The Prudential Series Fund

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INDUSTRIAL PROPERTY Year Ended December 31, 2008 Net Investment Income/(Loss) 2008 Net Investment Income/(Loss) 2007 Realized Gain/(Loss) 2008 Unrealized Gain/(Loss) 2007 Occupancy 2008 Occupancy 2007 Property Aurora, CO (1) $ - $49,279 $ - $345,832 N/A N/A (1) The Partnership sold the property on February 7, 2007. Net Investment Income The Partnership sold its industrial property on February 7, 2007. Therefore no net investment income was received for the year ended December, 2008, reflecting a minimal decrease from the prior year. Total Realized and Unrealized Gain/Loss The Partnership’s industrial property was sold on February 7, 2007. Therefore no realized gains and/or losses were recorded for the year ended December 31, 2008, compared with realized gains of $0.3 million during the prior year. HOTEL PROPERTY Year Ended December 31, 2008 Net Investment Income/(Loss) 2008 Net Investment Income/(Loss) 2007 Unrealized Gain/(Loss) 2008 Unrealized Gain/(Loss) 2007 Occupancy 2008 Occupancy 2007 Property Lake Oswego, OR $1,213,328 $1,343,200 $(1,347,338) $2,409,924 71% 76% Net Investment Income Net investment income for the Partnership’s hotel property was approximately $1.2 million for the year ended December 31, 2008, reflecting a decrease of $0.1 million from the prior year due to lost occupancy. Unrealized Gain/Loss The hotel property owned by the Partnership recorded an unrealized loss of approximately $1.3 million for the year ended December 31, 2008, compared with an unrealized gain of approximately $2.4 million for the prior year. The unrealized loss for the year ended December 31, 2008 reflects increased investment rates and decreased average daily rate growth projections. Other Other net investment loss increased approximately $1.4 million during the year ended December 31, 2008 from the prior year. Other net investment loss includes interest income from short-term investments, investment management fees, and portfolio level expenses. (c) Inflation A majority of the Partnership’s leases with its commercial tenants provide for recoveries of expenses based upon the tenant’s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may partially reduce the Partnership’s exposure to increases in operating costs resulting from inflation. Critical Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or “U.S. GAAP”, requires the application of accounting policies that often involve a significant degree of judgment. Management reviews critical estimates and assumptions on an ongoing basis. If management determines, as a result of its consideration of facts and circumstances, that modifications in assumptions and estimates are appropriate, results of operations and financial position as reported in the audited Consolidated Financial Statements of the Account and the Partnership may change significantly. 22 - Real Property
The following sections discuss those critical accounting policies applied in preparing the unaudited Consolidated Financial Statements of the Account and the Partnership that are most dependent on the application of estimates and assumptions. Accounting Pronouncements Adopted The Partnership adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an Interpretation of FASB Statement No. 109 as of January 1, 2007. This interpretation prescribes a comprehensive model for how a Partnership should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Partnership has taken or expects to take on a tax return. The adoption of FIN 48 had no effect to the financial position and result of operations of the Partnership. In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires additional disclosures about fair value measurements. This statement does not require any new fair value measurements, but the application of this statement could change current practices in determining fair value. This adoption did not change the methodology used to fair value our real estate investments. In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” including an amendment of FASB Statement No. 115. This statement provides partnerships with an option to report selected financial assets and liabilities at fair value. SFAS No. 157 and SFAS No. 159 are effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Partnership adopted SFAS No. 157 and SFAS No. 159 effective January 1, 2008, however, the Partnership did not make a fair value option election for its existing debt. The adoption does not have any effect on the Partnership’s consolidated financial position and results of operations. Please refer to Notes 2D and 5 for details. New Accounting Pronouncements FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), was issued in January 2003. In December 2003, FASB issued a revised interpretation of FIN 46 (“FIN 46-R”) that supersedes FIN 46. FIN 46-R defers the effective date for applying the provisions of FIN 46 for those companies currently accounting for their investments in accordance with the AICPA Audit and Accounting Guide, “Audits of Investment Companies” (the “Audit Guide”). The FASB is currently considering modifying FIN 46-R to provide an exception for companies that apply the Audit Guide. The Partnership is awaiting further guidance from the FASB in order to evaluate the extent in which, if any, its investments may need to be consolidated as a result of this FIN 46-R. In June 2007, the Accounting Standards Executive Committee issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 provides guidance for determining whether an entity is within the scope of the Audit Guide. SOP 07-1 was originally determined to be effective for fiscal years beginning on or after December 15, 2007, however, on February 6, 2008, FASB issued a Staff Position indefinitely deferring the effective date. In December 2007, FASB issued SFAS No. 141 (revised 2007) (“SFAS 141R”), “Business Combinations”, and SFAS No. 160, “Non-controlling interests in Consolidated Financial Statements, an Amendment to ARB No. 51” (“SFAS 160”). SFAS 141R expands the definition of a business and redefines the acquisition date in a merger and acquisition transaction. It significantly modifies the existing SFAS 141, including changes to acquisition related contingent consideration, pre-acquisition contingencies, non-controlling interest, restructuring costs, in-process R&D, goodwill and partial acquisition. SFAS 160 requires the non-controlling interest to be reported as a separate component of equity. It also changes the allocation of losses and accounting in step acquisitions. The provisions in SFAS 160 should be applied prospectively except for the presentation and disclosure requirements, which are required retrospectively for all periods presented. SFAS 141R and SFAS 160 are effective for the acquisitions closing after the first annual reporting period beginning after December 15, 2008. The Partnership is currently reviewing the provisions in SFAS 141R and SFAS 160, and assessing whether the changes would be material to its financial statements upon adoption. Valuation of Investments Real Estate Investments - Real estate investments are carried at fair value. Properties owned are initially recorded at the purchase price plus closing costs. Development costs and major renovations are capitalized as a component of cost, and routine maintenance and repairs are charged to expense as incurred. Real estate costs include the cost of acquired property, including all the tangible and intangible assets. Tangible assets include the value of all land, 23 - Real Property
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MAY 1, 2009 PROSPECTUS The Prudenti
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THE PRUDENTIAL SERIES FUND Diversif
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THE PRUDENTIAL SERIES FUND Natural
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This prospectus discusses the follo
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INTRODUCTION ABOUT THE FUND AND ITS
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■ prepayment risk The Portfolio i
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■ ■ ■ ■ ■ ■ ■ ■ ■
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a representative sample of the stoc
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PRINCIPAL RISKS Although we try to
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Foreign investment risk. Investing
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Market risk. Market risk is the ris
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guaranteeing the obligation for ult
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PAST PERFORMANCE Conservative Balan
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Equity Portfolio Annual Returns (Cl
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Global Portfolio Annual Returns (Cl
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High Yield Bond Portfolio Annual Re
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Money Market Portfolio Annual Retur
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Small Capitalization Stock Portfoli
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Value Portfolio Annual Returns (Cla
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EXAMPLE The following Example, whic
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and are considered speculative. We
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can’t guarantee success, and it i
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■ ■ Repurchase agreements. The
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Government Income Portfolio The inv
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The Portfolio may also invest in ob
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unrated, of comparable quality in o
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■ Illiquid securities The Portfol
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MORE DETAILED INFORMATION ABOUT OTH
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Page 63 and 64: Equity Portfolio Spiros “Sig” S
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Page 67 and 68: Natural Resources Portfolio David A
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Page 75 and 76: FINANCIAL HIGHLIGHTS INTRODUCTION T
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Page 85 and 86: TABLE OF CONTENTS Page PER SHARE IN
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Page 89 and 90: Summary of Charges The Partnership
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Page 127 and 128: NOTES TO THE CONSOLIDATED FINANCIAL
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Pruco Life Insurance Company Notes
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The Prudential Series Fund

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