—			(0.01		)	—
Total distributions	(0.33		)	—			—			—			(0.01		)	—
Net Asset Value, end of period	$	6.36		$	6.77		$	5.83		$	4.19		$	5.43		$	8.48
Total Investment Return(b)	(1.15		)%	16.12		%	39.14		%	(22.84		)%	(35.92		)%	(13.28		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	128.4		$	139.0		$	113.6		$	23.6		$	14.9		$	2.7
Ratios to average net assets:
Expenses	1.38		%(c)	1.41		%	1.54		%	1.64		%(d)	1.64		%(d)	1.64		%(c)(d)
Net investment income (loss)	1.01		%(c)	0.21		%	0.04		%	(0.11		)%(d)(h)	(0.03		)%(d)(h)	—		%(c)(d)
Portfolio turnover rate	39		%(e)	137		%	121		%	108		%	86		%	12		%(e)

(a) Commencement of offering of Class II shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contracts charges. Total returns for periods of less than one full year are not annualized.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.80% and (0.26)%, respectively, for the year ended December 31, 2002 and 2.26% and (0.66)%, respectively, for the year ended December 31, 2001 and 3.84% and (2.20)%, respectively, for the year ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

(g) Calculated based upon weighted average shares outstanding during the year.

(h) Includes custody fee credits of 0.02% and 0.13% for the years ended December 31, 2002 and 2001, respectively. If the Portfolio had not earned custodian fee credits, the annual net investment loss would have been (0.13)% and (0.16)%, respectively for the years ended December 31, 2002 and 2001.

Financial Highlights

	Diversified Conservative Growth Portfolio
	Six Months
	Ended
	June 30,			Year Ended
	2005			December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.28		$	10.63		$	9.17		$	9.89		$	10.16		$	10.37
Income From Investment Operations:
Net investment income	0.17			0.26			0.32			0.38			0.42			0.46
Net realized and unrealized gains (losses) on investments	0.05			0.72			1.58			(1.08		)	(0.28		)	(0.09		)
Total from investment operations	0.22			0.98			1.90			(0.70		)	0.14			0.37
Less Dividends and Distributions:
Dividends from net investment income	(0.34		)	(0.33		)	(0.44		)	(0.02		)	(0.41		)	(0.46		)
Distributions in excess of net investment income	—			—			—			—			—			(0.01		)
Distributions from net realized gains	—			—			—			—			—			(0.09		)
Distributions in excess of net realized gains	—			—			—			—			—			(0.02		)
Total dividends and distributions	(0.34		)	(0.33		)	(0.44		)	(0.02		)	(0.41		)	(0.58		)
Net Asset Value, end of period	$	11.16		$	11.28		$	10.63		$	9.17		$	9.89		$	10.16
Total Investment Return(a)	2.10		%	9.56		%	21.57		%	(7.10		)%	1.51		%	3.79		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	156.0		$	167.0		$	169.6		$	157.1		$	204.1		$	204.8
Ratios to average net assets:
Expenses	0.98		%(b)	0.97		%	0.98		%	0.92		%	0.94		%	0.93		%
Net investment income	2.73		%(b)	2.29		%	2.93		%	3.63		%	4.17		%	4.71		%
Portfolio turnover	164		%(c)	186		%	224		%	271		%	315		%	319		%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

	Jennison 20/20 Focus Portfolio Class I
	Six Months
	Ended
	June 30,			Year Ended
	2005			December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	12.37		$	10.68		$	8.28		$	10.65		$	10.99		$	11.88
Income From Investment Operations:
Net investment income	0.03			0.04			0.02			0.02			0.05			0.05
Net realized and unrealized gains (losses) on investments	0.53			1.66			2.40			(2.39		)	(0.15		)	(0.71		)
Total from investment operations	0.56			1.70			2.42			(2.37		)	(0.10		)	(0.66		)
Less Dividends and Distributions:
Dividends from net investment income	(0.03		)	(0.01		)	(0.02		)	—		(b)	(0.05		)	(0.05		)
Distributions from net realized gains	—			—			—			—			(0.19		)	(0.18		)
Total dividends and distributions	(0.03		)	(0.01		)	(0.02		)	—			(0.24		)	(0.23		)
Net Asset Value, end of period	$	12.90		$	12.37		$	10.68		$	8.28		$	10.65		$	10.99
Total Investment Retun(a):	4.56		%	15.94		%	29.30		%	(22.24		)%	(1.01		)%	(5.41		)%
Ratios Supplemental Data:
Net assets, end of period (in millions)	$	69.9		$	68.4		$	64.6		$	57.2		$	87.8		$	95.8
Ratios to average net assets:
Expenses	0.85		%(c)	0.88		%	0.95		%	0.97		%	0.93		%	0.88		%
Net investment income	0.49		%(c)	0.29		%	0.18		%	0.19		%	0.46		%	0.45		%
Portfolio turnover rate	47		%(d)	87		%	102		%	75		%	131		%	163		%

(b) Less than $0.005 per share.

(d) Not annualized.

Financial Highlights

	Jennison 20/20 Focus Portfolio Class II
	Six Months
	Ended															February 15, 2000(a)
	June 30,			Year Ended												through
	2005			December 31,												December 31,
	(Unaudited)			2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	12.23		$	10.60		$	8.23		$	10.63		$	10.99		$	11.36
Income From Investment Operations:
Net investment income	0.01			0.01			—		(d)	—		(d)	0.02			0.01
Net realized and unrealized gains (losses) on investments	0.53			1.62			2.37			(2.40		)	(0.15		)	(0.19		)
Total from investment operations	0.54			1.63			2.37			(2.40		)	(0.13		)	(0.18		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			—			(0.04		)	(0.01		)
Distributions from net realized gains	—			—			—			—			(0.19		)	(0.18		)
Total dividends and distributions	—			—			—			—			(0.23		)	(0.19		)
Net Asset Value, end of period	$	12.77		$	12.23		$	10.60		$	8.23		$	10.63		$	10.99
Total Investment Retun(b):	4.42		%	15.38		%	28.80		%	(22.58		)%	(1.30		)%	(1.53		)%
Ratios Supplemental Data:
Net assets, end of period (in millions)	$	130.9		$	101.0		$	39.6		$	7.5		$	2.0		$	0.7
Ratios to average net assets:
Expenses	1.25		%(c)	1.28		%	1.35		%	1.37		%	1.33		%	1.28		%(c)
Net investment income (loss)	0.10		%(c)	(0.02		)%	(0.22		)%	(0.21		)%	0.06		%	0.10		%(c)
Portfolio turnover rate	47		%(e)	87		%	102		%	75		%	131		%	163		%(e)

(a) Commencement of offering of Class II shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total returns for periods of less than one full year are not annualized.

(d) Less than $0.005 per share.

(e) Not annualized.

THE PRUDENTIAL SERIES FUND, INC. (PSF)

PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION

DATED MAY 1, 2005

SUPPLEMENT DATED SEPTEMBER 26, 2005

I. The Board of Directors of The Prudential Series Fund, Inc. (the Fund) recently approved or ratified, as applicable, changes in certain benchmarks of the following portfolios of the Fund (the Portfolios) as indicated in the table below:

Portfolio	Prior Benchmark	New Benchmark

High Yield Bond Portfolio	The Lehman Brothers U.S. Corporate High Yield Bond Index	The Lehman Brothers High Yield 2% Issuer Capped Index
SP PIMCO High Yield Portfolio	The Merrill Lynch U.S. High Yield Master II BB-B Rated Index	The Merrill Lynch U.S. High Yield Master II BB-B Index with 2% Issuer constraint

	Prior Customized Benchmark	New Customized Benchmark

SP Aggressive Growth Asset Allocation Portfolio	Russell 1000 Value Index (Russell 1000 Value) (17.5%) Russell 1000 Growth Index (Russell 1000 Growth) (17.5%) Russell 2000 Value Index (Russell 2000 Value) (17.5%) Russell Midcap Growth Index (Russell Midcap Growth) (17.5%) Morgan Stanley Capital International (MCSI) EAFE Index (30%)	Russell 3000 Index (Russell 3000) (80%) MSCI EAFE (20%)
SP Balanced Asset Allocation Portfolio	Russell 1000 Value (17.5%) Russell 1000 Growth (17.5%) Russell 2500 Value Index (Russell 2500 Value) (7.5%) Russell Midcap Growth (7.5%) Lehman Brothers Aggregate Bond Index (Lehman Agg) (30%) The Lehman Brothers Intermediate BB Index (10%) MCSI EAFE (10%)	Russell 3000 (48%) Lehman Agg (40%) MSCI EAFE (12%)
SP Conservative Asset Allocation Portfolio*	Russell 1000 Value (15%) Russell 1000 Growth (15%) Russell 2000 Value (2.5%) Lehman Agg (55%) The Lehman Brothers Intermediate BB Index (10%) Russell Midcap Growth (2.5%)	Russell 3000 (32%) Lehman Agg (60%) MSCI EAFE (8%)
SP Growth Asset Allocation Portfolio	Russell 1000 Value (17.5%) Russell 1000 Growth (17.5%) Russell 2500 Value (12.5%) Russell Midcap Growth (12.5%) Lehman Agg (12.5%)	Russell 3000 Index (64%) Lehman Agg (20%) MSCI EAFE (16%)

Portfolio		Prior Benchmark		New Benchmark
		The Lehman Brothers Intermediate BB Index (7.5%) MCSI EAFE (20%)

* The Board ratified change in the customized benchmark.

To reflect the change in the Portfolios’ benchmarks, the table of average annual total returns appearing in the section of the Prospectus titled “EVALUATING PERFORMANCE” for each of the Portfolios is hereby amended as set forth below:

High Yield Bond Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	10.30	%	5.12	%	6.92	%
Lehman Brothers Corporate High Yield Bond Index**	11.13	%	6.97	%	8.13	%
Lehman Brothers High Yield 2% Issuer Capped Index***	11.14	%	7.24	%	8.28	%
Lipper Variable Insurance Products (VIP) High Current Yield Funds Average***	9.84	%	4.78	%	6.95	%

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

**The Lehman Brothers Corporate High Yield Bond Index is made up of over 700 non-investment grade bonds. The index is an unmanaged index that includes the reinvestment of all interest but does not reflect the payment of transaction costs and advisory fees associated with an investment in the Portfolio. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses.

***The Lehman Brothers High Yield 2% Issuer Capped Index is made up of over 700 non-investment grade bonds. However, the representation of any single bond issuer is restricted to a maximum of 2% of the total index. The index is an unmanaged index that includes the reinvestment of all interest but does not reflect the payment of transaction costs and advisory fees associated with an investment in the Portfolio. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The Portfolio has changed from the Lehman Brothers U.S. Corporate High Yield Bond Index to Lehman Brothers High Yield 2% Issuer Capped Index because the Lehman Brothers High Yield 2% Issuer Capped Index better represents the composition of the Portfolio. In particular, the Portfolio generally maintains positions of 2% or less per issuer (although the Portfolio may hold positions of greater than that amount).

SP PIMCO High Yield Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	9.32	%	8.55	%
Merrill Lynch U.S. High Yield Master II BB-B Rated Index**	9.93	%	7.36	%
Merrill Lynch U.S. High Yield Master II BB-B Rated Index with 2% Issuer constraint***	9.93	%	7.96	%
Lipper Variable Insurance Products (VIP) High Current Yield Funds Average****	9.84	%	6.04	%

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

**The Merrill Lynch U.S. High Yield Master II BB-B Rated Index is an unmanaged index that includes high yield bonds across the maturity spectrum, within the BB-B rated spectrum, included in the below-investment-grade universe. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio.

*** The Merrill Lynch U.S. High Yield Master II BB-B Rated Index with 2% Issuer constraint is an unmanaged index that includes high yield bonds across the maturity spectrum, within the BB-B rated spectrum, included in the below-investment-grade universe. However, the representation of any single bond issuer is restricted to a maximum of 2% of the total index. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio. The Portfolio has changed from the Merrill Lynch High Yield Index to the Merrill Lynch High Yield Master II Index with 2% Issuer constraint because the Merrill Lynch High Yield Master II Index with 2% Issuer constraint better reflects the composition of the Portfolio. In particular, the Portfolio generally maintains positions of 2% or less per issuer (although the Portfolio may hold positions of greater than that amount).

SP Aggressive Growth Asset Allocation Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	14.76	%	-2.21	%
S&P 500 Index**	10.87	%	-2.38	%
Prior Aggressive Growth AA Custom Blended Index***	13.57	%	-1.05	%
Current Aggressive Growth AA Custom Blended Index***	13.67	%	-0.97	%
Lipper Variable Insurance Products (VIP) Multi Cap Core Funds Average****	12.06	%	-1.11	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***Prior Aggressive Growth AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2000 Value Index (17.5%), the Russell Midcap Growth Index (17.5%), and the MSCI EAFE Index (30%). Current Aggressive Growth AA Custom Blended Index consists of the Russell 3000 Index (80%) and MCSI EAFE Index (20%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the

effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio. The Portfolio has changed the composition of its customized benchmark to better represent the composition of the Portfolio. The new customized benchmarks are designed to set established percentages to provide a relative performance comparison covering both asset allocation and the performance of the underlying Portfolios.

SP Balanced Asset Allocation Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	11.09	%	2.63	%
S&P 500 Index**	10.87	%	-2.38	%
Prior Balanced AA Custom Blended Index***	9.89	%	2.65	%
Current Balanced AA Custom Blended Index***	9.92	%	2.70	%
Lipper Variable Insurance Products (VIP) Balanced Funds Average****	8.55	%	2.59	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***Prior Balanced AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2500 Value Index (7.5%), the Russell Midcap Growth Index (7.5%), the Lehman Brothers Aggregate Bond Index (30%), the Lehman Brothers Intermediate BB Index (10%) and the MSCI EAFE Index (10%). Current Balanced AA Custom Blended Index consists of the Russell 3000 Index (48%), the Lehman Brothers Aggregate Bond Index (40%) and the MSCI EAFE Index (12%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio. The Portfolio has changed the composition of its customized benchmark to better represent the composition of the Portfolio. The new customized benchmarks are designed to set established percentages to provide a relative performance comparison covering both asset allocation and the performance of the underlying Portfolios.

SP Conservative Asset Allocation Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	8.89	%	4.38	%
S&P 500 Index**	10.87	%	-2.38	%
Prior Conservative AA Custom Blended Index***	8.08	%	4.38	%
Current Conservative AA Custom Blended Index***	8.04	%	4.34	%
Lipper Variable Insurance Products (VIP) Income Funds Average****	8.47	%	4.28	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio.

*** Prior Conservative AA Custom Blended Index consists of the Russell 1000 Value Index (15%), the Russell 1000 Growth Index (15%), the Russell 2000 Value Index (2.5%), %), the Lehman Brothers Aggregate Bond Index (55%), the Lehman Brothers Intermediate BB Index (10%) and the Russell Midcap Growth Index (2.5%). Current Conservative AA Custom Blended Index consists of the Russell 3000 Index (32%), Lehman Brothers U.S. Aggregate Bond Index (60%) and MSCI EAFE Index (8%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio. The Portfolio has changed the composition of its customized benchmark to better represent the composition of the Portfolio. The new customized benchmarks are designed to set established percentages to provide a relative performance comparison covering both asset allocation and the performance of the underlying Portfolios.

SP Growth Asset Allocation Portfolio

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	13.05	%	0.24	%
S&P 500 Index**	10.87	%	-2.38	%
Prior Growth AA Custom Blended Index***	11.73	%	0.85	%
Current Growth AA Custom Blended Index***	11.78	%	0.90	%
Lipper Variable Insurance Products (VIP) Multi Cap Core Funds Average****	12.06	%	-1.11	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception ” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***Prior Growth AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2500 Value Index (12.5%), the Russell Midcap Growth Index (12.5%) the Lehman Brothers Aggregate Bond Index (12.5%) the Lehman Brothers Intermediate BB Index (7.5%), and the MSCI EAFE Index (20%). Current Growth AA Custom Blended Index consists of the Russell 3000 Index (64%), the Lehman Brothers Aggregate Bond Index (20%) and the MSCI EAFE Index

(16%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception “ return reflects the closest calendar month-end return to the inception date of the Portfolio. The Portfolio has changed the composition of its customized benchmark to better represent the composition of the Portfolio. The new customized benchmarks are designed to set established percentages to provide a relative performance comparison covering both asset allocation and the performance of the underlying Portfolios.

II. Set forth below are important changes to the Prospectus and Statement of Additional Information. The following should be read in conjunction with your prospectus and should be retained for future reference:

Proposed Change in Federal Income Tax Status and Related Reorganization

The Board of Directors of PSF recently approved proposals to cause each PSF Portfolio to change its federal income tax status from a regulated investment company to a partnership (the PSF Conversion). In order to complete the PSF Conversion, PSF will be reorganized from a Maryland corporation to a Delaware statutory trust (the PSF Reorganization and, together with the PSF Conversion, the PSF Transactions).

The investment objectives, policies, restrictions, net asset values per share, service providers, fiscal years, and investment portfolios of the PSF Portfolios will not change as a result of the PSF Transactions. In addition, it is expected that the PSF Transactions will not have any adverse federal income tax consequences for the PSF Portfolios or for the owners of variable annuity contracts and/or variable life insurance policies (Contract owners). All fees and expenses incurred in connection with the completion of the PSF Transactions will be borne by Prudential Investments LLC (the Manager) or its affiliates. Additionally, the Manager or its affiliates also will bear any transitional costs and any ongoing incremental increases in Portfolio fees and expenses that are charged to PSF by its service providers and that are directly attributable to the PSF Transactions.

Completion of the PSF Transactions is subject to the satisfaction of certain contractual and regulatory terms and conditions and the receipt of a legal opinion substantially to the effect that the PSF Transactions will not result in federal income tax liability to any PSF Portfolio or any Contract owner. It is expected that the PSF Transactions will be effected on or about January 1, 2006. The PSF Transactions will not cause any change in each PSF Portfolio’s current practice of distributing its net income and net capital gains to its shareholders of record (that is, the insurance company separate accounts) as described in the “Taxation of the Fund” section of the SAI.

Upon completion of the PSF Transactions, all disclosure relating to the PSF Portfolios’ status as regulated investment companies and their compliance with related requirements shall be deemed to be deleted.

Upon completion of the PSF Transactions, the Fund will be re-named “The Prudential Series Fund.”

PSFSUP66

THE PRUDENTIAL SERIES FUND, INC.

SP Prudential U.S. Emerging Growth Portfolio

Supplement Dated August 31, 2005 to the

Prospectus and Statement of Additional Information Dated May 1, 2005

On August 31, 2005, John P. Mullman replaced Susan B. Hirsch as portfolio manager of the SP Prudential U.S. Emerging Growth Portfolio (the Portfolio). The following amends the section of the prospectus entitled “How the Fund is Managed – Investment Subadvisers – Portfolio Managers” as it relates to the Portfolio:

John P. Mullman , CFA, is the portfolio manager of the Portfolio effective August 31, 2005. Mr. Mullman has final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows. The portfolio manager for the Portfolio is supported by members of Jennison’s research team, which is comprised of other research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

John P. Mullman is a Senior Vice President of Jennison. He has been in the investment business since 1987, when he joined Prudential. Prior to joining Jennison in August 2000, Mr. Mullman managed institutional portfolios with Prudential. He earned his B.A. from the College of the Holy Cross and his M.B.A. from Yale University. He is also a member of The New York Society of Security Analysts, Inc.

The following information amends the subsections outlined below of the statement of additional information entitled “INVESTMENT MANAGEMENT AND DISTRIBUTION ARRANGEMENTS – II. Portfolio Managers” as it relates to the Portfolio:

A. Other Accounts Managed by Portfolio Managers .

SP Prudential U.S. Emerging Growth*

Jennison
John P. Mullman

1 Registered Mutual Fund with $505,624,000, in total assets under management.

3 Unregistered Pooled Investment Vehicle with $483,317,000 in assets under management.

6 Other Accounts** with $785,412,000 in total assets under management.

* Information provided as of June 30, 2005.

** Other Accounts excludes the assets and number of accounts in wrap fee programs that are managed using a model portfolio.

C. Portfolio Manager Securities Ownership.

SP Prudential U.S. Emerging Growth

John P. Mullman (Jennison)

None

PSFSUP65

THE PRUDENTIAL SERIES FUND, INC.

Supplement dated August 15, 2005 to the Prospectus dated May 1, 2005

This supplement sets forth the changes to The Prudential Series Fund, Inc. (“PSF” or the “Fund”) Prospectus dated May 1, 2005. All of the Portfolios discussed in this supplement may not be available under your variable contract. For more information about the Portfolios available under your contract, please refer to your contract prospectus. The following should be read in conjunction with the PSF Prospectus and should be retained for future reference.

This supplement sets forth changes to the Prospectus with respect to fees and expenses of the Portfolios.

I. The single asterisk footnote under the Class I Shares Annual Portfolio Operating Expenses Table on page 49 is deleted and replaced with the following:

* The Portfolio’s total actual annual operating expenses for the year ended December 31, 2004 were less than the amount shown in the table due to fee waivers, reimbursement of expenses and expense offset arrangements. These waivers, reimbursements, and offset arrangements are voluntary and may be terminated by Prudential Investments LLC (the “Investment Adviser”) at any time. After accounting for the waivers, reimbursements and offset arrangements, the Portfolio’s actual annual operating expenses were 1.00% for SP AIM Core Equity Portfolio, 1.10% for SP LSV International Value Portfolio, 1.00% for SP Mid Cap Growth Portfolio, 1.01% for SP Strategic Partners Focused Growth Portfolio.

Effective for the periods July 1, 2005 through December 31, 2005 and January 1, 2006 through June 30, 2006, the Investment Adviser has voluntarily agreed to waive a portion or all of its management fee and reimburse expenses if necessary to limit total expenses, for certain Portfolios as described in the table below. Had such total expense limits been in place at year-end, annual operating expenses for the year ended December 31, 2004 would have been as given in the following table:

Portfolio	Voluntary Management Fee Waiver and Expense Reimbursement, if necessary, to limit Total Expenses (as % of Portfolio assets) effective July 1, 2005 through December 31, 2005		Total Annual Operating Expenses had Voluntary Total Expense Limit effective 7/1/05 been in place at year-end 12/31/04 (as % of Portfolio assets)		Voluntary Management Fee Waiver and Expense Reimbursement, if necessary, to limit Total Expenses (as % of Portfolio assets) effective January 1, 2006 through June 30, 2006		Total Annual Operating Expenses had Voluntary Total Expense Limit effective 1/1/06 been in place at year-end 12/31/04 (as % of Portfolio assets)

SP AllianceBernstein Large Cap Growth	1.02	%	1.02	%	1.06	%	1.06	%
SP LSV International Value	1.10	%	1.10	%	1.10	%	1.10	%

Effective for the period July 1, 2005 through June 30, 2006, the Investment Adviser has voluntarily agreed to limit total expenses, for certain Portfolios as described in the table below. Had such total expense limits been in place at year-end, annual operating expenses for the year ended December 31, 2004 would have been as given in the following table:

Portfolio		Voluntary Total Expense Limit (as % of Portfolio assets)		Total Annual Operating Expenses had Voluntary Total Expense Limit been in place at 12/31/04 (as % of Portfolio assets)
SP Strategic Partners Focused Growth		1.25	%	1.25	%

II. The single asterisk footnote under the Class II Shares Annual Portfolio Operating Expenses Table on page 50 is deleted and replaced with the following:

* The Portfolio’s total actual annual operating expenses for the year ended December 31, 2004 were less than the amount shown in the table due to fee waivers, reimbursement of expenses and expense offset arrangements. These waivers, reimbursements, and offset arrangements are voluntary and may be terminated by Prudential Investments LLC at any time. After accounting for the waivers, reimbursements and offset arrangements, the SP Strategic Partners Focused Growth Portfolio’s actual annual operating expenses were 1.41%.

Portfolio		Voluntary Total Expense Limit (as % of Portfolio assets)		Total Annual Operating Expenses had Voluntary Total Expense Limit been in place at 12/31/04 (as% of Portfolio assets)
SP Strategic Partners Focused Growth		1.65	%	1.65	%

THE PRUDENTIAL SERIES FUND, INC.

Supplement dated July 25, 2005 to Prospectus dated May 1, 2005

This Supplement sets forth certain changes to the Prospectus of The Prudential Series Fund, Inc. (the “Fund”) dated May 1, 2005. All of the Portfolios discussed in this Supplement may not be available under your variable contract. For more information about the Portfolios available under your contract, please refer to your contract prospectus. The following should be read in conjunction with your Prospectus and should be retained for future reference.

I. This section of the Supplement sets forth changes to the Prospectus with respect to subadviser changes for: (A) the Equity Portfolio, (B) the Global Portfolio, (C) the SP AllianceBernstein Large Cap Growth Portfolio, and (D) the SP Goldman Sachs Small Cap Value Portfolio. These changes will become effective on or about December 5, 2005.

A. Effective on or about December 5, 2005, GE Asset Management Inc. (“GEAM”) will be terminated as a subadviser to the Equity Portfolio. Jennison Associates LLC (“Jennison”) and Salomon Brothers Asset Management Inc. (“SaBAM”) will remain as subadvisers to the Equity Portfolio. As of such date, a ll references in the Prospectus to GEAM’s management of the Equity Portfolio shall be deemed to be deleted.

The following replaces the discussion in the section of the Prospectus titled “More Detailed Information on How the Portfolios Invest—Equity Portfolio:”

Equity Portfolio

The investment objective of this Portfolio is long term growth of capital . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We normally invest at least 80% of the Portfolio’s investable assets in common stock of major established companies (over $5 billion in market capitalization) as well as smaller companies. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. Up to 20% of the Portfolio’s investable assets may be invested in short, intermediate or long-term debt obligations, convertible and nonconvertible preferred stock and other equity-related securities. Up to 5% of these investable assets may be rated below investment grade. These securities are considered speculative and are sometimes referred to as “junk bonds.”

In deciding which stocks to buy, the portfolio managers use a blend of investment styles. Jennison will use a “value” approach with respect to 25% of the Portfolio’s assets and a “growth” approach with respect to 25% of the Portfolio’s assets. A value approach seeks to identify strong companies selling at a discount from their perceived true value while a growth approach seeks to identify companies that exhibit higher-than-average earnings growth. There is a risk that “value” stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the markets for long periods of time. “Growth” stocks usually involve a higher level of risk than “value” stocks, because growth stocks tend to attract more attention and speculative investment than value stocks. SaBAM will use a “core” approach with respect to 50% of the Portfolio’s assets. A core approach seeks to combine certain aspects of the value approach with certain aspects of the growth approach. As a result, the Portfolio may invest in stocks that may be undervalued given the company’s earnings, assets, cash flow and dividends and also may invest in companies experiencing some or all of the following: a price/ earnings ratio lower than earnings per share growth, strong market position, improving profitability and distinctive attributes such as unique marketing ability, strong research and development, new product flow, and financial strength.

Up to 30% of the Portfolio’s total assets may be invested in foreign securities, including money market instruments, equity securities and debt obligations. For these purposes, we do not consider American Depositary Receipts (ADRs) as foreign securities.

We may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell stock index and foreign currency futures contracts and options on these futures contracts.

• Forward foreign currency exchange contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities of Real Estate Investment Trusts (REITs).

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

The Portfolio is co-managed by Jennison and SaBAM. Jennison and SaBAM are each responsible for managing approximately 50% of the Portfolio’s assets. GEAM served a subadviser to the Portfolio from 2001 to December 5, 2005.

B. Effective on or about December 5, 2005, Jennison Associates LLC (“Jennison”) will be terminated as the subadviser to the Global Portfolio and will be replaced by William Blair & Company LLC (“William Blair”), LSV Asset Management (“LSV”), Marsico Capital Management, LLC (“Marsico”), and T. Rowe Price Associates, Inc. (“T. Rowe Price”). As of such date, a ll references in the Prospectus to Jennison’s management of the Global Portfolio shall be deemed to be deleted.

The following replaces the discussion in the section of the Prospectus titled “Investment Objectives and Principal Strategies of the Portfolios—Global Portfolio:”

Global Portfolio

Investment Objective: long-term growth of capital.

The Portfolio invests primarily in common stocks (and their equivalents) of foreign and U.S. companies. Each subadviser for the Portfolio generally will use either a “growth” approach or a “value” approach in selecting either foreign or U.S. common stocks. The target asset allocation, area of geographic focus, and primary investment style for each subadviser are set forth below.

Subadviser	Target Asset Allocation of Global Portfolio’s Assets	Primary Geographic Focus and Asset Class	Investment Style
William Blair	25%	Foreign Equity	Growth-oriented
LSV	25%	Foreign Equity	Value-oriented
Marsico	25%	U.S. Equity	Growth-oriented
T. Rowe Price	25%	U.S. Equity	Value-oriented

Generally, the Portfolio invests in at least three countries, including the U.S., but may invest up to 35% of its in companies located in any one country. The 35% limitation does not apply to U.S investments. The Portfolio may invest in emerging markets securities. The actual allocation to each subadviser may vary from the target allocation listed above. The Portfolio may change the target allocations. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• currency risk

The following replaces the discussion in the section of the Prospectus titled “More Detailed Information on How the Portfolios Invest—Global Portfolio:”

Global Portfolio

The investment objective of this Portfolio is long-term growth of capital . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Subadviser	Target Asset Allocation of Global Portfolio’s Assets	Primary Geographic Focus and Asset Class	Investment Style
William Blair	25%	Foreign Equity	Growth-oriented
LSV	25%	Foreign Equity	Value-oriented
Marsico	25%	U.S. Equity	Growth-oriented
T. Rowe Price	25%	U.S. Equity	Value-oriented

William Blair uses fundamental research to identify foreign companies with market capitalizations over $100 million that have above-average prospective growth, evidence of sustainability of future growth, above-average profitability and reinvestment of internal capital, and conservative capital structure. LSV employs a proprietary model and other quantitative methods in an attempt to pick undervalued stocks with high near-term appreciation potential. Cash flow-to-price ratios, book-to-market ratios and certain past performance measures are some of the important variables reviewed by LSV in its investment process. In selecting investments for the Portfolio, Marsico uses an approach that combines top-down macroeconomic analysis with bottom-up stock selection. The top-down approach takes into consideration macro-economic factors such as interest rates, inflation, demographics, the regulatory environment and the global competitive landscape. As a result of the top-down analysis, Marsico seeks to identify sectors, industries and companies that may benefit from the overall trends Marsico has observed. Marsico then looks for individual companies (generally companies with market capitalizations of a least $4 billion) with earnings growth potential that may not be recognized by the market at large. In particular, Marsico may focus on any of a number of different attributes that may include the company’s specific market expertise or dominance, its franchise durability and pricing power, solid fundamentals, strong and ethical management, commitment to shareholder interests, and reasonable valuations in the context of projected growth rates. This process is called bottom-up stock selection. T. Rowe Price invests primarily in common stocks of large companies that appear to be undervalued, and in securities that are expected to produce dividend income. T. Rowe Price typically employs a “value” approach in selecting investments. T. Rowe Price’s in-house research team seeks to identify companies that appear to be undervalued by various measures and may be temporarily out of favor but have good prospects for capital appreciation and dividend growth. The actual allocation to each subadviser may vary from the target allocation listed above. The Portfolio may change the target allocations.

This Portfolio is intended to provide investors with the opportunity to invest in companies located throughout the world. As set forth above, the Portfolio invests approximately 50% of its assets in the equity and equity-related securities of foreign companies and approximately 50% of its assets in the equity and equity-related securities of U.S.companies. Generally, the Portfolio invests in at least three countries, including the U.S., but may invest up to 35% of its assets in companies located in any one country. The 35% limitation does not apply to U.S investments. The Portfolio may invest in emerging markets securities.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell futures contracts on stock indexes, debt securities, interest rate indexes and foreign currencies and options on these futures contracts.

• Forward foreign currency exchange contracts .

• Purchase securities on a when-issued or delayed delivery basis.

• Equity swaps . The Portfolio may also lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

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

The Portfolio is co-managed by William Blair, LSV, Marsico, and T. Rowe Price. William Blair, LSV, Marsico, and T. Rowe Price are each responsible for managing approximately 25% of the Portfolio’s assets. The Global Portfolio was managed by Jennison from 2001 to December 5, 2005.

The following is added to the discussion in the section of the Prospectus titled “How the Fund is Managed—Investment Subadvisers:”

Marsico Capital Management, LLC (“Marsico”), 1200 17th Street, Suite 1600, Denver, CO 80202, serves as a subadviser for approximately 25% of the assets of the Global Portfolio. Marsico was organized in September 1997 as a registered investment adviser and became a wholly-owned indirect subsidiary of Bank of America Corporation in January 2001. Marsico provides investment management services to other mutual funds and private accounts and, as of March 31, 2005, had approximately $46 billion under management. Thomas F. Marsico is the founder and Chief Executive Officer of Marsico.

T. Rowe Price Associates, Inc. (“T. Rowe Price”), 100 East Pratt Street, Baltimore, Maryland 21202, serves as a subadviser for approximately 25% of the assets of the Global Portfolio. As of March 31, 2005, the firm and its affiliates managed approximately $235.9 billion in assets.

The following replaces the discussion in the section of the Prospectus titled “How the Fund is Managed—Portfolio Managers—Global Portfolio:”

W. George Greig, is responsible for the day-to-day management of the portion of the Portfolio advised by William Blair. Mr. Greig, a principal of William Blair, has headed the firm’s international investment management team since 1996. He serves as the Portfolio Manager for the William Blair International Growth Fund as well as leading the Portfolio Team on separately managed portfolios. Before joining William Blair, he headed international equities for PNC Bank in Philadelphia from 1995 to 1996 and previously served as Investment Director with London-based Framlington Group PLC as well as managing global and emerging markets funds there. He has over twenty-five years of experience in domestic and international investment research and portfolio management. Education: B.S., Massachusetts Institute of Technology; M.B.A., Wharton School of the University of Pennsylvania.

Josef Lakonishok, Robert Vishny, and Menno Vermeulen are responsible for the day-to-day management of the portion of the Global Portfolio advised by LSV.

Josef Lakonishok has served as CEO, Partner and Portfolio Manager for LSV since its founding in 1994. He has more than 25 years of investment and research experience. In addition to his duties at LSV, Mr. Lakonishok serves as the William G. Karnes Professor of Finance at the University of Illinois at Urbana-Champaign. Robert Vishny has served as Partner and Portfolio Manager of LSV since its founding in 1994. He has more than 18 years experience of investment and research experience. In addition to his duties at LSV, Mr. Vishny serves as the Eric J. Gleacher Professor of Finance at the University of Chicago. Menno Vermeulen, CFA, has served as a Portfolio Manager and Senior Quantitative Analyst of LSV since 1995 and a Partner since 1998. He has mpre than 13 years of investment and research experience. Prior to joining LSV, Mr. Vermeulen served as a portfolio manager for ABP Investments.

Thomas F. Marsico is responsible for the day-to-day management of the portion of the Global Portfolio advised by Marsico. Mr. Marsico is the Chief Investment Officer of Marsico and has over 20 years of experience as a securities analyst and a portfolio manager. Prior to forming Marsico Capital in September 1997, Mr. Marsico served as the portfolio manager of the Janus Twenty Fund from January 31, 1998 through August 11, 1997 and served in the same capacity for the Janus Growth and Income Fund from May 31, 1991 (the Fund’s inception date) through August 11, 1997.

Brian Rogers, Steve Boesel, and John Linehan are responsible for the day-to-day management of the portion of the Global Portfolio advised by T. Rowe Price.

Brian Rogers is the Chief Investment Officer of T. Rowe Price Group, Inc. In addition he manages major institutional equity portfolios and serves as President of the Equity Income Fund. He serves on the Board of Directors of T. Rowe Price Group and is a member of the Management Committee. His other responsibilities include serving on the Equity, Fixed Income, International, and Asset Allocation committees. Prior to joining the firm in 1982, Brian was employed by Bankers Trust Company. He earned an A.B. from Harvard College and an M.B.A. from Harvard Business School. Steve Boesel is a Vice President of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc., and Portfolio Manager in the Equity Division responsible for several of the firm’s major separate account portfolios. He is President of the Capital Appreciation Fund and the Chairman of the fund’s Investment Advisory Committee. Steve is also Executive Vice President and an Investment Advisory Committee member of the Personal Strategy Funds. He is a Vice President and Investment Advisory Committee member of the Balanced Fund, Equity Income Fund, Real Estate Fund, and Value Fund. Steve also serves as an Investment Advisory Committee member of the Tax-Efficient Funds. He joined the firm in 1973 from National City Bank, where he was a Senior Research Analyst. Steve earned a B.A. in Economics from Baldwin-Wallace College and an M.B.A. from the University of Denver. He is a member of the Baltimore Society of Security Analysts and the Association for Investment Management and Research. John Linehan is a Vice President of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. He is also a Portfolio Manager in the Equity Division. John is President of the Value Fund and Chairman of the fund’s Investment Advisory Committee. He also co-manages several of the firm’s separate account portfolios as a member of the Large-Cap Strategy Team and is the Lead Portfolio Manager for the SICAV U.S. Large-Cap Value Equity Fund. In addition, John is also a Vice President and member of the Investment Advisory Committee of the Equity Income Fund, New Era Fund and Global Stock Fund. In addition, he is a Vice President of the Capital Appreciation Fund. John joined the firm in 1998 and has nine years of previous investment experience at Bankers Trust and E.T. Petroleum. He earned a B.A. from Amherst College and an M.B.A. from Stanford University where he was the Henry Ford II Scholar, an Arjay Miller Scholar, and the winner of the Alexander A. Robichek Award in Finance. He has also earned the Chartered Financial Analyst accreditation.

C. Effective on or about December 5, 2005, T. Rowe Price Associates, Inc. (“T. Rowe Price”) will replace Alliance Capital Management (“Alliance”) as subadviser to the SP AllianceBernstein Large-Cap Growth Portfolio. Effective on or about December 5, 2005, the name of the Portfolio will change to the SP T. Rowe Price Large-Cap Growth Portfolio. As of such date, a ll references in the Prospectus to Alliance ‘s management of the Portfolio shall be deemed to be deleted. In addition, as of such date, a ll references in the Prospectus to the SP AllianceBernstein Large-Cap Growth Portfolio shall be deemed to refer to the SP T. Rowe Price Large-Cap Growth Portfolio.

The following replaces the discussion in the section of the Prospectus titled “Investment Objectives and Principal Strategies of the Portfolios—SP AllianceBernstein Large Cap Growth Portfolio”(to be renamed SP T. Rowe Price Large Cap Growth Portfolio):

SP T. Rowe Price Large Cap Growth Portfolio (formerly SP AllianceBernstein Large Cap Growth Portfolio)

Investment Objective: long term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stocks of large cap companies. A large cap company is defined as one whose market capitalization is larger than the median market capitalization of companies in the Russell 1000 Growth Index, a widely used benchmark of the largest domestic growth stocks. As of December 31, 2004, such median market capitalization was $4.366 billion and is subject to change. The market capitalization of companies in the Portfolio and the Russell 1000 Growth Index will change over time; the Portfolio will not automatically sell or cease to purchase stock of a company it already owns just because the company’s market capitalization falls below this level. In selecting securities, T. Rowe Price uses a growth approach. T. Rowe Price generally looks for companies with an above-average rate of earnings and cash flow growth and a lucrative niche in the economy that gives them the ability to sustain earnings momentum even during times of slow economic growth. As growth investors, T. Rowe Price believes that when a company increases its earnings faster than both inflation and the overall economy, the market will eventually reward it with a higher stock price. Up to 15% of the Portfolio’s total assets may be invested in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

The following replaces the discussion in the section of the Prospectus titled “More Detailed Information on How the Portfolios Invest—SP AllianceBernstein Large Cap Growth Portfolio”(to be renamed SP T. Rowe Price Large Cap Growth Portfolio):

SP T. Rowe Price Large-Cap Growth Portfolio (formerly SP AllianceBernstein Large Cap Growth Portfolio)

The investment objective of this Portfolio is long-term growth of capital. While we make every effort to achieve our objective, we cannot guarantee success and it is possible that you could lose money.

Under normal circumstances, the Portfolio invests at least 80% of its investable assets in common stocks of large cap companies. A large cap company is defined as one whose market capitalization is larger than the median market capitalization of companies in the Russell 1000 Growth Index, a widely used benchmark of the largest domestic growth stocks. As of December 31, 2004, such median market capitalization was $4.366 billion and is subject to change. The market capitalization of companies in the Portfolio and the Russell 1000 Growth Index will change over time; the Portfolio will not automatically sell or cease to purchase stock of a company it already owns just because the company’s market capitalization falls below this level. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

The Portfolio also may invest up to 20% of its investable assets in convertible debt and convertible preferred stock and up to 15% of its total assets in equity securities of non-U.S. companies.

In selecting securities, T. Rowe Price uses a growth approach. T. Rowe Price generally looks for companies with an above-average rate of earnings and cash flow growth and a lucrative niche in the economy that gives them the ability to sustain earnings momentum even during times of slow economic growth. As growth investors, T. Rowe Price believes that when a company increases its earnings faster than both inflation and the overall economy, the market will eventually reward it with a higher stock price.

The Portfolio may invest in a wide variety of equity securities, including large cap stocks, convertible and preferred securities, warrants and rights. The Portfolio may also invest in foreign securities, including foreign equity securities, and other securities that represent interests in foreign equity securities, such as European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs). The Portfolio may invest in American Depositary Receipts ( ADRs ), which are not subject to the 15% limitation on foreign securities. The Portfolio may also invest in derivatives and in short term investments, including money market securities, short term U.S. Government obligations, repurchase agreements, commercial paper, banker’s acceptances and certificates of deposit.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Foreign securities (up to 15% of the Portfolio’s total assets may be invested in foreign securities).

• Purchase and sell exchange-traded index options and stock index future contracts .

• Write covered exchange-traded call options on its securities of up to 15% of its total assets, and purchase and sell exchange-traded call and put options on common stocks written by others of up to, for all options, 10% of its total assets.

• Short sales against-the-box of up to 15% of net Portfolio assets.

• Illiquid securities (up to 10% of net Portfolio assets).

In response to adverse market conditions or when restructuring the Portfolio, T. Rowe Price may invest up to 100% of the Portfolio’s assets in money market instruments. Investing heavily in these securities limits the ability to achieve the investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

In pursuing its investment objective the Portfolio’s management has the discretion to purchase some securities that do not meet its normal investment criteria, as described above, when it perceives an unusual opportunity for gain. These special situations might arise when the Portfolio’s management believes a security could increase in value for a variety of reasons, including a change in management, an extraordinary event, or a temporary imbalance in the supply of or demand for the securities.

The Portfolio may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities.

The Portfolio is managed by T. Rowe Price Associates, Inc. Alliance served as a subadviser to the Portfolio from inception to December 5, 2005.

The following is added to the discussion in the section of the Prospectus titled “Management of the Fund—Investment Subadvisers:”

T. Rowe Price Associates, Inc. (“T. Rowe Price”), 100 East Pratt Street, Baltimore, Maryland 21202, serves as the subadviser for the SP T. Rowe Price Large-Cap Growth Portfolio . As of March 31, 2005, the firm and its affiliates managed approximately $235.9 billion in assets.

The following replaces the discussion in the section of the Prospectus titled “How the Fund is Managed—Portfolio Managers—SP AllianceBernstein Large Cap Growth Portfolio”(to be renamed SP T. Rowe Price Large Cap Growth Portfolio):

Robert W. Sharps is responsible for the day-to-day management of the Portfolio. Mr. Sharps is a Vice President of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. He is also the lead Portfolio Manager on the Large-Cap Growth Strategy Team in the Equity Division. Mr. Sharps serves as Executive Vice President and an Investment Advisory Committee member of the Growth Stock Fund. In addition, Mr. Sharps is a Vice President and Investment Advisory Committee member of the Blue Chip Growth Fund, Financial Services Fund, Growth & Income Fund, and New America Growth Fund. He is also a member of the Investment Advisory Committee of the Tax-Efficient Growth Fund. Prior to joining the firm in 1997, Mr. Sharps was a Senior Consultant at KPMG Peat Marwick. He earned a B.S., summa cum laude, in Accounting from Towson University and an M.B.A. in Finance from the Wharton School, University of Pennsylvania. Mr. Sharps has also earned the Chartered Financial Analyst and Certified Public Accountant accreditations.

D. Effective on or about December 5, 2005, Salomon Brothers Asset Management Inc. (“SaBAM”) will join Goldman Sachs Asset Management, L.P. (“GSAM”) as a subadviser to the SP Goldman Sachs Small Cap Value Portfolio. Effective on or about December 5, 2005, the name of the Portfolio will change from the SP Goldman Sachs Small Cap Value Portfolio to the SP Small Cap Value Portfolio. As of such date, a ll references in the Prospectus to the SP Goldman Sachs Small Cap Value Portfolio shall be deemed to refer to the SP Small Cap Value Portfolio.

The following replaces the discussion in the section of the Prospectus titled “Investment Objectives and Principal Strategies of the Portfolios—SP Goldman Sachs Small Cap Value Portfolio” (to be renamed Small Cap Value Portfolio):

SP Small Cap Value Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in the equity securities of small capitalization companies. The 80% requirement applies at the time the Portfolio invests its assets. The Portfolio generally defines small capitalization companies as those with market capitalizations that do not exceed the greater of: (i) $4 billion or (ii) the highest month-end market capitalization value of any common stock in the Russell 2000 Index during the preceding 12 months. The Portfolio may invest up to 25% of its assets in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• portfolio turnover risk

• smaller company risk

The following replaces the discussion in the section of the Prospectus titled “More Detailed Information on How the Portfolios Invest—SP Goldman Sachs Small Cap Value Portfolio” (to be renamed SP Small Cap Value Portfolio):

SP Small Cap Value Portfolio

The Portfolio normally invests at least 80% of its investable assets in the equity securities of small capitalization companies. The Portfolio will not change this policy unless it provides 60 days written prior notice to contract owners. The Portfolio generally defines small capitalization companies as those with market capitalizations that do not exceed the greater of: (i) $4 billion or (ii) the highest month-end market capitalization value of any common stock in the Russell 2000 Index during the preceding 12 months. The Portfolio may invest up to 25% of its assets in foreign securities.

The Portfolio seeks to achieve its objective through investments primarily in equity securities of small capitalization companies that are believed to be undervalued in the marketplace. In deciding which stocks to buy, each subadviser uses what is known as a value investment style.

GSAM seeks to identify:

• Well-positioned businesses that have:

i. Attractive returns on capital;

ii. Sustainable earnings and cash flow;

iii. Strong company management focused on long-term returns to shareholders;

• Attractive valuation opportunities where:

i. The intrinsic value of the business is not reflected in the stock price.

Price and Prospects. All successful investing should thoughtfully weigh two important attributes of a stock: price and prospects. Since most value managers tend to focus almost exclusively on price, they often underestimate the importance of prospects. GSAM believes a company’s prospective ability to generate high cash flow and returns on capital will strongly influence investment success.

Uncertainty creates opportunity. Some stock price declines truly reflect a permanently disadvantaged business model. These stocks are the “value traps” that mire price-oriented investors. Other stock price declines merely reflect near-term market volatility. Through GSAM’s proprietary research and strong valuation discipline, it seeks to purchase well-positioned, cash generating businesses run by shareholder-oriented managements at a price low enough to provide a healthy margin of safety.

Avoiding “value traps”. GSAM believes the key to successful investing in the small cap value space is to avoid the “losers” or “value traps.” Academic studies have shown that small cap value has historically outperformed other asset classes, but with higher volatility and less liquidity. By focusing on stock selection within sectors and avoiding the “losers,” GSAM believes that it can participate in the long-term performance of small cap value with much less risk than other managers.

SaBAM emphasizes individual security selection while spreading the Portfolio’s investments among industries and sectors. SaBAM uses both quantitative and fundamental methods to identify stocks of smaller capitalization companies it believes have a high probability of outperforming other stocks in the same industry or sector. SaBAM uses quantitative parameters to select a universe of smaller capitalized companies that fit the fund’s general investment criteria. In selecting individual securities from within this range, the manager looks for “value” attributes, such as: (i) low stock price relative to earnings, book value and cash flow and (ii) high return on invested capital. SaBAM also uses quantitative methods to identify catalysts and trends that might influence the Portfolio’s industry or sector focus, or SaBAM ‘s individual security selection.

Under normal conditions, there will be an approximately equal division of the Portfolio’s assets between the subadvisers. All daily cash inflows (that is, purchases and reinvested distributions) and outflows (that is, redemptions and expense items) will usually be divided between the subadvisers as the Manager deems appropriate. There will be a periodic rebalancing of each segment’s assets to take account of market fluctuations in order to maintain the approximately equal allocation. As a consequence, the Manager may allocate assets from the portfolio segment that has appreciated more to the other.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Derivative strategies to reduce certain risks of its investments and to enhance income.

• Purchase and sell options on equity securities or stock indices.

• Purchase and sell foreign currency options on U.S. exchanges or U.S. over-the-counter markets.

• Purchase and sell stock index futures contracts and options on these futures contracts for certain hedging and risk management purposes. New financial products and risk management techniques continue to be developed, and the Portfolio may use these new investments and techniques to the extent consistent with its investment objective and policies.

• Forward foreign currency exchange contracts.

• Preferred stock and bonds that have attached warrants and convertible debt and convertible preferred stock .

• Swaps.

• Repurchase agreements .

• REITs .

• Private Investments in Public Equity “PIPES .”

The Portfolio may, for temporary defensive purposes or pending other investments, invest in high-quality, short-term debt obligations of banks, corporations or the U.S. government. While the Portfolio is in a defensive position, its ability to achieve its investment objective of long-term growth of capital will be limited.

The Portfolio is co-managed by Goldman Sachs Asset Management, L.P. (“GSAM”) and Salomon Brothers Asset Management Inc. (“SaBAM”). GSAM and SaBAM are each responsible for managing approximately 50% of the Portfolio’s assets. From January 20, 2004 to December 5, 2005, GSAM managed 100% of the Portfolio’s assets.

The following is added to the discussion in the section of the Prospectus titled “How the Fund is Managed—Portfolio Managers—SP Goldman Sachs Small Cap Value Portfolio” (to be renamed SP Small Cap Value Portfolio):

Peter Hable is responsible for the day-to-day management of the portion of the Portfolio advised by SaBAM. Mr. Hable has more than 21 years of investment industry experience. Mr. Hable has a B.S. in Economics from Southern Methodist University and an MBA from the University of Pennsylvania’s Wharton School of Finance. He has been with SaBAM since 1983.

II. This section of the Supplement sets forth changes to the Prospectus with respect to the SP William Blair International Growth Portfolio.

The following replaces the first sentence in the third paragraph in the section of the Prospectus titled “More Detailed Information on How the Portfolios Invest— SP William Blair International Growth Portfolio”:

The Portfolio primarily invests in non-U.S. growth companies whose shares appear attractively valued on a relative and absolute basis.

III. This section of the Supplement sets forth changes to the Prospectus with respect to certain changes to the non-fundamental investment policies of the SP Aggressive Growth Asset Allocation Portfolio, the SP Balanced Asset Allocation Portfolio, the SP Conservative Asset Allocation Portfolio and the SP Growth Asset Allocation Portfolio (each, an “SP Asset Allocation Portfolio” and collectively, the “SP Asset Allocation Portfolios”).

The Prospectus currently: (i) specifies each Portfolio of the Fund in which an SP Asset Allocation Portfolio invests, (ii) provides the approximate percentage of an SP Asset Allocation Portfolio’s assets that are invested in the applicable Portfolio of the Fund, (iii) provides that the Manager will evaluate the approximate percentage of each SP Asset Allocation Portfolio’s assets to be invested in the other Portfolios of the Fund on an annual basis, that such percentages may be adjusted based on the Manager’s evaluation, and that such adjustments would be reflected in the annual update to the Prospectus, and (iv) provides that r ebalancings will occur on a monthly basis (although re-balancings may occur less frequently). Effective as of the date hereof, the Manager may: (i) invest the assets of each SP Asset Allocation Portfolio in any Portfolio of the Fund (other than another SP Asset Allocation Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia Trust (“AST”), and the AST LSV International Value Portfolio of AST (collectively, the Underlying Portfolios), (ii) change allocations among Underlying Portfolios when deemed necessary or appropriate, and (iii) effect the rebalancing of SP Asset Allocation Portfolio assets when deemed necessary appropriate. In addition, the Prospectus will no longer specify the Underlying Portfolios in which an SP Asset Allocation Portfolio invests and the approximate percentage of the SP Asset Allocation Portfolio’s assets that are invested in that Underlying Portfolio. Instead, the Prospectus generally will indicate the types of Underlying Portfolios in which each SP Asset Allocation Portfolio will primarily invest (i.e., Underlying Portfolios that focus on equity securities or Underlying Portfolios that focus on debt securities/money market instruments).

The following replaces the discussions in the sections of the Prospectus titled “Investment Objectives and Principal Strategies of the Portfolios—SP Aggressive Growth Asset Allocation Portfolio,” Investment Objectives and Principal Strategies of the Portfolios—SP Balanced Asset Allocation Portfolio,” Investment Objectives and Principal Strategies of the Portfolios—SP Conservative Asset Allocation Portfolio,” and Investment Objectives and Principal Strategies of the Portfolios—SP Growth Asset Allocation Portfolio:”

SP Aggressive Growth Asset Allocation Portfolio

SP Balanced Asset Allocation Portfolio

SP Conservative Asset Allocation Portfolio

SP Growth Asset Allocation Portfolio

Investment Objectives: The investment objective of each SP Asset Allocation Portfolio is to obtain the highest potential total return consistent with the specified level of risk tolerance . The definition of risk tolerance level is not a fundamental policy and, therefore, can be changed by the Fund’s Board of Directors at any time.

The SP Asset Allocation Portfolios actively allocate their respective assets by investing in combinations of Underlying Portfolios. Each SP Asset Allocation Portfolio intends its strategy of investing in combinations of Underlying Portfolios to result in investment diversification that an investor could otherwise achieve only by holding numerous investments. SP Asset Allocation Portfolio assets are expected to be invested in several Underlying Portfolios at any time.

Each SP Asset Allocation Portfolio has a distinctive risk/return balance. Certain SP Asset Allocation Portfolios will be focused more heavily on Underlying Portfolios that invest primarily in equity securities while other SP Asset Allocation Portfolios will be focused more heavily on Underlying Portfolios that invest primarily in debt securities/money market instruments as set forth below.

Relative Investment Focus*

* Not intended to represent actual allocations among Underlying Portfolios or asset classes.

The Manager may, at any time, change an SP Asset Allocation Portfolio’s allocation of assets among Underlying Portfolios based on its assessment of macroeconomic, market, financial, security valuation, and other factors. The Manager also may rebalance an SP Asset Allocation Portfolio’s investments to cause such investments to match the Underlying Portfolio allocation at any time.

The performance of each SP Asset Allocation Portfolio depends on how its assets are allocated and reallocated between the Underlying Portfolios. A principal risk of investing in each SP Asset Allocation Portfolio is that the Manager will make less than optimal decisions regarding allocation of assets in the Underlying Portfolios. Because each of the SP Asset Allocation Portfolios generally invests all of its assets in Underlying Portfolios, the risks associated with each SP Asset Allocation Portfolio are closely related to the risks associated with the securities and other investments held by the Underlying Portfolios. The ability of each SP Asset Allocation Portfolio to achieve its investment objective will depend on the ability of the Underlying Portfolios to achieve their investment objectives. For more information on the Underlying Portfolios, please refer to their investment summaries included in this Prospectus.

Investors should choose an SP Asset Allocation Portfolio by determining which risk tolerance level most closely corresponds to their individual planning needs, objectives and comfort based on the information below. While each SP Asset Allocation Portfolio will try to achieve its objective, we can’t guarantee success and it is possible that you could lose money.

The following replaces the discussions in the sections of the Prospectus titled “More Detailed Information on How the Portfolios Invest —SP Asset Allocation Portfolios,” “More Detailed Information on How the Portfolios Invest —SP Aggressive Growth Asset Allocation Portfolio,” “More Detailed Information on How the Portfolios Invest —SP Balanced Asset Allocation Portfolio,” “More Detailed Information on How the Portfolios Invest —SP Conservative Asset Allocation Portfolio,” and “More Detailed Information on How the Portfolios Invest —SP Growth Asset Allocation Portfolio:”

SP Aggressive Growth Asset Allocation Portfolio

SP Balanced Asset Allocation Portfolio

SP Conservative Asset Allocation Portfolio

SP Growth Asset Allocation Portfolio

There are four SP Asset Allocation Portfolios. The investment objective of each SP Asset Allocation Portfolio is to obtain the highest potential total return consistent with the specified level of risk tolerance . The definition of risk tolerance level is not a fundamental policy and, therefore, can be changed by the Fund’s Board of Directors at any time.

• the investor who wants to maximize total return potential, but lacks the time, or expertise to do so effectively;

• the investor who does not want to watch the financial markets in order to make periodic exchanges among Portfolios; and

• the investor who wants to take advantage of the risk management features of an asset allocation program.

Each SP Asset Allocation Portfolio seeks to achieve its investment objective by investing in one or more mutual funds as described below. Each SP Asset Allocation Portfolio may invest in any other Portfolio of the Fund (other than another SP Asset Allocation Portfolio), the AST Marsico Capital Growth Portfolio of American Skandia Trust (AST), and the AST LSV International Value Portfolio of AST (collectively, the Underlying Portfolios). AST is an open-end management investment company co-managed by the Manager and its affiliate, American Skandia Investment Services, Inc. under a manager-of-managers approach. Each SP Asset Allocation Portfolio also may invest in government securities and cash for cash management purposes. The Fund may, in the future, seek exemptive relief from the provisions of the Investment Company Act of 1940. If such relief is granted, the SP Asset Allocation Portfolios may invest in other securities, including exchange traded funds and derivatives.

Relative Investment Focus*

* Not intended to represent actual allocations among Underlying Portfolios or asset classes.

Up to 100% of an SP Asset Allocation Portfolio’s assets may be invested temporarily in cash or cash equivalents and such Portfolio may otherwise deviate from its customary investment strategies in response to extraordinary adverse political, economic, financial, or stock market events. Temporary investments may include U.S. or foreign government obligations, commercial paper, bank obligations, and repurchase agreements. While an SP Asset Allocation Portfolio is in a defensive position, the opportunity to achieve its investment objective of total return

will be limited. Shares of the Underlying Portfolios may be sold for a variety of reasons, such as to effect a change in Underlying Portfolio allocations, to secure gains or limit losses, or to re-deploy assets to more promising opportunities.

The performance of each SP Asset Allocation Portfolio depends on how its assets are allocated and reallocated between the Underlying Portfolios. A principal risk of investing in each SP Asset Allocation Portfolio is that the Manager will make less than optimal decisions regarding allocation of assets in the Underlying Portfolios. Because each of the SP Asset Allocation Portfolios generally invests all of its assets in Underlying Portfolios, the risks associated with each SP Asset Allocation Portfolio are closely related to the risks associated with the securities and other investments held by the Underlying Portfolios. The ability of each SP Asset Allocation Portfolio to achieve its investment objective will depend on the ability of the Underlying Portfolios to achieve their investment objectives. In addition, the officers and Directors of the Fund also presently have responsibilities with respect to AST, the SP Asset Allocation Portfolios, and all of the Underlying Portfolios. Therefore conflicts may arise as those persons fulfill their responsibilities to the Fund, AST, the SP Asset Allocation Portfolios, and the Underlying Portfolios.

For more information on the Underlying Portfolios other than the AST Marsico Capital Growth Portfolio and AST LSV International Value Portfolio, please refer to their investment summaries included in this Prospectus. For more information on the AST Marsico Capital Growth Portfolio and AST LSV International Value Portfolio, please see below.

The AST Marsico Capital Growth Portfolio invests primarily in the common stocks of large companies (typically companies that have a market capitalization in the range of $4 billion or more) that are selected for their growth potential. The Portfolio will normally hold a core position of between 35 and 50 common stocks. The Portfolio may hold a limited number of additional common stocks at times when the portfolio manager is accumulating new positions, phasing out existing positions, or responding to exceptional market conditions. In selecting investments for the Portfolio, the Sub-advisor uses an approach that combines “top-down” macroeconomic analysis with “bottom-up” stock selection. The Portfolio’s core investments generally are comprised of well-known, established growth companies. However, the Portfolio also may typically include more aggressive growth companies, and companies undergoing significant changes: e.g. , the introduction of a new product line, the appointment of a new management team, or an acquisition. As a result, the Portfolio may invest in certain companies for relatively short periods of time. Such short-term activity may cause the Portfolio to incur higher transaction costs (which may adversely affect the Portfolio’s performance) and may increase taxable distributions for shareholders.

The AST LSV International Value Portfolio will invest, under normal circumstances, at least 80% of the value of its assets in equity securities. The Portfolio pursues its investment objective by primarily investing in the equity securities of foreign companies that are represented in the MSCI EAFE Index. The MSCI EAFE Index tracks stocks in Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. This Portfolio’s investment strategy can be described as a “contrarian value” approach. The objective of the strategy is to outperform the unhedged US Dollar total return (net of foreign dividend withholding taxes) of the MSCI EAFE Index.

PSFSUP63

PROSPECTUS

May 1, 2005

THE PRUDENTIAL SERIES FUND, INC.

The Prudential Series Fund, Inc. (the “Fund”) is an investment company made up of the following 33 separate portfolios (“Portfolios”):

Conservative Balanced Portfolio		SP AllianceBernstein Large Cap Growth Portfolio
Diversified Bond Portfolio		SP Davis Value Portfolio
Diversified Conservative Growth Portfolio		SP Goldman Sachs Small Cap Value Portfolio
Equity Portfolio		SP Large Cap Value Portfolio
Flexible Managed Portfolio		SP LSV International Value Portfolio
Global Portfolio		SP Mid Cap Growth Portfolio
Government Income Portfolio		SP PIMCO High Yield Portfolio
High Yield Bond Portfolio		SP PIMCO Total Return Portfolio
Jennison Portfolio		SP Prudential U.S. Emerging Growth Portfolio
Jennison 20/20 Focus Portfolio		SP Small Cap Growth Portfolio
Money Market Portfolio		SP Strategic Partners Focused Growth Portfolio
Natural Resources Portfolio		SP William Blair International Growth Portfolio
Small Capitalization Stock Portfolio		SP Aggressive Growth Asset Allocation Portfolio
Stock Index Portfolio		SP Balanced Asset Allocation Portfolio
Value Portfolio		SP Conservative Asset Allocation Portfolio
Zero Coupon Bond Portfolio 2005		SP Growth Asset Allocation Portfolio
SP AIM Core Equity Portfolio

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 Fund is an investment vehicle for life insurance companies (“Participating Insurance Companies”) writing variable annuity contracts and variable life insurance policies. Shares of the Fund may also be sold directly to certain tax-deferred retirement plans. Each variable annuity contract and variable life insurance policy involves fees and expenses not described in this Prospectus. Please read the Prospectus for the variable annuity contract or variable life insurance policy for information regarding the contract or policy, including its fees and expenses.

The Fund received an order from the Securities and Exchange Commission permitting its Investment Manager, subject to approval by its Board of Directors, to change subadvisers without shareholder approval. For more information, please see this Prospectus under “How the Fund is Managed.”

Table of Contents

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES OF THE PORTFOLIOS	1

PRINCIPAL RISKS	13

EVALUATING PERFORMANCE	16

FEES AND EXPENSES OF INVESTING IN THE PORTFOLIOS	49

MORE DETAILED INFORMATION ON HOW THE PORTFOLIOS INVEST	53

Investment Objectives and Policies
Conservative Balanced Portfolio
Diversified Bond Portfolio
Diversified Conservative Growth Portfolio
Equity Portfolio
Flexible Managed Portfolio
Global Portfolio
Government Income Portfolio
High Yield Bond Portfolio
Jennison Portfolio
Jennison 20/20 Focus Portfolio
Money Market Portfolio
Natural Resources Portfolio
Small Capitalization Stock Portfolio
Stock Index Portfolio
Value Portfolio
Zero Coupon Bond Portfolio 2005
SP AIM Core Equity Portfolio
SP AllianceBernstein Large Cap Growth Portfolio(1)
SP Davis Value Portfolio
SP Goldman Sachs Small Cap Value Portfolio
SP Large Cap Value Portfolio
SP LSV International Value Portfolio(2)
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small Cap Growth Portfolio(3)
SP Strategic Partners Focused Growth Portfolio
SP William Blair International Growth Portfolio
SP Asset Allocation Portfolios
SP Aggressive Growth Asset Allocation Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Growth Asset Allocation Portfolio

MORE DETAILED INFORMATION ABOUT OTHER INVESTMENTS AND STRATEGIES USED BY THE PORTFOLIOS	85

American Depositary Receipts
Asset-Backed Securities
Collateralized Debt Obligations
Convertible Debt and Convertible Preferred Stock
Credit Default Swaps
Credit-Linked Securities
Derivatives
Dollar Rolls

(1) Formerly Alliance Large Cap Growth Portfolio

(2) Formerly SP Deutsche International Equity Portfolio

(3) Formerly SP State Street Research Small Cap Growth Portfolio

Equity Swaps
Event-Linked Bonds
Forward Foreign Currency Exchange Contracts
Futures Contracts
Interest Rate Swaps
Joint Repurchase Account
Loans and Assignments
Mortgage-Related Securities
Options
Real Estate Investment Trusts
Repurchase Agreements
Reverse Repurchase Agreements
Short Sales
Short Sales Against-the-Box
Swap Options
Swaps
Total Return Swaps
When-Issued and Delayed Delivery Securities

HOW THE FUND IS MANAGED	88

Board of Directors
Investment Adviser
Investment Subadvisers
Portfolio Managers

HOW TO BUY AND SELL SHARES OF THE FUND	104

Frequent Purchases and Redemptions of Fund Shares
Net Asset Value
Distributor

OTHER INFORMATION	106

Federal Income Taxes
Monitoring for Possible Conflicts
Disclosure of Portfolio Holdings

FINANCIAL HIGHLIGHTS	107

(For more information—see back cover)

This prospectus provides information about The Prudential Series Fund, Inc. (the Fund), which consists of 36 separate portfolios (each, a Portfolio).

The Fund offers two classes of shares in each Portfolio: Class I and Class II. Class I shares are sold only to separate accounts of The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, Prudential) as investment options under variable life insurance and variable annuity contracts (the Contracts). (A separate account keeps the assets supporting certain insurance contracts separate from the general assets and liabilities of the insurance company.) Class II shares are offered only to separate accounts of non-Prudential insurance companies for the same types of Contracts. Not every Portfolio is available under every Contract . The prospectus for each Contract lists the Portfolios currently available through that Contract.

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

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES OF THE PORTFOLIOS

The following summarizes the investment objectives, principal strategies and principal risks for each of the Portfolios. A Portfolio may have a similar name or an investment objective and investment policies closely resembling those of a mutual fund managed by the same investment adviser that is sold directly to individual investors. Despite such similarities, there can be no assurance that the investment performance of any Portfolio will resemble that of its retail fund counterpart.

We describe each of the terms listed as principal risks in the section entitled “Principal Risks” which follows this section. While we make every effort to achieve the investment objective for each Portfolio, we can’t guarantee success and it is possible that you could lose money.

Conservative Balanced Portfolio

Investment Objective: total investment return consistent with a conservatively managed diversified portfolio.

We invest in a mix of equity securities, debt obligations and money market instruments. Up to 30% of the Portfolio’s total assets may be invested in foreign securities. We may invest a portion of the Portfolio’s assets in high-yield/high-risk debt securities, which are riskier than high-grade securities. This Portfolio may be appropriate for an investor who wants diversification with a relatively lower risk of loss than that associated with the Flexible Managed Portfolio (see below). While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

Diversified Bond Portfolio

Investment Objective: high level of income over a longer term while providing reasonable safety of capital.

We look for investments that we think will provide a high level of current income, but which are not expected to involve a substantial risk of loss of capital through default. We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in high-grade debt obligations and high-quality money market investments. We may purchase securities that are issued outside the U.S. by foreign or U.S. issuers. In addition, we may invest a portion of the Portfolio’s assets in high-yield/high-risk debt securities, which are riskier than high-grade securities. We may invest up to 20% of the Portfolio’s total assets in debt securities issued outside the U.S. by U.S. or foreign issuers whether or not such securities are denominated in the U.S. dollar. These securities are included in the limits described above for debt obligations that may or may not

be investment grade. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

Diversified Conservative Growth Portfolio

Investment Objective: current income and a reasonable level of capital appreciation.

We invest in a diversified portfolio of debt and equity securities. Up to 35% of the Portfolio’s total assets may be invested in high-yield/high-risk debt securities, which are riskier than high-grade securities. The Portfolio may invest in foreign securities, including debt obligations of issuers in emerging markets. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

Equity Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stock of major established companies as well as smaller companies that we believe offer attractive prospects of appreciation. The Portfolio may invest up to 30% of its total assets in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

Flexible Managed Portfolio

Investment Objective: high total return consistent with an aggressively managed diversified portfolio.

We invest in a mix of equity securities, debt obligations and money market instruments. The Portfolio may invest in foreign securities. A portion of the debt portion of the Portfolio may be invested in high-yield/high-risk debt securities, which are riskier than

high-grade securities. This Portfolio may be appropriate for an investor who wants diversification and is willing to accept a relatively high level of loss in an effort to achieve greater appreciation. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

Global Portfolio

Investment Objective: long-term growth of capital.

We invest primarily in common stocks (and their equivalents) of foreign and U.S. companies. Generally, we invest in at least three countries, including the U.S., but we may invest up to 35% of the Portfolio’s assets in companies located in any one country other than the U.S. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

Government Income Portfolio

Investment Objective: a high level of income over the long term consistent with the preservation of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in U.S. Government securities, including intermediate and long-term U.S. Treasury securities and debt obligations issued by agencies or instrumentalities established by the U.S. Government, mortgage-related securities and collateralized mortgage obligations. The Portfolio may invest up to 20% of investable assets in other securities, including corporate debt securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• derivatives risk

• foreign investment risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• mortgage risk

• prepayment risk

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

High Yield Bond Portfolio

Investment Objective: a high total return.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in high-yield/high-risk debt securities. Such securities have speculative characteristics and are riskier than high-grade securities. The Portfolio may invest up to 20% of its total assets in foreign debt obligations. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

Jennison Portfolio

Investment Objective: long-term growth of capital.

We invest primarily in equity securities of major, established corporations that we believe offer above-average growth prospects. The Portfolio may invest up to 30% of its total assets in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

Jennison 20/20 Focus Portfolio

Investment Objective: long-term growth of capital.

We invest primarily in up to 40 equity securities of U.S. companies that are selected by the Portfolio’s two portfolio managers (up to 20 by each) as having strong capital appreciation potential. One manager uses a “value” approach, which means he or she attempts to identify strong companies selling at a discount from their perceived true value. There is a risk that “value” stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the markets for long periods of time. The other manager uses a “growth” approach, which means he or she seeks companies that exhibit higher-than-average earnings growth. “Growth” stocks usually involve a higher level of risk than “value” stocks, because growth stocks tend to attract more attention and speculative investment than value stocks. Up to 20% of the Portfolio’s total assets may be invested in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

Money Market Portfolio

Investment Objective: maximum current income consistent with the stability of capital and the maintenance of liquidity.

We invest in high-quality short-term money market instruments issued by the U.S. Government or its agencies, as well as by corporations and banks, both domestic and foreign. The Portfolio will invest only in instruments that mature in thirteen months or less, and which are denominated in U.S. dollars. While we make every effort to achieve our objective, we can’t guarantee success.

Principal Risks:

• credit risk

• interest rate risk

• management risk

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

Natural Resources Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stocks and convertible securities of natural resource companies and securities that are related to the market value of some natural resource. The Portfolio is non-diversified. As a non-diversified Portfolio, the Natural Resources Portfolio may hold larger positions in single issuers than a diversified Portfolio. As a result, the Portfolio’s performance may be tied more closely to the success or failure of a smaller group of portfolio holdings. There are additional risks associated with the Portfolio’s investment in the securities of natural resource companies. The market value of these securities may be affected by numerous factors, including events occurring in nature, inflationary pressures, and international politics. Up to 30% of the Portfolio’s total assets may be invested in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• credit risk

• derivatives risk

• foreign investment risk

• industry/sector risk

• interest rate risk

• leveraging risk

• management risk

• market risk

Small Capitalization Stock Portfolio

Investment Objective: long-term growth of capital.

We invest primarily in equity securities of publicly-traded companies with small market capitalizations. With the price and yield performance of the Standard & Poor’s Small Capitalization 600 Stock Index (the S&P SmallCap 600 Index) as our benchmark, we normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in all or a representative sample of the stocks in the S&P SmallCap 600 Index. The market capitalization of the companies that make up the S&P SmallCap 600 Index may change from time to time. As of February 28, 2005 the S&P SmallCap 600 Index stocks had market capitalizations of between $300 million and $1 billion.

The Portfolio is not “managed” in the traditional sense of using market and economic analyses to select stocks. Rather, the portfolio manager purchases stocks to duplicate the stocks and their weighting in the S&P SmallCap 600 Index. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• leveraging risk

• market risk

Stock Index Portfolio

Investment Objective: investment results that generally correspond to the performance of publicly-traded common stocks.

With the price and yield performance of the Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index) as our benchmark, we normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in S&P 500 stocks. The S&P 500 Index represents more than 70% of the total market value of all publicly-traded common stocks and is widely viewed as representative of publicly-traded common stocks as a whole. The Portfolio is not “managed” in the traditional sense of using market and economic analyses to select stocks. Rather, the portfolio manager purchases stocks in proportion to their weighting in the S&P 500 Index. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• market risk

Value Portfolio

Investment Objective: capital appreciation.

We invest primarily in common stocks that we believe are undervalued — those stocks that are trading below their underlying asset value, cash generating ability and overall earnings and earnings growth. We normally invest at least 65% of the Portfolio’s total assets in the common stock of companies that we believe will provide investment returns above those of the Russell 1000 Value Index and, over the long term, the Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index). Most of our investments will be securities of large capitalization companies. The Portfolio may invest up to 25% of its total assets in real estate investment trusts (REITs) and up to 30% of its total assets in foreign securities. There is a risk that “value” stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the markets for long periods of time. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• credit risk

• foreign investment risk

• interest rate risk

• leveraging risk

• management risk

• market risk

Zero Coupon Bond Portfolio 2005

Investment Objective: highest predictable compound investment for a specific period of time, consistent with safety of invested capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in debt obligations of the United States Treasury and corporations that have been issued without interest coupons or have been stripped of their interest coupons, or have interest coupons that have been stripped from the debt obligations. On the Portfolio’s liquidation date, the Portfolio will redeem all investments. Please refer to your Contract prospectus for information on your reallocation options and the Portfolio to which your investment will be transferred if you do not provide other instructions. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• interest rate risk

• management risk

• market risk

Note: The Zero Coupon Bond Portfolio 2005 will liquidate as of November 15, 2005. On the liquidation date, all of the securities held by the Portfolio will be sold and all outstanding shares of the Portfolio will be redeemed. Please consult your contract prospectus for information on reallocation options and the Portfolio to which your investment will be transferred if you do not provide other instructions.

SP AIM Core Equity Portfolio

Investment Objective: growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in equity securities, including convertible securities of established companies that have long-term above-average growth in earnings and growth companies that the portfolio managers believe have the potential for above-average growth in earnings. In complying with this 80% requirement, the Portfolio’s investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the Portfolio’s direct investments and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts (ADRs). The portfolio manager considers whether to sell a particular security when they believe the security no longer has that potential or the capacity to generate income. The Portfolio may invest up to 20% of its total assets in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• credit risk

• derivatives risk

• foreign investment risk

• interest rate risk

• liquidity risk

• leveraging risk

• management risk

• market risk

SP AllianceBernstein Large Cap Growth Portfolio (formerly, SP Alliance Large Cap Growth Portfolio)

Investment Objective: long term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in stocks of companies considered to have large capitalizations (i.e., similar to companies included in the S&P 500 Index). Up to 15% of the Portfolio’s total assets may be invested in foreign securities. Unlike most equity funds, the Portfolio focuses on a relatively small number of intensively researched companies. From a research universe of more than 500 companies, Alliance Capital Management L.P. (AllianceBernstein) selects the Portfolio’s investments from those companies that have strong management, superior industry positions, excellent balance sheets, and superior earnings growth prospects. “Alliance”, “Alliance Capital”, “AllianceBernstein” and their logos are registered marks of Alliance Capital Management L.P. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

SP Davis Value Portfolio

Investment Objective: growth of capital.

We invest primarily in common stock of U.S. companies with market capitalizations of at least $5 billion. The portfolio managers use the investment philosophy of Davis Advisors to perform extensive research to buy companies with expanding earnings at value prices and hold them for the long-term. They look for companies with sustainable growth rates selling at modest price-earnings multiples that they hope will expand as other investors recognize the company’s true worth. The portfolio managers believe

that if you combine a sustainable growth rate with a gradually expanding multiple, these rates compound and can generate returns that could exceed average returns earned by investing in large capitalization domestic stocks. They consider selling a company if the company no longer exhibits the characteristics that they believe foster sustainable long-term growth, minimize risk and enhance the potential for superior long-term returns. There is a risk that “value” stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the markets for long periods of time. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• foreign company risk

• leveraging risk

• management risk

• market risk

SP Goldman Sachs Small Cap Value Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in small capitalization companies. The 80% requirement applies at the time the Portfolio invests its assets. The Portfolio generally defines small capitalization stocks as stocks of companies with a capitalization of $4 billion or less. The Portfolio may invest up to 25% of its assets in foreign securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• portfolio turnover risk

• smaller company risk

SP Large Cap Value Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stocks and securities convertible into common stock of companies. The Portfolio generally defines large capitalization companies as those with a total market capitalization of $5 billion or more (measured at the time of purchase). While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• portfolio turnover risk

• style risk

SP LSV International Value Portfolio (formerly, SP Deutsche International Equity Portfolio)

Investment Objective: long-term capital appreciation.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus borrowings made for investment purposes) in the stocks and other equity securities of companies in developed countries outside the United States that are represented

in the MSCI EAFE Index. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money. This Portfolio is advised by LSV Asset Management (LSV).

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

SP Mid Cap Growth Portfolio

Investment Objective: long-term growth of capital.

We invest, under normal market conditions, at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts for those securities. These securities typically are of medium market capitalizations, which Calamos Advisors LLC (Calamos) believes have above-average growth potential. Medium market capitalization companies are defined by the Portfolio as companies with market capitalizations equaling or exceeding $250 million but not exceeding the top of the Russell Midcap ^™ Growth Index range at the time of the Portfolio’s investment. This Index is a widely recognized, unmanaged index of mid cap common stock prices. Companies whose market capitalizations fall below $250 million or exceed the top of the Russell Midcap ^™ Growth Index range after purchase continue to be considered medium-capitalization companies for purposes of the Portfolio’s 80% investment policy. The Portfolio’s investments may include securities listed on a securities exchange or traded in the over-the-counter markets. Calamos uses a bottom-up and top-down analysis in managing the Portfolio. This means that securities are selected based upon fundamental analysis (such as an analysis of earnings, cash flows, competitive position and management’s abilities), as well as top-down approach of diversification by industry and company and paying attention to macro-level investment themes. The Portfolio may invest in foreign securities (including emerging markets securities). The Portfolio is expected to engage in active and frequent trading to achieve its principal investment strategies. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• portfolio turnover risk

SP PIMCO High Yield Portfolio

Investment Objective: maximum total return, consistent with preservation of capital and prudent investment management.

We invest under normal circumstances at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in a diversified portfolio of high yield/high risk securities rated below investment grade but rated at least CCC by Moody’s Investor Service, Inc. (Moody’s) or Standard & Poor’s Ratings Group (S&P), or, if unrated, determined by Pacific Investment Management Company (PIMCO) to be of comparable quality, subject to a maximum of 5% of total Portfolio assets invested in securities rated CCC. The remainder of the Portfolio’s assets may be invested in investment grade fixed income instruments. The duration of the Portfolio normally varies within a two- to six-year time frame based on PIMCO’s forecast for interest rates. The Portfolio may invest without limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio may invest up to 15% of its assets in non-U.S.-denominated securities. The Portfolio normally will hedge at least 75% of its exposure to foreign curency to reduce the risk of loss due to fluctuations in currency exchange rates. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• liquidity risk

• management risk

• market risk

• prepayment risk

SP PIMCO Total Return Portfolio

Investment Objective: maximum total return, consistent with preservation of capital and prudent investment management.

We invest under normal circumstances at least 65% of its assets in a diversified portfolio of fixed income instruments of varying maturities. The portfolio duration of this Portfolio normally varies within a three- to six-year time frame based on PIMCO’s forecast for interest rates. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• credit risk

• derivatives risk

• foreign investment risk

• high yield risk

• interest rate risk

• leveraging risk

• management risk

• market risk

• prepayment risk

SP Prudential U.S. Emerging Growth Portfolio

Investment Objective: long-term capital appreciation.

We invest under normal circumstances at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in equity securities of small and medium-sized U.S. companies that Jennison Associates LLC believes have the potential for above-average growth. The Portfolio also may use derivatives for hedging or to improve the Portfolio’s returns. The Portfolio may actively and frequently trade its portfolio securities. High portfolio turnover results in higher transaction costs and can affect the Portfolio’s performance. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• portfolio turnover risk

SP Small Cap Growth Portfolio (formerly, SP State Street Research Small Cap Growth Portfolio)

Investment Objective: long-term capital growth.

We normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in common stocks of Small Capitalization companies. The fund considers a company to be a Small Capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000 Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. We are primarily looking for companies in the developing stages of their life cycles, which are currently priced below our estimation of their potential, have earnings which may be expected to grow faster than the U.S. economy in general, and/or offer the potential for accelerated earnings growth due to rapid growth of sales, new products, management changes, and/or structural changes in the economy. Investments in small, developing companies carry greater risk than investments in larger, more established companies.

While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money. This Portfolio is advised by Neuberger Berman Asst Management and Eagle Asset Management.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• smaller company risk

SP Strategic Partners Focused Growth Portfolio

Investment Objective: long-term growth of capital.

We normally invest at least 65% of the Portfolio’s total assets in equity-related securities of U.S. companies that the adviser believes to have strong capital appreciation potential. The Portfolio’s strategy is to combine the efforts of two investment advisers and to invest in the favorite stock selection ideas of three portfolio managers (two of whom invest as a team). Each investment adviser to the Portfolio utilizes a growth style to select approximately 20 securities. The portfolio managers build a portfolio with stocks in which they have the highest confidence and may invest more than 5% of the Portfolio’s assets in any one issuer. The Portfolio is nondiversified, meaning it can invest a relatively high percentage of its assets in a small number of issuers. Investing in a nondiversified portfolio, particularly a portfolio investing in approximately 40 equity-related securities, involves greater risk than investing in a diversified portfolio because a loss resulting from the decline in the value of one security may represent a greater portion of the total assets of a nondiversified portfolio. The Portfolio may actively and frequently trade its portfolio securities. While we make every effort to achieve our objective, we cannot guarantee success and it is possible that you could lose money. This Portfolio is advised by Jennison Associates LLC and Alliance Capital Management L.P.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

• portfolio turnover risk

SP William Blair International Growth Portfolio

Investment Objective: long-term growth of capital.

We invest primarily in equity-related securities of foreign issuers. This means the Portfolio looks for investments that William Blair & Company thinks will increase in value over a period of years. The Portfolio invests primarily in the common stock of large and medium-sized foreign companies. Under normal circumstances, the Portfolio invests at least 65% of its total assets in common stock of foreign companies operating or based in at least five different countries. The Portfolio looks primarily for stocks of companies whose earnings are growing at a faster rate than other companies. These companies typically have characteristics such as above average growth in earnings and cash flow, improving profitability, strong balance sheets, management strength and strong market share for its products. The Portfolio also tries to buy such stocks at attractive prices in relation to their growth prospects. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money. This Portfolio is advised by William Blair & Company LLC.

Principal Risks:

• company risk

• derivatives risk

• foreign investment risk

• leveraging risk

• management risk

• market risk

SP Aggressive Growth Asset Allocation Portfolio

Investment Objective: capital appreciation by investing in domestic equity Portfolios and international equity Portfolios.

Pertinent risks are those associated with each Portfolio in which this Portfolio invests. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

The SP Aggressive Growth Asset Allocation Portfolio currently invests in shares of the following Fund Portfolios:

• a domestic equity component (approximately 72% of the Portfolio), invested in shares of:

Jennison Portfolio		(32% of Portfolio)
SP Large Cap Value Portfolio		(35% of Portfolio)
SP Small Cap Growth Portfolio		(3% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(2% of Portfolio)

• an international equity component (approximately 28% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(14%of Portfolio)
SP William Blair International Growth Portfolio		(14%of Portfolio)

For more information on the underlying Portfolios, please refer to their investment summaries included in this prospectus.

SP Balanced Asset Allocation Portfolio

Investment Objective: to provide a balance between current income and growth of capital by investing in domestic equity Portfolios, fixed income Portfolios, and international equity Portfolios.

The SP Balanced Asset Allocation Portfolio currently invests in shares of the following Portfolios:

• a domestic equity component (approximately 45% of the Portfolio), invested in shares of:

Jennison Portfolio		(20% of Portfolio)
SP Large Cap Value Portfolio		(22% of Portfolio)
SP Small Cap Growth Portfolio		(1.5% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1.5% of Portfolio)

• a fixed income component (approximately 37% of the Portfolio), invested in shares of:

SP PIMCO Total Return Portfolio		(30% of Portfolio)
SP PIMCO High Yield Portfolio		(3% of Portfolio)
Money Market Portfolio		(4% of Portfolio)

• an international equity component (approximately 18% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(9% of Portfolio)
SP William Blair International Growth Portfolio		(9% of Portfolio)

For more information on the underlying Portfolios, please refer to their investment summaries included in this prospectus.

SP Conservative Asset Allocation Portfolio

Investment Objective: to provide current income with low to moderate capital appreciation by investing in domestic equity Portfolios, fixed income Portfolios, and international equity Portfolios.

The SP Conservative Asset Allocation Portfolio currently invests in shares of the following Portfolios:

• a domestic equity component (approximately 31% of the Portfolio), invested in shares of:

Jennison Portfolio		(13% of Portfolio)
SP Large Cap Value Portfolio		(16% of Portfolio)

SP Small Cap Growth Portfolio		(1% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1% of Portfolio)

• a fixed income component (approximately 57% of the Portfolio), invested in shares of:

SP PIMCO Total Return Portfolio		(47% of Portfolio)
SP PIMCO High Yield Portfolio		(3% of Portfolio)
Money Market Portfolio		(7% of Portfolio)

• an international equity component (approximately 12% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(6% of Portfolio)
SP William Blair International Growth Portfolio		(6% of Portfolio)

For more information on the underlying Portfolios, please refer to their investment summaries included in this prospectus.

SP Growth Asset Allocation Portfolio

Investment Objective: provide long-term growth of capital with consideration also given to current income, by investing in domestic equity Portfolios, fixed income Portfolios, and international equity Portfolios.

The Growth Asset Allocation Portfolio currently invests in shares of the following Portfolios:

• a domestic equity component (approximately 59% of the Portfolio), invested in shares of:

Jennison Portfolio		(26% of Portfolio)
SP Large Cap Value Portfolio		(29% of Portfolio)
SP Small Cap Growth Portfolio		(2.5% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1.5% of Portfolio)

• a fixed income component (approximately 18% of the Portfolio), invested in shares of:

SP PIMCO High Yield Portfolio		(3% of Portfolio)
SP PIMCO Total Return Portfolio		(15% of Portfolio)

• an international equity component (approximately 23% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(11.5% of Portfolio)
SP William Blair International Growth Portfolio		(11.5% of Portfolio)

For more information on the underlying Portfolios, please refer to their investment summaries included in this prospectus.

PRINCIPAL RISKS

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

Company risk. The price of the stock of a particular company can vary based on a variety of factors, such as the company’s financial performance, changes in management and product trends, and the potential for takeover and acquisition. This is especially true with respect to equity securities of smaller companies, whose prices may go up and down more than equity securities of larger, more established companies. Also, since equity securities of smaller companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for a Portfolio to sell securities at a desirable price. Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

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

Derivatives risk. Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, interest rate or index. The Portfolios typically use derivatives as a substitute for taking a position in the underlying asset and/or

as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. A Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. A Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mis-pricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. A Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances.

Foreign investment risk. Investing in foreign securities generally involves more risk than investing in securities of U.S. issuers. Foreign investment risk includes the specific risks described below:

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

Emerging market risk. To the extent that a Portfolio invests in emerging markets to enhance overall returns, it may face higher political, information, and stock market risks. In addition, profound social changes and business practices that depart from norms in developed countries’ economies have sometimes hindered the orderly growth of emerging economies and their stock markets in the past. High levels of debt may make emerging economies heavily reliant on foreign capital and vulnerable to capital flight.

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

Information risk. Financial reporting standards for companies based in foreign markets usually differ from those in the United States. Since the “numbers” themselves sometimes mean different things, the sub-advisers devote much of their research effort to understanding and assessing the impact of these differences upon a company’s financial conditions and prospects.

Liquidity risk. Stocks that trade less can be more difficult or more costly to buy, or to sell, than more liquid or active stocks. This liquidity risk is a factor of the trading volume of a particular stock, as well as the size and liquidity of the entire local market. On the whole, foreign exchanges are smaller and less liquid than the U.S. market. This can make buying and selling certain shares more difficult and costly. Relatively small transactions in some instances can have a disproportionately large effect on the price and supply of shares. In certain situations, it may become virtually impossible to sell a stock in an orderly fashion at a price that approaches an estimate of its value.

Political developments. Political developments may adversely affect the value of a Portfolio’s foreign securities.

Political risk. Some foreign governments have limited the outflow of profits to investors abroad, extended diplomatic disputes to include trade and financial relations, and imposed high taxes on corporate profits.

Regulatory risk . Some foreign governments regulate their exchanges less stringently, and the rights of shareholders may not be as firmly established.

Growth stock risk. Investors often expect growth companies to increase their earnings at a certain rate. If these expectations are not met, investors can punish the stocks inordinately, even if earnings do increase. In addition, growth stocks typically lack the dividend yield that can cushion stock prices in market downturns.

High yield risk. Portfolios that invest in high yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”) may be subject to greater levels of interest rate, credit and liquidity risk than Portfolios that do not invest in such securities. High yield securities are considered predominantly speculative with respect to the issuer’s continuing ability to make principal and interest payments. An economic downturn or period of rising interest rates could adversely affect the market for high yield securities and reduce a Portfolio’s ability to sell its high yield securities (liquidity risk).

Industry/sector risk. Portfolios that invest in a single market sector or industry can accumulate larger positions in single issuers or an industry sector. As a result, the Portfolio’s performance may be tied more directly to the success or failure of a smaller group of portfolio holdings.

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

Initial public offering (IPO) risk. The prices of securities purchased in initial public offerings (IPOs) can be very volatile. The effect of IPOs on the performance of a Portfolio depends on a variety of factors, including the number of IPOs the Portfolio invests in relative to the size of the Portfolio and whether and to what extent a security purchased in an IPO appreciates or depreciates in value. As a Portfolio’s asset base increases, IPOs often have a diminished effect on a Portfolio’s performance.

Leveraging risk. Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward commitment contracts. The use of derivatives may also create leveraging risks. To mitigate leveraging risk, a sub-adviser can segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause a Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leveraging tends to exaggerate the effect of any increase or decrease in the value of a Portfolio’s securities.

Liquidity risk. Liquidity risk exists when particular investments are difficult to purchase or sell. A Portfolio’s investments in illiquid securities may reduce the returns of the Portfolio because it may be unable to sell the illiquid securities at an advantageous time or price. Portfolios with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risk.

Management risk. Actively managed investment portfolios are subject to management risk. Each sub-adviser will apply investment techniques and risk analyses in making investment decisions for the Portfolios, but there can be no guarantee that these will produce the desired results.

Market risk. Common stocks are subject to market risk stemming from factors independent of any particular security. Investment markets fluctuate. All markets go through cycles and market risk involves being on the wrong side of a cycle. Factors affecting market risk include political events, broad economic and social changes, and the mood of the investing public. You can see market risk in action during large drops in the stock market. If investor sentiment turns gloomy, the price of all stocks may decline. It may not matter that a particular company has great profits and its stock is selling at a relatively low price. If the overall market is dropping, the values of all stocks are likely to drop. Generally, the stock prices of large companies are more stable than the stock prices of smaller companies, but this is not always the case. Smaller companies often offer a smaller range of products and services than large companies. They may also have limited financial resources and may lack management depth. As a result, stocks issued by smaller companies may fluctuate in value more than the stocks of larger, more established companies.

Mortgage risk. A Portfolio that purchases mortgage related securities is subject to certain additional risks. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. As a result, in a period of rising interest rates, a Portfolio that holds mortgage-related securities may exhibit additional volatility. This is known as extension risk. In addition, mortgage-related securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the returns of a Portfolio because the Portfolio will have to reinvest that money at the lower prevailing interest rates.

Portfolio turnover risk. A Portfolio’s investments may be bought and sold relatively frequently. A high turnover rate may result in higher brokerage commissions and taxable capital gain distributions to a Portfolio’s shareholders.

Prepayment risk. A Portfolio that purchases mortgage-related securities or asset-backed securities is subject to additional risks. The underlying mortgages or assets may be prepaid, partially or completely, generally during periods of falling interest rates, which could adversely affect yield to maturity and could require the Portfolio to reinvest in lower yielding securities.

Short sale risk. A Portfolio that enters into short sales, which involves selling a security it does not own in anticipation that the security’s price will decline, expose the Portfolio to the risk that it will be required to buy the security sold short (also known as “covering” the short position) at a time when the security has appreciated in value, thus resulting in a loss to the Portfolio.

Smaller company risk. The shares of smaller companies tend to trade less frequently than those of larger, more established companies, which can have an adverse effect on the pricing of these securities and on a Portfolio’s ability to sell these securities. In the case of small cap technology companies, the risks associated with technology companies (see technology company risk below) are magnified.

EVALUATING PERFORMANCE

Conservative Balanced Portfolio

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

Best Quarter		Worst Quarter
10.14% (2 ^nd quarter of 2003)		-8.18% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	8.04	%	2.64	%	7.36	%
S&P 500 Index**	10.87	%	- 2.30	%	12.07	%
Conservative Balanced Custom Blended Index***	7.33	%	2.49	%	9.84	%
Lipper Variable Insurance Products (VIP) Balanced Average****	8.55	%	2.96	%	9.27	%

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

***The Conservative Balanced Custom Blended Index consists of the S&P 500 Index (50%), the Lehman Brothers Aggregate Bond Index (40%) and the T-Bill 3-Month Blend (10%). These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses.

Diversified Bond Portfolio

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

Best Quarter		Worst Quarter
7.32% (2 ^nd quarter of 1995)		- 2.54% (2 ^nd quarter of 2004)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	5.59	%	7.36	%	7.58	%
Lehman Brothers Aggregate Bond Index**	4.34	%	7.71	%	7.72	%
Lipper Variable Insurance Products (VIP) Corporate Debt Funds BBB Average***	5.18	%	7.70	%	7.86	%

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

**The Lehman Brothers Aggregate Bond Index is comprised of more than 5,000 government and corporate bonds. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses.

***The Lipper Average is calculated by Lipper Analytical Services, Inc. and reflects the return of certain portfolios underlying variable life and annuity products. The returns are net of investment fees and fund expenses but not product charges. These returns would have been lower if they included the effect of product charges.

Diversified Conservative Growth Portfolio

Best Quarter		Worst Quarter
9.78% (2nd quarter of 2003)		- 7.46% (3rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5-Year		Since Inception (5/3/99)
Class I Shares	9.56	%	5.44	%	5.89	%
S&P 500 Index**	10.87	%	- 2.30	%	- 0.21	%
Diversified Conservative Growth Custom Blended Index***	9.10	%	4.89	%	5.05	%
Lipper Variable Insurance Products (VIP) Income Funds Average****	8.47	%	4.60	%	4.10	%

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

***The Diversified Conservative Growth Custom Blended Index consists of the Standard & Poor’s Barra Value Index (15%), the Standard & Poor’s Barra Growth Index (15%), the Russell 2000 Value Index (5%), the Russell 2000 Growth Index (5%), the Lehman Brothers Aggregate Bond Index (40%), and the Lehman Brothers High Yield Bond Index (20%). These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

Equity Portfolio

Best Quarter		Worst Quarter
16.81% (2nd quarter of 2003)		- 17.48% (3rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years		Since Class II Inception (5/3/99)
Class I Shares	9.93	%	0.61	%	9.42	%	11.49	%
Class II Shares	9.51	%	0.20	%	N/A		0.06	%
S&P 500 Index**	10.87	%	- 2.30	%	12.07	%	- 0.21	%
Russell 1000 Index***	11.40	%	- 1.76	%	12.16	%	0.35	%
Lipper Variable Insurance Products (VIP) Large Cap Core Funds Average****	8.59	%	- 2.88	%	9.72	%	- 0.62	%

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

***The Russell 1000 Index consists of the 1000 largest securities in the Russell 3000 Index. The Russell 3000 Index consists of the 3000 largest companies, as determined by market capitalization. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

Flexible Managed Portfolio

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

Best Quarter		Worst Quarter
12.31% (2 ^nd quarter of 2003)		- 11.45% (3rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	10.74	%	2.14	%	8.19	%
S&P 500 Index**	10.87	%	- 2.30	%	12.07	%
Flexible Managed Custom Blended Index***	8.14	%	1.73	%	10.46	%
Lipper Variable Insurance Products (VIP) Flexible Portfolio Funds Average****	8.25	%	3.04	%	10.00	%

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

***The Flexible Managed Custom Blended Index consists of the S&P 500 Index (60%), the Lehman Brothers Aggregate Bond Index (35%) and the T-Bill 3-Month Blend (5%). These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses.

Global Portfolio

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

Best Quarter		Worst Quarter
31.05% (4th quarter of 1999)		- 21.45% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	9.59	%	- 5.70	%	7.45	%
MSCI World Index**	14.72	%	- 2.45	%	8.09	%
Lipper Variable Insurance Products (VIP) Global Funds Average***	15.69	%	- 1.81	%	9.62	%

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

**The Morgan Stanley Capital International World Index (MSCI World Index) is a weighted index comprised of approximately 1,500 companies listed on the stock exchanges of the U.S., Europe, Canada, Australia, New Zealand and the Far East. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses.

Government Income Portfolio

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

Best Quarter		Worst Quarter
6.72% (2nd quarter of 1995)		-2.61% (1st quarter of 1996)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	3.12	%	7.61	%	7.45	%
Lehman Brothers Government Bond Index**	3.48	%	7.48	%	7.46	%
Lipper Variable Insurance Products (VIP) General U.S. Government Funds Average***	3.92	%	7.02	%	6.88	%

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

**The Lehman Brothers Government Bond Index is a weighted index comprised of securities issued or backed by the U.S. Government, its agencies and instrumentalities with a remaining maturity of one to 30 years. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses.

High Yield Bond Portfolio

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

Best Quarter		Worst Quarter
8.91% (2nd quarter of 2003)		-9.50% (3 ^rd quarter of 1998)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	10.30	%	5.12	%	6.92	%
Lehman Brothers Corporate High Yield Bond Index**	11.13	%	6.97	%	8.13	%
Lipper Variable Insurance Products (VIP) High Current Yield Funds Average***	9.84	%	4.78	%	6.95	%

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

Jennison Portfolio

Best Quarter		Worst Quarter
29.46% (4 ^th quarter of 1998)		-19.83% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		Since Class I Inception (4/25/95)		Since Class II Inception (2/10/00)
Class I Shares	9.63	%	-7.81	%	9.75	%	N/A
Class II Shares	9.22	%	N/A		N/A		-9.39	%
S&P 500 Index**	10.87	%	-2.30	%	11.10	%	-1.31	%
Russell 1000 Growth Index***	6.30	%	-9.29	%	8.67	%	-8.55	%
Lipper Variable Insurance Products (VIP) Large Cap Growth Funds Average****	8.04	%	-7.58	%	8.65	%	-7.03	%

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

***The Russell 1000 Growth Index consists of those securities included in the Russell 1000 Index that have a greater-than-average growth orientation. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

Jennison 20/20 Focus Portfolio

Best Quarter		Worst Quarter
13.96% (2 ^nd quarter of 2003)		-18.81% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		Since Class I Inception (5/3/99)		Since Class II Inception (2/15/00)
Class I Shares	15.94	%	1.77	%	4.71	%	N/A
Class II Shares	15.38	%	N/A		N/A		2.32	%
S&P 500 Index**	10.87	%	-2.30	%	-0.21	%	-0.94	%
Russell 1000 Index***	11.40	%	-1.76	%	0.35	%	-0.91	%
Lipper Variable Insurance Products (VIP) Large Cap Core Funds Average****	8.59	%	-2.88	%	-0.62	%	-2.23	%
Lipper Variable Insurance Products (VIP) Multi Cap Core Funds Average****	12.06	%	0.04	%	2.29	%	0.46	%

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

****The Lipper Average is calculated by Lipper Analytical Services, Inc. and reflects the return of certain portfolios underlying variable life and annuity products. The returns are net of investment fees and fund expenses but not product charges. These returns would have been lower if they included the effect of product charges. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio. Although Lipper classifies the Portfolio in the Multi Cap Core Funds Average, the returns for the Large Cap Core Funds Average are also shown, because the management of the portfolios in the Large Cap Core Funds Average is more consistent with the management of the Portfolio.

Money Market Portfolio

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

Best Quarter		Worst Quarter
1.59% (3 ^rd quarter of 2000)		0.18% (4 ^th quarter of 2003)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	1.01	%	2.71	%	4.03	%
Lipper Variable Insurance Products (VIP) Money Market Funds Average**	0.83	%	2.49	%	3.82	%

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

**The Lipper Average is calculated by Lipper Analytical Services, Inc. and reflects the return of certain portfolios underlying variable life and annuity products. The returns are net of investment fees and fund expenses but not product charges. These returns would have been lower if they included the effect of product charges.

7-Day Yield* (as of 12/31/04)

Money Market Portfolio		1.95	%
Average Money Market Fund**		1.40	%

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

**Source: iMoneyNet, Inc. as of 12/28/04, based on the iMoneyNet Prime Retail Universe.

Natural Resources Portfolio

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

Best Quarter		Worst Quarter
24.94% (2 ^nd quarter of 1999)		-21.60% (4 ^th quarter of 1997)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	25.17	%	20.69	%	16.36	%
S&P 500 Index**	10.87	%	-2.30	%	12.07	%
Lipper Variable Insurance Products (VIP) Natural Resources Funds Average***	20.32	%	12.73	%	9.98	%

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

Small Capitalization Stock Portfolio

Best Quarter		Worst Quarter
20.50% (4 ^th quarter of 2001)		-20.61% (3 ^rd quarter of 1998)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		Since Inception (4/25/95)
Class I Shares	22.04	%	11.32	%	13.59	%
S&P SmallCap 600 Index**	22.65	%	11.60	%	14.01	%
Lipper Variable Insurance Products (VIP) SmallCap Core Funds Average***	17.47	%	7.82	%	12.61	%

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

**The Standard & Poor’s SmallCap 600 Index (S&P SmallCap 600 Index) is a capital-weighted index representing the aggregate market value of the common equity of 600 small company stocks. The S&P SmallCap 600 Index is an unmanaged index that includes the reinvestment of all dividends but does not reflect the payment of transaction costs and advisory fees associated with an investment in the Portfolio. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

Stock Index Portfolio

Best Quarter		Worst Quarter
21.44% (4 ^th quarter of 1998)		-17.25% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	10.45	%	-2.50	%	11.78	%
S&P 500 Index**	10.87	%	-2.30	%	12.07	%
Lipper Variable Insurance Products (VIP) S&P 500 Objective Funds Average***	10.35	%	-2.64	%	11.69	%

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

Value Portfolio

Best Quarter		Worst Quarter
17.01% (2 ^nd quarter of 2003)		-20.44% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years		Since Class II Inception (5/14/01)
Class I Shares	16.31	%	5.64	%	11.33	%	N/A
Class II Shares	15.83	%	N/A		N/A		2.61	%
S&P 500 Index**	10.87	%	-2.30	%	12.07	%	0.84	%
Russell 1000 Value Index***	16.49	%	5.27	%	13.83	%	5.65	%
Lipper Variable Insurance Products (VIP) Large Cap Value Funds Average****	11.53	%	4.00	%	11.20	%	2.53	%
Lipper Variable Insurance Products (VIP) Multi Cap Value Funds Average****	14.62	%	5.42	%	11.18	%	4.36	%

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

***The Russell 1000 Value Index consists of those securities included in the Russell 1000 Index that have a less-than-average growth orientation. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

Zero Coupon Bond Portfolio 2005

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

Best Quarter		Worst Quarter
12.13% (2 ^nd quarter of 1995)		-6.17% (1 ^st quarter of 1996)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		5 Years		10 Years
Class I Shares	0.57	%	6.83	%	7.90	%
Lehman Brothers Government Bond Index**	3.48	%	7.48	%	7.46	%
Lipper Variable Insurance Products (VIP) Target Maturity Funds Average***	3.05	%	8.94	%	8.95	%

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

**The Lehman Brothers Government Bond Index (LGI) is a weighted index made up of securities issued or backed by the U.S. Government, its agencies and instrumentalities with a remaining maturity of one to 30 years. The LGI is an unmanaged index and includes the reinvestment of all interest but does not reflect the payment of transaction costs and advisory fees associated with an investment in the Portfolio. These returns would have been lower if they included the effect of these expenses.

SP AIM Core Equity Portfolio

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

Best Quarter		Worst Quarter
14.69% (2 ^nd quarter of 2003)		-21.41% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	8.79	%	-6.70	%
S&P 500 Index**	10.87	%	-2.38	%
Russell 1000 Index***	11.40	%	-2.40	%
Lipper Variable Insurance Products (VIP) Large Cap Core Funds Average****	8.59	%	-3.75	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 1000 Index consists of the 1000 largest companies included in the Russell 3000 Index. The Russell 3000 Index consists of the 3000 largest companies, as determined by market capitalization. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP AllianceBernstein Large Cap Growth Portfolio (formerly, SP Alliance Large Cap Growth Portfolio)

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

Best Quarter		Worst Quarter
14.58% (4 ^th quarter of 2001)		-16.82% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	6.10	%	-9.20	%
Russell 1000 Index**	11.40	%	-2.40	%
Russell 1000 Growth Index***	6.30	%	-10.55	%
Lipper Variable Insurance Products (VIP) Large Cap Growth Funds Average****	8.04	%	-9.53	%

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

**The Russell 1000 Index consists of the 1000 largest companies in the Russell 3000 Index. The Russell 3000 Index consists of the 3000 largest companies, as determined by market capitalization. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 1000 Growth Index consists of those securities included in the Russell 1000 Index that have a greater-than-average growth orientation. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Davis Value Portfolio

Best Quarter		Worst Quarter
17.06% (2 ^nd quarter of 2003)		-13.69 (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	12.53	%	2.64	%
S&P 500 Index**	10.87	%	-2.38	%
Russell 1000 Value Index***	16.49	%	5.42	%
Lipper Variable Insurance Products (VIP) Multi Cap Value Funds Average****	14.62	%	5.01	%
Lipper Variable Insurance Products (VIP) Large Cap Value Funds Average****	11.53	%	3.85	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how stock prices have performed. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 1000 Value Index consists of those companies in the Russell 1000 Index that have a less-than-average growth orientation. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Goldman Sachs Small Cap Value Portfolio

Best Quarter		Worst Quarter
15.70% (2 ^nd quarter of 2003)		-19.18% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	20.69	%	11.27	%
Russell 2500 Index**	18.29	%	7.87	%
Russell 2000 Value Index***	22.25	%	17.00	%
Lipper Variable Insurance Products (VIP) Small Cap Value Funds Average****	20.64	%	15.97	%

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

**The Russell 2500 Index measures the performance of the 2,500 smallest companies in the Russell 3000 Index, which represents approximately 17% of the total market capitalization of the Russell 3000 Index. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 2000 Value Index measures the performance of Russell 2000 companies with higher price-to-book ratios. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Large Cap Value Portfolio

Best Quarter		Worst Quarter
15.25% (2 ^nd quarter of 2003)		-17.90% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	17.75	%	4.26	%
Russell 1000 Index**	11.40	%	-2.40	%
Russell 1000 Value Index***	16.49	%	5.42	%
Lipper Variable Insurance Products (VIP) Large- Cap Value Funds Average****	11.53	%	3.85	%
Lipper Variable Insurance Products (VIP) Multi Cap Cap Value Funds Average****	14.62	%	5.01	%

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

***The Russell 1000 Value Index measures the performance of those Russell 1000 companies that have a less-than-average growth orientation. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP LSV International Value Portfolio (formerly, SP Deutsche International Equity Portfolio)

Best Quarter		Worst Quarter
15.48% (2 ^nd quarter of 2003)		-17.91% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	15.80	%	-2.37	%
MSCI EAFE Index**	20.25	%	1.63	%
Lipper Variable Insurance Products (VIP) International Value Funds Average***	20.75	%	4.22	%

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

**The Morgan Stanley Capital International (MSCI) Europe, Australia, Far East (EAFE) Index is a weighted, unmanaged index of performance that reflects stock price movements in Europe, Australasia, and the Far East. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Mid Cap Growth Portfolio

Best Quarter		Worst Quarter
29.37% (4 ^th quarter of 2001)		-33.97% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	19.55	%	-8.16	%
Russell Midcap Index**	20.22	%	6.06	%
Russell Midcap Growth Index***	15.48	%	-7.04	%
Lipper Variable Insurance Products (VIP) Mid Cap Growth Funds Average****	14.75	%	-7.35	%
Lipper Variable Insurance Products (VIP) Multi Cap Growth Funds Average****	10.40	%	-9.73	%

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

**The Russell Midcap Index consists of the 800 smallest securities in the Russell 1000 Index, as ranked by total market capitalization. These returns do not include the effect of investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell Midcap Growth Index consists of those securities in the Russell Midcap Index that have a greater-than-average growth orientation. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP PIMCO High Yield Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below demonstrate the risk of investing in the Portfolio by showing how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past performance does not mean that the Portfolio will achieve similar results in the future.

Best Quarter		Worst Quarter
8.00% (4 ^th quarter of 2002)		-4.15% (3 ^rd quarter of 2002)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	9.32	%	8.55	%
Merrill Lynch U.S. High Yield Master II BB-B Rated Index**	9.93	%	7.36	%
Lehman Brothers Intermediate BB Corporate Bond Index***	8.55	%	8.18	%
Lipper Variable Insurance Products (VIP) High Current Yield Funds Average****	9.84	%	6.04	%

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

**The Merrill Lynch U.S. High Yield Master II BB-B Rated Index is an unmanaged index that includes high yield bonds across the maturity spectrum, within the BB-B rated spectrum, included in the below-investment-grade universe. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Lehman Brothers Intermediate BB Corporate Bond Index is an unmanaged index comprised of various fixed income securities rated BB. The”Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP PIMCO Total Return Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below demonstrate the risk of investing in the Portfolio by showing how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past performance does not mean that the Portfolio will achieve similar results in the future.

Best Quarter		Worst Quarter
5.69% (3 ^rd quarter of 2001)		-2.04% (2 ^nd quarter of 2004)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	5.28	%	8.06	%
Lehman Brothers U.S. Aggregate Bond Index**	4.34	%	7.38	%
Lipper Variable Insurance Products (VIP) Intermediate Investment Grade Debt Funds Average***	4.22	%	7.05	%

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

**The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index comprised of more than 5,000 government and corporate bonds. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Prudential U.S. Emerging Growth Portfolio

Best Quarter		Worst Quarter
24.62% (2 ^nd quarter of 2003)		-27.97% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Class I Inception (9/22/00)		Since Class II Inception (7/9/01)
Class I Shares	21.39	%	-4.86	%	N/A
Class II Shares	21.01	%	N/A		1.50	%
S&P MidCap 400 Index**	16.48	%	6.19	%	8.48	%
Russell Midcap Growth Index***	15.48	%	-7.04	%	2.70	%
Lipper Variable Insurance Products (VIP) Mid Cap Growth Funds Average****	14.75	%	-7.35	%	0.11	%

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

**The Standard & Poor’s MidCap 400 Composite Stock Price Index (S&P MidCap 400 Index)—an unmanaged index of 400 domestic stocks chosen for market size, liquidity and industry group representation—gives a broad look at how mid cap stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell Midcap Growth Index consists of those securities in the Russell Midcap Index that have a greater-than-average growth orientation. The Russell Midcap Index consists of the 800 smallest securities in the Russell 1000 Index, as ranked by total market capitalization. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Small Cap Growth Portfolio (formerly, SP State Street Research Small Cap Growth Portfolio)

Best Quarter		Worst Quarter
25.50% (4 ^th quarter of 2001)		-26.36% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	-0.92	%	-9.71	%
Russell 2000 Index**	18.33	%	6.79	%
Russell 2000 Growth Index***	14.31	%	-3.55	%
Lipper Variable Insurance Products (VIP) Small Cap Growth Funds Average****	11.71	%	-4.23	%

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

**The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 2000 Growth Index consists of those companies in the Russell 2000 Index that have a greater-than-average growth orientation. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Strategic Partners Focused Growth Portfolio

Best Quarter		Worst Quarter
13.30% (4 ^th quarter of 2001)		-19.07% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Class I Inception (9/22/00)		Since Class II Inception (7/9/01)
Class I Shares	10.58	%	-7.99	%	N/A
Class II Shares	9.90	%	N/A		-5.07	%
S&P 500 Index**	10.87	%	-2.38	%	1.39	%
Russell 1000 Growth Index***	6.30	%	-10.55	%	-2.27	%
Lipper Variable Insurance Products (VIP) Large Cap Growth Funds Average****	8.04	%	-9.53	%	-1.76	%

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

**The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index)—an unmanaged index of 500 stocks of large U.S. companies—gives a broad look at how mid cap stock prices have performed. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

***The Russell 1000 Growth Index consists of those Russell 1000 securities that have a greater-than-average growth orientation. The Russell 1000 Index consists of the 1000 largest securities in the Russell 3000 Index. The Russell 3000 Index consists of the 3000 largest U.S. securities, as determined by total market capitalization. These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP William Blair International Growth Portfolio

Best Quarter		Worst Quarter
19.14% (2 ^nd quarter of 2003)		-20.59% (1 ^st quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Class I Inception (9/22/00)		Since Class II Inception (10/4/00)
Class I Shares	16.54	%	-8.35	%	N/A
Class II Shares	16.12	%	N/A		-8.29	%
MSCI EAFE Index**	20.25	%	1.63	%	1.63	%
Lipper Variable Insurance Products (VIP) International Growth Funds Average***	17.36	%	-3.37	%	-3.37	%

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

**The Morgan Stanley Capital International (MSCI) Europe, Australia, Far East (EAFE) Index is a weighted, unmanaged index of performance that reflects stock price movements in Europe, Australasia, and the Far East . These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Aggressive Growth Asset Allocation Portfolio

Best Quarter		Worst Quarter
17.65% (2 ^nd quarter of 2003)		-18.08% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	14.76	%	-2.21	%
S&P 500 Index**	10.87	%	-2.38	%
Aggressive Growth AA Custom Blended Index***	13.57	%	-1.05	%
Lipper Variable Insurance Products (VIP) Multi Cap Core Funds Average****	12.06	%	-1.11	%

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

***The Aggressive Growth AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2000 Value Index (17.5%), the Russell Midcap Growth Index (17.5%), and the MSCI EAFE Index (30%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Balanced Asset Allocation Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below demonstrate the risk of investing in the Portfolio by showing how the Portfolio’s average annual returns compare with market indexes and a group of similar mutual funds. Past performance does not mean that the Portfolio will achieve similar results in the future.

Best Quarter		Worst Quarter
11.68% (2 ^nd quarter of 2003)		-9.62% (3 ^rd quarter of 2001)

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	11.09	%	2.63	%
S&P 500 Index**	10.87	%	-2.38	%
Balanced AA Custom Blended Index***	9.89	%	2.65	%
Lipper Variable Insurance Products (VIP) Balanced Funds Average****	8.55	%	2.59	%

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

***The Balanced AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2500 Value Index (7.5%), the Russell Midcap Growth Index (7.5%), the Lehman Brothers Aggregate Bond Index (30%), the Lehman Brothers Intermediate BB Index (10%) and the MSCI EAFE Index (10%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Conservative Asset Allocation Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below demonstrate the risk of investing in the Portfolio by showing how the Portfolio’s average annual returns compare with market indexes and a group of similar mutual funds. Past performance does not mean that the Portfolio will achieve similar results in the future.

Best Quarter		Worst Quarter
8.59% ( 2 ^nd quarter of 2003 )		-5.30% ( 3 ^rd quarter of 2002 )

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	8.89	%	4.38	%
S&P 500 Index**	10.87	%	-2.38	%
Conservative AA Custom Blended Index***	8.04	%	4.34	%
Lipper Variable Insurance Products (VIP) Income Funds Average****	8.47	%	4.28	%

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

***The Conservative AA Custom Blended Index consists of the Russell 3000 Index (32%). Lehman Brothers U.S. Aggregate Bond Index (60%) and MSCI EAFE Index (8%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

SP Growth Asset Allocation Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below demonstrate the risk of investing in the Portfolio by showing how the Portfolio’s average annual returns compare with market indexes and a group of similar mutual funds. Past performance does not mean that the Portfolio will achieve similar results in the future.

Best Quarter		Worst Quarter
14.52% ( 2 ^nd quarter of 2003 )		-13.64% (3 ^rd quarter of 2001 )

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/04)

	1 Year		Since Inception (9/22/00)
Class I Shares	13.05	%	0.24	%
S&P 500 Index**	10.87	%	-2.38	%
Growth AA Custom Blended Index***	11.73	%	0.85	%
Lipper Variable Insurance Products (VIP) Multi Cap Core Funds Average****	12.06	%	-1.11	%

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

***The Growth AA Custom Blended Index consists of the Russell 1000 Value Index (17.5%), the Russell 1000 Growth Index (17.5%), the Russell 2500 Value Index (12.5%), the Russell Midcap Growth Index (12.5%) the Lehman Brothers Aggregate Bond Index (12.5%) the Lehman Brothers Intermediate BB Index (7.5%), and the MSCI EAFE Index (20%). These returns do not include the effect of any investment management expenses. These returns would have been lower if they included the effect of these expenses. The “Since Inception” return reflects the closest calendar month-end return to the inception date of the Portfolio.

FEES AND EXPENSES OF INVESTING IN THE PORTFOLIOS

Investors incur certain fees and expenses in connection with an investment in the Fund’s Portfolios. The following table shows the fees and expenses that you may incur if you invest in Class I shares of the Portfolios through a variable Contract. The table does not include Contract charges. Because Contract Charges are not included, the total fees and expenses that you will incur will be higher than the fees and expenses set forth in the following table. See the accompanying Contract prospectus for more information about Contract changes.

CLASS I SHARES

Annual Portfolio Operating Expenses

(expenses that are deducted from Portfolio assets)

	Shareholder Fees (fees paid directly from your investment)	Management Fees		Distribution (12b-1) Fees	Other Expenses		Total Annual Portfolio Operating Expenses
Conservative Balanced Portfolio	N/A	0.55	%	None	.04	%	.59	%
Diversified Bond Portfolio	N/A	0.40	%	None	.05	%	.45	%
Diversified Conservative Growth Portfolio	N/A	0.75	%	None	.22	%	.97	%
Equity Portfolio	N/A	0.45	%	None	.03	%	.48	%
Flexible Managed Portfolio	N/A	0.60	%	None	.02	%	.62	%
Global Portfolio	N/A	0.75	%	None	.09	%	.84	%
Government Income Portfolio	N/A	0.40	%	None	.07	%	.47	%
High Yield Bond Portfolio	N/A	0.55	%	None	.04	%	.59	%
Jennison Portfolio	N/A	0.60	%	None	.04	%	.64	%
Jennison 20/20 Focus Portfolio	N/A	0.75	%	None	.13	%	.88	%
Money Market Portfolio	N/A	0.40	%	None	.05	%	.45	%
Natural Resources Portfolio	N/A	0.45	%	None	.06	%	.51	%
Small Capitalization Stock Portfolio	N/A	0.40	%	None	.07	%	.47	%
Stock Index Portfolio	N/A	0.35	%	None	.03	%	.38	%
Value Portfolio	N/A	0.40	%	None	.04	%	.44	%
Zero Coupon Bond 2005 Portfolio	N/A	0.40	%	None	.23	%	.63	%
SP AIM Core Equity Portfolio*	N/A	0.85	%	None	.63	%	1.48	%
SP AllianceBernstein Large Cap Growth Portfolio	N/A	0.90	%	None	.17	%	1.07	%
SP Davis Value Portfolio	N/A	0.75	%	None	.07	%	.82	%
SP Goldman Sachs Small Cap Value Portfolio	N/A	0.90	%	None	.06	%	.96	%
SP Large Cap Value Portfolio	N/A	0.80	%	None	.06	%	.86	%
SP LSV International Value Portfolio*	N/A	0.90	%	None	.33	%	1.23	%
SP Mid Cap Growth Portfolio*	N/A	0.80	%	None	.26	%	1.06	%
SP PIMCO High Yield Portfolio	N/A	0.60	%	None	.08	%	.68	%
SP PIMCO Total Return Portfolio	N/A	0.60	%	None	.05	%	.65	%
SP Prudential U.S. Emerging Growth Portfolio	N/A	0.60	%	None	.18	%	.78	%
SP Small Cap Growth Portfolio	N/A	0.95	%	None	.14	%	1.09	%
SP Strategic Partners Focused Growth Portfolio*	N/A	0.90	%	None	.38	%	1.28	%
SP William Blair International Growth Portfolio	N/A	0.85	%	None	.17	%	1.02	%
SP Aggressive Growth Asset Allocation Portfolio	N/A	0.84	%**	None	.11	%	.95	%***
SP Balanced Asset Allocation Portfolio	N/A	0.76	%**	None	.09	%	.85	%***
SP Conservative Asset Allocation Portfolio	N/A	0.72	%**	None	.08	%	.80	%***
SP Growth Asset Allocation Portfolio	N/A	0.81	%**	None	.10	%	.91	%***

* The Portfolio’s total actual annual operating expenses for the year ended December 31, 2004 were less than the amount shown in the table due to fee waivers, reimbursement of expenses and expense offset arrangements. These waivers, reimbursements, and offset arrangements are voluntary and may be terminated by Prudential Investments LLC at any time. After accounting for the waivers, reimbursements and offset arrangements, the Portfolio’s actual annual operating expenses were 1.00% for SP AIM Core Equity Portfolio, 1.10% for SP LSV International Value Portfolio, 1.00% for SP Mid Cap Growth Portfolio, 1.01% for SP Strategic Partners Focused Growth Portfolio.

** Each Asset Allocation Portfolio invests only in shares of other underlying Fund Portfolios. The management fees shown for each Asset Allocation Portfolio is based on the weighted average of the management fees borne by the underlying Fund Portfolios according to the allocation percentage targets in place during 2004, plus a 0.05% annual management fee paid to Prudential Investments LLC. The only management fee directly paid by the Asset Allocation Portfolios is the 0.05% fee paid to Prudential Investments LLC.

*** Although the Asset Allocation Portfolios do not incur any expenses directly other than the 0.05% fee paid to Prudential Investments LLC, shareholders indirectly bear the expenses of the underlying Fund Portfolios in which the Asset Allocation Portfolios invest. The Total Annual Portfolio Operating Expenses figures shown include (a) management fees based on the weighted average of the management fees borne by the underlying Fund Portfolios according to the allocation percentage targets in place during 2004, (b) Other Expenses based on the weighted average of the Other Expenses of the underlying Fund Portfolios according to the allocation percentage targets in place during 2004, and (c) the 0.05% fee paid to Prudential Investments LLC.

The following table shows the fees and expenses that you may incur if you invest in Class II shares of the Portfolios through a variable Contract. The table does not include Contract charges. Because Contract Charges are not included, the total fees and expenses that you will incur will be higher than the fees and expenses set forth in the following table. See the accompanying Contract prospectus for more information about Contract charges.

CLASS II

Annual Portfolio Operating Expenses

(expenses that are deducted from Portfolio assets)

	Shareholder Fees (fees paid directly from your investment)	Management Fees		Distribution (12b-1) Fees		Other Expenses (1)		Total Annual Portfolio Operating Expenses
Equity Portfolio	N/A	0.45	%	0.25	%	.18	%	.88	%
Jennison Portfolio	N/A	0.60	%	0.25	%	.19	%	1.04	%
Jennison 20/20 Focus Portfolio	N/A	0.75	%	0.25	%	.28	%	1.28	%
Value Portfolio	N/A	0.40	%	0.25	%	.19	%	.84	%
SP Prudential U.S. Emerging Growth Portfolio	N/A	0.60	%	0.25	%	.33	%	1.18	%
SP Strategic Partners Focused Growth Portfolio*	N/A	0.90	%	0.25	%	.53	%	1.68	%
SP William Blair International Growth Portfolio	N/A	0.85	%	0.25	%	.32	%	1.42	%

(1) Includes 0.15% administration fee.

* The Portfolio’s total actual annual operating expenses for the year ended December 31, 2004 were less than the amount shown in the table due to fee waivers, reimbursement of expenses and expense offset arrangements. These waivers, reimbursements, and offset arrangements are voluntary and may be terminated by Prudential Investments LLC at any time. After accounting for the waivers, reimbursements and offset arrangements, the SP Strategic Partners Focused Growth Portfolio’s actual annual operating expenses were 1.41%.

Example

The following example, which reflects the Portfolio operating expenses listed in the preceding tables, is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The following example does not include the effect of Contract charges. Because Contract Charges are not included, the total fees and expenses that you will incur will be higher than the example set forth in the following table. For more information about Contract charges see the accompanying Contract prospectus.

The example assumes that you invest $10,000 in shares of the Portfolios for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the Portfolio’s operating expenses remain the same as in the prior tables. The figures shown would be the same whether or not you sold your shares at the end of each period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

CLASS I SHARES

	1 Year		3 Years		5 Years		10 Years
Conservative Balanced Portfolio	$	60	$	189	$	329	$	738
Diversified Bond Portfolio	46		144		252		567
Diversified Conservative Growth Portfolio	99		309		536		1,190
Equity Portfolio	49		154		269		604
Flexible Managed Portfolio	63		199		346		774
Global Portfolio	86		268		466		1,037
Government Income Portfolio	48		151		263		591
High Yield Bond Portfolio	60		189		329		738
Jennison Portfolio	65		205		357		798
Jennison 20/20 Focus Portfolio	90		281		488		1,084
Money Market Portfolio	46		144		252		567
Natural Resources Portfolio	52		164		285		640
Small Capitalization Stock Portfolio	48		151		263		591
Stock Index Portfolio	39		122		213		480
Value Portfolio	45		141		246		555
Zero Coupon Bond 2005 Portfolio	64		202		351		786
SP AIM Core Equity Portfolio	102		421		762		1,727
SP AllianceBernstein Large Cap Growth Portfolio	109		340		590		1,306
SP Davis Value Portfolio	84		262		455		1,014
SP Goldman Sachs Small Cap Value Portfolio	98		306		531		1,178
SP Large Cap Value Portfolio	88		274		477		1,061
SP LSV International Value Portfolio	112		377		663		1,477
SP Mid Cap Growth Portfolio	102		331		579		1,289
SP PIMCO High Yield Portfolio	69		218		379		847
SP PIMCO Total Return Portfolio	66		208		362		810
SP Prudential U.S. Emerging Growth Portfolio	80		249		433		966
SP Small Cap Growth Portfolio	111		347		601		1,329
SP Strategic Partners Focused Growth Portfolio	103		379		676		1,522
SP William Blair International Growth Portfolio	104		325		563		1,248
SP Aggressive Growth Asset Allocation Portfolio	96		302		525		1,165
SP Balanced Asset Allocation Portfolio	86		270		470		1,048
SP Conservative Asset Allocation Portfolio	81		254		443		989
SP Growth Asset Allocation Portfolio	92		289		503		1,119

CLASS II SHARES

	1 Year		3 Years		5 Years		10 Years
Equity Portfolio	$	90	$	281	$	488	$	1,084
Jennison Portfolio	106		331		574		1,271
Jennison 20/20 Focus Portfolio	130		406		702		1,545
Value Portfolio	86		268		466		1,037
SP Prudential U.S. Emerging Growth Portfolio	120		375		649		1,432
SP Strategic Partners Focused Growth Portfolio	144		503		887		1,964
SP William Blair International Growth Portfolio	145		449		776		1,702

MORE DETAILED INFORMATION ON HOW THE PORTFOLIOS INVEST

Investment Objectives and Policies

We describe each Portfolio’s investment objective and policies below. We describe certain investment instruments that appear in bold lettering below in the section entitled More Detailed Information About Other Investments and Strategies Used by the Portfolios. Although we make every effort to achieve each Portfolio’s objective, we can’t guarantee success and it is possible that you could lose money. Unless otherwise stated, each Portfolio’s investment objective is a fundamental policy that cannot be changed without shareholder approval. The Board of Directors can change investment policies that are not fundamental.

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

Conservative Balanced Portfolio

The investment objective of this Portfolio is to seek a total investment return consistent with a conservatively managed diversified portfolio. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We invest in equity, debt and money market securities in order to achieve diversification. We seek to maintain a conservative blend of investments that will have strong performance in a down market and solid, but not necessarily outstanding, performance in up markets. This Portfolio may be appropriate for an investor looking for diversification with less risk than that of the Flexible Managed Portfolio, while recognizing that this reduces the chances of greater appreciation.

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

Asset Type	Minimum		Normal		Maximum
Stocks	15	%	50	%	75	%
Debt obligations and money market securities	25	%	50	%	85	%

The equity portion of the Portfolio is generally managed as an index fund, designed to perform similarly to the holdings of the Standard & Poor’s 500 Composite Stock Price Index. For more information about the index and index investing, see the investment summary for Stock Index Portfolio included in this prospectus.

Debt securities are basically written promises to repay a debt. There are numerous types of debt securities which vary as to the terms of repayment and the commitment of other parties to honor the obligations of the issuer. Most of the securities in the debt portion of this Portfolio will be rated “investment grade.” This means major rating services, like Standard & Poor’s Ratings Group (S&P) or Moody’s Investors Service, Inc. (Moody’s), have rated the securities within one of their four highest rating categories. The Portfolio also invests in high quality money market instruments.

The Portfolio may also invest in lower-rated securities, which are riskier and are considered speculative. These securities are sometimes referred to as “junk bonds.” We may also invest in instruments that are not rated, but which we believe are of comparable quality to the instruments described above. The Portfolio’s investment in debt securities may include investments in mortgage-related securities.

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

We may also invest in fixed and floating rate loans (secured or unsecured) arranged through private negotiations between a corporation which is the borrower and one or more financial institutions that are the lenders. Generally, these types of investments are in the form of loans or assignments .

The Portfolio may invest in asset-backed securities . Up to 5% of the Portfolio’s assets may also be invested in collateralized debt obligations (CDOs) and other credit-related asset-backed securities.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, debt securities, stock indexes and foreign currencies

• Purchase and sell exchange-traded fund shares

• Purchase and sell stock index, interest rate, interest rate swap and foreign currency futures contracts and options on those contracts

• Forward foreign currency exchange contracts

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales. No more than 25% of the Portfolio’s net assets may be used as collateral or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-the-box .

• Swap agreements; including interest rate, credit default, currency exchange rate and total return swaps. The Portfolio may also invest in options on swaps .

• Credit-linked securities, , which may be linked to one or more underlying credit default swaps. No more than 5% of the Portfolio’s assets may be invested in credit default swaps or credit-linked securities.

• Repurchase Agreements . The Portfolio may participate with certain other Portfolios of the Fund and other affiliated funds in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs) .

• Reverse repurchase agreements and dollar rolls in the management of the fixed-income portion of the Portfolio. The Portfolio will not use more than 30% of its net assets in connection with reverse repurchase transactions and dollar rolls.

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

The equity Portfolio is managed by Quantitative Management Associates LLC and the fixed income and money market portions of the Portfolio are managed by Prudential Investment Management, Inc. Prior to July 1, 2004, the entire Portfolio was managed by Prudential Investment Management, Inc.

Diversified Bond Portfolio

The investment objective of this Portfolio is a high level of income over a longer term while providing reasonable safety of capital . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

To achieve our objective, we normally invest at least 80% of the Portfolio’s investable assets in intermediate and long term debt obligations that are rated investment grade and high quality money market instruments. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

In general, the value of debt obligations moves in the opposite direction as interest rates—if a bond is purchased and then interest rates go up, newer bonds will be worth more relative to existing bonds because they will have a higher rate of interest. We will adjust the mix of the Portfolio’s short-term, intermediate and long-term debt obligations in an attempt to benefit from price appreciation when interest rates go down and to incur smaller declines when interest rates go up.

Investment grade debt securities are those that major rating services, like Standard and Poor’s Ratings Group (S&P) or Moody’s Investor Service, Inc. (Moody’s), have rated the securities within one of their four highest rating categories. The Portfolio may continue to hold a debt obligation if it is downgraded below investment grade after it is purchased or if it is no longer rated by a major rating service. We may also invest up to 20% of the Portfolio’s investable assets in lower rated securities which are riskier and considered speculative. These securities are sometimes referred to as “junk bonds.” We may also invest in instruments that are not rated, but which we believe are of comparable quality to the instruments described above. Debt obligations are basically written promises to repay a debt. The terms of repayment vary among the different types of debt obligations, as do the commitments of other parties to honor the obligations of the issuer of the security. The types of debt obligations in which we can invest include U.S. Government securities, mortgage-related securities, asset-backed securities, and corporate bonds.

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

We may invest up to 20% of the Portfolio’s total assets in debt securities issued outside the U.S. by U.S. or foreign issuers whether or not such securities are denominated in the U.S. dollar.

The Portfolio may also invest in convertible debt and convertible and preferred stocks and non-convertible preferred stock of any rating. The Portfolio will not acquire any common stock except by converting a convertible security or exercising a warrant. No more than 10% of the Portfolio’s total assets will be held in common stocks, and those will usually be sold as soon as a favorable opportunity arises. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

We may also invest in loans or assignments arranged through private negotiations between a corporation which is the borrower and one or more financial institutions that are the lenders.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Collateralized debt obligations (CDOs) and other credit-related asset-backed securities. No more than 5% of the Portfolio’s assets may invested in CDO’s.

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on debt securities and financial indexes; purchase and sell interest rate and interest rate swap futures contracts and options on those contracts.

• Forward foreign currency exchange contracts; and purchase securities on a when-issued or delayed delivery basis.

• Short sales . No more than 25% of the Portfolio’s net assets may be used as collateral or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-the-box .

• Swap agreements; including interest rate, credit default, currency exchange rate and total return swaps. The Portfolio may also invest in option swaps .

• C redit-linked securities , which may be linked to one or more underlying credit default swaps.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC. The Portfolio may also invest up to 30% of its net assets in reverse repurchase agreements and dollar rolls . The Portfolio will not use more than 30% of its net assets in connection with reverse repurchase transactions and dollar rolls.

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

The Portfolio is managed by Prudential Investment Management, Inc.

Diversified Conservative Growth Portfolio

The investment objective of this Portfolio is to provide current income and a reasonable level of capital appreciation . We seek to achieve this objective by investing in a diversified portfolio of debt and equity securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We normally invest in a diversified portfolio of debt and equity securities. Under normal market conditions, we invest approximately 60% of the Portfolio’s total assets in debt securities of varying maturities with a dollar- weighted average portfolio maturity of between 4 and 15 years or an average duration ranging between two years below and two years above the average duration of the Portfolio’s benchmark index. The Portfolio will normally invest approximately 40% of its total assets in equity and equity-related securities issued by U.S. and foreign companies.

This Portfolio is designed for investors who want investment professionals to make their asset allocation decisions for them and are seeking current income and low to moderate capital appreciation. We have contracted with five highly regarded subadvisers who each will manage a portion of the Portfolio’s assets. In this way, the Portfolio offers diversification not only of asset type, but also of investment style. Investors in this Portfolio should have both sufficient time and tolerance for risk to accept periodic declines in the value of their investment.

The types of debt securities in which we can invest include U.S. Government securities, securities of its agencies or government sponsored enterprises, corporate debt obligations of non-U.S. issuers, including convertible securities and corporate commercial paper, debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises, mortgage-backed and asset-backed securities, inflation-indexed bonds of governments and corporations, structured notes, including hybrid or “indexed” securities, delayed funding loans and revolving credit facilities, obligations of international agencies and

supranational agencies, commercial paper, bank certificates of deposit, fixed time deposits, and bankers acceptances. These debt securities will generally be investment grade. This means major rating services, like Standard and Poor’s Ratings Group (S&P) or Moody’s Investor Service, Inc. (Moody’s), have rated the securities within one of their four highest rating categories. We may also invest up to 35% of the Portfolio’s total assets in lower rated securities that are riskier and considered speculative. Up to 25% of the Portfolio’s total assets may be invested in debt obligations issued or guaranteed by foreign governments, their agencies and instrumentalities, supranational organizations, and foreign corporations or financial institutions. Up to 10% of the Portfolio’s total assets may be invested in debt obligations of issuers in emerging markets. (The maturity of a bond is the number of years until the principal is due and payable. Weighted average maturity is calculated by adding the maturities of all of the bonds in the Portfolio and dividing by the number of bonds on a dollar-weighted basis.)

Up to 15% of the Portfolio’s total assets may be invested in foreign equity securities, including those of companies in emerging markets. For these purposes, we do not consider American Depositary Receipts (ADRs) as foreign securities.

Generally, the Portfolio’s assets will be allocated as shown in the table below. However, we may rebalance the Portfolio’s assets at any time or add or eliminate portfolio segments, in accordance with the Portfolio’s investment objective and policies.

Percent of Portfolio Assets	Asset Class	Subadviser	Investment Style

40%	Fixed income	Pacific Investment Management Company LLC	Mostly high-quality debt instruments
20%	Fixed income	Prudential Investment Management, Inc. (PIM)	High-yield debt, including junk bonds and emerging market debt
15%	Equities	Jennison Associates LLC	Growth-oriented, focusing on large cap stocks
15%	Equities	Jennison Associates LLC	Value-oriented, focusing on large cap stocks
5%	Equities	EARNEST Partners LLC	Value-oriented, focusing on small cap and mid cap stocks
5%	Equities	RS Investment Management LP	Growth-oriented, focusing on small cap and mid cap stocks.

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

We may also invest in debt securities of the U.S. Treasury and corporations that have been issued without interest coupons or that have been stripped of their interest coupons, or have interest coupons that have been stripped from the debt obligation (stripped securities).

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Collateralized debt obligations (CDOs) and other credit-related asset-backed securities. No more than 5% of the Portfolio’s assets may be invested in CDO’s.

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Forward foreign currency exchange contracts .

• Purchase and sell options on equity securities, debt securities, financial indexes and U.S. Government securities; engage in foreign currency exchange contracts and related options.

• Purchase and write put and call options on foreign currencies; trade currency futures contracts and options on those contracts.

• Purchase and sell futures on debt securities, U.S. Government securities, financial indexes, interest rates, interest rate swaps and related options.

• Invest in delayed delivery and when-issued securities.

• Swap agreements, including interest rate, credit default, currency exchange rate and total return swaps . The Portfolio may also invest in option swaps .

• Preferred stock.

• Convertible debt .

• Debt from emerging markets.

• Event-linked bonds.

• Credit-linked securities , which may be linked to one or more underlying credit default swaps.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

• Long and short credit default swaps.

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

Equity Portfolio

20% of the Portfolio’s investable assets may be invested in short, intermediate or long-term debt obligations, convertible and nonconvertible preferred stock and other equity-related securities. Up to 5% of these investable assets may be rated below investment grade. These securities are considered speculative and are sometimes referred to as “junk bonds.”

In deciding which stocks to buy, our portfolio managers use a blend of investment styles. That is, we invest in stocks that may be undervalued given the company’s earnings, assets, cash flow and dividends and also invest in companies experiencing some or all of the following: a price/ earnings ratio lower than earnings per share growth, strong market position, improving profitability and distinctive attributes such as unique marketing ability, strong research and development, new product flow, and financial strength.

We may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies

• Purchase and sell stock index and foreign currency futures contracts and options on these futures contracts.

• Forward foreign currency exchange contracts

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities of Real Estate Investment Trusts (REITs).

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

Jennison Associates LLC is responsible for managing approximately 50% of the Portfolio’s assets. GE Asset Management Inc. and Salomon Brothers Asset Management Inc are each responsible for managing approximately 25% of the Portfolio’s assets.

Flexible Managed Portfolio

The investment objective of this Portfolio is to seek a high total return consistent with an aggressively managed diversified portfolio. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We invest in a mix of equity and equity-related securities, debt obligations and money market instruments. We adjust the percentage of Portfolio assets in each category depending on our expectations regarding the different markets.

We invest in equity, debt and money market securities — in order to achieve diversification in a single Portfolio. We seek to maintain a more aggressive mix of investments than the Conservative Balanced Portfolio. This Portfolio may be appropriate for an investor looking for diversification who is willing to accept a relatively high level of loss in an effort to achieve greater appreciation.

Generally, we will invest within the ranges shown below:

Asset Type	Minimum		Normal		Maximum
Stocks	25	%	60	%	100	%
Fixed income securities	0	%	40	%	75	%

The equity portion of the Fund is generally managed under an “enhanced index style.” Under this style, the portfolio managers utilize a quantitative approach in seeking to out-perform the Standard & Poor’s 500 Composite Stock Price Index and to limit the possibility of significantly under-performing that index.

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

Most of the securities in the fixed income portion of this Portfolio will be investment grade. However, we may also invest up to 25% of this portion of the Portfolio in debt securities rated as low as BB, Ba or lower by a major rating service at the time they are purchased. These high-yield or “junk bonds” are riskier and considered speculative. We may also invest in instruments that are not rated, but which we believe are of comparable quality to the instruments described above. The fixed income portion of the Portfolio may also include loans and assignments in the form of loan participations, mortgage-related securities and other asset-backed securities.

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

We may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Real Estate Investment Trusts (REITs).

• Collateralized debt obligations (CDOs) and other credit-related asset-backed securities (up to 5% of the Portfolio’s assets may be invested in these instruments).

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, debt securities, stock indexes, and foreign currencies.

• Purchase and sell exchange-traded fund shares.

• Purchase and sell stock index, interest rate, interest rate swap and foreign currency futures contracts and options on those contracts.

• Forward foreign currency exchange contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• Swap agreements; including interest rate, credit default, currency exchange rate and total return swaps. The Portfolio may also invest in option swaps .

• Credit-linked securities , which may be linked to one or more underlying credit default swaps. No more than 5% of the Portfolio’s assets may be invested in credit default swaps or credit-linked securities.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC. We may also invest in reverse repurchase agreements and dollar rolls in the management of the fixed-income portion of the Portfolio. The Portfolio will not use more than 30% of its net assets in connection with reverse repurchase transactions and dollar rolls.

The stock portion of the Portfolio is managed by Quantitative Management Associates LLC and the fixed income portion of the Portfolio is managed by Prudential Investment Management, Inc. Prior to July 1, 2004, the entire Portfolio was managed by Prudential Investment Management, Inc.

Global Portfolio

We invest primarily in equity and equity-related securities of foreign and U.S. companies. When selecting stocks, we use a growth approach which means we look for companies that have above-average growth prospects. In making our stock picks, we look for companies that have had growth in earnings and sales, high returns on equity and assets or other strong financial characteristics. Often, the companies we choose have superior management, a unique market niche or a strong new product.

This Portfolio is intended to provide investors with the opportunity to invest in companies located throughout the world. Although we are not required to invest in a minimum number of countries, we intend generally to invest in at least three countries, including the U.S. However, in response to market conditions, we can invest up to 35% of the Portfolio’s total assets in any one foreign country (The 35% limitation does not apply to U.S investments).

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell futures contracts on stock indexes, debt securities, interest rate indexes and foreign currencies and options on these futures contracts.

• Forward foreign currency exchange contracts .

• Purchase securities on a when-issued or delayed delivery basis.

• Equity swaps . The Portfolio may also lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

The Portfolio is managed by Jennison Associates LLC.

Government Income Portfolio

The investment objective of this Portfolio is a high level of income over the longer term consistent with the preservation of capital . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Normally, we invest at least 80% of the Portfolio’s investable assets in U.S. Government securities, which include Treasury securities, obligations issued or guaranteed by U.S. Government agencies and instrumentalities and mortgage-related securities issued by U.S. Government instrumentalities. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

U.S. Government securities are considered among the most creditworthy of debt securities. Because they are generally considered less risky, their yields tend to be lower than the yields from corporate debt. Like all debt securities, the values of U.S. Government securities will change as interest rates change.

The Portfolio may normally invest up to 20% of its investable assets in (i) money market instruments, (ii) asset-backed securities rated at least single A by Moody’s or S&P (or if unrated, of comparable quality in our judgment) and (iii) subject to a limit of 10% of its investable assets and as long as such securities are rated at least single A by Moody’s or S&P (or if unrated, of comparable quality in our judgment), foreign securities (including securities issued by foreign governments, supranational

organizations or non-governmental foreign issuers such as banks or corporations) denominated in U.S. dollars or in foreign currencies which may or may not be hedged to the U.S. dollar. The Portfolio may invest up to 15% of its net assets in zero coupon bonds.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on debt securities and financial indexes.

• Purchase and sell domestic and foreign interest rate and interest rate swap futures contracts and options on these futures contracts; and purchase securities on a when-issued or delayed delivery basis.

• Swap agreements, including interest rate, credit-default, total return and index swaps. The Portfolio may also invest in options on swaps .

• Forward foreign currency exchange contracts and foreign currency futures contracts.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Reverse repurchase agreements and dollar rolls (the Portfolio may invest up to 30% of its assets in these instruments).

The Portfolio may invest up to 100% of its assets in money market instruments in response to adverse market conditions or when restructuring the Portfolio. Investing heavily in these securities limits our ability to achieve capital appreciation, but can help to preserve the Portfolio’s assets when the markets are unstable. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

The Portfolio is managed by Prudential Investment Management, Inc.

High Yield Bond Portfolio

The investment objective of this Portfolio is a high total return . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We invest primarily in high yield/high risk debt securities, which are often referred to as high yield bonds or “junk bonds.” High yield bonds and junk bonds are riskier than higher rated bonds and are considered speculative. Normally, we will invest at least 80% of the Portfolio’s investable assets in medium to lower rated debt securities. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

Lower rated and comparable unrated securities tend to offer better yields than higher rated securities with the same maturities because the issuer’s financial condition may not have been as strong as that of higher rated issuers. Changes in the perception of the creditworthiness of the issuers of lower rated securities tend to occur more frequently and in a more pronounced manner than for issuers of higher rated securities.

The Portfolio may invest up to 20% of its total assets in U.S. dollar denominated debt securities issued outside the U.S. by foreign and U.S. issuers.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Common stock, debt securities and convertible debt and preferred stock .

• Loans or assignments arranged through private negotiations between a corporation which is the borrower and one or more financial institutions that are the lenders.

• Asset-backed securities .

• Collateralized debt obligations (CDOs) and other credit-related asset-backed securities. No more than 5% of the Portfolio’s assets may be invested in CDO’s.

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on debt securities.

• Purchase and sell interest rate and interest rate swap futures contracts and options on these futures contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• PIK bonds.

• Swap agreements; including interest rate, credit default, currency exchange rate and total return swaps. The Portfolio may also invest in options on swaps .

• Credit-linked securities , which may be linked to one or more underlying credit default swaps.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Reverse repurchase agreements and dollar rolls (up to 30 % of the Portfolio’s assets may be invested in these instruments).

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

The Portfolio is managed by Prudential Investment Management, Inc.

Jennison Portfolio

The investment objective of this Portfolio is to achieve long-term growth of capital . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We normally invest at least 65% of the Portfolio’s total assets in equity-related securities of companies that exceed $1 billion in market capitalization at the time of investment and that we believe have above-average growth prospects. We may also invest in common stocks, preferred stocks and other equity-related securities of companies that are undergoing changes in management, product and/or marketing dynamics which we believe have not yet been reflected in reported earnings or recognized by investors.

We select stocks on a company- by-company basis using fundamental analysis. In making our stock picks, we look for companies that have had growth in earnings and sales, high returns on equity and assets or other strong financial characteristics. Often, the companies we choose have superior management, a unique market niche or a strong new product.

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

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

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell stock index and foreign currency futures contracts and options on those futures contracts.

• Forward foreign currency exchange contracts .

• Purchase securities on a when-issued or delayed delivery basis.

• Equity swap agreements.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

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

The Portfolio is managed by Jennison Associates LLC.

Jennison 20/20 Focus Portfolio

The investment objective of this Portfolio is long-term growth of capital . While we make every effort to achieve this objective, we can’t guarantee success and it is possible that you could lose money.

The Portfolio invests primarily in up to 40 equity securities of U.S. companies that are selected by the Portfolio’s two portfolio managers as having strong capital appreciation potential. Each portfolio manager will manage his own portion of the Portfolio’s assets, which will usually include a maximum of 20 securities. Because the Portfolio will be investing in 40 or fewer securities, an investment in this Portfolio may be riskier than an investment in a more widely diversified fund. We intend to be fully invested, under normal market conditions, but may accumulate cash and other short- term investments in such amounts and for such temporary periods of time as market conditions dictate.

Our strategy is to combine the efforts of two outstanding portfolio managers, each with a different investment style, and to invest in only the favorite stock picks of each manager. One manager will invest using a value approach, which means he will attempt to identify strong companies selling at a discount from their perceived true value. The other manager will use a growth approach, which means he seeks companies that exhibit higher-than-average earnings growth.

Normally, the Portfolio will invest at least 80% of its total assets in common stocks and equity-related securities such as preferred stocks, convertible stocks, and equity interests in partnerships, joint ventures and other noncorporate entities. We may also invest in warrants and similar rights that can be exercised for equity securities, but will not invest more than 5% of the Portfolio’s total assets in unattached warrants or rights. The Portfolio may invest up to 20% of its total assets in cash, obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities and derivatives. Up to 20% of the Portfolio’s total assets may be invested in foreign securities. For these purposes, we do not consider American Depositary Receipts ( ADRs ) as foreign securities.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs) .

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on financial indexes that are traded on U.S or foreign securities exchanges or in the over-the-counter market.

• Purchase and sell futures contracts on stock indexes and foreign currencies and options on those contracts.

• Purchase or sell securities on a when-issued or delayed delivery basis.

• Short sales . No more than 25% of the Portfolio’s net assets may be used as collateral or segregated for purposes of securing a short sale obligation. We may also use up to 25% of the Portfolio’s net assets for short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio is managed by Jennison Associates LLC.

Money Market Portfolio

The investment objective of this Portfolio is to seek the maximum current income that is consistent with stability of capital and maintenance of liquidity . While we make every effort to achieve our objective, we can’t guarantee success.

We invest in a diversified portfolio of short-term debt obligations of the U.S. Government, its agencies and instrumentalities, as well as commercial paper, asset backed securities, funding agreements, certificates of deposit, floating and variable rate demand notes, notes and other obligations issued by banks, corporations and other companies (including trust structures), and obligations issued by foreign banks, companies or foreign governments.

The net asset value for the Portfolio will ordinarily remain issued at $10 per share because dividends are declared and reinvested daily. The price of each share remains the same, but when dividends are declared the value of your investment grows.

We make investments that meet the requirements of specific rules for money market mutual funds, such as Investment Company Act of 1940 (Investment Company Act) Rule 2a-7. As such, we will not acquire any security with a remaining maturity exceeding thirteen months, and we will maintain a dollar-weighted average portfolio maturity of 90 days or less. In addition, we will comply with the diversification, quality and other requirements of Rule 2a-7. This means, generally, that the instruments that we purchase present “minimal credit risk” and are of “eligible quality.” “Eligible quality” for this purpose means a security is: (1) rated in one of the two highest short-term rating categories by at least two major rating services (or if only one major rating service has rated the

security, as rated by that service); or (2) if unrated, of comparable quality in our judgment. All securities that we purchase will be denominated in U.S. dollars.

Commercial paper is short-term debt obligations of banks, corporations and other borrowers. The obligations are usually issued by financially strong businesses and often include a line of credit to protect purchasers of the obligations.

An asset-backed security is a loan or note that pays interest based upon the cash flow of a pool of assets, such as mortgages, loans and credit card receivables. Funding agreements are contracts issued by insurance companies that guarantee a return of principal, plus some amount of interest. When purchased by money market funds, funding agreements will typically be short-term and will provide an adjustable rate of interest.

Certificates of deposit, time deposits and bankers’ acceptances are obligations issued by or through a bank. These instruments depend upon the strength of the bank involved in the borrowing to give investors comfort that the borrowing will be repaid when promised.

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

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

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

We may also use alternative investment strategies including derivatives to try to improve the Portfolio’s returns, protect its assets or for short-term cash management. There is no guarantee that these strategies will work, that the instruments necessary to implement these strategies will be available or that the Portfolio will not lose money.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Purchase securities on a when-issued or delayed delivery basis.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Reverse repurchase agreements (the Portfolio may invest up to 10% of its net assets in these instruments).

The Portfolio is managed by Prudential Investment Management, Inc.

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

Natural Resources Portfolio

We normally invest at least 80% of the Portfolio’s investable assets in common stocks and convertible securities of natural resource companies and in securities that are related to the market value of some natural resource (asset-indexed securities). The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. Natural resource companies are companies that primarily own, explore, mine, process or otherwise develop natural resources, or supply goods and services to such companies. Natural resources generally include precious metals, such as gold, silver and platinum, ferrous and nonferrous metals, such as iron, aluminum and copper, strategic metals such as uranium and titanium, hydrocarbons such as coal and oil, timberland, undeveloped real property and agricultural commodities.

We seek securities that are attractively priced as compared to the intrinsic value of the underlying natural resource or securities of companies in a position to benefit from current or expected economic conditions.

Depending on prevailing trends, we may shift the Portfolio’s focus from one natural resource to another, however, we will not invest more than 25% of the Portfolio’s total assets in a single natural resource industry.

The Portfolio is a non-diversified mutual fund portfolio. This means that the Portfolio may invest a relatively high percentage of its assets in a small number of issuers. As a result, the Portfolio’s performance may be more clearly tied to the success or failure of a smaller group of Portfolio holdings. There are additional risks associated with the Portfolio’s investment in the securities of natural resource companies. The market value of the securities may be affected by numerous factors, including events occurring in nature, inflationary pressures, and international politics.

When acquiring asset-indexed securities, we usually will invest in obligations rated at least BBB by Moody’s or Baa by S&P (or, if unrated, of comparable quality in our judgment). However, we may invest in asset-indexed securities rated as low as CC by Moody’s or Ca by S&P or in unrated securities of comparable quality. These high-risk or “junk bonds” are considered speculative.

The Portfolio may also acquire asset-indexed securities issued in the form of commercial paper provided they are rated at least A-2 by S&P or P-2 by Moody’s (or, if unrated, of comparable quality in our judgment).

The Portfolio may invest up to 20% of its investable assets in securities that are not asset-indexed or natural resource related. These holdings may include common stocks, convertible stock, debt securities and money market instruments. When acquiring debt securities, we usually will invest in obligations rated A or better by S&P or Moody’s (or, if unrated, of comparable quality in our judgment). However, we may invest in debt securities rated as low as CC by Moody’s or Ca by S&P or in unrated securities of comparable quality.

Up to 30% of the Portfolio’s total assets may be invested in foreign equity and equity-related securities. For these purposes, we do not consider American Depositary Receipts ( ADRs ) as foreign securities.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell stock index and foreign currency futures contracts and options on these futures contracts.

• Forward foreign currency exchange contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales against-the-box .

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

Under normal circumstances, the Portfolio may invest up to 20% of its investable assets in money market instruments. In response to adverse market conditions or when restructuring the Portfolio, we may invest up to 100% of the Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

The Portfolio is managed by Jennison Associates LLC.

Small Capitalization Stock Portfolio

We attempt to achieve the investment results of the Standard & Poor’s Small Capitalization 600 Stock Index (S&P SmallCap 600 Index), a market-weighted index which consists of 600 smaller capitalization U.S. stocks. Normally we do this by investing at least 80% of the Portfolio’s investable assets in all or a representative sample of the stocks in the S&P SmallCap 600 Index. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. Because the Portfolio seeks to achieve the performance of a stock index, the Portfolio is not “managed” in the traditional sense of using market and economic analyses to select stocks.

The market capitalization of the companies that make up the S&P SmallCap 600 Index may change from time to time — as of December 31, 2004, the S&P SmallCap 600 Index stocks had market capitalizations of between $69 million and $4.89 billion. They are selected for market size, liquidity and industry group. The S&P SmallCap 600 Index has above-average risk and may fluctuate more than the S&P 500 Index.

The Portfolio may also hold cash or cash equivalents, in which case its performance will differ from that of the Index.

We attempt to minimize these differences by using stock index futures contracts, options on stock indexes and options on stock index futures contracts. The Portfolio will not use these derivative securities for speculative purposes or to hedge against a decline in the value of the Portfolio’s holdings.

We may also use alternative investment strategies to try to improve the Portfolio’s returns or for short-term cash management. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income. There is no guarantee that these strategies will work, that the instruments necessary to implement these strategies will be available or that the Portfolio will not lose money.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Purchase and sell options on equity securities and stock indexes.

• Purchase and sell stock index futures contracts and options on those futures contracts.

• Purchase and sell exchange-traded fund shares.

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales and short sales against-the-box . No more than 5% of the Portfolio’s total assets may be used as collateral or segregated for purposes of securing a short sale obligation.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio is managed by Quantitative Management Associates LLC. Prior to July 1, 2004, the Portfolio was managed by Prudential Investment Management, Inc.

A stock’s inclusion in the S&P SmallCap 600 Index in no way implies S&P’s opinion as to the stock’s attractiveness as an investment. The Portfolio is not sponsored, endorsed, sold or promoted by S&P. S&P makes no representations regarding the advisability of investing in the Portfolio. “Standard & Poor’s,” “Standard & Poor’s Small Capitalization Stock Index” and “Standard & Poor’s SmallCap 600” are trademarks of McGraw Hill.

Stock Index Portfolio

The investment objective of this Portfolio is to achieve investment results that generally correspond to the performance of publicly-traded common stocks . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

To achieve our objective, we use the performance of the Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index). Under normal conditions, we attempt to invest in all 500 stocks represented in the S&P 500 Index in proportion to their weighting in the Standard & Poor’s 500 Composite Stock Price Index. The S&P 500 Index is a market- weighted index which represents more than 70% of the market value of all publicly-traded common stocks.

We will normally invest at least 80% of the Portfolio’s investable assets in S&P 500 Index stocks, but we will attempt to remain as fully invested in the S&P 500 Index stocks as possible in light of cash flow into and out of the Portfolio. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

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

We may also use alternative investment strategies including derivatives to try to improve the Portfolio’s returns or for short-term cash management. There is no guarantee that these strategies will work, that the instruments necessary to implement these strategies will be available or that the Portfolio will not lose money.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Purchase and sell options on stock indexes.

• Purchase and sell stock futures contracts and options on those futures contracts.

• Purchase and sell exchange-traded fund shares.

• Short sales and short sales against-the-box . No more than 5% of the Portfolio’s total assets may be used as collateral or segregated for purposes of securing a short sale obligation.

• Repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

The Portfolio is managed by Quantitative Management Associates LLC. Prior to July 1, 2004, the Portfolio was managed by Prudential Investment Management, Inc.

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

Value Portfolio

The investment objective of this Portfolio is to seek capital appreciation . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We will normally invest at least 65% of the Portfolio’s total assets in equity and equity-related securities. Most of our investments will be securities of large capitalization companies. When deciding which stocks to buy, we combine a set of quantitative screens with fundamental research to invest in companies that are undervalued in the market and have identifiable catalysts that may be able to close the gap between the stock price and what we believe to be the true worth of the company. We focus on stocks that are undervalued — those stocks that are trading below their underlying asset value, cash generating ability, and overall earnings and earnings growth. We also buy equity-related securities — like bonds, corporate notes and preferred stock — that can be converted into a company’s common stock or other equity security.

In deciding which stocks to buy, we use what is known as a value investment style. That is, we invest in stocks that we believe are undervalued, given the company’s earnings, cash flow or asset values. We look for catalysts that will help unlock inherent value. A number of conditions can warrant the sale of an existing position, including (1) the stock has reached its price target; (2) subsequent events invalidate our investment thesis; (3) the catalysts we expected to narrow the gap between the stock price and what we believe to be the true worth of the company have passed or no longer exist; or (4) the stock price declines to below what we had thought to be the reasonable worst-case scenario.

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

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Swap agreements, including interest rate and equity swaps.

• Purchase and sell options on equity securities.

• Purchase and sell exchange traded funds, stock indexes and foreign currencies.

• Purchase and sell stock index and foreign currency futures contracts and options on these futures contracts

• Forward foreign currency exchange contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• Short sales and short sales against-the-box .

• Repurchase agreements. The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs) .

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

Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

The Portfolio is managed by Jennison Associates LLC.

Zero Coupon Bond Portfolio 2005

The investment objective of this Portfolio is the highest predictable compound investment for a specific period of time, consistent with the safety of invested capital . On the liquidation date all of the securities held by the Portfolio will be sold and all outstanding shares of the Portfolio will be redeemed. Please refer to your variable contract prospectus for information on your reallocation options and the Portfolio to which your investment will be transferred if you do not provide other instructions. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

We invest at least 80% of the Portfolio’s investable assets in debt securities of the U.S. Treasury and corporations that have been issued without interest coupons or that have been stripped of their interest coupons, or have interest coupons that have been stripped from the debt obligation (stripped securities). The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. The Portfolio seeks a higher yield than would be realized by just holding the Portfolio’s initial investments. We actively manage the Portfolio to take advantage of trading opportunities that may arise from supply and demand dynamics or perceived differences in the quality or liquidity of securities. By pursuing this strategy, the Portfolio has the risk that it will not realize the yield of its initial investments.

The Portfolio invests only in debt securities that do not involve substantial risk of loss of capital through default and that can be readily sold. Although these securities are not high-risk, their value does vary because of changes in interest rates. In order to lessen the impact of interest rate changes, we will keep the duration of the Portfolio within one year of the Portfolio’s liquidation date. (Duration is a measure of a “length” of a bond, or in this case, a portfolio of bonds. It is a mathematical calculation that takes into account the maturities of the bonds, coupon rates and prevailing interest rates.)

Generally, we invest at least 70% of the Portfolio’s total assets in stripped securities that are obligations of the U.S. Government and which mature within two years of the Portfolio’s liquidation date. Up to 30% of the Portfolio’s total assets may be invested in either stripped securities of corporations or interest bearing corporate debt securities rated no lower than Baa by a major rating service (or, if unrated, of comparable quality in our judgment).

Under normal conditions, no more than 20% of the Portfolio’s investable assets may be invested in interest-bearing securities. However, as the liquidation date of the Portfolio draws near, we may invest more than 20% in interest bearing securities as a defensive measure.

The Portfolio may also enter into repurchase agreements . The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

Under normal circumstances, the Portfolio may invest in money market instruments for cash management purposes. As the Portfolio’s liquidation date nears, we may increase our investment in money market instruments. In addition, in response to adverse market conditions, we may temporarily invest up to 100% of the Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

The Portfolio is managed by Prudential Investment Management, Inc.

SP AIM Core Equity Portfolio

The investment objective of this Portfolio is growth of capital . This investment objective is non-fundamental, meaning that we can change the objective without seeking a vote of contract owners. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

The Portfolio normally invests at least 80% of its investable assets in equity securities, including convertible securities, of established companies that have long-term above-average growth in earnings and growth companies that the portfolio managers believe have the potential for above-average growth in earnings. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. In complying with this 80% requirement, the Portfolio’s investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the Portfolio’s direct investments, and may include warrants, futures, options , exchange-traded funds and American Depositary Receipts (ADRs) .

The Portfolio may invest in corporate debt securities. Corporations issue debt securities of various types, including bonds and debentures (which are long-term), notes (which may be short- or long-term), bankers acceptances (indirectly secured borrowings to facilitate commercial transactions) and commercial paper (short-term unsecured notes).

The Portfolio may also invest in convertible securities whose values will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and price that is unfavorable to the Portfolio.

The values of fixed rate income securities tend to vary inversely with changes in interest rates, with longer-term securities generally being more volatile than shorter-term securities. Corporate securities frequently are subject to call provisions that entitle the issuer to repurchase such securities at a predetermined price prior to their stated maturity. In the event that a security is called during a period of declining interest rates, the Portfolio may be required to reinvest the proceeds in securities having a lower yield. In addition, in the event that a security was purchased at a premium over the call price, the Portfolio will experience a capital loss if the security is called. Adjustable rate corporate debt securities may have interest rate caps and floors.

The Portfolio may invest in securities issued or guaranteed by the United States Government or its agencies or instrumentalities. These include Treasury securities (bills, notes, bonds and other debt securities) which differ only in their interest rates, maturities and times of issuance. U.S. Government agency and instrumentality securities include securities which are supported by the full faith and credit of the U.S., securities that are supported by the right of the agency to borrow from the U.S. Treasury, securities that are supported by the discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality and securities that are supported only by the credit of such agencies. While the U.S. Government may provide financial support to such U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so. The U.S. Government, its agencies and instrumentalities do not guarantee the market value of their securities. The values of such securities fluctuate inversely to interest rates.

The Portfolio may hold up to 20% of its assets in foreign securities. Such investments may include American Depositary Receipts ( ADRs ), European Depositary Receipts (EDRs) and other securities representing underlying securities of foreign issuers. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted.

The Portfolio has authority to deal in foreign exchange between currencies of the different countries in which it will invest either for the settlement of transactions or as a hedge against possible variations in the foreign exchange rates between those currencies. This may be accomplished through direct purchases or sales of foreign currency, purchases of futures contracts with respect to foreign currency (and options thereon), and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange-traded futures contracts.

The Portfolio may also pursue certain types of investment strategies and/or invest in certain types of securities including but not limited to the following:

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs) . Such investments will not exceed 15% of the total assets of the Portfolio.

• Purchase and sell options on futures contracts or forward contracts which are denominated in a particular foreign currency to hedge the risk of fluctuations in the value of another currency.

• Reverse repurchase agreements. The Portfolio may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction.

• Purchase securities of unseasoned issuers. Securities in such issuers may provide opportunities for long term capital growth. Greater risks are associated with investments in securities of unseasoned issuers than in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.

• Securities of other investment companies to the extent permitted by the Investment Company Act, and rules and regulations thereunder, and if applicable, exemptive orders granted by the SEC.

• Purchase and sell stock index futures contracts and related options on stock index futures, and may purchase and sell futures contracts on foreign currencies and related options on foreign currency futures contracts.

• Preferred stock, convertible debt and convertible preferred stock.

• Forward foreign currency exchange contracts.

• Restricted securities.

• Repurchase agreements.

• Dollar rolls.

• Warrants.

• When-issued and delayed delivery securities

• Options on stock and debt securities, options on stock indexes, and options on foreign currencies.

• Equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts, World Equity Benchmark Series, NASDAQ 100 tracking shares, Dow Jones Industrial Average Instruments and Optimised Portfolios as Listed Securities. Investments in equity-linked derivatives involve the same risk associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investment in other investment companies.

• U.S. Government securities.

• Short sales against-the-box (no more than 10% of the Portfolio’s total assets may be deposited or pledged as collateral for short sales at any one time).

In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the Portfolio may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. The Portfolio may borrow for emergency or temporary purposes. As a result, the Portfolio may not achieve its investment objective.

The Portfolio is managed by A I M Capital Management, Inc.

SP AllianceBernstein Large Cap Growth Portfolio (formerly, SP Alliance Large Cap Growth Portfolio)

The investment objective of this Portfolio is growth of capital by pursuing aggressive investment policies . While we make every effort to achieve our objective, we cannot guarantee success and it is possible that you could lose money.

Under normal circumstances, the Portfolio invests at least 80% of its investable assets in stocks of companies considered to have large capitalizations. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. During market declines, while adding to positions in favored stocks, the Portfolio becomes somewhat more aggressive, gradually reducing the number of companies represented in its portfolio. Conversely, in rising markets, while reducing or eliminating fully-valued positions, the Portfolio becomes somewhat more conservative, gradually increasing the number of companies represented in the portfolio. Through this approach, AllianceBernstein seeks to gain positive returns in good markets while providing some measure of protection in poor markets.

The Portfolio usually invests in about 40-60 companies, with the 25 most highly regarded of these companies generally constituting approximately 70% of the Portfolio’s investable assets. AllianceBernstein seeks to gain positive returns in good markets while providing some measure of protection in poor markets.

The Portfolio also may invest up to 20% of its investable assets in convertible debt and convertible preferred stock and up to 15% of its total assets in equity securities of non-U.S. companies.

The Portfolio will invest in special situations from time to time. A special situation arises when, in the opinion of AllianceBernstein, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development particularly or uniquely applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among other, liquidations, reorganizations, recapitalizations or mergers, material litigation, technological breakthroughs and new management or management policies. Although large and well-known companies may be involved, special situations often involve much greater risk than is inherent in ordinary investment securities.

Among the principal risks of investing in the Portfolio is market risk. Because the Portfolio invests in a smaller number of securities than many other equity funds, your investment has the risk that changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value.

The Portfolio seeks long-term growth of capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. As a matter of fundamental policy, the Portfolio normally invests at least 85% of its total assets in the equity securities of U.S. companies. The Portfolio is thus

atypical from most equity mutual funds in its focus on a relatively small number of intensively researched companies. The Portfolio is designed for those seeking to accumulate capital over time with less volatility than that associated with investment in smaller companies.

AllianceBernstein’s investment strategy for the Portfolio emphasizes stock selection and investment in the securities of a limited number of issuers. AllianceBernstein relies heavily upon the fundamental analysis and research of its large internal research staff, which generally follows a primary research universe of more than 500companies. An emphasis is placed on identifying companies whose substantially above average prospective earnings growth is not fully reflected in current market valuations.

In managing the Portfolio, AllianceBernstein seeks to utilize market volatility judiciously (assuming no change in company fundamentals), striving to capitalize on apparently unwarranted price fluctuations, both to purchase or increase positions on weakness and to sell or reduce overpriced holdings. The Portfolio normally remains nearly fully invested and does not take significant cash positions for market timing purposes.

The Portfolio may invest in a wide variety of equity securities including large cap stocks, convertible and preferred securities, warrants and rights. The Portfolio may also invest in foreign securities, including foreign equity securities, and other securities that represent interests in foreign equity securities, such as European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs). The Portfolio may invest in American Depositary Receipts ( ADRs ), which are not subject to the 15% limitation on foreign securities. The Portfolio may also invest in derivatives and in short term investments, including money market securities, short term U.S. Government obligations, repurchase agreements, commercial paper, banker’s acceptances and certificates of deposit.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Foreign securities (up to 15% of the Portfolio’s total assets may be invested in foreign securities).

• Purchase and sell exchange-traded index options and stock index future contracts .

• Short sales against-the-box of up to 15% of net Portfolio assets.

• Illiquid securities (up to 10% of net Portfolio assets).

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

The Portfolio is managed by Alliance Capital Management, L.P.

SP Davis Value Portfolio

The investment objective of this Portfolio is growth of capital . While we will make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

The Portfolio invests primarily in common stocks of U.S. companies with market capitalizations of at least $5 billion. It may also invest in stocks of foreign companies and U.S. companies with smaller capitalizations.

Over the years, Davis has developed a list of characteristics that it believes allows companies to expand earnings over the long term and minimize risk to enhance their potential for superior long-term returns. While few companies possess all of these characteristics at any given time, Davis Advisors searches for companies that demonstrate a majority or an appropriate mix of these characteristics.

First Class Management

• Proven track record

• Significant personal ownership in business

• Intelligent allocation of capital

• Smart application of technology to improve business and lower costs

Strong Financial Condition and Profitability

• Strong balance sheet

• Low cost structure/low debt

• High after-tax returns on capital

• High quality of earnings

Strategic Positioning for the Long Term

• Non-obsolescent products/services

• Dominant or growing market share in a growing market

• Global presence and brand names

Davis Advisors emphasizes individual stock selection and believes that the ability to evaluate management is critical. Davis Advisors routinely visits managers at their places of business in order to gain insight into the relative value of different businesses.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Equity and/or debt securities issued by Real Estate Investment Trusts (REITs) .

The Portfolio uses short-term investments to maintain flexibility while evaluating long-term opportunities. The Portfolio also may use short-term investments for temporary defensive purposes; in the event the portfolio managers anticipate a decline in the market values of common stock of large capitalization domestic companies, they may reduce the risk by investing in short-term securities until market conditions improve. Unlike common stocks, these investments will not appreciate in value when the market advances. In such a circumstance, the short-term investments will not contribute to the Portfolio’s investment objective.

The Portfolio is managed by Davis Advisors.

SP Goldman Sachs Small Cap Value Portfolio

The Portfolio normally invests at least 80% of its investable assets in small capitalization companies. The Portfolio will not change this policy unless it provides 60 days written prior notice to contract owners. The Portfolio generally defines small capitalization stocks as stocks of companies with a capitalization of $4 billion or less. The Portfolio may invest up to 25% of its assets in foreign securities.

The Portfolio seeks to achieve its objective through investments primarily in equity securities of small capitalization companies that are believed to be undervalued in the marketplace. Typically, in choosing stocks, the subadviser looks for companies using the subadviser’s value investment philosophy. The subadviser seeks to identify:

• Well-positioned businesses that have:

i. Attractive returns on capital;

ii. Sustainable earnings and cash flow;

iii. Strong company management focused on long-term returns to shareholders;

• Attractive valuation opportunities where:

i. The intrinsic value of the business is not reflected in the stock price.

Price and Prospects. All successful investing should thoughtfully weigh two important attributes of a stock: price and prospects. Since most value managers tend to focus almost exclusively on price, they often underestimate the importance of prospects. The Sub-Advisor believes a company’s prospective ability to generate high cash flow and returns on capital will strongly influence investment success.

Uncertainty creates opportunity. Some stock price declines truly reflect a permanently disadvantaged business model. These stocks are the “value traps” that mire price-oriented investors. Other stock price declines merely reflect near-term market volatility. Through our proprietary research and strong valuation discipline, the Sub-Advisor seeks to purchase well-positioned, cash generating businesses run by shareholder-oriented managements at a price low enough to provide a healthy margin of safety.

Avoiding “value traps”. The Sub-Advisor believes the key to successful investing in the small cap value space is to avoid the “losers” or “value traps.” Academic studies have shown that small cap value has historically outperformed other asset classes, but with higher volatility and less liquidity. By focusing on stock selection within sectors and avoiding the “losers,” we believe we can participate in the long-term performance of small cap value with much less risk than other managers.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Derivative strategies to reduce certain risks of its investments and to enhance income.

• Purchase and sell options on equity securities or stock indices.

• Purchase and sell foreign currency options on U.S. exchanges or U.S. over-the-counter markets.

• Forward foreign currency exchange contracts.

• Preferred stock and bonds that have attached warrants and convertible debt and convertible preferred stock .

• Swaps.

• Repurchase agreements .

• REITs .

• Private Investments in Public Equity “PIPES .”

The Portfolio is managed by Goldman Sachs Asset Management, L.P.

SP Large Cap Value Portfolio

The Portfolio normally invests at least 80% of its investable assets in common stocks and securities convertible into common stocks. The Portfolio generally defines large capitalization companies as those with a total market capitalization of $5 billion or more (measured at the time of purchase). The Portfolio will not change this policy unless it provides 60 days written notice to contract owners.

The Portfolio seeks to achieve its objective through investments primarily in equity securities or large capitalization companies that are believed to be undervalued and have an above-average potential to increase in price, given the company’s sales, earnings, book value, cash flow and recent performance.

The Portfolio may invest in debt obligations for their appreciation potential, including debt obligations issued by the U.S. Treasury, debt obligations issued or guaranteed by the U.S. Government, and debt obligations issued by U.S. and foreign companies that are rated at least A by Standard & Poor’s or by Moody’s or the equivalent by another major rating service.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Preferred stock and bonds that have attached warrants.

• Convertible debt and convertible preferred stock.

• Asset-backed securities.

• Alternative investment strategies—including derivatives—to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity or debt securities, stock indexes and foreign currencies.

• Purchase and sell stock index and foreign currency futures contracts and options on these futures contracts.

• Swaps.

• Repurchase agreements.

In response to adverse market, economic or political conditions, the Portfolio may temporarily invest up to 100% of its assets in money market instruments or U.S. Government securities. Investing heavily in these securities limits our ability to achieve the Portfolio’s investment objective, but can help preserve the Portfolio’s assets when the markets are unstable.

The Portfolio is co-managed by J.P. Morgan Investment Management Inc. (J.P. Morgan) and Hotchkis and Wiley Capital Management LLC (Hotchkis and Wiley). J.P. Morgan and Hotchkis and Wiley are each responsible for managing approximately 50% of the Portfolio’s assets.

SP LSV International Value Portfolio (formerly, SP Deutsche International Equity Portfolio)

The investment objective of this Portfolio is long-term capital appreciation . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

The Portfolio invests primarily in equity securities of companies represented in the MSCI EAFE Index. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

LSV uses proprietary investment models to manage the Portfolio in a bottom-up security selection approach combined with overall portfolio risk management. The primary components of the investment models are: 1) indicators of fundamental undervaluation, such as high dividend yield, low price-to-cash flow ratio or low price-to-earnings ratio, 2) indicators of past negative market sentiment, such as poor past stock price performance, 3) indicators of recent momentum, such as high recent stock price performance, and 4) control of incremental risk relative to the benchmark index. All such indicators are measured relative to the overall universe of non-US, developed market equities. This investment strategy can be described as a “contrarian value” approach. The objective of the strategy is to outperform the unhedged U.S. Dollar total return (net of foreign dividend withholding taxes) of the MSCI EAFE Index.

The Portfolio may invest in equity securities from any of the countries comprising the MSCI EAFE Index. The Portfolio will typically hold at least 100 stocks and will generally align its country weightings with those of the MSCI EAFE Index. LSV intends to keep the Portfolio’s assets as fully invested in non-U.S. equities as practicable at all times, except as needed to accommodate the Portfolio’s liquidity needs.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Convertible securities.

• Warrants.

• Foreign securities.

• Options (on stock, debt, stock indices, foreign currencies, and futures).

• Futures contracts.

• Forward foreign currency exchange contracts.

• Interest rate swaps.

• Loan participations.

• Reverse repurchase agreements.

• Dollar rolls.

• When-issued and delayed delivery securities

• Short sales.

• Illiquid securities.

The Portfolio may from time to time adopt a temporary defensive position in response to extraordinary adverse political, economic or stock market events. The Portfolio may invest up to 100% of its assets in U.S. or foreign government money market investments, or other short-term bonds that offer comparable safety, if the situation warranted. To the extent the Portfolio might adopt such a position over the course of its duration, the Portfolio may not meet its goal of long-term capital appreciation.

The Portfolio is managed by LSV Asset Management. Prior to November 22, 2004, the Portfolio was managed by Deutsche Asset Management Investment Services Limited.

SP Mid Cap Growth Portfolio

The Portfolio invests, under normal market conditions, at least 80% of its investable assets in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts for those securities, of companies with medium market capitalizations that are believed to have above-average growth potential. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

Medium market capitalization companies are defined by the Portfolio as companies with market capitalizations equaling or exceeding $250 million but not exceeding the top of the Russell Midcap ^™ Growth Index range at the time of the Portfolio’s investment. This Index is a widely recognized, unmanaged index of mid cap common stock prices. Companies whose market capitalizations fall below $250 million or exceed the top of the Russell Midcap ^™ Growth Index range after purchase continue to be considered medium-capitalization companies for purposes of the fund’s 80% investment policy. As of February 28, 2004, the top of the Russell Midcap ^™ Growth Index range was approximately $36.073 billion. The Portfolio’s investments may include securities

listed on a securities exchange or traded in the over-the-counter markets. The investment adviser uses a bottom-up and top-down, analysis in managing the Portfolio. This means that securities are selected based upon fundamental analysis (such as an analysis of earnings, cash flows, competitive position and management’s abilities) as well as top-down approach of diversification by industry and company, and paying attention to macro-level investment themes.

The Portfolio may invest in foreign securities (including emerging markets securities) through which it may have exposure to foreign currencies. The Portfolio is expected to engage in active and frequent trading to achieve its principal investment strategies. Generally, the Portfolio will invest no more than (i) 20% of its net assets in foreign securities and (ii) 10% in lower rated bonds, and the Portfolio will not lend more than 30% of the value of its securities.

The Portfolio may also invest in a variety of debt securities, equity securities, and other instruments, including the following types of securities:

• Corporate debt.

• Lower-rated bonds.

• U.S. Government securities.

• Variable and floating rate obligations.

• Zero coupon bonds.

• Deferred interest bonds.

• PIK bonds.

• Depository receipts.

• Emerging markets equity securities.

• Forward contracts.

• Futures contracts.

• Securities issued by investment companies.

• Options (on currencies, futures, securities, and stock indices).

• Repurchase agreements.

• Restricted securities.

• Short sales and short sales against-the-box.

• Short-term debt.

• Warrants.

• When-issued and delayed delivery securities.

The Portfolio may borrow for temporary purposes.

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

The Portfolio is managed by Calamos Advisors LLC

SP PIMCO High Yield Portfolio

The investment objective of this Portfolio is a high total return . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Under normal circumstances, the Portfolio invests at least 80% of its net assets in high yield/high risk bonds, which are often referred to as “junk bonds.” The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners. The Portfolio may invest up to 15% of its total assets in derivative instruments, such as options , futures contracts or swaps . The Portfolio may also invest in mortgage-related securities or asset-backed securities.

The Portfolio may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls ). The “total return” sought by the Portfolio consists of income earned on the Portfolio’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security.

In selecting securities for the Portfolio, PIMCO develops an outlook for interest rates, currency exchange rates and the economy; analyzes credit and call risks, and uses other security selection techniques. The proportion of a Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. economy and the economies of other countries in the world, the financial markets and other factors.

PIMCO attempts to identify areas of the bond market that are undervalued relative to the rest of the market. PIMCO identifies these areas by grouping bonds into the following sectors: money markets, governments, corporates, mortgages, asset-backed and international. Sophisticated proprietary software then assists in evaluating sectors and pricing specific securities. Once investment opportunities are identified, PIMCO will shift assets among sectors depending upon changes in relative valuations and credit spreads. There is no guarantee that PIMCO’s security selection techniques will produce the desired results.

The Portfolio may invest in Brady Bonds, which are described below in the section on the SP PIMCO Total Return Portfolio. The Portfolio may also invest in the following types of debt obligations: commercial paper, bank certificates of deposit, fixed time deposits and bankers’ acceptances, obligations of non-U.S. governments or their sub-divisions, agencies and government-sponsored enterprises, international agencies or supranational entities, debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises, mortgage-backed and other asset-backed securities, structured notes, including hybrid or “indexed” securities and loan participations, delayed funding loans and revolving credit facilities.

Securities rated lower than Baa by Moody’s Investors Service, Inc. (Moody’s) or lower than BBB by Standard & Poor’s Ratings Services (S&P) are sometimes referred to as “high yield” or “junk” bonds. Investing in high yield securities involves special risks in addition to the risks associated with investments in higher-rated fixed income securities. While offering a greater potential opportunity for capital appreciation and higher yields, high yield securities typically entail greater potential price volatility and may be less liquid than higher-rated securities. High yield securities may be regarded as predominantly speculative with respect to the issuer’s continuing ability to meet principal and interest payments. They may also be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• S wap agreements, including interest rate, credit default, currency exchange rate and total return swaps .

• Preferred stock.

• Debt from emerging markets.

• Event-linked bonds .

• Inflation-indexed bonds issued by both governments and corporations.

• Convertible debt and convertible preferred stock securities .

• Short sales.

• Securities issued on a when-issued or delayed delivery basis (the Portfolio may make contracts to purchase such securities for a fixed price at a future date beyond normal settlement time (forward commitment)).

• Repurchase Agreements and Reverse repurchase agreements.

• Dollar rolls.

• Illiquid securities (up to 15% of the Portfolio’s net assets may be invested in these instruments).

• Securities issued by other investment companies (up to 10% of the Portfolio’s assets may be invested in such securities). As a shareholder of an investment company, a Portfolio may indirectly bear service and other fees which are in addition to the fees the Portfolio pays its service providers.

• Long and short credit default swaps .

The Portfolio may also enter into, or acquire participations in, delayed funding loans and revolving credit facilities, which are described in the section on SP PIMCO Total Return Portfolio.

For the purpose of achieving income, each Portfolio may lend its portfolio securities to brokers, dealers, and other financial institutions provided a number of conditions are satisfied, including that the loan is fully collateralized.

For temporary or defensive purposes, the Portfolio may invest without limit in U.S. debt securities, including taxable securities and short-term money market securities, when PIMCO deems it appropriate to do so. When the Portfolio engages in such strategies, it may not achieve its investment objective.

The Portfolio is managed by Pacific Investment Management Company LLC (PIMCO).

SP PIMCO Total Return Portfolio

The Investment objective of this Portfolio is a high total return . This investment objective is non-fundamental, meaning that we can change the investment objective without seeking a vote of contract owners. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

The Portfolio invests primarily in investment grade debt securities. It may also invest up to 10% of its assets in high yield/high risk securities (also known as “junk bonds”) rated B or higher by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality.

The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

The Portfolio may invest all of its assets in derivative instruments , such as options , futures contracts or swap agreements, or in mortgage- or asset-backed securities. The Portfolio may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls ). The “total return” sought by the Portfolio consists of income earned on the Portfolio’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security.

In selecting securities for a Portfolio, PIMCO develops an outlook for interest rates, currency exchange rates and the economy; analyzes credit and call risks, and uses other security selection techniques. The proportion of a Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. economy and the economies of other countries in the world, the financial markets and other factors.

The Portfolio may invest in Brady Bonds, which are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with a debt restructuring. Investments in Brady Bonds may be viewed as speculative. Brady Bonds acquired by the Portfolio may be subject to restructuring arrangements or to requests for new credit, which may cause the Portfolio to suffer a loss of interest or principal on any of its holdings.

The Portfolio may invest in the following types of debt securities: commercial paper, bank certificates of deposit, fixed time deposits and bankers’ acceptances, obligations of non-U.S. governments or their sub-divisions, agencies and government-sponsored enterprises, international agencies or supranational entities, debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises, mortgage-backed and other asset-backed securities, structured notes, including hybrid or “indexed” securities and loan participations, delayed funding loans and revolving credit facilities.

The Portfolio may invest in inflation-indexed bonds issued by both governments and corporations, which are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal. The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than inflation, real interest rates may rise, leading to a decrease in value of inflation-indexed bonds. Short-term increases in inflation may lead to a decline in value. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Swap agreements, including interest rate, credit default, currency exchange rate, total return and swap spreadlock swaps .

• Preferred stock.

• Debt from emerging markets.

• Forward foreign currency exchange contracts .

• Event-linked bonds .

• Convertible debt and convertible preferred stock.

• Short sales.

• Securities issued on a when-issued or delayed delivery basis, and may make contracts to purchase such securities for a fixed price at a future date beyond normal settlement time (forward commitments).

• Repurchase Agreements and Reverse Repurchase Agreements.

• Dollar rolls.

• Illiquid securities (up to15% of the Portfolio’s assets may be invested in these instruments).

• Securities of other investment companies (up to 10% of the Portfolio’s assets may be invested in these instruments). As a shareholder of an investment

• company, the Portfolio may indirectly bear service and other fees which are in addition to the fees the Portfolio pays its service providers.

• Long and short credit default swaps .

The Portfolio may also enter into, or acquire participations in, delayed funding loans and revolving credit facilities, in which a lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. These commitments may have the effect of requiring a Portfolio to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that a Portfolio is committed to advance additional Portfolios, it will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Directors in an amount sufficient to meet such commitments. Delayed loans and revolving credit facilities are subject to credit, interest rate and liquidity risk and the risks of being a lender.

The Portfolio is managed by Pacific Investment Management Company LLC (PIMCO).

SP Prudential U.S. Emerging Growth Portfolio

The investment objective of this Portfolio is long-term capital appreciation . While we make every effort to achieve its objective, we can’t guarantee success and it is possible that you could lose money.

In deciding which equities to buy, the Portfolio uses what is known as a growth investment style. This means the Portfolio invests in companies that it believes could experience superior sales or earnings growth. In pursuing this objective, the Portfolio normally invests at least 80% of the Portfolio’s investable assets in equity securities of small and medium-sized U.S. companies with the potential for above-average growth. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

The Portfolio considers small and medium-sized companies to be those with market capitalizations that are less than the largest capitalization of the Standard and Poor’s Mid Cap 400 Stock Index as of the end of a calendar quarter. As of December 31, 2003, this number was $11.8 billion. We use the market capitalization measurements used by S&P at time of purchase.

In addition to buying equities, the Portfolio may invest in other equity-related securities. Equity-related securities include American Depositary Receipts (ADRs) ; common stocks; nonconvertible preferred stocks; warrants and rights that can be exercised to obtain stock; investments in various types of business ventures, including partnerships and joint ventures; Real Estate Investment Trusts (REITs) ; and similar securities.

The Portfolio also may buy convertible debt securities and convertible preferred stock . These are securities that the Portfolio can convert into the company’s common stock or some other equity security. The Portfolio will only invest in investment-grade convertible securities. Generally, the Portfolio considers selling a security when, in the opinion of the investment adviser, the stock has experienced a fundamental disappointment in earnings; it has reached an intermediate-term price objective and its outlook no longer seems sufficiently promising; a relatively more attractive stock emerges; or the stock has experienced adverse price movements.

The Portfolio can invest up to 20% of investable assets in equity securities of companies with larger or smaller market capitalizations than previously noted. The Portfolio may participate in the initial public offering (IPO) market. IPO investments may increase the Portfolio’s total returns. As the Portfolio’s assets grow, the impact of IPO investments will decline, which may reduce the Portfolio’s total returns.

The Portfolio can invest up to 35% of total assets in foreign securities, including stocks and other equity-related securities, money market instruments and other investment-grade fixed-income securities of foreign issuers, including those in developing

countries. For purposes of the 35% limit, the Portfolio does not consider ADRs and other similar receipts or shares to be foreign securities.

The Portfolio can invest up to 20% of investable assets in investment-grade corporate or government obligations. Investment-grade obligations are rated in one of the top four long-term quality ratings by a major rating service (such as Baa/BBB or better by Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group (S&P), respectively). The Portfolio also may invest in obligations that are not rated, but which it believes to be of comparable quality. Obligations rated in the fourth category (Baa/BBB) have speculative characteristics. These lower-rated obligations are subject to a greater risk of loss of principal and interest. Generally, fixed-income securities provide a fixed rate of return, but provide less opportunity for capital appreciation than investing in stocks. The Portfolio will purchase money market instruments only in one of the two highest short-term quality ratings of a major rating service.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Repurchase agreements.

• Foreign currency forward contracts.

• Derivative strategies.

• Securities issued by agencies of the U.S. Government or instrumentalities of the U.S. Government. These obligations, including those which are guaranteed by Federal agencies or instrumentalities, may or may not be backed by the full faith and credit of the United States.

• Mortgage-related securities , including those which represent undivided ownership interests in pools of mortgages. The U.S. Government or the issuing agency or instrumentality guarantees the payment of interest on and principal of these securities. However, the guarantees do not extend to the yield or value of the securities nor do the guarantees extend to the yield or value of the Portfolio’s shares.

• Purchase and write (that is, sell) put and call options on securities, stock indexes and currencies that are traded on U.S. or foreign securities exchanges or in the over-the-counter market.

• Financial futures contracts and options thereon which are traded on a commodities exchange or board of trade.

The Portfolio also follows certain policies when it borrows money (the Portfolio can borrow up to 20% of the value of its total assets); and holds illiquid securities (the Portfolio may hold up to 15% of its net assets in illiquid securities, including securities with legal or contractual restrictions on resale, those without a readily available market and repurchase agreements with maturities longer than seven days).

As a result of the strategies described above, the Portfolio may have an annual portfolio turnover rate of up to 200%. Portfolio turnover is generally the percentage found by dividing the lesser of portfolio purchases or sales by the monthly average value of the portfolio. High portfolio turnover (100% or more) results in higher brokerage commissions and other transaction costs and can affect the Portfolio’s performance.

In response to adverse market, economic or political conditions, the Portfolio may temporarily invest up to 100% of the Portfolio’s assets in cash or money market instruments. Investing heavily in these securities limits the Portfolio’s ability to achieve capital appreciation, but can help to preserve its assets when the equity markets are unstable.

The Portfolio is managed by Jennison Associates LLC.

SP Small Cap Growth Portfolio (formerly, SP State Street Research Small Cap Growth Portfolio)

The investment objective of this Portfolio is long-term capital growth . While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Under normal circumstances, the Portfolio will invest at least 80% of its investable assets in common stocks of small capitalization companies. The fund considers a company to be a small capitalization company if it has a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000 Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Portfolio will not change this policy unless it provides 60 days prior written notice to contract owners.

The subadvisers are primarily looking for companies in the developing stages of their life cycles, which are currently priced below the subadvisers’ estimation of their potential, have earnings which may be expected to grow faster than the U.S. economy in general, and/or offer earnings growth due to rapid growth of sales, new products, management changes, and/or structural changes in the economy. The Portfolio may invest up to 25% of its assets in securities of non-U.S. issuers. Securities of Canadian issuers and American Depositary Receipts (ADRs) are not subject to this 25% limitation.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• D erivatives . A derivative is a financial instrument whose value is “derived,” in some manner, from the price of another security, index, asset or rate. Derivatives include options and futures contracts , among a wide range of other instruments.

• Repurchase agreements .

• Debt securities.

• Convertible securities

• High yield or “junk” bonds.

• Warrants.

• Forward foreign currency exchange contracts.

• Interest rate swaps.

• When-issued and delayed delivery securities.

• Short sales against-the-box.

• U.S. Government securities.

• Brady Bonds.

• Illiquid securities.

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

The Portfolio is co-managed by Neuberger Berman Asset Management (Neuberger Berman) and Eagle Asset Management (Eagle). Neuberger Berman and Eagle are each responsible for managing approximately 50% of the Portfolio’s assets. Prior to May 1, 2005, the Portfolio was managed on an interim basis by BlackRock Advisors, Inc. from January 31, 2005 to April 30, 2005. Prior to January 31, 2005, the Portfolio was managed by State Street Research and Management Company.

SP Strategic Partners Focused Growth Portfolio

The Portfolio normally invests at least 65% of its total assets in equity-related securities of U.S. companies that are believed to have strong capital appreciation potential. The Portfolio’s strategy is to combine the efforts of two investment advisers and to invest in the favorite stock selection ideas of three portfolio managers (two of whom invest as a team). Each investment adviser to the Portfolio utilizes a growth style to select approximately 20 securities. The portfolio managers build a portfolio with stocks in which they have the highest confidence and may invest more than 5% of the Portfolio’s assets in any one issuer

The Portfolio may actively and frequently trade its portfolio securities. The Portfolio is a non-diversified mutual fund portfolio. This means that the Portfolio may invest in a relatively high percentage of net assets in a small number of issuers. Investing in a nondiversified mutual fund, particularly a fund investing in approximately 40 equity-related securities, involves greater risk than investing in a diversified fund because a loss resulting from the decline in the value of one security may represent a greater portion of the total assets of a nondiversified fund.

The primary equity-related securities in which the Portfolio invests are common stocks. Generally, each investment adviser will consider selling or reducing a stock position when, in their opinion, the stock has experienced a fundamental disappointment in earnings; it has reached an intermediate-term price objective and its outlook no longer seems sufficiently promising; a relatively more attractive stock emerges; or the stock has experienced adverse price movement. A price decline of a stock does not necessarily mean that an investment adviser will sell the stock at that time. During market declines, either investment adviser may add to positions in favored stocks, which can result in a somewhat more aggressive strategy, with a gradual reduction of the number of companies in which the adviser invests. Conversely, in rising markets, either investment adviser may reduce or eliminate fully valued positions, which can result in a more conservative investment strategy, with a gradual increase in the number of companies represented in the adviser’s portfolio segment.

In deciding which stocks to buy, each investment adviser uses what is known as a growth investment style. This means that each adviser will invest in stocks they believe could experience superior sales or earnings growth.

The Portfolio may buy common stocks of companies of every size — small-, medium- and Large Capitalization —although its investments are mostly in medium- and Large Capitalization stocks. The Portfolio intends to be fully invested, holding less than 5% of its total assets in cash under normal market conditions.

Under normal conditions, there will be an approximately equal division of the Portfolio’s assets between the two investment advisers. All daily cash inflows (that is, purchases and reinvested distributions) and outflows (that is, redemptions and expense items) will usually be divided between the two investment advisers as the portfolio manager deems appropriate. There will be a periodic rebalancing of each segment’s assets to take account of market fluctuations in order to maintain the approximately equal allocation. As a consequence, the manager may allocate assets from the portfolio segment that has appreciated more to the other.

AllianceBernstein’s portfolio manager utilizes the fundamental analysis and research of AllianceBernsteins’s large internal research staff. In selecting stocks for the Portfolio, he emphasizes stock selection and investment in a limited number of companies that have strong management, superior industry positions, excellent balance sheets and the ability to demonstrate superior earnings growth.

Jennison Associates’ portfolio managers invest in mid-size and large companies experiencing some or all of the following: high sales growth, high unit growth, high or improving returns on assets and equity and a strong balance sheet. These companies generally trade at high prices relative to their current earnings.

Reallocations may result in additional costs since sales of securities may result in higher portfolio turnover. Also, because each investment adviser selects portfolio securities independently, it is possible that a security held by one portfolio segment may also be held by the other portfolio segment of the Portfolio or that the two advisers may simultaneously favor the same industry. Prudential Investments LLC will monitor the overall portfolio to ensure that any such overlaps do not create an unintended industry concentration. In addition, if one investment adviser buys a security as the other adviser sells it, the net position of the Portfolio in the security may be approximately the same as it would have been with a single portfolio and no such sale and purchase, but the Portfolio will have incurred additional costs. The portfolio manager will consider these costs in determining the allocation of assets. The portfolio manager will consider the timing of reallocation based upon the best interests of the Portfolio and its shareholders. To maintain the Portfolio’s federal income tax status as a regulated investment company, Jennison Associates also may have to sell securities on a periodic basis.

The Portfolio may invest up to 20% of its total assets in foreign securities, including stocks and other equity-related securities, money market instruments and other fixed-income securities of foreign issuers. The Portfolio does not consider ADRs and other similar receipts or shares to be foreign securities.

The Portfolio may temporarily hold cash or invest in high-quality foreign or domestic money market instruments pending investment of proceeds from new sales of Portfolio shares or to meet ordinary daily cash needs subject to the policy of normally investing at least 65% of the Portfolio’s assets in equity-related securities. In response to adverse market, economic, political or other conditions, the Portfolio may temporarily invest up to 100% of its assets in money market instruments. Investing heavily in these securities limits the ability to achieve the investment objective, but can help to preserve the Portfolio’s assets when the equity markets are unstable.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• R epurchase agreements.

• Purchase and write (that is, sell) put and call options on securities indexes that are traded on U.S. or foreign securities exchanges or in the over-the-counter market to try to enhance return or to hedge the Portfolio’s portfolio. The Portfolio may write covered put and call options to generate additional income through the receipt of premiums, purchase put options in an effort to protect the value of a security that it owns against a decline in market value and purchase call options in an effort to protect against an increase in the price of securities it intends to purchase. The Portfolio also may purchase put and call options to offset previously written put and call options of the same series. The Portfolio will write only “covered” options. The Portfolio may purchase and sell stock index futures contracts and related options on stock index futures. The Portfolio may purchase and sell futures contracts on foreign currencies and related options on foreign currency futures contracts.

• Securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government. Not all U.S. Government securities are backed by the full faith and credit of the United States. Some are supported only by the credit of the issuing agency.

• Futures contracts and options on futures contracts for certain bona fide hedging, return enhancement and risk management purposes.

• Purchase put and call options and write (that is, sell) “covered” put and call options on futures contracts that are traded on U.S. and foreign exchanges.

• Short sales.

• Derivatives to try to improve the Portfolio’s returns. The Portfolio may use hedging techniques to try to protect the Portfolio’s assets. We cannot guarantee that these strategies will work, that the instruments necessary to implement these strategies will be available, or that the Portfolio will not lose money.

• Nonconvertible preferred stocks.

• Convertible debt and convertible preferred stock

• American Depositary Receipts ( ADRs).

• Warrants and rights that can be exercised to obtain stock.

• Investments in various types of business ventures, including partnerships and joint ventures.

• Equity and debt securities issued by Real Estate Investment Trusts (REITs ).

The Portfolio also follows certain policies when it borrows money (the Portfolio can borrow up to 33% of the value of its total assets); and holds illiquid securities (the Portfolio may hold up to 15% of its net assets in illiquid securities, including securities with legal or contractual restrictions on resale, those without a readily available market and repurchase agreements with maturities longer than seven days). The Portfolio is subject to certain investment restrictions that are fundamental policies, which means they cannot be changed without shareholder approval. For more information about these restrictions, see the SAI.

It is not a principal strategy of the Portfolio to actively and frequently trade its portfolio securities to achieve its investment objective. Nevertheless, the Portfolio may have an annual portfolio turnover rate of up to 200%. Portfolio turnover is generally the percentage found by dividing the lesser of portfolio purchases and sales by the monthly average value of the portfolio. High portfolio turnover (100% or more) results in higher brokerage commissions and other costs and can affect the Portfolio’s performance.

The Portfolio is managed by Jennison Associates LLC and Alliance Capital Management L.P

SP William Blair International Growth Portfolio

The Portfolio invests primarily in equity related securities of foreign companies. A company is considered to be a foreign company if it satisfies at least one of the following criteria: its securities are traded principally on stock exchanges in one or more foreign countries; it derives 50% or more of its total revenue from goods produced, sales made or services performed in one or more foreign countries; it maintains 50% or more of its assets in one or more foreign countries; it is organized under the laws of a foreign country; or its principal executive office is located in a foreign country.

The Portfolio invests in about 60 securities of primarily non-U.S. growth companies whose shares appear attractively valued on a relative and absolute basis. The Portfolio looks for companies that have above-average actual and potential earnings growth over the long term and strong financial and operational characteristics. The Portfolio selects stocks on the basis of individual company research. Thus, country, currency and industry weightings are primarily the result of individual stock selections. Although the Portfolio may invest in companies of all sizes, the Portfolio typically focuses on large and medium sized companies. Under normal conditions, the Portfolio intends to invest at least 65% of its total assets in the equity-related securities of foreign companies in at least five foreign countries. The Portfolio may invest anywhere in the world, including North America, Western Europe, the United Kingdom and the Pacific Basin, but generally not the U.S.

The principal type of equity-related security in which the Portfolio invests is common stock. In addition to common stock, the Portfolio may invest in other equity-related securities that include, but are not limited to, preferred stock, rights that can be exercised to obtain stock, warrants and debt securities or preferred stock convertible or exchangeable for common or preferred stock and master limited partnerships. The Portfolio may also invest in American Depositary Receipts (ADRs) , which we consider to be equity-related securities.

In deciding which stocks to purchase for the Portfolio, William Blair looks for growth companies that have both strong fundamentals and appear to be attractively valued relative to their growth potential. William Blair uses a bottom-up approach in selecting securities for the Portfolio, which means that they select stocks based on individual company research, rather than allocating by country or sector. In researching which stocks to buy, William Blair looks at a company’s basic financial and operational characteristics as well as compare the company’s stock price to the price of stocks of other companies that are its competitors, absolute historic valuation levels for that company’s stock, its earnings growth and the price of existing portfolio holdings. Another important part of William Blair’s research process is to have regular contact with management of the companies that they purchase in order to confirm earnings expectations and to assess management’s ability to meet its stated goals. Although the Portfolio may invest in companies of all sizes, it typically focuses on large and medium sized companies.

Generally, William Blair looks for companies that have one or more of the following characteristics: actual and potential growth in earnings and cash flow; actual and improving profitability; strong balance sheets; management strength; and strong market share for the company’s products.

In addition, William Blair looks for companies whose securities appear to be attractively valued relative to: each company’s peer group; absolute historic valuations; and existing holdings of the Portfolio. Generally, they consider selling a security when there is an identifiable change in a company’s fundamentals or when expectations of future earnings growth become fully reflected in the price of that security.

The Portfolio may invest in bonds, money market instruments and other fixed income obligations. Generally, the Portfolio will purchase only “Investment-Grade” fixed income investments. This means the obligations have received one of the four highest quality ratings determined by Moody’s Investors Service, Inc. (Moody’s), or Standard & Poor’s Ratings Group (S&P), or one of the other nationally recognized statistical rating organizations (NRSROs). Obligations rated in the fourth category (Baa for Moody’s or BBB for S&P) have speculative characteristics and are subject to a greater risk of loss of principal and interest. On occasion, the Portfolio may buy instruments that are not rated, but that are of comparable quality to the investment-grade bonds described above.

The Portfolio may also pursue the following types of investment strategies and/or invest in the following types of securities:

• Alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns, protect its assets or for short-term cash management.

• Purchase and sell options on equity securities, stock indexes and foreign currencies.

• Purchase and sell futures contracts on stock indexes, debt securities, interest rate indexes and foreign currencies and options on these futures contracts,

• Forward foreign currency exchange contracts.

• Purchase securities on a when-issued or delayed delivery basis.

• Borrow up to 33% of the value of the Portfolio’s total assets.

• Short sales against-the-box.

• Repurchase agreements. The Portfolio may participate with certain other Portfolios of the Fund in a joint repurchase account under an order obtained from the SEC.

In response to adverse market, economic or political conditions, the portfolio may temporarily invest up to 100% of its assets in money market instruments or in the stock and other equity-related securities of U.S. companies. Investing heavily in money market instruments limits the ability to achieve capital appreciation, but may help to preserve the portfolio’s assets when global or international markets are unstable. When the portfolio is temporarily invested in equity-related securities of U.S. companies, the portfolio may achieve capital appreciation, although not through investment in foreign companies.

This Portfolio is managed by William Blair & Company LLC.

SP Asset Allocation Portfolios

There are four Asset Allocation Portfolios. The investment objective of each of the Portfolios is to obtain the highest potential total return consistent with the specified level of risk tolerance . The definition of risk tolerance level is not a fundamental policy and, therefore, can be changed by the Fund’s Board of Directors at any time. While each Portfolio will try to achieve its objective, we can’t guarantee success and it is possible that you could lose money. The Asset Allocation Portfolios are designed for:

• the investor who wants to maximize total return potential, but lacks the time, or expertise to do so effectively;

• the investor who does not want to watch the financial markets in order to make periodic exchanges among Portfolios; and

• the investor who wants to take advantage of the risk management features of an asset allocation program.

The investor chooses an Asset Allocation Portfolio by determining which risk tolerance level most closely corresponds to the investor’s individual planning needs, objectives and comfort.

Each Asset Allocation Portfolio currently invests its assets in shares of underlying Portfolios according to the target percentages indicated in the Portfolio descriptions below. Periodically, we will rebalance each Asset Allocation Portfolio to bring the Portfolio’s holdings in line with those target percentages. Prudential Investments LLC (PI) expects that the rebalancing will occur on a monthly basis, although the rebalancing may occur less frequently. In addition, PI will review the target percentages annually. Based on its evaluation, the target percentages may be adjusted. Such adjustments will be reflected in the annual update to this prospectus. With respect to each of the four Asset Allocation Portfolios, PI reserves the right to alter the percentage allocations indicated below and/or the underlying Fund Portfolios in which the Asset Allocation Portfolio invests if market conditions warrant. Although we will make every effort to meet each Asset Allocation Portfolio’s investment objective, we can’t guarantee success.

The performance of each Asset Allocation Portfolio depends on how its assets are allocated and reallocated between the underlying Portfolios. A principal risk of investing in each Asset Allocation Portfolio is that PI will make less than optimal decisions

regarding allocation of assets in the underlying Portfolios. Because each of the Asset Allocation Portfolios invests all of its assets in underlying Portfolios, the risks associated with each Asset Allocation Portfolio are closely related to the risks associated with the securities and other investments held by the underlying Portfolios. The ability of each Asset Allocation Portfolio to achieve its investment objective will depend on the ability of the underlying Portfolios to achieve their investment objectives.

Each Asset Allocation Portfolio is managed by Prudential Investments LLC.

SP Aggressive Growth Asset Allocation Portfolio

This Portfolio seeks capital appreciation by investing in domestic equity Portfolios and international Portfolios. The Portfolio currently invests in the following underlying Portfolios:

• a domestic equity component (approximately 72% of the Portfolio), invested in shares of:

Jennison Portfolio		(32% of Portfolio)
SP Large Cap Value Portfolio		(35% of Portfolio)
SP Small Cap Growth Portfolio		(3% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(2% of Portfolio)

• an international equity component (approximately 28% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(14% of Portfolio)
SP William Blair International Growth Portfolio		(14% of Portfolio)

For more information on the underlying Portfolios, please refer to the descriptions of each Portfolio’s investment objectives and policies included in this prospectus.

SP Balanced Asset Allocation Portfolio

This Portfolio seeks to balance current income and growth of capital by investing in domestic equity Portfolios, fixed income Portfolios and international Portfolios. The Portfolio currently invests in the following underlying Portfolios:

• a domestic equity component (approximately 45% of the Portfolio), invested in shares of:

Jennison Portfolio		(20% of Portfolio)
SP Large Cap Value Portfolio		(22% of Portfolio)
SP Small Cap Growth Portfolio		(1.5% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1.5% of Portfolio)

• a fixed income component (approximately 37% of the Portfolio), invested in shares of:

SP PIMCO Total Return Portfolio		(30% of Portfolio)
SP PIMCO High Yield Portfolio		(3% of Portfolio)
Money Market Portfolio		(4% of Portfolio)

• an international equity component (approximately 18% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(9% of Portfolio)
SP William Blair International Growth Portfolio		(9% of Portfolio)

For more information on the underlying Portfolios, please refer to the description of each Portfolio’s investment objectives and policies included in this prospectus.

SP Conservative Asset Allocation Portfolio

This Portfolio seeks to provide current income with low to moderate capital appreciation by investing in domestic equity Portfolios, fixed income Portfolios, and international Portfolios. The Portfolio currently invests in the following underlying Portfolios:

• a domestic equity component (approximately 31% of the Portfolio), invested in shares of:

Jennison Portfolio		(13% of Portfolio)
SP Large Cap Value Portfolio		(16% of Portfolio)
SP Small Cap Growth Portfolio		(1% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1% of Portfolio)

• a fixed income component (approximately 57% of the Portfolio), invested in shares of:

SP PIMCO Total Return Portfolio		(47% of Portfolio)
SP PIMCO High Yield Portfolio		(3% of Portfolio)
Money Market Portfolio		(7% of Portfolio)

• an international equity component (approximately 12% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(6% of Portfolio)
SP William Blair International Growth Portfolio		(6% of Portfolio)

For more information on the underlying Portfolios, please refer to the description of each Portfolio’s investment objectives and policies included in this prospectus.

SP Growth Asset Allocation Portfolio

This Portfolio seeks to provide long-term growth of capital with consideration also given to current income by investing in domestic equity Portfolios, fixed income Portfolios, and international Portfolios. The Portfolio currently invests in the following underlying Portfolios:

• a domestic equity component (approximately 59% of the Portfolio), invested in shares of:

Jennison Portfolio		(26% of Portfolio)
SP Large Cap Value Portfolio		(29% of Portfolio)
SP Small Cap Growth Portfolio		(2.5% of Portfolio)
SP Goldman Sachs Small Cap Value Portfolio		(1.5% of Portfolio)

• a fixed income component (approximately 18% of the Portfolio), invested in shares of:

SP PIMCO High Yield Portfolio		(3% of Portfolio)
SP PIMCO Total Return Portfolio		(15% of Portfolio)

• an international equity component (approximately 23% of the Portfolio), invested in shares of:

SP LSV International Value Portfolio		(11.5% of Portfolio)
SP William Blair International Growth Portfolio		(11.5% of Portfolio)

For more information on the underlying Portfolios, please refer to the descriptions of each Portfolio’s investment objectives and policies included in this prospectus.

* * *

MORE DETAILED INFORMATION ABOUT OTHER INVESTMENTS AND STRATEGIES USED BY THE PORTFOLIOS

As indicated in the descriptions of the Portfolios above, we may invest in the following types of securities and/or use the following investment strategies to increase a Portfolio’s return or protect its assets if market conditions warrant.

American Depositary Receipts (ADRs) — Certificates representing the right to receive foreign securities that have been deposited with a U.S. bank or a foreign branch of a U.S. bank.

Asset-Backed Securities — An asset-backed security is a type of pass-through instrument that pays interest based upon the cash flow of an underlying pool of assets, such as automobile loans or credit card receivables. Asset-backed securities may also be collateralized by a portfolio of corporate bonds, including junk bonds, or other securities.

Collateralized Debt Obligations (CDOs) — A CDO is a security backed by an underlying portfolio of debt obligations, typically including one or more of the following types of investments: high yield securities, investment grade securities, bank loans, futures or swaps. A CDO provides a single security that has the economic characteristics of a diversified portfolio. The cash flows generated by the collateral are used to pay interest and principal to investors.

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

Credit Default Swaps — In a credit default swap, the Portfolio and another party agree to exchange payment of the par (or other agreed-upon) value of a referenced debt obligation in the event of a default on that debt obligation in return for a periodic stream of payments over the term of the contract provided no event of default has occurred. See also “Swaps” defined below.

Credit-Linked Securities — Credit linked securities are securities that are collateralized by one or more credit default swaps on corporate credits. The Portfolio has the right to receive periodic interest payments from the issuer of the credit-linked security at an agreed-upon interest rate, and a return of principal at the maturity date. See also “Credit Default Swaps” defined above.

Derivatives — A derivative is an investment instrument that derives its price, performance, value, or cash flow from one or more underlying securities or other interests. Derivatives involve costs and can be volatile. With derivatives, the investment adviser tries to predict whether the underlying investment — a security, market index, currency, interest rate or some other benchmark — will go up or down at some future date. We may use derivatives to try to reduce risk or to increase return consistent with a Portfolio’s overall investment objective. The investment adviser will consider other factors (such as cost) in deciding whether to employ any particular strategy, or use any particular instrument. Any derivatives we use may not fully offset a Portfolio’s underlying positions and this could result in losses to the Portfolio that would not otherwise have occurred.

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

Equity Swaps — In an equity swap, the Portfolio and another party agree to exchange cash flow payments that are based on the performance of equities or an equity index. See also “Swaps” defined below.

Event-Linked Bonds — Event-linked bonds are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific “trigger” event, such as a hurricane, earthquake, or other physical or weather-related phenomenon. If a trigger event occurs, a Portfolio may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including credit risk, adverse regulatory or jurisdictional interpretations, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.

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

Futures Contracts — A futures contract is an agreement to buy or sell a set quantity of an underlying product at a future date, or to make or receive a cash payment based on the value of a securities index. When a futures contract is entered into, each party deposits with a futures commission merchant (or in a segregated account) approximately 5% of the contract amount. This is known as the “initial margin.” Every day during the futures contract, either the buyer or the futures commission merchant will make payments of “variation margin.” In other words, if the value of the underlying security, index or interest rate increases, then the buyer will have to add to the margin account so that the account balance equals approximately 5% of the value of the contract on that day. The next day, the value of the underlying security, index or interest rate may decrease, in which case the borrower would receive money from the account equal to the amount by which the account balance exceeds 5% of the value of the contract on that day. A stock index futures contract is an agreement between the buyer and the seller of the contract to transfer an amount of cash equal to the daily variation margin of the contract. No physical delivery of the underlying stocks in the index is made.

Interest Rate Swaps — In an interest rate swap, the Portfolio and another party agree to exchange interest payments. For example, the Portfolio may wish to exchange a floating rate of interest for a fixed rate. We would enter into that type of a swap if we think interest rates are going down. See also “Swaps” defined below.

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

Loans and Assignments — Loans are privately negotiated between a corporate borrower and one or more financial institutions. The Portfolio acquires interests in loans directly (by way of assignment from the selling institution) or indirectly (by way of the purchase of a participation interest from the selling institution. Purchasers of loans depend primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. If scheduled interest or principal payments are not made, the value of the instrument may be adversely affected. Interests in loans are also subject to additional liquidity risks. Loans are not generally traded in organized exchange markets but are traded by banks and other institutional investors engaged in loan syndications. Consequently, the liquidity of a loan will depend on the liquidity of these trading markets at the time that the Portfolio sells the loan.

In assignments, the Portfolio will have no recourse against the selling institution, and the selling institution generally makes no representations about the underlying loan, the borrowers, the documentation or the collateral. In addition, the rights against the borrower that are acquired by the Portfolio may be more limited than those held by the assigning lender.

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

Mortgage-related securities include collateralized mortgage obligations, multi-class pass through securities and stripped mortgage-backed securities. A collateralized mortgage-backed obligation (CMO) is a security backed by an underlying portfolio of mortgages or mortgage-backed securities that may be issued or guaranteed by entities such as banks, U.S. Governmental entities or broker-dealers. A multi-class pass-through security is an equity interest in a trust composed of underlying mortgage assets.

Payments of principal and interest on the mortgage assets and any reinvestment income provide the money to pay debt service on the CMO or to make scheduled distributions on the multi-class pass-through security. A stripped mortgage-backed security (MBS strip) may be issued by U.S. Governmental entities or by private institutions. MBS strips take the pieces of a debt security (principal

and interest) and break them apart. The resulting securities may be sold separately and may perform differently. MBS strips are highly sensitive to changes in prepayment and interest rates.

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

Private Investments in Public Equity (PIPEs) — A PIPE is an equity security in a private placement that are issued by issuers who have outstanding, publicly-traded equity securities of the same class. Shares in PIPEs generally are not registered with the SEC until after a certain time period from the date the private sale is completed. This restricted period can last many months. Until the public registration process is completed, PIPEs are restricted as to resale and the Fund cannot freely trade the securities. Generally, such restrictions cause the PIPEs to be illiquid during this time. PIPEs may contain provisions that the issuer will pay specified financial penalties to the holder if the issuer does not publicly register the restricted equity securities within a specified period of time, but there is no assurance that the restricted equity securities will be publicly registered, or that the registration will remain in effect.

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

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

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

Short Sales — In a short sale, we sell a security we do not own to take advantage of an anticipated decline in the stock’s price. The Portfolio borrows the stock for delivery and if it can buy the stock later at a lower price, a profit results.

Short Sales Against-the-Box — A short sale against-the-box means the Portfolio owns securities identical to those sold short.

Swap Options — A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a swap agreement or to shorten, extend cancel or otherwise modify an existing swap agreement at some designated future time on specified terms. See also “Options” defined above.

Swaps — Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. Credit Default Swaps, Equity Swaps, Interest Rate Swaps and Total Return Swaps are four types of swap agreements.

Total Return Swaps — In a total return swap, payment (or receipt) of an index’s total return is exchanged for the receipt (or payment) of a floating interest rate. See also “Swaps” defined above.

When-Issued and Delayed Delivery Securities — With when-issued or delayed delivery securities, the delivery and payment can take place a month or more after the date of the transaction. A Portfolio will make commitments for when-issued transactions only with the intention of actually acquiring the securities. A Portfolio’s custodian will maintain in a segregated account, liquid assets having a value equal to or greater than such commitments. If the Portfolio chooses to dispose of the right to acquire a when-issued security prior to its acquisition, it could, as with the disposition of any other security, incur a gain or loss.

Except for the Money Market Portfolio and the Zero Coupon Bond Portfolio 2005, each Portfolio also follows certain policies when it borrows money (each Portfolio may borrow up to 5% of the value of its total assets, except that SP Large Cap Value Portfolio and SP Goldman Sachs Small Cap Value Portfolio may each borrow up to 33% of their total assets); lends its securities; and holds illiquid securities (a Portfolio may hold up to 15% of its net assets in illiquid securities, including securities with legal or contractual restrictions on resale, those without a readily available market and repurchase agreements with maturities longer than seven days). If the Portfolio were to exceed this limit, the investment adviser would take prompt action to reduce a Portfolio’s holdings in illiquid securities to no more than 15% of its net assets, as required by applicable law. A Portfolio is subject to certain investment restrictions that are fundamental policies, which means they cannot be changed without shareholder approval. For more information about these restrictions, see the Statement of Additional Information (SAI).

The Money Market Portfolio also follows certain policies when it borrows money (the Portfolio may borrow up to 5% of the value of its total assets) and holds illiquid securities (the Portfolio may hold up to 10% of its net assets in illiquid securities, including securities with legal or contractual restrictions on resale, those without a readily available market and repurchase agreements with maturities longer than seven days). If the Portfolio were to exceed this limit, the investment adviser would take prompt action to reduce the Portfolio’s holdings in illiquid securities to no more than 10% of its net assets, as required by applicable law. The Portfolio is subject to certain investment restrictions that are fundamental policies, which means they cannot be changed without shareholder approval. For more information about these restrictions, see the SAI.

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

HOW THE FUND IS MANAGED

Board of Directors

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

Investment Adviser

Prudential Investments LLC (PI), a wholly-owned subsidiary of Prudential Financial, Inc., serves as the overall investment adviser for the Fund. PI is located at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102. PI and its predecessors have served as manager and administrator to investment companies since 1987. As of December 31, 2004, PI served as the investment manager to all of the Prudential U.S. and offshore investment companies, and as manager or administrator to closed-end investment companies, with aggregate assets of approximately $94 billion.

The Fund uses a “manager-of-managers” structure. Under this structure, PI is authorized to select (with approval of the Fund’s independent directors) one or more subadvisers to handle the actual day-to-day investment management of each Portfolio. PI monitors each subadviser’s performance through quantitative and qualitative analysis, and periodically reports to the Fund’s board of directors as to whether each subadviser’s agreement should be renewed, terminated or modified. PI also is responsible for allocating assets among the subadvisers if a Portfolio has more than one subadviser. In those circumstances, the allocation for each subadviser can range from 0% to 100% of a Portfolio’s assets, and PI can change the allocations without board or shareholder approval. The Fund will notify contract owners of any new subadviser or any material changes to any existing subadvisory agreement.

The following chart lists the total annualized investment advisory fees paid by the Fund to PI in 2004 for each of the Fund’s Portfolios.

Portfolio	Total advisory fees as% of average net assets
Conservative Balanced	0.55
Diversified Bond	0.40
Diversified Conservative Growth	0.75
Equity	0.45
Flexible Managed	0.60
Global	0.75
Government Income	0.40
High Yield Bond	0.55
Jennison 20/20 Focus	0.75
Jennison	0.60
Money Market	0.40
Natural Resources	0.45
Small Capitalization Stock	0.40
Stock Index	0.35
Value	0.40
Zero Coupon Bond 2005	0.40
SP AIM Core Equity	0.85
SP AllianceBernstein Large Cap Growth	0.90
SP Davis Value	0.75
SP Goldman Sachs Small Cap Value	0.90
SP Large Cap Value	0.80
SP LSV International Value	0.90
SP Mid Cap Growth	0.80
SP PIMCO High Yield	0.60
SP PIMCO Total Return	0.60
SP Prudential U.S. Emerging Growth	0.60
SP Small Cap Growth	0.95
SP Strategic Partners Focused Growth	0.90
SP William Blair International Growth	0.85
SP Aggressive Growth Asset Allocation	0.85	**
SP Balanced Asset Allocation	0.77	**
SP Conservative Asset Allocation	0.72	**
SP Growth Asset Allocation	0.81	**

** Each Asset Allocation Portfolio invests only in shares of other underlying Fund Portfolios. The management fee shown for each Asset Allocation Portfolio is based on the weighted average of the management fees borne by the underlying Fund Portfolios according to the allocation percentage targets in place during 2004, plus a 0.05% annual management fee paid to PI. The only management fee directly paid by the Asset Allocation Portfolios is the 0.05% fee paid to PI.

Investment Subadvisers

Each Portfolio has one or more subadvisers providing the day-to-day investment management of the Portfolio. PI pays each subadviser out of the fee that PI receives from the Fund.

Jennison Associates LLC (Jennison) serves as the subadviser for the following Portfolios:

• Global Portfolio

• Natural Resources Portfolio

• Jennison Portfolio

• Jennison 20/20 Focus Portfolio

• SP Prudential U.S. Emerging Growth Portfolio

• Value Portfolio

• Diversified Conservative Growth Portfolio (portion)

• Equity Portfolio (portion)

• SP Strategic Partners Focused Growth Portfolio (portion)

Jennison is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. As of December 31, 2004, Jennison had approximately $64 billion in assets under management for institutional and mutual fund clients. The address of Jennison is 466 Lexington Avenue, New York, New York 10017.

Prudential Investment Management, Inc. (PIM) serves as the subadviser for the following Portfolios:

• Conservative Balanced Portfolio (portion)

• Diversified Bond Portfolio

• Flexible Managed Portfolio (portion)

• Government Income Portfolio

• High Yield Bond Portfolio

• Money Market Portfolio

• Zero Coupon Bond Portfolio 2005

• Diversified Conservative Growth Portfolio (portion)

PIM is a wholly owned subsidiary of Prudential Financial, Inc. As of December 31, 2004, PIM had approximately $200 billion in assets under management. The address of PIM is Gateway Center Two, 100 Mulberry Street, Newark, New Jersey 07102.

Quantitative Management Associates LLC (QMA) serves as the subadviser for the following Portfolios:

• Conservative Balanced Portfolio (portion)

• Flexible Managed Portfolio (portion)

• Small Capitalization Stock Portfolio

• Stock Index Portfolio

QMA is a wholly owned indirect subsidiary of Prudential Investment Management, Inc. (PIM). As of December 31, 2004, QMA had approximately $52 billion in assets under management. The address of QMA is Gateway Center Two, 100 Mulberry Street, Newark, New Jersey 07102.

A I M Capital Management, Inc. (AIM Capital) serves as the subadviser for the following Portfolios:

• SP AIM Core Equity Portfolio

AIM Capital, a registered investment adviser, is an indirect, wholly-owned subsidiary of AMVESCAP, PLC, an international investment management company based in London, with money managers in Europe, South America and the Far East. AIM Capital, together with its affiliates, advised or managed approximately 200 investment portfolios as of December 31, 2004, encompassing a broad range of investment objectives. AIM Capital uses a team approach to investment management. As of December 31, 2004, AIM Capital and its affiliates managed approximately $138 billion in assets. The address of AIM Capital is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.

Alliance Capital Management L.P. (AllianceBernstein) serves as the subadviser for the following Portfolios:

• SP AllianceBernstein Large Cap Growth Portfolio

• SP Strategic Partners Focused Growth Portfolio (portion)

AllianceBernstein is a leading global investment management firm, with approximately $539 billion assets under management at December 31, 2004. AllianceBernstein provides investment management services for many of the largest U.S. public and private employee benefit plans, foundations, public employee retirement funds, pension funds, endowments, banks, insurance companies and high-net-worth individuals worldwide. AllianceBernstein is also one of the largest mutual fund sponsors, with a diverse family of globally distributed mutual fund portfolios. The address of AllianceBernstein is 1345 Avenue of the Americas, New York, New York 10105.

Calamos Advisors LLC (Calamos) serves as the subadviser to the SP Mid Cap Growth Portfolio. Calamos, a registered investment adviser, is a wholly-owned subsidiary of Calamos Holdings LLC. As of December 31, 2004, Calamos managed approximately $38 billion in assets for institutions, individuals, investment companies and hedge funds. The address of Calamos is 1111 E. Warrenville Road, Naperville, Illinois 60563-1463.

Davis Advisors (Davis) serves as the subadviser to the SP Davis Value Portfolio. As of December 31, 2004, Davis managed approximately $58 billion in assets. The address of Davis is 2949 East Elvira Road, Suite 101, Tucson, Arizona 85706.

Eagle Asset Management (Eagle) serves as subadviser for approximately 50% of the assets of the SP Small Cap Growth Portfolio. Eagle is a wholly-owned subsidiary of Raymond James Financial, Inc. that was founded in 1976. Eagle employs approximately 40 investment professionals, and has approximately $10 billion in assets under management as of December 31, 2004. The address of Eagle is 880 Carillon Parkway, St. Petersburg, Florida 33733.

EARNEST Partners LLC (EARNEST) serves as a subadviser to a portion of the assets of the Diversified Conservative Growth Portfolio. EARNEST was founded in 1998 and as of December 31, 2004, managed approximately $13.934 billion in assets. The address of EARNEST is 75 Fourteenth Street, Suite 2300, Atlanta, Georgia 30309.

GE Asset Management Incorporated (GEAM) serves as the subadviser to approximately 25% of the Equity Portfolio. GEAM’s ultimate parent is General Electric Company. As of December 31, 2004, GEAM oversees in excess of $178 billion under management. The address of GEAM is 3001 Summer Street, Stamford, Connecticut 06904.

Goldman Sachs Asset Management, L.P. (GSAM) serves as the subadviser to the SP Goldman Sachs Small Cap Value Portfolio. GSAM, along with other units of the Investment Management Division of Goldman, Sachs & Company (Goldman Sachs), managed approximately $451.3 billion in assets as of December 31, 2004. The address of GSAM is 32 Old Slip, 23 ^rd floor, New York, New York 10005.

Hotchkis and Wiley Capital Management LLC (Hotchkis and Wiley) serves as the subadviser for approximately 50% of the assets of the SP Large Cap Value Portfolio. Hotchkis and Wiley is a registered investment adviser, the primary members of which are HWCap Holdings, a limited liability company whose members are employees of Hotchkis and Wiley and Stephen Group, Inc. and affiliates, which is a diversified holding company. As of December 31, 2004, Hotchkis and Wiley had over $19.4 billion in assets under management. The address of Hotchkis and Wiley is 725 South Figueroa Street, Suite 3900, Los Angeles, California 90017-5439.

J.P. Morgan Investment Management Inc. (J.P. Morgan) serves as the subadviser for approximately 50% of the assets of the SP Large Cap Value Portfolio. J.P. Morgan is an indirect wholly-owned subsidiary of J.P. Morgan Chase & Co., a publicly held bank holding company and global financial services firm. JP Morgan manages assets for governments, corporations, endowments, foundations and individuals worldwide. As of December 31, 2004, J.P. Morgan and its affiliated companies had approximately $791 billion in assets under management worldwide. The address of J.P. Morgan is 522 Fifth Avenue, New York, New York 10036.

LSV Asset Management (LSV) serves as the subadviser for the SP LSV International Value Portfolio. Formed in 1994, LSV is a quantitative value equity manager providing active asset management for institutional clients through the application of proprietary models. As of December 31, 2004, LSV had approximately $35.4 billion in assets under management. The address of LSV is One North Wacker Drive, Suite 4000, Chicago, Illinois 60606.

Neuberger Berman Management, Inc. (Neuberger Berman) serves as subadviser for approximately 50% of the assets of the SP Small Cap Growth Portfolio. Neuberger Berman is a wholly owned subsidiary of Neuberger Berman Inc. (“NBI”), which is a wholly owned subsidiary of Lehman Brothers Holdings Inc. (“LBHI”). LBHI, which trades on the New York Stock Exchange under the ticker symbol “LEH” through its subsidiaries (LBHI and its subsidiaries collectively “Lehman Brothers”), is one of the leading global investment banks, serving institutional, corporate, government and high net worth individual clients. Lehman Brothers, which is a registered broker-dealer, futures commission merchant and investment adviser, provides a full array of capital markets products, investment banking services and investment management and advisory services worldwide. LSV had approximately $89.2 billion in assets under management. The address of Neuberger Berman is 605 Third Avenue, New York, NY 10158.

Pacific Investment Management Company LLC (PIMCO) serves as the subadviser for the following Portfolios:

• Diversified Conservative Growth Portfolio (portion)

• SP PIMCO Total Return Portfolio

• SP PIMCO High Yield Portfolio.

Pacific Investment Management Company LLC (“PIMCO”), a Delaware limited liability company, is a majority-owned subsidiary of Allianz Global Investors of America L.P., (“AGI LP”). Allianz Aktiengesellschaft (“Allianz AG”) is the indirect majority owner of AGI LP. Allianz AG is a European-based, multinational insurance and financial services holding company. Pacific Life Insurance Company holds an indirect minority interest in AGI LP. As of December 31, 2004, PIMCO managed over $445.7 billion in assets. The address of PIMCO is 840 Newport Center Drive, Newport Beach, California 92660.

RS Investment Management, L.P. (RS Investment Management, L.P.) serves as a subadviser to a portion of the assets of the Diversified Conservative Growth Portfolio. RS Investment Management, L.P. is an independent, privately held money management firm that specializes in domestic small and mid cap stocks. As of December 31, 2004, the firm managed approximately $8.44 billion, which include a family of no-load mutual funds and institutional separate accounts. The address of RS Investment Management, L.P. is 388 Market St., Suite 1700, San Francisco, California 94111.

Salomon Brothers Asset Management Inc (SaBAM) serves as a subadviser for a portion of the assets of the Equity Portfolio. SaBAM was established in 1988 and together with affiliates in London, Tokyo and Hong Kong, provides a broad range of fixed income and equity investment services to individuals and institutional clients throughout the world. SaBAM is a wholly-owned

subsidiary of Citigroup, Inc. As of December 31, 2004, SaBAM managed over $79.9 billion in total assets. SaBAM’s principal address is 399 Park Avenue, New York, New York 10022.

William Blair & Company LLC (William Blair) serves as the subadviser for the SP William Blair International Growth Portfolio. Since the founding of the firm in 1935, William Blair has been dedicated to researching, financing and investing in high quality growth companies through four primary divisions: investment banking, sales and trading, asset management and private capital. As of December 31, 2004, William Blair managed approximately $26.0 billion in assets. The address of William Blair is 222 West Adams Street, Chicago, Illinois 60606.

Portfolio Managers

The Statement of Additional Information (SAI) provides additional information about each Portfolio Manager’s compensation, other accounts managed by each Portfolio Manager, and each Portfolio Manager’s ownership of shares of the Fund’s Portfolios.

Conservative Balanced Portfolio and Flexible Managed Portfolio

Fixed-Income Segments

Kay T. Willcox and Malcolm Dalrymple of PIM’s Fixed Income Group manage the fixed income segments of the Portfolios.

Kay T. Willcox, Principal, has managed the fixed income portion of the Portfolios since 1999. She is also portfolio manager for Prudential Fixed Income’s Core Fixed Income Strategy and is a mortgage portfolio manager. Formerly, Ms. Willcox managed a segment of The Prudential Insurance Company of America’s proprietary portfolio and mutual fund fixed income portfolios, and handled mortgage-backed security analysis and trading. Ms. Willcox joined Prudential Financial in 1987. She has 22 years investment experience.

Malcolm Dalrymple, Principal, has managed the fixed income portion of the Portfolios with Ms. Willcox since 1999. He is also a portfolio manager for Structured and Short Maturity Strategies and is a corporate bond portfolio manager. He has specialized in corporate bonds since 1990. Earlier, he was a money markets portfolio manager. He joined Prudential Financial in 1979 as a securities lending trader and a bank analyst. Mr. Dalrymple has 21 years investment experience.

Equity Segments

Margaret Stumpp, John Moschberger, and Michael Lenarcic are primarily responsible for the day-to-day management of the equity portion of the Conservative Balanced Portfolio.

Margaret S. Stumpp, PhD is the Chief Investment Officer of Quantitative Management Associates (QMA). She is portfolio manager for enhanced equity index portfolios for institutional investors and mutual fund clients. Maggie is extensively involved in quantitative research in asset allocation, security selection and portfolio construction for Quantitative Management Associates. Prior to joining the firm, Maggie was employed by the AT&T Treasury department and by Price Waterhouse as a senior consultant. In both positions, she was responsible for providing expert testimony on economic and financial matters. She has published articles on finance and economics in numerous publications, including, The Financial Analysts Journal , The Journal of Portfolio Management , The Journal of Investment Management and Award Papers in Public Utility Economics . Maggie earned a BA cum laude with distinction in Economics from Boston University, and holds an AM and PhD in Economics from Brown University. She has managed the Conservative Balanced Portfolio since June of 1998.

John W. Moschberger, CFA is Managing Director for Quantitative Management Associates (QMA). He manages the Dryden Stock Index Fund and its corresponding variable life and annuity portfolio, the Prudential Series Fund - Stock Index Portfolio. John also manages both retail and institutional account portfolios benchmarked against the S&P 500, Russell 2000, Topix, MSCI EAFE, and MSCI Kokusai. He is also responsible for trading foreign and domestic equities, foreign exchange and derivative instruments. Previously, John was a research analyst with Prudential Equity Management Associates. He joined Prudential Financial in 1980. John earned a BS in Finance from the University of Delaware, and an MBA from Fairleigh Dickinson University. He has managed the Portfolio since 1998

Michael A. Lenarcic, PhD is Managing Director for Quantitative Management Associates (QMA). He manages single client accounts - including a large public employee retirement fund - and co-manages two commingled balanced portfolios. Previously, Mike was a vice president at Wilshire Associates, a leading pension consulting firm, where he was head of the Asset Allocation Division. In this capacity, he worked with plan sponsors and investment managers in the selection of appropriate investment policies.

Earlier, Mike was an assistant professor at Northeastern University where he taught Finance and Economics. He earned a BA in Business Administration from Kent State University, and holds an AM and PhD in Business Economics from Harvard University. He has managed the Portfolio since 2000.

Dr. Stumpp and James Scott are primarily responsible for the day-to-day management of the equity portion of the Flexible Managed Portfolio. The background of Dr. Stumpp is discussed above. She has managed the Flexible Managed Portfolio since May of 2000.

James H. Scott, PhD is President of Quantitative Management Associates (QMA). QMA provides equity and balanced portfolios for institutional retail clients worldwide. Jim also co-heads the Quantitative Core Equity team, managing portfolios against various global, regional and country benchmarks. Prior to joining the predecessor of QMA, Jim was a professor and head of the Finance Department at Columbia University Graduate School of Business. His academic career included positions at Stanford University, University of Wisconsin-Milwaukee, and Carnegie Mellon University. During this period, Jim also served as a consultant, corporate director, mutual fund trustee, and research fellow at the Federal Reserve Bank of Cleveland. He has written numerous articles that have appeared in the Journal of Portfolio Management , the Journal of Finance , and the Financial Analysts Journal , among other publications. Jim is a cum laude graduate from Rice University where he holds a BA in Economics. He holds a Masters and PhD in Economics from Carnegie Mellon University. He serves on the Business Board of Advisors for the Tepper School of Business at Carnegie Mellon University, and is a Director of the Institute for Quantitative Research in Finance, and Chair of its Research Committee. He is also a member of the Board of Editors of the Financial Analyst Journal and of the Journal of Investment Management . He has managed the Portfolio since 2000.

Diversified Bond Portfolio

Steven Kellner, Robert Tipp, and David Bessey of the PIM Fixed Income Group are primarily responsible for the day-to-day management of the Portfolio.

Steven Kellner, CFA, is Managing Director and Head of Credit Related Strategies, including US Investment Grade Corporate Bonds, High Yield, Emerging Markets, and Bank Loans. He also is a senior portfolio manager for Investment Grade Corporate Bonds and is co-portfolio manager for Core Plus strategies. He has managed the Diversified Bond Portfolio since 1999. Previously, Mr. Kellner managed US corporate bonds for Prudential Financial’s proprietary fixed income portfolios. He joined Prudential Financial in 1986 and has 19 years investment experience.

Robert Tipp, CFA, Chief Investment Strategist, has managed the Portfolio since 2003. He has supervisory responsibility for portfolio managers who manage mutual funds and institutional client accounts in the U.S. Liquidity (U.S. governments and mortgages), Money Market, Municipal Bond, and Global Bond sectors. He is also portfolio manager for asset liability strategies and a co-portfolio manager of Core Plus, Government, and global bond strategies. Previously, Mr. Tipp served as co-head of Prudential Financial’s institutional fixed income business. Before joining Prudential Financial in 1991, Mr. Tipp was a Director in the Portfolio Strategies Group at First Boston Corporation. Prior to that, he was a senior analyst at the Allstate Research & Planning Center, and managed fixed income and equity derivative strategies at Wells Fargo Investment Advisors. Mr. Tipp has 21 years investment experience.

David Bessey is Managing Director and Head of the Emerging Markets team. Mr. Bessey is also co-portfolio manager for all Core Plus Fixed Income strategies and specializes in the utility and emerging markets sectors for the High Yield Team. He has managed the Diversified Bond Portfolio since 2004. From 1994 to 1999, Mr. Bessey was a senior portfolio manager for emerging markets portfolios and $US investment grade assets. Previously, he developed asset allocation strategies for insurance portfolios and managed Prudential Financial’s long-term funding book. Mr. Bessey joined Prudential Financial in 1989 and has 15 years investment experience.

Diversified Conservative Growth Portfolio

Core Fixed-Income Segment

Pacific Investment Management Company LLC (PIMCO). Chris Dialynas is responsible for the day-to-day management of the portfolio’s assets. William H. Gross heads PIMCO’s investment committee, which is responsible for the development of major investment themes and which sets targets for various portfolio characteristics in accounts managed by PIMCO, including the portfolio.

Chris Dialynas is a Managing Director, portfolio manager, and a senior member of PIMCO’s investment strategy group. He joined PIMCO in 1980. Mr. Dialynas has written extensively and lectured on the topic of fixed income investing. He served on the Editorial Board of The Journal of Portfolio Management and was a member of Fixed Income Curriculum Committee of the Association for Investment Management and Research. He has twenty-four years of investment experience and holds a bachelor’s

degree in economics from Pomona College, and holds an MBA in finance from The University of Chicago Graduate School of Business. . Mr. Dialynas has managed the core fixed-income segment of the Portfolio since July 2000.

High Yield Bond Segment

The portfolio managers on the PIM Fixed Income Group High Yield Team, led by Paul Appleby, manage the high yield bond portion of the Portfolio. See “High Yield Bond Portfolio” below for more information. Mr. Appleby has managed the Portfolio since 1999.

Large Cap Growth Equity Segment

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Michael A. Del Balso, Spiros Segalas and Kathleen A. McCarragher are the portfolio managers of the large cap growth equity portion of the Portfolio. Mr. Del Balso generally has final authority over all aspects of the large cap growth equity portion of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the large cap growth equity portion of the Portfolio are supported by members of Jennison’s Large Cap Growth Equity Team, which is comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

Michael A. Del Balso joined Jennison in 1972 and is currently an Executive Vice President at Jennison. He is also Jennison’s Director of Research for Growth Equity. Mr. Del Balso is a graduate of Yale University and received his M.B.A. from Columbia University. He is a member of The New York Society of Security Analysts, Inc. He has managed the large cap growth equity portion of the Portfolio since April 2000.

Spiros Segalas was a founding member of Jennison in 1969 and is currently a Director, President and Chief Investment Officer at Jennison. He received his B.A. from Princeton University and is a member of The New York Society of Security Analysts, Inc. He has managed the large cap growth equity portion of the Portfolio since April 1999.

Kathleen A. McCarragher joined Jennison in 1998 and is an Executive Vice President at Jennison. She is also Jennison’s Head of Growth Equity. Prior to joining Jennison, she was employed at Weiss, Peck & Greer L.L.C. as a managing director and director of large cap growth equities for six years. Ms McCarragher received her B.B.A. degree from the University of Wisconsin and her M.B.A. from Harvard University. She has managed the large cap growth equity portion of the Portfolio since April 1999.

Large Cap Value Equity Segment

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. David A. Kiefer and Avi Z. Berg are the portfolio managers of the large cap value equity portion of the Portfolio. Mr. Kiefer and Mr. Berg generally have final authority over all aspects of the large cap value equity portion of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the large cap value equity portion of the Portfolio are supported by members of Jennison’s Large Cap Value Team, which is comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

David A. Kiefer, CFA, is an Executive Vice President of Jennison, which he joined in September 2000. He joined Prudential’s management training program in 1986. From 1988 to 1990, Mr. Kiefer worked at Prudential Power Funding Associates, making loans to the energy industry. He then left to attend business school, rejoining Prudential in equity asset management in 1992. Mr. Kiefer became a portfolio manager in 1994 at Prudential. Mr. Kiefer earned a B.S. from Princeton University and an M.B.A. from Harvard Business School. He has managed the large cap value equity portion of the Portfolio since January 2004.

Avi Z. Berg is a Vice President of Jennison, which he joined in January 2001. Prior to that, he was with Goldman Sachs Asset Management from 1997 to 2000 as an Equity Research Associate for their small and mid cap value funds. From 1995 to 1997, Mr. Berg worked in equity research at Schroder Wertheim & Co. and Fir Tree Partners. From 1991 to 1995, he was a consultant with Price Waterhouse LLP. Mr. Berg received his A.B. in Economics magna cum laude from Harvard University in 1991 and his M.B.A. in Finance and Accounting with honors and distinctions from Columbia Business School in 1997. He has managed the large cap value equity portion of the Portfolio since January 2004.

Small / Mid-Cap Growth Equity Segment

Bill Wolfenden, a principal of RS Investment Management, L.P. and portfolio manager of the firm’s Small Cap Growth accounts, is primarily responsible for the day-to-day management of the portion of the Portfolio advised by RS Investment Management, L.P.. Prior to joining RS Investment Management, L.P., he was at Dresdner RCM Global Investors since 1994 where he served on the micro-cap and Small Cap growth investment management teams. He holds a B.A. in economics from Southern Methodist University and an M.B.A. with a dual concentration in finance and accounting from Vanderbilt University. He has managed the Portfolio since November 2002.

Small / Mid-Cap Value Equity Segment

Paul E. Viera, Jr. is primarily responsible for the day-to-day management of the small/mid cap value portion of the Portfolio advised by EARNEST Partners LLC (EARNEST). Mr. Viera is a founding member of EARNEST. Prior to joining EARNEST, Mr. Viera served as a global partner and portfolio manager with INVESCO Capital Management from 1991 to 1998. He has managed the Portfolio since December 2001.

Equity Portfolio

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Spiros “Sig” Segalas, Blair A. Boyer and David A. Kiefer and are the portfolio managers of the portion of the Portfolio managed by Jennison. Mr. Segalas, Mr. Boyer and Mr. Kiefer generally have final authority over all aspects of the portion of the Portfolio’s investment portfolio managed by Jennison, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the portion of the Portfolio managed by Jennison are supported by members of Jennison’s Large Cap Growth Equity and Large Cap Value Teams, which are comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the teams may change from time to time.

Spiros Segalas was a founding member of Jennison in 1969 and is currently a Director, President and Chief Investment Officer at Jennison. He received his B.A. from Princeton University and is a member of The New York Society of Security Analysts, Inc. He has managed the portion of the Portfolio managed by Jennison since February 2005.

Blair A. Boyer is an Executive Vice President of Jennison. Mr. Boyer came to Jennison in 1993 after ten years with Arnhold & S. Bleichroeder, Inc. In January 2003, Mr. Boyer joined the growth equity team, after co-managing international equity portfolios since joining Jennison. During his tenure as an international equity portfolio manager, he managed the Jennison International Growth Fund from its inception in March 2000. Mr. Boyer managed international equity portfolios at Bleichroeder from 1989 to 1993. Prior to that, he was a research analyst and then a senior portfolio manager in the Verus Capital division at Bleichroeder. Mr. Boyer graduated from Bucknell University in 1983 with a B.A. in Economics. He received an M.B.A. in Finance from New York University in 1989. He has managed the portion of the Portfolio managed by Jennison since January 2005.

David A. Kiefer, CFA, is an Executive Vice President of Jennison, which he joined in September 2000. He joined Prudential’s management training program in 1986. From 1988 to 1990, Mr. Kiefer worked at Prudential Power Funding Associates, making loans to the energy industry. He then left to attend business school, rejoining Prudential in equity asset management in 1992. Mr. Kiefer became a portfolio manager in1994 at Prudential. Mr. Kiefer earned a B.S. from Princeton University and an M.B.A. from Harvard Business School. He has managed the portion of the Portfolio managed by Jennison since August 2000.

Richard Sanderson, Senior Vice President and Director of Investment Research, Domestic Equities, for GEAM, is primarily responsible for the day-to-day management of the portion of the Portfolio advised by GEAM. Mr. Sanderson, a Chartered Financial Analyst, has 35 years of asset management experience and has been employed with GEAM for over 9 years and holds B.A. and M.B.A. degrees from the University of Michigan. He has managed the Portfolio since 1995.

Michael Kagan, a Managing Director of SaBAM, has been responsible for the day-to-day management of the portion of the Portfolio advised by SaBAM since February 2001. Mr. Kagan has been with SaBAM since 1994.

Kevin Caliendo, a Managing Director of SaBAM, has co-managed the portion of the Portfolio advised by SaBAM since November 2003. Mr. Caliendo has been with SaBAM since 2002. From 2001 to 2002, Mr. Caliendo was a Healthcare Equity Analyst and Convertible Bond Fund Portfolio Manager for SAC Capital Advisors, LLC and from 1998-2001, he was a Convertible Bond Analyst of the Healthcare sector for Wachovia Securities.

Global Portfolio

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Daniel J. Duane and Michelle I. Picker are the portfolio managers of the Portfolio. Mr. Duane and Ms. Picker generally have final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the Portfolio are supported by members of Jennison’s research team, which is comprised of research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

Daniel J. Duane, CFA, is an Executive Vice President of Jennison. Prior to joining Jennison in October 2000, Mr. Duane was a Managing Director within Prudential’s Public Equity Unit. Mr. Duane began his money management career as a research analyst at Value Line in 1978. After six years at Value Line, he moved to TIAA-CREF where he managed a portion of their global portfolio. After TIAA-CREF, Mr. Duane spent over four years at First Investors Asset Management where he was in charge of all global equity investments. He earned a dual A.B. from Boston College, a Ph.D. from Yale University and a M.B.A. from New York University. Mr. Duane also was a Fulbright Scholar at the University of Tubingen in Germany. He has managed the Portfolio since 1990.

Michelle I. Picker, CFA, is a Vice President of Jennison. Prior to joining Jennison in October 2000, Ms. Picker was an Investment Vice President within Prudential’s Public Equity Unit. She joined Prudential’s global equity investment group in 1992 as a U.S. growth stock analyst. Prior to joining Prudential, Ms. Picker was an accountant and consultant at Price Waterhouse. She received her B.A. in Psychology from the University of Pennsylvania and her M.B.A. from New York University. She has managed the Portfolio since 1997.

Government Income Portfolio and Zero Coupon Bond Portfolio 2005

Robert Tipp and Richard Piccirillo of PIM’s Fixed Income Group co-manage the Portfolios.

Richard Piccirillo, Vice President, has managed the Portfolio since 2003. He has specialized in mortgage-backed securities since joining Prudential Financial in 1993. Prior to that, he was a fixed income analyst with Fischer Francis Trees & Watts, and an analyst at Smith Barney. He has 14 years investment experience.

High Yield Bond Portfolio

The PIM Fixed Income High Yield Team, headed by Paul Appleby, manages the Portfolio. The Team also includes portfolio managers David Bessey, Richard Burns, Stephen Haeckel, and Michael Collins.

Paul Appleby, CFA, is Managing Director and Head of the High Yield Team. He oversees all portfolio management and trading activities for high yield portfolios, and also specializes in the cable, technology, commodities, and healthcare sectors.

Previously, Mr. Appleby was Director of Credit Research and Chief Equity Strategist for Prudential Financial’s proprietary portfolios. He also was a high yield credit analyst and worked in Prudential Financial’s private placement group. Mr. Appleby joined Prudential Financial in 1987 and has 18 years investment experience. He has managed the Portfolio since 1999.

David Bessey is Managing Director and Head of the Emerging Markets team. Mr. Bessey is also co-portfolio manager for all Core Plus Fixed Income strategies and specializes in the utility and emerging markets sectors for the High Yield Team. From 1994 to 1999, Mr. Bessey was a senior portfolio manager for emerging markets portfolios and $US investment grade assets. Previously, he developed asset allocation strategies for insurance portfolios and managed Prudential Financial’s long-term funding book. Mr. Bessey joined Prudential Financial in 1989 and has 15 years investment experience. He has managed the Portfolio since May 2003.

Richard Burns, CFA is Principal and portfolio manager on the High Yield Team. He is responsible for proprietary high yield portfolios and has specialized in the telecommunications, energy, gaming, retail, and lodging. Mr. Burns joined Prudential Financial in 1986 as a research analyst. He has managed the Portfolio since 1999 and has 22 years overall investment experience.

Stephen Haeckel is Principal and portfolio manager on the High Yield Team. He is portfolio manager for the Higher Quality High Yield Strategies and specializes in the media, industrials, homebuilders, and transportation sectors. Before joining the High Yield Team in 1999, Mr. Haeckel was credit analyst with PIM Fixed Income. He also worked in the Corporate Finance and Financial Restructuring groups, managing Prudential Financial’s private investments. Mr. Haeckel served on the Board of Directors of three private companies in conjunction with the Financial Restructuring Group. He joined Prudential Financial in 1990. Previously, he was an Investment Officer at MONY Capital Management. Mr. Haeckel has managed the Portfolio since 1999 and has 17 years investment experience.

Michael J. Collins, CFA, is Principal and portfolio manager/strategist on the High Yield Team, responsible for portfolio management, strategy, and risk management. Prior to his current role, Mike was Senior Investment Strategist, covering all fixed income sectors. Previously, Mike was a credit research analyst. He also developed proprietary quantitative international interest rate and currency valuation models for our global bond unit. Mike began his career at Prudential Financial in 1986 as a software applications designer. He has managed the Portfolio since 2001 and has 12 years investments experience.

Jennison Portfolio

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Michael A. Del Balso, Spiros Segalas and Kathleen A. McCarragher are the portfolio managers of the Portfolio. Mr. Del Balso generally has final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the Portfolio are supported by members of Jennison’s Large Cap Growth Equity Team, which is comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

Jennison 20/20 Focus Portfolio

Spiros “Sig” Segalas is the portfolio manager for the growth portion of the Portfolio, and David A. Kiefer is the portfolio manager for the value portion of the Portfolio.

Mr. Segalas and Mr. Kiefer have final authority over all aspects of the portion of the Portfolio’s investment portfolio for which they are responsible, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the Portfolio are supported by members of Jennison’s Large Cap Growth Equity and Large Cap Value Teams, which are comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the teams may change from time to time.

Money Market Portfolio

The PIM Fixed Income Money Market Team, led by Joseph M. Tully, manages the Portfolio. The Team also includes portfolio managers Manolita Brasil, Robert Browne, and Douglas Spratley.

Joseph M. Tully is Managing Director and Head of the Money Market Team. He has managed the Portfolio since 1995. Mr. Tully has 19 years of experience managing short-term fixed income investments, and 21 years of total investment experience. Prior to joining Prudential Financial in 1987, he worked for Merrill Lynch Asset Management as portfolio manager and senior bank credit analyst, and was an assistant national bank examiner for the Office of the Comptroller of the Currency.

Manolita Brasil is Vice President and portfolio manager on the Money Market Team, responsible for taxable money markets funds. In addition, Ms. Brasil coordinates credit research for commercial paper and other short-term instruments. She has been managing money markets portfolios for PIM Fixed Income since 1988. Previously, she previously managed the money markets support staff. Ms. Brasil joined Prudential Financial in 1979. She has managed the Portfolio since 1996 and has 17 years of investment experience.

Robert T. Browne is Vice President and portfolio manager on the Money Market Team, responsible for taxable money markets portfolios. Before assuming his current position in 1995, he spent two years analyzing and trading currency and global bonds, and handling operations, marketing, compliance and business planning functions. Mr. Browne joined Prudential Financial in 1989. He has managed the Portfolio since 1998 and has 11 years of total investment experience.

Douglas Spratley , CFA is an Associate and portfolio manager on the Money Markets team, responsible for short-term portfolios and government repo trading. Previously, Mr. Spratley was an investment analyst for the Prudential Capital Group. He joined Prudential in 1992. Mr. Spratley has 9 years investment experience.

Natural Resources Portfolio

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Leigh R. Goehring and Michael A. Del Balso are the portfolio managers of the Portfolio. Mr. Goehring generally has final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the Portfolio are supported by members of Jennison’s research team, which is comprised of other research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

Leigh R. Goehring is a Vice President of Jennison. Prior to joining Jennison in September 2000, he was a Vice President of Prudential Investment Management, Inc. Before joining Prudential in 1986, Mr. Goehring managed general equity accounts in the

trust department at The Bank of New York. He earned his B. A. from Hamilton College with a double major in Economics and Mathematics. He has managed the Portfolio since 1992.

Small Capitalization Stock Portfolio

Wai C. Chiang is Managing Director for Quantitative Management Associates (QMA), and is primarily responsible for the day-to-day management of the Portfolio. He currently manages and trades domestic equity portfolios, including index funds, quantitative core equity funds, and futures tactical asset allocation accounts on behalf of institutional and retail clients. Earlier in his career, Wai was a stock research analyst for Salomon Brothers and a research and development engineer for Westinghouse Electric Corporation. He has developed proprietary computer-based models and authored a number of Salomon and Westinghouse publications. Wai was a contributing author to Indexing For Maximum Investment Results , a book published on indexing. Wai graduated summa cum laude with a BS in Engineering from Syracuse University, and earned an MBA in Finance from the Wharton School at the University of Pennsylvania. He has managed the Portfolio since its inception in 1995.

Stock Index Portfolio

John W. Moschberger, CFA is Managing Director for Quantitative Management Associates (QMA), and is primarily responsible for the day-to-day management of the Portfolio. He manages the Dryden Stock Index Fund and its corresponding variable life and annuity portfolio, the Prudential Series Fund - Stock Index Portfolio. John also manages both retail and institutional account portfolios benchmarked against the S&P 500, Russell 2000, Topix, MSCI EAFE, and MSCI Kokusai. He is also responsible for trading foreign and domestic equities, foreign exchange and derivative instruments. Previously, John was a research analyst with Prudential Equity Management Associates. He joined Prudential Financial in 1980. John earned a BS in Finance from the University of Delaware, and an MBA from Fairleigh Dickinson University. He has managed the Portfolio since 1990

Value Portfolio

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. David A. Kiefer and Avi Z. Berg are the portfolio managers of the Portfolio. Mr. Kiefer and Mr. Berg generally have final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the Portfolio are supported by members of Jennison’s Large Cap Value Team, which is comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

SP AIM Core Equity Portfolio

Ronald S. Sloan, Senior Portfolio Manager, is primarily responsible for the day-to-day management of the Portfolio. He has been responsible for the Portfolio since 2002. Mr. Sloan joined AIM Capital in 1998 from Verissimo Research and Management, where he served as president since 1993. He is a Chartered Financial Analyst and is assisted by the Mid/Large Cap Core Team, which

may be comprised of portfolio managers, research analysts and other investment professionals of the advisor. Team members provide research support and make securities recommendations with respect to the fund’s portfolio, but do not have day-to-day management responsibilities with respect to the fund’s portfolio. Members of the team may change from time to time.

SP AllianceBernstein Large Cap Growth Portfolio

Syed Hasnain is primarily responsible for the day-to-day management of the Portfolio. Mr. Hasnain is a Senior Vice President and Senior Portfolio Manager with AllianceBernstein. Prior to joining AllianceBernstein, he worked as a strategist with Merrill Lynch Capital Markets. Previously he was an international economist with Citicorp and a financial analyst at Goldman Sachs & Co. He holds a M. Phil in Finance from Cambridge University and Sc.B. from Brown University, and he studied towards a doctorate at Stanford Business School. He has 14 years of investment experience. He has managed the Portfolio since its inception in September 2000.

SP Davis Value Portfolio

Christopher C. Davis and Kenneth Charles Feinberg are primarily responsible for the day-to-day management of the Portfolio.

Christopher C. Davis is President of Davis New York Venture Fund, Inc. and manages or co-manages other equity funds advised by Davis Advisors. He has been portfolio manager of Davis New York Venture Fund since October 1995. From September 1989 to September 1995, he was Assistant Portfolio Manager and research analyst working with Shelby M.C. Davis. He has managed the Portfolio since its inception in September 2000.

Kenneth Charles Feinberg has been the co-portfolio manager of Davis New York Venture Fund with Christopher C. Davis since May 1998. He also co-manages other equity funds advised by Davis Advisors. Mr. Feinberg was a research analyst at Davis Advisors beginning in December 1994, and he was Assistant Vice President of Investor Relations for Continental Corp. from 1988 to 1994. He has managed the Portfolio since its inception in September 2000.

SP Goldman Sachs Small Cap Value Portfolio

GSAM employs a team-based approach to managing the Portfolio. The portfolio managers primarily responsible for the day-to-day management of the Portfolio are Chip Otness, Lisa Parisi, Kelly Flynn, David Berdon, Dolores Bamford, and Scott Carroll.

Chip Otness, Managing Director, joined Goldman Sachs as a senior portfolio manager in 2000. From 1998 to 2000, he headed Dolphin Asset Management. From 1970 to 1998, Mr. Otness worked at J.P. Morgan, most recently as a managing director and senior portfolio manager responsible for small-cap institutional equity investments.

Lisa Parisi, Managing Director, joined Goldman Sachs as a portfolio manager in August 2001. From December 2000 to August 2001, she was a portfolio manager at John A. Levin & Co. Mr. Flynn, Vice President, joined Goldman Sachs as a portfolio manager in April 2002. Prior to joining Goldman Sachs, Mr. Flynn spent 3 years at Lazard Asset Management where he was a portfolio manager for Small Cap/Mid Cap Value products.

David Berdon is a Vice President at Goldman Sachs. Mr. Berdon is a Portfolio Manager on the U.S. Value team, where he has broad research responsibilities across the value strategies. Before joining Goldman Sachs, Mr. Berdon was a vice president for Business Development and Strategic Alliances at Soliloquy Inc., a Principal Consultant at Diamond Technology Partners, and an analyst at Chase Manhattan Bank and Morgan Stanley. He received a B.A. in Government and Law from Lafayette College and an M.B.A. in Finance from Wharton School of Business. Mr. Berdon joined the Value Team in March of 2001.

Dolores Bamford is a Managing Director at Goldman Sachs. Ms. Bamford is a portfolio manager for the U.S. Value team, where she has broad research responsibility across the value portfolios. Ms. Bamford joined the Value Team in April 2002. Prior to arriving at Goldman Sachs, Ms. Bamford worked as a Portfolio Manager at Putnam Investments for various products, beginning t in 1992. While at Putnam, she was portfolio manager for a variety of funds, including the Putnam Convertible Income-Growth Fund and the Global Resources Fund. Ms. Bamford received a B.A. from Wellesley College and an M.S. from the MIT Sloan School of Management. She is a C.F.A. chartholder.

Scott Carroll is a Vice President at Goldman Sachs. He is a portfolio manager on the U.S. Value team, where he has broad research responsibilities across the value portfolios. He joined the Value Team in May 2002. Before joining Goldman Sachs, Mr. Carroll spent over five years at Van Kampen Funds, where he had portfolio management and analyst responsibilities for a Growth and Income fund and for an Equity Income fund. Prior to joining Van Kampen, Mr. Carroll spent three years at Lincoln Capital Management as an equity analyst. He also spent two years as a Senior Auditor at Pittway Corporation. Mr. Carroll received a B.S. in

100

Accounting from Northern Illinois University and an M.B.A. from the University of Chicago Graduate School of Business. Mr. Carroll is a C.F.A. Chartholder.

Kelly Flynn is a Vice President of Goldman, Sachs & Co. He is a portfolio manager for the U.S. Value team, where he has broad research responsibilities across value the strategies. Prior to joining Goldman Sachs Kelly spent 3 years at Lazard Asset management where he was a portfolio manager for Small Cap/SMID Cap Value products. Before Lazard, Kelly was a small cap value portfolio manager at 1838 Investment Advisors. Kelly has also spent time working for Edgewater Private Equity Fund as a research analyst and at First Boston in the mergers and acquisitions department. Kelly received a B.A. from Harvard and an M.B.A. from Wharton School of Business. Kelly joined the Value Team in April of 2002.

SP Large Cap Value Portfolio

Raffaele Zingone and Terance Chen are primarily responsible for the day-to-day management of the portion of the Portfolio managed by J.P. Morgan, and Cristian Posada is responsible for product management and client servicing across J.P. Morgan’s large cap equity spectrum of products. Mr. Zingone, Vice President of J.P. Morgan, is a portfolio manager in the U.S. Equity Group. He joined J.P. Morgan in 1991. Mr. Chen, Vice President of J.P. Morgan, is a portfolio manager in the U.S. Equity Group. He joined J.P. Morgan in 1994. Mr. Posada, Vice President of J.P. Morgan, is a client portfolio manager in the U.S. Equity Group. He Joined J.P. Morgan in 1991. Mr. Zingone and Mr. Posada have managed the Portfolio since January 2004. Mr. Chen has managed the Portfolio since May 2005.

Hotchkis and Wiley also manages institutional separate accounts and is the advisor and sub-advisor to other mutual funds. The investment process is the same for similar accounts, including the Portfolio and is driven by team-oriented, in-depth, fundamental research. The investment research staff is organized by industry coverage and supports all of the accounts managed in each of the sub-advisor’s investment strategies. Weekly research meetings provide a forum where analysts and portfolio managers discuss current investment ideas within their assigned industries. Generally, the entire investment team, or a sub-set of the team, then debates the merits of recommendations, taking into account the prevailing market environment, the portfolio’s current composition, and the relative value of alternative investments. The culmination of this process is the formation of a “target portfolio” for each investment strategy representing the best investment ideas with appropriate weights for each of the holdings.

For the portion of the Portfolio managed by Hotchkis and Wiley, Hotchkis and Wiley has identified the five portfolio managers with the most significant responsibility for the Portfolio’s assets. Each individual has managed the portion of the Portfolio assigned to Hotchkis and Wiley since January 2004. This list does not include all members of the investment team.

Sheldon Lieberman – Mr. Lieberman participates in the investment decision process during the group meetings in which the team decides the stock/weight selection for the target portfolio. He has authority to direct trading activity on the Portfolio. Mr. Lieberman, currently Principal and Portfolio Manager of Hotchkis and Wiley, joined Hotchkis and Wiley in 1994 as Portfolio Manager and Analyst.

George Davis – Mr. Davis participates in the investment decision process during the group meetings in which the team decides the stock/weight selection for the target portfolio. He has authority to direct trading activity on the Portfolio. Mr. Davis, currently Principal, Portfolio Manager and Chief Executive Officer of Hotchkis and Wiley, joined Hotchkis and Wiley in 1988 as Portfolio Manager and Analyst.

Joe Huber - Mr. Huber participates in the investment decision process during the group meetings in which the team decides the stock/weight selection for the target portfolio. He is jointly responsible for the day-to-day management of the Portfolio’s cash flows, which includes directing the Portfolio’s purchases and sales to ensure that the Portfolio’s holdings remain reflective of the “target portfolio.” Mr. Huber, currently Principal, Portfolio Manager and Director of Research of Hotchkis and Wiley joined Hotchkis and Wiley in 2000 as Portfolio Manager and Analyst and soon thereafter became the Director of Research.

Patricia McKenna – Ms. McKenna participates in the investment decision process during the group meetings in which the team decides the stock/weight selection for the target portfolio. She has authority to direct trading activity on the Portfolio. Ms. McKenna, currently Principal and Portfolio Manager of Hotchkis and Wiley, joined Hotchkis and Wiley in 1995 as Portfolio Manager and Analyst.

Stan Majcher - Mr. Majcher participates in the investment decision process during the group meetings in which the team decides the stock/weight selection for the target portfolio. He is jointly responsible for the day-to-day management of the Portfolio’s cash flows, which includes directing the Portfolio’s purchases and sales to ensure that the Portfolio’s holdings remain reflective of the “target portfolio.” Mr. Majcher, currently Principal and Portfolio Manager of Hotchkis and Wiley, joined Hotchkis and Wiley in 1996 as Analyst and became Portfolio Manager in 1999.

101

SP LSV International Value Portfolio

The Portfolio is co-managed by Josef Lakonishok, Robert Vishny and Menno Vermeulen, CFA. Mr. Lakonishok has served as CEO, Partner and Portfolio Manager for LSV since its founding in 1994. He has more than 25 years of investment and research experience. In addition to his duties at LSV, Mr. Lakonishok serves as the William G. Karnes Professor of Finance at the University of Illinois at Urbana-Champaign. Mr. Vishny has served as a Partner and Portfolio Manager of LSV since its founding in 1994. He has more than 18 years of investment and research experience. In addition to his duties at LSV, Mr. Vishny serves as the Eric J. Gleacher Professor of Finance at the University of Chicago. Mr. Vermeulen has served as a Portfolio Manager and Senior Quantitative Analyst of LSV since 1995 and a Partner since 1998. He has more than 13 years of investment experience. Prior to joining LSV, Mr. Vermuelen served as a portfolio manager for ABP Investments. Messrs. Lakonishok, Vishny and Vermeulen have managed the Portfolio since LSV became the Portfolio’s subadviser in November 2004.

SP Mid Cap Growth Portfolio

John P. Calamos, Chief Executive Officer and President of Calamos, Nick P. Calamos, Executive Vice President of Calamos, and John P. Calamos, Jr., Executive Vice President of Calamos, are primarily responsible for the day-to-day management of the Portfolio. Each has been with Calamos since 1987. John P. Calamos and Nick P. Calamos have managed money together at Calamos or a related entity for over 20 years. They have managed the Portfolio since Calamos became the Portfolio’s subadviser in December 2002.

SP PIMCO High Yield Portfolio

Raymond G. Kennedy is a Managing Director, portfolio manager and senior member of PIMCO’s investment strategy group. He manages High Yield funds and oversees bank loan trading and collateralized debt obligations. Mr. Kennedy joined the firm in 1996, previously having been associated with the Prudential Insurance Company of America as a private placement asset manager, where he was responsible for investing and managing a portfolio of investment grade and high yield privately placed fixed income securities. Prior to that, he was a consultant for Andersen Consulting (now Accenture) in Los Angeles and London. He has seventeen years of investment management experience and holds a bachelor’s degree from Stanford University and an MBA from the Anderson Graduate School of Management at the University of California, Los Angeles. Mr. Kennedy is also a member of LSTA.

SP PIMCO Total Return Portfolio

Chris Dialynas is a Managing Director, portfolio manager, and a senior member of PIMCO’s investment strategy group. He joined PIMCO in 1980. Mr. Dialynas has written extensively and lectured on the topic of fixed income investing. He served on the Editorial Board of The Journal of Portfolio Management and was a member of Fixed Income Curriculum Committee of the Association for Investment Management and Research. He has twenty-four years of investment experience and holds a bachelor’s degree in economics from Pomona College, and holds an MBA in finance from The University of Chicago Graduate School of Business. Mr. Dialynas has managed the Portfolio since July 2000.

William H. Gross, CFA, managing director and chief investment officer, was a founding partner of PIMCO in 1971. Mr. Gross has over 30 years of investment experience and is the author of Bill Gross on Investing . Mr. Gross has an MBA from UCLA Graduate School of Business.

SP Prudential U.S. Emerging Growth Portfolio

Susan B. Hirsch is the portfolio manager of the Portfolio. Ms. Hirsch has final authority over all aspects of the Portfolio’s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows. The portfolio manager for the Portfolio is supported by members of Jennison’s research team, which is comprised of other research analysts and other investment professionals of Jennison.

Susan B. Hirsch is an Executive Vice President of Jennison. Prior to joining Jennison in August 2000, Ms. Hirsch was a Managing Director of Prudential. Prior to joining Prudential in 1996, she was employed by Lehman Brothers Global Asset Management from 1986 to 1996 and Delphi Asset Management in 1996. Ms. Hirsch managed growth stock portfolios at both firms. During that time, she was recognized as an Institutional Investor All-America Research Team Analyst for small growth stocks in 1991, 1992 and 1993. Ms. Hirsch received her B.S. in Accounting from Brooklyn College, where she graduated cum laude. She is a

102

member of the Financial Analysts Federation and The New York Society of Securities Analysts, Inc. She has managed the Portfolio since its inception in August 2000.

SP Small Cap Growth Portfolio

Michael Fasciano, CFA, is responsible for the day-to-day management of the portion of the Portfolio advised by Neuberger Berman. Mr. Fasciano has been a managing director of Neuberger Berman since 2001. From 1986 through 2001, Mr. Fasciano was President of Fasciano Company, Inc. From 1983 to 1986, Mr. Fasciano was an analyst with BCS Financial Corporation. Mr. Fasciano has managed the portion of the Portfolio advised by Neuberger Berman since May 2005.

Bert Boksen, Senior Vice President and Managing Director of Eagle, is responsible for the portion of the Portfolio advised by Eagle Asset Management. Mr. Boksen received a B.A. degree in business from City College of New York in 1970 and his M.B.A. in Finance from St. John’s University in 1977. Mr. Boksen is a Chartered Financial Analyst, and has been a Senior Vice President of Eagle since April 1995. He has portfolio management responsibilities for the Small Cap Growth Equity accounts. Mr. Boksen was appointed a Managing Director of Eagle in June 1999. Prior to joining Eagle, Mr. Boksen was Senior Vice President and Chief Investment Officer of Raymond James & Associates, Inc. where he was Chairman of the Raymond James Focus Committee.

SP Strategic Partners Focused Growth Portfolio

Thomas G. Kamp is primarily responsible for the day-to-day management of the portion of the Portfolio advised by AllianceBernstein. Mr. Kamp is Senior Vice President and US Large Cap Growth Portfolio Manager. He joined AllianceBernstein in 1993 after a successful entrepreneurial career. He founded and was president of Premier Computer Corporation, the world’s largest disk drive repair organization. After successfully selling the company, he became a venture capitalist with 1A1 Venture Capital Group. He graduated summa cum laude with a BSME in 1983 from Southern Methodist University and received an MBA from Northwestern University, where he was chairman of the Austin Scholars. Mr. Kamp has 12 years of investment experience.

Jennison typically follows a team approach in the management of its portfolios, while preserving individual accountability with respect to a particular portfolio. The teams are generally organized along product strategies (e.g., large cap growth, large cap value) and meet regularly to review the portfolio holdings and discuss purchase and sales activity of all accounts in the particular product strategy. Spiros Segalas and Kathleen A. McCarragher are the portfolio managers of the portion of the Portfolio managed by Jennison. Mr. Segalas generally has final authority over all aspects of the portion of the Portfolio’s investment portfolio managed by Jennison, including but not limited to, purchases and sales of individual securities, portfolio construction, risk assessment, and management of cash flows.

The portfolio managers for the portion of the Portfolio managed by Jennison are supported by members of Jennison’s Large Cap Growth Equity Team, which is comprised of other portfolio managers, research analysts and other investment professionals of Jennison. Team members provide research support and make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.

Spiros Segalas was a founding member of Jennison in 1969 and is currently a Director, President and Chief Investment Officer at Jennison. He received his B.A. from Princeton University and is a member of The New York Society of Security Analysts, Inc. He has managed the portion of the Portfolio managed by Jennison since the Portfolio’s inception in August 2000.

Kathleen A. McCarragher joined Jennison in 1998 and is an Executive Vice President at Jennison. She is also Jennison’s Head of Growth Equity. Prior to joining Jennison, she was employed at Weiss, Peck & Greer L.L.C. as a managing director and director of large cap growth equities for six years. Ms McCarragher received her B.B.A. degree from the University of Wisconsin and her M.B.A. from Harvard University. She has managed the portion of the Portfolio managed by Jennison since the Portfolio’s inception in August 2000.

SP William Blair International Growth Portfolio

W. George Grieg is responsible for the day-to-day management of the Portfolio. Mr. Grieg is a principal of William Blair and joined the firm in 1996 as an international portfolio manager. Mr. Grieg has managed the Portfolio since William Blair became the Portfolio’s subadviser in May 2004.

SP Asset Allocation Portfolios

For the four Asset Allocation Portfolios, PI invests in shares of other Fund Portfolios according to the percentage allocations discussed in this prospectus.

103

HOW TO BUY AND SELL SHARES OF THE FUND

The Fund offers two classes of shares in each Portfolio — Class I and Class II. Each Class participates in the same investments within a given Portfolio, but the Classes differ as far as their charges. Class I shares are sold only to separate accounts of Prudential as investment options under certain variable annuity and variable life insurance Contracts. Class II is offered only to separate accounts of non-Prudential insurance companies as investment options under certain of their Contracts. Please refer to the accompanying Contract prospectus to see which Portfolios are available through your Contract.

The way to invest in the Portfolios is through certain variable life insurance and variable annuity contracts. Together with this prospectus, you should have received a prospectus for such a Contract. You should refer to that prospectus for further information on investing in the Portfolios.

Both Class I and Class II shares of a Portfolio are sold without any sales charge at the net asset value of the Portfolio. Class II shares, however, are subject to an annual distribution or “12b-1” fee of 0.25% of the average daily net assets of Class II. Under the distribution plan adopted by the Fund for Class II shares, Class II of each Portfolio pays to Prudential Investment Management Services LLC (PIMS) a distribution or 12b-1 fee at the annual rate of 0.25% of the average daily net assets of Class II. This fee pays for distribution services for Class II shares. Because these fees are paid out of the Portfolio’s assets on an ongoing basis, over time these fees will increase the cost of your investment in Class II shares and may cost you more than paying other types of sales charges. Class II shares are also subject to an administration fee of 0.15% of the average daily net assets of Class II. Class I shares do not have a distribution or administration fee.

Shares are redeemed for cash within seven days of receipt of a proper notice of redemption or sooner if required by law. There is no redemption charge. We may suspend the right to redeem shares or receive payment when the New York Stock Exchange (NYSE) is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC.

Frequent Purchases or Redemptions of Fund Shares

The Fund is part of the group of investment companies advised by PI that seeks to prevent patterns of frequent purchases and redemptions of shares by its investors (the “PI funds”). Frequent purchases and redemptions may adversely affect performance and the interests of long-term investors. When an investor engages in frequent or short-term trading, the PI funds may have to sell portfolio securities to have the cash necessary to pay the redemption amounts. This can happen when it is not advantageous to sell any securities, so the PI funds’ performance may be hurt. When large dollar amounts are involved, frequent trading can also make it difficult to use long-term investment strategies because the PI funds cannot predict how much cash they will have to invest. In addition, if a PI fund is forced to liquidate investments due to short-term trading activity, it may incur increased brokerage and tax costs. Similarly, the PI funds may bear increased administrative costs as a result of the asset level and investment volatility that accompanies patterns of short-term trading. Moreover, frequent or short-term trading by certain investors may cause dilution in the value of PI fund shares held by other investors. PI funds that invest in foreign securities may be particularly susceptible to frequent trading because time zone differences among international stock markets can allow an investor engaging in short-term trading to exploit fund share prices that may be based on closing prices of foreign securities established some time before the fund calculates its own share price. PI funds that invest in certain fixed income securities, such as high-yield bonds or certain asset-backed securities, may also constitute effective vehicles for an investor’s frequent trading strategies.

The Boards of Directors of the PI funds, including the Fund, have adopted policies and procedures designed to discourage or prevent frequent trading by investors. The policies and procedures for the Fund are limited, however, because Prudential and other insurance companies maintain the individual contract owner accounts for investors in the Fund’s Portfolios. In particular, each insurance company submits to the Fund transfer agent aggregate orders combining the transactions of many investors, and therefore the Fund and its transfer agent cannot monitor investments by individual investors. The policies and procedures require the Fund to communicate in writing to each investing insurance company that the Fund expects the insurance company to impose restrictions on transfers by contract owners. In addition, the Fund receives reports on the trading restrictions imposed by Prudential and its affiliates on variable contract owners investing in the Portfolios, and the Fund monitors the aggregate cash flows received from unaffiliated insurance companies. The Fund also employs fair value pricing procedures to deter frequent trading. Finally, the Fund and its transfer agent reserve the right to reject all or a portion of a purchase order from an investing insurance company. If a purchase order is rejected, the purchase amount will be returned to the insurance company.

Investors seeking to engage in frequent trading activities may use a variety of strategies to avoid detection and, despite the efforts of the Fund and the insurance companies to prevent such trading, there is no guarantee that the Fund or the insurance companies will be able to identify these investors or curtail their trading practices. Therefore, some Fund investors may be able to engage in frequent trading, and, if they do, the other Fund investors would bear any harm caused by that frequent trading. The Fund does not have any arrangements intended to permit trading in contravention of the policies described above.

104

For information about the trading limitations applicable to you, please see the prospectus for your variable contract or contact your insurance company.

Net Asset Value

Any purchase or sale of Portfolio shares is made at the net asset value, or NAV, of such shares. The price at which a purchase or redemption is made is based on the next calculation of the NAV after the order is received in good order. The NAV of each share class of each Portfolio is determined on each day the NYSE is open for trading as of the close of the exchange’s regular trading session (which is generally 4:00 p.m. New York time). The NYSE is closed on most national holidays and Good Friday. The Fund does not price, and shareholders will not be able to purchase or redeem, the Fund’s shares on days when the NYSE is closed but the primary markets for the Fund’s foreign securities are open, even though the value of these securities may have changed. Conversely, the Fund will ordinarily price its shares, and shareholders may purchase and redeem shares, on days that the NYSE is open but foreign securities markets are closed.

The securities held by each of the Fund’s portfolios are valued based upon market quotations or, if not readily available, at fair value as determined in good faith under procedures established by the Fund’s Board of Directors. The Fund may use fair value pricing if it determines that a market quotation is not reliable based, among other things, on market conditions that occur after the quotation is derived or after the closing of the primary market on which the security is traded, but before the time that the NAV is determined. This use of fair value pricing most commonlyoccurs with securities that are primarily traded outside of the U.S. because such securities present time-zone arbitrage opportunities when events or conditions affecting the prices of specific securities or the prices of securities traded in such markets generally occur after the close of the foreign markets but prior to the time that a Portfolio determines its NAV.

The Fund may also use fair value pricing with respect to U.S. traded securities if, for example, trading in a particular security is halted and does not resume before a Portfolio calculates its NAV or the exchange on which a security is traded closes early. In addition, fair value pricing is used for securities where the pricing agent or principal market maker does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Manager (or Subadviser) does not represent fair value. Different valuation methods may result in differing values for the same security. The fair value of a portfolio security that a Portfolio uses to determine its NAV may differ from the security’s published or quoted price. If a Portfolio needs to implement fair value pricing after the NAV publishing deadline but before shares of the Portfolio are processed, the NAV you receive or pay may differ from the published NAV price. For purposes of computing the Fund’s NAV, we will value the Fund’s futures contracts 15 minutes after the close of regular trading on the NYSE. Except when we fair value securities, we normally value each foreign security held by the Fund as of the close of the security’s primary market.

Fair value pricing procedures are designed to result in prices for a Portfolio’s securities and its NAV that are reasonable in light of the circumstances which make or have made market quotations unavailable or unreliable, and to reduce arbitrage opportunities available to short-term traders. There is no assurance, however, that fair value pricing will more accurately reflect the market value of a security than the market price of such security on that day or that it will prevent dilution of a Portfolio’s NAV by short-term traders.

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

To determine a Portfolio’s NAV, its holdings are valued as follows:

Equity Securities for which the primary market is on an exchange (whether domestic or foreign) shall be valued at the last sale price on such exchange or market on the day of valuation or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price. Securities included within the NASDAQ market shall be valued at the NASDAQ official closing price (NOCP) on the day of valuation, or if there was no NOCP issued, at the last sale price on such day. Securities included within the NASDAQ market for which there is no NOCP and no last sale price on the day of valuation shall be valued at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price. Equity securities that are not sold on an exchange or NASDAQ are generally valued by an independent pricing agent or principal market maker.

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

105

All Short-term Debt Securities held by the Money Market Portfolio are valued at amortized cost. Short-term debt securities with remaining maturities of 12 months or less held by the Conservative Balanced and Flexible Managed Portfolios are valued on an amortized cost basis. The amortized cost valuation method is widely used by mutual funds. It means that the security is valued initially at its purchase price and then decreases in value by equal amounts each day until the security matures. It almost always results in a value that is extremely close to the actual market value. The Fund’s Board of Directors has established procedures to monitor whether any material deviation between valuation and market value occurs and if so, will promptly consider what action, if any, should be taken to prevent unfair results to Contract owners.

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

Short-term Debt Securities with remaining maturities of 60 days or less are valued at cost with interest accrued or discount amortized to the date of maturity, unless such valuation, in the judgment of PI or a subadviser, does not represent fair value.

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

Other debt securities — those that are not valued on an amortized cost basis — are valued using an independent pricing service.

Options on stock and stock indexes that are traded on a national securities exchange are valued at the last sale price on such exchange on the day of valuation or, if there was no such sale on such day, at the mean between the most recently quoted bid and asked prices on such exchange.

Futures contracts and options on futures contracts are valued at the last sale price at the close of the commodities exchange or board of trade on which they are traded. If there has been no sale that day, the securities will be valued at the mean between the most recently quoted bid and asked prices on that exchange or board of trade.

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

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

Distributor

Prudential Investment Management Services LLC (PIMS) distributes the Fund’s shares under a Distribution Agreement with the Fund. PIMS’ principal business address is Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-3777. The Fund has adopted a distribution plan under Rule 12b-1 of the Investment Company Act covering Class II shares. These 12b-1 fees do not apply to Class I.

OTHER INFORMATION

Federal Income Taxes

If you own or are considering purchasing a variable contract, you should consult the prospectus for the variable contract for tax information about that variable contract. You should also consult with a qualified tax adviser for information and advice. The SAI provides information about certain tax laws applicable to the Fund.

Monitoring For Possible Conflicts

The Fund sells its shares to fund variable life insurance contracts and variable annuity contracts and is authorized to offer its shares to qualified retirement plans. Because of differences in tax treatment and other considerations, it is possible that the interest of

106

variable life insurance contract owners, variable annuity contract owners and participants in qualified retirement plans could conflict. The Fund will monitor the situation and in the event that a material conflict did develop, the Fund would determine what action, if any, to take in response.

Disclosure of Portfolio Holdings

A description of the Fund’s policies and procedures with respect to the disclosure of each Portfolio’s portfolio securities is described in the Fund’s Statement of Additional Information and on the Fund’s website at www.prudential.com. The Fund will provide a full list of each Portfolio’s portfolio holdings as of the end of the fiscal quarter on its website within 60 days after the end of its fiscal quarter. In addition, the Fund may release each Portfolio’s top ten holdings, sector and country breakdowns, and largest industries on a monthly basis. Such information will be posted to the Fund’s website no earlier than 15 days after the end of each month. These postings can be located at www.prudential.com.

FINANCIAL HIGHLIGHTS

107

Financial Highlights

	Conservative Balanced Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	14.34		$	12.43		$	13.69		$	14.63		$	15.36
Income (Loss) From Investment Operations:
Net investment income	0.34			0.28			0.34			0.44			0.59
Net realized and unrealized gains (losses) on investments	0.78			1.99			(1.57		)	(0.75		)	(0.65		)
Total from investment operations	1.12			2.27			(1.23		)	(0.31		)	(0.06		)
Less Distributions:
Dividends from net investment income	(0.28		)	(0.36		)	—			(0.48		)	(0.56		)
Distributions from net realized gains	(0.08		)	—			(0.03		)	(0.15		)	(0.11		)
Distributions in excess of net realized gains	—			—			—			—			—
Total distributions	(0.36		)	(0.36		)	(0.03		)	(0.63		)	(0.67		)
Net Asset Value, end of year	$	15.10		$	14.34		$	12.43		$	13.69		$	14.63
Total Investment Return(a)	8.04		%	18.77		%	(8.98		)%	(2.02		)%	(0.48		)%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	2,893.6		$	2,895.0		$	2,660.3		$	3,259.7		$	3,714.3
Ratios to average net assets:
Expenses	0.59		%	0.58		%	0.58		%	0.58		%	0.60		%
Net investment income	2.27		%	2.02		%	2.49		%	3.05		%	3.79		%
Portfolio turnover rate	153		%	248		%	260		%	239		%	85		%

	Diversified Bond Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	11.17		$	10.82		$	11.36		$	11.28		$	10.95
Income (Loss) From Investment Operations:
Net investment income	0.52			0.45			0.57			0.67			0.77
Net realized and unrealized gains on investments	0.09			0.35			0.17			0.12			0.26
Total from investment operations	0.61			0.80			0.74			0.79			1.03
Less Dividends and Distributions:
Dividends from net investment income	(0.50		)	(0.45		)	(1.27		)	(0.71		)	(0.70		)
Distributions from net realized gains	—			—			—			—			—		(b)
Tax return of capital distributions	—			—			(0.01		)	—			—
Total dividends and distributions	(0.50		)	(0.45		)	(1.28		)	(0.71		)	(0.70		)
Net Asset Value, end of year	$	11.28		$	11.17		$	10.82		$	11.36		$	11.28
Total Investment Return(a)	5.59		%	7.49		%	7.07		%	6.98		%	9.72		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	1,283.7		$	1,418.0		$	1,370.3		$	1,400.7		$	1,269.8
Ratios to average net assets:
Expenses	0.45		%	0.44		%	0.44		%	0.44		%	0.45		%
Net investment income	4.57		%	4.02		%	5.25		%	6.35		%	6.83		%
Portfolio turnover rate	382		%	706		%	595		%	257		%	139		%

(b) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 1

Financial Highlights

	Diversified Conservative Growth Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	10.63		$	9.17		$	9.89		$	10.16		$	10.37
Income (Loss) From Investment Operations:
Net investment income	0.26			0.32			0.38			0.42			0.46
Net realized and unrealized gains (losses) on investments	0.72			1.58			(1.08		)	(0.28		)	(0.09		)
Total from investment operations	0.98			1.90			(0.70		)	0.14			0.37
Less Dividends and Distributions:
Dividends from net investment income	(0.33		)	(0.44		)	(0.02		)	(0.41		)	(0.46		)
Distributions in excess of net investment income	—			—			—			—			(0.01		)
Distributions from net realized gains	—			—			—			—			(0.09		)
Distributions in excess of net realized gains	—			—			—			—			(0.02		)
Total dividends and distributions	(0.33		)	(0.44		)	(0.02		)	(0.41		)	(0.58		)
Net Asset Value, end of year	$	11.28		$	10.63		$	9.17		$	9.89		$	10.16
Total Investment Return(a)	9.56		%	21.57		%	(7.10		)%	1.51		%	3.79		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	167.0		$	169.6		$	157.1		$	204.1		$	204.8
Ratios to average net assets:
Expenses	0.97		%	0.98		%	0.92		%	0.94		%	0.93		%
Net investment income	2.29		%	2.93		%	3.63		%	4.17		%	4.71		%
Portfolio turnover	186		%	224		%	271		%	315		%	319		%

	Equity Portfolio
	Class I
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	20.55		$	15.75		$	20.49		$	24.50		$	28.90
Income (Loss) From Investment Operations:
Net investment income	0.28			0.17			0.17			0.18			0.51
Net realized and unrealized gains (losses) on investments	1.75			4.81			(4.75		)	(2.83		)	0.26
Total from investment operations	2.03			4.98			(4.58		)	(2.65		)	0.77
Less Distributions:
Dividends from net investment income	(0.27		)	(0.18		)	(0.16		)	(0.18		)	(0.51		)
Distributions in excess of net investment income	—			—			—			—			(0.02		)
Distributions from net realized gains	—			—			—			(1.18		)	(4.64		)
Total dividends and distributions	(0.27		)	(0.18		)	(0.16		)	(1.36		)	(5.17		)
Net Asset Value, end of year	$	22.31		$	20.55		$	15.75		$	20.49		$	24.50
Total Investment Return(a)	9.93		%	31.65		%	(22.34		)%	(11.18		)%	3.28		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	4,135.7		$	4,012.3		$	3,273.6		$	4,615.9		$	5,652.7
Ratios to average net assets:
Expenses	0.48		%	0.49		%	0.48		%	0.49		%	0.49		%
Net investment income	1.29		%	0.96		%	0.88		%	0.84		%	1.75		%
Portfolio turnover rate	50		%	54		%	54		%	153		%	78		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 2

Financial Highlights

	Equity Portfolio
	Class II
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	20.58		$	15.76		$	20.49		$	24.51		$	28.92
Income (Loss) From Investment Operations:
Net investment income	0.20			0.08			0.09			0.09			0.39
Net realized and unrealized gains (losses) on investments	1.74			4.83			(4.72		)	(2.83		)	0.26
Total from investment operations	1.94			4.91			(4.63		)	(2.74		)	0.65
Less distributions:
Dividends from net investment income	(0.18		)	(0.09		)	(0.10		)	(0.10		)	(0.40		)
Distributions in excess of net investment income	—			—			—			—			(0.02		)
Distributions from net realized gains	—			—			—			(1.18		)	(4.64		)
Total dividends and distributions	(0.18		)	(0.09		)	(0.10		)	(1.28		)	(5.06		)
Net Asset Value, end of year	$	22.34		$	20.58		$	15.76		$	20.49		$	24.51
Total Investment Return(a)	9.51		%	31.11		%	(22.62		)%	(11.57		)%	2.83		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	1.1		$	0.8		$	0.4		$	1.1		$	1.8
Ratios to average net assets:
Expenses	0.88		%	0.89		%	0.88		%	0.89		%	0.91		%
Net investment income	0.91		%	0.54		%	0.46		%	0.45		%	1.26		%
Portfolio turnover rate	50		%	54		%	54		%	153		%	78		%

	Flexible Managed Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	15.19		$	12.55		$	14.79		$	16.53		$	17.64
Income (Loss) From Investment Operations:
Net investment income	0.29			0.22			0.27			0.42			0.61
Net realized and unrealized gains (losses) on investments	1.32			2.70			(2.10		)	(1.35		)	(0.86		)
Total from investment operations	1.61			2.92			(1.83		)	(0.93		)	(0.25		)
Less Dividends and Distributions:
Dividends from net investment income	(0.22		)	(0.28		)	(0.41		)	(0.58		)	(0.62		)
Distributions from net realized gains	—			—			—			(0.23		)	(0.24		)
Total dividends and distributions	(0.22		)	(0.28		)	(0.41		)	(0.81		)	(0.86		)
Net Asset Value, end of year	$	16.58		$	15.19		$	12.55		$	14.79		$	16.53
Total Investment Return(a)	10.74		%	23.76		%	(12.74		)%	(5.68		)%	(1.44		)%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	3,883.5		$	3,693.6		$	3,181.0		$	3,896.6		$	4,463.8
Ratios to average net assets:
Expenses	0.62		%	0.62		%	0.63		%	0.64		%	0.64		%
Net investment income	1.83		%	1.55		%	1.92		%	2.61		%	3.22		%
Portfolio turnover rate	150		%	204		%	238		%	236		%	132		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 3

Financial Highlights

	Global Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	15.14		$	11.35		$	15.29		$	23.61		$	30.98
Income (Loss) From Investment Operations:
Net investment income	0.11			0.10			0.07			0.09			0.07
Net realized and unrealized gains (losses) on investments	1.33			3.74			(3.87		)	(3.58		)	(5.30		)
Total from investment operations	1.44			3.84			(3.80		)	(3.49		)	(5.23		)
Less Dividends and Distributions:
Dividends from net investment income	(0.15		)	(0.05		)	(0.14		)	(0.06		)	(0.07		)
Distributions in excess of net investment income	—			—			—			—			(0.13		)
Distributions from net realized gains	—			—			—			(4.77		)	(1.94		)
Total dividends and distributions	(0.15		)	(0.05		)	(0.14		)	(4.83		)	(2.14		)
Net Asset Value, end of year	$	16.43		$	15.14		$	11.35		$	15.29		$	23.61
Total Investment Return(a)	9.59		%	34.07		%	(25.14		)%	(17.64		)%	(17.68		)%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	691.1		$	665.6		$	514.9		$	885.0		$	1,182.1
Ratios to average net assets:
Expenses	0.84		%	0.87		%	0.82		%	0.84		%	0.85		%
Net investment income	0.67		%	0.78		%	0.47		%	0.58		%	0.25		%
Portfolio turnover rate	128		%	88		%	75		%	67		%	95		%

	Government Income Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	11.92		$	12.50		$	12.26		$	12.02		$	11.55
Income (Loss) From Investment Operations:
Net investment income	0.49			0.46			0.38			0.65			0.89
Net realized and unrealized gain (losses) on investment	(0.13		)	(0.15		)	1.00			0.31			0.52
Total from investment operations	0.36			0.31			1.38			0.96			1.41
Less Dividends and Distributions:
Dividends from net investment income	(0.44		)	(0.46		)	(1.06		)	(0.72		)	(0.91		)
Distributions from net realized gains	(0.19		)	(0.43		)	(0.08		)	—			(0.03		)
Total dividends and distributions	(0.63		)	(0.89		)	(1.14		)	(0.72		)	(0.94		)
Net Asset Value, end of year	$	11.65		$	11.92		$	12.50		$	12.26		$	12.02
Total Investment Return(a)	3.12		%	2.46		%	12.05		%	8.06		%	12.78		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	420.2		$	461.5		$	484.3		$	311.0		$	291.5
Ratios to average net assets:
Expenses	0.47		%	0.46		%	0.44		%	0.47		%	0.47		%
Net investment income	4.07		%	3.76		%	4.29		%	5.53		%	6.03		%
Portfolio turnover rate	617		%	695		%	508		%	361		%	184		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 4

Financial Highlights

	High Yield Bond Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	5.29		$	4.59		$	5.40		$	6.14		$	7.52
Income (Loss) From Investment Operations:
Net investment income	0.39			0.41			0.29			0.58			0.74
Net realized and unrealized gains (losses) on investments	0.13			0.71			(0.21		)	(0.62		)	(1.30		)
Total from investment operations	0.52			1.12			0.08			(0.04		)	(0.56		)
Less Dividends:
Dividends from net investment income	(0.39		)	(0.42		)	(0.89		)	(0.70		)	(0.82		)
Net Asset Value, end of year	$	5.42		$	5.29		$	4.59		$	5.40		$	6.14
Total Investment Return(a)	10.30		%	25.04		%	1.50		%	(0.44		)%	(7.91		)%
Ratios/Supplement Data:
Net assets, end of year (in millions)	$	1,595.7		$	1,466.7		$	1,128.6		$	655.8		$	661.3
Ratios to average net assets:
Expenses	0.59		%	0.60		%	0.58		%	0.60		%	0.60		%
Net investment income	7.42		%	8.11		%	9.36		%	10.93		%	10.47		%
Portfolio turnover rate	65		%	93		%	77		%	84		%	76		%

	Jennison Portfolio
	Class I
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	16.62		$	12.79		$	18.57		$	22.97		$	32.39
Income (Loss) From Investment Operations:
Net investment income	0.08			0.04			0.03			0.04			0.01
Net realized and unrealized gains (losses) on investments	1.52			3.83			(5.78		)	(4.22		)	(5.61		)
Total from investment operations	1.60			3.87			(5.75		)	(4.18		)	(5.60		)
Less Dividends and Distributions:
Dividends from net investment income	(0.08		)	(0.04		)	(0.03		)	(0.03		)	—		(b)
Distributions from net realized gains	—			—			—			(0.19		)	(3.82		)
Total dividends and distributions	(0.08		)	(0.04		)	(0.03		)	(0.22		)	(3.82		)
Net Asset Value, end of year	$	18.14		$	16.62		$	12.79		$	18.57		$	22.97
Total Investment Return(a)	9.63		%	30.25		%	(30.95		)%	(18.25		)%	(17.38		)%
Ratios/Supplement Data:
Net assets, end of year (in millions)	$	2,044.1		$	1,772.4		$	1,388.8		$	2,186.9		$	2,892.7
Ratios to average net assets:
Expenses	0.64		%	0.64		%	0.61		%	0.64		%	0.64		%
Net investment income	0.50		%	0.28		%	0.21		%	0.18		%	0.02		%
Portfolio turnover rate	74		%	69		%	74		%	86		%	89		%

(b) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 5

Financial Highlights

	Jennison Portfolio
	Class II
	Year Ended												February 10, 2000(e)
	December 31,												through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	16.46		$	12.70		$	18.45		$	22.88			$	34.25
Income (Loss) From Investment Operations:
Net investment income (loss)	0.02			(0.01		)	(0.02		)	0.01				(0.03		)
Net realized and unrealized gains (losses) on investments	1.50			3.77			(5.73		)	(4.25		)		(7.54		)
Total from investment operations	1.52			3.76			(5.75		)	(4.24		)		(7.57		)
Less Distributions:
Dividends from net investment income	(0.01		)	—			—			—		(d)		—		(d)
Distributions from net realized gains	—			—			—			(0.19		)		(3.80		)
Total distributions	(0.01		)	—			—			(0.19		)		(3.80		)
Net Asset Value, end of year	$	17.97		$	16.46		$	12.70		$	18.45			$	22.88
Total Investment Return(a)	9.22		%	29.61		%	(31.17		)%	(18.60		)%		(22.19		)%
Ratios/Supplement Data:
Net assets, end of year (in millions)	$	84.9		$	74.3		$	48.1		$	59.6			$	13.3
Ratios to average net assets:
Expenses	1.04		%	1.04		%	1.01		%	1.04		%		1.04		%(b)
Net investment income (loss)	0.11		%	(0.13		)%	(0.19		)%	(0.19		)%		(0.39		)%(b)
Portfolio turnover rate	74		%	69		%	74		%	86		%		89		%(c)

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods less than one full year are not annualized.

(b) Annualized.

(d) Less than $0.005 per share.

(e) Commencement of offering of Class II Shares.

	Jennison 20/20 Focus Portfolio
	Class I
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	10.68		$	8.28		$	10.65		$	10.99		$	11.88
Income (Loss) From Investment Operations:
Net investment income	0.04			0.02			0.02			0.05			0.05
Net realized and unrealized gains (losses) on investments	1.66			2.40			(2.39		)	(0.15		)	(0.71		)
Total from investment operations	1.70			2.42			(2.37		)	(0.10		)	(0.66		)
Less Dividends and Distributions:
Dividends from net investment income	(0.01		)	(0.02		)	—		(b)	(0.05		)	(0.05		)
Distributions from net realized gains	—			—			—			(0.19		)	(0.18		)
Total dividends and distributions	(0.01		)	(0.02		)	—			(0.24		)	(0.23		)
Net Asset Value, end of year	$	12.37		$	10.68		$	8.28		$	10.65		$	10.99
Total Investment Return(a):	15.94		%	29.30		%	(22.24		)%	(1.01		)%	(5.41		)%
Ratios Supplemental Data:
Net assets, end of year (in millions)	$	68.4		$	64.6		$	57.2		$	87.8		$	95.8
Ratios to average net assets:
Expenses	0.88		%	0.95		%	0.97		%	0.93		%	0.88		%
Net investment income	0.29		%	0.18		%	0.19		%	0.46		%	0.45		%
Portfolio turnover rate	87		%	102		%	75		%	131		%	163		%

(b) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 6

Financial Highlights

	Jennison 20/20 Focus Portfolio
	Class II
	Year Ended December 31,												February 15, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.60		$	8.23		$	10.63		$	10.99			$	11.36
Income (Loss) From Investment Operations:
Net investment income	0.01			—		(d)	—		(d)	0.02				0.01
Net realized and unrealized gains (losses) on investments	1.62			2.37			(2.40		)	(0.15		)		(0.19		)
Total from investment operations	1.63			2.37			(2.40		)	(0.13		)		(0.18		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			(0.04		)		(0.01		)
Distributions from net realized gains	—			—			—			(0.19		)		(0.18		)
Total dividends and distributions	—			—			—			(0.23		)		(0.19		)
Net Asset Value, end of period	$	12.23		$	10.60		$	8.23		$	10.63			$	10.99
Total Investment Return(b):	15.38		%	28.80		%	(22.58		)%	(1.30		)%		(1.53		)%
Ratios Supplemental Data:
Net assets, end of period (in millions)	$	101.0		$	39.6		$	7.5		$	2.0			$	0.7
Ratios to average net assets:
Expenses	1.28		%	1.35		%	1.37		%	1.33		%		1.28		%(c)
Net investment income (loss)	(0.02		)%	(0.22		)%	(0.21		)%	0.06		%		0.10		%(c)
Portfolio turnover rate	87		%	102		%	75		%	131		%		163		%(e)

(a) Commencement of offering of Class II shares.

(d) Less than $0.005 per share.

(e) Not annualized.

	Money Market Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	10.00		$	10.00		$	10.00		$	10.00		$	10.00
Income (Loss) From Investment Operations:
Net investment income and realized and unrealized gains	0.01			0.08			0.15			0.41			0.60
Dividend and distributions	(0.01		)	(0.08		)	(0.15		)	(0.41		)	(0.60		)
Net Asset Value, end of year	$	10.00		$	10.00		$	10.00		$	10.00		$	10.00
Total Investment Return(a)	1.01		%	0.84		%	1.52		%	4.22		%	6.20		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	885.4		$	933.7		$	1,366.6		$	1,501.9		$	1,238.2
Ratios to average net assets:
Expenses	0.45		%	0.44		%	0.43		%	0.43		%	0.44		%
Net investment income	1.01		%	0.84		%	1.52		%	3.86		%	6.03		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 7

Financial Highlights

	Natural Resources Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	27.49		$	22.35		$	19.11		$	23.59		$	17.38
Income (Loss) From Investment Operations:
Net investment income	0.19			0.25			0.09			0.43			0.13
Net realized and unrealized gains (losses) on investments	6.28			7.38			3.52			(2.89		)	6.36
Total from investment operations	6.47			7.63			3.61			(2.46		)	6.49
Less Dividends and Distributions:
Dividends from net investment income	(1.00		)	(0.98		)	(0.12		)	(0.55		)	(0.16		)
Distributions in excess of net investment income	—			—			—			—			(0.09		)
Distributions from net realized gains	(1.08		)	(1.51		)	(0.25		)	(1.47		)	(0.03		)
Total dividends and distributions	(2.08		)	(2.49		)	(0.37		)	(2.02		)	(0.28		)
Net Asset Value, end of year	$	31.88		$	27.49		$	22.35		$	19.11		$	23.59
Total Investment Return(a)	25.17		%	39.00		%	18.92		%	(10.08		)%	37.66		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	622.6		$	498.7		$	379.2		$	336.1		$	393.2
Ratios to average net assets:
Expenses	0.51		%	0.51		%	0.50		%	0.52		%	0.58		%
Net investment income	0.49		%	0.80		%	0.47		%	1.94		%	0.67		%
Portfolio turnover rate	24		%	24		%	37		%	23		%	30		%

	Small Capitalization Stock Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	17.64		$	12.91		$	15.48		$	17.11		$	16.25
Income (Loss) From Investment Operations:
Net investment income	0.12			0.07			0.06			0.06			0.07
Net realized and unrealized gains (losses) on investments	3.75			4.82			(2.31		)	0.67			1.81
Total from investment operations	3.87			4.89			(2.25		)	0.73			1.88
Less Distributions:
Dividends from net investment income	(0.11		)	(0.07		)	(0.13		)	(0.08		)	(0.08		)
Distributions from net realized gains	(0.07		)	(0.09		)	(0.19		)	(2.28		)	(0.94		)
Total distributions	(0.18		)	(0.16		)	(0.32		)	(2.36		)	(1.02		)
Net Asset Value, end of year	$	21.33		$	17.64		$	12.91		$	15.48		$	17.11
Total Investment Return(a)	22.04		%	38.27		%	(14.92		)%	5.53		%	12.81		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	743.2		$	619.9		$	467.4		$	611.1		$	568.3
Ratios to average net assets:
Expenses	0.47		%	0.48		%	0.46		%	0.48		%	0.48		%
Net investment income	0.62		%	0.47		%	0.40		%	0.52		%	0.59		%
Portfolio turnover rate	18		%	15		%	17		%	23		%	29		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 8

Financial Highlights

	Stock Index Portfolio
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	29.29		$	24.09		$	31.64		$	38.66		$	44.45
Income (Loss) From Investment Operations:
Net investment income	0.50			0.36			0.37			0.36			0.36
Net realized and unrealized gains (losses) on investments	2.50			6.14			(7.34		)	(5.05		)	(4.37		)
Total from investment operations	3.00			6.50			(6.97		)	(4.69		)	(4.01		)
Less Dividends & Distributions:
Dividends from net investment income	(0.49		)	(0.37		)	(0.36		)	(0.35		)	(0.37		)
Distributions from net realized gains	(0.51		)	(0.93		)	(0.22		)	(1.98		)	(1.41		)
Total distributions	(1.00		)	(1.30		)	(0.58		)	(2.33		)	(1.78		)
Net Asset Value, end of year	$	31.29		$	29.29		$	24.09		$	31.64		$	38.66
Total Investment Return(a)	10.45		%	28.18		%	(22.19		)%	(12.05		)%	(9.03		)%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	3,094.7		$	2,940.9		$	2,352.3		$	3,394.1		$	4,186.0
Ratios to average net assets:
Expenses	0.38		%	0.37		%	0.37		%	0.39		%	0.39		%
Net investment income	1.64		%	1.42		%	1.25		%	1.02		%	0.83		%
Portfolio turnover rate	3		%	2		%	4		%	3		%	7		%

	Value Portfolio
	Class I
	Year Ended December 31,
	2004			2003			2002(b)			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	17.36		$	13.75		$	17.91		$	20.46		$	19.52
Income (Loss) From Investment Operations:
Net investment income	0.28			0.23			0.22			0.25			0.46
Net realized and unrealized gains (losses) on investments	2.55			3.62			(4.15		)	(0.69		)	2.45
Total from investment operations	2.83			3.85			(3.93		)	(0.44		)	2.91
Less Distributions:
Dividends from net investment income	(0.26		)	(0.24		)	(0.23		)	(0.30		)	(0.44		)
Distributions from net realized gains	—			—			—			(1.81		)	(1.53		)
Tax return of capital distributions	—			—		(c)	—			—			—
Total distributions	(0.26		)	(0.24		)	(0.23		)	(2.11		)	(1.97		)
Net asset value, end of year	$	19.93		$	17.36		$	13.75		$	17.91		$	20.46
Total Investment Return(a)	16.31		%	28.07		%	(21.97		)%	(2.08		)%	15.59		%
Ratios/Supplement Data:
Net assets, end of year (in millions)	$	1,595.6		$	1,456.1		$	1,247.0		$	1,801.4		$	1,975.3
Ratios to average net assets:
Expenses	0.44		%	0.44		%	0.43		%	0.44		%	0.45		%
Net investment income	1.48		%	1.49		%	1.39		%	1.32		%	2.31		%
Portfolio turnover rate	52		%	72		%	94		%	175		%	85		%

(b) Calculated based upon weighted average shares outstanding during the year.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 9

Financial Highlights

	Value Portfolio
	Class II
	Year Ended December 31,									May 14, 2001(d) through
										December 31,
	2004			2003(e)			2002(e)			2001
Per Share Operating Performance:
Net Asset Value, beginning of period	$	17.37		$	13.75		$	17.91			$	19.79
Income (Loss) From Investment Operations:
Net investment income	0.20			0.16			0.16				0.12
Net realized and unrealized gains (losses) on investments	2.55			3.62			(4.15		)		(1.01		)
Total from investment operations	2.75			3.78			(3.99		)		(0.89		)
Less Distributions:
Dividends from net investment income	(0.18		)	(0.16		)	(0.17		)		(0.14		)
Distributions from net realized gains	—			—			—				(0.85		)
Tax return of capital distributions	—			—		(f)	—				—
Total distributions	(0.18		)	(0.16		)	(0.17		)		(0.99		)
Net Asset Value, end of period	$	19.94		$	17.37		$	13.75			$	17.91
Total Investment Return(a)	15.83		%	27.63		%	(22.35		)%		(4.34		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	3.0		$	2.9		$	1.5			$	1.1
Ratios to average net assets:
Expenses	0.84		%	0.84		%	0.83		%		0.84		%(b)
Net investment income	1.08		%	1.10		%	1.04		%		0.94		%(b)
Portfolio turnover rate	52		%	72		%	94		%		175		%(c)

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(b) Annualized.

(d) Commencement of offering of Class II shares.

(e) Calculated based upon weighted average shares outstanding during the year.

(f) Less than .005 per share.

	Zero Coupon Bond Portfolio 2005
	Year Ended December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of year	$	13.38		$	13.73		$	13.77		$	13.38		$	12.68
Income (Loss) From Investment Operations:
Net investment income	0.55			0.60			0.59			0.65			0.65
Net realized and unrealized gains (losses) on investments	(0.47		)	(0.34		)	0.75			0.42			1.02
Total from investment operations	0.08			0.26			1.34			1.07			1.67
Less Dividends and Distributions:
Dividends from net investment income	(0.55		)	(0.60		)	(1.25		)	(0.64		)	(0.67		)
Distributions from net realized gains	(0.32		)	(0.01		)	(0.13		)	(0.04		)	(0.30		)
Total dividends and distributions	(0.87		)	(0.61		)	(1.38		)	(0.68		)	(0.97		)
Net Asset Value, end of year	$	12.59		$	13.38		$	13.73		$	13.77		$	13.38
Total Investment Return(a)	0.57		%	1.90		%	10.40		%	8.11		%	13.76		%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	60.6		$	63.9		$	66.8		$	55.0		$	49.8
Ratios to average net assets:
Expenses	0.63		%	0.66		%	0.63		%	0.63		%	0.65		%
Net investment income	4.19		%	4.33		%	4.64		%	5.05		%	5.26		%
Portfolio turnover rate	9		%	8		%	1		%	10		%	67		%

SEE NOTES TO FINANCIAL STATEMENTS.

F- 10

Financial Highlights

	SP AIM Aggressive Growth Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.49		$	5.13		$	6.49		$	8.60			$	10.00
Income (Loss) From Investment Operations:
Net investment loss	(0.03		)	(0.03		)	(0.03		)	(0.04		)		(0.01		)
Net realized and unrealized gains (losses) on investments	0.80			1.39			(1.33		)	(2.07		)		(1.39		)
Total from investment operations	0.77			1.36			(1.36		)	(2.11		)		(1.40		)
Net Asset Value, end of period	$	7.26		$	6.49		$	5.13		$	6.49			$	8.60
Total Investment Return(b)	11.86		%	26.51		%	(20.96		)%	(24.53		)%		(14.00		)%
Ratios/Supplement Data:
Net assets, end of period (in millions)	$	32.8		$	22.4		$	9.3		$	5.7			$	3.9
Ratios to average net assets:(d)
Expenses	1.07		%	1.07		%	1.07		%	1.07		%		1.07		%(c)
Net investment loss	(0.58		)%	(0.73		)%	(0.72		)%	(0.73		)%		(0.40		)%(c)
Portfolio turnover rate	156		%	85		%	73		%	87		%		16		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.52% and (1.03)%, respectively, for the year ended December 31, 2004, 2.02% and (1.68)%, respectively, for the year ended December 31, 2003, 2.81% and (2.46)%, respectively, for the year ended December 31, 2002, 3.45% and (3.11)%, respectively, for the year ended December 31, 2001 and 5.57% and (4.90)%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

	SP AIM Core Equity Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.80		$	5.52		$	6.51		$	8.41			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	0.08			0.04			0.02			(—		)(f)		0.01
Net realized and unrealized gain (loss) on investments	0.51			1.26			(1.01		)	(1.90		)		(1.59		)
Total from investment operations	0.59			1.30			(0.99		)	(1.90		)		(1.58		)
Less Dividends:
Dividends from net investment income	(0.03		)	(0.02		)	—			—				(0.01		)
Net Asset Value, end of period	$	7.36		$	6.80		$	5.52		$	6.51			$	8.41
Total Investment Return(b)	8.79		%	23.69		%	(15.21		)%	(22.68		)%		(15.74		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	31.8		$	22.8		$	13.9		$	10.2			$	4.3
Ratios to average net assets:(d)
Expenses	1.00		%	1.00		%	1.00		%	1.00		%		1.00		%(c)
Net investment income (loss)	1.27		%	0.70		%	0.45		%	(0.02		)%		0.26		%(c)
Portfolio turnover rate	68		%	37		%	116		%	65		%		15		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income (loss) ratios would have been 1.48% and 0.79%, respectively, for the year ended December 31, 2004, and 1.72% and (0.02)%, respectively for the year ended December 31, 2003, 1.79% and (0.34)%, respectively, for the year ended December 31, 2002, 2.55% and (1.57)%, respectively for the year ended December 31, 2001 and 5.53% and (4.27)%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 11

Financial Highlights

	SP AllianceBernstein Large Cap Growth Portfolio (formerly, SP Alliance Large Cap Growth Portfolio)
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.23		$	5.03		$	7.31		$	8.55			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.01		)	0.00		(f)	(0.01		)	(0.01		)		0.01
Net realized and unrealized gains (losses) on investments	0.39			1.20			(2.27		)	(1.23		)		(1.45		)
Total from investment operations	0.38			1.20			(2.28		)	(1.24		)		(1.44		)
Less Distributions:
Dividends from net investment income	—			—			—			—				(0.01		)
Tax return of capital distributions	—			—			—			—		(f)		—
Total distributions	—			—			—			—		(f)		(0.01		)
Net Asset Value, end of period	$	6.61		$	6.23		$	5.03		$	7.31			$	8.55
Total Investment Return(b)	6.10		%	23.86		%	(31.19		)%	(14.47		)%		(14.44		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	65.7		$	146.5		$	57.7		$	35.9			$	7.1
Ratios to average net assets:
Expenses	1.07		%	1.06		%	1.10		%(d)	1.10		%(d)		1.10		%(c)(d)
Net investment income (loss)	(0.14		)%	(0.11		)%	(0.27		)%(d)	(0.08		)%(d)		0.44		%(c)(d)
Portfolio turnover rate	122		%	38		%	34		%	47		%		10		%(e)

(a) Commencement of operations.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for years of less than one full year are not annualized.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the expense and net investment loss ratios would have been 1.19% and (0.35)%, respectively, for the year ended December 31, 2002, 1.57% and (0.55)%, respectively, for the year ended December 31, 2001 and 4.26% and (2.72)%, respectively, for the year ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

	SP Davis Value Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	9.80		$	7.62		$	9.04		$	10.15			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.10			0.05			0.05			0.05				0.02
Net realized and unrealized gains (losses) on investments and foreign currencies	1.12			2.18			(1.47		)	(1.11		)		0.15
Total from investment operations	1.22			2.23			(1.42		)	(1.06		)		0.17
Less Dividends:
Dividends from net investment income	(0.04		)	(0.05		)	—		(f)	(0.05		)		(0.02		)
Net Asset Value, end of period	$	10.98		$	9.80		$	7.62		$	9.04			$	10.15
Total Investment Return(b)	12.53		%	29.40		%	(15.70		)%	(10.46		)%		1.69		%
Ratios/Supplement Data:
Net assets, end of period (in millions)	$	285.5		$	391.2		$	165.0		$	94.4			$	12.8
Ratios to average net assets:
Expenses	0.82		%	0.82		%	0.83		%(e)	0.83		%(e)		0.83		%(c)(e)
Net investment income	0.89		%	0.80		%	0.82		%(e)	0.64		%(e)		1.48		%(c)(e)
Portfolio turnover rate	34		%	7		%	22		%	17		%		3		%(d)

(a) Commencement of operations.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and included reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(d) Not annualized.

(e) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 0.87% and 0.78%, respectively, for the period ended December 31, 2002, 1.03% and 0.43%, respectively, for the period ended December 31, 2001, and 3.16% and (0.85)%, respectively, for the period ended December 31, 2000.

(f) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 12

Financial Highlights

	SP Goldman Sachs Small Cap Value Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	12.88		$	9.68		$	11.36		$	11.13			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.08			0.02			0.05			0.08				0.03
Net realized and unrealized gains (losses) on investments	2.57			3.18			(1.68		)	0.26				1.10
Total from investment operations	2.65			3.20			(1.63		)	0.34				1.13
Less Dividends and Distributions:
Dividends from net investment income	(0.02		)	—		(b)	(0.05		)	(0.11		)		—		(b)
Distributions from net realized gains	—		(b)	—			—			—				—
Total dividends and distributions	(0.02		)	0.00			(0.05		)	(0.11		)		0.00
Net Asset Value, end of period	$	15.51		$	12.88		$	9.68		$	11.36			$	11.13
Total Investment Return(c)	20.69		%	33.11		%	(14.38		)%	3.11		%		11.33		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	393.3		$	250.6		$	99.2		$	47.4			$	6.1
Ratios to average net assets:
Expenses	0.96		%	1.04		%	1.05		%(e)	1.05		%(e)		1.05		%(d)(e)
Net investment income	0.69		%	0.37		%	0.69		%(e)	1.08		%(e)		1.79		%(d)(e)
Portfolio turnover rate	127		%	90		%	116		%	89		%		18		%(f)

(a) Commencement of operations.

(b) Less than $0.005 per share.

(c) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investment returns for periods of less than one full year are not annualized.

(d) Annualized.

(e) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 1.10% and 0.64%, respectively, for the year ended December 31, 2002, 1.56% and 0.57%, respectively, for the year ended December 31, 2001 and 4.84% and (2.00)%, respectively, for the period ended December 31, 2000.

(f) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 13

Financial Highlights

	SP Large Cap Value Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004(g)			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	9.90		$	7.81		$	9.44		$	10.44			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.16			0.09			0.08			0.09				0.04
Net realized and unrealized gains (losses) on investments	1.58			2.00			(1.62		)	(0.99		)		0.44
Total from investment operations	1.74			2.09			(1.54		)	(0.90		)		0.48
Less Dividends and Distributions:
Dividends from net investment income	(.08		)	—			(0.09		)	(0.10		)		(0.04		)
Distributions in excess of net investment income	—			—			—			—				—		(e)
Tax Return of Capital	—			—			—		(e)	—				—
Total dividends and distributions	(.08		)	—			(0.09		)	(0.10		)		(0.04		)
Net Asset Value, end of period	$	11.56		$	9.90		$	7.81		$	9.44			$	10.44
Total Investment Return(b)	17.75		%	26.76		%	(16.37		)%	(8.65		)%		4.82		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	601.4		$	72.9		$	38.3		$	23.7			$	3.9
Ratios to average net assets:
Expenses	0.86		%	0.90		%(d)	0.90		%(d)	0.90		%(d)		0.90		%(c)(d)
Net investment income	1.53		%	1.32		%(d)	1.22		%(d)	1.18		%(d)		1.60		%(c)(d)
Portfolio turnover rate	77		%	73		%	96		%	61		%		13		%(f)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income (loss) ratios would have been 1.11% and 1.11%, respectively, for the year ended December 31, 2003 and 1.31% and 0.81%, respectively, for the year ended December 31, 2002, 1.98% and 0.10%, respectively, for the year ended December 31, 2001 and 5.47% and (2.97)%, respectively, for the period ended December 31, 2000.

(e) Less than $0.005 per share.

(f) Not annualized.

(g) Calculated based upon weighted average shares outstanding during the year.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 14

Financial Highlights

	SP LSV International Value Portfolio (formerly, SP Deutsche International Equity Portfolio)
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003(f)			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	7.67		$	6.08		$	7.35		$	9.44			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.04			0.06			0.04			0.05				0.01
Net realized and unrealized gains (losses) on investments	1.17			1.58			(1.31		)	(2.09		)		(0.57		)
Total from investment operations	1.21			1.64			(1.27		)	(2.04		)		(0.56		)
Less Dividends:
Dividends from net investment income	(0.04		)	(0.05		)	—			(0.05		)		—
Net Asset Value, end of period	$	8.84		$	7.67		$	6.08		$	7.35			$	9.44
Total Investment Return(b)	15.80		%	27.37		%	(17.17		)%	(22.07		)%		(5.20		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	240.7		$	119.9		$	46.4		$	24.7			$	7.8
Ratios to average net assets:(e)
Expenses	1.10		%	1.10		%	1.10		%	1.10		%		1.10		%(c)
Net investment income	0.69		%	0.89		%	0.55		%	0.61		%		0.55		%(c)
Portfolio turnover rate	159		%	87		%	141		%	155		%		51		%(d)

(a) Commencement of operations.

(d) Not annualized.

(e) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income (loss) ratios would have been 1.23% and 0.55%, respectively, for the year ended December 31, 2004, 1.30% and 0.69%, respectively, for the year ended December 31, 2003, 1.77% and (0.12)%, respectively, for the year ended December 31, 2002, 3.27% and (1.56)%, respectively, for the year ended December 31, 2001, and 4.21% and (2.56)%, respectively, for the period ended December 31, 2000.

(f) Calculated based upon weighted average shares outstanding during the year.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 15

Financial Highlights

	SP MFS Capital Opportunities Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.33		$	5.00		$	7.01		$	9.15			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.04			0.01			0.01			—		(f)		0.01
Net realized and unrealized gains (losses) on investments	0.74			1.33			(2.02		)	(2.13		)		(0.85		)
Total from investment operations	0.78			1.34			(2.01		)	(2.13		)		(0.84		)
Less Dividends:
Dividends from net investment income	(0.01		)	(0.01		)	—			(0.01		)		(0.01		)
Net Asset Value, end of period	$	7.10		$	6.33		$	5.00		$	7.01			$	9.15
Total Return(b)	12.39		%	26.80		%	(28.67		)%	(23.28		)%		(8.39		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	27.8		$	20.3		$	9.3		$	8.2			$	4.3
Ratios to average net assets:(d)
Expenses	1.00		%	1.00		%	1.00		%	1.00		%		1.00		%(c)
Net investment income	0.64		%	0.34		%	0.16		%	(—		)%(g)		0.40		%(c)
Portfolio turnover rate	66		%	58		%	143		%	99		%		25		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.45% and 0.19%, respectively, for the year ended December 31, 2004, 2.02% and (0.69)%, respectively, and 2.28% and (1.12)%, respectively, for the year ended December 31, 2002, for the year ended December 31, 2003, 3.04% and (2.04)%, respectively, for the year ended December 31, 2001 and 5.48% and (4.08)%, respectively and for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

(g) Less than .005%.

	SP Mid-Cap Growth Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	5.73		$	4.09		$	7.62		$	9.69			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.03		)	(0.02		)	(0.02		)	(0.01		)		0.02
Net realized and unrealized gain (loss) on investments	1.15			1.66			(3.51		)	(2.01		)		(0.25		)
Total from investment operations	1.12			1.64			(3.53		)	(2.02		)		(0.23		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			(0.01		)		(0.02		)
Distributions from net realized gains	—			—			—			(0.04		)		(0.06		)
Total dividends and distributions	—			—			—			(0.05		)		(0.08		)
Net Asset Value, end of period	$	6.85		$	5.73		$	4.09		$	7.62			$	9.69
Total Investment Return(b)	19.55		%	40.10		%	(46.33		)%	(20.93		)%		(2.26		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	107.5		$	58.9		$	18.3		$	15.9			$	5.6
Ratios to average net assets:(d)
Expenses	1.00		%	1.00		%	1.00		%	1.00		%		1.00		%(c)
Net investment income (loss)	(0.68		)%	(0.73		)%	(0.59		)%	(0.20		)%		1.16		%(c)
Portfolio turnover rate	79		%	73		%	255		%	93		%		27		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.07% and (0.75)%, respectively, for the year ended December 31, 2004, 1.34% and (1.07)%, respectively, for the year ended December 31, 2003, 1.68% and (1.27)%, respectively, for the year ended December 31, 2002, 2.11% and (1.31)%, respectively, for the year ended December 31, 2001 and 4.59% and (2.43)%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 16

Financial Highlights

	SP PIMCO High Yield Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.53		$	9.17		$	9.81		$	10.02			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.69			0.65			0.64			0.59				0.17
Net realized and unrealized gains (losses) on investments	0.25			1.36			(0.64		)	(0.21		)		0.02
Total from investment operations	.94			2.01			—			0.38				0.19
Less Dividends and Distributions:
Dividends from net investment income	(0.70		)	(0.65		)	(0.64		)	(0.59		)		(0.16		)
Distributions from net realized gains	(0.10		)	—			—			—				(0.01		)
Distributions in excess of net realized capital gains	—			—			—			—				—		(d)
Total dividends and distributions	(0.80		)	(0.65		)	(0.64		)	(0.59		)		(0.17		)
Net Asset Value, end of period	$	10.67		$	10.53		$	9.17		$	9.81			$	10.02
Total Investment Return(b)	9.32		%	22.41		%	0.15		%	3.97		%		1.94		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	312.5		$	248.2		$	112.2		$	52.0			$	8.0
Ratios to average net assets:
Expenses	0.68		%	0.72		%	0.82		%	0.82		%(e)		0.82		%(c)(e)
Net investment income	6.68		%	6.97		%	7.79		%	7.44		%(e)		7.78		%(c)(e)
Portfolio turnover rate	53		%	74		%	108		%	105		%		88		%(f)

(a) Commencement of operations.

(d) Less than $0.005 per share.

(e) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 1.08% and 7.18%, respectively, for the year ended December 31, 2001 and 3.42% and 5.18%, respectively, for the period ended December 31, 2000.

(f) Not annualized.

	SP PIMCO Total Return Portfolio
	Year Ended December 31,												September 22,2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	11.54		$	11.41		$	10.70		$	10.40			$	10.00
Income From Investment Operations:
Net investment income	0.22			0.23			0.28			0.32				0.13
Net realized and unrealized gains on investments	0.36			0.43			0.71			0.57				0.39
Total from investment operations	0.58			0.66			0.99			0.89				0.52
Less Dividends and Distributions:
Dividends from net investment income	(0.23		)	(0.28		)	(0.28		)	(0.34		)		(0.11		)
Distributions from net realized gains	(0.21		)	(0.25		)	—		(f)	(0.25		)		(0.01		)
Total dividends and distributions	(0.44		)	(0.53		)	(0.28		)	(0.59		)		(0.12		)
Net Asset Value, end of period	$	11.68		$	11.54		$	11.41		$	10.70			$	10.40
Total Investment Return(b)	5.28		%	5.85		%	9.39		%	8.66		%		5.18		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	1,099.0		$	839.1		$	471.7		$	147.0			$	10.7
Ratios to average net assets:
Expenses	0.65		%	0.65		%	0.67		%	0.76		%(d)		0.76		%(c)(d)
Net investment income	2.01		%	2.19		%	3.02		%	3.69		%(d)		5.94		%(c)(d)
Portfolio turnover rate	590		%	656		%	574		%	718		%		239		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment income ratios would have been 0.82% and 3.63%, respectively, for the year ended December 31, 2001 and 2.73% and 3.97%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 17

Financial Highlights

	SP Prudential U.S. Emerging Growth Portfolio
	Class I
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.65		$	4.68		$	6.89		$	8.38			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.05		)	(0.02		)	(0.02		)	(0.01		)		0.01
Net realized and unrealized gains (losses) on investments	1.47			1.99			(2.19		)	(1.48		)		(1.62		)
Total from investment operations	1.42			1.97			(2.21		)	(1.49		)		(1.61		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			—				(0.01		)
Distributions from net realized gains	—		(f)	—			—			—				—
Total dividends and distributions	—		(f)	—			—			—				(0.01		)
Net Asset Value, end of period	$	8.07		$	6.65		$	4.68		$	6.89			$	8.38
Total Investment Return(b)	21.39		%	42.09		%	(32.08		)%	(17.78		)%		(16.11		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	128.3		$	170.0		$	51.0		$	31.2			$	6.4
Ratios to average net assets:
Expenses	0.78		%	0.80		%	0.90		%(d)	0.90		%(d)		0.90		%(c)(d)
Net investment income (loss)	(0.53		)%	(0.56		)%	(0.48		)%(d)	(0.37		)%(d)		0.49		%(c)(d)
Portfolio turnover rate	212		%	213		%	299		%	258		%		82		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have 0.98% and (0.56)%, respectively, for the year ended December 31, 2002, 1.41% and (0.88)%, respectively, for the year ended December 31, 2001 and 4.26% and (2.87)%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share

SEE NOTES TO FINANCIAL STATEMENTS.

F- 18

Financial Highlights

	SP Prudential U.S Emerging Growth Portfolio
	Class II
	Year Ended December 31,									July 9, 2001(a) through
										December 31,
	2004			2003			2002			2001
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.58		$	4.65		$	6.88			$	7.56
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.07		)	(0.05		)	(0.05		)		(0.01		)
Net realized and unrealized gains (losses) on investments	1.45			1.98			(2.18		)		(0.67		)
Total from investment operations	1.38			1.93			(2.23		)		(0.68		)
Less Distributions:
Distributions from net realized gains	—		(f)	—			—				—
Total distributions	—		(f)	—			—				—
Net Asset Value, end of period	$	7.96		$	6.58		$	4.65			$	6.88
Total Investment Return(b)	21.01		%	41.51		%	(32.41		)%		(8.99		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	0.4		$	0.3		$	0.2			$	0.2
Ratios to average net assets:
Expenses	1.18		%	1.20		%	1.30		%(c)		1.30		%(c)(d)
Net investment loss	(0.94		)%	(0.97		)%	(0.89		)%(c)		(0.87		)%(c)(d)
Portfolio turnover rate	212		%	213		%	299		%		258		%(e)

(a) Commencement of offering of Class II shares.

(c) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.38% and (0.95)%, respectively, for the year ended December 31, 2002, 1.81% and (1.38)%, respectively, for the period ended December 31, 2001.

(d) Annualized.

(e) Not annualized.

(f) Less than $0.005 per share

SEE NOTES TO FINANCIAL STATEMENTS.

F- 19

Financial Highlights

	SP Small Cap Growth Portfolio (formerly, SP State Street Research Small Cap Growth Portfolio)
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.52		$	4.84		$	6.94		$	8.38			$	10.00
Income (Loss) From Investment Operations:
Net investment loss	(0.03		)	(0.03		)	(0.03		)	(0.02		)		—		(f)
Net realized and unrealized gains (losses) on investments	(0.03		)	1.71			(2.07		)	(1.42		)		(1.62		)
Total from investment operations	(0.06		)	1.68			(2.10		)	(1.44		)		(1.62		)
Net Asset Value, end of period	$	6.46		$	6.52		$	4.84		$	6.94			$	8.38
Total Investment Return(b)	(0.92		)%	34.71		%	(30.26		)%	(17.18		)%		(16.20		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	184.1		$	35.0		$	12.5		$	8.4			$	5.5
Ratios to average net assets:
Expenses	1.09		%	1.15		%(d)	1.15		%(d)	1.15		%(d)		1.15		%(c)(d)
Net investment loss	(0.82		)%	(0.72		)%(d)	(0.73		)%(d)	(0.28		)%(d)		(0.10		)%(c)(d)
Portfolio turnover rate	240		%	122		%	109		%	83		%		29		%(e)

(a) Commencement of operations.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.78% and (1.35)%, respectively for the year ended December 31, 2003, 2.30% and (1.89)%, respectively, for the year ended December 31, 2002, 2.84% and (1.97)%, respectively, for the year ended December 31, 2001 and 4.00% and (2.95)% respectively, for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 20

Financial Highlights

	SP Strategic Partners Focused Growth Portfolio
	Class I
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001(g)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.33		$	5.03		$	6.73		$	7.94			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	—		(f)	(0.01		)	(0.01		)	(0.01		)		—		(f)
Net realized and unrealized gains (losses) on investments	0.67			1.31			(1.69		)	(1.20		)		(2.06		)
Total from investment operations	0.67			1.30			(1.70		)	(1.21		)		(2.06		)
Net Asset Value, end of period	$	7.00		$	6.33		$	5.03		$	6.73			$	7.94
Total Investment Return(b)	10.58		%	25.84		%	(25.26		)%	(15.32		)%		(20.47		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	30.1		$	21.6		$	10.8		$	7.7			$	5.9
Ratios to average net assets:(d)
Expenses	1.01		%	1.01		%	1.01		%	1.01		%		1.01		%(c)
Net investment income (loss)	(0.01		)%	(0.28		)%	(0.30		)%	(0.16		)%		0.18		%(c)
Portfolio turnover rate	84		%	93		%	62		%	116		%		37		%(e)

(a) Commencement of offering of Class I shares.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.28% and (0.28)%, respectively, for the year ended December 31, 2004, 1.65% and (0.92)%, respectively, for the year ended December 31, 2003, 1.98% and (1.28)%, respectively for the year ended December 31, 2002, 2.61% and (1.76)%, respectively, for the year ended December 31, 2001 and 3.88% and (2.69)%, respectively, for the period ended December 31, 2000.

(e) Not annualized.

(f) Less than $0.005 per share

(g) Calculated based upon weighted average shares outstanding during the year.

	SP Strategic Partners Focused Growth Portfolio
	Class II
	Year Ended December 31,									January 12, 2001(a) through
										December 31,
	2004			2003			2002			2001(f)
Per Share Operating Performance:
Net Asset Value, beginning of period	$	6.26		$	4.99		$	6.70			$	8.43
Income (Loss) From Investment Operations:
Net investment loss	(0.01		)	(0.03		)	(0.02		)		(0.03		)
Net realized and unrealized gains (losses) on investments	0.63			1.30			(1.69		)		(1.70		)
Total from investment operations	0.62			1.27			(1.71		)		(1.73		)
Net Asset Value, end of period	$	6.88		$	6.26		$	4.99			$	6.70
Total Investment Return(b)	9.90		%	25.45		%	(25.52		)%		(20.80		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	32.1		$	14.3		$	6.6			$	2.0
Ratios to average net assets:(d)
Expenses	1.41		%	1.41		%	1.41		%		1.41		%(c)
Net investment loss	(0.34		)%	(0.68		)%	(0.68		)%		(0.58		)%(c)
Portfolio turnover rate	84		%	93		%	62		%		116		%(e)

(a) Commencement of offering of Class II shares.

(d) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.68% and (0.61)%, respectively, for the year ended December 31, 2004, 2.05% and (1.32)%, respectively, for the year ended December 31, 2003, 2.34% and (1.61)%, respectively, for the year ended December 31, 2002 and 3.01% and (2.18)%, respectively, for the period ended December 31, 2001.

(e) Not annualized.

(f) Calculated based upon weighted average shares outstanding during the period.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 21

Financial Highlights

	SP Technology Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	4.77		$	3.35		$	5.71		$	7.62			$	10.00
Income (Loss) From Investment Operations:
Net investment income (loss)	(0.02		)	(0.03		)	(0.04		)	(0.03		)		0.01
Net realized and unrealized gains (losses) on investments	0.02			1.45			(2.32		)	(1.88		)		(2.38		)
Total from investment operations	—			1.42			(2.36		)	(1.91		)		(2.37		)
Less Dividends and Distributions:
Dividends from net investment income	—			—			—			—				(0.01		)
Distributions in excess of net investment income	—			—			—			—				—		(c)
Total dividends and distributions	—			—			—			—				(0.01		)
Net Asset Value, end of period	$	4.77		$	4.77		$	3.35		$	5.71			$	7.62
Total Investment Return(b)	0.00		%	42.39		%	(41.33		)%	(25.07		)%		(23.71		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	29.0		$	20.0		$	6.5		$	7.7			$	6.1
Ratios to average net assets:(f)
Expenses	1.30		%	1.30		%	1.30		%	1.30		%		1.30		%(d)
Net investment income (loss)	(0.53		)%	(1.05		)%	(1.10		)%	(0.69		)%		0.37		%(d)
Portfolio turnover rate	118		%	88		%	81		%	47		%		23		%(e)

(a) Commencement of operations.

(d) Annualized.

(e) Not annualized.

(f) Net of expense subsidy. If the investment advisor had not subsidized expenses, the annual expense and net investment loss ratios would have been 1.79% and (1.02)%, respectively, for the year ended December 31, 2004, 2.56% and (2.31)%, respectively, for the year ended December 31, 2003, 3.00% and (2.81)%, respectively, for the year ended December 31, 2002, 3.16% and (2.53)%, respectively, for the year ended December 31, 2001 and 4.66% and (2.99)%, respectively, for the period ended December 31, 2000.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 22

Financial Highlights

	SP William Blair International Growth Portfolio
	Class I
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001(f)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	5.89		$	4.22		$	5.45		$	8.50			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.02			0.01			0.01			0.02				0.01
Net realized and unrealized gains (losses) on investments	0.95			1.66			(1.24		)	(3.05		)		(1.51		)
Total from investment operations	0.97			1.67			(1.23		)	(3.03		)		(1.50		)
Less Dividends and Distributions:
Dividends from net investment income	(0.01		)	—			—			—				—
Tax return of capital distributions	—			—			—			(0.02		)		—
Total dividends and distributions	(0.01		)	—			—			(0.02		)		—
Net Asset Value, end of period	$	6.85		$	5.89		$	4.22		$	5.45			$	8.50
Total Investment Return(b)	16.54		%	39.57		%	(22.57		)%	(35.64		)%		(15.00		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	249.1		$	105.6		$	34.9		$	19.9			$	7.6
Ratios to average net assets
Expenses	1.02		%	1.15		%	1.24		%(d)	1.24		%(d)		1.24		%(c)(d)
Net investment income	0.51		%	0.56		%	0.26		%(d)(g)	0.31		%(d)(g)		0.51		%(c)(d)
Portfolio turnover rate	137		%	121		%	108		%	86		%		12		%(e)

(a) Commencement of offering of Class I shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions and does not reflect the effect of insurance contract charges. Total investments returns for periods of less than one full year are not annualized.

(e) Not annualized.

(f) Calculated based upon weighted average shares outstanding during the year.

(g) Includes custody fee credits of 0.02% and 0.12% for the year ended December 31, 2002 and the year ended December 31, 2001, respectively. If the Portfolio had not earned custodian fee credits, the annual net investment income would have been 0.24% and 0.19%, respectively for the year ended December 31, 2002 and the year ended December 31, 2001.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 23

Financial Highlights

	SP William Blair International Growth Portfolio
	Class II
	Year Ended December 31,												October 4, 2000(a) through
													December 31,
	2004			2003			2002			2001(g)			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	5.83		$	4.19		$	5.43		$	8.48			$	9.79
Income (Loss) From Investment Operations:
Net investment income	0.01			0.01			—		(f)	—		(f)		—		(f)
Net realized and unrealized gains (losses) on investments	0.93			1.63			(1.24		)	(3.04		)		(1.31		)
Total from investment operations	0.94			1.64			(1.24		)	(3.04		)		(1.31		)
Less Distributions:
Tax return of capital distributions	—			—			—			(0.01		)		—
Net Asset Value, end of period	$	6.77		$	5.83		$	4.19		$	5.43			$	8.48
Total Investment Return(b)	16.12		%	39.14		%	(22.84		)%	(35.92		)%		(13.28		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	139.0		$	113.6		$	23.6		$	14.9			$	2.7
Ratios to average net assets:
Expenses	1.42		%	1.54		%	1.64		%(d)	1.64		%(d)		1.64		%(c)(d)
Net investment income (loss)	0.21		%	0.04		%	(0.11		)%(d)(h)	(0.03		)%(d)(h)		—		%(c)(d)
Portfolio turnover rate	137		%	121		%	108		%	86		%		12		%(e)

(a) Commencement of offering of Class II shares.

(e) Not annualized.

(f) Less than $0.005 per share.

(g) Calculated based upon weighted average shares outstanding during the year.

(h) Includes custody fee credits of 0.02% and 0.13% for the year ended December 31, 2002 and the year ended December 31, 2001, respectively. If the Portfolio had not earned custodian fee credits, the annual net investment loss would have been (0.13)% and (0.16)%, respectively for the year ended December 31, 2002 and the year ended December 31, 2001.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 24

Financial Highlights

	SP Aggressive Growth Asset Allocation Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	7.83		$	5.90		$	7.58		$	9.33			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.02			0.01			—		(e)	0.02				0.01
Net realized and unrealized gains (losses) on investments	1.13			1.92			(1.68		)	(1.69		)		(0.67		)
Total from investment operations	1.15			1.93			(1.68		)	(1.67		)		(0.66		)
Less Dividends and Distributions:
Dividends from net investment income	—		(e)	—		(e)	—			(0.02		)		(0.01		)
Distributions from net realized gains	—			—			—			(0.06		)		—
Total dividends and distributions	—			—			—			(0.08		)		(0.01		)
Net Asset Value, end of period	$	8.98		$	7.83		$	5.90		$	7.58			$	9.33
Total Investment Return(b)	14.76		%	32.77		%	(22.16		)%	(17.92		)%		(6.65		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	136.9		$	60.6		$	15.1		$	7.5			$	2.1
Ratios to average net assets:
Expenses	0.05		%	0.05		%	0.05		%	0.05		%		0.05		%(c)
Net investment income	0.27		%	0.16		%	0.06		%	0.39		%		0.36		%(c)
Portfolio turnover rate	60		%	22		%	26		%	62		%		6		%(d)

(a) Commencement of operations.

(d) Not annualized.

(e) Less than $0.005 per share.

	SP Balanced Asset Allocation Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	9.66		$	7.96		$	9.02		$	9.80			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.09			0.09			0.11			0.14				0.06
Net realized and unrealized gain (loss) on investments	0.97			1.71			(1.16		)	(0.73		)		(0.20		)
Total from investment operations	1.06			1.80			(1.05		)	(0.59		)		(0.14		)
Less Dividends and Distributions:
Dividends from net investment income	(0.08		)	(0.10		)	—			(0.14		)		(0.06		)
Distributions from net realized gains	(0.01		)	—			(0.01		)	(0.05		)		—
Total dividends and distributions	(0.09		)	(0.10		)	(0.01		)	(0.19		)		(0.06		)
Net Asset Value, end of period	$	10.63		$	9.66		$	7.96		$	9.02			$	9.80
Total Investment Return(b)	11.09		%	22.87		%	(11.67		)%	(5.99		)%		(1.42		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	837.0		$	449.8		$	147.3		$	66.1			$	3.7
Ratios to average net assets:
Expenses	0.05		%	0.05		%	0.05		%	0.05		%		0.05		%(c)
Net investment income	1.37		%	1.83		%	1.96		%	3.26		%		4.89		%(c)
Portfolio turnover rate	48		%	12		%	22		%	35		%		4		%(d)

(a) Commencement of operations.

(d) Not annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 25

Financial Highlights

	SP Conservative Asset Allocation Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	10.48		$	9.16		$	9.77		$	10.00			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.14			0.16			0.16			0.21				0.08
Net realized and unrealized gains (losses) on investments	0.77			1.33			(0.73		)	(0.24		)		—		(c)
Total from investment operations	0.91			1.49			(0.57		)	(0.03		)		0.08
Less Distributions:
Dividends from net investment income	(0.16		)	(0.16		)	(0.03		)	(0.16		)		(0.08		)
Distributions from net realized gains	(0.03		)	(0.01		)	(0.01		)	(0.04		)		—		(c)
Total distributions	(0.19		)	(0.17		)	(0.04		)	(0.20		)		(0.08		)
Net Asset Value, end of period	$	11.20		$	10.48		$	9.16		$	9.77			$	10.00
Total Investment Return(b)	8.89		%	16.49		%	(5.88		)%	(0.23		)%		0.84		%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	459.9		$	281.2		$	117.5		$	47.9			$	1.9
Ratios to average net assets:
Expenses	0.05		%	0.05		%	0.05		%	0.05		%		0.05		%(d)
Net investment income	1.86		%	2.60		%	2.79		%	4.76		%		8.07		%(d)
Portfolio turnover rate	47		%	22		%	25		%	29		%		4		%(e)

(a) Commencement of operations.

(d) Annualized.

(e) Not annualized.

	SP Growth Asset Allocation Portfolio
	Year Ended December 31,												September 22, 2000(a) through
													December 31,
	2004			2003			2002			2001			2000
Per Share Operating Performance:
Net Asset Value, beginning of period	$	8.71		$	6.84		$	8.27		$	9.52			$	10.00
Income (Loss) From Investment Operations:
Net investment income	0.06			0.04			0.06			0.09				0.03
Net realized and unrealized gains (losses) on investments	1.07			1.88			(1.49		)	(1.21		)		(0.49		)
Total from investment operations	1.13			1.92			(1.43		)	(1.12		)		(0.46		)
Less Dividends & Distributions:
Dividends from net investment income	(0.04		)	(0.05		)	—			(0.08		)		(0.02		)
Distributions from net realized gains	—			—			—		(e)	(0.05		)		—
Total dividends & distributions	(0.04		)	(0.05		)	—			(0.13		)		(0.02		)
Net Asset Value, end of period	$	9.80		$	8.71		$	6.84		$	8.27			$	9.52
Total Investment Return(b)	13.05		%	28.27		%	(17.26		)%	(11.77		)%		(4.56		)%
Ratios/Supplemental Data:
Net assets, end of period (in millions)	$	662.7		$	326.7		$	96.4		$	46.8			$	3.9
Ratios to average net assets:
Expenses	0.05		%	0.05		%	0.05		%	0.05		%		0.05		%(c)
Net investment income	0.94		%	1.10		%	1.12		%	1.71		%		2.95		%(c)
Portfolio turnover rate	53		%	18		%	24		%	43		%		39		%(d)

(a) Commencement of operations.

(d) Not annualized.

(e) Less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS.

F- 26

Mailing Address		Counsel to the Independent Directors

The Prudential Series Fund, Inc.		Bell, Boyd & Lloyd LLC
Gateway Center Three		70 West Madison Street
100 Mulberry Street		Chicago, IL 60602
Newark, NJ 07102

Investment Manager

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102

Subadvisers

Jennison Associates LLC

Prudential Investment Management, Inc.

Quantitative Management Associates LLC

A I M Capital Management, Inc.

Alliance Capital Management L.P.

Calamos Advisors LLC

Davis Advisors

Eagle Asset Management

EARNEST Partners LLC

GE Asset Management Incorporated

Goldman Sachs Asset Management, L.P.

Hotchkis and Wiley Capital Management LLC

J.P. Morgan Investment Management Inc.

LSV Asset Management

Neuberger Berman Management, Inc.

Pacific Investment Management Company LLC

RS Investment Management, L.P.

Salomon Brothers Asset Management Inc

William Blair & Company LLC

Independent Registered Public Accounting Firm

KPMG LLP

757 Third Avenue

New York, NY 10017

Legal Counsel

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, DC 20001

INVESTOR INFORMATION SERVICES:

Shareholder inquiries should be made by calling (800) 778-2255 or by writing to The Prudential Series Fund, Inc. at Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102.

Additional information about the Portfolios is included in a Statement of Additional Information, which is incorporated by reference into this Prospectus. Additional information about the Portfolios’ investments is available in the annual and semi-annual reports to holders of variable annuity contracts and variable life insurance policies. In the annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected each Portfolio’s performance during its last fiscal year. The Statement of Additional Information and additional copies of annual and semi-annual reports are available without charge by calling the above number. The Statement of Additional Information and the annual and semi-annual reports are also available without charge on the Fund’s website at www.prudential.com.

Delivery of Prospectus and Other Documents to Households. To lower costs and eliminate duplicate documents sent to your address, the Fund, in accordance with applicable laws and regulations, may begin mailing only one copy of the Fund’s prospectus, prospectus supplements, annual and semi-annual reports, proxy statements and information statements, or any other required documents to your address even if more than one shareholder lives there. If you have previously consented to have any of these documents delivered to multiple investors at a shared address, as required by law, and you wish to revoke this consent or would otherwise prefer to continue to receive your own copy, you should call the number above, or write to the Fund at the above address. The Fund will begin sending individual copies to you within thirty days of revocation.

The information in the Fund’s filings with the Securities and Exchange Commission (including the Statement of Additional Information) is available from the Commission. Copies of this information may be obtained, upon payment of duplicating fees, by electronic request to publicinfo@sec.gov or by writing the Public Reference Section of the Commission, Washington, DC 20549-0102. The information can also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-942-8090. Finally, information about the Fund is available on the EDGAR database on the Commission’s internet site at www.sec.gov.

Investment Company File Act No. 811-03623

THE PRUDENTIAL SERIES FUND

Supplement dated January 1, 2006 to Statement of Additional Information dated May 1, 2005

This Supplement sets forth the changes to the Statement of Additional Information (“SAI”) of The Prudential Series Fund, formerly named the Prudential Series Fund, Inc. (the “Fund”) dated May 1, 2005. The following should be read in conjunction with the SAI and should be retained for future reference.

FINANCIAL STATEMENTS

Each Portfolio’s financial statements are incorporated into the Statement of Additional Information by reference to each Portfolio’s 2005 Semi-Annual Report. You may request a copy of a Portfolio’s 2005 Semi-Annual Report at no charge by calling [(800) 778-2255] on any business day.

INVESTMENT RESTRICTIONS

The disclosure pertaining to the Investment Restrictions applicable to Portfolios in revised follows:

Set forth below are certain investment restrictions applicable to the Portfolios. Restrictions 1, 4 and 7 through 9 are fundamental and, as required by the 1940 Act, may not be changed without the approval of a majority of the outstanding shares of the affected Fund, or if it is less, 67% of the shares represented at a meeting of shareholders at which the holders of 50% or more of the shares are represented. Restrictions 2, 3, 5, 6 and 10 are not fundamental and may be changed by the Board of Directors without shareholder approval.

The Prudential Series Fund, Inc.

Supplement dated June 6, 2005 to the
Statements of Additional Information (SAI) of the Funds listed below.

PFPC Trust Company, located at 400 Bellevue Parkway, Wilmington DE, 19809, will serve as custodian for each Fund’s portfolio securities and cash, and in that capacity will maintain certain financial and accounting books and records pursuant to an agreement with the applicable Fund, beginning on the dates specified below. These effective dates may vary for any Fund if circumstances require. Subcustodians will continue to provide custodial services for each Fund’s foreign assets held outside the United States.

Name of Fund	Effective Date	SAI Date

The Prudential Series Fund, Inc.		May 1, 2005
Diversified Conservative Growth Portfolio	October 17, 2005
Equity Portfolio	October 31, 2005
Strategic Partners AIM Core Equity Portfolio	October 31, 2005
Strategic Partners Alliance Large Cap Growth Portfolio	October 31, 2005
Strategic Partners Davis Value Portfolio	October 31, 2005
Strategic Partners Goldman Sachs Small Cap Value Portfolio	October 31, 2005
Strategic Partners Focused Growth Portfolio	October 31, 2005
Strategic Partners Large Capitalization Value Portfolio	October 31, 2005
Strategic Partners LSV International Value Portfolio	October 31, 2005
Strategic Partners Mid Capitalization Growth Portfolio	October 31, 2005
Strategic Partners PIMCO High Yield Portfolio	September 26. 2005
Strategic Partners PIMCO Total Return Portfolio	September 26, 2005
Strategic Partners Small Capitalization Growth Portfolio	October 31, 2005
Strategic Partners William Blair International Growth Portfolio	October 31, 2005

Prudential’s Gibraltar Fund

The Prudential Series Fund, Inc.

Supplement dated June 6, 2005 to the
Statements of Additional Information (SAI) of the Funds listed below.

The Bank of New York (BNY), located at One Wall Street, New York, New York 10286, will serve as custodian for each Fund’s portfolio securities and cash, and in that capacity will maintain certain financial and accounting books and records pursuant to an agreement with the applicable Fund, beginning on the dates specified below. These effective dates may vary for any Fund if circumstances require. Subcustodians will continue to provide custodial services for each Fund’s foreign assets held outside the United States.

Name of Fund	Effective Date	SAI Date

Prudential’s Gibraltar Fund	July 25, 2005	May 1, 2005
The Prudential Series Fund, Inc.		May 1, 2005
Conservative Balanced Portfolio	July 25, 2005
Diversified Bond Portfolio	July 25, 2005
Flexible Managed Portfolio	July 25, 2005
Global Portfolio	July 25, 2005
Government Income Portfolio	July 25, 2005
High Yield Bond Portfolio	July 25, 2005
Jennison 20/20 Focus Portfolio	July 25, 2005
Jennison Portfolio	July 25, 2005
Money Market Portfolio	September 12, 2005
Natural Resources Portfolio	July 25, 2005
Small Capitalization Stock Portfolio	July 25, 2005
Strategic Partners Aggressive Growth Asset Allocation Portfolio	September 12, 2005
Strategic Partners Balanced Asset Allocation Portfolio	September 12, 2005
Strategic Partners Conservative Asset Allocation Portfolio	September 12, 2005
Strategic Partners Growth Asset Allocation Portfolio	September 12, 2005
SP Prudential U.S. Emerging Growth Portfolio	July 25, 2005
Stock Index Portfolio	July 25, 2005
Value Portfolio	July 25, 2005

THE PRUDENTIAL SERIES FUND, INC.

Supplement dated July 25, 2005 to Statement of Additional Information dated May 1, 2005

This Supplement sets forth the changes to the Statement of Additional Information (“SAI”) of The Prudential Series Fund, Inc. (the “Fund”) dated May 1, 2005. All of the Portfolios discussed in this Supplement may not be available under your variable contract. For more information about the Portfolios available under your contract, please refer to your contract prospectus. The following should be read in conjunction with the SAI and should be retained for future reference.

I. This section of the Supplement sets forth changes to the SAI with respect to subadviser changes for: (A) the Equity Portfolio, (B) the Global Portfolio, (C) the SP AllianceBernstein Large Cap Growth Portfolio, and (D) the SP Goldman Sachs Small Cap Value Portfolio. These changes will become effective on or about December 5, 2005.

A. Effective on or about December 5, 2005, GE Asset Management Inc. (“GEAM”) will be terminated as a subadviser to the Equity Portfolio. Jennison Associates LLC (“Jennison”) and Salomon Brothers Asset Management Inc. (“SaBAM”) will remain as subadvisers to the Equity Portfolio. As of such date, all references in the SAI to GEAM’s management of the Equity Portfolio and GEAM’s portfolio managers for the Equity Portfolio shall be deemed to be deleted.

The following replaces the information relating to the Equity Portfolio in the table titled “Subadvisory Fee Rates” under the section ”Investment Management and Distribution Arrangements.”

Subadvisory Fee Rates

Portfolio	Subadviser	Fee
Equity	Jennison	0.225% of average daily net assets
	SaBAM(1)	0.30% of average daily net assets to $300 million and 0.15% of average daily net assets over $300 million.

(1) For purposes of calculating the fee payable to SaBAM, the assets of the Equity Portfolio managed by SaBAM will be combined with the assets of the retail fund counterpart to the Equity Portfolio advised by Prudential Investments LLC and advised by SaBAM.

B. Effective on or about December 5, 2005, Jennison Associates LLC (“Jennison”) will be terminated as the subadviser to the Global Portfolio and will be replaced by William Blair & Company LLC (“William Blair”), LSV Asset Management (“LSV”), Marsico Capital Management, LLC (“Marsico”), and T. Rowe Price Associates, Inc. (“T. Rowe Price”). As of such date, all references in the SAI to Jennison’s management of the Global Portfolio shall be deemed to be deleted.

The following replaces the information relating to the Global Portfolio in the table titled “Subadvisory Fee Rates” under the section "Investment Management and Distribution Arrangements.”

Subadvisory Fee Rates

Portfolio	Subadviser	Fee
Global	William Blair(2)	0.30% of average daily net assets to $500 million; 0.25% of average daily net assets from $500 million to $1 billion; and 0.20% of average daily net assets over $1 billion
	LSV(3)	0.45% of average daily net assets to $150 million; 0.425% of average daily net assets from $150 million to $300 million; 0.40%of average daily net assets from $300 million to $450 million; 0.375% of average daily net assets from $450 million to $750 million; and 0.35% of average daily.
	Marsico(4)	0.45% of average daily net assets
	T. Rowe Price	0.40% on average daily net assets to $250 million; 0.375% on average daily net assets from $250 million to $500 million; and 0.35% on average daily net assets over $500 million.

(2) For purposes of calculating the fee payable to William Blair, the assets managed by William Blair in the Global Portfolio will be aggregated with the assets managed by William Blair in the SP William Blair International Equity Portfolio, in the SP William Blair International Growth Portfolio, and in any other portfolio subadvised by William Blair on behalf of PI.

(3) For purposes of calculating the fee payable to LSV, the assets managed by LSV in the Global Portfolio will be aggregated with the assets managed by LSV in the SP LSV International Value Portfolio, in the AST LSV International Value Portfolio of American Skandia Trust, and in any other portfolio subadvised by LSV on behalf of PI.

(4) Marsico has voluntarily agreed to waive the portion of its fee that exceeds the following: 0.40% of the combined average daily net assets to $1.5 billion; and 0.35% of average daily net assets over $1.5 billion; of: (i) the portion of the Global Portfolio of the Fund that is managed by Marsico, (ii) the AST Marsico Capital Growth Portfolio, and (iii) the series of Strategic Partners Mutual Funds, Inc. (formerly, American Skandia Advisor Funds, Inc.) that is managed by Marsico and identified by an Investment Manager and Marsico as being similar to the portion of the Global Portfolio managed by Marsico.

The following replaces the information relating to the Global Portfolio under the section ”Investment Management and Distribution Arrangements—Portfolio Managers.”

A. Other Accounts Managed by Portfolio Managers . The table below identifies as of March 31, 2005, for each portfolio manager, the number of accounts managed and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts whose fees are based on performance is indicated in italics typeface.

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Global	William Blair William Greig (W. George Greig in Bio)	10 Registered Mutual Funds with $6,692,600,000 in total assets under management.	8 Unregistered Pooled Investment Vehicle with $828,000,000 in assets under management.	1,040 Other Accounts with $3,323,300,000 in total assets under management.

Global	LSV Josef Lakonishok	19 Registered Mutual Funds with $4,879,571,008 in total assets under management.	18 Unregistered Pooled Investment Vehicle with $2,142,587,937 in assets under management.	378 Other Accounts with $28,043,289,462 in total assets under management.

		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	13 Other Accounts with $1,700,000,000 in total assets under management.

Global	LSV Robert Vishny	19 Registered Mutual Funds with $4,879,571,008 in total assets under management.	18 Unregistered Pooled Investment Vehicle with $2,142,587,937 in assets under management.	378 Other Accounts with $28,043,289,462 in total assets under management.

		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	13 Other Accounts with $1,700,000,000 in total assets under management.

Global	LSV Menno Vermeulen	19 Registered Mutual Funds with $4,879,571,008 in total assets under management.	18 Unregistered Pooled Investment Vehicle with $2,142,587,937 in assets under management.	378 Other Accounts with $28,043,289,462 in total assets under management.

		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	13 Other Accounts with $1,700,000,000 in total assets under management.

Global	Marsico Thomas F. Marsico	30 Registered Mutual Funds with $22,310,427,000 in total assets under management.	12 Unregistered Pooled Investment Vehicle with $1,165,949,000 in assets under management.	170 Other Accounts with $11,764,806,000 in total assets under management.

		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Account with $6,001,000,000 in total assets under management.

Global	T. Rowe Price Brian C. Rogers	13 Registered Mutual Funds with $26,869,400,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	17 Other Accounts with $1,345,100,000 in total assets under management.

Global	T. Rowe Price Stephen W. Boesel	3 Registered Mutual Funds with $8,807,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	5 Other Accounts with $94,800,000 in total assets under management.

Global

T. Rowe Price
John D. Linehan

2 Registered Mutual Funds with $3,292,200,000 in total assets under management.

3 Unregistered Pooled Investment Vehicle with $429,600,000 in assets under management.

8 Other Accounts with $791,800,000 in total assets under management.

B. Portfolio Manager Compensation / Material Conflicts of Interest. The table below identifies, for each Portfolio Manager, the structure of, and method(s) used to determine, portfolio manager compensation. The table below also identifies, for each Portfolio Manager, any material conflicts of interest that may arise between a Portfolio Manager’s management of a Portfolio’s investments and investments in other accounts.

Portfolio		Compensation Structure and Methods/Material Conflicts of Interest
Global		William Blair Compensation The compensation of William Blair portfolio managers is based on the firm’s mission: “to achieve success for its clients.” The Fund’s portfolio manager is a principal of William Blair, and as of December 31, 2004 his compensation consists of a base salary, a share of the firm’s profits and, in some instances, a discretionary bonus. The portfolio manager’s compensation is determined by the head of William Blair’s Investment Management Department, subject to the approval of the firm’s Executive Committee. The base salary is fixed and the portfolio manager’s ownership stake can vary over time based upon the portfolio manager’s sustained contribution to the firm’s revenue, profitability, long-term investment performance, intellectual capital and brand reputation. In addition, the discretionary bonus (if any) is based, in part, on the long-term investment performance, profitability and assets under management of all accounts managed by the portfolio manager, including the Fund. Conflicts of Interest Since the portfolio manager manages other accounts in addition to the Fund, conflicts of interest may arise in connection with the portfolio manager’s management of the Fund’s investments on the one hand and the investments of such other accounts on the other hand. However, William Blair has adopted policies and procedures designed to address such conflicts, including, among others, policies and procedures relating to allocation of investment opportunities, soft dollars and aggregation of trades.

Global		LSV Compensation Messrs. Lakonishok, Vishny, and Vermeulen each receive a base salary and bonus which is a fuction of overall firm profitability. In addition, each portfolio manager is a partner and receives a portion of the firm’s net income. Potential Conflicts There are no material conflicts of interest.

Portfolio		Compensation Structure and Methods/Material Conflicts of Interest
Global		Marsico Portfolio Manager Compensation. The structure of, and the method used to determine the compensation of each portfolio manager. Marsico portfolio managers are generally subject to the compensation structure applicable to all Marsico employees. As such, Mr. Marsico’s compensation consists of a base salary (reevaluated at least annually), and periodic cash bonuses. Bonuses are typically based on two primary factors: (1) Marsico’s overall profitability for the period, and (2) individual achievement and contribution. Portfolio manager compensation takes into account, among other factors, the overall performance of all accounts for which the manager provides investment advisory services. Portfolio managers do not receive special consideration based on the performance of particular accounts. Exceptional individual efforts are rewarded through greater participation in the bonus pool. Portfolio manager compensation comes solely from Marsico. Although Marsico may compare account performance with relevant benchmark indices, portfolio manager compensation is not directly tied to achieving any pre-determined or specified level of performance. In order to encourage a long-term time horizon for managing portfolios, Marsico seeks to evaluate the portfolio manager’s individual performance over periods longer than the immediate compensation period. In addition, portfolio managers are compensated based on other criteria, including effectiveness of leadership within Marsico’s Investment Team, contributions to Marsico’s overall investment performance, discrete securities analysis, and other factors. In addition to his salary and bonus, Mr. Marsico may participate in other Marsico benefits to the same extent and on the same basis as other Marsico employees. Material Conflicts. A description of any material conflicts of interest that may arise in connection with the portfolio manager’s management of the fund’s investment, on the one hand, and the investments of the other accounts list in a. above, on the other. This description would include, for example, material conflicts between the investment strategy on the fund and the investment strategy of other accounts managed by the portfolio manager and material conflicts in allocation of investment opportunities between the fund and other accounts managed by the portfolio manager. Portfolio managers at Marsico typically manage multiple accounts. These accounts may include, among others, mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations, and accounts managed on behalf of individuals), and commingled trust accounts. Portfolio managers make investment decisions for each portfolio, including the Global Portfolio, based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may purchase (or sell) securities for one portfolio and not another portfolio, or may take similar actions for different portfolios at different times. Consequently, the mix of securities purchased in one portfolio may perform better than the mix of securities purchased for another portfolio. Similarly, the sale of securities from

Portfolio		Compensation Structure and Methods/Material Conflicts of Interest
		one portfolio may cause that portfolio to perform better than others if the value of those securities decline. Potential conflicts of interest may also arise when allocating and/or aggregating trades. Marsico often aggregates into a single trade order several individual contemporaneous client trade orders in a single security. Under Marsico’s trade management policy and procedures, when trades are aggregated on behalf of more than one account, such transactions will be allocated to all participating client accounts in a fair and equitable manner. With respect to IPOs and other syndicated or limited offerings, it is Marsico’s policy to seek to assure that over the long term, accounts with the same or similar investment objectives will receive an equitable opportunity to participate meaningfully and will not be unfairly disadvantaged. To deal with such situations, Marsico has adopted policies and procedures for allocating such transactions across multiple accounts. Marsico’s policies also seek to ensure that portfolio managers do not systematically allocate other types of trades in a manner that would be more beneficial to one account than another. Marsico’s compliance department monitors transactions made on behalf of multiple clients to seek to assure adherence to its policies.

Global		T. Rowe Price Portfolio Manager Compensation Structure Portfolio manager compensation consists primarily of a base salary, a cash bonus, and an equity incentive that usually comes in the form of a stock option grant. Occasionally, portfolio managers will also have the opportunity to participate in venture capital partnerships. Compensation is variable and is determined based on the following factors: Investment performance over one-, three-, five-, and 10-year periods is the most important input. We evaluate performance in absolute, relative, and risk-adjusted terms. Relative performance and risk-adjusted performance are determined with reference to the broad based index (ex. S&P 500) and an applicable Lipper index (ex. Large-Cap Growth), though other benchmarks may be used as well. Investment results are also compared to comparably managed funds of competitive investment management firms. Performance is primarily measured on a pre-tax basis though tax-efficiency is considered and is especially important for tax efficient funds. It is important to note that compensation is viewed with a long term time horizon. The more consistent a manager’s performance over time, the higher the compensation opportunity. The increase or decrease in a fund’s assets due to the purchase or sale of fund shares is not considered a material factor. Contribution to our overall investment process is an important consideration as well. Sharing ideas with other portfolio managers, working effectively with and mentoring our younger analysts, and being good corporate citizens are important components of our long term success and are highly valued. All employees of T. Rowe Price, including portfolio managers, participate in a 401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are eligible to purchase T. Rowe Price common stock through an employee stock purchase plan that features a limited corporate matching contribution. Eligibility for and participation in these plans is on the same basis as for all employees. Finally, all vice presidents of T. Rowe Price Group, including all portfolio managers, receive supplemental medical/hospital reimbursement benefits.

Portfolio		Compensation Structure and Methods/Material Conflicts of Interest
		This compensation structure is used for all portfolios managed by the portfolio manager. Conflicts of Interest We are not aware of any material conflicts of interest that may arise in connection with the Portfolio Manager’s management of the Fund’s investments and the investments of the other account(s) included in response to this question. Portfolio managers at T. Rowe Price typically manage multiple accounts. These accounts may include, among others, mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), and commingled trust accounts. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may purchase (or sell) securities for one portfolio and not another portfolio. T. Rowe Price has adopted brokerage and trade allocation policies and procedures which it believes are reasonably designed to address any potential conflicts associated with managing multiple accounts for multiple clients. Also, as disclosed under the “Portfolio Manager Compensation” above, our portfolio managers’ compensation is determined in the same manner with respect to all portfolios managed by the portfolio manager. T. Rowe Price has developed written trade allocation guidelines for its Trading Desks. Generally, when the amount of securities available in a public offering or the secondary markets is insufficient to satisfy the volume or price requirements for the participating client portfolios, the guidelines require a pro rata allocation based upon the relative sizes of the participating client portfolio or the relative sizes of the participating client orders depending upon the market involved. In allocating trades made on a combined basis, the trading desks seek to achieve the same net unit price of the securities for each participating client. Because a pro rate allocation may not always adequately accommodate all facts and circumstances, the guidelines provide for exceptions to allocate trades on an adjusted basis. For example, adjustments may be made: (i) to recognize the efforts of a portfolio manager in negotiating a transaction or a private placement; (ii) to eliminate de minimus positions; (iii) to give priority to accounts with specialized investment policies and objectives; and (iv) to reallocate in light of a participating portfolio’s characteristics (e.g., available cash, industry or issuer concentration, duration, credit exposure). Also, with respect to private placement transactions, conditions imposed by the issuer may limit availability of allocations to client accounts.

C. Portfolio Manager Securities Ownership. The table below identifies, for each Portfolio Manager, ownership of the Fund’s securities by each Portfolio Manager.

Portfolio	Portfolio Manager(s)	Ownership of Fund Securities
Global	William Blair W. George Greig	None
Global	LSV

Portfolio	Portfolio Manager(s)	Ownership of Fund Securities
	Josef Lakonishok Robert Vishny Menno Vermeulen	None None None
Global	Marsico Thomas F. Marsico	None
Global	T. Rowe Price Brian C. Rogers Stephen W. Boesel John D. Linehan	None None None

C. Effective on or about December 5, 2005, T. Rowe Price Associates, Inc. (“T. Rowe Price”) will replace Alliance Capital Management (“Alliance”) as subadviser to the SP AllianceBernstein Large-Cap Growth Portfolio. Effective on or about December 5, 2005, the name of the Portfolio will change to the SP T. Rowe Price Large-Cap Growth Portfolio. As of such date, all references in the SAI to Alliance’s management of the Portfolio and Alliance’s portfolio managers for the Portfolio shall be deemed to be deleted. In addition, as of such date, all references in the SAI to the SP AllianceBernstein Large-Cap Growth Portfolio shall be deemed to refer to the SP T. Rowe Price Large-Cap Growth Portfolio.

The following replaces the information relating to the Portfolio in the table titled “Subadvisory Fee Rates” under the section "Investment Management and Distribution Arrangements.”

Subadvisory Fee Rates

Portfolio		Subadviser		Fee
SP T. Rowe Price Large-Cap Growth		T. Rowe Price(4)		0.40% of average daily net assets to $250 million; 0.375% of average daily net assets from $250 million to $500 million; and 0.35% of average daily net assets over $500 million

(4) For purposes of calculating the fee payable to T. Rowe Price, the assets of the SP T. Rowe Price Large-Cap Growth Portfolio managed by T. Rowe Price will be combined with the assets of the AST T. Rowe Price Large-Cap Growth Portfolio of American Skandia Trust managed by T. Rowe Price.

The following replaces the information relating to the Portfolio under the section "Investment Management and Distribution Arrangements—Portfolio Managers.”

A. Other Accounts Managed by Portfolio Managers. The table below identifies as of March 31, 2005, for each portfolio manager, the number of accounts managed and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts whose fees are based on performance is indicated in italics typeface.

Portfolio		Portfolio Manager(s)		Registered Investment Companies		Other Pooled Investment Vehicles		Other Accounts
SP T. Rowe Price Large-Cap Growth		Robert W. Sharps		5 Registered Investment Funds with $1.5 billion in total assets under management		3 Unregistered Investment Vehicles with $249 million in assets under management		6 Other Accounts with $580 million in total assets under management

B. Portfolio Manager Compensation / Material Conflicts of Interest. The table below identifies, for each Portfolio Manager,the structure of, and method(s) used to determine, portfolio manager compensation. The table below also identifies, for each Portfolio Manager, any material conflicts of interest that may arise between a Portfolio Manager’s management of a Portfolio’s investments and investments in other accounts.

Portfolio		Compensation Structure and Method(s)/Material Conflicts of Interest
SP T. Rowe Price Large Cap Growth		Portfolio Manager Compensation Structure. Portfolio manager compensation consists primarily of a base salary, a cash bonus, and an equity incentive that usually comes in the form of a stock option grant. Occasionally, portfolio managers will also have the opportunity to participate in venture capital partnerships. Compensation is variable and is determined based on the following factors: Investment performance over one-, three-, five-, and 10-year periods is the most important input. T Rowe Price evaluates performance in absolute, relative, and risk-adjusted terms. Relative performance and risk-adjusted performance are determined with reference to the broad based index (ex. S&P500) and an applicable Lipper index (ex. Large-Cap Growth), though other benchmarks may be used as well. Investment results are also compared to comparably managed funds of competitive investment management firms. Performance is primarily measured on a pre-tax basis though tax-efficiency is considered and is especially important for tax efficient funds. It is important to note that compensation is viewed with a long term time horizon. The more consistent a manager’s performance over time, the higher the compensation opportunity. The increase or decrease in a fund’s assets due to the purchase or sale of fund shares is not considered a material factor. Contribution to the overall investment process is an important consideration as well. Sharing ideas with other portfolio managers, working effectively with and mentoring our younger analysts, and being good corporate citizens are important components of long-term success and are highly valued. All employees of T. Rowe Price, including portfolio managers, participate in a 401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are eligible to purchase T. Rowe Price common stock through an employee stock purchase plan that features a limited corporate matching contribution. Eligibility for and participation in these plans is on the same basis as for all employees. Finally, all vice presidents of T. Rowe Price Group, including all portfolio managers, receive supplemental medical/hospital reimbursement benefits. This compensation structure is used for all portfolios managed by the portfolio manager. Conflicts of Interest We are not aware of any material conflicts of interest that may arise in connection with the Portfolio Manager’s management of the Fund’s investments and the investments of the other account(s) included in response to this question. Portfolio managers at T. Rowe Price typically manage multiple accounts. These accounts may include, among others, mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), and commingled trust accounts. Portfolio managers make

investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may purchase (or sell) securities for one portfolio and not another portfolio. T. Rowe Price has adopted brokerage and trade allocation policies and procedures which it believes are reasonably designed to address any potential conflicts associated with managing multiple accounts for multiple clients. Also, as disclosed under the “Portfolio Manager Compensation” above, our portfolio managers’ compensation is determined in the same manner with respect to all portfolios managed by the portfolio manager. T. Rowe Price has developed written trade allocation guidelines for its Trading Desks. Generally, when the amount of securities available in a public offering or the secondary markets is insufficient to satisfy the volume or price requirements for the participating client portfolios, the guidelines require a pro rata allocation based upon the relative sizes of the participating client portfolio or the relative sizes of the participating client orders depending upon the market involved. In allocating trades made on a combined basis, the trading desks seek to achieve the same net unit price of the securities for each participating client. Because a pro rate allocation may not always adequately accommodate all facts and circumstances, the guidelines provide for exceptions to allocate trades on an adjusted basis. For example, adjustments may be made: (i) to recognize the efforts of a portfolio manager in negotiating a transaction or a private placement; (ii) to eliminate de minimus positions; (iii) to give priority to accounts with specialized investment policies and objectives; and (iv) to reallocate in light of a participating portfolio’s characteristics (e.g., available cash, industry or issuer concentration, duration, credit exposure). Also, with respect to private placement transactions, conditions imposed by the issuer may limit availability of allocations to client accounts.

C. Portfolio Manager Securities Ownership. The table below identifies, for each Portfolio Manager, ownership of Fund securities by each Portfolio Manager.

Portfolio		Portfolio Manager(s)		Ownership of Fund Securities
SP T. Rowe Price Large Cap Growth		Robert W. Sharps		None

D. Effective on or about December 5, 2005, Salomon Brothers Asset Management Inc. (“SaBAM”) will join Goldman Sachs Asset Management, L.P. (“GSAM”) as a subadviser to the SP Goldman Sachs Small Cap Value Portfolio. Effective on or about December 5, 2005, the name of the Portfolio will change from the SP Goldman Sachs Small Cap Value Portfolio to the SP Small Cap Value Portfolio. As of such date, all references in the Prospectus to the SP Goldman Sachs Small Cap Value Portfolio shall be deemed to refer to the SP Small Cap Value Portfolio.

The following replaces the information relating to the Portfolio in the table titled “Subadvisory Fee Rates” under the section ”Investment Management and Distribution Arrangements.”

Subadvisory Fee Rates

Portfolio	Subadviser	Fee
SP Small Cap Value	GSAM(5)	0.50% of average daily net assets to $500 million and 0.45% of average daily net assets over $500 million
	SaBAM	0.40% of average daily net assets

(5) For purposes of calculating the fee payable to GSAM, the assets managed by GSAM in the SP Small Cap Value Portfolio will be aggregated with the assets managed by GSAM in the AST Goldman Sachs Small Cap Value Portfolio of American Skandia Trust and the SP Goldman Sachs Small Cap Value Portfolio of Strategic Partners Mutual Funds, Inc.

The following is added to the information relating to the Portfolio under the section ”Investment Management and Distribution Arrangements—Portfolio Managers.”

A. Other Accounts Managed by Portfolio Managers. The table below identifies as of March 31, 2005, for each portfolio manager, the number of accounts managed and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts whose fees are based on performance is indicated in italics typeface.

Portfolio		Portfolio Manager(s)		Registered Investment Companies		Other Pooled Investment Vehicles		Other Accounts
SP Small Cap Value		Peter Hable		21 Registered Investment Companies with $10.5 billion in total assets under management		2 Unregistered Pooled Investment Vehicles with $470 million in assets under management		99,565 Other Accounts with $13.85 billion in total assets under management

B. Portfolio Manager Compensation / Material Conflicts of Interest. The table below identifies, for each Portfolio Manager,the structure of, and method(s) used to determine, portfolio manager compensation. The table below also identifies, for each Portfolio Manager, any material conflicts of interest that may arise between a Portfolio Manager’s management of a Portfolio’s investments and investments in other accounts.

Portfolio

Compensation Structure and Method(s)/Material Conflicts of Interest

SP Small Cap Value

SaBAM

Portfolio Manager Compensation

Citigroup Asset Management (“CAM”) investment professionals receive base salary and other employee benefits and are eligible to receive incentive compensation. Base salary is typically determined based on market factors and the skill and experience of individual investment personnel.

CAM has recently implemented an investment management incentive and deferred compensation plan (the “Plan”) for its investment professionals, including the fund’s portfolio manager(s). Each investment professional works as a part of an investment team. The Plan is designed to align the objectives of CAM investment professionals with those of fund shareholders and other CAM clients. Under the Plan a “base incentive pool” is established for each team each year as a percentage of CAM’s revenue attributable to the team (largely management and related fees generated by funds and other accounts). A team’s revenues are typically expected to increase or decrease depending on the effect that the team’s investment performance as well as inflows and outflows have on the level of assets in the investment products managed by the team. The “base incentive pool” of a team is reduced by base salaries paid to members of the team and employee benefits expenses attributable to the team.

pool for a team may also be adjusted to reflect other factors (e.g., severance pay to departing members of the team, and discretionary allocations by the applicable CAM chief investment officer from one investment team to another). The incentive pool will be allocated by the applicable CAM chief investment officer to the team leader and, based on the recommendations of the team leader, to the other members of the team.

Up to 40% of an investment professional’s annual incentive compensation is subject to deferral. Amounts deferred will accrue a return based on the hypothetical returns of a composite of CAM’s investment products (where deemed appropriate, approximately half of the deferred amount will accrue a return based on the return of products managed by the applicable investment team). An additional portion of awarded incentive compensation may be received in the form of Citigroup stock or options to purchase common stock. Citigroup may from time to time offer other stock purchase or option programs to investment personnel.

Potential Conflicts of Interest

Potential conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to one or more other funds or other accounts, as is the case for the portfolio manager listed in the table above. The investment adviser and the fund(s) have adopted compliance polices and procedures that are designed to address various conflicts of interest that may arise for the investment adviser and the individuals that it employs. For example, CAM seeks to minimize the effects of competing interests for the time and attention of portfolio managers by assigning portfolio managers to manage funds and accounts that share a similar investment style. CAM has also adopted trade allocation procedures that are designed to facilitate the fair allocation of limited investment opportunities among multiple funds and accounts. There is no guarantee, however, that the policies and procedures adopted by CAM and the fund(s) will be able to detect and/or prevent every situation in which an actual or potential conflict may appear.

These potential conflicts include:

Allocation of Limited Time and Attention . A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. As a result, the portfolio manager may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as might be the case if he or she were to devote substantially more attention to the management of a single fund. The effects of this potential conflict may be more pronounced where funds and/or accounts overseen by a particular portfolio manager have different investment strategies.

Allocation of Limited Investment Opportunities . If a portfolio manager identifies a limited investment opportunity that may be suitable for multiple funds and/or accounts, the opportunity may be allocated among these several funds or accounts, which may limit a fund’s ability to take full advantage of the investment opportunity.

Pursuit of Differing Strategies . At times, a portfolio manager may determine that an investment opportunity may be appropriate for only some of the funds and/or accounts for which he or she exercises investment responsibility, or may decide that certain of the funds and/or accounts should take differing positions with respect to a particular security. In these cases, the portfolio manager may place separate

transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and/or accounts.

Selection of Brokers/Dealers . Portfolio managers may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the funds and/or account that they supervise. In addition to executing trades, some brokers and dealers provide portfolio managers with brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934), which may result in the payment of higher brokerage fees than might have otherwise be available. These services may be more beneficial to certain funds or accounts than to others. Although the payment of brokerage commissions is subject to the requirement that the portfolio manager determine in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the fund, a portfolio manager’s decision as to the selection of brokers and dealers could yield disproportionate costs and benefits among the funds and/or accounts that he or she manages.

Variation in Compensation . A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ among the funds and/or accounts that he or she manages. If the structure of the investment adviser’s management fee and/or the portfolio manager’s compensation differs among funds and/or accounts (such as where certain funds or accounts pay higher management fees or performance-based management fees), the portfolio manager might be motivated to help certain funds and/or accounts over others. The portfolio manager might be motivated to favor funds and/or accounts in which he or she has an interest or in which the investment advisor and/or its affiliates have interests. Similarly, the desire to maintain or raise assets under management or to enhance the portfolio manager’s performance record or to derive other rewards, financial or otherwise, could influence the portfolio manager to lend preferential treatment to those funds and/or accounts that could most significantly benefit the portfolio manager.

Related Business Opportunities . The investment adviser or its affiliates may provide more services (such as distribution or recordkeeping) for some types of funds or accounts than for others. In such cases, a portfolio manager may benefit, either directly or indirectly, by devoting disproportionate attention to the management of fund and/or accounts that provide greater overall returns to the investment manager and its affiliates.

C. Portfolio Manager Securities Ownership. The table below identifies, for each Portfolio Manager, ownership of Fund securities by each Portfolio Manager.

Portfolio		Portfolio Manager(s)		Ownership of Fund Securities
SP Small Cap Value		Peter Hable of SaBAM		None

PSFSUP3

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2005

THE PRUDENTIAL SERIES FUND, INC.

The Prudential Series Fund, Inc. (the Fund) is a diversified, open-end management investment company (commonly known as a mutual fund) that is intended to provide a range of investment alternatives through its 33 separate Portfolios, each of which is, for investment purposes, in effect a separate fund (the Portfolios).

The Fund offers two classes of shares of each Portfolio: Class I and Class II. Class I shares are sold only to separate accounts of The Prudential Insurance Company of America, Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, Prudential Insurance) as investment options under variable life insurance and variable annuity contracts. Class II shares are offered only to separate accounts of non-Prudential insurance companies for the same types of contracts (collectively with the Prudential Insurance contracts, the Contracts). These separate accounts invest in shares of the Fund through subaccounts that correspond to the Portfolios. The separate accounts will redeem shares of the Fund to the extent necessary to provide benefits under the Contracts or for such other purposes as may be consistent with the Contracts.

Not every Portfolio is available under each Contract. The prospectus for each Contract lists the Portfolios currently available under that particular Contract.

In order to sell shares to both Prudential and non-Prudential insurance companies, the Fund has obtained an exemptive order (the Order) from the United States Securities and Exchange Commission (SEC). The Fund and its Portfolios are managed in compliance with the terms and conditions of that Order. This statement of additional information is not a prospectus and should be read in conjunction with the Fund’s prospectus dated May 1, 2005, which is available without charge upon written request to The Prudential Series Fund, Inc., Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102 or by telephoning (800) 778-2255. The Fund’s audited financial statements for the fiscal year ended December 31, 2004 are incorporated in this statement of additional information by reference to the Fund’s 2004 annual report (file no. 811-03623). You may obtain a copy of the Fund’s annual report at no charge by request to the Fund, at the address or telephone number noted below.

The Prudential Series Fund, Inc.

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

Telephone: (800) 778-2255

PSF2

CONTENTS

INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS	B-1
General
Convertible Securities
Warrants
Foreign Securities
Options on Stock and Debt Securities
Options on Stock Indexes
Options on Foreign Currencies
Futures Contracts and Options on Futures Contracts
Forward Foreign Currency Exchange Contracts
Swap Agreements
Loans
Reverse Repurchase Agreements and Dollar Rolls
When-Issued and Delayed Delivery Securities
Short Sales
Loans of Portfolio Securities
Illiquid Securities
Further Information about the Zero Coupon Bond Portfolio 2005
U.S. Government Securities
Asset-Backed Securities
Collateralized Debt Obligations
Credit-Linked Securities
Brady Bonds
Risk Factors Relating to Junk Bonds
Loans and Other Direct Debt Instruments
Other Investment Companies
Preferred Stock
Real Estate Investment Trusts
Restricted Securities
Securities Lending
INVESTMENT RESTRICTIONS	B-21
INVESTMENT MANAGEMENT AND DISTRIBUTION ARRANGEMENTS	B-24
Investment Management Arrangements
Portfolio Managers
Distribution Arrangements
Codes of Ethics
Proxy Voting and Recordkeeping Policies
OTHER INFORMATION CONCERNING THE FUND	B-109
Incorporation and Authorized Stock
Portfolio Transactions and Brokerage
Taxation of the Fund
Disclosure of Portfolio Holdings
Custodian and Transfer Agent
Independent Registered Public Accounting Firm
Licenses
Portfolio Reorganizations
MANAGEMENT OF THE FUND	B-120
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES	B-129
FUND PERFORMANCE	B-130
CALCULATION OF YIELD	B-131
FINANCIAL STATEMENTS	B-131
APPENDIX I: DEBT RATINGS	A-1
APPENDIX II: SUBADVISER PROXY VOTING POLICIES	A-4

INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS

I. General

This Statement of Additional Information provides information about the Fund, which consists of 33 separate portfolios—the Conservative Balanced Portfolio, Diversified Bond Portfolio, Diversified Conservative Growth Portfolio, Equity Portfolio, Flexible Managed Portfolio, Global Portfolio, Government Income Portfolio, High Yield Bond Portfolio, Money Market Portfolio, Natural Resources Portfolio, Jennison Portfolio, Jennison 20/20 Focus Portfolio, Value Portfolio, Small Capitalization Stock Portfolio, SP Aggressive Growth Asset Allocation Portfolio, SP AIM Core Equity Portfolio, SP AllianceBernstein Large Cap Growth Portfolio, SP Balanced Asset Allocation Portfolio, SP Conservative Asset Allocation Portfolio, SP Davis Value Portfolio, SP Goldman Sachs Small Cap Value Portfolio, SP Growth Asset Allocation Portfolio, SP Large Cap Value Portfolio, SP LSV International Value Portfolio (formerly, SP Deutsche International Equity Portfolio), SP Mid Cap Growth Portfolio, SP PIMCO High Yield Portfolio, SP PIMCO Total Return Portfolio, SP Prudential U.S. Emerging Growth Portfolio, SP Small Cap Growth Portfolio, SP Strategic Partners Focused Growth Portfolio, Stock Index Portfolio, SP William Blair International Growth Portfolio and Zero Coupon Bond Portfolio 2005. Not every Portfolio is available under every Contract. The prospectus for each Contract lists the Portfolios currently available under that particular Contract. The Portfolios are managed by Prudential Investments LLC (PI) as discussed under INVESTMENT MANAGEMENT AND DISTRIBUTION ARRANGEMENTS .

Each of the Portfolios has a different investment objective. For this reason, each Portfolio will have different investment results and be subject to different financial and market risks. As discussed in the prospectus, several of the Portfolios may invest in money market instruments and comparable securities as part of assuming a temporary defensive position.

The investment objectives of the Portfolios can be found under INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES OF THE PORTFOLIOS and MORE DETAILED INFORMATION ON HOW THE PORTFOLIOS INVEST in the prospectus.

A detailed discussion of the types of investment instruments in which the Portfolios may invest follows.

Convertible Securities

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

Warrants

Certain Portfolios may invest in warrants on common stocks. A warrant is a right to buy a number of shares of stock at a specified price during a specified period of time. The risk associated with warrants is that the market price of the underlying stock will stay below the exercise price of the warrant during the exercise period. If this occurs, the warrant becomes worthless and the investor loses the money he or she paid for the warrant.

From time to time, certain fixed-income Portfolios may invest in debt securities that are offered together with warrants but only when the debt security meets the Portfolio’s investment criteria and the value of the warrant is relatively very small. If the warrant later becomes valuable, it may be sold or exercised.

Foreign Securities

Certain portfolios may invest in common stock and convertible securities denominated in a foreign currency and issued by foreign or domestic issuers. Certain portfolios may invest in foreign debt securities, which may be denominated either in U.S. dollars or foreign currencies, and which may be issued by either foreign or domestic issuers.

American Depositary Receipts (ADRs) are not considered “foreign securities” for purposes of the percentage limitations set forth in the prospectus. ADRs are U.S. dollar-denominated certificates issued by a U.S. bank or trust company. ADRs represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a U.S. bank and are traded on a U.S. exchange or in the over-the-counter (OTC) market. Investments in ADRs have certain advantages over direct investments in the

B-1

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 U.S. issuers.

Foreign securities (including ADRs) involve certain risks, which should be considered carefully by an investor. These risks include political or economic instability in the country of an issuer, the difficulty of predicting international trade patterns, the possibility of imposition of exchange controls and, in the case of securities not denominated in U.S. currency, the risk of currency fluctuations. Foreign securities may be subject to greater movement in price than U.S. securities and under certain market conditions, may be less liquid than U.S securities. In addition, there may be less publicly available information about a foreign company than a U.S company. Foreign companies generally are not subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. companies. There is generally less government regulation of securities exchanges, brokers and listed companies abroad than in the U.S., and, with respect to certain foreign countries, there is a possibility of expropriations, confiscatory taxation or diplomatic developments which could affect investment in those countries. Finally, in the event of a default of any foreign debt obligations, it may be more difficult for a Portfolio to obtain or enforce a judgment against the issuers of such securities.

If a security is denominated in a foreign currency, it may be affected by changes in currency rates and in exchange control regulations, and costs may be incurred in connection with conversions between currencies. The Portfolios that may invest in foreign securities may enter into forward foreign currency exchange contracts for the purchase or sale of foreign currency for hedging purposes, including: locking in the U.S. dollar price equivalent of interest or dividends to be paid on such securities which are held by a Portfolio; and protecting the U.S. dollar value of such securities which are held by the Portfolio. A Portfolio will not enter into such forward contracts or maintain a net exposure to such contracts where the consummation of the contracts would obligate the Portfolio to deliver an amount of foreign currency in excess of the value of the Portfolio’s securities or other assets denominated in that currency. In addition, the Portfolios may, for hedging purposes, enter into certain transactions involving options on foreign currencies, foreign currency futures contracts and options on foreign currency futures contracts.

Options on Stock and Debt Securities

A. Options on Stock

Certain Portfolios may purchase and “write” (that is, sell) put and call options on equity securities that are traded on securities exchanges, listed on the National Association of Securities Dealers Automated Quotation System (NASDAQ), or privately negotiated with broker-dealers (OTC equity options).

A call option is a short-term contract that gives the option purchaser or “holder” the right to acquire a particular equity security for a specified price at any time during a specified period. For this right, the option purchaser pays the option seller a certain amount of money or “premium” which is set before the option contract is entered into. The seller or “writer” of the option is obligated to deliver the particular security if the option purchaser exercises the option.

A put option is a similar contract. In a put option, the option purchaser has the right to sell a particular security to the option seller for a specified price at any time during a specified period. In exchange for this right, the option purchaser pays the option seller a premium.

The Portfolios will write only “covered” options on stocks. A call option is covered if:

(1) the Portfolio owns the security underlying the option;

(2) the Portfolio has an absolute right to acquire the security immediately; or

(3) the Portfolio has a call on the same security that underlies the option which has an exercise price equal to or less than the exercise price of the covered option (or, if the exercise price is greater, the Portfolio sets aside in a segregated account liquid assets that are equal to the difference).

A put option is covered if:

(1) the Portfolio sets aside in a segregated account liquid assets that are equal to or greater than the exercise price of the option; or

(2) the Portfolio holds a put on the same security that underlies the option which has an exercise price equal to or greater than the exercise price of the covered option (or, if the exercise price is less, the Portfolio sets aside in a segregated account liquid assets that are equal to the difference).

B-2

Certain Portfolios can also purchase “protective puts” on equity securities. These are acquired to protect a Portfolio’s security from a decline in market value. In a protective put, a Portfolio has the right to sell the underlying security at the exercise price, regardless of how much the underlying security may decline in value. In exchange for this right, the Portfolio pays the put seller a premium.

The Portfolios may use options for both hedging and investment purposes. The Portfolios may purchase equity securities that have a put or call option provided by the issuer.

B. Options on Debt Securities

Certain Portfolios may purchase and sell put and call options on debt securities, including U.S. Government debt securities, that are traded on a U.S. securities exchange or privately negotiated with primary U.S. Government securities dealers that are recognized by the Federal Reserve Bank of New York (OTC debt options).

Options on debt securities are similar to stock options (see above) except that the option holder has the right to acquire or sell a debt security rather than an equity security.

The Portfolios will write only covered options. Options on debt securities are covered in much the same way as options on equity securities. One exception is in the case of call options on U.S. Treasury Bills. With these options, a Portfolio might own U.S. Treasury Bills of a different series from those underlying the call option, but with a principal amount and value that matches the option contract amount and a maturity date that is no later than the maturity date of the securities underlying the option.

The above Portfolios may also write straddles—which are simply combinations of a call and a put written on the same security at the same strike price and maturity date. When a Portfolio writes a straddle, the same security is used to “cover” both the put and the call. If the price of the underlying security is below the strike price of the put, the Portfolio will set aside liquid assets as additional cover equal to the difference. A Portfolio will not use more than 5% of its net assets as cover for straddles.

The above Portfolios may also purchase protective puts to try to protect the value of one of the securities it owns against a decline in market value, as well as putable and callable debt securities.

C. Risks of Transactions in Options on Equity and Debt Securities

A Portfolio’s use of options on equity or debt securities is subject to certain special risks, in addition to the risk that the market value of the security will move opposite to the Portfolio’s option position. An exchange-traded option position may be closed out only on an exchange, board of trade or other trading facility which provides a secondary market for an option of the same series. Although the Portfolios 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 the Portfolio 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 a Portfolio, 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: (1) there may be insufficient trading interest in certain options; (2) restrictions imposed by an exchange on opening transactions or closing transactions or both; (3) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; (4) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (5) the facilities of an exchange or a clearing corporation may not be adequate at all times to handle the trading volume; or (6) 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 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 OTC options will also be subject to certain risks. Unlike exchange-traded options, OTC options generally do not have a continuous liquid market. Consequently, a Portfolio 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 a Portfolio writes an OTC

B-3

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 the Portfolio originally wrote the OTC option. While the Portfolios will seek to enter into OTC options only with dealers who agree to enter into closing transactions with the Portfolio, there can be no assurance that a Portfolio 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, a Portfolio may be unable to liquidate an OTC option. PI monitors the creditworthiness of dealers with whom the Portfolios enter into OTC option transactions under the Board of Directors’ (the Board) general supervision.

Options on Stock Indexes

A. Stock Index Options

Certain Portfolios may purchase and sell put and call options on stock indexes that are traded on securities exchanges, listed on NASDAQ or that are privately-negotiated with broker-dealers (OTC options).

Options on stock indexes are similar to options on stocks, except that instead of giving the option holder the right to receive or sell a stock, it gives the holder the right to receive an amount of cash if the closing level of the stock index is greater than (in the case of a call) or less than (in the case of a put) the exercise price of the option. The amount of cash the holder will receive is determined by multiplying the difference between the index’s closing price and the option’s exercise price, expressed in dollars, by a specified “multiplier”. Unlike stock options, stock index options are always settled in cash and gain or loss depends on price movements in the stock market generally (or a particular market segment, depending on the index) rather than the price movement of an individual stock.

A Portfolio will only sell or “write” covered options on stock indexes. A call option is covered if the Portfolio holds stocks at least equal to the value of the index times the multiplier times the number of contracts (the Option Value). When a Portfolio writes a call option on a broadly based stock market index, the Portfolio will set aside cash, cash equivalents or “qualified securities” (defined below). The value of the assets to be segregated cannot be less than 100% of the Option Value as of the time the option is written.

If a Portfolio has written an option on an industry or market segment index, it must set aside at least five “qualified securities,” all of which are stocks of issuers in that market segment, with a market value at the time the option is written of not less than 100% of the Option Value. The qualified securities 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 the Portfolio’s holdings in that industry or market segment. No individual security will represent more than 15% of the amount so set aside in the case of broadly based stock market index options or 25% of such amount in the case of options on a market segment index. If at the close of business on any day the market value of the qualified securities falls below 100% of the Option Value as of that date, the Portfolio will set aside an amount in liquid unencumbered assets equal in value to the difference. In addition, when a Portfolio writes a call on an index which is “in-the-money” at the time the option is written—that is, the index’s value is above the strike price—the Portfolio will set aside liquid unencumbered assets equal to the amount by which the call is in-the-money times the multiplier times the number of contracts. Any amount so set aside may be applied to the Portfolio’s obligation to segregate additional amounts in the event that the market value of the qualified securities falls below 100% of the current Option Value. A “qualified security” is an equity security which is listed on a securities exchange or listed on NASDAQ against which the Portfolio has not written a stock call option and which has not been hedged by the Portfolio by the sale of stock index futures. However, the Portfolio will not be subject to the requirement described in this paragraph if it holds a call on the same index as the call written and 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 the Portfolio in liquid unencumbered assets in a segregated account with its custodian.

A put index option is covered if: (1) the Portfolio sets aside in a segregated account liquid unencumbered assets of a value equal to the strike price times the multiplier times the number of contracts; or (2) the Portfolio 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 the Portfolio in liquid unencumbered assets in a segregated account.

B. Risks of Transactions in Options on Stock Indexes

A Portfolio’s purchase and sale of options on stock indexes has the same risks as stock options described in the previous section. In addition, the distinctive characteristics of options on indexes create special risks. Index prices may be distorted if trading of certain stocks included in the index is interrupted. Trading in 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, a Portfolio would not be able to close out options which it had purchased or written and, if restrictions on exercise were imposed, may be unable to exercise an option it holds, which could result in substantial losses to the Portfolio. It is the policy of the Portfolios to purchase or write options only on stock indexes which include a number of stocks sufficient to minimize the likelihood of a trading halt in options on the index.

B-4

The ability to establish and close out positions on stock index options are subject to the existence of a liquid secondary market. A Portfolio will not purchase or sell any index option contract unless and until, in the portfolio manager’s opinion, the market for such options has developed sufficiently that the risk in connection with such transactions is no greater than the risk in connection with options on stocks.

There are certain additional risks associated with writing calls on stock indexes. Because exercises of index options are settled in cash, a call writer such as a Portfolio cannot determine the amount of its settlement obligations in advance and, unlike call writing on specific stocks, cannot precisely provide in advance for, or cover, its potential settlement obligations by acquiring and holding the underlying securities. However, the Portfolios will follow the “cover” procedures described above.

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

When a Portfolio has written a stock index call, there is also a risk that the market may decline between the time the Portfolio has a call exercised against it, at a price which is fixed as of the closing level of the index on the date of exercise, and the time the Portfolio is able to sell stocks in its portfolio. As with stock options, a Portfolio will not learn that an index option has been exercised until the day following the exercise date but, unlike a call on stock where the Portfolio would be able to deliver the underlying securities in settlement, the Portfolio 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 indexes than with stock options. For example, even if an index call which a Portfolio has written is “covered” by an index call held by the Portfolio with the same strike price, the Portfolio will bear the risk that the level of the index may decline between the close of trading on the date the exercise notice is filed with the clearing corporation and the close of trading on the date the Portfolio exercises the call it holds or the time the Portfolio sells the call which in either case would occur no earlier than the day following the day the exercise notice was filed.

There are also certain special risks involved in purchasing put and call options on stock indexes. If a Portfolio holds an index option and exercises it before final determination of the closing index value for that day, it runs the risk that the level of the underlying index may change before closing. If such a change causes the exercised option to fall out-of-the-money, the Portfolio will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer. Although the Portfolio may be able to minimize this 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

A. Options on Foreign Currency

Certain Portfolios may purchase and write put and call options on foreign currencies traded on U.S. or foreign securities exchanges or boards of trade for hedging purposes in a manner similar to that in which forward foreign currency exchange contracts and futures contracts on foreign currencies are employed (see below).

Options on foreign currencies are similar to options on stocks, except that the option holder has the right to take or make delivery of a specified amount of foreign currency rather than stock.

A Portfolio may purchase and write options to hedge its securities denominated in foreign currencies. If the U.S. dollar increases in value relative to a foreign currency in which the Portfolio’s securities are denominated, the value of those securities will decline in U.S. dollar terms. To hedge against a decline of a foreign currency a Portfolio may purchase put options on that foreign currency. If the value of the foreign currency declines, the gain realized on the put option would offset, at least in part, the decline in the value of the Portfolio’s holdings denominated in that foreign currency. Alternatively, a Portfolio may write a call option on a foreign currency. If the foreign currency declines, the option would not be exercised and the decline in the value of the Portfolio’s securities denominated in that foreign currency would be offset in part by the premium the Portfolio received for the option.

B-5

If, on the other hand, the portfolio manager anticipates purchasing a foreign security and also anticipates a rise in the foreign currency in which it is denominated, the Portfolio may purchase call options on the foreign currency. The purchase of such options could offset, at least partially, the effects of adverse movements of the exchange rates. Alternatively, the Portfolio could write a put option on the currency and, if the exchange rates move as anticipated, the option would expire unexercised.

B. Risks of Transactions in Options on Foreign Currency

A Portfolio’s successful use of options on foreign currencies depends upon the portfolio manager’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. For instance, if the currency being hedged has moved in a favorable direction, the corresponding appreciation of the Portfolio’s securities denominated in such currency would be partially offset by the premiums paid on the options. If the currency exchange rate does not change, the Portfolio’s net income would be less than if the Portfolio had not hedged since there are costs associated with options.

The use of these options is subject to various additional risks. The correlation between the movements in the price of options and the price of the currencies being hedged is imperfect. The use of these instruments will hedge only the currency risks associated with investments in foreign securities, not market risk. A Portfolio’s ability to establish and maintain positions will depend on market liquidity. The ability of the Portfolio to close out an option depends on a liquid secondary market. There is no assurance that liquid secondary markets will exist for any particular option at any particular time.

Because there are two currencies involved, developments in either or both countries can affect the values of options on foreign currencies. In addition, the quantities of currency underlying option contracts represent odd lots in a market dominated by transactions between banks, which can mean extra transaction costs upon exercise. Option markets may be closed while round-the-clock interbank currency markets are open, which can create price and rate discrepancies.

Futures Contracts and Options on Futures Contracts

A. Futures and Options on Futures

Certain Portfolios may purchase and sell stock index futures contracts. A stock index futures contract is an agreement between the buyer and the seller of the contract to transfer an amount of cash equal to the daily variation margin of the contract. No physical delivery of the underlying stocks in the index is made.

Certain Portfolios may, to the extent permitted by applicable regulations, purchase and sell futures contracts on interest-bearing securities, interest rate indexes or interest rate swaps. Certain Portfolios may, to the extent permitted by applicable regulations, purchase and sell futures contracts on debt securities, aggregates of debt securities, and U.S. Government securities.

Certain Portfolios may purchase and sell futures contracts on foreign currencies.

When a futures contract is entered into, each party deposits with a futures commission merchant (or in a segregated account) approximately 5% of the contract amount. This is known as the “initial margin.” Every day during the futures contract, either the buyer or the futures commission merchant will make payments of “variation margin.” In other words, if the value of the underlying security, index, interest rate or interest rate swap increases, then the buyer will have to add to the margin account so that the account balance equals approximately 5% of the value of the contract on that day. The next day, the value of the underlying security, index, interest rate or interest rate swap may decrease, in which case the buyer would receive money from the account equal to the amount by which the account balance exceeds 5% of the value of the contract on that day.

The Portfolios may purchase or sell futures contracts without limit for bona fide hedging purposes within the meaning of the regulations of the Commodity Futures Trading Commission. This would be the case, for example, if a portfolio manager is using a futures contract to reduce the risk of a particular position on a security. The Portfolios can also purchase or sell futures contract for non-hedging purposes provided the initial margins and premiums associated with the contracts do not exceed 5% of the fair market value of the Portfolio’s assets, taking into account unrealized profits or unrealized losses on any such futures. This would be the case if a portfolio manager uses futures for investment purposes, to increase income or to adjust the Portfolio’s asset mix.

B. Additional Information Regarding the Use of Futures and Options by the Stock Index and Small Capitalization Stock Portfolios

As explained in the prospectus, the Stock Index Portfolio seeks to duplicate the performance of the Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index) and the Small Capitalization Stock Portfolio seeks to duplicate the performance of the Standard & Poor’s Small Capitalization Stock Index (S&P SmallCap Index). The Portfolios will be as fully invested in the S&P

B-6

Indexes’ stocks as is feasible in light of cash flow patterns and the cash requirements for efficiently investing in a unit of the basket of stocks comprising the S&P 500 and S&P SmallCap Indexes, respectively. When the Portfolios do have short-term investments, they may purchase stock index futures contracts in an effort to have the Portfolio better follow the performance of a fully invested portfolio. When a Portfolio purchases stock index futures contracts, an amount of cash and cash equivalents, equal to either the market value or the initial margin requirement of the futures contracts, will be deposited in a segregated account with the Portfolio’s custodian and/or in a margin account with a broker to collateralize the position and thereby ensure that the use of futures is unleveraged.

As an alternative to the purchase of a stock index futures contract, a Portfolio may construct synthetic positions involving options on stock indexes and options on stock index futures that are equivalent to such a long futures position. In particular, a Portfolio may utilize “put/call combinations” as synthetic long stock index futures positions. A put/call combination is the purchase of a call and the sale of a put at the same time with the same strike price and maturity. It is equivalent to a forward position and, if settled every day, is equivalent to a long futures position. When a Portfolio purchases stock index futures contracts, an amount equal to the initial margin requirement of the futures contracts, will be deposited in a segregated account with the Portfolio’s custodian and/or in a margin account with a broker, and the remaining cash and/or cash equivalents equal to the market value of the futures will be held in other accounts to ensure that the use of futures is unleveraged.

C. Risks of Transactions In Futures Contracts

There are several risks associated with a Portfolio’s use of futures contracts. When used for investment purposes (that is, non-hedging purposes), successful use of futures contracts, like successful investment in securities, depends on the ability of the portfolio manager to predict correctly movements in the relevant markets, interest rates and/or currency exchange rates. When used for hedging purposes, there is a risk of imperfect correlation between movements in the price of the futures contract and the price of the securities or currency that are the subject of the hedge. In the case of futures contracts on stock or interest rate indexes, the correlation between the price of the futures contract and movements in the index might not be perfect. To compensate for differences in volatility, a Portfolio could purchase or sell futures contracts with a greater or lesser value than the securities or currency it wished to hedge or purchase. Other risks apply to use for both hedging and investment purposes. Temporary price distortions in the futures market could be caused by a variety of factors. Further, the ability of a Portfolio to close out a futures position depends on a liquid secondary market. There is no assurance that a liquid secondary market on an exchange will exist for any particular futures contract at any particular time.

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

D. Risks of Transactions in Options on Futures Contracts

Options on futures contracts are subject to risks similar to those described above with respect to options on securities, options on stock indexes, and futures contracts. These risks include the risk that the portfolio manager 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, a Portfolio 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 the Portfolio 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 the Portfolio.

Forward Foreign Currency Exchange Contracts

Certain Portfolios may enter into foreign currency exchange contracts to protect the value of their foreign holdings against future changes in the level of currency exchange rates.

When a Portfolio enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when a Portfolio anticipates the receipt in a foreign currency of dividends or interest payments on a security which it holds, the Portfolio may desire to “lock-in” the U.S. dollar price of the security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. By entering into a forward contract for a fixed amount of dollars, for the purchase or sale of the amount of foreign currency involved in the underlying transactions, the Portfolio will be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made or received.

B-7

Additionally, when a portfolio manager believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, the Portfolio may enter into a forward contract for a fixed amount of dollars, to sell the amount of foreign currency approximating the value of some or all of the portfolio securities denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible since the future value of securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the forward contract is entered into and the date it matures. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. The above Portfolios will not enter into such forward contracts or maintain a net exposure to such contracts where the consummation of the contracts would obligate a Portfolio to deliver an amount of foreign currency in excess of the value of the securities or other assets denominated in that currency held by the Portfolio. Under normal circumstances, consideration of the prospect for currency parities will be incorporated into the long-term investment decisions made with regard to overall diversification strategies. However, the Portfolios believe that it is important to have the flexibility to enter into such forward contracts when it is determined that the best interests of the Portfolios will thereby be served.

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

It is impossible to forecast with absolute precision the market value of a particular security at the expiration of the contract. Accordingly, it may be necessary for a Portfolio to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency that the Portfolio is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency.

If a Portfolio retains the security and engages in an offsetting transaction, the Portfolio will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If forward prices decline during the period between the Portfolio’s entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the Portfolio will realize a gain to the extent that the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. If forward prices increase, the Portfolio will suffer a loss to the extent that the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.

The Portfolios’ use of forward foreign currency exchange contracts will be limited to the transactions described above. Of course, the Portfolios are not required to enter into such transactions with regard to their foreign currency-denominated securities. It also should be realized that this method of protecting the value of a Portfolio’s securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities which are unrelated to exchange rates. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time they tend to limit any potential gain which might result should the value of such currency increase.

Although the Portfolios value their assets daily in terms of U.S. dollars, they do not intend physically to convert their holdings of foreign currencies into U.S. dollars on a daily basis. They will do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the spread) between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer.

Swap Agreements

Certain Portfolios may enter into interest rate, index, credit default, forward swap spreadlock, total return, equity, and, to the extent that they may invest in foreign currency-denominated securities, currency exchange rate swap agreements. Certain Portfolios may also enter into options on swap agreements (swap options). These transactions are entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to the Portfolio than if the Portfolio had invested directly in an instrument that yielded that desired return. With respect to the Conservative Balanced, Diversified Bond, Diversified Conservative Growth, Flexible Managed, Government Income and High Yield Bond Portfolios, investments in each of credit default swaps, total return and index swaps, or options on swaps are limited to 15% of such Portfolio’s assets.

Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” that is, the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a

B-8

“basket” of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. A swap option is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. Each Portfolio may write (sell) and purchase put and call swap options.

Most swap agreements entered into by the Portfolios would calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Portfolio’s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the net amount). A Portfolio’s current obligations under a swap agreement will be accrued daily (offset against any amounts owed to the Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the segregation of liquid assets to avoid any potential leveraging. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of the Fund’s investment restriction concerning senior securities. A Portfolio will not enter into a swap agreement with any single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of the Portfolio’s assets.

Whether a Portfolio’s use of swap agreements or swap options will be successful in furthering its investment objective will depend on the subadviser’s ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, a Portfolio bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.

The Portfolios will enter into swap agreements only with counterparties that meet certain standards of creditworthiness (generally, such counterparties would have to be eligible counterparties under the terms of the Fund’s repurchase agreement guidelines). Certain restrictions imposed on the Fund by the Internal Revenue Code may limit a Portfolio’s ability to use swap agreements. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a Portfolio’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Depending on the terms of the particular option agreement, a Portfolio will generally incur a greater degree of risk when it writes a swap option than it will incur when it purchases a swap option. When a Portfolio purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when a Portfolio writes a swap option, upon exercise of the option the Portfolio will become obligated according to the terms of the underlying agreement.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act (CEA) and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations approved by the CFTC.

Certain Portfolios may enter into interest rate swaps. Interest rate swaps, in their most basic form, involve the exchange by a Portfolio with another party of their respective commitments to pay or receive interest. For example, a Portfolio 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 interest indexes 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 a Portfolio’s exposure to long or short-term interest rates. For example, a Portfolio may enter into a swap transaction to preserve a return or spread on a particular investment or a portion of its portfolio or to protect against any increase in the price of securities the Portfolio anticipates purchasing at a later date.

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

Certain Portfolios may enter into credit default swap contracts for investment purposes. The “buyer” in a credit default contract is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or “par value,” of the reference obligation in exchange for the reference obligation. A Portfolio may be either the buyer or seller in a credit default swap transaction. If a Portfolio is a buyer and no event of default occurs, the Portfolio will lose its investment and

B-9

recover nothing. However, if an event of default occurs, the Portfolio (if the buyer) will receive the full notional value of the reference obligation that may have little or no value. As a seller, a Portfolio receives a fixed rate of income throughout the term of the contract, which typically is between six months and three years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. Credit default swap transactions involve greater risks than if a Portfolio had invested in the reference obligation directly.

Certain Portfolios may also purchase credit default swap contracts in order to hedge against the risk of default of debt securities they hold, in which case the Portfolio would function as the counterparty referenced in the preceding paragraph. This would involve the risk that the swap may expire worthless and would only generate income in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial instability). It would also involve credit risk—that the seller may fail to satisfy its payment obligations to the Portfolio in the event of a default.

Certain Portfolios may enter into total return swaps. Total return swaps are used as substitutes for owning the physical securities that comprise a given market index, or to obtain non-leveraged exposure in markets where no physical securities are available such as an interest rate index. Total return refers to the payment (or receipt) of an index’s total return, which is then exchanged for the receipt (or payment) of a floating interest rate. Total return swaps provide a Portfolio with the additional flexibility of gaining exposure to a market or sector index by using the most cost-effective vehicle available. For example, a Portfolio can gain exposure to the broad mortgage sector by entering into a swap agreement, whereby the Portfolio receives the total return of the Lehman Brothers Mortgage Index in exchange for a short-term floating interest rate, such as the 3-month LIBOR. This is fundamentally identical to purchasing the underlying securities that comprise the index, which requires an investor to pay cash, thereby surrendering the short-term interest rate to be earned from cash holdings, in order to receive the return of the index. Total return swaps provide a Portfolio with the opportunity to actively manage the cash maintained by the Portfolio as a result of not having to purchase securities to replicate a given index. Similar to interest rate swaps, the cash backing total return swaps is actively managed to earn a premium in excess of the floating rate paid on the swap.

Certain Portfolios may enter into equity swaps. In an equity swap, payments on one or both sides are linked to the performance of equities or an equity index. Equity swaps are normally used to (1) initiate and maintain cross-border equity exposures either in an index or a specific stock portfolio; (2) temporarily eliminate exposure to an equity portfolio without disturbing the underlying equity position; or (3) increase, reduce or eliminate market exposure to a single issue or a narrow stock portfolio or obtain greater diversification for a limited period of time without disturbing an underlying position.

For purposes of applying the Funds’ investment policies and restrictions (as stated in the prospectuses and SAI) swap agreements are generally valued by the Funds at market value. In the case of a credit default swap sold by a Fund ( i.e. , where the Fund is selling credit default protection), however, the Fund will generally value the swap at its notional amount. The manner in which certain securities or other instruments are valued by the Funds for purposes of applying investment policies and restrictions may differ from the manner in which those investments are valued by other types of investors.

Loans

Certain Portfolios may invest in fixed and floating rate loans that are privately negotiated between a corporate borrower and one or more financial institutions. The Portfolios may acquire interests in loans directly (by way of assignment from the selling institution) or indirectly (by way of the purchase of a participation interest from the selling institution).

The purchaser of an assignment of an interest in a loan typically succeeds to all the rights and obligations of the assigning selling institution and becomes a lender under the loan agreement with respect to that loan. Assignments are, however, arranged through private negotiations between assignees and assignors, and in certain cases the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than, those held by the assigning selling institution. Assignments are sold strictly without recourse to the selling institutions, and the selling institutions will generally make no representations or warranties about the underlying loan, the borrowers, the documentation of the loans or any collateral securing the loans.

In the typical loan participation, the Portfolio will have a contractual relationship with the lender but not the borrower. This means that the Portfolio will not have any right to enforce the borrower’s compliance with the terms of the loan and may not benefit directly from any collateral supporting the loan. As a result, the Portfolio will assume the credit risk of both the borrower and the lender. In the event of the lender’s insolvency, the Portfolio may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.

Purchasers of loans depend primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. If scheduled interest or principal payments are not made, the value of the instrument may be adversely affected. Loans that are fully secured provide more protections than an unsecured loan in the event of failure to make scheduled interest or principal payments. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower’s

B-10

obligation, or that the collateral could be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks and may be highly speculative. Borrowers that are in bankruptcy may never pay off their indebtedness, or may pay only a small fraction of the amount owed.

Investments in loans through direct assignment of a financial institution’s interests with respect to a loan may involve additional risks. For example, if a loan is foreclosed, the purchaser could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, a purchaser could be held liable as a co-lender. Direct assignment of a loan may also involve a risk of insolvency of the lending bank or other intermediary.

A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless, under the terms of the loan or other indebtedness, the purchaser has direct recourse against the borrower, the purchaser may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of a purchaser were determined to be subject to the claims of the agent’s general creditors, the purchaser might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest.

Interests in loans are also subject to additional liquidity risks. Loans are not generally traded in organized exchange markets but are traded by banks and other institutional investors engaged in loan syndications. Consequently, the liquidity of a loan will depend on the liquidity of these trading markets at the time that the Portfolio sells the loan.

Reverse Repurchase Agreements and Dollar Rolls

Certain Portfolios may use up to 30% of their investable assets for reverse repurchase agreements and dollar rolls. The Money Market Portfolio and the money market sub-portion of any balanced Portfolio may use up to 10% of its investable assets for reverse repurchase agreements.

In a reverse repurchase transaction, a Portfolio sells one of its securities and agrees to repurchase the same security at a set price on a specified date. During the time the security is held by the other party, the Portfolio will often continue to receive principal and interest payments on the security. The terms of the reverse repurchase agreement reflect a rate of interest for use of the money received by the Portfolio and thus is similar to borrowing.

Dollar rolls involve the sale by the Portfolio of one of its securities for delivery in the current month and a contract to repurchase substantially similar securities (for example, with the same coupon) from the other party on a specified date in the future at a specified amount. During the roll period, a Portfolio does not receive any principal or interest earned on the security. The Portfolio realizes a profit to the extent the current sale price is more than the price specified for the future purchase, plus any interest earned on the cash paid to the Portfolio on the initial sale.

A Portfolio participating in reverse repurchase or dollar roll transactions will set aside liquid assets in a segregated account which equal in value the Portfolio’s obligations under the reverse repurchase agreement or dollar roll, respectively.

Reverse repurchase agreements and dollar rolls involve the risk that the market value of the securities retained by a Portfolio may decline below the price of the securities it has sold but is obligated to repurchase under the agreement. If the other party in a reverse purchase or dollar roll transaction becomes insolvent, a Portfolio’s use of the proceeds of the agreement may be restricted pending a determination by a third party of whether to enforce the Portfolio’s obligation to repurchase.

When-issued and Delayed Delivery Securities

The Portfolios may purchase or sell securities on a when-issued or delayed delivery basis.

Purchasing a security on a when-issued or delayed delivery basis means that the delivery and payment can take place a month or more after the date of the transaction. A Portfolio will make commitments for when-issued transactions only with the intention of actually acquiring the securities. A Portfolio’s custodian will maintain, in a segregated account, liquid assets having a value equal to or greater to such commitments. If the Portfolio chooses to dispose of the right to acquire a when-issued security prior to its acquisition, it could, as with the disposition of any other security, incur a gain or loss.

B-11

Short Sales

Certain Portfolios may enter into short sales.

In a short sale, a Portfolio sells a security it does not own in anticipation of a decline in the market value of those securities. To complete the transaction, the Portfolio will borrow the security to make delivery to the buyer. The Portfolio is then obligated to replace the security it borrowed by purchasing it at the market price at the time of replacement. The price at that time may be more or less than the price at which the Portfolio sold it. Until the security is replaced, the Portfolio is required to pay to the lender any interest which accrues during the period of the loan. To borrow the security, the Portfolio may be required to pay a fee which would increase the cost of the security sold.

Until a Portfolio replaces a borrowed security used in a short sale, it will set aside liquid assets in a segregated account equal to the current market value of the security sold short or otherwise cover the short position. No more than 25% of any Portfolio’s net assets (33% of total assets for SP PIMCO High Yield Portfolio and SP PIMCO Total Return Portfolio, 5% of total assets for Small Capitalization Stock Portfolio, SP Mid Cap Value Portfolio and Stock Index Portfolio) will be, when added together: (1) deposited as collateral for the obligation to replace securities borrowed in connection with short sales and (2) segregated in accounts in connection with short sales.

A Portfolio incurs a loss in a short sale if the price of the security increases between the date of the short sale and the date the Portfolio replaces the borrowed security. On the other hand, a Portfolio will realize gain if the security’s price decreases between the date of the short sale and the date the security is replaced.

Loans of Portfolio Securities

All of the Portfolios except the Money Market Portfolio may lend the securities they hold to broker-dealers, qualified banks and certain institutional investors. All securities loans will be made pursuant to a written agreement and continuously secured by collateral in the form of cash, U.S. Government securities or irrevocable standby letters of credit in an amount equal or greater than the market value of the loaned securities plus the accrued interest and dividends. While a security is loaned, the Portfolio will continue to receive the interest and dividends on the loaned security while also receiving a fee from the borrower or earning interest on the investment of the cash collateral. Upon termination of the loan, the borrower will return to the Portfolio a security identical to the loaned security. The Portfolio generally will not have the right to vote a security that is on loan, but would be able to terminate the loan and retain 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 this event, if the borrower fails to return the loaned security, the existing collateral might be insufficient to purchase back the full amount of the security loaned, and the borrower would be unable to furnish additional collateral. The borrower would be liable for any shortage but the Portfolio would be an unsecured creditor with respect to any shortfall and might not be able to recover all or any of it. However, this risk can be decreased by the careful selection of borrowers and securities to be lent.

None of the Portfolios will lend securities to entities affiliated with Prudential Financial, Inc.

Illiquid Securities

Each Portfolio, other than the Money Market Portfolio, may hold up to 15% of its net assets in illiquid securities. The Money Market Portfolio may hold up to 10% of its net assets in illiquid securities. Securities are “illiquid” if they cannot be sold in the ordinary course of business within seven days at approximately the value at which the Portfolio has them valued. Repurchase agreements with a maturity of greater than seven days are considered illiquid.

The Portfolios may purchase securities which are not registered under the Securities Act of 1933 (the Securities Act) but which can be sold to qualified institutional buyers in accordance with Rule 144A under that Act. These securities will not be considered illiquid so long as it is determined by the investment adviser, acting under guidelines approved and monitored by the Board of Directors, that an adequate trading market exists for that security. In making that determination, the investment adviser will consider, among other relevant factors: (1) the frequency of trades and quotes for the security; (2) the number of dealers willing to purchase or sell the security and the number of other potential purchasers; (3) dealer undertakings to make a market in the security; and (4) the nature of the security and the nature of the marketplace trades. A Portfolio’s treatment of Rule 144A securities as liquid could have the effect of increasing the level of portfolio illiquidity to the extent that qualified institutional buyers become, for a time, uninterested in purchasing these securities. In addition, the investment adviser, acting under guidelines approved and monitored by the Board of Directors, may conditionally determine, for purposes of the 15% test, that certain commercial paper issued in reliance on the exemption from registration in Section 4(2) of the Securities Act will not be considered illiquid, whether or not it may be resold under Rule 144A. To make that determination, the following conditions must be met: (1) the security must not be traded flat or in default as

B-12

to principal or interest; (2) the security must be rated in one of the two highest rating categories by at least two nationally recognized statistical rating organizations (NRSROs), or if only one NRSRO rates the security, by that NRSRO (if the security is unrated, the investment adviser must determine that the security is of equivalent quality); and (3) the investment adviser must consider the trading market for the specific security, taking into account all relevant factors. The investment adviser will continue to monitor the liquidity of any Rule 144A security or any Section 4(2) commercial paper which has been determined to be liquid and, if a security is no longer liquid because of changed conditions, the holdings of illiquid securities will be reviewed to determine if any steps are required to assure that the 15% test (10% for the Money Market Portfolio) continues to be satisfied.

Further Information about the Zero Coupon Bond Portfolio 2005

As stated in the prospectus, the objective of Zero Coupon Bond Portfolio 2005 is to achieve the highest predictable compounded investment return for a specified period of time, consistent with the safety of invested capital. This discussion provides a more detailed explanation of the investment policies that will be employed to manage this Portfolio.

If the Portfolio held only stripped securities that were obligations of the United States Government, maturing on the liquidation date, the compounded yield of the Portfolio from the date of initial investment until the liquidation date could be calculated arithmetically to a high degree of accuracy. By: (1) including stripped corporate obligations and interest bearing debt securities; (2) including securities with maturity dates within 2 years of the liquidation date; and (3) more actively managing the Portfolio, the accuracy of the predicted yield is reduced somewhat with the objective of achieving an increased yield. The reduction in accuracy is kept to an acceptably small amount, however, by an investment technique known as “immunization.” By purchasing securities with maturity dates or with interest payment dates prior to the liquidation date, a risk is incurred that the payments received will not be able to be reinvested at interest rates as high as or higher than the yield initially predicted. This is known as “reinvestment risk.” By including securities with maturity dates after the liquidation date, a risk is incurred that, because interest rates have increased, the market value of such securities will be lower than had been anticipated. This is known as “market risk.” It is also possible, conversely, that payments received prior to the liquidation date can be reinvested at higher rates than the predicted yield and that the value of unmatured securities on the liquidation date will be greater than anticipated. Reinvestment risk and market risk are thus reciprocal in that any change in the general level of interest rates has an opposite effect on the two classes of securities described above.

The Portfolio’s investment adviser seeks to balance these risks by making use of the concept of “duration.” A bond’s duration is the average weighted period of time until receipt of all scheduled cash payments under the bond (whether principal or interest), where the weights are the present value of the amounts to be received on each payment date. Unlike the concept of a bond’s “term to maturity,” therefore, duration takes into account both the amount and timing of a bond’s interest payments, in addition to its maturity date and yield to maturity. The duration of a zero coupon bond is the product of the face amount of the bond and the time until maturity. As applied to a portfolio of bonds, a portfolio’s “duration” is the average weighted period of time until receipt of all scheduled payments, whether principal or interest, from all bonds in the portfolio.

When the Portfolio’s duration is equal to the length of time remaining until its liquidation date, fluctuations in the amount of income accumulated by the Portfolio through reinvestment of coupon or principal payments received prior to the liquidation date (that is, fluctuations caused by reinvestment risk) will, over the period ending on the liquidation date, be approximately equal in magnitude to, but opposite in direction from, fluctuations in the market value on the liquidation date of the Portfolio’s unmatured bonds (that is, fluctuations caused by market risk). By maintaining the Portfolio’s duration within one year of the length of time remaining until its liquidation date, the investment adviser believes that the Portfolio’s value on its liquidation date, and hence an investor’s compounded investment return to that date, will largely be immunized against changes in the general level of interest rates. The success of this technique could be affected, however, by such factors as changes in the relationship between long-term and short-term interest rates and changes in the difference between the yield on corporate and Treasury securities.

The investment adviser will also calculate a projected yield for the Portfolio. At the beginning of each week, after the net asset value of the Portfolio has been determined, the investment adviser will calculate the compounded annual yield that will result if all securities in the Portfolio are held until the liquidation date or, if earlier, until their maturity dates (with the proceeds reinvested until the liquidation date). This is the predicted yield for that date. It can also be expressed as the amount to which a premium of $10,000 is predicted to grow by the Portfolio’s liquidation date. Both of these numbers will be furnished upon request. Unless there is a significant change in the general level of interest rates—in which case a recalculation will be made—the predicted yield is not likely to vary materially over the course of each week.

As stated in the prospectus, as much as 30% of the Portfolio’s assets may be invested in zero coupon debt securities issued by United States corporations or in high grade interest-bearing debt securities, provided that no more than 20% of the assets of the Portfolio may be invested in interest-bearing securities. The extent to which the Portfolio invests in interest-bearing securities may rise above 20% as the Portfolio moves closer to its liquidation date since both reinvestment risk and market risk become smaller as the period to the liquidation date decreases.

B-13

U.S. Government Securities

A. U.S. Treasury Securities

Certain Portfolios may invest in U.S. Treasury securities, including bills, notes, bonds and other debt securities issued by the U.S. Treasury. These instruments are direct obligations of the U.S. Government and, as such, are backed by the “full faith and credit” of the United States. They differ primarily in their interest rates, the lengths of their maturities and the dates of their issuances.

B. Obligations Issued or Guaranteed by U.S. Government Agencies and Instrumentalities

Certain Portfolios may invest in debt securities issued or guaranteed by agencies or instrumentalities of the U.S. Government, including but not limited to, Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) securities. Obligations of GNMA, the Farmers Home Administration and the Export-Import Bank are backed by the “full faith and credit” of the United States. In the case of securities not backed by the “full faith and credit” of the United States, a Portfolio must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment. Such securities include obligations issued by the Student Loan Marketing Association (SLMA), FNMA and FHLMC, each of which may borrow from the U.S. Treasury to meet its obligations, although the U.S. Treasury is under no obligation to lend to such entities.

Obligations issued or guaranteed as to principal and interest by the U.S. Government may be acquired by a Portfolio in the form of U.S. Treasury notes or bonds. Such notes and bonds are held in custody by a bank on behalf of the owners. These custodial receipts are commonly referred to as Treasury Strips.

Certain Portfolios may invest in component parts of U.S. Government debt securities, namely either the corpus (principal) of such obligations or one or more of the interest payments scheduled to be paid on such obligations. These obligations may take the form of (1) obligations from which the interest coupons have been stripped; (2) the interest coupons that are stripped; (3) book-entries at a Federal Reserve member bank representing ownership of obligation components; or (4) receipts evidencing the component parts (corpus or coupons) of U.S. Government obligations that have not actually been stripped. Such receipts evidence ownership of component parts of U.S. Government obligations (corpus or coupons) purchased by a third party (typically an investment banking firm) and held on behalf of the third party in physical or book-entry form by a major commercial bank or trust company pursuant to a custody agreement with the third party. Portfolios may also invest in custodial receipts held by a third party that are not U.S. Government securities.

U.S. Government securities are considered among the most creditworthy of fixed-income investments. The yields available from U.S. Government securities are generally lower than the yields available from corporate debt securities. The values of U.S. Government securities (like those of fixed-income securities generally) will change as interest rates fluctuate.

During periods of falling U.S. interest rates, the values of outstanding long-term U.S. Government securities generally rise. Conversely, during periods of rising interest rates, the values of such securities generally decline. The magnitude of those fluctuations will generally be greater for securities with longer maturities. Although changes in the value of U.S. Government securities will not affect investment income from those securities, they will affect the net asset value (NAV) of a Portfolio.

At a time when a Portfolio has written call options on a portion of its U.S. Government securities, its ability to profit from declining interest rates will be limited. Any appreciation in the value of the securities held in the portfolio above the strike price would likely be partially or wholly offset by unrealized losses on call options written by a Portfolio. The termination of option positions under these conditions would generally result in the realization of capital losses, which would reduce the Portfolio’s capital gains distributions. Accordingly, a Portfolio would generally seek to realize capital gains to offset realized losses by selling portfolio securities. In such circumstances, however, it is likely that the proceeds of such sales would be reinvested in lower yielding securities.

C. Mortgage-Related Securities Issued or Guaranteed by U.S. Government Agencies and Instrumentalities

Certain Portfolios may invest in mortgage-backed securities and other derivative mortgage products, including those representing an undivided ownership interest in a pool of mortgages, e.g., GNMA, FNMA and FHLMC certificates where the U.S. Government or its agencies or instrumentalities guarantees the payment of interest and principal of these securities. However, these guarantees do not extend to the securities’ yield or value, which are likely to vary inversely with fluctuations in interest rates nor do these guarantees extend to the yield or value of a Portfolio’s shares. These certificates are in most cases “pass-through” instruments, through which the holder receives a share of all interest and principal payments from the mortgages underlying the certificate, net of certain fees.

B-14

In addition to GNMA, FNMA or FHLMC certificates through which the holder receives a share of all interest and principal payments from the mortgages underlying the certificate, certain Portfolios may also invest in certain mortgage pass-through securities issued by the U.S. Government or its agencies and instrumentalities commonly referred to as mortgage-backed security strips or MBS strips. MBS strips are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of stripped mortgage security will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The yields to maturity on IOs and POs are sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and principal payments may have a material effect on yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a Portfolio may not fully recoup its initial investment in IOs. Conversely, if the underlying mortgage assets experience less than anticipated prepayments of principal, the yield on POs could be materially adversely affected.

Certain Portfolios will invest in both Adjustable Rate Mortgage Securities (ARMs), which are pass-through mortgage securities collateralized by adjustable rate mortgages, and Fixed-Rate Mortgage Securities (FRMs), which are collateralized by fixed-rate mortgages.

FHLMC Securities.

FHLMC presently issues two types of mortgage pass-through securities, mortgage participation certificates (PCs) and guaranteed mortgage certificates (GMCs). PCs resemble GNMA certificates in that each PC represents a pro rata share of all interest and principal payments made and owed on the underlying pool. FHLMC guarantees timely monthly payment of interest on PCs and the stated principal amount.

Adjustable Rate Mortgage Securities.

Generally, Adjustable Rate Mortgage Securities (ARMs) have a specified maturity date and amortize principal over their life. In periods of declining interest rates, there is a reasonable likelihood that ARMs will experience increased rates of prepayment of principal. However, the major difference between ARMs and FRMs is that the interest rate and the rate of amortization of principal of ARMs can and do change in accordance with movements in a particular, pre-specified, published interest rate index. Because the interest rate on ARMs generally moves in the same direction as market interest rates, the market value of ARMs tends to be more stable than that of long-term fixed-rate securities.

Fixed-Rate Mortgage Securities.

Certain Portfolios may invest in high-coupon fixed-rate mortgage securities (FRMs). Such securities are collateralized by fixed-rate mortgages and tend to have high prepayment rates when the level of prevailing interest rates declines significantly below the interest rates on the mortgages. Thus, under those circumstances, the securities are generally less sensitive to interest rate movements than lower coupon FRMs.

Collateralized Mortgage Obligations.

Collateralized mortgage obligations (CMOs) are debt instruments collateralized by GNMA, FNMA or FHLMC certificates, but also may be collateralized by whole loans or private mortgage pass-through securities (such collateral collectively hereinafter referred to as Mortgage Assets). Multi-class pass-through securities are equity interests in a trust composed of Mortgage Assets. Payments of principal of and interest on the Mortgage Assets, and any reinvestment income thereon, provide the funds to pay debt service on the CMOs or make scheduled distributions on the multi-class pass-through securities. CMOs may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including depository institutions, mortgage banks, investment banks and special-purpose subsidiaries of the foregoing. The issuer of a series of CMOs may elect to be treated as a Real Estate Mortgage Investment Conduit (REMIC). All future references to CMOs include REMICs and multi-class pass-through securities.

In a CMO, a series of bonds or certificates is issued in multiple classes. Each class of CMOs, often referred to as a “tranche,” is issued at a specific fixed or floating coupon rate and has a stated maturity or final distribution date. Principal prepayments on the Mortgage Assets may cause the CMOs to be retired substantially earlier than their stated maturities or final distribution dates. Interest is paid or accrues on all classes of the CMOs on a monthly, quarterly or semi-annual basis. The principal of and interest on the Mortgage Assets may be allocated among the several classes of a CMO series in a number of different ways.

B-15

Special Considerations of Mortgage-Backed Securities.

The underlying mortgages which collateralize the ARMs, CMOs and REMICs in which certain Portfolios may invest will frequently have caps and floors which limit the maximum amount by which the loan rate to the residential borrower may change up or down (1) per reset or adjustment interval and (2) over the life of the loan. Some residential mortgage loans restrict periodic adjustments by limiting changes in the borrower’s monthly principal and interest payments rather than limiting interest rate changes. These payment caps may result in negative amortization. In addition, because of the pass-through of prepayments of principal on the underlying securities, mortgage-backed securities are often subject to more rapid prepayment of principal than their stated maturity would indicate.

The market value of mortgage securities, like other U.S. Government securities, will generally vary inversely with changes in market interest rates, declining when interest rates rise and rising when interest rates decline. However, mortgage securities, while having comparable risk of decline during periods of rising rates, usually have less potential for capital appreciation than other investments of comparable maturities due to the likelihood of increased prepayments of mortgages as interest rates decline. In addition, to the extent such mortgage securities are purchased at a premium, mortgage foreclosures and unscheduled principal prepayments generally will result in some loss of the holders’ principal to the extent of the premium paid. On the other hand, if such mortgage securities are purchased at a discount, an unscheduled prepayment of principal will increase current and total returns and will accelerate the recognition of income which when distributed to shareholders will be taxable as ordinary income.

Because the prepayment characteristics of the underlying mortgages vary, it is not possible to predict accurately the average life of a particular issue of pass-through certificates. Mortgage-backed securities are often subject to more rapid prepayment than their stated maturity date would indicate as a result of the pass-through of prepayments on the underlying mortgage obligations. During periods of declining interest rates, prepayments of mortgages underlying mortgage-backed securities can be expected to accelerate. When mortgage obligations are prepaid, a Portfolio reinvests the prepaid amounts in securities, the yields of which reflect interest rates prevailing at that time. Therefore, a Portfolio’s ability to maintain a portfolio of high-yielding mortgage-backed securities will be adversely affected to the extent that prepayments of mortgages must be reinvested in securities which have lower yields than the prepaid mortgages. Moreover, prepayments of mortgages which underlie securities purchased at a premium generally will result in capital losses. During periods of rising interest rates, the rate of prepayment mortgages underlying mortgage-backed securities can be expected to decline, extending the projected average maturity of the mortgage-backed securities. This maturity extension risk may effectively change a security which was considered short- or intermediate-term at the time of purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in interest rates than short- or intermediate-term securities.

Asset-Backed Securities

Certain Portfolios may invest in asset-backed securities. Through the use of trusts and special purpose corporations, various types of assets, primarily automobile and credit card receivables, home equity loans, student loans, and residential mortgages, have been securitized in pass-through structures similar to the mortgage pass-through structures or in a pay-through structure similar to the CMO structure. Asset-backed securities may be guaranteed up to a certain amount by guarantees, insurance or letters of credit issued by a financial institution affiliated or unaffiliated with the originator of the pool. Certain Portfolios may invest in these and other types of asset-backed securities that may be developed in the future.

Asset-backed securities are subject to the credit risk that the underlying receivables will not be paid by debtors or by credit insurers or guarantors of such instruments. Unlike mortgage-backed securities, traditional asset-backed securities typically do not have the complete benefit of a security interest in the related collateral. Credit card receivables, for example, are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, some of which may reduce the ability to obtain full payment. In the case of automobile receivables, the security interests in the underlying automobiles are often not transferred when the pool is created, with the resulting possibility that the collateral could be resold. In addition, due to various legal and economic factors, proceeds from repossessed automobile collateral may not always be sufficient to support payments on these securities. In many instances, asset-backed securities are over-collateralized to ensure the relative stability of their credit-quality.

Asset-backed securities differ from traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and principal may be prepaid at any time because the underlying assets generally may be prepaid at any time. As a result, if a Portfolio purchases such a security at a premium, a prepayment rate that is faster than expected will reduce yield to maturity, while a prepayment rate that is slower than expected will have the opposite effect of increasing yield to maturity. Alternatively, if the Portfolio purchases these securities at a discount, faster than expected prepayments will increase, while slower than expected prepayments will reduce yield to maturity.

B-16

A Portfolio that invests in an asset-backed security may also experience delays in payment if the full amounts due on underlying loans, leases or receivables are not realized because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors.

Asset-backed securities generally decrease in value as a result of increases in interest rates and usually have less potential for capital appreciation during periods of declining interest rates than other fixed-income securities with comparable maturities because of the risk of prepayment. The extent of prepayments depends on various economic and other factors.

Certain Portfolios are also permitted to invest up to 15% of their assets in credit-related asset-backed securities. This type of asset-backed security is collateralized by a basket of corporate bonds or other securities, including junk bonds (see “Investment Objectives and Policies of the Portfolios – Risk Factors Relating to Junk Bonds” for risks associated with junk bonds). Unlike the traditional asset-backed securities described above, these asset-backed securities often do have the benefit of a security interest or ownership interest in the related collateral. With a credit-related asset-backed security, the underlying bonds have the risk of being prepaid prior to maturity. Although generally not pre-payable at any time, some of the underlying bonds may have call options, while others may have maturity dates that are earlier than the asset-backed security itself. As with traditional asset-backed securities described above, the Portfolio bears the risk of loss of the resulting increase or decrease in yield to maturity after a prepayment of an underlying bond. However, the primary risk associated with credit-related asset-backed securities is the potential loss of principal associated with losses on the underlying bonds.

Collateralized Debt Obligations (CDOs)

Certain Portfolios may invest up to 5% of their investable assets in collateralized debt obligations (CDOs). CDOs include collateralized bond obligations (CBOs), collaterallized loan obligations (CLOs) and other similarly structured securities. In a typical CDO investment, a Portfolio will purchase a security that is backed by an underlying portfolio of debt obligations, typically including one or more of the following types of investments: high yield securities, investment grade securities, bank loans, futures and swaps. The cash flows generated by the collateral are used to pay interest and principal to the Portfolio.

The portfolio underlying the CDO security is subject to investment guidelines. However, a Portfolio that invests in a CDO cannot monitor the underlying obligations of the CDO, and is subject to the risk that the CDO’s underlying obligations may not be authorized investments for the Portfolio.

In addition, a CDO is a derivative, and is subject to credit, liquidity and interest rate risks, as well as volatility. The market value of the underlying securities at any time will vary, and may vary substantially from the price at which such underlying securities were initially purchased. The amount of proceeds received upon sale or disposition, or the amount received or recovered upon maturity, may not be sufficient to repay principal and interest to investors, which could result in losses to the Portfolio.

The securities issued by a CDO are not traded in organized exchange markets. Consequently, the liquidity of a CDO security is limited and there can be no assurance that a market will exist at the time that the Portfolio sells the CDO security. CDO investments may also be subject to transfer restrictions that further limit the liquidity of the CDO security.

Credit-Linked Securities

Certain Portfolios may invest up to 15% of their assets in credit-linked securities. Credit-linked securities are securities that collateralized by one of more credit default swaps on corporate credits. The Portfolio has the right to receive periodic interest payments from issuer of the credit-linked security at an agreed-upon interest rate, and a return of principal at the maturity date.

Credit-linked securities are typically privately negotiated transactions between two or more parties. The Portfolio bears the risk that the issuer of the credit-linked security will default or become bankrupt. The Portfolio bears the risk of loss of its principal investment, and the periodic interest payments expected to be received for the duration of its investment in the credit-linked security.

Credit-linked securities are also subject to credit risk of the corporate credits underlying the credit default swaps. If one of the underlying corporate credits defaults, the Portfolio may receive the security that has defaulted, and the Portfolio’s principal investment would be reduced by the corresponding face value of the defaulted security.

The market for credit-linked securities may be, or suddenly can become, illiquid. The other parties to the transaction may be the only investors with sufficient understanding of the derivative to be interested in bidding for it. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for credit-linked securities. In certain cases, a market price for a credit-linked security may not be available.

B-17

The collateral for a credit-linked security is one or more credit default swaps, which are subject to additional risks. See “Investment Objectives and Policies of the Portfolios – Swap Agreements” for a description of additional risks associated with credit default swaps.

Brady Bonds

Certain Portfolios may invest in debt obligations commonly known as “Brady Bonds” which are created through the exchange of existing commercial bank loans to foreign entities for new obligations in connection with debt restructurings under a plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the Brady Plan). Brady Bonds have been issued in connection with the restructuring of the bank loans, for example, of the governments of Mexico, Venezuela and Argentina.

Brady Bonds do not have a long repayment history. They may be collateralized or uncollateralized and issued in various currencies (although most are dollar-denominated) and they are actively traded in the over-the-counter secondary market.

Dollar-denominated, collateralized Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal due at maturity by U.S. Treasury zero coupon obligations which may have the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of rolling interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to value recovery payments in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation components: (1) the collateralized repayment of principal at final maturity; (2) the collateralized interest payments; (3) the uncollateralized interest payments; and (4) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the residual risk). In the event of a default with respect to collateralized Brady Bonds as a result of which payment obligations of the issuer are accelerated, the U.S. Treasury zero coupon obligations held as collateral for the payment of principal will not be distributed to investors, nor will such obligations be sold and the proceeds distributed. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds which will continue to be outstanding at the time the face amount of the collateral will equal the principal payments which would have been due on the Brady Bonds in the normal course. In addition, in light of the residual risk of Brady Bonds and, among other factors, the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as speculative.

Risk Factors Relating to Junk Bonds

Fixed-income securities are subject to the risk of an issuer’s inability to meet principal and interest payments on the obligations (credit risk) and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (market risk). Lower rated or unrated (that is, high yield or high risk) securities (commonly referred to as junk bonds) are more likely to react to developments affecting market and credit risk than are more highly rated securities, which react primarily to movements in the general level of interest rates. Fluctuations in the prices of portfolio securities subsequent to their acquisition will not affect cash income from such securities but will be reflected in a Portfolio’s net asset value. The investment adviser considers both credit risk and market risk in making investment decisions for a Portfolio. Investors should carefully consider the relative risks of investing in high-yield securities and understand that such securities are not generally meant for short term investing.

The investment adviser will perform its own investment analysis and will not rely principally on the ratings assigned by the rating services, although such ratings will be considered by the investment adviser. The investment adviser will consider, among other things, the financial history and condition, the prospects and the management of an issuer in selecting securities for a Portfolio.

Under adverse economic conditions, there is a risk that highly leveraged issuers may be unable to service their debt obligations or to repay their obligations upon maturity. During an economic downturn or recession, securities of highly leveraged issuers are more likely to default than securities of higher rated issuers. In addition to the risk of default, there are the related costs of recovery on defaulted issues. In addition, the secondary market for high-yield securities, which is concentrated in relatively few market makers, may not be as liquid as the secondary market for more highly rated securities and, from time to time, it may be more difficult to value high-yield securities than more highly rated securities. Under adverse market or economic conditions, the secondary market for high-yield securities could contract further, independent of any specific adverse changes in the condition of a particular issuer. As a result, the investment adviser could find it more difficult to sell these securities or may be able to sell the securities only at prices lower than if such securities were widely traded. Prices realized upon the sale of such lower rated or unrated securities, under these circumstances, may be less than the prices used in calculating the Fund’s NAV.

Lower rated or unrated debt obligations also present risks based on payment expectations. If an issuer calls the obligation for redemption, a Portfolio may have to replace the security with a lower yielding security, resulting in a decreased return for investors. If

B-18

a Portfolio experiences unexpected net redemptions, it may be forced to sell its higher rated securities, resulting in a decline in the overall credit quality of the debt portion of the Portfolio’s portfolio and increasing the exposure of the Portfolio to the risks of high-yield securities.

Ratings of fixed-income securities represent the rating agencies’ opinions regarding their credit quality and are not a guarantee of quality. Rating agencies attempt to evaluate the safety of principal and interest payments and do not evaluate the risks of fluctuations in market value. Also, rating agencies may fail to make timely changes in credit ratings in response to subsequent events, so that an issuer’s current financial condition may be better or worse than a rating indicates. Since investors generally perceive that there are greater risks associated with the medium to lower rated securities of the type in which a Portfolio may invest, the yields and prices of such securities may tend to fluctuate more than those for higher rated securities. In the lower quality segments of the fixed-income securities market, changes in perceptions of issuers’ creditworthiness tend to occur more frequently and in a more pronounced manner than do changes in higher quality segments of the fixed-income securities which fluctuate in response to the general level of interest rates.

Loans and Other Direct Debt Instruments

Direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other parties. Direct debt instruments involve a risk of loss in case of default or insolvency of the borrower and may offer less legal protection to the purchaser in the event of fraud or misrepresentation, or there may be a requirement that a Portfolio supply additional cash to a borrower on demand.

Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. If scheduled interest or principal payments are not made, the value of the instrument may be adversely affected. Loans that are fully secured provide more protections than an unsecured loan in the event of failure to make scheduled interest or principal payments. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower’s obligation, or that the collateral could be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of developing countries also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due.

Investments in loans through direct assignment of a financial institution’s interests with respect to a loan may involve additional risks. For example, if a loan is foreclosed, the purchaser could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, a purchaser could be held liable as a co-lender. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary.

Direct indebtedness may include letters of credit, revolving credit facilities, or other standby financing commitments that obligate purchasers to make additional cash payments on demand. These commitments may have the effect of requiring a purchaser to increase its investment in a borrower at a time when it would not otherwise have done so, even if the borrower’s condition makes it unlikely that the amount will ever be repaid.

Other Investment Companies

A Portfolio may invest in securities of other investment companies, including shares of closed-end investment companies, unit investment trusts, and open-end investment companies, which represent interests in professionally managed portfolios that may invest in any type of instrument. Investing in other investment companies involves substantially the same risks as investing directly in the underlying instruments, but may involve additional expenses at the investment company level, such as portfolio management fees and operating expenses. Certain types of investment companies, such as closed-end investment companies, used a fixed number of shares that trade on a stock exchange or over-the-counter at a premium or a discount to their net asset value. Others are continuously offered at the net asset value, but may also be traded in the secondary market.

B-19

In addition, pursuant to an exemptive order issued by the Commission, each of the Portfolios can also “sweep” excess cash balances of the Portfolios to one or more affiliated money market mutual funds or short-term bond funds for temporary investment purposes, so long as no more than 25% of a Portfolio’s total assets are invested in shares of an affiliated money market mutual fund or short-term bond fund.

The extent to which a Portfolio can invest in other investment companies is limited by federal securities laws.

Preferred Stock

Certain Portfolios may invest in preferred stock. Preferred stock is a class of equity or ownership in an issuer that pays dividends at a specified rate and that has precedence over common stock in the payment of dividends. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock.

Real Estate Investment Trusts

Certain Portfolios may invest in Real Estate Investment Trusts (REITs). Equity real estate investment trusts own real estate properties, while mortgage real estate investment trusts make construction, development, and long-term mortgage loans. Their value may be affected by changes in the value of the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, and tax and regulatory requirements, such as those relating to the environment. Both types of trusts are dependent upon management skill, are not diversified, and are subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to qualify for tax-free status of income under the Internal Revenue Code and failing to maintain exemption from the Investment Company Act of 1940 (Investment Company Act).

Restricted Securities

Certain Portfolios may invest in restricted securities. Restricted securities are subject to legal restrictions on their sale. Difficulty in selling securities may result in a loss or be costly to a Portfolio. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act, or in a registered public offering. Where registration is required, the holder of a registered security may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time it may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the holder might obtain a less favorable price than prevailed when it decided to seek registration of the security.

Securities Lending

Consistent with applicable regulatory requirements, each Portfolio may lend its portfolio securities to brokers, dealers and financial institutions or other recognized institutional borrowers of securities, provided that outstanding loans do not exceed in the aggregate 33-1/3% of the value of the Portfolio’s total assets and provided that such loans are callable at any time by the Portfolio and are at all times secured by cash or equivalent collateral (including a letter of credit) that is equal to at least 100%, determined daily, of the market value of the loaned securities. During the time portfolio securities are on loan, the borrower will pay the Portfolio an amount equivalent to any dividend or interest paid on such securities and the Portfolio may invest the cash collateral and earn additional income, or it may receive an agreed-upon amount of interest income from the borrower. The advantage of such loans is that the Portfolio continues to receive payments in lieu of the interest and dividends of the loaned securities, while at the same time earning interest either directly from the borrower or on the collateral which will be invested in short-term obligations.

A loan may be terminated by the borrower or the Portfolio at any time. If the borrower fails to maintain the requisite amount of collateral, the loan automatically terminates, and the Portfolio can use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. As with any extensions of credit, there are risks of delay in recovery and in some cases loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will only be made to firms determined to be creditworthy pursuant to procedures approved by the Board of Trustees. On termination of the loan, the borrower is required to return the securities to the Portfolio, and any gain or loss in the market price during the loan would inure to the Portfolio.

Since voting or consent rights which accompany loaned securities pass to the borrower, the Portfolio will follow the policy of calling the loan, in whole or in part as may be appropriate, to permit the exercise of such rights if the matters involved would have a material effect on the Portfolio’s investment in the securities which are the subject of the loan. The Portfolio will pay reasonable finders’, administrative and custodial fees in connection with a loan of its securities or may share the interest earned on collateral with the borrower.

B-20

INVESTMENT RESTRICTIONS

Set forth below are certain investment restrictions applicable to the Portfolios. Restrictions 1, 4, and 7 through 9 are fundamental and may not be changed without shareholder approval as required by the 1940 Act. Restrictions 2, 3, 5, 6 and 10 are not fundamental and may be changed by the Board of Directors without shareholder approval.

With respect to each Portfolio (other than the SP Large Cap Value and SP Goldman Sachs Small Cap Value Portfolios), none of the Portfolios will:

1. Buy or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported or secured by interests in real estate are not subject to this limitation, and except that the Portfolios may exercise rights relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner. None of the Portfolios will buy or sell commodities or commodity contracts, except that a Portfolio may, consistent with its investment style, purchase and sell financial futures contracts and options thereon. For purposes of this restriction, futures contracts on currencies and on securities indices and forward foreign currency exchange contracts are not deemed to be commodities or commodity contracts.

2. No Portfolio will, except as part of a merger, consolidation, acquisition, or reorganization, invest more than 5% of the value of its total assets in the securities of any one investment company or more than 10% of the value of its total assets, in the aggregate, in the securities of two or more investment companies, or acquire more than 3% of the total outstanding voting securities of any one investment company. Provided, however, that any Portfolio may invest in the securities of one or more investment companies to the extent permitted by any order of exemption granted by the SEC.

3. Make short sales of securities or maintain a short position, except that the Diversified Bond, Diversified Conservative Growth, Jennison 20/20 Focus, High Yield Bond, Government Income, Conservative Balanced, and Flexible Managed, and certain SP Portfolios may sell securities short up to 25% of their net assets (the SP PIMCO High Yield and SP PIMCO Total Return Portfolios may sell securities short up to 33% of their net assets; the Small Capitalization Stock, SP AIM Aggressive Growth, SP AIM Core Equity, SP State Street Research Small Cap Growth, SP Mid Cap Value and Stock Index Portfolios may sell securities short up to 5% of their total assets) and except that the Portfolios (other than the Money Market and Zero Coupon Bond 2005 Portfolios) may make short sales against-the-box. Collateral arrangements entered into with respect to options, futures contracts, forward contracts and swap agreements are not deemed to be short sales.

4. Purchase securities on margin (but a Portfolio may obtain such short-term credits as may be necessary for the clearance of transactions); provided that the deposit or payment by a Portfolio of initial or maintenance margin in connection with otherwise permissible futures or options is not considered the purchase of a security on margin. None of the Portfolios will issue senior securities, borrow money or pledge assets, except as permitted by the Investment Company Act and rules thereunder, or by exemptive order, SEC release, no-action letter, or similar relief or interpretations. For purposes of this restriction, the purchase or sale of securities on a when-issued or delayed-delivery basis, reverse repurchase agreements, short sales, derivative and hedging transactions and collateral arrangements with respect thereto, and obligations of the Fund to Directors pursuant to deferred compensation agreements are not deemed to be a pledge of assets or the issuance of a senior security.

5. Enter into reverse repurchase agreements if, as a result, the Portfolio’s obligations with respect to reverse repurchase agreements would exceed 10% of the Portfolio’s net assets (defined to mean total assets at market value less liabilities other than reverse repurchase agreements); except that the Diversified Bond, Diversified Conservative Growth, High Yield Bond, and Government Income Portfolios, as well as the fixed income portions of the Conservative Balanced and Flexible Managed Portfolios, may enter into reverse repurchase agreements and dollar rolls provided that the Portfolio’s obligations with respect to those instruments do not exceed 30% of the Portfolio’s net assets (defined to mean total assets at market value less liabilities other than reverse repurchase agreements and dollar rolls).

6. Pledge or mortgage assets, except that no more than 10% of the value of any Portfolio may be pledged (taken at the time the pledge is made) to secure authorized borrowing and except that a Portfolio may enter into reverse repurchase agreements. Collateral arrangements entered into with respect to futures and forward contracts and the writing of options are not deemed to be the pledge of assets. Collateral arrangements entered into with respect to interest rate swap agreements are not deemed to be the pledge of assets.

7. Make loans, except through loans of assets of a Portfolio, repurchase agreements, trade claims, loan participations or similar investments, or as permitted by the Investment Company Act and rules thereunder, or by exemptive order, SEC release, no-action letter or similar relief or interpretations. Provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government

B-21

obligations, commercial paper, certificates of deposit, bankers’ acceptances or instruments similar to any of the foregoing will not be considered the making of a loan.

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

9. Purchase securities of a company in any industry if, as a result of the purchase, a Portfolio’s holdings of securities issued by companies in that industry would exceed 25% of the value of the Portfolio, except that this restriction does not apply to purchases of obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities or issued by domestic banks. For purposes of this restriction, neither finance companies as a group nor utility companies as a group are considered to be a single industry and will be grouped instead according to their services; for example, gas, electric, and telephone utilities will each be considered a separate industry. For purposes of this exception, domestic banks shall include all banks which are organized under the laws of the United States or a state (as defined in the 1940 Act), U.S. branches of foreign banks that are subject to the same regulations as U.S. banks and foreign branches of domestic banks (as permitted by the SEC).

10. Invest more than 15% of its net assets in illiquid securities. (The Money Market Portfolio will not invest more than 10% of its net assets in illiquid securities.) For purposes of this restriction, illiquid securities are those deemed illiquid pursuant to SEC regulations and guidelines, as they may be revised from time to time.

Consistent with item 4 above, the Fund has entered into a $500 million revolving credit facility with other Prudential mutual funds to facilitate redemptions if necessary. This credit facility, which was entered into on October 29, 2004, is an arrangement with PNC Bank, National Association and The Bank of New York.

Whenever any fundamental investment policy or restriction states a maximum percentage of a Portfolio’s assets, it is intended that if the percentage limitation is set at the time the investment is made, a later change in percentage resulting from changing total or net asset values will not be considered a violation of such policy.

The Natural Resources Portfolio will generally invest a substantial majority of its total assets in securities of natural resource companies. With respect to item 9 above, as it relates to the Natural Resources Portfolio, the following categories will be considered separate and distinct industries: integrated oil/domestic, integrated oil/international, crude oil production, natural gas production, gas pipeline, oil service, coal, forest products, paper, foods (including corn and wheat), tobacco, fertilizers, aluminum, copper, iron and steel, all other basic metals (for example, nickel, lead), gold, silver, platinum, mining finance, plantations (for example, edible oils), mineral sands, and diversified resources. A company will be deemed to be in a particular industry if the majority of its revenues is derived from or the majority of its assets is dedicated to one of the categories described in the preceding sentence. The Fund’s Board will review these industry classifications from time to time to determine whether they are reasonable under the circumstances and may change such classifications, without shareholder approval, to the extent necessary.

Certain additional non-fundamental investment policies are applicable only to the Money Market Portfolio. That Portfolio will not:

1. Invest in oil and gas interests, common stock, preferred stock, warrants or other equity securities.

2. Write or purchase any put or call option or combination of them, except that it may purchase putable or callable securities.

3. Invest in any security with a remaining maturity in excess of 397 days, except that securities held pursuant to repurchase agreements may have a remaining maturity of more than 397 days.

Certain additional non-fundamental investment policies are applicable only to the High Yield Bond Portfolio. That Portfolio will not:

1. Invest in any non-fixed income equity securities, including warrants, except when attached to or included in a unit with fixed income securities, but not including preferred stock.

2. Invest more than 20% of the market or other fair value of its total assets in United States currency denominated issues of foreign governments and other foreign issuers; or invest more than 10% of the market or other fair value of its total assets in securities which are payable in currencies other than United States dollars. The Portfolio will not engage in investment activity in non-U.S. dollar denominated issues without first obtaining authorization to do so from the Fund’s Board. See INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES OF THE PORTFOLIOS.

B-22

Current federal income tax laws require that the assets of each Portfolio be adequately diversified so that Prudential and other insurers with separate accounts which invest in the Fund, as applicable, and not the Contract owners, are considered the owners of assets held in the Accounts for federal income tax purposes. PI intends to maintain the assets of each Portfolio pursuant to those diversification requirements.

Fundamental Investment Restrictions Applicable only to SP Large Cap Value

Portfolio and SP Goldman Sachs Small Cap Value Portfolio

Investment Limitations of SP Large Cap Value Portfolio

The following are the Portfolio’s fundamental investment limitations set forth in their entirety. The Portfolio may not:

1. Issue senior securities, except as permitted under the Investment Company Act, as amended;

2. Borrow money, except that the Portfolio may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 ¹ / ₃ % of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 ¹ / ₃ % limitation;

3. Underwrite securities issued by others, except to the extent that the Portfolio may be considered an underwriter within the meaning of the Securities Act in the disposition of restricted securities or in connection with investments in other investment companies;

4. Purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, or securities of other investment companies), if, as a result, more than 25% of the Portfolio’s total assets would be invested in companies whose principal business activities are in the same industry;

5. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this will not prevent the Portfolio from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business);

6. Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities);

7. Lend any security or make any loan if, as a result, more than 33 ¹ / ₃ % of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements.

Investment Limitations of SP Goldman Sachs Small Cap Value Portfolio

The following are the Portfolio’s fundamental investment limitations set forth in their entirety. The Portfolio may not:

1. Issue senior securities, except as permitted under the Investment Company Act, as amended;

2. Borrow money, except that the Portfolio may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33% of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount will be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33% limitation;

B-23

6. Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Portfolio from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities);

7. Lend any security or make any loan if, as a result, more than 33% of its total assets would be lent to other parties, but this limitation does not apply to purchases of debt securities or to repurchase agreements.

INVESTMENT MANAGEMENT AND
DISTRIBUTION ARRANGEMENTS

I. Investment Management Arrangements

(a) Manager and Subadvisers

The Manager of the Fund is Prudential Investments LLC (PI or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102. PI serves as manager to all of the other investment companies that, together with the Fund, comprise the Prudential mutual funds. See “How the Fund is Managed-Investment Adviser” in the Prospectus of the Fund. As of December 31, 2004, PI served as the investment manager to all of the Prudential U.S. and offshore open-end investment companies, and as administrator to closed-end investment companies, with aggregate assets of approximately $94 billion.

PI is a wholly-owned subsidiary of PIFM Holdco, Inc., which is a wholly-owned subsidiary of Prudential Asset Management Holding Company, which is a wholly-owned subsidiary of Prudential Financial, Inc. Prudential Mutual Fund Services LLC (PMFS or the Transfer Agent), an affiliate of PI, serves as the transfer agent and dividend distribution agent for the Prudential mutual funds and, in addition, provides customer service, recordkeeping and management and administrative services to qualified plans. Pursuant to a Management Agreement with the Fund (the Management Agreement), PI, subject to the supervision of the Fund’s Board and in conformity with the stated policies of the Fund, manages both the investment operations of the Fund and the composition of the Fund’s portfolios, including the purchase, retention disposition and loan of securities and other assets. In connection therewith, PI is obligated to keep certain books and records of the Fund. PI has hired subadvisers to provide investment advisory services to the Portfolios. PI also administers the Fund’s corporate affairs and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical, and bookkeeping services which are not being furnished by State Street Bank & Trust Company (State Street), the Fund’s custodian (the Custodian) and PMFS. The management services of PI to the Fund are not exclusive under the terms of the Management Agreement and PI is free to, and does, render management services to others.

In connection with its management of the corporate affairs of the Fund, PI bears the following expenses:

(1) the salaries and expenses of all personnel of the Fund and the Manager, except the fees and expenses of Directors who are not affiliated persons of the Manager or the Fund’s subadvisers;

(2) all expenses incurred by the Manager or by the Fund in connection with managing the ordinary course of the Fund’s business, other than those assumed by the Fund, as described below; and

(3) the costs, expenses and fees payable to each Subadviser, pursuant to a Subadvisory Agreement between PI and the Subadviser (the Subadvisory Agreement).

Under the terms of the Management Agreement, the Fund is responsible for the payment of the following expenses, including (1) the fee payable to the Manager; (2) the fees and expenses of Directors who are not affiliated with the Manager or the Fund’s Investment Adviser; (3) the fees and certain expenses of the Fund’s Custodian and Transfer and Dividend Disbursing Agent, including the cost of providing records to the Manager in connection with its obligation of maintaining required records of the Fund and of pricing the Fund’s shares; (4) the charges and expenses of the Fund’s legal counsel and independent accountants; (5) brokerage commissions and any issue or transfer taxes chargeable to the Fund in connection with its securities transactions; (6) all taxes and corporate fees payable by the Fund to governmental agencies; (7) the fees of any trade association of which the Fund is a member; (8) the cost of share certificates representing shares of the Fund; (9) the cost of fidelity and directors and officers and errors and omissions insurance; (10) the fees and expenses involved in registering and maintaining registration of the Fund and of its shares with the SEC and registering the Fund as a broker or dealer and qualifying its shares under state securities laws, including the preparation and printing of the Fund’s registration statements and prospectuses for such purposes; (11) allocable communication expenses with respect

B-24

to investor services and all expenses of shareholders’ and Directors’ meetings and of preparing, printing and mailing reports to shareholders; (12) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund’s business; and (13) distribution and service fees.

The Fund pays a fee to PI for the services performed and the facilities furnished by PI computed daily and payable monthly, at the rates which are set forth in the table entitled “Investment Management Fee Rates” included in subsequent pages of this SAI. The Management Agreement provides that the Manager shall not be liable to the Fund for any error of judgment by the Manager or for any loss sustained by the Fund except in the case of a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damage will be limited as provided in the Investment Company Act) or of willful misfeasance, bad faith, gross negligence or reckless disregard of duty.

The Management Agreement provides that it shall terminate automatically if assigned (as defined in the Investment Company Act), and that it may be terminated without penalty by either the Manager or the Fund (by the Board of Directors or vote of a majority of the outstanding voting securities of the Fund, as defined in the Investment Company Act) upon not more than 60 days’ nor less than 30 days’ written notice.

For the fiscal years ended December 31, 2004, December 31, 2003 and December 31, 2002, the Fund paid management fees to PI as set forth in the table entitled “Investment Management Fees” included in subsequent pages of this SAI. PI may from time to time waive all or a portion of its management fee and subsidize all or a portion of the operating expenses of the Fund. Fee waivers and subsidies will increase the Fund’s total return. These voluntary waivers may be terminated at any time without notice.

PI has entered into Subadvisory Agreements with various subadvisers. Each Subadvisory Agreement provides that the Subadviser furnish investment advisory services in connection with the management of one or more Portfolios of the Fund. In connection therewith, the Subadviser is obligated to keep certain books and records of the Fund. PI continues to have responsibility for all investment advisory services pursuant to the Management Agreement and supervises each Subadviser’s performance of those services. The fee rates pursuant to which fees are payable to each Subadviser are set forth in the table entitled “Investment Management Fee Rates” included in subsequent pages of this SAI.

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

(b) Matters Considered by the Board

The Management Agreement and all of the Subadvisory Agreements, except as otherwise noted, were last approved by the Directors, including all of the Independent Directors, on May 27, 2004 at a meeting called for that purpose. The Subadvisory Agreement between PI and LSV Asset Management was approved by the Directors, including all of the Independent Directors, at a meeting called for that purpose on August 31, 2004. The Subadvisory Agreements between PI and each of Eagle Asset Management and Neuberger Berman Management were approved by the Directors, including all of the Independent Directors, at a meeting called for that purpose on January 24, 2005.

In approving the Management and Subadvisory Agreements, the Board primarily considered the nature and quality of the services provided under the Agreements and the overall fairness of the Agreements to the Fund. The Board requested and evaluated reports from the Manager and the subadvisers that addressed specific factors designed to inform the Board’s consideration of these and other issues.

With respect to the nature and quality of the services provided, the Board considered performance of each Portfolio of the Fund in comparison to relevant market indices and the performance of a peer group of investment companies pursuing broadly similar strategies over the past one, three, five and ten years (or shorter periods if the Portfolio has not been in operation for ten years or if the subadviser has not served in that capacity for ten years). The Board also considered the quality of brokerage execution obtained by the subadviser. The Board reviewed the subadvisers’ use of brokers or dealers in Portfolio transactions that provided research or other services to the subadvisers, as well as the benefits derived by each Portfolio from such services.

With respect to the overall fairness of the Management and Subadvisory Agreements, the Board primarily considered the fee structure of the Agreements and estimates of the Manager’s profit or loss. The Board reviewed information from an independent data service about the rates of compensation paid to investment advisers, and overall expense ratios, for variable insurance product funds comparable in size, character and investment strategy to each Portfolio. The Board reviewed the Manager’s estimate of its profit or loss on each Portfolio and carefully examined the Manager’s cost allocation methodology. In reviewing the Subadvisory Agreements

B-25

with subadvisers not affiliated with the Manager, the Board considered that the subadvisory fee was set as part of the negotiation between the Manager and the subadviser. The Board concluded that the Management and Subadvisory Agreements, including the fees, were reasonable. These matters were also considered by the Independent Directors meeting separately.

The Fund operates under a manager-of-managers structure. PI is authorized to select (with approval of the Board’s independent directors) one or more subadvisers to handle the actual day-to-day investment management of each Portfolio. PI monitors each subadviser’s performance through quantitative and qualitative analysis and periodically reports to the Board as to whether each subadviser’s agreement should be renewed, terminated or modified. It is possible that PI will continue to be satisfied with the performance record of the existing subadvisers and not recommend any additional subadvisers. PI is also responsible for allocating assets among the subadvisers if a Portfolio has more than one subadviser. In those circumstances, the allocation for each subadviser can range from 0% to 100% of the Portfolio’s assets, and PI can change the allocations without Board or shareholder approval. Shareholders will be notified of any new subadvisers or materially amended subadvisory agreements.

The manager-of-managers structure operates under an order issued by the SEC. The current order permits us to hire subadvisers or amend subadvisory agreements, without shareholder approval, only with subadvisers that are not affiliated with Prudential Financial, Inc.The current order imposes the following conditions:

1. PI will provide general management and administrative services to the Fund including overall supervisory responsibility for the general management and investment of the Fund’s securities portfolio, and, subject to review and approval by the Board, will (a) set the Portfolios’ overall investment strategies; (b) select subadvisers; (c) monitor and evaluate the performance of subadvisers; (d) allocate and, when appropriate, reallocate a Portfolio’s assets among its subadvisers in those cases where a Portfolio has more than one subadviser; and (e) implement procedures reasonably designed to ensure that the subadvisers comply with the Fund’s investment objectives, policies, and restrictions.

2. Before a Portfolio may rely on the order, the operation of the Portfolio in the manner described in the Application will be approved by a majority of its outstanding voting securities, as defined in the Investment Company Act, or, in the case of a new Portfolio whose public shareholders purchased shares on the basis of a prospectus containing the disclosure contemplated by condition (4) below, by the sole shareholder before offering of shares of such Portfolio to the public.

3. The Fund will furnish to shareholders all information about a new subadviser or subadvisory agreement that would be included in a proxy statement. Such information will include any change in such disclosure caused by the addition of a new subadviser or any proposed material change in a Portfolio’s subadvisory agreement. The Fund will meet this condition by providing shareholders with an information statement complying with the provisions of Regulation 14C under the Securities Exchange Act of 1934 (the Exchange Act), as amended, and Schedule 14C thereunder. With respect to a newly retained subadviser, or a change in a subadvisory agreement, this information statement will be provided to shareholders of the Portfolio a maximum of ninety (90) days after the addition of the new subadviser or the implementation of any material change in a subadvisory agreement. The information statement will also meet the requirements of Schedule 14A under the Exchange Act.

4. The Fund will disclose in its prospectus the existence, substance and effect of the order granted pursuant to the Application.

5. No Director or officer of the Fund or director or officer of PI will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such director or officer) any interest in any subadviser except for (a) ownership of interests in PI or any entity that controls, is controlled by or is under common control with PI, or (b) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly-traded company that is either a subadviser or any entity that controls, is controlled by or is under common control with a subadviser.

6. PI will not enter into a subadvisory agreement with any subadviser that is an affiliated person, as defined in Section 2(a)(3) of the Investment Company Act, of the Fund or PI other than by reason of serving a subadviser to one or more Portfolios (an “Affiliated Subadviser”) without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Portfolio.

7. At all times, a majority of the members of the Board will be persons each of whom is not an “interested person” of the Fund as defined in Section 2(a)(19) of the Investment Company Act (“Independent Directors”), and the nomination of new or additional Independent Directors will be placed within the discretion of the then existing Independent Directors.

8. When a subadviser change is proposed for a Portfolio with an Affiliated Subadviser, the Board, including a majority of the Independent Directors, will make a separate finding, reflected in the Board’s minutes, that such change is in the best interests of the Portfolio and its shareholders and does not involve a conflict of interest from which PI or the Affiliated subadviser derives an inappropriate advantage.

B-26

PI currently charges an advisory fee to each Portfolio based on the following annual rates of average daily net assets:

INVESTMENT MANAGEMENT FEE RATES

Portfolio		Fee
Conservative Balanced		0.55%
Diversified Bond		0.40%
Diversified Conservative Growth		0.75%
Equity		0.45%
Flexible Managed		0.60%
Global		0.75%
Government Income		0.40%
High Yield Bond		0.55 %
Jennison		0.60 %
Jennison 20/20 Focus		0.75%
Money Market		0.40%
Natural Resources		0.45%
Small Capitalization Stock		0.40%
Stock Index		0.35% to $4 billion 0.30% over $4 billion
Value		0.40%
Zero Coupon Bond 2005		0.40%
SP AIM Core Equity		0.85%
SP AllianceBernstein Large Cap Growth		0.90%
SP Davis Value		0.75%
SP Goldman Sachs Small Cap Value		0.90%
SP Large Cap Value		0.80%
SP LSV International Value		0.90%
SP Mid Cap Growth		0.80%
SP PIMCO High Yield		0.60%
SP PIMCO Total Return		0.60%
SP Prudential U.S. Emerging Growth		0.60%
SP Small Cap Growth		0.95%
SP Strategic Partners Focused Growth		0.90%
SP William Blair International Growth		0.85%
SP Aggressive Growth Asset Allocation*		0.84%
SP Balanced Asset Allocation*		0.76%
SP Conservative Asset Allocation*		0.72%
SP Growth Asset Allocation*		0.81%

*Each Asset Allocation Portfolio invests only in shares of other underlying Fund Portfolios. The management fee shown for each Asset Allocation Portfolio is based on the weighted average of the management fees borne by the underlying Fund Portfolios according to the allocation percentage targets in place during 2004, plus a 0.05% annual management fee paid to PI. The only management fee directly paid by each Asset Allocation Portfolio is the 0.05% fee paid to PI.

B-27

PI currently pays a subadvisory fee to each subadviser based on the following annual rate of average daily net assets managed by the subadviser:

SUBADVISORY FEE RATES

Portfolio	Subadviser	Fee
Conservative Balanced	Prudential Investment Management, Inc. (PIM)	0.275%
	Quantitative Management Associates LLC (QMA)	0.275%
Diversified Bond	PIM	0.20%
Diversified Conservative Growth	PIM	0.375%
	RS Investment Management, L.P. (7)	0.50% for the first $150 million in assets, 0.45% over $150 million in assets
	Jennison Associates LLC (Jennison)	Growth Portion 0.30% for the first $300 million in assets 0.25% over $300 million in assets Value Portion 0.375%
	Pacific Investment Management Co. LLC	0.25%
	EARNEST Partners LLC	0.40%
Equity	Jennison	0.225%
	GE Asset Management Inc. (1)	0.30% for first $50 million in assets; 0.20% for next $250 million in assets; 0.15% over $300 million in assets;
	Salomon Brothers Asset Management Inc (2)	0.40% for first $50 million in assets 0.30% for next $250 million in assets; 0.155% over $300 million in assets;
Flexible Managed	PIM	0.30%
	QMA	0.30%
Global	Jennison	0.375%
Government Income	PIM	0.20%
High Yield Bond	PIM	0.275%
Jennison	Jennison	0.75% for first $10 million in assets; 0.50% for next $30 million in assets 0.35% for next $25 million in assets 0.25% for next $335 million in assets; 0.22% for next $600 million in assets; 0.20% for assets above $1 billion
Jennison 20/20 Focus	Jennison	Growth Portion 0.30% for first $300 million in assets; 0.25% above $300 million in assets Value Portion 0.375%
Money Market	PIM	0.20%
Natural Resources	Jennison	0.225%
Small Capitalization Stock	QMA	0.26%

B-28

Portfolio	Subadviser	Fee
Stock Index	QMA	0.175%
Value	Jennison	0.20%
Zero Coupon Bond 2005	PIM	0.20%
SP AIM Core Equity	A I M Capital Management, Inc.	0.55% for first $500 million in assets 0.50% over $500 million in assets
SP AllianceBernstein Large Cap Growth	Alliance Capital Management L.P.	0.60% for first $500 million in assets; 0.50% over $500 million in assets
SP Davis Value	Davis Advisors	0.45% for first $100 million in assets; 0.40% for next $400 million in assets; 0.35% over $500 million in assets
SP Goldman Sachs Small Cap Value	Goldman Sachs Asset Management, L.P.	0.50% for first $500 million in assets; 0.45% over $500 million in assets(3)
SP Large Cap Value	J.P. Morgan Investment Management Inc. Hotchkis and Wiley Capital Management LLC	0.30% 0.30%
SP LSV International Value	LSV Asset Management	0.45% for first $150 million in assets; 0.425% for next $150 million in assets; 0.40% for next $150 million in assets; 0.375% for next $300 million in assets; 0.35% over $750 million in assets(4)
SP Mid Cap Growth	Calamos Advisors LLC (5)	0.45% on the first $100 million in assets 0.40% over $100 million in assets
SP PIMCO High Yield	Pacific Investment Management Co. LLC	0.25%
SP PIMCO Total Return	Pacific Investment Management Co. LLC	0.25%
SP Prudential U.S. Emerging Growth	Jennison	0.30%
SP Small Cap Growth	Eagle Asset Management	0.45% for first $100 million in assets; 0.40% over $100 million in assets
	Neuberger Berman Management Inc.	0.50% for first $100 million in assets; 0.45% for next $250 million in assets; 0.40% over $350 million in assets
SP Strategic Partners Focused Growth	Jennison	0.30% for first $300 million in assets; 0.25% over $300 million in assets.
SP Strategic Partners Focused Growth	Alliance Capital Management L.P.	0.60% for first $1 billion in assets; 0.55% over $1 billion in assets
SP William Blair International Growth	William Blair & Company LLC	0.30% for first $500 million; 0.25% for next $500 million; 0.20% over $1 billion(6)

(1) For purposes of calculating the fee payable to GE Asset Management Inc., (GEAM) the assets of the Equity Portfolio managed by GEAM will be combined with the assets of the PI-advised retail fund counterpart to the Portfolio managed by GEAM.

(2) For purposes of calculating the fee payable to Salomon Brothers Asset Management Inc (Salomon), the assets of the Equity Portfolio managed by Salomon will be combined with the assets of the PI-advised retail fund counterpart to the Portfolio managed by Salomon.

B-29

(3) For purposes of calculating the fee payable to Goldman Sachs Asset Management, L.P. (GSAM) the assets managed by GSAM in the SP Goldman Sachs Small Cap Value Portfolio will be aggregated with the assets managed by GSAM in the American Skandia Trust AST Goldman Sachs Small Cap Value Portfolio and the American Skandia Advisor Funds, Inc. (ASAF) ASAF Goldman Sachs Small Cap Value Portfolio.

(4) For purposes of calculating the fee payable to LSV Asset Management (LSV) the assets managed by LSV in the SP LSV International Value Portfolio will be aggregated with the assets managed by LSV in the American Skandia Trust AST LSV International Value Portfolio and any other portfolio subadvised by LSV.

(5) For purposes of calculating the fee payable to Calamos Advisors LLC (Calamos) the assets managed by Calamos in the SP Mid Cap Growth Portfolio will be aggregated with the assets managed by Calamos in the Strategic Partners Opportunity Funds – New Era Growth Fund.

(6) For purposes of calculating the fee payable to William Blair & Company LLC (William Blair), the assets managed by William Blair in the SP William Blair International Equity Portfolio will be aggregated with the assets managed by William Blair in any other portfolio subadvised by William Blair which is managed or co-managed by PI.

(7) For purposes of calculating the fee payable to RS Investments Management, LP (RS) the assets managed by RS in the Diversified Conservative Growth Portfolio will be aggregated with the assets managed by RS in any other portfolio subadvised by RS which is managed or co-managed by PI.

Each Asset Allocation Portfolio invests in shares of other Portfolios only. As a result, no subadvisory fees are directly paid by PI for these Portfolios.

For the years ended December 31, 2004, 2003 and 2002, the following fees were paid by the Portfolios to PI for providing investment management services to the Portfolios:

INVESTMENT MANAGEMENT FEES

YEARS ENDED DECEMBER 31

Portfolio	2004		2003		2002
Conservative Balanced	$	15,644,479	$	14,928,039	$	16,232,536
Diversified Bond	5,461,750		5,649,956		5,659,096
Diversified Conservative Growth	1,251,800		1,192,995		1,359,025
Equity	17,841,307		15,723,338		17,674,618
Flexible Managed	22,218,623		20,078,030		21,220,924
Global Portfolio	4,916,113		4,273,255		5,002,944
Government Income	1,730,251		1,982,987		1,736,261
High Yield Bond	8,083,755		7,095,408		5,069,450
Jennison	11,650,035		9,507,138		10,861,875
Jennison 20/20 Focus	981,790		570,076		568,560
Money Market	3,683,849		4,765,229		5,084,709
Natural Resources	2,446,574		1,828,730		1,657,846
Small Capitalization Stock	2,638,921		2,038,923		2,214,924
Stock Index	10,304,686		8,883,674		9,922,603
Value	5,967,723		5,132,821		6,045,228
Zero Coupon Bond 2005	248,196		265,376		243,672
SP AIM Core Equity	224,337		147,520		107,424
SP AllianceBernstein Large Cap Growth	849,105		817,116		429,292
SP Davis Value	2,345,285		1,838,356		993,658
SP Goldman Sachs Small Cap Value	2,765,394		1,354,612		696,651
SP Large Cap Value	2,870,992		409,060		264,154
SP LSV International Value	1,589,386		650,895		333,371
SP Mid Cap Growth	625,848		266,823		131,400
SP PIMCO High Yield	1,638,357		975,775		474,422
SP PIMCO Total Return	5,734,119		4,008,826		1,766,956
SP Prudential U.S. Emerging Growth	815,744		575,081		247,577
SP Small Cap Growth	1,090,179		195,610		101,018
SP Strategic Partners Focused Growth	412,271		225,063		120,263
SP William Blair International Growth	2,535,914		922,491		434,310
SP Aggressive Growth Asset Allocation	46,990		14,520		5,735

B-30

Portfolio	2004	2003	2002
SP Balanced Asset Allocation	318,686	130,242	53,638
SP Conservative Asset Allocation	184,191	93,693	39,691
SP Growth Asset Allocation	242,689	88,014	35,606

B-31

For the years ended December 31, 2004, 2003, and 2002, PI paid the following fees to the subadvisers listed below for providing subadvisory services to the Portfolios:

SUBADVISORY FEES (1)

Portfolio	Subadviser	2004		2003		2002
Conservative Balanced	Prudential Investment Management, Inc.	$	3,441,786	$	7,464,020	$	8,116,268
	Quantitative Management Associates LLC	4,380,454		—		—
Diversified Bond	Prudential Investment Management, Inc.	2,730,875		2,824,978		2,829,548
Diversified Conservative Growth	Pacific Investment Management Co. LLC	151,079		146,264		173,646
	Prudential Investment Management, Inc.	140,019		132,111		145,526
	RS Investment Management, L.P.	43,964		42,733		4,819
	Jennison Associates LLC	155,306		145,219		163,514
	Franklin Advisers, Inc.	—		—		39,303
	Earnest Partners LLC	34,126		33,512		38,435
Equity	Jennison Associates LLC	4,577,009		4,045,303		4,457,233
	GE Asset Management, Inc.	1,528,744		1,390,254		1,545,328
	Salomon Brothers Asset Management Inc	1,917,227		1,771,026		1,750,817
Flexible Managed	Prudential Investment Management, Inc.	3,660,073		10,039,015		10,610,462
	Quantitative Management Associates LLC	7,443,239		—		—
Global	Jennison Associates LLC	2,458,057		2,136,627		2,501,472
Government Income	Prudential Investment Management, Inc.	865,125		991,493		868,130
High Yield Bond	Prudential Investment Management, Inc.	4,041,878		3,547,704		2,534,725
Jennison	Jennison Associates LLC	4,353,345		3,639,046		4,090,625
Jennison 20/20 Focus	Jennison Associates LLC	440,367		253,816		257,152
Money Market	Prudential Investment Management, Inc.	1,841,924		2,382,615		2,542,355
Natural Resources	Jennison Associates LLC	1,223,288		914,365		828,923
Small Capitalization Stock	Prudential Investment Management, Inc.	—		1,325,300		1,439,701
	Quantitative Management Associates LLC	1,715,300		—		—
Stock Index	Prudential Investment Management, Inc.	—		4,441,837		4,961,302
	Quantitative Management Associates LLC	5,152,343		—		—
Value	Jennison Associates LLC	2,983,862		2,556,411		1,654,975
	Victory Capital Management, Inc.	—		—		669,664
	Deutsche Asset Management, Inc.	—		—		690,382
Zero Coupon Bond 2005	Prudential Investment Management, Inc.	124,098		132,688		121,836
SP AIM Core Equity	A I M Capital Management, Inc.	145,159		95,454		69,509
SP AllianceBernstein Large Cap Growth	Alliance Capital Management L.P.	566,070		544,744		286,195
SP Davis Value	Davis Advisors	1,300,819		1,030,457		579,951
SP Goldman Sachs Small Cap Value	Fidelity Management & Research Co.	74,852		827,818		425,731
	Goldman Sachs Asset Management, L.P.	1,469,786		—		—
SP Large Cap Value	Fidelity Management & Research Co.	19,163		255,662		165,096
	J.P. Morgan Investment Management Inc.	529,879		—		—
	Hotchkis and Wiley Capital Management LLC	535,245		—		—
SP LSV International Value	Deutsche Asset Management Investment Services Limited	833,671		397,769		203,727
	LSV Asset Management	115,513		—		—
SP Mid Cap Growth	Massachusetts Financial Services Co.	—		—		62,163
	Calamos Advisors LLC	344,231		149,865		3,537
SP PIMCO High Yield	Pacific Investment Management Co. LLC	682,649		406,573		197,676
SP PIMCO Total Return	Pacific Investment Management Co. LLC	2,389,216		1,670,344		736,232
SP Prudential U.S. Emerging Growth	Jennison Associates LLC	407,872		287,541		123,788
SP Small Cap Growth	INVESCO Institutional (N.A.)	72,956		113,248		58,484
	State Street Research and Management Company	494,398		—		—
SP Strategic Partners Focused Growth	Alliance Capital Management L.P.	130,677		71,802		38,392
	Jennison Associates LLC	72,085		39,120		20,909

B-32

Portfolio	Subadviser	2004	2003	2002
SP William Blair International Growth	Jennison Associates LLC	502,018	651,170	306,572
	William Blair & Company LLC	519,150	—	—

(1) Each SP Asset Allocation Portfolio invests in shares of other Portfolios only. As a result, no subadvisory fees are directly paid by PI for these Portfolios

Fee Waivers/Subsidies

PI may from time to time waive all or a portion of its management fee and subsidize all or a portion of its management fee and subsidize all or a portion of the operating expenses of the Portfolios. Fee waivers and subsidies will increase a Portfolio’s return. In addition, the only expense charged to the Asset Allocation Portfolios is a management fee. All other expenses attributable to these Portfolios are borne by PI.

II. Portfolio Managers

The following tables set forth certain additional information with respect to the portfolio managers for each of the Fund’s Portfolios. Unless noted otherwise, all information is provided as of December 31, 2004.

A. Other Accounts Managed by Portfolio Managers . The table below identifies, for each portfolio manager, the number of accounts managed and the total assets in such accounts, within each of the following categories: registered investment companies, other pooled investment vehicles, and other accounts. For each category, the number of accounts and total assets in the accounts whose fees are based on performance is indicated in italics typeface.

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Conservative Balanced	PIM PIM Fixed Income Kay T. Wilcox	3 Registered Mutual Funds with $513,357,000 in total assets under management.	11 Unregistered Pooled Investment Vehicle with $1,116,243,000 in assets under management.	21 Other Accounts with $3,366,423,300 in total assets under management.
	Malcolm Dalrymple	4 Registered Mutual Funds with $750,157,000 in total assets under management.	10 Unregistered Pooled Investment Vehicle with $688,017,440 in assets under management.	8 Other Accounts with $1,458,513,000 in total assets under management.
	QMA Equity Segment Margaret Stumpp	5 Registered Mutual Funds with $4,610,868,129 in total assets under management.	10 Unregistered Pooled Investment Vehicle with $1,667,304,139 in assets under management.	10 Other Accounts with $2,985,573,422 in total assets under management.
	John Moschberger	2 Registered Mutual Funds with $3,859,130,841 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $13,027,435 in assets under management.	4 Other Accounts with $5,731,794,621 in total assets under management.
	Michael Lenarcic	0 Registered Mutual Funds with $0 in total assets under management.	21 Unregistered Pooled Investment Vehicle with $1,233,078,070 in assets under management.	0 Other Accounts with $0 in total assets under management.
	James Scott	4 Registered Mutual Funds with	4 Unregistered Pooled Investment Vehicle	3 Other Accounts with

B-33

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		$1,836,436,565 in total assets under management.	with $494,917,627 in assets under management.	$912,469,610 in total assets under management.
Diversified Bond	PIM Steven Kellner	2 Registered Mutual Funds with $430,904,000 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $35,952,000 in assets under management.	12 Other Accounts with $2,345,561,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	2 Other Accounts with $652,874,000 in total assets under management.
	Robert Tipp	17 Registered Mutual Funds with $5,010,770,000 in total assets under management.	17 Unregistered Pooled Investment Vehicle with $37,362,660,900 in assets under management.	28 Other Accounts with $16,307,722,270 in total assets under management.
	David Bessey	8 Registered Mutual Funds with $3,815,607,000 in total assets under management.	21 Unregistered Pooled Investment Vehicle with $7,176,792,000 in assets under management.	15 Other Accounts with $8,270,743,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $131,294,000 in assets under management.	3 Other Accounts with $100,725,000 in total assets under management.
Diversified Conservative Growth	Earnest Small/Mid-Cap Value Equity Segment Paul E. Viera	4 Registered Mutual Funds with $1,003,000,000 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $6,400,000 in assets under management.	168 Other Accounts with $10,400,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $2,200,000 in assets under management.	7 Other Accounts with $488,200,000 in total assets under management.
	PIMCO Core Fixed Income Segment Chris Dialynas (PIMCO)	10 Registered Mutual Funds with $2,514,600,000 in total assets under management.	14 Unregistered Pooled Investment Vehicle with $5,934,100,000 in assets under management.	95 Other Accounts with $38,588,690,000 in total assets under management.

B-34

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	12 Other Accounts with $2,634,400,000 in total assets under management.
	PIM High Yield Bond Segment PIM Fixed Income Group High Yield Team lead by Paul Appleby	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728 in assets under management.	8 Other Accounts with $7,528,033,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
	David Besey	8 Registered Mutual Funds with $2,413,342,000 in total assets under management.	21 Unregistered Pooled Investment Vehicles with $7,176,792,000 in assets under management.	15 Other Accounts with $8,270,743,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	3 Other Accounts with $100,725,000 in total assets under management.
	Richard Burns	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728,000 in assets under management.	8 Other Accounts with $8,176,272,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $179,386,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
	Stephen Haeckel	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728,000 in assets under management.	8 Other Accounts with $7,530,892,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.

B-35

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
	Michael J. Collins	10 Registered Mutual Funds with $2,329,477,000 in total assets under management.	8 Unregistered Pooled Investment Vehicles with $1,049,487,000 in assets under management.	9 Other Accounts with $3,365,759,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
	Jennison Large Cap Growth Equity Segment Spiros “Sig” Segalas	13 Registered Mutual Funds with $14,378,619,883 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $222,629,452 in assets under management.	9 Other Accounts with $2,580,147,144 in total assets under management.
	Michael A. Del Balso	14 Registered Mutual Funds with $8,815,494,636 in total assets under management.	5 Unregistered Pooled Investment Vehicle with $1,287,496,329 in assets under management.	15 Other Accounts with $1,308,957,600 in total assets under management.
	Kathleen A. McCarragher	14 Registered Mutual Funds with $7,675,195,683 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $253,264,620 in assets under management.	37 Other Accounts with $3,627,689,050 in total assets under management.
	Jennison Large Cap Value Equity Segment David A. Kiefer	11 Registered Mutual Funds with $11,764,809,388 in total assets under management.	6 Unregistered Pooled Investment Vehicle with $1,027,188,779 in assets under management.	1 Other Accounts with $23,515,491 in total assets under management.
	Avi Z. Berg	5 Registered Mutual Funds with $2,699,690,069 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $36,719,034 in assets under management.	1 Other Accounts with $23,865,590 in total assets under management.
	RS Investment Management, L.P. Small/Mid-Cap Growth Equity Segment Bill Wolfenden	9 Registered Mutual Funds with $749,319,282 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	7 Other Accounts with $65,168,719 in total assets under management.
Equity	Jennison Blair A. Boyer	1 Registered Mutual Funds with $121,686,451 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	10 Other Accounts with $1,276,721,697 in total assets under management.
	David A. Kiefer	11 Registered Mutual Funds with	6 Unregistered Pooled Investment Vehicle	1 Other Accounts with

B-36

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		$9,798,044,933 in total assets under management.	with $1,027,188,779 in assets under management.	$23,515,491 in total assets under management.
	Spiros Segalas	14 Registered Mutual Funds with $14,405,183,631 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $222,147,144 in assets under management.	9 Other Accounts with $2,580,147,144 in total assets under management.
	GEAM Richard Sanderson	5 Registered Mutual Funds with $1,225,500,000 in assets under management*	9 Unregistered Pooled Investment Vehicle with $171,600,000 in assets under management*	23 Other Accounts with $4,847,000,000 in assets under management*.
		*Amounts include only the portions of each account’s total assets for which Mr. Sanderson is primarily responsible for the day-to-day management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	2 Other Accounts with $22,200,000 in total assets under management.
	Salomon Michael Kagan	5 Registered Mutual Funds with $3,830,000,000 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $520,000,000 in assets under management.	3 Other Accounts with $50,000,000 in total assets under management.
	Kevin Caliendo	6 Registered Mutual Funds with $5,440,000,000 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $520,000,000 in assets under management.	3 Other Accounts with $50,000,000 in total assets under management.
Flexible Managed	PIM PIM Fixed Income Kay T. Wilcox	3 Registered Mutual Funds with $628,571,000 in total assets under management.	11 Unregistered Pooled Investment Vehicle with $1,116,243,000 in assets under management.	21 Other Accounts with $3,366,423,300 in total assets under management.
	Malcolm Dalrymple	4 Registered Mutual Funds with $809,134,000 in total assets under management.	10 Unregistered Pooled Investment Vehicle with $688,017,440 in assets under management.	8 Other Accounts with $1,485,513,000 in total assets under management.
	PIM PIM Equity Segment	5 Registered Mutual Funds with	10 Unregistered Pooled Investment Vehicle	10 Other Accounts with

B-37

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
	Margaret Stumpp	$4,610,868,129 in total assets under management.	with $1,667,304,139 in assets under management.	$2,985,573,422 in total assets under management.
	John Moschberger	2 Registered Mutual Funds with $3,859,130,841 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $13,027,435 in assets under management.	4 Other Accounts with $5,731,794,621 in total assets under management.
	Michael Lenarcic	0 Registered Mutual Funds with $0 in total assets under management.	21 Unregistered Pooled Investment Vehicle with $1,233,078,070 in assets under management.	0 Other Accounts with $0 in total assets under management.
	James Scott	4 Registered Mutual Funds with $1,836,436,565 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $494,917,627 in assets under management.	3 Other Accounts with $912,469,610 in total assets under management.
	QMA Margaret Stumpp	5 Registered Mutual Funds with $4,610,868,129 in total assets under management.	10 Unregistered Pooled Investment Vehicle with $1,667,304,139 in assets under management.	10 Other Accounts with $2,985,573,422 in total assets under management.
	James Scott	4 Registered Mutual Funds with $1,836,436,565 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $494,917,627 in assets under management.	3 Other Accounts with $912,469,610 in total assets under management.

Global	Jennison Daniel J. Duane	1 Registered Mutual Funds with $437,992,739 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $428,086,940 in assets under management.	2 Other Accounts with $29,604,227 in total assets under management.
	Michelle I. Picker	1 Registered Mutual Funds with $437,992,739 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $428,086,940 in assets under management.	2 Other Accounts with $29,604,227 in total assets under management.
Government Income	PIM Robert Tipp	17 Registered Mutual Funds with $5,898,037,000 in total assets under management.	17 Unregistered Pooled Investment Vehicle with $37,362,660,900 in assets under management.	28 Other Accounts with $16,307,722,270 in total assets under management.
	Richard Piccirillo	9 Registered Mutual Funds with $3,171,910,000 in total assets under	15 Unregistered Pooled Investment Vehicle with $1,203,194,640 in assets under	31 Other Accounts with $3,918,009,640 in total assets

B-38

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		management.	management.	under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Accounts with $7,442,000 in total assets under management.
High Yield Bond	PIM PIM Fixed Income High Yield Team Paul Appleby	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728 in assets under management.	8 Other Accounts with $7,528,033,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
	David Bessey	8 Registered Mutual Funds with $1,654,766,000 in total assets under management.	21 Unregistered Pooled Investment Vehicles with $7,176,792,000 in assets under management.	15 Other Accounts with $8,270,743,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	3 Other Accounts with $100,725,000 in total assets under management.
	Richard Burns	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728,000 in assets under management.	8 Other Accounts with $8,176,272,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $179,386,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
	Stephen Haeckel	5 Registered Mutual Funds with $2,113,735,000 in total assets under management.	15 Unregistered Pooled Investment Vehicles with $2,830,728,000 in assets under management.	8 Other Accounts with $7,530,892,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	3 Unregistered Pooled Investment Vehicles with $131,294,000 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.

B-39

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
	Michael J. Collins	10 Registered Mutual Funds with $2,329,477,000 in total assets under management.	8 Unregistered Pooled Investment Vehicles with $1,049,487,000 in assets under management.	9 Other Accounts with $3,365,759,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	2 Other Accounts with $43,013,000 in total assets under management.
Jennison	Jennison Spiros “Sig” Segalas	13 Registered Mutual Funds with $12,274,403,222 in total assets under management.	2 Unregistered Pooled Investment Vehicles with $222,629,452 in assets under management.	9 Other Accounts with $2,580,147,144 in total assets under management.
	Michael A. Del Balso	14 Registered Mutual Funds with $6,711,277,975 in total assets under management.	5 Unregistered Pooled Investment Vehicles with $1,287,496,329 in assets under management.	15 Other Accounts with $1,308,957,600 in total assets under management.
	Kathleen A. McCarragher	14 Registered Mutual Funds with $5,570,979,022 in total assets under management.	4 Unregistered Pooled Investment Vehicles with $253,264,620 in assets under management.	37 Other Accounts with $3,627,689,050 in total assets under management.
Jennison 20/20 Focus	Jennison Spiros “Sig” Segalas	13 Registered Mutual Funds with $14,318,428,743 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $222,629,452 in assets under management.	9 Other Accounts with $2,580,147,144 in total assets under management.
	David A. Kiefer	11 Registered Mutual Funds with $11,696,096,363 in total assets under management.	6 Unregistered Pooled Investment Vehicle with $1,027,188,779 in assets under management.	1 Other Accounts with $23,515,491 in total assets under management.
Money Market	N/A
Natural Resources	Jennison David A. Kiefer	11 Registered Mutual Funds with $11,097,157,841 in total assets under management.	6 Unregistered Pooled Investment Vehicle with $1,027,188,779 in assets under management.	1 Other Accounts with $23,515,491 in total assets under management.
	Michael L. Del Balso	14 Registered Mutual Funds with $8,219,448,216 in total assets under management.	5 Unregistered Pooled Investment Vehicle with $1,287,496,329 in assets under management.	15 Other Accounts with $1,308,957,600 in total assets under management.
Small Capitalization Stock	QMA	0 Registered Mutual	5 Unregistered Pooled	6 Other

B-40

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
	Wai Chiang	Funds with $0 in total assets under management.	Investment Vehicle with $6,448,830,563 in assets under management.	Accounts with $4,907,742,338 in total assets under management.
Stock Index	QMA John Moeschberger	2 Registered Mutual Funds with $3,859,130,841 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $13,027,435 in assets under management.	4 Other Accounts with $5,731,794,621 in total assets under management.
Value	Jennison David A. Kiefer	11 Registered Mutual Funds with $10,238,762,558 in total assets under management.	6 Unregistered Pooled Investment Vehicle with $1,027,188,779 in assets under management.	1 Other Accounts with $23,515,491 in total assets under management.
	Avi Z. Berg	5 Registered Mutual Funds with $1,124,915,324 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $36,719,034 in assets under management.	1 Other Accounts with $23,865,590 in total assets under management.
Zero Coupon Bond 2005	PIM Robert Tipp	17 Registered Mutual Funds with $6,232,339,000 in total assets under management.	17 Unregistered Pooled Investment Vehicle with $37,362,660,900 in assets under management.	28 Other Accounts with $16,307,722,270 in total assets under management.
	Richard Piccirillo	9 Registered Mutual Funds with $3,322,139,000 in total assets under management.	15 Unregistered Pooled Investment Vehicle with $1,203,194,640 in assets under management.	31 Other Accounts with $3,918,009,640 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Accounts with $7,442,000 in total assets under management.
SP AIM Core Equity	AIM AIM Team Approach Ronald S. Sloan primary responibility	9 Registered Mutual Funds with $17,631,505,549 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $55,285,105 in assets under management.	8796 Other Accounts with $1,925,777,183 in total assets under management.
SP AllianceBernstein Large Cap Growth	AllianceBernstein Syed Hasnain	3 Registered Mutual Funds with $369,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	16 Other Accounts with $1,291,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in	0 Unregistered Pooled Investment Vehicle	2 Other Accounts with

B-41

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		total assets under management.	with $0 in assets under management.	$144,000,000 in total assets under management.
SP Davis Value	Davis Advisors Christopher Davis	23 Registered Mutual Funds with $42,000,000,000 in total assets under management.	6 Unregistered Pooled Investment Vehicle with $717,000,000 in assets under management.	30,000 Other Accounts with $8,600,000,000 in total assets under management.
	Kenneth Feinberg	21 Registered Mutual Funds with $42,000,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	30,000 Other Accounts with $8,600,000,000 in total assets under management.
SP Goldman Sachs Small Cap Value	Goldman Sachs Team Chip Otness	6 Registered Mutual Funds with $3,000,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	26 Other Accounts with $622,000,000 in total assets under management.
	Kelly Flynn	6 Registered Mutual Funds with $3,000,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $[ ] in assets under management.	26 Other Accounts with $622,000,000 in total assets under management.
	Lisa Parisi	19 Registered Mutual Funds with $9,200,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $[ ] in assets under management.	311 Other Accounts with $4,700,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Account with $113,600,000 in total assets under management.
	Dolores Bamford	19 Registered Mutual Funds with $9,200,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	311 Other Accounts with $4,700,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Account with $113,600,000 in total assets under management.
	David Berdon	19 Registered Mutual Funds with $9,200,000,000 in total assets under	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	311 Other Accounts with $4,700,000,000 in total assets

B-42

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		management.		under management.
		0 Registered Mutual Funds with $0 in total assets under management	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Account with $113,600,000 in total assets under management.
	Scott Carroll	19 Registered Mutual Funds with $9,200,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	311 Other Accounts with $4,700,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	1 Other Account with $113,600,000 in total assets under management.
SP Large Cap Value	Hotchkis & Wiley Sheldon Lieberman	15 Registered Mutual Funds with $9,844,851,256 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $314,916,061 in assets under management.	95 Other Accounts with $9,016,730,768 in total assets under management.
		1 Registered Mutual Funds with $1,675,168,025 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $1,024,657,851 in total assets under management.
	George Davis	15 Registered Mutual Funds with $9,844,851,256 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $314,916,061 in assets under management.	95 Other Accounts with $9,016,730,768 in total assets under management.
		1 Registered Mutual Funds with $1,675,168,025 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $1,024,657,851 in total assets under management.
	Joe Huber	15 Registered Mutual Funds with $9,844,851,256 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $314,916,061 in assets under management.	95 Other Accounts with $9,016,730,768 in total assets under management.
		1 Registered Mutual Funds with $1,675,168,025 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $1,024,657,851 in total assets under management.

B-43

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
	Patricia McKenna	15 Registered Mutual Funds with $9,844,851,256 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $314,916,061 in assets under management.	95 Other Accounts with $9,016,730,768 in total assets under management.
		1 Registered Mutual Funds with $1,675,168,025 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $1,024,657,851 in total assets under management.
	Stan Majcher	15 Registered Mutual Funds with $9,844,851,256 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $314,916,061 in assets under management.	95 Other Accounts with $9,016,730,768 in total assets under management.
		1 Registered Mutual Funds with $1,675,168,025 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $1,024,657,851 in total assets under management.
	J.P.Morgan Terance Chen	8 Registered Mutual Funds with $1,500,000,000 in total assets under management.	8 Unregistered Pooled Investment Vehicle with $2,4000,000,000 in assets under management.	15 Other Accounts with $4,700,000,000 in total assets under management.
	Cristian Posada	0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	0 Other Accounts with $0 in total assets under management.
	Raffaele Zingone	3 Registered Mutual Funds with $224,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	12 Other Accounts with $5,600,000,000 in total assets under management.
SP LSV International Value	LSV Josef Lakonishok	18 Registered Mutual Funds with $3,830,977,016 in total assets under management.	18 Unregistered Pooled Investment Vehicle with $1,770,432,958 in assets under management.	391 Other Accounts with $29,319,344,883 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	13 Unregistered Pooled Investment Vehicle with $1,700,000,000 in assets under management.	0 Other Accounts with $0 in total assets under management.
	Robert Vishny	18 Registered Mutual Funds with $3,830,977,016 in	18 Unregistered Pooled Investment Vehicle with $1,770,432,958 in	391 Other Accounts with $29,319,344,883

B-44

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		total assets under management.	assets under management.	in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	13 Unregistered Pooled Investment Vehicle with $1,700,000,000 in assets under management.	0 Other Accounts with $0 in total assets under management.
	Menno Vermeulen	18 Registered Mutual Funds with $3,830,977,016 in total assets under management.	18 Unregistered Pooled Investment Vehicle with $1,770,432,958 in assets under management.	391 Other Accounts with $29,319,344,883 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	13 Unregistered Pooled Investment Vehicle with $1,700,000,000 in assets under management.	0 Other Accounts with $0 in total assets under management.
SP Mid Cap Growth	Calamos Advisors LLC John P. Calamos	17 Registered Mutual Funds with $27,528,239,460 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $142,261,190 in assets under management.	25,120 Other Accounts with $10,101,227,665 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $74,325,150 in assets under management.	1 Other Accounts with $9,353,119 in total assets under management.
	Nick P. Calamos	17 Registered Mutual Funds with $27,528,239,460 in total assets under management.	3 Unregistered Pooled Investment Vehicle with $142,261,190 in assets under management.	25,120 Other Accounts with $10,101,227,665 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $74,325,150 in assets under management.	1 Other Accounts with $9,353,119 in total assets under management.
	John P. Calamos Jr.	7 Registered Mutual Funds with $14,803,449,547 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $74,325,150 in assets under management.	25,120 Other Accounts with $10,101,227,665 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $74,325,150 in assets under management.	1 Other Accounts with $9,353,119 in total assets under

B-45

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
				management.
SP PIMCO High Yield	PIMCO Raymond G. Kennedy (PIMCO)	8 Registered Mutual Funds with $14,136,600,000 in total assets under management.	7 Unregistered Pooled Investment Vehicle with $3,909,960,000 in assets under management.	20 Other Accounts with $3,544,000,000 in total assets under management.
SP PIMCO Total Return	PIMCO Chris Dialynas	10 Registered Mutual Funds with $1,477,200,000 in total assets under management.	14 Unregistered Pooled Investment Vehicle with $5,934,100 in assets under management.	95 Other Accounts with $38,588,690,000 in total assets under management.
		0 Registered Mutual Funds with $0 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	12 Other Accounts with $2,634,400,000 in total assets under management.
SP Prudential U.S. Emerging Growth	Jennison Susan Hirsch	3 Registered Mutual Funds with $792,250,413, in total assets under management.	1 Unregistered Pooled Investment Vehicle with $27,177,007 in assets under management.	0 Other Accounts with $0 in total assets under management.
SP Small Cap Growth	Eagle	6 Registered Mutual Funds with $697,652,474 in total assets under management.	1 Unregistered Pooled Investment Vehicle with $31,930,436 under management.	1050 Other Accounts with $880,754,330 in total assets under management.
	Neuberger Berman Michael Fasciano	3 Registered Mutual Funds with $523,000,000 in total assets under management.	0 Unregistered Pooled Investment Vehicle with $0 in assets under management.	6 Other Accounts with $949,000,000 in total assets under management.
SP Strategic Partners Focused Growth	Jennison Spiros “Sig” Segalas	13 Registered Mutual Funds with $14,372,255,712 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $222,629,452 in assets under management.	9 Other Accounts with $2,580,147,144 in total assets under management.
	Kathleen A. McCarragher	14 Registered Mutual Funds with $7,668,831,511 in total assets under management.	4 Unregistered Pooled Investment Vehicle with $253,264,620 in assets under management.	37 Other Accounts with $3,627,689,050 in total assets under management.
	AllianceBernstein Thomas G. Kamp	6 Registered Mutual Funds with $7,645,000,000 in total assets under management.	2 Unregistered Pooled Investment Vehicle with $342,000,000 in assets under management.	13 Other Accounts with $1,820,000,000 in total assets under management.
		0 Registered Mutual Funds with $0 in	0 Unregistered Pooled Investment Vehicle	1 Other Accounts with

B-46

Portfolio	Portfolio Manager(s)	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
		total assets under management.	with $0 in assets under management.	$286,000,000 in total assets under management.
SP William Blair International Growth	William Blair William Grieg (W. George Greig in Bio)	9 Registered Mutual Funds with $6,535,000,000 in total assets under management.	7 Unregistered Pooled Investment Vehicle with $826,500,000 in assets under management.	35 Other Accounts with $2,737,400,000 in total assets under management.

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

Conservative Balanced

PIM

Compensation

PIM Prudential Fixed Income seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Prudential Fixed Income’s investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial Inc., providing investment professionals with an ownership stake. Investment professionals are all covered by the same general compensation structure although they manage multiple accounts. All investment compensation is paid by the investment adviser and not from any assets of the investment company or other managed accounts.

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

Investment professional’s incentive compensation payments, including their annual bonus and long term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on three factors:

• investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus,

• Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and

• Market-based data indicating trends and levels of overall compensation in the asset management industry in a given year. Prudential Fixed Income regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness.

Each investment professional’s incentive compensation payment including the annual bonus and long-term incentive grant from the incentive pool is primarily determined by how significantly he/she contributes to delivering investment performance to clients consistent with portfolio objectives, guidelines, and risk parameters, as well as the individual’s qualitative contributions to the organization.

Potential Conflicts

B-47

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

PIM is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers and registered broker/dealers. PIM portfolio managers are often responsible for managing one or more Funds, in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles, such as commingled trust funds and unregistered hedge funds. These affiliations and portfolio manager responsibilities may cause potential and actual conflicts of interest. PIM aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund.

Management of multiple accounts and funds side-by-side may raise potential conflicts of interest relating to the allocation of investment opportunities, the aggregation and allocation of trades, and cross trading. PIM has developed policies and procedures designed to address these potential conflicts of interest.

The Fund may be prohibited from engaging in transactions with its affiliates even when such transactions may be beneficial for the Fund. Certain affiliated transactions are permitted in accordance with procedures adopted by the Fund and reviewed by the independent directors of the Fund.

PIM may be limited by law or regulation as to how much, if any, of a particular security it may purchase or sell on behalf of the Fund, and as to the timing of such purchase or sale. PIM may come into possession of material, non-public information with respect to a particular issuer and as a result be unable to execute purchase or sale transactions in securities of such issuer for the Fund. This is particularly true for fixed income investments because PIM has a bank loan unit that generally invests in private loans that often require the issuer to provide material non-public information. PIM is able to avoid certain other potential conflicts due to the possession of material, non-public information by maintaining an “Information Barrier” to prevent the transfer of this information between units of PIM as well as between affiliates and PIM. Additionally, in an effort to avoid potential conflicts of interest, PIM Fixed Income has procedures in place to carefully consider whether or not to accept material non-public information with respect to certain issuers, where appropriate.

Regulation may also prevent the Fund from participating in transactions that could be viewed as a joint transaction of the adviser. PIM would not be able to purchase for the Fund securities newly offered by an issuer if the proceeds from such new offering are to be used by the issuer to pay off a private loan that an affiliate of PIM may have made to the issuer.

Certain affiliates of PIM develop and publish credit research that is independent from the research developed within PIM. PIM may hold different opinions on the investment merits of a given security or industry such that PIM may be purchasing or holding a security for the Fund and an affiliated entity may be selling or recommending a sale of the same security. Conversely, PIM may be selling a security for the Fund and an affiliated entity may be purchasing or recommending a buy of the same security. In addition, PIM’s affiliated brokers or investment advisers may be executing transactions in the market in the same securities as the Fund at the same time.

With respect to the management the Fund, PIM may cause securities transactions to be executed concurrently with authorizations to purchase or sell the same securities for other accounts managed by PIM, including proprietary accounts or accounts of affiliates. In these instances, the executions of purchases or sales, where possible, are allocated equitably among the various accounts (including the Fund).

PIM may buy or sell, or may direct or recommend that another person buy or sell, securities of the same kind or class that are purchased or sold for the Fund, at a price which may or may not differ from the price of the securities purchased or sold for the Fund. In addition, PIM may, at any time, execute trades of securities of the same kind or class in one direction for an account and trade in the opposite direction or not trade for any other account, including the Fund, due to differences in investment strategy or client direction.

B-48

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		portfolio being managed, the relationship with the client, the origination and service requirements and the asset class involved. Fees may also differ based on account type (e.g., commingled accounts, trust accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for the adviser than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to PIM of favoring accounts that pay a higher fee or generate more income for PIM. To address this conflict of interest, PIM has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, portfolio managers may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with PIM’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). PIM portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, PIM has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its respective investment objectives, investment strategies and restrictions, as well as with PIM’s fiduciary obligations. Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

		QMA Compensation QMA Quantitative Management Associates (QMA) seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professional, which includes portfolio managers and research analysts, and to align he interests of its investment professionals with that of its clients and overall firm results. Investment professionals are all covered by the same general compensation structure even though they manage other accounts. All investment compensation is paid by the investment adviser and not by any assets of the investment company or other managed accounts Investment professionals are compensated through a combination of base salary, a performance-based

B-49

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial, Inc., providing investment professionals with an ownership stake.

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

Investment professional’s incentive compensation payments, including their annual bonus and long-term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on two primary factors: 1) investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus, and 2) business results as measured by QMA’s pre-tax net income, based on planned and reasonably anticipated expenses. QMA regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness.

Potential Conflicts

QMA is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers and registered broker/dealers. QMA portfolio managers are often responsible for managing one or more Funds in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles. These affiliations and portfolio management responsibilities may cause potential and actual conflicts of interest. QMA aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund.

Management of multiple accounts and funds side-by-side may raise potential conflicts of interest relating to the allocation of investment opportunities, the aggregation and allocation of trades and cross trading. QMA has developed policies and procedures designed to address these potential conflicts of interest.

The Fund may be prohibited from engaging in transactions with its affiliates even when such transaction may be beneficial for the Fund. Certain affiliated transactions are permitted in accordance with procedures adopted by the Fund and reviewed by the independent directors of the Fund.

There may be restrictions imposed by law, regulation or contract regarding how much, if any, of a particular security QMA may purchase or sell on behalf of the Fund, and as to the timing of such purchase or sale. QMA may come into possession of material, non-public information with respect to a particular issuer and as a result be unable to execute purchase or sale transactions in securities of such issuer for the Fund. QMA is able to avoid a variety of potential conflicts due to the possession of material, non-public information by maintaining an “Information Barrier” to prevent the transfer of information between affiliates.

Certain affiliates of QMA develop and publish credit research that is independent from the research developed within QMA. QMA may hold different opinions on the investment merits of a given security or industry such that QMA may be purchasing or holding a security for the Fund and an affiliated entity may be selling or recommending a sale of the same security. Conversely, QMA may be selling a security for the Fund and an affiliated entity may be purchasing or recommending a buy of the same security. In addition, QMA’s affiliated brokers or investment advisers may be executing transactions in the market in the same securities as the Fund at the same time.

With respect to the management of the Fund, QMA may cause securities transactions to be

B-50

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		executed concurrently with authorizations to purchase or sell the same securities for other accounts managed by QMA, including proprietary accounts or accounts of affiliates. In these instances, the executions of purchases or sales, where possible, are allocated equitably among the various accounts (including the Fund). QMA may buy or sell, or may direct or recommend that another person buy or sell, securities of the same kind or class that are purchased or sold for the Fund, at a price which may or may not differ from the price of the securities purchased or sold for the Fund. In addition, QMA may, at any time, execute trades of securities of the same kind or class in one direction for an account and trade in the opposite direction or not trade for any other account, including the Fund, due to differences in investment strategy or client direction. The fees charged to advisory clients by QMA may differ depending upon a number of factors including, but not limited to, the particular strategy, the size of a portfolio being managed, the relationship with the client, the origination and service requirements and the asset class involved. Fees may also differ based on account type (e.g., commingled accounts, trust accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for QMA than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to QMA of favoring accounts that pay a higher fee or generate more income for QMA. To address this conflict of interest, QMA has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, investment personnel may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with QMA’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). QMA portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, QMA has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its investment objectives, investment strategies and restrictions, as well as with QMA’s fiduciary obligations. QMA has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Diversified Bond		PIM Compensation PIM Prudential Fixed Income seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Prudential Fixed Income’s investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial Inc., providing investment professionals with an ownership stake. Investment professionals are all covered by the same general compensation structure although they manage multiple accounts. All

B-51

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

investment compensation is paid by the investment adviser and not from any assets of the investment company or other managed accounts.

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

• Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and

Potential Conflicts

Certain affiliates of PIM develop and publish credit research that is independent from the

B-52

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

research developed within PIM. PIM may hold different opinions on the investment merits of a given security or industry such that PIM may be purchasing or holding a security for the Fund and an affiliated entity may be selling or recommending a sale of the same security. Conversely, PIM may be selling a security for the Fund and an affiliated entity may be purchasing or recommending a buy of the same security. In addition, PIM’s affiliated brokers or investment advisers may be executing transactions in the market in the same securities as the Fund at the same time.

The fees charged to advisory clients by PIM may differ depending upon a number of factors including, but not limited to, the unit providing the advisory services, the particular strategy, the size of a portfolio being managed, the relationship with the client, the origination and service requirements and the asset class involved. Fees may also differ based on account type (e.g., commingled accounts, trust accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for the adviser than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to PIM of favoring accounts that pay a higher fee or generate more income for PIM. To address this conflict of interest, PIM has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts.

Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting.

In addition, portfolio managers may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with PIM’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). PIM portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, PIM has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its respective investment objectives, investment strategies and restrictions, as well as with PIM’s fiduciary obligations.

Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions.

Because of the substantial size of Prudential’s General Account, trading by Prudential’s General

B-53

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Diversified Conservative Growth		Jennison Associates LLC: Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend

B-54

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows. In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

		Earnest Compensation All EARNEST Partners personnel are paid a salary and a discretionary bonus. A portion of the bonus may consist of profit sharing and/or deferred compensation. The Company also matches a portion of employees’ 401(k) contributions, if any. The bonus is a function of client satisfaction with respect to investment results and service. Equity ownership is another component of compensation for the portfolio manager. The Firm is employee-owned. Potential Conflicts No material conflicts of interest exist. All accounts are managed to model portfolios that are approved by the investment committee, and trades are allocated pro-rata to all accounts so that no one account is advantaged over another pursuant to trade allocation policies and procedures.

		PIMCO Portfolio Manager Compensation PIMCO has adopted a “Total Compensation Plan” for its professional level employees, including its portfolio managers, that is designed to pay competitive compensation and reward performance, integrity and teamwork consistent with the firm’s mission statement. The Total Compensation Plan includes a significant incentive component that rewards high performance standards, work ethic and consistent individual and team contributions to the firm. The compensation of portfolio managers consists of a base salary, a bonus, and may include a retention bonus. Portfolio managers who are Managing Directors of PIMCO also receive compensation from PIMCO’s profits. Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO’s deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee’s compensation. PIMCO’s contribution rate increases at a specified compensation level, which is a level that would include portfolio managers. Salary and Bonus. Base salaries are determined by considering an individual portfolio manager’s experience and expertise and may be reviewed for adjustment annually. Portfolio managers are entitled to receive bonuses, which may be significantly more than their base salary, upon attaining certain performance objectives based on predetermined measures of group or department success. These goals are specific to individual portfolio managers and are mutually agreed upon annually by each portfolio

B-55

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

manager and his or her manager. Achievement of these goals is an important, but not exclusive, element of the bonus decision process.

In addition, the following non-exclusive list of qualitative criteria (collectively, the “Bonus Factors”) may be considered when determining the bonus for portfolio managers:

• 3-year, 2-year and 1-year dollar-weighted and account-weighted investment performance as judged against benchmarks and relative to applicable industry peer groups;

• Appropriate risk positioning that is consistent with PIMCO’s investment philosophy and the Investment Committee/CIO approach to the generation of alpha;

• Amount and nature of assets managed by the portfolio manager;

• Consistency of investment performance across portfolios of similar mandate and guidelines (reward low dispersion);

• Generation and contribution of investment ideas in the context of PIMCO’s secular and cyclical forums, portfolio strategy meetings, Investment Committee meetings, and on a day-to-day basis;

• Absence of defaults and price defaults for issues in the portfolios managed by the portfolio manager;

• Contributions to asset retention, gathering and client satisfaction;

• Contributions to mentoring, coaching and/or supervising; and

• Personal growth and skills added.

Final award amounts are determined by the PIMCO Compensation Committee.

Retention Bonuses . Certain portfolio managers may receive a discretionary, fixed amount retention bonus, based upon the Bonus Factors and continued employment with PIMCO. Each portfolio manager who is a Senior Vice President or Executive Vice President of PIMCO receives a variable amount retention bonus, based upon the Bonus Factors and continued employment with PIMCO.

Investment professionals, including portfolio managers, are eligible to participate in a Long Term Cash Bonus Plan (“Cash Bonus Plan”), which provides cash awards that appreciate or depreciate based upon the performance of PIMCO’s parent company, Allianz Global Investors of America L.P. (“AGI”), and PIMCO over a three-year period. The aggregate amount available for distribution to participants is based upon AGI’s profit growth and PIMCO’s profit growth. Participation in the Cash Bonus Plan is based upon the Bonus Factors, and the payment of benefits from the Cash Bonus Plan, is contingent upon continued employment at PIMCO.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing Directors of PIMCO receive compensation from a non-qualified profit sharing plan consisting of a portion of PIMCO’s net profits. Portfolio managers who are Managing Directors receive an amount determined by the Managing Director Compensation Committee, based upon an individual’s overall contribution to the firm and the Bonus Factors. Under his employment agreement, William Gross receives a fixed percentage of the profit sharing plan.

Allianz Transaction Related Compensation. In May 2000, a majority interest in the predecessor holding company of PIMCO was acquired by a subsidiary of Allianz AG (“Allianz”). In connection with the transaction, Mr. Gross received a grant of restricted stock of Allianz, the last of which vests on May 5, 2005.

From time to time, under the PIMCO Class B Unit Purchase Plan, Managing Directors and certain executive management (including Executive Vice Presidents) of PIMCO may become eligible to purchase Class B Units of PIMCO. Upon their purchase, the Class B Units are immediately exchanged for Class A Units of PIMCO Partners, LLC, a California limited liability company that holds a minority interest in PIMCO and is owned by the Managing Directors and certain executive management of PIMCO. The Class A Units of PIMCO Partners, LLC entitle their holders to distributions of a portion of the profits of PIMCO. The PIMCO Compensation Committee determines which Managing Directors and executive management may purchase Class B Units and the number of Class B Units that each may purchase. The Class B Units are purchased pursuant to full recourse notes issued to the holder. The base compensation of each Class B Unit holder is increased in an amount equal to the principal amortization applicable to the notes given by the Managing Director or member of executive management.

B-56

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

Portfolio managers who are Managing Directors also have long-term employment contracts, which guarantee severance payments in the event of involuntary termination of a Managing Director’s employment with PIMCO.

Securities Ownership

As of December 31, 2004 no portfolio manager was the beneficial owner of shares of a Fund that he managed.

Conflicts of Interest

From time to time, potential conflicts of interest may arise between a portfolio manager’s management of the investments of a Fund, on the one hand, and the management of other accounts, on the other. The other accounts might have similar investment objectives or strategies as the Funds, track the same index a Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Funds. The other accounts might also have different investment objectives or strategies than the Funds.

Knowledge and Timing of Fund Trades. A potential conflict of interest may arise as a result of the portfolio manager’s day-to-day management of a Fund. Because of their positions with the Funds, the portfolio managers know the size, timing and possible market impact of a Fund’s trades. It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the possible detriment of a Fund.

Investment Opportunities. A potential conflict of interest may arise as result of the portfolio manager’s management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for both a Fund and other accounts managed by the portfolio manager, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by a Fund and another account. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.

Under PIMCO’s allocation procedures, investment opportunities are allocated among various investment strategies based on individual account investment guidelines and PIMCO’s investment outlook. PIMCO has also adopted additional procedures to complement the general trade allocation policy that are designed to address potential conflicts of interest due to the side-by-side management of the Funds and certain pooled investment vehicles, including investment opportunity allocation issues.

Performance Fees. A portfolio manager may advise certain accounts with respect to which the advisory fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the portfolio manager in that the portfolio manager may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to a Fund. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities between such other accounts and the Funds on a fair and equitable basis over time.

RS Investment Management, L.P.

Compensation

RS Investment Management, L.P. is an employee-owned investment firm. The firm has two separate investment advisory operating divisions, each with separate compensation and profit sharing structures. Each of the firm’s portfolio managers is part of either the Growth Group or the Value Group. William J. Wolfenden III is a member of the Growth Group (the “Group”).

In establishing salaries and bonuses, RS Investment Management, L.P. considers information regarding industry compensation levels, which is prepared by a leading consulting firm. RS Investment

B-57

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

Management, L.P. sets salary and bonus levels by reference to other investment firms investing in similar categories.

In consultation with G. Randall Hecht and Terry R. Otton, Co-Chief Executive Officers of RS Investment Management, L.P., the leaders of the Group (James L. Callinan, John L. Wallace, and William J. Wolfenden III), determined all salaries and bonuses for the Group for the fiscal year ended December 31, 2004. Salaries were based on industry standards, as described above.

Bonuses within the Group were based on a number of factors, including (1) pre-tax investment performance for each account managed by a portfolio manager against a relevant peer group over one— and three-year periods, with an emphasis on the most recent one-year period, and (2) experience.

Assets under management did not directly affect any individual’s salary or bonus, although the amount of the Group’s assets under management affected the fee revenue attributable to the Group, which in turn affected the maximum amount of money available for the Group’s aggregate salaries and bonuses.

In addition, the Group’s portfolio managers participated in the profits of the Group based on their profit sharing percentages. The Group’s leaders, in consultation with Mr. Hecht and Mr. Otton, set these percentages at the beginning of each year based on a number of factors, including tenure, assets under management, long-term investment performance (compared to appropriate benchmarks), and overall contribution to the Group’s investment process.

Some of the Group’s portfolio managers also have an equity interest in RS Investment Management, L.P. and so participate in overall firm profits in addition to Group profits.

Conflicts of Interest

Whenever a portfolio manager manages multiple accounts, potential conflicts of interest exist, including potential conflicts between the investment strategy of each account and the investment strategy of the other accounts and potential conflicts in the allocation of investment opportunities among the accounts. In addition, in certain instances, a portfolio manager may take conflicting positions in a particular security. For example, a portfolio manager may sell short a security for one account that another account holds long, or may take a long position in a security for one account that the portfolio manager has sold short for another account. RS Investment Management, L.P. seeks to identify potential conflicts of interest resulting from a portfolio manager’s management of multiple accounts, and has adopted policies and procedures, including a Code of Ethics, designed to address such conflicts.

RS Investment Management, L.P. and each of the portfolio managers attempt to resolve any conflicts in a manner that is generally fair over time to all of its clients. RS Investment Management, L.P. may give advice and take action with respect to any of its clients that may differ from advice given or the timing or nature of action taken with respect to any particular account so long as it is RS Investment’s policy, to the extent practicable, to allocate investment opportunities over time on a fair and equitable basis relative to other accounts. It is RS Investment Management, L.P.’ policy that when the amount of securities of a particular issuer available to RS Investment Management, L.P.’ client accounts in an initial public offering is insufficient to meet the requirements of each account for which a portfolio manager has determined that the purchase of such securities is appropriate, RS Investment generally will allocate those securities among those accounts based on the size of each account as of the close of business on the preceding day. It is also RS Investment Management, L.P.’ policy that it may aggregate sale and purchase orders of securities for accounts with similar orders being made simultaneously for other clients if, in RS Investment’s reasonable judgment, such aggregation is reasonably likely to result generally in lower per-share brokerage commission costs. In many instances, the purchase or sale of securities for accounts will be effected simultaneously with the purchase or sale of like securities for other accounts. Such transactions may be made at slightly different prices, due to the volume of securities purchased or sold. In such event, each client may be charged or credited, as the case may be, the average transaction price of all securities purchased or sold in such transaction. As a result, however, the price may be less favorable to a client than it would be if similar transactions were not being executed concurrently for other accounts.

B-58

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

PIM

Compensation

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

• Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and

Potential Conflicts

B-59

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

potential conflicts due to the possession of material, non-public information by maintaining an “Information Barrier” to prevent the transfer of this information between units of PIM as well as between affiliates and PIM. Additionally, in an effort to avoid potential conflicts of interest, PIM Fixed Income has procedures in place to carefully consider whether or not to accept material non-public information with respect to certain issuers, where appropriate.

B-60

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		and restrictions, as well as with PIM’s fiduciary obligations. Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Equity		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may

B-61

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows. In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

		GEAM Compensation At GE Asset Management (GEAM), a xportfolio manager’s compensation package includes both fixed (“Base Compensation”) and variable (“Incentive Compensation”) components. In determining the Base Compensation, “GEAM” seeks to be competitive with its industry peers. GEAM bases each portfolio manager’s Base Compensation on his/her professional experience and responsibilities relative to similarly situated GEAM portfolio managers. Each portfolio manager is eligible to receive Incentive Compensation annually in the form of variable cash bonuses that are based on quantitative and qualitative factors. Generally, 60% of Incentive Compensation is quantitatively determined, based on the investment performance of the individual portfolio manager and, where applicable, the investment performance of the portfolio manager’s investment team as a whole, over both a one- and three-year time-frame relative to relevant benchmarks. The remaining 40% of Incentive Compensation is based on several qualitative factors, including but not limited to: • Teamwork/Leadership – effectively collaborating, cooperating and managing within the investment team and/or the department; • Marketing Support – devoting appropriate time and effort to support the education of clients and consultants on performance and investment methodology; and • Effective Communication – driving efficient, open and effective sharing of information, data and ideas across the investment team and with the broader organization and clients.

B-62

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

In addition to the Base Compensation and Incentive Compensation, GEAM’s parent company, GE Company (“GE”) periodically grants restricted stock units and options to purchase shares of GE common stock. GE determines the overall timing, frequency and size of such grants, which it distributes to its subsidiary businesses and provides guidelines for the subsequent grant to individual employees. The pool of GEAM employees eligible for such grants could include portfolio managers; however, no special grants are guaranteed, allocated or anticipated specifically for portfolio managers. The strike price of stock options is the selling price of GE common stock as of the grant date. The strike price, dividend guidelines and vesting schedule are published to recipients by GE at the time of the grant.

All employees, including portfolio managers, are eligible to participate in GE’s defined benefit plan and its defined contribution plan, which offers participating employees the tax benefits of deferring the receipt of a portion of their cash compensation. Aside from such plans, deferred compensation is not a regular component of a portfolio manager’s compensation. In the past, GE has periodically offered the opportunity for certain executives (which may include certain portfolio managers) to defer portions of their Base Compensation and Incentive Compensation. These deferral programs are offered and administered at the discretion of GE and provide for the deferral of salary at a specific rate of return, payable upon retirement according to a predetermined payment schedule.

Potential Conflicts of Interest

Portfolio managers at GE Asset Management Incorporated (“GEAM”) may manage multiple registered investment companies, unregistered investment pools and/or investment accounts, which could raise potential conflicts of interest in the areas described below. GEAM has policies and procedures in place that are reasonably designed to mitigate these conflicts of interest, which are also described below.

Compensation. The compensation paid to GEAM for managing the Prudential Series Fund, Equity Portfolio (the “Fund”) is based only on a percentage of assets under management. Although there are a small number of client accounts that pay GEAM a performance-based fee, the portfolio managers’ compensation does not take into consideration the basis for GEAM’s compensation. This structure coupled with the small number of client accounts that pay a performance-based fee to GEAM serve to mitigate conflicts of interest that may arise when a portfolio manager’s compensation is more directly or more significantly based on revenues from performance-based fees on certain clients’ accounts.

Research. Execution and research services provided by brokers may not always be utilized in connection with the Fund or other client accounts that may have provided the commission or a portion of the commission paid to the broker providing the services. GEAM allocates brokerage commissions for these services in a manner that it believes is fair and equitable and consistent with its fiduciary obligations to all of its clients.

IPO Allocation. If a portfolio manager identifies an initial public offering that may be suitable for more than one Fund or other client account, the Fund may not be able to take full advantage of that opportunity. To mitigate this conflict of interest, GEAM allocates shares of initial public offerings to the Fund and other client accounts in a manner that it believes is fair and equitable and consistent with its fiduciary obligations to all of its clients.

Trade Allocation. If a portfolio manager identifies a limited investment opportunity that may be suitable for more than one Fund or other client account, the Fund may not be able to take full advantage of that opportunity. To mitigate this conflict of interest, GEAM aggregates orders of the Fund with orders from its other client accounts in order to ensure that all clients are treated fairly and equitably over time and consistent with GEAM’s fiduciary obligations.

Salomon

Compensation

Salomon Citigroup Asset Management (“CAM”) investment professionals receive base salary and other employee benefits and are eligible to receive incentive compensation. Base salary is typically determined based on market factors and the skill and experience of individual investment personnel.

CAM has recently implemented an investment management incentive and deferred

B-63

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

compensation plan (the “Plan”) for its investment professionals, including the fund’s portfolio manager(s). Each investment professional works as a part of an investment team. The Plan is designed to align the objectives of CAM investment professionals with those of fund shareholders and other CAM clients. Under the Plan a “base incentive pool” is established for each team each year as a percentage of CAM’s revenue attributable to the team (largely management and related fees generated by funds and other accounts). A team’s revenues are typically expected to increase or decrease depending in part on the effect that the team’s investment performance has on the level of assets in the investment products managed by the team. The “base incentive pool” of a team is reduced by base salaries paid to members of the team and employee benefits expenses attributable to the team.

The investment team’s incentive pool is then adjusted to reflect the team’s investment performance against the applicable product benchmark (e.g., a securities index) and its ranking among a “peer group” of non-CAM investment managers. Longer-term performance will be more heavily weighted than shorter-term performance in the calculation of the performance adjustment factor. The incentive pool for a team may also be adjusted to reflect other factors (e.g., severance pay to departing members of the team, and discretionary allocations by the applicable CAM chief investment officer from one investment team to another). The incentive pool will be allocated by the applicable CAM chief investment officer to the team leader and, based on the recommendations of the team leader, to the other members of the team.

Material Conflicts of Interest

Material conflicts of interest may arise when a Fund’s portfolio manager also has day-to-day management responsibilities with respect to one or more other funds or other accounts, as is the case for [certain of] the portfolio managers listed in the table above. These potential conflicts include:

Allocation of Limited Investment Opportunities . If a portfolio manager identifies a limited investment opportunity that may be suitable for multiple funds and/or accounts, the opportunity may be allocated among these several funds or accounts, which may limit a fund’s ability to take full advantage of the investment opportunity.

Pursuit of Differing Strategies . At times, a portfolio manager may determine that an investment opportunity may be appropriate for only some of the funds and/or accounts for which he or she exercises investment responsibility, or may decide that certain of the funds and/or accounts should take differing positions with respect to a particular security. In these cases, the portfolio manager may place separate transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and/or accounts.

Selection of Brokers/Dealers . Portfolio managers may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the funds and/or account that they supervise. In addition to executing trades, some brokers and dealers provide portfolio managers with brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934), which may result in the payment of higher brokerage fees than might have otherwise be available. These services may be more beneficial to certain funds or accounts than to others. Although the payment of brokerage commissions is subject to the requirement that the portfolio manager determine in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the fund, a portfolio manager’s decision as to the selection of brokers and dealers

B-64

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

could yield disproportionate costs and benefits among the funds and/or accounts that he or she manages.

Variation in Compensation . A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ among the funds and/or accounts that he or she manages. If the structure of the investment adviser’s management fee and/or the portfolio manager’s compensation differs among funds and/or accounts (such as where certain funds or accounts pay higher management fees or performance-based management fees), the portfolio manager might be motivated to help certain funds and/or accounts over others. The portfolio manager might be motivated to favor funds and/or accounts in which he or she has an interest or in which the investment advisor and/or its affiliates have interests. Similarly, the desire to maintain assets under management or to enhance the portfolio manager’s performance record or to derive other rewards, financial or otherwise, could influence the portfolio manager in affording preferential treatment to those funds and/or accounts that could most significantly benefit the portfolio manager.

Related Business Opportunities . The investment adviser or its affiliates may provide more services (such as distribution or recordkeeping) for some types of funds or accounts than for others. In such cases, a portfolio manager may benefit, either directly or indirectly, by devoting disproportionate attention to the management of fund and/or accounts that provide greater overall returns to the investment manager and its affiliates.

Flexible Managed

PIM

Compensation

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

• Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and

Potential Conflicts

B-65

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

unregistered hedge funds. These affiliations and portfolio manager responsibilities may cause potential and actual conflicts of interest. PIM aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund.

B-66

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for the adviser than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to PIM of favoring accounts that pay a higher fee or generate more income for PIM. To address this conflict of interest, PIM has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, portfolio managers may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with PIM’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). PIM portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, PIM has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its respective investment objectives, investment strategies and restrictions, as well as with PIM’s fiduciary obligations. Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

		QMA Compensation QMA Quantitative Management Associates (QMA) seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professional, which includes portfolio managers and research analysts, and to align he interests of its investment professionals with that of its clients and overall firm results. Investment professionals are all covered by the same general compensation structure even though they manage other accounts. All investment compensation is paid by the investment adviser and not by any assets of the investment company or other managed accounts Investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial, Inc., providing investment professionals with an ownership stake.

B-67

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

Potential Conflicts

Management of multiple accounts and funds side-by-side may raise potential conflicts of interest relating to the allocation of investment opportunities, the aggregation and allocation of trades and cross trading. QMA has developed policies and procedures designed to address these potential conflicts of interest.

With respect to the management of the Fund, QMA may cause securities transactions to be executed concurrently with authorizations to purchase or sell the same securities for other accounts managed by QMA, including proprietary accounts or accounts of affiliates. In these instances, the executions of purchases or sales, where possible, are allocated equitably among the various accounts (including the Fund).

B-68

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		QMA may buy or sell, or may direct or recommend that another person buy or sell, securities of the same kind or class that are purchased or sold for the Fund, at a price which may or may not differ from the price of the securities purchased or sold for the Fund. In addition, QMA may, at any time, execute trades of securities of the same kind or class in one direction for an account and trade in the opposite direction or not trade for any other account, including the Fund, due to differences in investment strategy or client direction. The fees charged to advisory clients by QMA may differ depending upon a number of factors including, but not limited to, the particular strategy, the size of a portfolio being managed, the relationship with the client, the origination and service requirements and the asset class involved. Fees may also differ based on account type (e.g., commingled accounts, trust accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for QMA than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to QMA of favoring accounts that pay a higher fee or generate more income for QMA. To address this conflict of interest, QMA has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, investment personnel may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with QMA’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). QMA portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, QMA has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its investment objectives, investment strategies and restrictions, as well as with QMA’s fiduciary obligations. QMA has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Global		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an

B-69

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows. In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

Government Income		PIM Compensation PIM Prudential Fixed Income seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm

B-70

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

results. Prudential Fixed Income’s investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial Inc., providing investment professionals with an ownership stake. Investment professionals are all covered by the same general compensation structure although they manage multiple accounts. All investment compensation is paid by the investment adviser and not from any assets of the investment company or other managed accounts.

The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual.

• Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and

Potential Conflicts

Regulation may also prevent the Fund from participating in transactions that could be viewed as

B-71

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

a joint transaction of the adviser. PIM would not be able to purchase for the Fund securities newly offered by an issuer if the proceeds from such new offering are to be used by the issuer to pay off a private loan that an affiliate of PIM may have made to the issuer.

B-72

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

High Yield Bond		PIM Compensation Prudential Fixed Income seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Prudential Fixed Income’s investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial Inc., providing investment professionals with an ownership stake. Investment professionals are all covered by the same general compensation structure although they manage multiple accounts. All investment compensation is paid by the investment adviser and not from any assets of the investment company or other managed accounts. The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual. Investment professional’s incentive compensation payments, including their annual bonus and long term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on three factors: • investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus, • Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and • Market-based data indicating trends and levels of overall compensation in the asset management industry in a given year. Prudential Fixed Income regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness. Each investment professional’s incentive compensation payment including the annual bonus and long-term incentive grant from the incentive pool is primarily determined by how significantly he/she contributes to delivering investment performance to clients consistent with portfolio objectives, guidelines, and risk parameters, as well as the individual’s qualitative contributions to the organization. Potential Conflicts PIM is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers and registered broker/dealers. PIM portfolio managers are often responsible for managing one or more Funds, in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles, such as commingled trust funds and unregistered hedge funds. These affiliations and portfolio manager responsibilities may cause potential and actual conflicts of interest. PIM aims to conduct itself in a manner it considers to be the most fair

B-73

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

and consistent with its fiduciary obligations to all of its clients including the Fund.

B-74

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		faced with a conflict of interest when allocating scarce investment opportunities given the benefit to PIM of favoring accounts that pay a higher fee or generate more income for PIM. To address this conflict of interest, PIM has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, portfolio managers may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with PIM’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). PIM portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, PIM has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its respective investment objectives, investment strategies and restrictions, as well as with PIM’s fiduciary obligations. Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Jennison		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more

B-75

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows. In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

Jennison 20/20 Focus		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary

B-76

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals.

Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following:

• One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible.

• The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes;

• Historical and long-term business potential of the product strategies;

• Qualitative factors such as teamwork and responsiveness; and

• Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation.

Potential Conflicts of Interest

In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts.

Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows.

In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

B-77

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest

Money Market		N/A

Natural Resources		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio. Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows.

B-78

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest

		In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.

Small Capitalization Stock		QMA Compensation Quantitative Management Associates (QMA) seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professional, which includes portfolio managers and research analysts, and to align he interests of its investment professionals with that of its clients and overall firm results. Investment professionals are all covered by the same general compensation structure even though they manage other accounts. All investment compensation is paid by the investment adviser and not by any assets of the investment company or other managed accounts Investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial, Inc., providing investment professionals with an ownership stake. The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual. Investment professional’s incentive compensation payments, including their annual bonus and long-term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on two primary factors: 1) investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus, and 2) business results as measured by QMA’s pre-tax net income, based on planned and reasonably anticipated expenses. QMA regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness. Each investment professional’s incentive compensation payment including the annual bonus and long-term incentive grant from the incentive pool is primarily determined by how significantly he/she contributes to delivering investment performance to clients consistent with portfolio objectives, guidelines, and risk parameters, as well as the individual’s qualitative contributions to the organization. Potential Conflicts QMA is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers and registered broker/dealers. QMA portfolio managers are often responsible for managing one or more Funds in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles. These affiliations and portfolio management responsibilities may cause potential and actual conflicts of interest. QMA aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund. Management of multiple accounts and funds side-by-side may raise potential conflicts of interest relating to the allocation of investment opportunities, the aggregation and allocation of trades and cross trading. QMA has developed policies and procedures designed to address these potential conflicts of

B-79

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

interest.

QMA may buy or sell, or may direct or recommend that another person buy or sell, securities of the same kind or class that are purchased or sold for the Fund, at a price which may or may not differ from the price of the securities purchased or sold for the Fund. In addition, QMA may, at any time, execute trades of securities of the same kind or class in one direction for an account and trade in the opposite direction or not trade for any other account, including the Fund, due to differences in investment strategy or client direction.

The fees charged to advisory clients by QMA may differ depending upon a number of factors including, but not limited to, the particular strategy, the size of a portfolio being managed, the relationship with the client, the origination and service requirements and the asset class involved. Fees may also differ based on account type (e.g., commingled accounts, trust accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for QMA than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to QMA of favoring accounts that pay a higher fee or generate more income for QMA. To address this conflict of interest, QMA has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts.

In addition, investment personnel may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with QMA’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). QMA portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, QMA has procedures, including supervisory review procedures,

B-80

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its investment objectives, investment strategies and restrictions, as well as with QMA’s fiduciary obligations. QMA has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Stock Index		QMA Compensation Quantitative Management Associates (QMA) seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professional, which includes portfolio managers and research analysts, and to align he interests of its investment professionals with that of its clients and overall firm results. Investment professionals are all covered by the same general compensation structure even though they manage other accounts. All investment compensation is paid by the investment adviser and not by any assets of the investment company or other managed accounts Investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial, Inc., providing investment professionals with an ownership stake. The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual. Investment professional’s incentive compensation payments, including their annual bonus and long-term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on two primary factors: 1) investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus, and 2) business results as measured by QMA’s pre-tax net income, based on planned and reasonably anticipated expenses. QMA regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness. Each investment professional’s incentive compensation payment including the annual bonus and long-term incentive grant from the incentive pool is primarily determined by how significantly he/she contributes to delivering investment performance to clients consistent with portfolio objectives, guidelines, and risk parameters, as well as the individual’s qualitative contributions to the organization. Potential Conflicts QMA is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers and registered broker/dealers. QMA portfolio managers are often responsible for managing one or more Funds in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles. These affiliations and portfolio management responsibilities may cause potential and actual conflicts of interest. QMA aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund. Management of multiple accounts and funds side-by-side may raise potential conflicts of interest relating to the allocation of investment opportunities, the aggregation and allocation of trades and cross trading. QMA has developed policies and procedures designed to address these potential conflicts of interest.

B-81

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

B-82

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its investment objectives, investment strategies and restrictions, as well as with QMA’s fiduciary obligations. QMA has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

Value		Jennison Portfolio Manager Compensation Jennison seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Overall firm profitability determines the total amount of incentive compensation pool that is available for investment professionals. Investment professionals are compensated with a combination of base salary and discretionary cash bonus. In general, the cash bonus comprises the majority of the compensation for investment professionals. Investment professionals’ total compensation is determined through a subjective process that evaluates numerous qualitative and quantitative factors. Not all factors will be applicable to each investment professional and there is no particular weighting or formula for considering the factors. The factors considered for an investment professional whose primary role is portfolio management will differ from an investment professional who is a research analyst or portfolio manager with research analyst responsibilities. In addition, some portfolio managers or analysts may manage or contribute ideas to more than one product strategy and are evaluated accordingly. The factors that may be reviewed include the following: • One and three year pre-tax investment performance of groupings of accounts (a “Composite”) relative to pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. • The investment professional’s contribution to client portfolios’ pre-tax one and three year performance from the investment professional’s recommended stocks relative to the strategy’s passive benchmarks and to the investment professional’s respective coverage universes; • Historical and long-term business potential of the product strategies; • Qualitative factors such as teamwork and responsiveness; and • Other factors such as experience and other responsibilities such as being a team leader or supervisor may also affect an investment professional’s total compensation. Potential Conflicts of Interest In managing other portfolios (including affiliated accounts), certain potential conflicts of interest may arise. Potential conflicts include, for example, conflicts among investment strategies, conflicts in the allocation of investment opportunities, or conflicts due to different fees. As part of its compliance program, Jennison has adopted policies and procedures that seek to address and minimize the effects of these conflicts. Jennison’s portfolio managers typically manage multiple accounts. These accounts may include, among others, mutual funds, separately managed advisory accounts (assets managed on behalf of institutions such as pension funds, colleges and universities, foundations), commingled trust accounts, affiliated single client and commingled insurance separate accounts, model nondiscretionary portfolios, and model portfolios used for wrap fee programs. Portfolio managers make investment decisions for each portfolio based on the investment objectives, policies, practices and other relevant investment considerations that the managers believe are applicable to that portfolio. Consequently, portfolio managers may recommend the purchase (or sale) of certain securities for one portfolio and not another portfolio. Securities purchased in one portfolio may perform better than the securities purchased for another portfolio.

B-83

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		Similarly, securities sold from one portfolio may result in better performance if the value of that security declines. Generally, however, portfolios in a particular product strategy (e.g., large cap growth equity) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in a strategy that have similar objectives, which tend to minimize the potential for conflicts of interest. While these accounts have many similarities, the investment performance of each account will be different primarily due to differences in guidelines, fees, expenses and cash flows. In addition, Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as IPOs and the allocation of transactions across multiple accounts. Currently, while no equity accounts under Jennison’s management have performance fees, some accounts have higher fees than others. These differences may give rise to a potential conflict that a portfolio manager may allocate more time to the management of one account over another. While Jennison does not monitor the specific amount of time that a portfolio manager spends on a single portfolio, senior Jennison personnel periodically review the performance of Jennison’s portfolio managers as well as periodically assesses whether the portfolio manager has adequate resources to effectively manage the accounts assigned to that portfolio manager. Jennison also believes that its compensation structure tends to mitigate this conflict.


Zero Coupon Bond 2005		PIM Compensation Prudential Fixed Income seeks to maintain a highly competitive compensation program designed to attract and retain outstanding investment professionals, which includes portfolio managers and research analysts, and to align the interests of its investment professionals with that of its clients and overall firm results. Prudential Fixed Income’s investment professionals are compensated through a combination of base salary, a performance-based annual cash incentive bonus and a long-term incentive grant. The long-term incentive grant is generally divided between stock options and restricted stock of Prudential Financial Inc., providing investment professionals with an ownership stake. Investment professionals are all covered by the same general compensation structure although they manage multiple accounts. All investment compensation is paid by the investment adviser and not from any assets of the investment company or other managed accounts. The salary component is based on market data relative to similar positions within the industry as well as the past performance, experience and responsibility of the individual. Investment professional’s incentive compensation payments, including their annual bonus and long term incentive grant, are paid from an annual incentive pool. The size of the annual incentive pool is determined quantitatively based on three factors: • investment performance (pre-tax) of portfolios on a 1-year and 3-year basis relative to appropriate market peer groups or benchmarks, such as the market-based benchmark specified in this prospectus, • Prudential Fixed Income’s business results as measured by financial indicators such as asset growth, operating margin and earnings growth, and • Market-based data indicating trends and levels of overall compensation in the asset management industry in a given year. Prudential Fixed Income regularly benchmarks its compensation program against leading asset management firms in the industry to monitor competitiveness. Each investment professional’s incentive compensation payment including the annual bonus and long-term incentive grant from the incentive pool is primarily determined by how significantly he/she contributes to delivering investment performance to clients consistent with portfolio objectives, guidelines, and risk parameters, as well as the individual’s qualitative contributions to the organization. Potential Conflicts PIM is an indirect, wholly-owned subsidiary of Prudential Financial, Inc. and as such is part of a full-scale global financial services organization, affiliated with insurance companies, investment advisers

B-84

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

and registered broker/dealers. PIM portfolio managers are often responsible for managing one or more Funds, in addition to other accounts, including accounts of affiliates, insurance company separate accounts, institutional accounts and other pooled investment vehicles, such as commingled trust funds and unregistered hedge funds. These affiliations and portfolio manager responsibilities may cause potential and actual conflicts of interest. PIM aims to conduct itself in a manner it considers to be the most fair and consistent with its fiduciary obligations to all of its clients including the Fund.

B-85

Portfolio		Compensation Structure and Method(s) / Material Conflicts of Interest
		accounts, insurance company separate accounts, and corporate, bank or trust-owned life insurance products). Fees are negotiable so one client with similar investment objectives or goals may be paying a higher fee than another client. Fees paid by certain clients may also be higher due to performance based fees which increase based on the performance of a portfolio above an established benchmark. Also, large clients generate more revenue for the adviser than do smaller accounts. A portfolio manager may be faced with a conflict of interest when allocating scarce investment opportunities given the benefit to PIM of favoring accounts that pay a higher fee or generate more income for PIM. To address this conflict of interest, PIM has adopted an Allocation Policy as well as supervisory procedures that attempt to fairly allocate investment opportunities among competing client accounts. Conflicts of interest may also arise regarding proxy voting. A committee of senior business representatives together with relevant regulatory personnel oversees the proxy voting process and monitors potential conflicts of interest relating to proxy voting. In addition, portfolio managers may advise proprietary accounts, affiliates’ accounts, and the general account of The Prudential Insurance Company of America (“Prudential’s General Account,” and together with PIM’s proprietary accounts and affiliates’ accounts, the “Affiliated Accounts”). PIM portfolio manager(s) may have a financial interest in the accounts they advise, either directly or indirectly. To address potential conflicts of interest, PIM has procedures, including supervisory review procedures, designed to ensure that, including to the extent that client accounts are managed differently from the Affiliated Accounts, each of the client accounts including the Fund, and each Affiliated Account, is managed in a manner that is consistent with its respective investment objectives, investment strategies and restrictions, as well as with PIM’s fiduciary obligations. Potential conflicts of interest may exist in instances in which PIM or its affiliates determine that a specific transaction in a security is appropriate for a specific account, including the Affiliated Accounts, based upon numerous factors including, among other things, investment objectives, investment strategies or restrictions, while other accounts (including the Affiliated Accounts) may hold or take the opposite position in the security in accordance with those accounts’ investment objectives, investment strategies and restrictions (these conflicting positions and transactions are collectively referred to as “Differing Position”). PIM periodically conducts reviews of these accounts and assesses the appropriateness of these Differing Positions. Because of the substantial size of Prudential’s General Account, trading by Prudential’s General Account in certain securities, particularly certain fixed income securities may result in market changes in response to the trade. Although PIM expects that Prudential’s General Account will execute transactions that will move a market in a security infrequently, and generally in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients including the Fund. PIM has adopted Prudential Financial’s Policy Statement on Business Ethics, a Personal Securities Trading Policy for investment personnel, Information Barrier Policy, Allocation Policy, Supervisory Procedures and a Conflicts of Interest Policy, among other policies and procedures, which are designed to ensure that clients are not harmed by these potential or actual conflicts of interests; however, there is no guarantee that such procedures will detect each and every situation in which a conflict may arise.

SP AIM Core Equity		AIM Compensation AIM seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. AIM evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager’s compensation consists of the following five elements: • Base salary. Each portfolio manager is paid a base salary. In setting the base salary, AIM’s

B-86

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

intention is to be competitive in light of the particular portfolio manager’s experience and responsibilities.

• Annual bonus. Each portfolio manager is eligible to receive an annual cash bonus which has quantitative and non-quantitative components. Generally, 70% of the bonus is quantitatively determined, based typically on a four-year rolling average of pre-tax performance of all registered investment company accounts for which a portfolio manager has day-to-day management responsibilities versus the performance of a pre-determined peer group. In instances where a portfolio manager has responsibility for management of more than one fund, an asset weighted four-year rolling average is used.

High fund performance (against applicable peer group) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor fund performance (versus applicable peer group) could result in no bonus. The amount of fund assets under management typically have an impact on the bonus potential (for example, managing more assets increases the bonus potential); however, this factor typically carries less weight than relative performance. The remaining 30% portion of the bonus is discretionary as determined by AIM and takes into account other subjective factors.

• Equity-based compensation. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares of AMVESCAP stock from pools determined from time to time by the Remuneration Committee of the AMVESCAP Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.

• Participation in group insurance programs. Portfolio managers are provided life insurance coverage in the form of a group variable universal life insurance policy, under which they may make additional contributions to purchase additional insurance coverage or for investment purposes.

• Participation in deferred compensation plan. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participating employees the tax benefits of deferring the receipt of a portion of their cash compensation.

Portfolio managers also participate in benefit plans and programs available generally to all employees.

Potential Conflicts

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and /or other accounts are presented with the following potential conflicts:

• The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each Fund and/or other account. AIM seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.

• If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, AIM and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.

• With respect to securities transactions for the Funds, AIM determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts (such as mutual funds for which AIM or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), AIM may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, AIM or its affiliates may place separate, non-simultaneous, transactions for a Fund and another account which may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Fund or the other account.

B-87

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

• Finally, the appearance of a conflict of interest may arise where AIM has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts with respect to which a portfolio manager has day-to-day management responsibilities.

AIM and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

SP AllianceBernstein Large Cap Growth

AllianceBernstein

Compensation

AllianceBernstein’s compensation program for investment professionals(1) is designed to be competitive and appropriate to attract and retain the highest caliber employees. Compensation of investment professionals primarily reflects their ability to generate long-term investment success for our clients, including shareholders of the AllianceBernstein Mutual Funds.

Investment professionals are compensated on an annual basis through a combination of the following: (i) fixed base salary; (ii) discretionary incentive compensation in the form of an annual cash bonus; (iii) discretionary incentive compensation in the form of awards under AllianceBernstein’s Partners Compensation Plan (“deferred awards”) and (iv) discretionary long-term incentive compensation in the form of restricted unit grants. Investment professionals also receive contributions under AllianceBernstein’s Profit Sharing/401(k) Plan. AllianceBernstein’s overall profitability determines the total amount of incentive compensation available to investment professionals. Deferred awards, for which there are various investment options, vest over a four-year period and are generally forfeited if the employee resigns or AllianceBernstein terminates his/her employment. Investment options under the deferred awards plan include many of the same AllianceBernstein Mutual Funds offered to mutual fund investors, thereby creating a closer alignment between the investment professionals and AllianceBernstein’s clients and mutual fund shareholders. AllianceBernstein also permits deferred award recipients to allocate up to 50% of their award to investments in AllianceBernstein’s publicly traded equity securities.

Among the factors considered are: relative investment performance of portfolios (although there are no specific benchmarks or periods of time used in measuring performance); complexity of investment strategies; participation in the investment team/discipline’s dialogue; contribution to business results and overall business strategy; success of marketing/business development efforts and client servicing; seniority/length of service with the firm; management and supervisory responsibilities and fulfillment of AllianceBernstein’s leadership criteria.

Potential Conflicts

As an investment adviser and fiduciary, AllianceBernstein owes our clients and shareholders an undivided duty of loyalty. We recognize that conflicts of interest are inherent in our business and accordingly have developed policies, procedures and disclosures reasonably designed to detect, manage and mitigate the effects of potential conflicts of interest in the area of employee personal trading, managing multiple accounts for multiple clients, including Funds (hereinafter “Clients”) and allocating investment opportunities. Investment professionals, including portfolio managers and research analysts, are subject to the above-mentioned policies and oversight to help ensure that all clients are treated equitably. As stated in these conflicts-related policies, we place the interests of our clients first and expect all of our employees to live up to our fiduciary duty.

Employee Personal Trading and the Code of Business Conduct and Ethics

B-88

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

AllianceBernstein has policies to avoid conflicts of interest when investment professionals and other personnel of AllianceBernstein own, buy or sell securities also owned by, or bought or sold for clients. AllianceBernstein permits its employees to engage in personal securities transactions, and also allows them to allocate investments in the AllianceBernstein Mutual Funds through direct purchase, 401K/profit sharing plan investment and/or deferred incentive compensation awards. Personal securities transactions by an employee may raise a potential conflict of interest when an employee owns or trades in a security that is owned or considered for purchase or sale by a client, or recommended for purchase or sale by an employee to a client. AllianceBernstein has adopted a Code of Business Conduct and Ethics (“Code”) that is designed to detect and prevent such conflicts of interest.

Managing Multiple Accounts for Multiple Clients

The investment professional or investment professional teams for each Fund have responsibilities for managing all or a portion of the investments of multiple accounts with a common investment strategy, including other registered investment companies, unregistered investment vehicles, such as hedge funds, pension plans, separate accounts, collective trusts and charitable foundations. Potential conflicts of interest may arise when an investment professional has responsibilities for the investments of more than one account because the investment professional may be unable to devote equal time and attention to each account. Accordingly, AllianceBernstein has compliance policies and oversight to manage these conflicts.

Allocating Investment Opportunities

In addition, the investment professionals may have to decide how to select and allocate investment opportunities among accounts. Portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar accounts, which minimizes the potential for conflicts of interest. Nevertheless, investment opportunities may be allocated differently among accounts due to the particular characteristics of an account, such as cash position, tax status, risk tolerance and investment restrictions or for other reasons. Potential conflicts of interest may also occur where AllianceBernstein would have an incentive, such a performance-based management fee, relating to an account. An investment professional may devote more time to developing and analyzing investment strategies and opportunities or allocating securities preferentially to the account for which AllianceBernstein could share in investment gains. As referenced above, AllianceBernstein has procedures designed to ensure that information relevant to investment decisions are disseminated fairly and investment opportunities are allocated equitably among different clients.

(1) Investment professionals at AllianceBernstein include portfolio managers and research analysts. Investment professionals are part of investment groups (or teams) that service individual fund portfolios. The number of investment professionals assigned to a particular fund will vary from fund to fund.

SP Davis Value

Davis Advisors

Compensation

Kenneth Feinberg’s compensation as a Davis Advisors employee consists of (i) a base salary, (ii) an annual bonus equal to a percentage of growth in Davis Advisors’ profits, (iii) awards of equity (“Units”) in Davis Advisors including Units, options on Units, and/or phantom Units, and (iv) an incentive plan whereby Davis Advisors purchases shares in selected funds managed by Davis Advisors. At the end of specified periods, generally five-years following the date of purchase, some, all, or none of the fund shares will be registered in the employee’s name based on fund performance, after expenses on a pre-tax basis, versus the S&P 500 Index, and versus peer groups as defined by Morningstar or Lipper. Davis Advisors’ portfolio managers are provided benefits packages including life insurance, health insurance, and participation in company 401(k) plan comparable to that received by other company employees.

Christopher Davis’ annual compensation as an employee and general partner of Davis Advisors consists of a base salary. Davis Advisors’ portfolio managers are provided benefits packages including life insurance, health insurance, and participation in company 401(k) plan comparable to that received by other company employees.

B-89

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

Potential Conflicts of Interest

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one portfolio or other account. More specifically, portfolio managers who manage multiple portfolios and/or other accounts are presented with the following potential conflicts:

• The management of multiple portfolios and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each portfolio and/or other account. Davis Advisors seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the portfolios.

• If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one portfolio or other account, a portfolio may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible portfolios and other accounts. To deal with these situations, Davis Advisors has adopted procedures for allocating portfolio transactions across multiple accounts.

• With respect to securities transactions for the portfolios, Davis Advisors determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts (such as mutual funds for which Davis Advisors other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), Davis Advisors may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Davis Advisors may place separate, non-simultaneous, transactions for a portfolio and another account which may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the portfolio or the other account.

• Finally, substantial investment of Davis Advisor or Davis Family assets in certain mutual funds may lead to conflicts of interest. To mitigate these potential conflicts of interest, Davis Advisors has adopted policies and procedures intended to ensure that all clients are treated fairly overtime. Davis Advisors does not receive an incentive based fee on any account.

SP Goldman Sachs Small Cap Value

Goldman Sachs Asset Management, L.P (“65 AM”)

Compensation

Value Team

GSAM and the GSAM Value Team’s (the “Value Team”) compensation package for its portfolio mangers is comprised of a base salary and a performance bonus. The performance bonus is a function of each portfolio manager’s individual performance and his or her contribution to overall team performance. Portfolio Managers are rewarded for their ability to outperform a benchmark while managing risk appropriately. Compensation is also influenced by the Value Team’s total revenues for the past year which in part is derived from advisory fees and for certain accounts, performance based fees. Anticipated compensation levels among competitor firms may also be considered, but is not a principal factor.

The performance bonus is significantly influenced by 3 Year period of investment performance. The following criteria are considered:

• Individual performance (relative, absolute)

• Team Performance (relative, absolute)

• Consistent performance that aligns with clients’ objectives

• Achievement of top rankings (relative and competitive)

B-90

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

The investment performance mentioned above is considered only on a pre-tax basis. As it relates to relative performance, the benchmark for this Fund is the Russell 2000 Value Index. As mentioned above, performance is measured on a 3 Year basis.

Other Compensation . In addition to base salary and performance bonus, GSAM has a number of additional benefits/deferred compensation programs for all portfolio managers in place including (i) a 401K program that enables employees to direct a percentage of their pretax salary and bonus income into a tax-qualified retirement plan; (ii) a profit sharing program to which Goldman Sachs & Co. makes a pretax contribution; and (iii) investment opportunity programs in which certain professionals are eligible to participate subject to certain net worth requirements. Portfolio Managers may also receive grants of restricted stock units and/or stock options as part of their compensation.

Certain GSAM Portfolio Managers may also participate in the firm’s Partner Compensation Plan, which covers many of the firm’s senior executives. In general, under the Partner Compensation Plan, participants receive a base salary and a bonus (which may be paid in cash or in the form of an equity-based award) that is linked to Goldman Sachs’ overall financial performance.

Conflicts of Interest

GSAM’s portfolio managers are often responsible for managing one or more Funds as well as other accounts, including proprietary accounts, separate accounts and other pooled investment vehicles, such as unregistered hedge funds. A portfolio manager may manage a separate account or other pooled investment vehicle which may have materially higher fee arrangements than the Fund and may also have a performance-based fee. The side-by-side management of these funds may raise potential conflicts of interest relating to cross trading, the allocation of investment opportunities and the aggregation and allocation of trades.

GSAM has a fiduciary responsibility to manage all client accounts in a fair and equitable manner. It seeks to provide best execution of all securities transactions and aggregate and then allocate securities to client accounts in a fair and timely manner. To this end, GSAM has developed policies and procedures designed to mitigate and manage the potential conflicts of interest that may arise from side-by-side management. In addition, GSAM has adopted policies limiting the circumstances under which cross-trades may be effected between a Fund and another client account. GSAM conducts periodic reviews of trades for consistency with these policies.

SP Large Cap Value

Hotchkis

Compensation

Portfolio Managers of the Fund are supported by the full research team of HWCM. Compensation is used to reward, attract and retain high quality investment professionals. An investment professional, such as a Portfolio Manager, has a base salary and is eligible for an annual bonus. Some Portfolio Managers also are involved in client servicing, marketing and in the general management of HWCM and are evaluated and compensated based on these functions as well as their investment management activities.

HWCM believes consistent execution of the proprietary research process results in superior, risk-adjusted portfolio returns. It is the quality of the investment professional’s execution of this process rather than the performance of particular securities that is evaluated in determining compensation. Compensation likewise is not tied to performance of the Fund or separate accounts, of specific industries within the Fund or separate accounts or to any type of asset or revenue related objective, other than to the extent that the overall revenues of HWCM attributable to such factors may affect the size of HWCM’s overall bonus pool.

Bonuses and salaries for investment professionals are determined by the Chief Executive Officer of HWCM using annual evaluations, compensation surveys, feedback from other employees and advice from members of HWCM’s Executive Committee and HWCM’s Compensation Committee. The amount

B-91

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

of the bonus usually is shaped by the total amount of HWCM’s bonus pool available for the year, which is generally a function of net income, but no investment professional receives a bonus that is a pre-determined percentage of net income.

Each of the Portfolio Managers owns equity in HWCM. HWCM believes that the ownership structure of the firm is a significant factor in ensuring a motivated and stable employee base.

Potential Conflicts

The Fund is managed by HWCM’s investment team (“Investment Team”). The Investment Team also manages institutional accounts and other mutual funds in several different investment strategies. The portfolios within an investment strategy are managed using a target portfolio; however, each portfolio may have different restrictions, cash flows, tax and other relevant considerations which may preclude a portfolio from participating in certain transactions for that investment strategy. Consequently, the performance of portfolios may vary due to these different considerations. The Investment Team may place transactions for one investment strategy that are directly or indirectly contrary to investment decisions made on behalf of another investment strategy. HWCM may be restricted from purchasing more than a limited percentage of the outstanding shares of a company. If a company is a viable investment for more than one investment strategy, HWCM has adopted policies and procedures reasonably designed to ensure that all of its clients are treated fairly and equitably.

Different types of accounts and investment strategies may have different fee structures. Additionally, certain accounts pay HWCM performance-based fees, which may vary depending on how well the account performs compared to a benchmark. Because such fee arrangements have the potential to create an incentive for HWCM to favor such accounts in making investment decisions and allocations, HWCM has adopted polices and procedures reasonably designed to ensure that all of its clients are treated fairly and equitably, including in respect of allocation decisions, such as initial public offerings.

Since all accounts are managed to a target portfolio by the Investment Team, adequate time and resources are consistently applied to all accounts in the same investment strategy.

J.P. Morgan

Fund Manager Compensation

The Adviser’s portfolio managers participate in a competitive compensation program that is designed to attract and retain outstanding people and closely link the performance of investment professionals to client investment objectives. The total compensation program includes a base salary fixed from year to year and a variable performance bonus consisting of cash incentives and restricted stock and, in some cases, mandatory deferred compensation. These elements reflect individual performance and the performance of the Adviser’s business as a whole.

Each portfolio manager’s performance is formally evaluated annually based on a variety of factors including the aggregate size and blended performance of the portfolios such portfolio manager manages. Individual contribution relative to client goals carries the highest impact. Portfolio manager compensation is primarily driven by meeting or exceeding clients’ risk and return objectives, relative performance to competitors or competitive indices and compliance with firm policies and regulatory requirements. In evaluating each portfolio manager’s performance with respect to the mutual funds he or she manages, the funds’ pre-tax performance is compared to the appropriate market peer group and to each fund’s benchmark index listed in the fund’s prospectus over one, three and five year periods (or such shorter time as the portfolio manager has managed the fund). Investment performance is generally more heavily weighted to the long-term.

Stock awards are granted as part of an employee’s annual performance bonus and comprise from 0% to 35% of a portfolio manager’s total award. As the level of incentive compensation increases, the percentage of compensation awarded in restricted stock also increases. Certain investment professionals may also be subject to a mandatory deferral of a portion of their compensation into proprietary mutual

B-92

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

funds based on long-term sustained investment performance

Potential Conflicts

The potential material conflicts of interest that may arise in connection with the portfolio managers’ management of the Fund and the management of their other accounts include:

1. A conflict between investment strategy of the Fund and the investment strategy of the other accounts managed by the portfolio manager

2. A conflict in allocation of investment opportunities between the Fund and the other accounts managed by the portfolio manager. However, the Adviser’s allocation practices are designed to achieve fair and equitable allocation of investment opportunities among its clients over time. Orders for the same equity security are aggregated on a continual basis throughout each trading day consistent with the Adviser’s duty of best execution for its clients. If aggregated trades are fully executed, accounts participating in the trade will be allocated their pro rata share on an average price basis. For equity securities, partially completed orders generally will be allocated among accounts with similar investment objectives and strategies on a pro-rata average price basis, subject to certain limited exceptions. One such exception provides that if an allocation results in a de minimis allocation relative to the size of the account or its investment strategy, the allocation may be reallocated to other accounts. While aggregation of the Fund’s order for a security with orders for the Adviser’s other clients seeks to achieve an equitable allocation of the order between the Fund and the Adviser’s other clients, it may adversely affect the size of the position the Fund may obtain or the price paid or received by the Fund.

3. The Fund is subject to different regulation than the other pooled investment vehicles and other accounts managed by the portfolio manager. As a consequence of this difference in regulatory requirements, the Fund may not be permitted to engage in all the investment techniques or transactions or to engage in these transactions to the same the extent as the other accounts managed by the portfolio manager.

SP LSV International Value

LSV

Compensation

LSV Portfolio Managers receive a base salary and bonus which is a fuction of overall firm profitability. In addition, each portfolio manager is a partner and receives a portion of the firm’s net income.

Potential Conflicts

There are no material conflicts of interest.

B-93

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

SP Mid Cap Growth

Calamos Advisors

Compensation

For the fiscal year ending March 31, 2004 the portfolio managers received all of their compensation from Calamos Advisors’ predecessor. The portfolio managers were also officers and equity owners of Calamos Advisors’ predecessor and therefore received compensation for serving in such capacity. John P. Calamos and Nick P. Calamos each received compensation in the form of salary and dividend distributions. John P.Calamos, Jr. received compensation in the form of salary, bonus and dividend distributions. Compensation for each portfolio manager was benchmarked against industry compensation standards for portfolio managers in comparable executive positions.

For fiscal year 2005 John P. Calamos, Nick P. Calamos and John P. Calamos, Jr. will receive compensation based partly on the performance of the accounts they manage as compared to investment performance benchmarks and also based upon the achievement of certain corporate goals such as growth of income, revenue and assets under management.

Potential Conflicts

The Fund’s portfolio managers are responsible for managing both the Funds and other accounts, including separate accounts and unregistered funds.

Other than potential conflicts between investment strategies, the side-by-side management of both the Funds and other accounts may raise potential conflicts of interest due to the interest held by Calamos Advisors in an account and certain trading practices used by the portfolio managers (e.g., cross trades between a Fund and another account and allocation of aggregated trades). Calamos Advisors hasdeveloped policies and procedures reasonably designed to mitigate those conflicts. For example, Calamos Advisors will only place cross-trades in securities held by the Funds in accordance with the rules promulgated under the Investment Company Act of 1940 and has adopted policies designed to ensure the fair allocation of securities purchased on an aggregated basis.

The portfolio managers advise certain accounts under a performance fee arrangement. A performance fee arrangement may create an incentive for a portfolio manager to make investments that are riskier or more speculative than would be the case in the absence of performance fees. A performance fee arrangement may result in increased compensation to the portfolio managers from such accounts due to unrealized appreciation as well as realized gains in the client’s account.

SP PIMCO High Yield

PIMCO

Portfolio Manager Compensation

PIMCO has adopted a “Total Compensation Plan” for its professional level employees, including its portfolio managers, that is designed to pay competitive compensation and reward performance, integrity and teamwork consistent with the firm’s mission statement. The Total Compensation Plan includes a significant incentive component that rewards high performance standards, work ethic and consistent individual and team contributions to the firm. The compensation of portfolio managers consists of a base salary, a bonus, and may include a retention bonus. Portfolio managers who are Managing Directors of PIMCO also receive compensation from PIMCO’s profits. Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO’s deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee’s compensation. PIMCO’s contribution rate increases at a specified compensation level, which is a level that would include portfolio managers.

Salary and Bonus. Base salaries are determined by considering an individual portfolio manager’s experience and expertise and may be reviewed for adjustment annually. Portfolio managers are entitled to receive bonuses, which may be significantly more than their base salary, upon attaining certain performance objectives based on predetermined measures of group or department success. These goals are specific to individual portfolio managers and are mutually agreed upon annually by each portfolio manager and his or her manager. Achievement of these goals is an important, but not exclusive, element

B-94

Portfolio

Compensation Structure and Method(s) / Material Conflicts of Interest

of the bonus decision process.