Prudential Variable Contract Account 11 NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES


Investment Company Act file number		811-03422

The Prudential Variable Contract Account—11

(Exact name of registrant as specified in charter)

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey

07102

(Address of principal executive offices)

(Zip code)

Deborah A. Docs

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

(Name and address of agent for service)

Registrant’s telephone number, including area code: 973-367-7521

Date of fiscal year end: 12/31/2007

Date of reporting period: 12/31/2007

Item 1 – Reports to Stockholders

Prudential MEDLEY Program

LOGO

Annual Report to Participants

December 31, 2007

Please note that inside is a Prospectus Supplement dated November 27, 2007. This is separate from and not a part of the annual report.

IFS-A114833

LOGO

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus for The MEDLEY Program. Investors should consider the contract and the underlying portfolios’ investment objectives, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectuses that can be obtained from your financial professional. You should read the prospectuses carefully before investing.

The report is for the information of persons participating in The Prudential Variable Contract Account-10 (VCA-10), The Prudential Variable Contract Account-11 (VCA-11), and The Prudential Variable Contract Account-24 (VCA-24) (Collectively known as the “Accounts”) of The MEDLEY Program. VCA-10, VCA-11, and VCA-24 are group annuity insurance products. Annuities are issued by Pruco Life Insurance Company, or in New York, Pruco Life Insurance Company of New Jersey, both located at 213 Washington Street, Newark, NJ 07102-2992, and Prudential Annuities Life Assurance Corporation, located at One Corporate Drive, Shelton, CT, 06484. Variable annuities are distributed by Prudential Annuities Distributors, Inc., also located in Shelton, CT. Prudential Annuities is a business unit of Prudential Financial.

All are Prudential Financial companies and each is solely responsible for its financial condition and contractual obligations.

Pru, Prudential, Prudential Financial, Rock Solid, “The Rock”, the Rock Logo and the Rock Prudential Logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.

This report includes the financial statements of VCA-10, VCA-11, and The Prudential Series Fund (the “Funds”).

This report does not include separate account financials for the VCA-24 Subaccounts. If you would like separate account financial statements as of December 31, 2007, please call the telephone number on the inside back cover of this report. They will be available commencing April 30, 2008.

Annuity contracts contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your plan sponsor or licensed financial professional can provide you with costs and complete details. Contract guarantees are based on the claims-paying ability of the issuing company.

A description of the Account’s proxy voting policies and procedures is available without charge, upon request. MEDLEY participants should call (888) 778-2888 to obtain a description of the Account’s proxy voting policies and procedures. The description is also available on the website of the Securities and Exchange Commission (the “Commission”) at www.sec.gov. Information regarding how the Account’s voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the website of the Commission at www.sec.gov and on the Account’s website.

The Funds Statement of Additional Information contains additional information about the Account’s Trustees and is available without charge upon request by calling (888) 778-2888.

Each Account files with the Commission a complete listing of portfolio holdings as of the end of the first and third quarters on Form N-Q. Form N-Q is available on the Commission’s website at www.sec.gov or by visiting the Commission’s Public Reference Room. For more information on the Commission’s Public Reference Room, please visit the Commission’s website or call 1-800-732-0330. MEDLEY participants may obtain copies of Form N-Q filings by calling (888) 778-2888.

The Prudential MEDLEY Program

Glossary of Benchmark Definitions

December 31, 2007

Conservative Balanced Custom Blended Index consists of a blend of the S&P 500 Index (50%), the Lehman Brothers Aggregate Bond Index (40%), and the 3-Month T-Bill (10%).

Flexible Managed Custom Blended Index consists of a blend of the S&P 500 Index (60%), the Lehman Brothers Aggregate Bond Index (35%), and the 3-Month T-Bill (5%).

Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index comprised of more than 5,000 government and corporate bonds.

Lehman Brothers U.S. Corporate High Yield Index is an unmanaged index of fixed-rate, non-investment-grade debt securities with at least one year remaining to maturity. It gives a broad look at how high yield (“junk”) bonds have performed.

Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped index covers the universe of U.S. dollar denominated, non-convertible, fixed-rate, non-investment-grade debt. Issuers are capped at 2% of the Index. Index holdings must have at least one year to final maturity, at least $150 million par amount outstanding, and be publicly issued with a rating of Ba1 or lower.

Lehman Brothers Government Bond Index is an unmanaged index comprised of securities issued or backed by the U.S. government, its agencies, and instrumentalities with a remaining maturity of 1 to 30 years.

The Lipper Variable Insurance Products (VIP) Funds Averages are calculated by Lipper Analytical Services, Inc., and reflect the investment return of certain portfolios underlying variable life and annuity products.


General U.S. Government Funds Average		Intermediate Investment Grade Debt Funds Average
Global Growth Funds Average		Large-Cap Core Funds Average
Mixed Asset Target Allocation Growth Funds Average
S&P 500 Index Objective Funds Average

Morgan Stanley Capital International (MSCI) World Index (GD) — The Morgan Stanley Capital International World Index is an unmanaged capitalization weighted index which includes the equity markets of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, United Kingdom and United States. The GD version does not reflect the impact of withholding taxes on reinvested dividends. 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.

Russell 1000 Index is a market cap-weighted index that measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market.

S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market.

This page may include certain benchmarks not applicable to the portfolios available in this particular report. Investors cannot invest directly in a market index or average. These returns are net of investment fees and fund expenses, but not product charges.

The Prudential MEDLEY Program

Table of Contents

December 31, 2007

Letter to Participants

VCA-10 CAPITAL GROWTH ACCOUNT

Financial Statements

VCA-11 MONEY MARKET ACCOUNT

Financial Statements

VCA-24 THE PRUDENTIAL SERIES FUND PORTFOLIOS

Conservative Balanced Portfolio

Diversified Bond Portfolio

Equity Portfolio

Flexible Managed Portfolio

Global Portfolio

Government Income Portfolio

Stock Index Portfolio

The Prudential MEDLEY Program

Letter to Participants

December 31, 2007

DEAR PARTICIPANTS:

At Prudential, it is our goal to help our clients achieve and maintain financial success. We hope you find the Prudential MEDLEY Program annual report both informative and useful.

We would also like to remind you about the benefits of diversifying your investment portfolio. In today’s volatile markets, diversification is key to protecting your investments. It helps position your investments when asset classes rotate in and out of favor, and is the best way to balance risk and return. In addition, diversification can help you meet your long-term investment goals although it does not assure against loss in declining markets.

Take the first step and contact your financial professional for help in creating a diversified investment portfolio. A comprehensive mix of assets that is evaluated periodically over time can help you maintain focus on your financial objectives.

Thank you for selecting our products. We value the opportunity to manage your investments as you plan for the future.

Sincerely,

LOGO

David R. Odenath, Jr.

President,

The Prudential Series Fund

Judy A. Rice,

President,

Variable Contract Accounts 10 & 11

January 31, 2008

Prudential Variable Contract Account-10 (VCA-10) & Variable Contract

Account-24 (VCA-24)

Presentation of Portfolio Holdings — unaudited

December 31, 2007


Conservative Balanced
Five Largest Holdings/Issues		(% of Net Assets)
Federal National Mortgage Association, 5.00%, TBA 30 YR		2.0%
Exxon Mobil Corp.		1.7%
Federal National Mortgage Association, 5.50%, TBA 30 YR		1.4%
Federal Home Loan Mortgage Corp., 5.50%, TBA 30 YR		1.3%
General Electric Co.		1.3%


Diversified Bond
Five Largest Issues		(% of Net Assets)
Federal National Mortgage Association, 5.00%, TBA 30 YR		5.9%
Federal Home Loan Mortgage Corp., 5.50%, TBA 30 YR		3.9%
Federal National Mortgage Association, 5.50%, TBA 30 YR		2.8%
Federal National Mortgage Association, 6.00%, TBA 30 YR		2.7%
Federal Home Loan Mortgage Corp., 6.00%, TBA 30 YR		2.0%


Equity
Five Largest Holdings		(% of Net Assets)
Microsoft Corp.		2.61%
General Electric Co.		2.24%
Cisco Systems, Inc.		1.87%
QUALCOMM, Inc.		1.81%
American International Group, Inc.		1.69%


Flexible Managed
Five Largest Holdings/Issues		(% of Net Assets)
Exxon Mobil Corp.		2.5%
Microsoft Corp.		1.6%
General Electric Co.		1.6%
Federal National Mortgage Association, 5.00%, TBA 30 YR		1.5%
AT&T, Inc.		1.4%


Global
Five Largest Holdings		(% of Net Assets)
Merck & Co., Inc.		1.4%
McDonald's Corp.		1.3%
UnitedHealth Group, Inc.		1.2%
AT&T, Inc.		1.1%
Goldman Sachs Group, Inc. (The)		1.1%


Government Income
Five Largest Issues		(% of Net Assets)
Federal National Mortgage Association, 5.50%, 1/01/33		6.9%
Federal Home Loan Mortgage Association, Zero, 2/19/08		5.1%
Federal National Mortgage Association, 5.30%, 2/22/11		4.3%
Federal National Mortgage Association, 3.496%, 6/01/34		3.4%
Federal Home Loan Mortgage Association, 6.00%, TBA 30 YR		3.0%


Stock Index
Five Largest Holdings		(% of Net Assets)
Exxon Mobil Corp.		3.9%
General Electric Co.		2.9%
Microsoft Corp.		2.2%
AT&T Inc.		1.9%
Procter & Gamble Co.		1.8%


VCA-10
Five Largest Holdings		(% of Net Assets)
Cadbury Schweppes PLC ADR (United Kingdom)		2.7%
Petroleo Brasileiro SA ADR (Brazil)		2.7%
Occidental Petroleum Corp.		2.6%
Suncor Energy, Inc.		2.5%
Comcast Corp.		2.5%

For a complete listing of holdings, refer to the Schedule of Investments section of this report. Holdings reflect only long-term investments. Holdings/Issues/Industries/Sectors are subject to change.

The Prudential MEDLEY Program — VCA-10 Capital Growth Account

Subadvised by: Jennison Associates LLC

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Capital Growth Acct. (VCA-10)¹	5.80	%	16.50	%	4.53	%
S&P 500 Index²	5.49		12.82		5.91

Capital Growth Account inception: 5/13/1983.

$10,000 INVESTED OVER 10 YEARS

LOGO

Past performance does not guarantee future returns. Portfolio performance is net of investment fees and fund expenses, but not product charges, which, if included, would significantly lower the performance quoted. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted.

Unless noted otherwise, Lipper Average and Index returns reflect performance beginning the closest month-end date to the Portfolio’s inception.

Market Review

The final quarter of 2007 capped a volatile year that saw two distinctly different environments for equity markets. Most markets advanced, led by emerging economies and those U.S. sectors directly exposed to global economic expansion, especially energy stocks. Interest rates increased as the Federal Reserve sought to contain the incipient inflation reflected in personal consumption.

By late July, the investment environment changed dramatically. The souring residential real estate market rekindled volatility, triggering a liquidity squeeze that by year-end had caused mortgage investors to incur losses of tens of billions of dollars. The credit market turmoil sparked a swift reappraisal of risk factors in the U.S. equity markets.

Employment remained healthy, but slowing economic growth, the prospect of recession in 2008, and the weak housing market pressured retail sales downward. Oil closed 2007 just shy of $100 per barrel. Many agricultural commodities hit new highs, and the US dollar slid further, fueling inflation concerns.

Performance Summary

Positions in energy, materials, and utilities boosted returns and beat the corresponding sectors of the S&P 500 Index (the Index). High spot oil prices lifted shares of Petroleo Brasileiro SA ADR (2.7%), Hess Corp. (1.2%), Occidental Petroleum Corp. (2.6%), Suncor Energy, Inc. (2.5%), and Murphy Oil Corp. (1.5%). Freeport-McMoRan Copper & Gold, Inc. (1.2%) advanced on sustained, elevated prices for copper, gold, and molybdenum. We believe the supply/demand imbalances will continue, keeping oil, copper, and gold prices above historical levels. Merchant power generation company NRG Energy (1.7%) benefited from the potential acquisition of Texas-based utility company TXU by a private equity firm.

The consumer staples, industrials, and information technology sectors helped performance, but trailed the Index. Tech stocks performed unevenly. Apple, Inc. (1.8%) and Google, Inc. (2.1%) soared, but Spansion, Inc. (0.8%), Motorola, Inc. (1.5%), and Marvell Technology Group Ltd. (1.2%) declined. Apple rocketed on the strength of its iPod and resurgent Macintosh computer sales. Spansion fell due to lower prices for its NOR flash-memory chips and liquidity concerns.

While consumer discretionary and financials ended 2007 with a negative total return, stock selection in both sectors and an underweight in financials benefited relative performance. Entangled in the credit crisis, MBIA, Inc. (1.2%), Citigroup, Inc. (1.3% as of 9/30/07), and SLM Corp. (1.3%) were hit hard. Telecom services and healthcare underperformed, lagging the corresponding sectors of the Index, weighed down mainly by Sprint Nextel Corp. (1.5%) and Omnicare, Inc. (1.3%).

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Account.

^1.

The Account performance results are after the deduction of all expenses and contract charges, including investment management and administrative fees but not including the effect of any sales charges. All total returns are for the periods indicated and are calculated based on changes in unit values.

^2.	The S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market. Investors cannot invest directly in an index.

For a complete list of holdings please see the Statement of Net Assets sections of this report.

FINANCIAL STATEMENTS OF VCA-10


		*STATEMENT OF NET ASSETS*

December 31, 2007


LONG-TERM INVESTMENTS — 98.8%		Value (Note 2)
COMMON STOCKS — 97.6%	Shares	Value (Note 2)
Biotechnology — 2.9%
Amgen, Inc. (a)	83,800	$	3,891,672
Genentech, Inc. (a)	61,500		4,124,805

			8,016,477

Capital Markets — 2.7%
Bank of New York Mellon Corp. (The)	78,672		3,836,047
UBS AG	77,600		3,569,600

			7,405,647

Commercial Services & Supplies — 1.6%
Waste Management, Inc.	137,400		4,488,858

Communications Equipment — 2.9%
Motorola, Inc.	248,000		3,977,920
QualComm, Inc.	97,200		3,824,820

			7,802,740

Computers & Peripherals — 4.8%
Apple, Inc. (a)	25,200		4,991,616
Lexmark International, Inc. Class A (a)	120,500		4,200,630
Seagate Technology	156,700		3,995,850

			13,188,096

Consumer Finance — 1.3%
SLM Corp.	174,100		3,506,374

Diversified Consumer Services — 3.0%
Career Education Corp. (a)	123,200		3,097,248
H & R Block, Inc.	278,700		5,175,459

			8,272,707

Electric Utilities — 3.0%
Entergy Corp.	37,300		4,458,096
Progress Energy, Inc.	79,000		3,825,970

			8,284,066

Food & Staples Retailing — 3.0%
Kroger Co. (The)	166,900		4,457,899
Wal-Mart Stores, Inc.	79,100		3,759,623

			8,217,522

Food Products — 4.5%
Cadbury Schweppes PLC ADR (United Kingdom)	148,700		7,341,319
ConAgra Foods, Inc.	204,700		4,869,813

			12,211,132

Health Care Providers & Services — 1.3%
Omnicare, Inc.	157,000		3,581,170

Hotels, Restaurants & Leisure — 1.4%
International Game Technology	84,700		3,720,871

Household Products — 1.2%
Kimberly-Clark Corp.	49,100		3,404,594

Independent Power Producers & Energy Traders — 1.7%
NRG Energy, Inc. (a)	108,500		4,702,390


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)
Industrial Conglomerates — 1.7%
General Electric Company	128,500	$	4,763,495

Insurance — 5.7%
American International Group	108,200		6,308,060
Loews Corp.	121,800		6,131,412
MBIA, Inc.	174,800		3,256,524

			15,695,996

Internet & Catalog Retail — 1.4%
IAC/InterActiveCorp. (a)	141,100		3,798,412

Internet Software & Services — 2.1%
Google, Inc. Class A (a)	8,200		5,670,136

Media — 6.0%
Liberty Global, Inc. Ser. C (a)	141,205		5,166,691
Comcast Corp. (a)	369,100		6,739,766
XM Satellite Radio Holdings, Inc. (a)	354,400		4,337,856

			16,244,313

Metals & Mining — 2.7%
Freeport-McMoRan Cooper & Gold, Inc.	32,300		3,308,812
Lihir Gold Limited ADR (Papua New Guinea)	126,000		3,929,940

			7,238,752

Multiline Retail — 1.3%
JC Penney Co., Inc.	80,800		3,554,392

Multi-Utilities — 2.1%
Sempra Energy	90,600		5,606,328

Office Electronics — 1.4%
Xerox Corp.	231,300		3,744,747

Oil, Gas & Consumable Fuels — 16.6%
Devon Energy Corp.	38,700		3,440,817
Hess Corp.	31,900		3,217,434
Marathon Oil Corp.	73,900		4,497,554
Murphy Oil Corp.	47,500		4,029,900
Nexen, Inc.	177,500		5,727,925
Occidental Petroleum Corp.	92,300		7,106,177
Petroleo Brasileiro SA ADR (Brazil)	63,000		7,260,120
Suncor Energy, Inc.	62,900		6,839,117
Williams Cos, Inc.	85,900		3,073,502

			45,192,546

Paper & Forest Products — 1.0%
Domtar Corp. (a)	354,300		2,724,567

Pharmaceuticals — 4.7%
Abbott Laboratories	55,600		3,121,940
Schering-Plough Corp.	111,500		2,970,360
Teva Pharmaceutical Industries Ltd. ADR (Israel)	47,100		2,189,208
Wyeth	100,800		4,454,352

			12,735,860

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL STATEMENTS OF VCA-10


		*STATEMENT OF NET ASSETS*

December 31, 2007


COMMON STOCKS			Value (Note 2)
(continued)	Shares		Value (Note 2)
Semiconductors & Semiconductor Equipment — 2.0%
Marvell Technology Group Ltd. (a)		243,000	$	3,397,140
Spansion, Inc. (a)		522,600		2,053,818

				5,450,958

Software — 3.4%
Adobe Systems Incorporated (a)		113,400		4,845,582
CA, Inc.		573		14,296
Symantec Corp. (a)		269,300		4,346,502

				9,206,380

Specialty Retail — 2.1%
Best Buy Co., Inc.		109,600		5,770,440

Thrifts & Mortgage Finance — 2.9%
Federal National Mortgage Association		113,400		4,533,732
People’s United Financial, Inc.		194,630		3,464,414

				7,998,146

Tobacco — 1.1%
Altria Group, Inc.		40,100		3,030,758

Wireless Telecommunication Services — 4.1%
NII Holdings, Inc. (a)		86,000		4,155,520
Sprint Nextel Corp.		315,164		4,138,103
Virgin Mobile USA, Inc. (a)		317,700		2,824,353

				11,117,976

TOTAL COMMON STOCKS (Cost: $233,390,456)				266,346,846

CORPORATE BOND — 1.2%
	Principal Amount (000)
Oil, Gas & Consumable Fuels
Trident Resources Corp., Unsec’d. Note, PIK, (Canada), Private Placement, due 12.966%, due 8/12/12 (b)(c) (Cost: $3,133,273; purchased 8/20/07)	$	3,131		3,349,392

WARRANT
	Shares
Oil, Gas & Consumable Fuels
Trident Resources Corp. (Canada), Private Placement, expiring 1/01/15 (a)(b)(c) (Cost: $0; purchased 8/20/07)		313,974		31

TOTAL LONG-TERM INVESTMENTS (Cost: $236,523,729)			$	269,696,269


SHORT-TERM INVESTMENTS — 0.9%
	Shares	Value (Note 2)
Affiliated Money Market Mutual Fund
Dryden Core Investment Fund- Taxable Money Market Series(e) (Cost: $2,525,541)	2,525,541	$	2,525,541

TOTAL INVESTMENTS(d)— 99.7% (Cost: $239,049,270)		$	272,221,810

OTHER ASSETS, LESS LIABILITIES
Receivable for Pending Capital Transactions			19,625
Dividends Receivable			373,964
Receivable for Securities Sold			391,181

OTHER ASSETS IN EXCESS OF LIABILITIES — 0.3%			784,770

NET ASSETS — 100%		$	273,006,580

NET ASSETS, representing:
Equity of Participants — 24,945,320 Accumulation Units at an Accumulation Unit Value of $10.9319			272,699,645
Equity of The Prudential Insurance Company of America			306,935

		$	273,006,580

(a)	Non-income producing security.

(b)	Indicates an illiquid security.

(c)	Indicates a security restricted to resale. The aggregate cost of such securities is $3,133,273. The aggregate value of $3,349,423 is approximately 1.2% of net assets.

(d)	As of December 31, 2007, two securities valued at $3,349,423 and representing 1.2% of the total market value of the portfolio were fair valued in accordance with the policies adopted by the Committee Members.

(e)	The Prudential Investments LLC, the Manager of the Account, also serves as Manager of the Dryden Core Investment Fund—Taxable Money Market Series.


ADR		American Depository Receipt
PIK		Payment in Kind

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL STATEMENTS OF VCA-10


		*STATEMENT OF NET ASSETS*

December 31, 2007

The industry classification of portfolio holdings and other assets in excess of liabilities shown as a percentage of net assets as of December 31, 2007 were as follows:


Oil, Gas & Consumable Fuels	16.6	%
Media	6.0
Insurance	5.7
Computers and Peripherals	4.8
Pharmaceuticals	4.7
Food Products	4.5
Wireless Telecommunication Services	4.1
Software	3.4
Diversified Consumer Services	3.0
Electric Utilities	3.0
Food & Staples Retailing	3.0
Biotechnology	2.9
Communications Equipment	2.9
Thrifts & Mortgage Finance	2.9
Capital Markets	2.7
Metals & Mining	2.7
Internet Software & Services	2.1
Multi-Utilities	2.1
Specialty Retail	2.1
Semiconductors & Semiconductor Equipment	2.0
Independent Power Producers & Energy Traders	1.7
Industrial Conglomerates	1.7
Commercial Services & Supplies	1.6
Hotels, Restaurants, & Leisure	1.4
Internet & Catalog Retail	1.4
Office Electronics	1.4
Consumer Finance	1.3
Health Care Providers & Services	1.3
Multiline Retail	1.3
Household Products	1.2
Corporate Bond	1.2
Tobacco	1.1
Paper & Forest Products	1.0
Affiliated Money Market Mutual Fund	0.9

	99.7
Other Assets in Excess of Liabilities	0.3

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL STATEMENTS OF VCA-10


		*STATEMENT OF OPERATIONS*

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated Dividend Income (net of $77,551 foreign withholding tax)	$	4,355,865
Affiliated Dividend Income		291,665
Total Income		4,647,530
EXPENSES
Fees Charged to Participants for Investment Management Services		(728,028	)
Fees Charged to Participants for Administrative Expenses		(2,157,203	)
Total Expenses .		(2,885,231	)
NET INVESTMENT INCOME		1,762,299
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investment Transactions		49,333,395
Net Change in Unrealized Appreciation on Investments		(34,155,433	)
NET GAIN ON INVESTMENTS		15,177,962
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	16,940,261


		*STATEMENT OF CHANGES IN NET ASSETS*


	Year Ended December 31,
	2007			2006
OPERATIONS
Net Investment Income	$	1,762,299		$	1,812,507
Net Realized Gain on Investment Transactions		49,333,395			51,909,218
Net Change In Unrealized Appreciation on Investments		(34,155,433	)		(14,156,960	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		16,940,261			39,564,765
CAPITAL TRANSACTIONS
Purchase Payments and Transfers In		10,055,096			14,307,187
Withdrawals and Transfers Out		(42,576,134	)		(63,679,961	)
Annual Account Charges Deducted from Participants’ Accounts		(37,712	)		(43,964	)
NET DECREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS		(32,558,750	)		(49,416,738	)
NET DECREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS		(2,017,738	)		(1,290	)
TOTAL DECREASE IN NET ASSETS		(17,636,227	)		(9,853,263	)
NET ASSETS
Beginning of year		290,642,807			300,496,070
End of year	$	273,006,580		$	290,642,807

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS FOR VCA-10


		INCOME AND CAPITAL CHANGES PER ACCUMULATION UNIT*

(For an Accumulation Unit outstanding throughout the year)


	Year Ended December 31,
	2007			2006			2005			2004			2003
Investment Income	$	.1753		$	.1539		$	.1061		$	.1198		$	.0827
Expenses
Investment management fee		(.0274	)		(.0237	)		(.0193	)		(.0170	)		(.0142	)
Administrative expenses		(.0821	)		(.0710	)		(.0600	)		(.0522	)		(.0424	)
Net Investment Income		.0658			.0592			.0268			.0506			.0261
Capital Changes
Net realized gain (loss) on investment transactions		1.8696			1.6855			.8647			.4174			(.0999	)
Net change in unrealized appreciation (depreciation) on investments		(1.3347	)		(.4319	)		.6037			.1877			1.8517
Net Increase in Accumulation Unit Value		.6007			1.3128			1.4952			.6557			1.7779
Accumulation Unit Value
Beginning of year		10.3312			9.0184			7.5232			6.8675			5.0896
End of year	$	10.9319		$	10.3312		$	9.0184		$	7.5232		$	6.8675
Total Return**		5.81	%		14.56	%		19.87	%		9.55	%		34.93	%
Ratio of Expenses To Average Net Assets***		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Ratio of Net Investment Income To Average Net Assets***		.60	%		.62	%		.32	%		.72	%		.45	%
Portfolio Turnover Rate		65	%		60	%		51	%		62	%		63	%
Number of Accumulation Units Outstanding
For Participants at end of year (000’s omitted)		24,945			27,921			33,107			36,252			39,109

Calculated by accumulating the actual per unit amounts daily.

Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported. Total returns may reflect adjustments to conform to generally accepted accounting principles.

***

These calculations exclude PICA’s equity in VCA-10.

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

SEE NOTES TO FINANCIAL STATEMENTS.

NOTES TO THE FINANCIAL STATEMENTS OF

VCA-10

Note 1:

General

The Prudential Variable Contract Account-10 (“VCA-10” or the “Account”) was established on March 1, 1982 by The Prudential Insurance Company of America (“PICA”) under the laws of the State of New Jersey and is registered as an open-end, diversified management investment company under the Investment Company Act of 1940, as amended. VCA-10 has been designed for use by employers (“Contract-holders”) in making retirement arrangements on behalf of their employees (“Participants”). The investment objective of the Account is long-term growth of capital. The Account’s investments are composed primarily of common stocks. Although variable annuity payments differ according to the investment performance of the Account, they are not affected by mortality or expense experience because PICA assumes the expense risk and the mortality risk under the contracts.

Note 2:

Summary of Significant Accounting Policies

Securities Valuation: Securities listed on a securities exchange are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and ask prices, or at the last bid price on such day in the absence of an asked price. Securities traded via Nasdaq are valued at the official closing price provided by Nasdaq. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”), in consultation with the subadviser(s), to be over-the-counter, are valued by an independent pricing agent or principal market maker. Options on securities and indices traded on an exchange are valued at the mean between the most recently quoted bid and asked prices on such exchange. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign market and before the Fund’s normal pricing time, are valued at fair value in accordance with the Accounts’ Committee Members approved fair valuation procedures. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.

Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.

Short-term investments which mature in more than 60 days are valued based on current market quotations. Short-term investments having maturities of 60 days or less are valued at amortized cost which approximates market value. Amortized cost is computed using the cost on the date of purchase, adjusted for constant accretion of discount or amortization of premium to maturity.

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized and unrealized gains or losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Net investment income and realized and unrealized gain or losses (other than administrative fees) are allocated to the Participants and PICA on a daily basis in proportion to their respective ownership in VCA-10.

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

Federal Income Taxes: The operations of VCA-10 are part of, and are taxed with, the operations of PICA. Under the current provisions of the Internal Revenue Code, PICA does not expect to incur federal income

taxes on earnings of VCA-10 to the extent the earnings are credited under the Contracts. As a result, the Unit Value of VCA-10 has not been reduced by federal income taxes.

Note 3:

Investment Management Agreement and Charges

The Account has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services. PI has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Account. PI pays for the services of Jennison.

A daily charge, at an effective annual rate of up to 1.00% of the current value of the Participant’s equity in VCA-10, is charged to the Account. Up to three quarters of the charge (0.75%) paid to PICA, is for administrative expenses not provided by the annual account charge, and one quarter (0.25%), paid to PI, is for investment management services. PICA may impose a reduced Administrative Fee where warranted by economies of scale and the expense characteristics of the employer, association or trust to which Prudential has issued a Contract.

PICA, PI and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

An annual account charge of not more than $30 is deducted from the account of each Participant, if applicable, at the time of withdrawal of the value of all of the Participant’s accounts or at the end of the fiscal year by canceling Units.

A deferred sales charge is imposed upon that portion of certain withdrawals which represents a return of contributions. The charge is designed to compensate PICA for sales and other marketing expenses. The maximum deferred sales charge is 7% on contributions withdrawn from an account during the first year of participation. After the first year of participation, the maximum deferred sales charge declines by 1% in each subsequent year until it reaches 0% after seven years. No deferred sales charge is imposed upon contributions withdrawn for any reason after seven years. For the years ended December 31, 2007 and December 31, 2006, PICA has advised the Account that it has received deferred sales charges of $967 and $2,219 respectively, imposed upon certain withdrawals from the Account.

Note 4:

Purchases and Sales of Portfolio Securities

For the year ended December 31, 2007, the aggregate cost of purchases and the proceeds from sales of securities, excluding short-term investments, were $200,972,131 and $188,839,960, respectively.

Investment in the Core Fund: The Account invests in the Taxable Money Market Series (the “Series”), a portfolio of Dryden Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Series is a money market mutual fund registered under the Investment Company Act of 1940, as amended, and managed by PI. During the year ended December 31, 2007, the Account earned $291,665, by investing its excess cash in the Series.

Note 5:

Unit Transactions

The number of Accumulation Units issued and redeemed for the years ended December 31, 2007 and December 31, 2006, respectively, are as follows:


	Year Ended December 31,
	2007	2006
Units issued	915,756	1,502,061
Units redeemed	(3,891,367)	(6,688,165)
Net decrease	(2,975,611)	(5,186,104)

Note 6:

Net Increase (Decrease) In Net Assets Resulting from Surplus Transfers

The increase (decrease) in net assets resulting from surplus transfers represents the net increase to/(reductions from) PICA’s investment in the Account. This increase (decrease) includes reserve adjustments for mortality and expense risks assumed by PICA.

Note 7:

Participant Loans

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

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

For the year ended December 31, 2007, $459,273 in participant loans were withdrawn from VCA-10 and $334,585 of principal and interest was repaid to VCA-10. For the year ended December 31, 2006, $536,915 in participant loans were withdrawn from VCA-10 and $402,543 of principal and interest was repaid to VCA-10. Loan repayments are invested in Participant’s account(s) as chosen by the Participant, which may not necessarily be VCA-10. The initial loan proceeds which are being repaid may not necessarily have originated solely from VCA-10. During the year ended December 31, 2007, PICA has advised the Account that it received $4,112 in loan origination fees. The participant loan principal and interest repayments are included in purchase payments and transfers in within the Statement of Changes in Net Assets.

Note 8:

New Accounting Pronouncements

On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (FAS 157). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact, if any, in the financial statements has not yet been determined.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Committee and Participants of

The Prudential Variable Contract Account-10:

We have audited the accompanying statement of net assets of The Prudential Variable Contract Account-10 (the “Account”) as of December 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2003 were audited by another independent registered public accounting firm, whose report dated February 24, 2004, expressed an unqualified opinion thereon.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Account as of December 31, 2007, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.

LOGO

New York, New York

February 26, 2008

The Prudential MEDLEY Program — VCA-11 Money Market Account

Subadvised by: Prudential Investment Management

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	7-Day Current Net Yield		1-Year		5-Year		10-Year
VCA-11 Money Market Acct.¹	4.25	%	4.49	%	2.32	%	3.07	%
Citigroup 3-mos T-Bill Index²	N/A		4.74		2.95		3.62

Portfolio inception: 5/13/1983.

MONEY MARKET ACCOUNT

ONE-YEAR TOTAL RETURN FOR THE

PAST 10 YEARS

LOGO

Unless noted otherwise, Lipper Average and Index returns reflect performance beginning the closest month-end date to the Portfolio’s inception. The yield quotation more closely reflects the current earnings of the Portfolio than the total return quotation.

On December 31, 2007, the VCA-11 Money Market Account’s 7-day current net yield was 4.25%. The Account returned 4.49% in 2007, while the Citigroup Three-Month U.S. Treasury Bill Index returned 4.74%.

The reporting period began with the target for the federal funds rate charged on overnight loans between banks at 5.25%, as the Federal Reserve (the Fed) held monetary policy steady after gradually increasing short-term rates to remove excess monetary stimulus from the U.S. economy. Meanwhile, the housing sector exhibited signs of weakness, raising expectations that the Fed would cut short-term rates to keep the economy growing.

Economic growth did slow during the first three months of 2007. Additionally, key data pointed to a steady decline in the housing sector. By summer, concerns about the credit quality of debt securities containing subprime mortgages (home loans made to borrowers with poor credit histories) spilled into the broader financial markets. Deepening concern about these debt securities and the financial institutions that held them severely hindered liquidity in the credit markets, and a flight to quality ensued that favored U.S. Treasury bills. Furthermore, the rates banks charge each other to borrow funds spiked higher amid fear that some banks might be overexposed to subprime mortgages and trading in some short-term debt securities came to a standstill.

During this time, the Fed aggressively added reserves to the financial system to ease the liquidity crunch. Conditions in the money markets improved somewhat when it unexpectedly cut the discount rate charged on direct Fed loans to banks by 50 basis points (a one hundredth of a percent) on August 17. It continued to ease stress in the markets by cutting its target for the federal funds rate by 50 basis points to 4.75% and the discount rate by the same amount on September 18.

Despite lower rates, credit quality concerns continued as the fourth quarter began. Additionally, many investors feared the economy was headed for a recession as consumers cut back on spending and the severe decline in the housing market continued. To avoid a recession and to further ease the liquidity crunch gripping the credit markets, the Fed reduced short-term rates in increments of 25 basis points in October and December, bringing the targeted federal funds rate to 4.25%. It also introduced a program to provide extended short-term loans to banks via auctions in December.

The Account benefited from its large holdings in variable-rate debt securities that reset periodically based on formulas tied to either the one- or three-month London interbank offered rates as these rates spiked higher during the second half of the year due to the liquidity crunch.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Account.

^1.

^2.

The Citigroup 3-Month Treasury Bill Index is an index whereby equal dollar amounts of three-month Treasury bills are purchased at the beginning of each of three consecutive months. As each bill matures, all proceeds are rolled over and reinvested in a new three-month bill. The income used to calculate the monthly return is derived by subtracting the original amount invested from the maturity value.

For current yields on the Money Market Account, please call (800) 458-6333. An investment in the Account is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. It is possible to lose money by investing in the Account.

For a complete list of holdings, refer to the Statement of Net Assets section of this report.

FINANCIAL STATEMENTS OF VCA-11


		*STATEMENT OF NET ASSETS*

As of December 31, 2007


SHORT TERM INVESTMENTS — 103.1%	Principal Amount (000)	Value (Note 2)
Certificates of Deposit — 21.7%
Banco Bilbao Vizcaya Argentaria 4.60%, 6/30/2008	2,000	$	2,000,000
Bank Of Scotland PLC 5.05%, 3/14/2008	2,000		2,000,040
Barclays Bank PLC
5.20%, 4/11/2008	1,000		1,000,000
5.37%, 6/4/2008	1,000		1,000,000
Marshall & Isley Bank 4.82%, 2/11/2008	1,000		1,000,000
Natixis 5.26%, 1/9/2008	1,000		999,970
Regions Bank 4.85%, 2/20/2008	2,000		2,000,000
Unicredito Italiano NY
5.19%, 2/19/2008	1,000		1,000,000
5.03%, 1/25/2008	1,000		1,000,020

			12,000,030

Commercial Paper(a) — 34.0%
Barton Capital Corp., 144A 5.70%, 1/10/2008	1,000		998,575
Bank Of America NA 4.985%, 2/8/2008	500		497,369
Cafco LLC, 144A 6.20%, 1/10/2008	1,000		998,450
Citigroup Funding Inc. 4.90%, 4/21/2008	2,000		1,969,783
Falcon Asset Securities Corp., 144A 5.75%, 1/22/2008	2,000		1,993,292
Long Lane Master Trust, 144A 5.20%, 1/31/2008	1,000		995,667
Old Line Funding Corp., 144A 5.90%, 1/7/2008	2,000		1,998,033
PNC Funding Corp. 4.89%, 3/19/2008	1,000		989,405
Prudential PLC, 144A 5.10%, 2/11/2008	1,000		994,192
San Paolo US 5.13%, 1/31/2008	1,000		995,725
Swedbank Mortgage AB, 144A
5.00%, 1/17/2008	1,475		1,471,722
5.15%, 2/5/2008	1,000		994,993
Swiss Re Financial Products, 144A 5.20%, 1/25/2008	1,500		1,494,800
Tulip Funding Corp., 144A
5.88%, 1/10/2008	1,500		1,497,795
5.75%, 1/14/2008	1,000		997,924

			18,887,725

Other Corporate Obligations — 41.2%
American Express Credit Corp., MTN 5.346%, 3/5/2008(b)	1,000		1,000,000


SHORT TERM INVESTMENTS (continued)	Principal Amount (000)	Value (Note 2)
Caja de Ahorro y Monta de Pirdad de Madrid, SA 5.349%, 8/12/2008	1,000	$	1,000,000
Fortis Bank NY 4.79%, 6/30/2008	2,000		1,998,754
Genworth Life Insurance Co. 4.976%, 8/22/2008 (b) (c) (cost: $1,000,000, purchase date 6/25/2007)	1,000		1,000,000
Goldman Sachs Group, MTN 4.899%, 11/14/2008	1,487		1,478,146
HSBC Finance Corp., MTN 4.125%, 3/11/2008	1,113		1,110,677
Irish Life & Permanent PLC, MTN, 144A
4.982%, 8/20/2008	2,000		1,999,936
JP Morgan Chase & Co., MTN
5.218%, 8/11/2008	2,000		2,000,000
Merrill Lynch & Co., MTN
5.036%, 8/22/2008(b)	1,000		998,891
5.168%, 8/14/2008(b)	500		500,000
Morgan Stanley, MTN
5.35%, 10/31/2008(b)	2,000		2,000,000
National City Bank, MTN
5.254%, 4/18/2008	1,000		1,000,128
5.303%, 1/10/2008	1,750		1,750,020
Paccar Financial Corp., MTN
5.204%, 8/12/2008(b)	1,000		1,000,000
Royal Bank of Canada, MTN
5.303%, 9/10/2008(b)	1,000		1,000,000
Skandinaviska Enskilda Banken AB, 144A
5.016%, 8/19/2008(b)	2,000		2,000,000
Wal Mart Stores
4.891%, 6/16/2008	1,000		999,790

			22,836,342

Loan Participation — 1.8%
Cargill, Inc.
4.97%, 1/22/2008	1,000		1,000,000

US Government Agency — 2.6%
Federal Home Loan Bank
4.50%, 12/11/2008	1,420		1,420,000

Repurchase Agreements(d) — 1.8%
Greenwich Capital Market,
4.75%, dated 12/31/2007, due 1/2/2008 in the amount of $997,263 (cost $997,000; the value of the collateral including accrued interest was $1,017,303)	997		997,000

TOTAL INVESTMENTS — 103.1%
(Cost: $57,141,097)		$	57,141,097

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL STATEMENTS OF VCA-11


		*STATEMENT OF NET ASSETS*

As of December 31, 2007


	Value (Note 2)
OTHER ASSETS, LESS LIABILITIES
Cash	$	8,215
Interest Receivable		256,673
Receivable for Pending Capital Transactions		3,154
Payable for Securities Purchased		(2,000,000	)

OTHER LIABILITIES IN EXCESS OF ASSETS — (3.1)%		(1,731,958	)

Net Assets — 100%	$	55,409,139

Net Assets, representing:
Equity of Participants —
16,559,557 Accumulation Units at an Accumulation Unit Value of 3.2939	$	54,545,809
Equity of the Prudential Insurance Company of America		863,330

	$	55,409,139

144A	Security was purchased pursuant to Rule 144A under the Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be illiquid.

MTN Medium Term Notes

(a)	Percentage quoted represents yield-to-maturity as of the purchase date.

(b)	Variable rate instrument. The maturity date presented for these instruments is the next date on which the rate of interest is adjusted. The interest rate given is as of December 31, 2007.

(c)	Indicates a security that has been deemed illiquid. The aggregate cost of the illiquid securities is $1,000,000. The aggregate value of $1,000,000 represents 1.8% of net assets.

(d)	Repurchase agreement is collateralized by federal agency obligations.

The industry classification of portfolio holdings and other liabilities in excess of assets shown as a percentage on net assets as of December 31, 2007 were as follows:


Foreign Banks	34.3	%
Asset Backed Securities	15.3
National Commercial Banks	10.4
Security Brokers and Dealers	8.9
Bank Holding Companies	8.1
Personal Credit Institutions	3.8
State Commercial Banks	3.6
Life Insurance	3.5
Fire Marine Casualty Insurance	2.7
Mortgage Bankers	2.7
Federal Credit Agencies	2.6
Farm Products & Raw Materials	1.8
Financial Services	1.8
Repurchase Agreement	1.8
Variety Stores	1.8

	103.1
Other liabilities in excess of assets	(3.1	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL STATEMENTS OF VCA-11


		*STATEMENT OF OPERATIONS*

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated Interest Income	$	3,076,569
Total		3,076,569
EXPENSES
Fees Charged to Participants for Investment Management Services		(139,320	)
Fees Charged to Participants for Administrative Expenses		(420,122	)
Total Expenses		(559,442	)
NET INVESTMENT INCOME		2,517,127
Realized Gain on Investment Transactions		885
NET INCREASE IN NET ASSETS FROM OPERATIONS	$	2,518,012


		*STATEMENT OF CHANGES IN NET ASSETS*


	Year Ended December 31,
	2007			2006
OPERATIONS
Net Investment Income	$	2,517,127		$	2,488,004
Net Realized Gain (Loss) on Investment Transactions		885			(101	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		2,518,012			2,487,903
CAPITAL TRANSACTIONS
Purchase Payments and Transfers In		9,926,395			13,559,046
Withdrawals and Transfers Out		(15,137,395	)		(21,683,680	)
Annual Account Charges Deducted from Participants’ Accounts		(29,093	)		(34,215	)
NET DECREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS		(5,240,093	)		(8,158,849	)
NET INCREASE IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS		440			32,050
TOTAL DECREASE IN NET ASSETS		(2,721,641	)		(5,638,896	)
NET ASSETS
Beginning of year		58,130,780			63,769,676
End of year	$	55,409,139		$	58,130,780

SEE NOTES TO FINANCIAL STATEMENTS.

FINANCIAL HIGHLIGHTS FOR VCA-11


		INCOME PER ACCUMULATION UNIT*

(For an Accumulation Unit outstanding throughout the year)


	Year Ended December 31,
	2007			2006			2005			2004			2003
Investment Income	$	.1735		$	.1561		$	.0985		$	.0431		$	.0374
Expenses
Investment management fee		(.0080	)		(.0077	)		(.0071	)		(.0072	)		(.0073	)
Administrative expenses		(.0235	)		(.0228	)		(.0223	)		(.0221	)		(.0220	)
Net Increase in Accumulation Unit Value		.1420			.1256			.0691			.0138			.0081
Accumulation Unit Value
Beginning of year		3.1519			3.0263			2.9572			2.9434			2.9353
End of year	$	3.2939		$	3.1519		$	3.0263		$	2.9572		$	2.9434
Total Return**		4.51	%		4.15	%		2.33	%		0.47	%		0.28	%
Ratio Of Expenses To Average Net Assets***		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Ratio Of Net Investment Income To Average Net Assets***		4.39	%		4.06	%		2.30	%		0.46	%		0.28	%
Number of Accumulation Units Outstanding
For Participants at end of year (000’s omitted)		16,560			18,183			20,822			24,298			26,594

Calculated by accumulating the actual per unit amounts daily.

***

These calculations exclude PICA’s equity in VCA-11.

SEE NOTES TO FINANCIAL STATEMENTS.

NOTES TO THE FINANCIAL STATEMENTS OF

VCA-11

Note 1:

General

The Prudential Variable Contract Account-11 (VCA-11 or the Account) was established on March 1, 1982 by The Prudential Insurance Company of America (“PICA”) under the laws of the State of New Jersey and is registered as an open-end, diversified management investment company under the Investment Company Act of 1940, as amended. VCA-11 has been designed for use by employers (Contract-holders) in making retirement arrangements on behalf of their employees (Participants). The investment objective of the Account is to realize a high level of current income as is consistent with the preservation of capital and liquidity. Its investments are primarily composed of short-term securities. The ability of the issuers of the securities held by the Account to meet their obligations may be affected by economic developments in a specific state, industry or region. Although variable annuity payments differ according to the investment performance of the Account, they are not affected by mortality or expense experience because PICA assumes the expense risk and the mortality risk under the contracts.

Note 2:

Summary of Significant Accounting Policies

Securities Valuation: Portfolio securities of VCA-11 are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of any discount or premium. If the amortized cost method is determined not to represent fair value, the fair value shall be determined by or under the direction of the Accounts’ Committee Members.

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from security transactions are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Net investment income (other than administration fees) is allocated to the Participants and PICA on a daily basis in proportion to their respective ownership or investment in VCA-11.

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

Repurchase Agreements: In connection with transactions in repurchase agreements with United States financial institutions, it is the Account’s policy that its custodian or designated subcustodians under triparty repurchase agreements, as the case may be, take possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase agreement exceeds one business day, the value of collateral is marked-to-market on a daily basis to ensure adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Account may be delayed or limited.

Note 3:

Investment Management Agreement and Charges

The Account has a management agreement with Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with management of the Account. PI pays for the services of PIM.

A daily charge, at an effective annual rate of up to 1.00% of the current value of the Participant’s equity in VCA-11, is charged to the Account. Up to three quarters of the charge (0.75%), paid to PICA, is for administrative expenses not provided by the annual account charge, and one quarter (0.25%), paid to PI, is for investment management services. PICA may impose a reduced Administrative Fee where warranted by

economies of scale and the expense characteristics of the employer, association or trust to which PICA has issued a contract.

PICA, PI and PIM are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

A deferred sales charge is imposed upon that portion of certain withdrawals which represents a return of contributions. The charge is designed to compensate PICA for sales and other marketing expenses. The maximum deferred sales charge is 7% on contributions withdrawn from an account during the first year of participation. After the first year of participation, the maximum deferred sales charge declines by 1% in each subsequent year until it reaches 0% after seven years. No deferred sales charge is imposed upon contributions withdrawn for any reason after seven years. For the years ended December 31, 2007 and December 31, 2006, PICA has advised the Account that it received deferred sales charges of $2,390 and $2,713, respectively, imposed upon certain withdrawals from the Account, respectively.

Note 4:

Unit Transactions

The number of Accumulation Units issued and redeemed for the years ended December 31, 2007 and December 31, 2006, are as follows:


	Year Ended December 31,
	2007	2006
Units issued	3,082,337	4,400,902
Units redeemed	(4,705,477)	(7,040,442)
Net decrease	(1,623,140)	(2,639,540)

Note 5:

Net Increase (Decrease) In Net Assets Resulting From Surplus Transfers

The increase (decrease) in net assets from surplus transfers represents the net increases to/(reductions from) PICA’s investment in the Account. This increase (decrease) includes reserve adjustments for mortality and expense risks assumed by PICA.

Note 6:

Participant Loans

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

For the year ended December 31, 2007, $315,056 in participant loans were withdrawn from VCA-11 and $136,553 of principal and interest was repaid to VCA-11. For the year ended December 31, 2006, $239,610 in participant loans were withdrawn from VCA-11 and $131,998 of principal and interest was repaid to VCA-11. Loan repayments are invested in Participant’s account(s) as chosen by the Participant, which may not necessarily be VCA-11. The initial loan proceeds which are being repaid may not necessarily have originated solely from VCA-11. During the year ended December 31, 2007, PICA has advised the Account that it received $4,985 in loan origination fees. The participant loan principal and interest repayments are included in purchase payments and transfers in within the Statement of Changes in Net Assets.

Note 7:

New Accounting Pronouncements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Committee and Participants of

The Prudential Variable Contract Account-11:

We have audited the accompanying statement of net assets of The Prudential Variable Contract Account-11 (the “Account”) as of December 31, 2007, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2003 were audited by another independent registered public accounting firm, whose report dated February 24, 2004, expressed an unqualified opinion thereon.

LOGO

New York, New York

February 26, 2008

MANAGEMENT OF VCA-10, 11

(Unaudited)

Information pertaining to the Committee Members of VCA-10, 11 is set forth below. Committee Members are not deemed to be “interested persons” of VCA-10, 11 as defined in the Investment Company Act are referred to as “Independent Committee Members.” Committee Members who are deemed to be “interested persons” of VCA-10, 11 are referred to as “Interested Committee Members.” “Fund Complex” consists of VCA-10, 11 and any other investment companies managed by PI.


Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Number of Portfolios In Fund Complex Overseen by Committee Member	Other Directorships Held by the Committee Member****

Linda W. Bynoe. (55)	Committee Member Since 2005	59	Director of Simon Property Group, Inc. (since May 2003) (real estate investment trust); Anixter International (since January 2006) (communication products distributor); Director of Northern Trust Corporation (since April 2006).

Principal Occupations During Past 5 Years – President and Chief Executive Officer (since March 1995) of Telemat Ltd. (management consulting); formerly Vice President at Morgan Stanley & Co.

David E. A. Carson (73)	Committee Member Since 2003	63	—

Principal Occupations During Past 5 Years – Director (since October 2007) of ICI Mutual Insurance Company; formerly Chairman and Chief Executive Officer of People’s Bank (1988-2000).

Robert E. La Blanc (73)	Committee Member Since 2003	61	Director of CA, Inc. (since 2002) (software company); FiberNet Telecom Group, Inc. (since 2003) (telecom company).

Principal Occupations During Past 5 Years – President (since 1981) of Robert E. La Blanc Associates, Inc. (telecommunications).

Douglas H. McCorkindale (68)	Committee Member Since 2003	59	Director of Continental Airlines, Inc. (since May 1993); Director of Lockheed Martin Corp. (aerospace and defense) (since May 2001).

Principal Occupations During Past 5 Years – Formerly Chairman (February 2001-June 2006), Chief Executive Officer (June 2000-July 2005), President (September 1997-July 2005) and Vice Chairman (March 1984-May 2000) of Gannett Co. Inc. (publishing and media).

Richard A. Redeker (64)	Committee Member Since 2003	60

Principal Occupations During Past 5 Years – Retired Mutual Fund Executive (36 years); Management Consultant; Director of Penn Tank Lines, Inc. (since 1999).

Robin B. Smith (68)	Committee Member Since 2003	61	Formerly Director of BellSouth Corporation (1992-2006).

Principal Occupations During Past 5 Years – Chairman of the Board (since January 2003) of Publishers Clearing House (direct marketing); formerly Chairman and Chief Executive Officer (August 1996-January 2003) of Publishers Clearing House.

Stephen D. Stoneburn (64)	Committee Member Since 2003	61

Principal Occupations During Past 5 Years – President and Chief Executive Officer (since June 1996) of Quadrant Media Corp. (publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media; Senior Vice President of Fairchild Publications, Inc (1975-1989).

Clay T. Whitehead (69)	Committee Member Since 2003	61

Principal Occupations During Past 5 Years – President (since 1983) of YCO (new business development firm).



Interested Committee Members
Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Number of Portfolios In Fund Complex Overseen by Committee Member	Other Directorships Held by the Committee Member****

Judy A. Rice (60)	President and Committee Member Since 2003	59

Principal Occupations During Past 5 Years – President, Chief Executive Officer, Chief Operating Officer and Officer-In-Charge (since February 2003) of Prudential Investments LLC; President, Chief Executive Officer and Officer-In-Charge (since April 2003) of Prudential Mutual Fund Services LLC; formerly Vice President (February 1999-April 2006) of Prudential Investment Management Services LLC; formerly President, Chief Executive Officer, Chief Operating Officer and Officer-In-Charge (May 2003-June 2005) and Director (May 2003-March 2006) and Executive Vice President (June 2005-March 2006) of AST Investment Services, Inc.; Member of Board of Governors of the Investment Company Institute.

*Robert F. Gunia (61)	Vice President Since 1999 and Committee Member Since 2003	149	Vice President and Director (since May 1989); Treasurer (since 1999) of The Asia Pacific Fund, Inc.; Vice President (since January 2007) of The Greater China Fund, Inc.

Principal Occupations During Past 5 Years – Chief Administrative Officer (since September 1999) and Executive Vice President (since December 1996) of Prudential Investments LLC; President (since April 1999) of Prudential Investment Management Services LLC; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; Chief Administrative Officer, Executive Vice President and Director (since May 2003) of AST Investment Services, Inc. Vice President and Director (since May 1999); Treasurer (since 1999) of The Asia Pacific Fund, Inc. and Vice President (since January 2007) of The Greater China Fund, Inc.



Officers
Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Principal Occupations During Past 5 Years

Grace C. Torres (48)	Treasurer and Principal Financial and Accounting Officer Since 1997	Assistant Treasurer (since March 1999) and Senior Vice President (since September 1999) of PI; Assistant Treasurer (since May 2003) and Vice President (since June 2005) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (since May 2003) of Prudential Annuities Advisory Services, Inc.; formerly Senior Vice President (May 2003-June 2005) of AST Investment Services, Inc.

Kathryn L. Quirk (55)	Chief Legal Officer Since 2005	Vice President and Corporate Counsel (since September 2004) of Prudential; Executive Vice President, Chief Legal Officer and Secretary (since July 2005) of PI and Prudential Mutual Fund Services LLC; Vice President and Corporate Counsel (since June 2005) and Secretary (since February 2006) of AST Investment Services, Inc.; formerly Senior Vice President and Assistant Secretary (November 2004-August 2005) of PI; formerly Assistant Secretary (June 2005-February 2006) of AST Investment Services, Inc.; formerly Managing Director, General Counsel, Chief Compliance Officer, Chief Risk Officer and Corporate Secretary (1997-2002) of Zurich Scudder Investments, Inc.

Deborah A. Docs (50)	Secretary Since 2005	Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of PI; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Jonathan D. Shain (49)	Assistant Secretary Since 2005	Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of PI; Vice President and Assistant Secretary (since February 2001) of PMFS; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Claudia DiGiacomo (33)	Assistant Secretary Since 2005	Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1999-2004).

John P. Schwartz (36)	Assistant Secretary Since 2006	Vice President and Corporate Counsel (since April 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1997-2005).



Officers
Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Principal Occupations During Past 5 Years

Timothy J. Knierim (49)	Chief Compliance Officer Since 2007	Chief Compliance Officer of Prudential Investment Management, Inc. (since July 2007); formerly Chief Risk Officer of PIM and PI (2002-2007) and formerly Chief Ethics Officer of PIM and PI (2006-2007).

Valerie M. Simpson (49)	Deputy Chief Compliance Officer Since 2007	Chief Compliance Officer (since April 2007) of PI and AST Investment Services, Inc.; formerly Vice President-Financial Reporting (June 1999-March 2006) for Prudential Life and Annuities Finance.

M. Sadiq Peshimam (44)	Assistant Treasurer Since 2006	Vice President (since 2005) and Director (2000-2005) within Prudential Mutual Fund Administration.

Peter Parrella (49)	Assistant Treasurer Since 2007	Vice President (since 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004).

Andrew R. French (45)	Assistant Secretary Since 2006	Director and Corporate Counsel (since May 2006) of Prudential; Vice President and Assistant Secretary (since January 2007) of PI; Vice President and Assistant Secretary (since January 2007) of PMFS; formerly Senior Legal Analyst of Prudential Mutual Fund Law Department (1997-2006).

Noreen M. Fierro (43)	Anti-Money Laundering Compliance Officer Since 2006	Vice President, Corporate Compliance (since May 2006) of Prudential; formerly Corporate Vice President, Associate General Counsel (April 2002-May 2005) of UBS Financial Services, Inc., in their Money Laundering Prevention Group; Senior Manager (May 2005-May 2006) of Deloitte Financial Advisory Services, LLP, in their Forensic and Dispute Services, Anti-Money Laundering Group.

* “Interested” Committee Members, as defined in the Investment Company Act, by reason of employment with the Manager (as defined below), and/or the Distributor (as defined below).

** Unless otherwise noted, the address of Committee Members and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102.

*** There is no set term of office for Committee Members and Officers. The Independent Committee Members have adopted a retirement policy, which calls for the retirement of Committee Members on December 31 of the year in which they reach the age of 75. The table shows how long they have served as Committee Member and/or Officer.

**** This column includes only directorships of companies required to register, or file reports with the SEC under the Securities Exchange Act of 1934 (i.e., “public companies”) or other investment companies registered under the Investment Company Act.

The Prudential Series Fund

The following pages represent information on The Prudential Series Fund Portfolios. Returns are at the Portfolio level, not at the Subaccount level.

Each Subaccount of VCA-24 will invest in the corresponding portfolio of The Prudential Series Fund (the “Fund”). Of the portfolios comprising the Fund, seven portfolios are presently available to The MEDLEY Program. The Diversified Bond Subaccount invests in the Diversified Bond Portfolio, the Government Income Subaccount in the Government Income Portfolio, the Conservative Balanced Subaccount in the Conservative Balanced Portfolio, the Flexible Managed Subaccount in the Flexible Managed Portfolio, the Stock Index Subaccount in the Stock Index Portfolio, the Equity Subaccount invests in the Equity Portfolio, and the Global Subaccount in the Global Portfolio.

There is no assurance that the investment objective of the portfolios will be attained, nor is there any guarantee that the amount available to a Participant will equal or exceed the total contributions made on that Participant’s behalf. The value of the investments held in each account may fluctuate daily and is subject to the risks of both changing economic conditions and the selection of investments necessary to meet the Subaccounts’ or Portfolios’ objectives.

Important Note

This information supplements the financial statements and other information included in this Report to Participants in The MEDLEY Program. It highlights the investment performance of the seven portfolios of The Prudential Series Fund which are available through the Prudential Variable Contract Account-24. The rates of return quoted on the following pages reflect deduction of investment management fees and portfolio expenses, but not product charges. They reflect the reinvestment of dividend and capital gains distributions. They are not an estimate or a guarantee of future performance.

Contract unit values increase or decrease based on the performance of the portfolio and when redeemed, may be worth more or less than original cost. Changes in contract values depend not only on the investment performance of the Portfolio but also on the insurance, administrative charges and applicable sales charges, if any, under a contract. These contract charges effectively reduce the dollar amount of any net gains and increase the dollar amount of any net losses.

The Prudential Series Fund, Conservative Balanced Portfolio

Subadvised by: Prudential Investment Management, Inc., Quantitative Management Associates LLC

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Conservative Balanced Portfolio	6.12	%	9.24	%	5.11	%
S&P 500 Index	5.49		12.82		5.91
Conservative Balanced Custom Blended Index	6.10		8.51		6.02
Lipper Mixed Asset Target Allocation Growth Funds Avg.	6.78		10.68		6.02

Portfolio inception: 5/13/1983.

$10,000 INVESTED OVER 10 YEARS

LOGO

Unless noted otherwise, Lipper Average and Index returns reflect performance beginning the closest month-end date to the Portfolio’s inception. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.

For the year ended December 31, 2007, the Conservative Balanced Portfolio had a total return that was in line with its Blended Index (50% stock, 40% bond, 10% cash) but below the average return of its peer group.

Quantitative Management Associates LLC (QMA) uses its proprietary asset allocation model to construct portfolios that invest in the three major classes of assets — stocks, debt securities, and cash. The latter may also include money market funds, U.S. Treasury bills, and other cash-equivalent securities.

QMA manages the portion of the Portfolio that invests in stocks. The Portfolio performed in line with its Blend Index, helped by its exposure to the stock of a foreign corporation. Foreign stock exposure accounted for about 8% of its assets at the end of the year. Shares of foreign companies are not included in the Blend Index as its equity component, the S&P 500 Index, is composed of shares of companies based in the United States. Foreign stock markets, as measured by the Morgan Stanley Capital International Europe, Australasia, and Far East (MSCI EAFE) Index, outperformed the S&P 500 Index in 2007. Much of the rise in the MSCI EAFE Index was attributable to the decline in the value of the U.S. dollar versus the euro. The U.S. dollar weakened as the Federal Reserve repeatedly cut short-term interest rates to stimulate growth in a U.S. economy that had begun to lose steam. At the end of the year, QMA continued to favor investing in stocks over investing in cash equivalent securities.

Prudential Investment Management, Inc. manages the portion of the Portfolio that invests in debt securities and cash. In 2007, that portion of the Portfolio outperformed the Lehman Brothers U.S. Aggregate Bond Index, which is the fixed income component of the Blend Index.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

For average and index definitions, refer to the Glossary of Benchmark Definitions page. Investors cannot invest directly in a market index or average. For a complete list of holdings refer to the Schedule of Investments section of this report.

The Prudential Series Fund, Diversified Bond Portfolio

Subadvised by: Prudential Investment Management, Inc.

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Diversified Bond Portfolio	5.71	%	5.40	%	5.69	%
Lehman Brothers U.S Aggregate Bond Index	6.97		4.42		5.97
Lipper VP Intermediate Investment Grade Debt Funds Avg.	6.25		4.39		5.57

Portfolio inception: 5/13/1983.

$10,000 INVESTED OVER 10 YEARS

LOGO

For the year ended December 31, 2007, the Diversified Bond Portfolio had a total return that was below its benchmark index and the average of its peer group.

The Federal Reserve (the Fed) held monetary policy steady during the first half of the year, but it repeatedly cut short-term interest rates in the second half, as a meltdown in debt securities linked to risky mortgages escalated into a full-fledged credit crisis that threatened the U.S. economic expansion. Investors seeking refuge from turmoil in the financial markets favored highly rated investment grade bonds such as U.S. Treasury securities. Consequently, Treasurys outperformed all other sectors of the U.S. bond market, including federal agency securities, investment-grade corporate bonds, high yield corporate “junk” bonds, residential mortgage-backed securities, commercial mortgage-backed securities, and asset-backed securities, which are backed by underlying pools of assets such as home equity loans and auto loans. Wall Street refers to these debt securities as “spread product” because the difference between their yield and the yield of a comparable Treasury security is called the spread.

The Portfolio underperformed its benchmark index because of its overweight exposure to spread product such as high-quality corporate bonds and asset-backed securities. Its exposure to high yield corporate bonds and emerging market bonds, which are not included in the benchmark, also hurt its relative performance.

The Portfolio’s relative performance benefited from its participation in a type of two-party contract called a credit default swap. Under this contract, the Portfolio paid a fee to the seller of the swap who agreed to pay the Portfolio an amount equal to the face value of certain BBB-rated asset-backed securities backed by home equity loans held by the Portfolio if the securities failed to pay interest and principal. As the subprime mortgage crisis worsened, the credit default swap gained in value, reflecting the growing risk associated with investing in debt securities backed by home equity loans. However, the positive impact from this strategy was partially offset by poor security selection among residential mortgage-backed securities, investment-grade corporate bonds, Treasurys, and emerging market bonds.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The Prudential Series Fund, Equity Portfolio

Subadvised by: Jennison Associates LLC, ClearBridge Advisors, LLC

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year		Since Inception
Equity Portfolio: Class I	9.32	%	14.70	%	5.69	%	N/A
Equity Portfolio: Class II	8.91		14.25		N/A		3.62	%
S&P 500 Index	5.49		12.82		5.91		2.76
Russell 1000^® Index	5.77		13.43		6.20		3.29
Lipper Large-Cap Core Funds Avg.	5.78		12.19		5.06		2.57

Portfolio (Class I) inception: 5/13/1983. Portfolio (Class II) inception: 5/4/1999.

$10,000 INVESTED OVER 10 YEARS¹

LOGO

Unless noted otherwise, Lipper Average and Index returns reflect performance beginning the closest month-end date to the Portfolio’s inception (Class II).

The Russell 1000^® Index is a trademark/service mark of the Frank Russell Company. Russell^® is a trademark of the Frank Russell Company. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.

For the year ended December 31, 2007, the Equity Portfolio had a total return that was above its benchmarks and the average return of its peer group.

Jennison Associates managed half the Portfolio, and ClearBridge Advisors managed the other half. Both portions contributed favorable stock selection, which was the primary reason the Portfolio outperformed its benchmarks for the year. Holdings in the energy sector, the consumer services sector (the media industry), and the technology sector (the electronic equipment and computer hardware industries) boosted the Portfolio’s performance.

The market environment generally favored growth stocks, which outperformed value stocks in 2007. Therefore, the Portfolio’s underweight exposure to stocks with value characteristics such as high dividend yields, low price-to-book ratios, and low price-to-earnings ratios had a slightly positive impact on its relative performance.

Allocation to various sectors of the stock market also had a slightly positive impact on the Portfolio’s performance due to the portion managed by Jennison. Compared to its benchmarks, the Portfolio had an underweight exposure to the financials sector, which was beset by problems as a meltdown in mortgages of less creditworthy borrowers escalated into a full-fledged financial crisis.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The graph is based on the performance of Class I shares. Performance of Class II shares will be lower due to differences in the fee structure. Class II shares have associated 12b-1 and administrative fees at an annual rate of 0.25% and 0.15% respectively of the average daily net assets of the Class II shares.

For average and index definitions, refer to the Glossary of Benchmark Definitions page. Investors cannot invest directly in a market index or average. For a complete list of holdings, refer to the Schedule of Investments section of this report.

The Prudential Series Fund, Flexible Managed Portfolio

Subadvised by: Prudential Investment Management, Inc., Quantitative Management Associates, LLC

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Flexible Managed Portfolio	6.36	%	11.24	%	5.08	%
S&P 500 Index	5.49		12.82		5.91
Flexible Managed Custom Blended Index	6.08		9.42		6.13
Lipper Mixed Target Allocation Growth Funds Avg.	6.78		10.68		6.02

Portfolio inception: 5/13/1983.

$10,000 INVESTED OVER 10 YEARS

LOGO

For the year ended December 31, 2007, the Flexible Managed Portfolio had a total return that was above its Blended Index (60% stocks, 35% bonds, 5% cash).

The Portfolio’s stock holdings are actively managed with risk characteristics similar to those of the S&P 500 Index. Its bond holdings are also actively managed and focus on high-grade bonds, relative to the Lehman Brothers Aggregate Bond index. Allocations to these asset classes are managed within a fairly wide range to take advantage of different market conditions. The more bullish management is on the equity market, the more their allocation will favor equities. As management becomes more bearish, allocations to debt and money markets will increase. The portfolio may also contain an allocation to the MSCI EAFE Index, when the managers believe it is warranted.

An overweight position in equities, which performed quite well during the first part of the year, drove the Portfolio’s outperformance relative to its benchmark. Stocks continued an upward trend in the third quarter, with the S&P 500 index rising to new peaks. U.S. exporters within the S&P 500 benefited from a fall in the dollar against the euro. However, a sharp acceleration in home mortgage defaults jolted financial markets. As markets moved downward in the latter part of the year, the S&P 500 index fell from its record highs. While some international markets, mostly those in Europe, were shaken by the ripple effect of the mortgage crisis and credit crunch, foreign markets were able to outpace U.S. returns. As a result, the MSCI EAFE index effectively doubled the return of the S&P 500 index.

The Portfolio’s bond holdings exceeded the returns of its benchmark. Despite underperforming in the fourth quarter, returns were ahead of the benchmark for the overall year. At year-end, the manager continued to favor equities over cash, a positioning that was consistent with its proprietary asset allocation model.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The Prudential Series Fund, Global Portfolio

Subadvised by: William Blair & Company LLC, LSV Asset Management, Marsico Capital Management, LLC, T. Rowe Price Associates, Inc.

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Global Portfolio	10.48	%	17.65	%	7.81	%
MSCI World Index (GD)	9.57		17.53		7.45
Lipper (VIP) Global Growth Funds Avg.	12.32		18.70		8.90

Portfolio inception: 9/19/1988.

$10,000 INVESTED OVER 10 YEARS

LOGO

For the year ended December 31, 2007, the Global Portfolio outperformed its benchmark, the MSCI World Index, but was below the average of its peer group.

The Portfolio is co-managed by four specialist subadvisers. Marsico Capital Management manages large-cap domestic growth stocks. T. Rowe Price manages large-cap domestic value stocks. William Blair & Company manages international growth stocks. LSV Asset Management manages international value stocks. Each firm is responsible for approximately a quarter of the Portfolio’s assets. We expect this diversified structure to reduce style and risk exposures, so that most of the Portfolio’s variance from its benchmark will be due to its co-managers’ stock selection. The major exception is that William Blair has the flexibility to invest in emerging markets stocks, which are not part of the Portfolio’s benchmark.

During 2007, the Portfolio benefited from an overweight allocation toward international equities, as well as an overweight position to growth stocks within the Portfolio’s domestic equity allocation. In the second half of the year, the market took a turn that favored firms with large capitalizations. This trend picked up steam when a financial crisis tied to risky mortgages sent investors fleeing to shares of companies with consistent earnings growth. As a result, international growth stocks significantly outperformed international value stocks. This was evident in the MSCI EAFE Index (the Index), as value stocks underperformed growth stocks by the widest margin since the EAFE Value and Growth indexes were created.

Accordingly, the portions of the Portfolio that outperformed mostly did so by taking positions in companies exhibiting growth attributes. Positions within specific emerging market countries also augmented performance relative to the Index. The Marsico Large-Cap Growth portion gained from strong stock selection, particularly within the financials, basic materials, telecommunications, and consumer services sectors. The T. Rowe Price Large Cap Value portion was rewarded as growth-oriented stocks outperformed “deep value” companies, as did companies with less debt on their balance sheets, due to the market turmoil related to the mortgage crisis. The William Blair International Growth portion outperformed the Index by a wide margin. The manager’s exposure to emerging markets countries Brazil and China helped to enhance the Portfolio’s value. Additionally, stock selection, particularly within financials, energy, and technology, contributed positively to relative performance.

The LSV International Value portion’s deep value approach and below-benchmark market cap exposure, however, underperformed the Index.

��

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The Prudential Series Fund, Government Income Portfolio

Subadvised by: Prudential Investment Management, Inc.

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Government Income Portfolio	5.70	%	3.50	%	5.58	%
Lehman Brothers Govt. Bond Index	8.66		4.10		5.92
Lipper (VIP) General U.S. Govt. Funds Avg.	7.34		3.72		5.25

Portfolio inception: 5/1/1989.

$10,000 INVESTED OVER 10 YEARS

LOGO

For the year ended December 31, 2007, the Government Income Portfolio had a total return that was below its benchmark index and the average of its peer group.

The Federal Reserve (the Fed) held monetary policy steady during the first half of the year, but it repeatedly cut short-term interest rates in the second half, as a meltdown in debt securities linked to risky mortgages escalated into a full-fledged credit crisis that threatened the U.S. economic expansion. Investors seeking refuge from turmoil in the financial markets favored highly rated investment grade bonds such as U.S. Treasury securities. Consequently, Treasurys outperformed all other sectors of the U.S. bond market, including federal agency securities, investment-grade corporate bonds, high yield corporate “junk” bonds, residential mortgage-backed securities, commercial mortgage-backed securities, and asset-backed securities. The latter pay interest based upon the cash flow of an underlying pool of assets such as home equity loans, automobile loans, or credit card receivables. Wall Street refers to these types of debt securities as “spread product” because the difference between their yield and the yield of a comparable Treasury security is called the spread.

Three key factors caused the Portfolio to underperform its benchmark index. The first was its exposure to spread product, including federal agency securities, residential mortgage-backed securities, investment-grade corporate bonds, and emerging market bonds. The second was its strategy concerning the yield curve, a graph that depicts the relationship between yields on short- and long-term bonds. The slope of the U.S. yield curve became steeper in response to the Fed’s rate cuts. Therefore, Prudential Investment Management’s strategy that anticipated a flatter yield curve detracted from the Portfolio’s relative performance. The third factor was poor security selection among Treasurys, residential mortgage-backed securities, emerging market bonds, and swap transactions. However, this was partially offset by favorable security selection among federal agency securities, investment-grade corporate bonds, AAA-rated asset-backed securities, and AAA-rated commercial mortgage-backed securities.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The Prudential Series Fund, Stock Index Portfolio

Subadvised by: Prudential Investment Management, Inc., Quantitative Management Associates LLC

December 31, 2007

Investment Manager’s Report

Performance Summary - As of December 31, 2007

Average Annual Total Return Percentages


	1-Year		5-Year		10-Year
Stock Index Portfolio	5.10	%	12.44	%	5.65	%
S&P 500 Index	5.49		12.82		5.91
Lipper (VIP) S&P 500 Index Objective Funds Avg.	5.12		12.39		5.59

Portfolio inception: 10/19/1987.

$10,000 INVESTED OVER 10 YEARS

LOGO

For the year ended December 31, 2007, the Stock Index Portfolio had a total return that was below the S&P 500 Index (the Index) and in line with the average return of its peer group. The average index fund based on the Index generally trails the Index primarily because funds have fees and expenses that indexes do not have.

The Index posted a total return for 2007 that was below its historical average, and sector returns varied widely. The strongest performing sectors in the Index were energy, materials, utilities, information technology, and consumer staples, all of which posted double-digit gains for the year. The industrials, healthcare, and telecommunications services sectors posted single-digit gains. The energy sector benefited as supply and demand factors coupled with political developments in oil-rich regions helped boost crude oil to nearly $100 a barrel in 2007. Industries in the materials sector benefited from the voracious appetite for raw materials in emerging market nations. Concern that the U.S. economy will soon tumble into a recession helped less cyclical sectors such as utilities and consumer staples, which tend to do relatively well during economically challenging times.

The weakest sectors in the Index were more vulnerable to economic woes in the United States, particularly the troubled housing and mortgage industries. The financials sector registered the largest decline in 2007, as some prominent banks and Wall Street firms took multibillion dollar write-downs on securities linked to risky mortgages. Consumer discretionary was the other sector that posted a loss, as shares of homebuilders, retailers, auto manufacturers, and others were hard hit by the housing industry problems and recession fears.

Although the Index finished the year in the black, it declined during the fourth quarter of 2007, which is a time of year when share prices tend to gain. The fourth-quarter decline resulted in a modest return in 2007 for the Index and the Stock Index Portfolio.

Prudential Investments LLC (PI), an indirect, wholly owned subsidiary of Prudential Financial, Inc., serves as the investment manager for the Fund.

The Prudential Series Fund

Fees and Expenses — unaudited

December 31, 2007

As a contract owner investing in Portfolios of the Fund through a variable annuity or variable life contract, you incur ongoing costs, including management fees, and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other investment options. This example does not reflect fees and charges under your variable annuity or variable life contract. If contract charges were included, the costs shown below would be higher. Please consult the prospectus for your contract for more information about contract fees and charges.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2007 through December 31, 2007.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the Portfolio expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the Portfolio expenses you paid on your account during this period. As noted above, the table does not reflect variable contract fees and charges.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other investment options. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other investment options.

Please note that the expenses shown in the table are meant to highlight your ongoing Portfolio costs only and do not reflect any contract fees and charges, such as sales charges (loads), insurance charges or administrative charges. Therefore the second line of the table is useful to compare ongoing investment option costs only, and will not help you determine the relative total costs of owning different contracts. In addition, if these contract fee and charges were included, your costs would have been higher.


The Prudential Series Fund Portfolios		Beginning Account Value July 1, 2007	Ending Account Value December 31, 2007	Annualized Expense Ratio based on the Six-Month period	Expenses Paid During the Six-Month period

Conservative Balanced (Class I)	Actual	$1,000.00	$1,014.30	0.59%	$3.00
	Hypothetical	$1,000.00	$1,022.23	0.59%	$3.01
Diversified Bond (Class I)	Actual	$1,000.00	$1,042.80	0.44%	$2.27
	Hypothetical	$1,000.00	$1,022.99	0.44%	$2.24
Equity (Class I)	Actual	$1,000.00	$1,014.90	0.46%	$2.34
	Hypothetical	$1,000.00	$1,022.89	0.46%	$2.35
Equity (Class II)	Actual	$1,000.00	$1,012.90	0.86%	$4.36
	Hypothetical	$1,000.00	$1,020.87	0.86%	$4.38
Flexible Managed (Class I)	Actual	$1,000.00	$1,005.00	0.63%	$3.18
	Hypothetical	$1,000.00	$1,022.03	0.63%	$3.21
Global (Class I)	Actual	$1,000.00	$1,017.20	0.82%	$4.17
	Hypothetical	$1,000.00	$1,021.07	0.82%	$4.18
Government Income (Class I)	Actual	$1,000.00	$1,049.60	0.55%	$2.84
	Hypothetical	$1,000.00	$1,022.43	0.55%	$2.80
Stock Index (Class I)	Actual	$1,000.00	$ 984.70	0.36%	$1.80
	Hypothetical	$1,000.00	$1,023.39	0.36%	$1.84

Portfolio expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended December 31, 2007, and divided by the 365 days in each Portfolio’s fiscal year ended December 31, 2007 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Portfolio may invest.


		*CONSERVATIVE BALANCED PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 87.3%		Value (Note 2)
COMMON STOCKS — 51.4%	Shares	Value (Note 2)

Aerospace & Defense — 1.3%
Boeing Co.	73,200	$	6,402,072
European Aeronautic Defence and Space Co. (Netherlands)	19,108		609,862
General Dynamics Corp.	37,400		3,328,226
Goodrich Corp.	11,300		797,893
Honeywell International, Inc.	70,912		4,366,052
L-3 Communications Holdings, Inc.	11,600		1,228,904
Lockheed Martin Corp.	33,300		3,505,158
Northrop Grumman Corp.	33,362		2,623,588
Precision Castparts Corp.	13,400		1,858,580
Raytheon Co.	41,300		2,506,910
Rockwell Collins, Inc.	15,400		1,108,338
United Technologies Corp.	90,600		6,934,524

			35,270,107

Air Freight & Logistics — 0.4%
C.H. Robinson Worldwide, Inc.	15,900		860,508
Expeditors International of Washington, Inc.	19,600		875,728
FedEx Corp.	27,500		2,452,175
TNT Post Group N.V.	11,504		475,149
United Parcel Service, Inc.	95,900		6,782,048

			11,445,608

Airlines — 0.1%
Air France KLM (France)	13,091		460,310
British Airways PLC (United Kingdom)(a)	11,347		69,964
Deutsche Lufthansa AG (Germany)	16,946		450,674
Japan Airlines Corp. (Japan)	27,000		61,229
Qantas Airways Ltd. (Australia)	229,453		1,090,210
Southwest Airlines Co.	70,800		863,761

			2,996,148

Auto Components — 0.2%
Aisin Seiki Co. Ltd. (Japan)	21,100		873,588
Bridgestone Corp. (Japan)	36,000		635,581
Denso Corp. (Japan)	14,700		598,205
Goodyear Tire & Rubber Co. (The)(a)(b)	19,500		550,290
Johnson Controls, Inc.	54,600		1,967,783
Rieter Holding AG (Switzerland)	239		105,551
Tokai Rika Co. Ltd. (Japan)	13,100		403,885
Toyota Industries Corp. (Japan)	11,300		458,145

			5,593,028

Automobiles — 0.4%
Daimler AG (Germany)	11,444		1,107,808
Fiat SpA (Italy)	29,473		762,712
Ford Motor Co.(a)(b)	178,995		1,204,636
General Motors Corp.(b)	53,791		1,338,858
Harley-Davidson, Inc.	23,100		1,079,001
Honda Motor Co. Ltd. (Japan)	12,800		422,846
Nissan Motor Co. Ltd. (Japan)	18,200		198,644
Peugeot SA (France)	15,551		1,178,881
Renault SA (France)	4,890		693,567
Toyota Motor Corp. (Japan)	62,400		3,323,343
Volkswagen AG (Germany)	581		132,880

			11,443,176

Beverages — 1.1%
Anheuser-Busch Cos., Inc.	68,500		3,585,290
Brown-Forman Corp. (Class B Stock)	7,700		570,647

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)
Beverages (continued)

Carlsberg A/S (Denmark)	4,450	$	538,357
Coca-Cola Co. (The)	181,800		11,157,066
Coca-Cola Enterprises, Inc.(b)	25,400		661,162
Coca-Cola Hellenic Bottling Co. SA (Greece)	11,018		476,823
Coca-Cola West Japan Co. Ltd. (Japan)	33,400		737,379
Constellation Brands, Inc.(a)(b)	19,100		451,524
Molson Coors Brewing Co. (Class B Stock)(b)	13,000		671,060
Pepsi Bottling Group, Inc.	11,600		457,736
PepsiCo, Inc.	148,530		11,273,428

			30,580,472

Biotechnology — 0.5%
Amgen, Inc.(a)	100,660		4,674,650
Biogen Idec, Inc.(a)	27,190		1,547,655
Celgene Corp.(a)	35,000		1,617,350
CSL Ltd. (Australia)	25,269		800,519
Genzyme Corp.(a)	23,300		1,734,452
Gilead Sciences, Inc.(a)	85,800		3,947,658

			14,322,284

Building Products — 0.2%
Asahi Glass Co. Ltd. (Japan)	54,000		714,171
Cie de Saint-Gobain (France)	11,886		1,120,704
Masco Corp.	34,800		752,028
Nippon Sheet Glass Co. Ltd. (Japan)	163,000		822,831
Sanwa Shutter Corp. (Japan)	29,000		142,374
Trane, Inc.	16,300		761,373

			4,313,481

Capital Markets — 1.7%
3i Group PLC	9,786		195,385
American Capital Strategies Ltd.(b)	16,000		527,360
Ameriprise Financial, Inc.	22,620		1,246,588
Bank of New York Mellon Corp. (The)	105,758		5,156,760
Bear Stearns Cos., Inc. (The)(b)	10,616		936,862
Charles Schwab Corp. (The)	88,550		2,262,453
Credit Suisse Group (Switzerland)	33,126		1,992,563
Deutsche Bank AG (Germany)	15,824		2,070,166
E*Trade Financial Corp.(a)(b)	41,500		147,325
Federated Investors, Inc. (Class B Stock)	9,000		370,440
Franklin Resources, Inc.	15,200		1,739,336
Goldman Sachs Group, Inc.(b)	37,800		8,128,890
Investec PLC (United Kingdom)	29,721		266,380
Janus Capital Group, Inc.(b)	19,800		650,430
Legg Mason, Inc.	11,900		870,485
Lehman Brothers Holdings, Inc.(b)	48,600		3,180,384
Macquarie Group Ltd. (Australia)	4,941		330,589
Merrill Lynch & Co., Inc.(b)	82,300		4,417,864
Morgan Stanley	96,780		5,139,986
Northern Trust Corp.(b)	17,300		1,324,834
State Street Corp.	35,500		2,882,600
T. Rowe Price Group, Inc.	24,600		1,497,648
UBS AG (Switzerland)	15,427		714,017

			46,049,345

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Chemicals — 1.0%
Air Products and Chemicals, Inc.	20,100	$	1,982,463
Altana AG (Germany)	10,180		247,069
Ashland, Inc.	4,500		213,435
BASF AG (Germany)	8,845		1,309,480
Daicel Chemical Industries Ltd. (Japan)	12,000		71,757
Dainippon Ink & Chemicals, Inc. (Japan)	91,000		453,683
Dow Chemical Co. (The)	87,431		3,446,530
E. I. Du Pont de Nemours & Co.	84,620		3,730,896
Eastman Chemical Co.	7,400		452,066
Ecolab, Inc.	16,100		824,481
Hercules, Inc.	11,500		222,525
International Flavors & Fragrances, Inc.	8,300		399,479
Koninklijke DSM NV (Netherlands)	23,520		1,111,747
Kuraray Co. Ltd. (Japan)	53,000		639,409
Mitsubishi Chemical Holdings Corp. (Japan)	131,000		999,488
Mitsubishi Gas Chemical Co., Inc. (Japan)	31,000		301,573
Mitsui Chemicals, Inc. (Japan)	8,000		51,935
Monsanto Co.	50,494		5,639,674
Nippon Shokubai Co. Ltd. (Japan)	24,000		229,967
PPG Industries, Inc.	15,500		1,088,565
Praxair, Inc.	28,300		2,510,493
Rohm & Haas Co.(b)	11,611		616,196
Shin-Etsu Chemical Co. Ltd. (Japan)	2,200		136,821
Sigma-Aldrich Corp.	12,000		655,200
Zeon Corp. (Japan)	23,000		137,195

			27,472,127

Commercial Banks — 2.5%
Allied Irish Banks PLC (Ireland)	8,599		197,019
Alpha Bank AE (Greece)	27,684		1,007,839
Australia & New Zealand Banking Group Ltd. (Australia)	4,867		116,474
Banco Bilbao Vizcaya Argentaria SA (Spain)	93,717		2,296,441
Banco BPI SA (Portugal)	29,904		234,346
Banco Espirito Santo SA (Portugal)	46,470		1,019,124
Banco Popolare Scarl (Italy)(a)	5,772		127,935
Banco Santander Central Hispano SA (Spain)	151,989		3,286,573
Barclay’s PLC (United Kingdom)	85,086		853,638
BB&T Corp.(b)	53,100		1,628,577
BNP Paribas (France)	21,683		2,352,899
Chiba Bank Ltd. (The) (Japan)	24,000		193,113
Comerica, Inc.	15,200		661,656
Commerce Bancorp, Inc.	16,700		636,938
Commerzbank AG (Germany)	35,915		1,380,478
Commonwealth Bank of Australia (Australia)	6,069		312,910
Credit Agricole SA (France)	4,328		145,981
Danske Bank A/S (Denmark)	31,080		1,217,288
Dexia (Belgium)	42,152		1,061,858
DNB NOR ASA (Norway)	81,400		1,244,270
EFG Eurobank Ergasias (Greece)	1,964		69,145
Fifth Third Bancorp	55,221		1,387,704
First Horizon National Corp.(b)	13,600		246,840
Hachijuni Bank Ltd. (The) (Japan)	12,000		80,628
HBOS PLC (United Kingdom)	81,542		1,193,036
HSBC Holdings PLC (United Kingdom)	120,067		2,012,430
Huntington Bancshares, Inc.	41,936		618,975
Hypo Real Estate Holding AG (Germany)	17,708		939,549
Intesa Sanpaolo SpA (Italy)	44,757		354,015
Jyske Bank A/S (Denmark)(a)	1,475		116,264
KeyCorp	37,100		869,995

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Commercial Banks (continued)
Lloyds TSB Group PLC (United Kingdom)	60,232	$	565,919
M&T Bank Corp.	8,300		677,031
Marshall & Ilsley Corp.(b)	24,900		659,352
Mitsubishi Financial Group, Inc. (Japan)	17,900		168,796
National Australia Bank Ltd. (Australia)	9,565		315,066
National Bank of Greece SA (Greece)	2,435		167,253
National City Corp.(b)	59,900		985,954
Nishi-Nippon City Bank Ltd. (The) (Japan)	16,000		39,629
PNC Financial Services Group, Inc.	32,000		2,100,800
Regions Financial Corp.(b)	70,203		1,660,301
Royal Bank of Scotland Group PLC (United Kingdom)	221,819		1,960,499
Skandinaviska Enskilda Banken AB (Class A Stock) (Sweden)	23,400		599,192
Societe Generale (France)	6,767		978,785
Sumitomo Mitsui Financial Group, Inc. (Japan)	99		732,628
SunTrust Banks, Inc.	33,000		2,062,170
Svenska Handelbanken (Class A Stock) (Sweden)	27,900		893,567
Swedbank AB (Class A Stock) (Sweden)	1,900		53,797
Sydbank A/S (Denmark)	3,072		132,065
Synovus Financial Corp.(b)	29,750		716,380
U.S. Bancorp	159,085		5,049,357
UniCredito Italiano SpA (Italy)	193,178		1,604,239
Wachovia Corp.(b)	181,640		6,907,768
Wells Fargo & Co.	308,500		9,313,614
Westpac Banking Corp. (Australia)	28,463		692,134
Zions Bancorporation	11,350		529,932

			67,430,166

Commercial Services & Supplies — 0.2%
Allied Waste Industries, Inc.(a)(b)	26,400		290,928
Avery Dennison Corp.	9,100		483,574
Cintas Corp.(b)	11,200		376,544
Downer EDI Ltd.	114,678		538,535
Equifax, Inc.	13,700		498,132
Michael Page International PLC (United Kingdom)	27,692		158,757
Monster Worldwide, Inc.(a)	13,100		424,440
Pitney Bowes, Inc.	21,600		821,664
Robert Half International, Inc.	15,500		419,120
RR Donnelley & Sons Co.	19,500		735,930
Waste Management, Inc.	48,542		1,585,867

			6,333,491

Communications Equipment — 1.3%
Ciena Corp.(a)(b)	9,142		311,834
Cisco Systems, Inc.(a)	560,200		15,164,613
Corning, Inc.	141,900		3,404,181
JDS Uniphase Corp.(a)(b)	14,075		187,198
Juniper Networks, Inc.(a)	51,500		1,709,800
Motorola, Inc.(b)	207,225		3,323,889
Nokia Corp. (Finland)	91,855		3,561,552
QUALCOMM, Inc.	152,900		6,016,615
Tellabs, Inc.(a)(b)	45,800		299,532

			33,979,214

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Computers & Peripherals — 2.0%
Apple, Inc.(a)	80,300	$	15,905,823
Dell, Inc.(a)	206,600		5,063,766
EMC Corp.(a)	191,550		3,549,422
Hewlett-Packard Co.	239,548		12,092,383
International Business Machines Corp.(b)	126,800		13,707,080
Lexmark International, Inc.(a)(b)	9,833		342,778
Network Appliance, Inc.(a)	38,800		968,448
QLogic Corp.(a)	16,600		235,720
SanDisk Corp.(a)(b)	19,500		646,815
Sun Microsystems, Inc.(a)(b)	81,575		1,478,955
Teradata Corp.(a)	17,600		482,416
Toshiba Corp. (Japan)	12,000		88,560
Wincor Nixdorf AG (Germany)	2,194		207,477

			54,769,643

Construction & Engineering — 0.1%
ACS Actividades de Construccion y Servicios SA (Spain)	12,580		747,660
COMSYS Holdings Corp. (Japan)	34,000		276,741
Fluor Corp.	8,100		1,180,332
Jacobs Engineering Group, Inc.(a)(b)	10,000		956,100
JGC Corp. (Japan)	6,000		102,877
YIT OYJ (Finland)	5,508		120,714

			3,384,424

Construction Materials — 0.1%
Cimpor Cimentos de Portugal SGPS SA (Portugal)	14,789		129,734
Holcim Ltd. (Switzerland)	7,861		842,238
Italcementi SpA (Italy)	5,480		117,216
Lafarge SA (France)	9,406		1,712,132
Vulcan Materials Co.	9,100		719,719

			3,521,039

Consumer Finance — 0.4%
American Express Co.	108,800		5,659,776
Capital One Financial Corp.(b)	38,761		1,831,845
Discover Financial Services	42,740		644,519
SLM Corp.(b)	41,900		843,866
Takefuji Corp. (Japan)	17,860		428,972

			9,408,978

Containers & Packaging
Ball Corp.	10,000		450,000
Bemis Co.	11,300		309,394
Pactiv Corp.(a)	10,900		290,267
Sealed Air Corp.	13,200		305,448

			1,355,109

Distributors — 0.1%
Genuine Parts Co.	15,200		703,760
Li & Fung Ltd. (Hong Kong)	62,000		247,177
Pacific Brands Ltd. (Australia)	220,957		627,502

			1,578,439

Diversified Consumer Services — 0.1%
Apollo Group, Inc.(a)(b)	13,000		911,950
H&R Block, Inc.(b)	29,100		540,387

			1,452,337

Diversified Financial Services — 2.1%
Babcock & Brown Ltd. (Australia)	5,925		139,370
Bank of America Corp.	408,238		16,843,899

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Diversified Financial Services (continued)
Challenger Financial Services Group Ltd. (Australia)	52,584	$	227,769
CIT Group, Inc.(b)	19,000		456,570
Citigroup, Inc.(b)	463,258		13,638,316
CME Group, Inc.	4,990		3,423,140
Fortis (Belgium)	34,966		920,709
Hong Kong Exchanges and Clearing Ltd. (Hong Kong)	34,000		953,149
ING Groep NV (Netherlands)	51,545		2,015,920
IntercontinentalExchange, Inc.(a)	6,100		1,174,250
JPMorgan Chase & Co.	313,201		13,671,224
Leucadia National Corp.(b)	14,600		687,660
Moody’s Corp.(b)	21,100		753,270
NYSE Euronext	23,800		2,088,926
OKO Bank PLC (Finland)	22,256		425,290
Singapore Exchange Ltd. (Singapore)	71,000		650,398

			58,069,860

Diversified Telecommunication Services — 1.7%
AT&T, Inc.	562,168		23,363,702
Belgacom SA (Belgium)	22,824		1,125,900
BT Group PLC (United Kingdom)	126,583		687,266
CenturyTel, Inc.	10,400		431,184
Citizens Communications Co.	31,000		394,630
Embarq Corp.	14,343		710,409
France Telecom SA (France)	42,304		1,522,763
Nippon Telegraph & Telephone Corp. (Japan)	88		437,442
Qwest Communications International, Inc.(a)(b)	151,257		1,060,312
Swisscom AG (Switzerland)	1,076		420,079
Tele2 AB (Class B Stock) (Sweden)	33,600		673,227
Telecom Corp. of New Zealand Ltd. (New Zealand)	99,674		332,965
Telecom Italia SpA (Italy)	38,827		120,630
Telecom Italia SpA (Italy)	534,665		1,271,058
Telefonica SA (Spain)	37,323		1,212,505
Verizon Communications Group, Inc.(b)	265,176		11,585,539
Windstream Corp.	45,857		597,058

			45,946,669

Electric Utilities — 1.2%
Allegheny Energy, Inc.	14,900		947,789
American Electric Power Co., Inc.	36,160		1,683,610
CLP Holdings Ltd. (Hong Kong)	71,500		485,772
Duke Energy Corp.	112,824		2,275,660
E.ON AG (Germany)	16,525		3,517,998
Edison International	29,800		1,590,426
Enel SpA (Italy)	94,789		1,127,401
Entergy Corp.	18,200		2,175,264
Exelon Corp.	62,474		5,100,378
FirstEnergy Corp.	27,401		1,982,188
FPL Group, Inc.	38,000		2,575,640
Hong Kong Electric Holdings (Hong Kong)	20,000		114,457
Pepco Holdings, Inc.	15,800		463,414
Pinnacle West Capital Corp.	9,700		411,377
PPL Corp.	36,000		1,875,240
Progress Energy, Inc.	24,583		1,190,555
Public Power Corp. SA (Greece)	6,658		350,436
Scottish & Southern Energy PLC (United Kingdom)	6,522		212,657
Southern Co. (The)	69,500		2,693,125
Union Fenosa SA (Spain)	13,943		941,601

			31,714,988

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Electrical Equipment — 0.4%
ABB Ltd. (Switzerland)	48,358	$	1,393,312
Alstom (France)	2,486		534,295
Cooper Industries Ltd.	17,400		920,112
Emerson Electric Co.	72,200		4,090,852
Hitachi Cable Ltd. (Japan)	48,000		283,252
Rockwell Automation, Inc.	16,200		1,117,152
Schneider Electric SA (France)	8,148		1,104,079
Sumitomo Electric Industries Ltd. (Japan)	13,700		216,070
Vestas Wind Systems A/S (Denmark)(a)	5,042		545,717

			10,204,841

Electronic Equipment & Instruments — 0.2%
Agilent Technologies, Inc.(a)	35,314		1,297,436
FUJIFILM Holdings Corp. (Japan)	2,400		100,453
Hitachi Ltd. (Japan)	46,000		341,750
Jabil Circuit, Inc.	21,600		329,832
Kyocera Corp. (Japan)	2,500		220,936
Molex, Inc.	11,700		319,410
Omron Corp. (Japan)	28,800		678,050
Tyco Electronics Ltd. (Bermuda)	46,315		1,719,677
Venture Manufacturing Ltd. Corp. (Singapore)	13,000		114,018

			5,121,562

Energy Equipment & Services — 1.2%
B.J. Services Co.	26,500		642,890
Baker Hughes, Inc.(b)	29,150		2,364,065
ENSCO International, Inc.	13,500		804,870
Halliburton Co.	85,500		3,241,305
Nabors Industries Ltd. (Bermuda)(a)	24,500		671,055
National Oilwell Varco, Inc.(a)(b)	33,600		2,468,256
Noble Corp.	25,200		1,424,052
Rowan Cos., Inc.(b)	8,200		323,572
Schlumberger Ltd.	109,000		10,722,330
Smith International, Inc.	17,900		1,321,915
Transocean, Inc.	28,247		4,043,558
Weatherford International Ltd.(a)	30,500		2,092,300
WorleyParsons Ltd. (Australia)	37,735		1,699,939

			31,820,107

Exchange Traded Fund
Ishares Msci Eafe Index Fund	4,400		345,400

Food & Staples Retailing — 1.2%
Casino GuichardPerrachon SA (France)	7,748		842,689
Circle K Sunkus Co. Ltd. (Japan)	5,100		75,383
Costco Wholesale Corp.	40,000		2,790,400
CVS Corp.	135,248		5,376,108
FamilyMart Co. Ltd. (Japan)	5,100		159,704
Koninklijke Ahold NV (Netherlands)	4,470		62,282
Kroger Co. (The)	65,846		1,758,747
Matsumotokiyoshi Holdings Co. Ltd. (Japan)	4,300		104,695
Safeway, Inc.	40,100		1,371,821
Supervalu, Inc.	20,010		750,775
Sysco Corp.	56,100		1,750,881
UNY Co. Ltd.	42,000		354,764
Walgreen Co.(b)	93,100		3,545,248
Wal-Mart Stores, Inc.(b)	220,800		10,494,624
Wesfarmers Ltd. (Australia)(a)	2,092		74,761

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Food & Staples Retailing (continued)
Whole Foods Market, Inc.(b)	14,100	$	575,280
Woolworths Ltd. (Australia)	52,604		1,560,025

			31,648,187

Food Products — 0.9%
Archer-Daniels-Midland Co.	57,126		2,652,360
Campbell Soup Co.	20,700		739,611
ConAgra Foods, Inc.	47,300		1,125,267
Danisco A/S (Denmark)	3,150		223,277
Dean Foods Co.	12,000		310,320
East Asiatic Co. Ltd. A/S (Denmark)	8,500		662,494
Futuris Corp. Ltd. (Australia)	100,391		188,315
General Mills, Inc.	29,400		1,675,800
Goodman Fielder Ltd.	505,016		834,865
H.J. Heinz Co.	28,000		1,307,040
Hershey Co. (The)(b)	15,300		602,820
Kellogg Co.(b)	24,400		1,279,292
Kraft Foods, Inc.	144,053		4,700,449
McCormick & Co., Inc.	11,000		417,010
Nestle SA (Class B Stock) (Switzerland)	4,773		2,192,254
Sara Lee Corp.	68,000		1,092,080
Tyson Foods, Inc. (Class A Stock)(b)	22,700		347,991
Unilever NV (Netherlands)	19,389		712,946
Unilever PLC (United Kingdom)	37,773		1,421,112
Wilmar International Ltd. (Singapore)	228,000		847,230
WM Wrigley Jr. Co.	20,000		1,171,000

			24,503,533

Gas Utilities — 0.1%
Gas Natural SDG SA (Spain)	7,157		418,766
Nicor, Inc.	4,600		194,810
Questar Corp.	15,200		822,320

			1,435,896

Healthcare Equipment & Supplies — 0.8%
Baxter International, Inc.	58,900		3,419,145
Becton Dickinson & Co.	22,400		1,872,192
Boston Scientific Corp.(a)(b)	114,967		1,337,066
C.R. Bard, Inc.	9,100		862,680
Covidien Ltd. (Bermuda)	46,315		2,051,291
Hospira, Inc.(a)	12,560		535,558
Medtronic, Inc.	103,600		5,207,973
Olympus Corp. (Japan)	15,000		611,325
St. Jude Medical, Inc.(a)	31,200		1,267,968
Stryker Corp.	21,700		1,621,424
Varian Medical Systems, Inc.(a)	11,600		605,056
Zimmer Holdings, Inc.(a)	22,500		1,488,375

			20,880,053

Healthcare Providers & Services — 1.1%
Aetna, Inc.	46,500		2,684,445
AmerisourceBergen Corp.	18,600		834,582
Cardinal Health, Inc.	34,250		1,977,938
Cigna Corp.	28,400		1,525,932
Coventry Health Care, Inc.(a)	13,950		826,538
Express Scripts, Inc.(a)	26,300		1,919,900
Humana, Inc.(a)(b)	15,900		1,197,429
Laboratory Corp. of America Holdings(a)(b)	11,200		845,936
McKesson Corp.	26,930		1,764,184

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Healthcare Providers & Services (continued)
Medco Health Solutions, Inc.(a)(b)	24,749	$	2,509,549
Parkway Holdings Ltd. (Singapore)	78,000		211,969
Patterson Cos., Inc.(a)(b)	10,000		339,500
Quest Diagnostics, Inc.(b)	15,100		798,790
Suzuken Co. Ltd. (Japan)	10,900		387,979
Tenet Healthcare Corp.(a)(b)	44,600		226,568
UnitedHealth Group, Inc.	121,700		7,082,939
WellPoint, Inc.(a)	54,600		4,790,058

			29,924,236

Healthcare Technology
IMS Health, Inc.	17,200		396,288

Hotels, Restaurants & Leisure — 0.6%
Carnival Corp.	41,400		1,841,886
Darden Restaurants, Inc.(b)	13,050		361,616
Enterprise Inns PLC (United Kingdom)	29,615		287,095
Harrah’s Entertainment, Inc.	17,500		1,553,125
International Game Technology	29,300		1,287,149
Marriott International, Inc. (Class A Stock)	30,300		1,035,654
McDonald’s Corp.(b)	108,900		6,415,299
OPAP SA (Greece)	2,290		91,805
Starbucks Corp.(a)	67,300		1,377,631
Starwood Hotels & Resorts Worldwide, Inc.	18,000		792,540
Wendy’s International, Inc.	9,600		248,064
Wyndham Worldwide Corp.	16,420		386,855
Yum! Brands, Inc.	48,200		1,844,614

			17,523,333

Household Durables — 0.3%
Barratt Developments PLC (United Kingdom)	34,117		309,346
Bellway PLC (United Kingdom)	7,664		127,159
Black & Decker Corp.	6,900		480,585
Bovis Homes Group PLC (United Kingdom)	7,894		96,797
Centex Corp.	8,700		219,762
D.R. Horton, Inc.(b)	23,700		312,129
Fortune Brands, Inc.	14,000		1,013,040
Harman International Industries, Inc.	6,400		471,744
KB Home(b)	5,700		123,120
Leggett & Platt, Inc.	14,800		258,112
Lennar Corp.(b)	13,300		237,937
Matsushita Electric Industrial Co. Ltd. (Japan)	25,000		512,272
Newell Rubbermaid, Inc.	26,414		683,594
Pulte Homes, Inc.	16,100		169,694
Sekisui Chemical Co. Ltd. (Japan)	108,000		721,391
Sekisui House Ltd. (Japan)	90,000		961,953
Snap-On, Inc.	4,900		236,376
Stanley Works (The)	7,900		382,992
Taylor Wimpey PLC (United Kingdom)	161,898		655,024
TomTom NV (Netherlands)(a)	993		74,769
Whirlpool Corp.	7,526		614,347

			8,662,143

Household Products — 1.1%
Clorox Co.	13,800		899,346
Colgate-Palmolive Co.	45,700		3,562,772
Kimberly-Clark Corp.	41,600		2,884,544
Procter & Gamble Co.	287,025		21,073,375
Reckitt Benckiser Group PLC (United Kingdom)	28,625		1,660,428

			30,080,465

SEE NOTES TO FINANCIAL STATEMENTS.


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Independent Power Producers & Energy Traders — 0.1%
AES Corp. (The)(a)	61,100	$	1,306,929
Constellation Energy Group, Inc.	17,100		1,753,263
Dynegy, Inc. (Class A Stock)(a)	37,500		267,750

			3,327,942

Industrial Conglomerates — 1.7%
3M Co.	65,400		5,514,528
Cookson Group PLC (United Kingdom)	9,396		130,365
General Electric Co.	939,000		34,808,729
Keppel Corp. Ltd. (Singapore)	80,000		712,854
Koninklijke (Royal) Philips Electronics NV (Netherlands)	1,202		51,878
Rheinmetall AG (Germany)	626		50,174
SembCorp Industries Ltd. (Singapore)	77,000		306,041
Siemens AG (Germany)	4,593		728,063
Textron, Inc.	21,700		1,547,210
Tyco International Ltd. (Bermuda)	46,315		1,836,390
Wendel (France)	3,596		520,181

			46,206,413

Insurance — 2.2%
ACE Ltd. (Bermuda)	31,000		1,915,180
Aegon NV (Netherlands)	23,250		410,972
Aflac, Inc.	44,600		2,793,298
Allianz AG (Germany)	11,366		2,460,747
Allstate Corp. (The)	56,200		2,935,326
AMBAC Financial Group, Inc.(b)	13,400		345,318
American International Group, Inc.	236,888		13,810,569
AON Corp.(b)	26,400		1,259,016
Assurant, Inc.(b)	10,300		689,070
Aviva PLC (United Kingdom)	71,913		963,402
AXA SA (France)	32,807		1,313,777
Chubb Corp.	36,700		2,003,086
Cincinnati Financial Corp.	17,837		705,275
CNP Assurances (France)	2,969		386,291
Genworth Financial, Inc.	42,900		1,091,805
Hartford Financial Services Group, Inc.	30,000		2,615,700
Legal & General Group PLC (United Kingdom)	85,000		220,977
Lincoln National Corp.	26,117		1,520,532
Loews Corp.	41,400		2,084,076
Marsh & McLennan Cos., Inc.	50,600		1,339,382
MBIA, Inc.(b)	12,250		228,218
MetLife, Inc.	68,500		4,220,969
Muenchener Rueckversicherungs-Gesellschaft AG (Germany)	9,036		1,755,095
Old Mutual PLC (United Kingdom)	64,863		216,399
Principal Financial Group	25,400		1,748,536
Progressive Corp. (The)	70,100		1,343,116
Royal & Sun Alliance Insurance Group PLC (United Kingdom)	277,795		819,516
SAFECO Corp.	11,000		612,480
SCOR (France)	17,548		448,982
Suncorp-Metway Ltd. (Australia)	17,009		251,053
Swiss Life Holding (Switzerland)	1,397		349,204
Swiss Reinsurance (Switzerland)	15,947		1,133,186
Torchmark Corp.	9,000		544,770
Travelers Cos., Inc. (The)	60,235		3,240,643
UnumProvident Corp.	32,210		766,276
XL Capital Ltd. (Class A Stock) (Bermuda)	18,300		920,673
Zurich Financial Services AG (Switzerland)	4,088		1,200,601

			60,663,516

SEE NOTES TO FINANCIAL STATEMENTS.

A10


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Internet & Catalog Retail — 0.2%
Amazon.com, Inc.(a)(b)	27,300	$	2,529,072
Expedia, Inc.(a)(b)	16,300		515,406
Home Retail Group PLC (United Kingdom)	162,348		1,060,000
IAC/InterActive Corp.(a)(b)	16,900		454,948

			4,559,426

Internet Software & Services — 0.8%
Akamai Technologies, Inc.(a)(b)	12,200		422,120
eBay, Inc.(a)	107,700		3,574,563
Google, Inc. (Class A Stock)(a)	21,250		14,693,950
Tencent Holdings Ltd. (China)	57,000		425,726
Verisign, Inc.(a)(b)	19,500		733,395
Yahoo!, Inc.(a)	123,100		2,863,306

			22,713,060

IT Services — 0.4%
Affiliated Computer Services, Inc.(a)	10,400		469,040
Automatic Data Processing, Inc.	51,500		2,293,295
Cognizant Technology Solutions Corp.(a)	27,200		923,168
Computer Sciences Corp.(a)	14,300		707,421
Convergys Corp.(a)	14,800		243,608
Electronic Data Systems Corp.	47,700		988,821
Fidelity National Information Services, Inc.	14,600		607,214
Fiserv, Inc.(a)(b)	15,700		871,193
Paychex, Inc.(b)	32,100		1,162,662
Unisys Corp.(a)(b)	31,500		148,995
Western Union Co.	72,110		1,750,831

			10,166,248

Leisure Equipment & Products — 0.1%
Brunswick Corp.(b)	7,200		122,760
Eastman Kodak Co.(b)	22,400		489,888
Hasbro, Inc.	15,800		404,164
Mattel, Inc.	36,451		694,027
Nikon Corp. (Japan)	24,000		816,439
Sankyo Co. Ltd. (Japan)	2,400		110,887
Yamaha Corp. (Japan)	5,100		116,364

			2,754,529

Life Sciences, Tools & Services — 0.2%
Applera Corp. – Applied Biosystems Group	17,300		586,816
Millipore Corp.(a)(b)	4,700		343,946
PerkinElmer, Inc.	12,800		333,056
Thermo Electron Corp.(a)	39,900		2,301,432
Waters Corp.(a)	9,200		727,444

			4,292,694

Machinery — 1.0%
Caterpillar, Inc.(b)	58,000		4,208,480
Charter PLC (United Kingdom)(a)	34,331		542,273
Cummins, Inc.	9,600		1,222,752
Danaher Corp.	22,300		1,956,602
Deere & Co.	40,600		3,780,672
Dover Corp.	19,300		889,537
Eaton Corp.	12,900		1,250,655
Illinois Tool Works, Inc.	38,400		2,055,936
Ingersoll-Rand Co. Ltd. (Class A Stock) (Bermuda)	29,200		1,356,924
ITT Corp.	16,500		1,089,660
Komatsu Ltd. (Japan)	50,700		1,359,732

SEE NOTES TO FINANCIAL STATEMENTS.

A11


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Machinery (continued)
Komori Corp. (Japan)	23,000	$	506,837
Konecranes OYJ (Finland)	11,581		399,257
Kubota Corp. (Japan)	33,000		222,074
MAN AG (Germany)	5,531		923,168
Manitowoc Co., Inc. (The)(b)	10,600		517,598
NSK Ltd. (Japan)	15,000		153,756
Paccar, Inc.	33,843		1,843,767
Pall Corp.	10,000		403,200
Parker Hannifin Corp.	16,065		1,209,855
Sandvik AB (Sweden)	27,499		473,336
Sumitomo Heavy Industries Ltd. (Japan)	10,000		91,176
Terex Corp.(a)	9,400		616,358
Trelleborg AB (Class B Stock) (Sweden)	13,200		276,736

			27,350,341

Marine — 0.1%
Cosco Corp. (Singapore) Ltd. (Singapore)	43,000		169,761
Kawasaki Kisen Kaisha Ltd. (Japan)	35,000		339,777
Mitsui O.S.K. Lines Ltd. (Japan)	96,000		1,213,661
Neptune Orient Lines Ltd.	19,000		51,075
Nippon Yusen KK (Japan)	55,000		433,290
Orient Overseas International Ltd. (Hong Kong)	12,000		87,915

			2,295,479

Media — 1.3%
CBS Corp. (Class B Stock)(b)	62,534		1,704,052
Clear Channel Communications, Inc.	45,700		1,577,564
Comcast Corp. (Class A Stock)(a)(b)	282,290		5,154,615
Daily Mail & General Trust PLC	18,954		187,423
DIRECTV Group, Inc. (The)(a)	69,200		1,599,904
E.W. Scripps Co.	8,600		387,086
Gannett Co., Inc.(b)	22,100		861,900
Gestevision Telecinco SA (Spain)	20,419		522,737
Interpublic Group of Cos., Inc.(a)(b)	37,200		301,692
Lagardere SCA (France)	4,545		340,824
McGraw-Hill Cos., Inc. (The)	32,500		1,423,825
Meredith Corp.	2,700		148,446
New York Times Co. (The) (Class A Stock)(b)	10,700		187,571
News Corp. (Class A Stock)	209,500		4,292,655
Omnicom Group, Inc.	31,400		1,492,442
Time Warner, Inc.	340,700		5,624,957
Viacom, Inc. (Class B Stock)(a)	63,734		2,799,197
Vivendi (France)	43,117		1,978,174
Walt Disney Co. (The)	177,300		5,723,244
Washington Post Co. (The) (Class B Stock)	200		158,286

			36,466,594

Metals & Mining — 0.9%
Acerinox SA (Spain)	11,138		274,065
Alcoa, Inc.	81,140		2,965,667
Allegheny Technologies, Inc.(b)	8,600		743,040
Anglo American PLC (United Kingdom)	4,919		301,587
ArcelorMittal (France)	7,301		587,094
BHP Billiton Ltd. (Australia)	67,974		2,376,237
BHP Billiton PLC (United Kingdom)	65,732		2,022,885
Boliden AB (Sweden)	4,350		54,685
Freeport-McMoRan Copper & Gold, Inc.(b)	34,694		3,554,053
Kobe Steel Ltd. (Japan)	142,000		457,788

SEE NOTES TO FINANCIAL STATEMENTS.

A12


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Metals & Mining (continued)
Mitsubishi Materials Corp. (Japan)	79,000	$	333,582
Newmont Mining Corp. (Netherlands)	42,500		2,075,275
Nippon Steel Corp. (Japan)	25,000		153,024
Nisshin Steel Co. Ltd. (Japan)	80,000		276,412
Nucor Corp.	27,400		1,622,628
Outokumpu OYJ (Class A Stock) (Finland)	12,357		383,192
Rio Tinto Group PLC (United Kingdom)	25,934		2,744,866
Salzgitter AG (Germany)	6,516		964,582
Sumitomo Metal Mining Co. Ltd.	13,000		219,785
ThyssenKrupp AG (Germany)	25,213		1,414,054
Titanium Metals Corp.(b)	4,000		105,800
United States Steel Corp.	11,400		1,378,374
Voestalpine AG (Australia)	4,504		325,632
Xstrata PLC (Switzerland)	1,622		114,621
Yamato Kogyo Co. Ltd. (Japan)	4,000		161,949

			25,610,877

Multiline Retail — 0.4%
Big Lots, Inc.(a)(b)	9,200		147,108
Dillard’s, Inc.	3,000		56,340
Family Dollar Stores, Inc.(b)	13,700		263,451
J.C. Penney Co., Inc.	21,100		928,189
Kohl’s Corp.(a)	28,400		1,300,720
Macy’s, Inc.	39,974		1,034,127
Marks & Spencer Group PLC (United Kingdom)	66,968		746,518
Next PLC (United Kingdom)	4,240		137,068
Nordstrom, Inc.	16,900		620,737
Ryohin Keikaku Co. Ltd. (Japan)	1,100		66,031
Sears Holding Corp.(a)(b)	6,342		647,201
Target Corp.	75,400		3,770,001

			9,717,491

Multi-Utilities — 0.6%
AGL Energy Ltd. (Australia)	5,626		65,493
Ameren Corp.(b)	18,100		981,201
CenterPoint Energy, Inc.	27,800		476,214
Centrica PLC (United Kingdom)	156,299		1,116,177
CMS Energy Corp.(b)	22,000		382,360
Consolidated Edison, Inc.(b)	25,000		1,221,250
Dominion Resources, Inc.	51,832		2,459,428
DTE Energy Co.(b)	16,800		738,528
Integrys Energy Group, Inc.	7,020		362,864
National Grid PLC (United Kingdom)	93,691		1,555,424
NiSource, Inc.	26,900		508,141
PG&E Corp.	33,400		1,439,206
Public Service Enterprise Group, Inc.	23,100		2,269,344
RWE AG (Germany)	2,040		287,671
Sempra Energy	24,219		1,498,672
Suez SA (France)	9,814		668,213
TECO Energy, Inc.	15,500		266,755
Xcel Energy, Inc.	39,110		882,713

			17,179,654

Office Electronics — 0.1%
Canon, Inc. (Japan)	13,600		622,426
Konica Minolta Holdings, Inc. (Japan)	15,000		262,965
Ricoh Co. Ltd. (Japan)	64,000		1,168,406
Xerox Corp.	90,900		1,471,670

			3,525,467

SEE NOTES TO FINANCIAL STATEMENTS.

A13


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Oil, Gas & Consumable Fuels — 5.1%
Anadarko Petroleum Corp.(b)	42,254	$	2,775,665
Apache Corp.	31,014		3,335,246
BP PLC (United Kingdom)	317,921		3,892,058
Chesapeake Energy Corp.	40,800		1,599,360
Chevron Corp.	196,722		18,360,064
ConocoPhillips	149,577		13,207,649
CONSOL Energy, Inc.(b)	17,300		1,237,296
Devon Energy Corp.	41,600		3,698,656
El Paso Corp.	64,336		1,109,153
ENI SpA (Italy)	31,149		1,140,814
EOG Resources, Inc.	22,800		2,034,900
Exxon Mobil Corp.	507,440		47,542,053
Hess Corp.(b)	25,800		2,602,188
Idemitsu Kosan Co. Ltd. (Japan)	2,300		242,247
Marathon Oil Corp.	65,782		4,003,493
Murphy Oil Corp.	16,900		1,433,796
Nippon Oil Corp. (Japan)	157,000		1,269,247
Noble Energy	14,500		1,153,040
Occidental Petroleum Corp.	76,300		5,874,337
OMV AG (Austria)	17,321		1,403,468
Peabody Energy Corp.(b)	22,800		1,405,392
Range Resources Corp.	10,800		554,688
Repsol YPF SA (Spain)	30,682		1,093,655
Royal Dutch Shell PLC (Netherlands)	34,918		1,467,312
Royal Dutch Shell PLC (Class B Stock) (Netherlands)	57,915		2,409,474
Singapore Petroleum Co. Ltd. (Singapore)	151,000		788,307
Spectra Energy Corp.	58,762		1,517,235
Sunoco, Inc.	11,000		796,840
Tesoro Corp.	12,600		601,020
Total SA (France)	32,825		2,727,378
Valero Energy Corp.	51,000		3,571,530
Williams Cos., Inc.	55,500		1,985,790
XTO Energy, Inc.	44,541		2,287,626

			139,120,977

Paper & Forest Products — 0.1%
International Paper Co.	39,473		1,278,136
MeadWestvaco Corp.(b)	16,314		510,628
Mondi Ltd. (South Africa)	3,086		29,125
Mondi PLC (United Kingdom)	39,537		334,486
Sonae Industria-SGPS SA (Portugal)(a)	31,903		310,182
Weyerhaeuser Co.(b)	19,100		1,408,433

			3,870,990

Personal Products — 0.1%
Avon Products, Inc.	40,500		1,600,965
Estee Lauder Cos., Inc. (The) (Class A Stock)(b)	10,400		453,544
Oriflame Cosmetics SA (Luxembourg)	2,300		146,971

			2,201,480

Pharmaceuticals — 3.1%
Abbott Laboratories	141,200		7,928,380
Allergan, Inc.(b)	26,900		1,728,056
Astellas Pharma, Inc. (Japan)	10,200		442,380
AstraZeneca PLC (United Kingdom)	40,585		1,748,267
Barr Pharmaceuticals, Inc.(a)(b)	8,400		446,040
Bristol-Myers Squibb Co.	183,000		4,853,160
Eli Lilly & Co.	90,100		4,810,439
Forest Laboratories, Inc.(a)	29,500		1,075,275
GlaxoSmithKline PLC (United Kingdom)	96,025		2,444,780
H Lundbeck A/S (Denmark)	4,600		124,469

SEE NOTES TO FINANCIAL STATEMENTS.

A14


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Pharmaceuticals (continued)
Johnson & Johnson	265,948	$	17,738,733
King Pharmaceuticals, Inc.(a)	23,566		241,316
Kyowa Hakko Kogyo Co. Ltd. (Japan)	33,000		352,442
Merck & Co., Inc.	199,300		11,581,323
Mylan Laboratories, Inc.(b)	20,900		293,854
Novartis AG (Switzerland)	15,158		831,437
Pfizer, Inc.	638,745		14,518,675
Roche Holding AG (Switzerland)	6,631		1,145,629
Sanofi-Aventis (France)	20,404		1,878,802
Schering-Plough Corp.	146,800		3,910,752
Shire PLC (United Kingdom)	14,574		333,337
Takeda Pharmaceutical Co. Ltd. (Japan)	7,600		443,998
Watson Pharmaceuticals, Inc.(a)	12,200		331,108
Wyeth	122,800		5,426,532

			84,629,184

Real Estate Investment Trusts — 0.5%
Apartment Investment & Management Co. (Class A Stock)(b)	10,800		375,084
AvalonBay Communities, Inc.	7,400		696,636
Boston Properties, Inc.(b)	11,800		1,083,358
Developers Diversified Realty Corp.	11,300		432,677
Equity Residential(b)	27,100		988,337
General Growth Properties, Inc.(b)	24,000		988,320
Host Hotels & Resorts, Inc.(b)	52,500		894,600
ING Industrial Fund (Australia)	304,765		675,227
Kimco Realty Corp.(b)	23,500		855,400
Mirvac Group (Australia)	76,695		400,814
Plum Creek Timber Co., Inc.(b)	15,100		695,204
ProLogis(b)	24,400		1,546,472
Public Storage, Inc.	10,900		800,169
Simon Property Group, Inc.(b)	20,600		1,789,316
Vornado Realty Trust	13,000		1,143,350
Westfield Group (Australia)	2,690		49,180

			13,414,144

Real Estate Management & Development — 0.1%
CB Richard Ellis Group, Inc.(a)(b)	18,800		405,140
Cheung Kong Holdings Ltd. (Hong Kong)	35,000		639,431
City Developments Ltd. (Singapore)	11,000		107,127
Forestar Real Estate Group, Inc.(a)	3,233		76,274
K.K. DaVinci Advisors (Japan)(a)	332		287,629
Leopalace21 Corp. (Japan)	11,400		306,292
Swire Pacific Ltd. (Hong Kong)	28,000		383,687
Wharf (Holdings) Ltd. (The) (Hong Kong)	139,000		719,051
Wihlborgs Fastigheter AB (Sweden)	2,924		52,366

			2,976,997

Road & Rail — 0.3%
Burlington Northern Santa Fe Corp.	27,500		2,288,825
CSX Corp.	40,600		1,785,588
Norfolk Southern Corp.	34,800		1,755,312
Ryder System, Inc.	6,900		324,369
Seino Transportation Co. Ltd. (Japan)	27,000		181,676
Union Pacific Corp.	24,600		3,090,252

			9,426,022

Semiconductors & Semiconductor Equipment — 1.2%
Advanced Micro Devices, Inc.(a)(b)	45,100		338,250
Altera Corp.	33,500		647,220

SEE NOTES TO FINANCIAL STATEMENTS.

A15


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Semiconductors & Semiconductor Equipment (continued)
Analog Devices, Inc.	27,400	$	868,580
Applied Materials, Inc.(b)	124,900		2,218,224
ASML Holding N.V. (Netherlands)(a)	4,934		156,250
Broadcom Corp. (Class A Stock)(a)(b)	43,950		1,148,853
Intel Corp.	540,700		14,415,062
KLA-Tencor Corp.	17,600		847,616
Linear Technology Corp.(b)	20,300		646,149
LSI Logic Corp.(a)	58,800		312,228
MEMC Electronic Materials, Inc.(a)	19,700		1,743,253
Microchip Technology, Inc.(b)	17,800		559,276
Micron Technology, Inc.(a)(b)	58,400		423,400
National Semiconductor Corp.(b)	23,900		541,096
Novellus Systems, Inc.(a)	10,400		286,728
NVIDIA Corp.(a)(b)	51,450		1,750,329
Teradyne, Inc.(a)(b)	19,300		199,562
Texas Instruments, Inc.(b)	130,100		4,345,340
Xilinx, Inc.	25,400		555,498

			32,002,914

Software — 1.7%
Adobe Systems, Inc.(a)	54,700		2,337,331
Autodesk, Inc.(a)(b)	21,800		1,084,768
BMC Software, Inc.(a)	18,500		659,340
CA, Inc.	35,664		889,817
Citrix Systems, Inc.(a)(b)	16,400		623,364
Compuware Corp.(a)	34,000		301,920
Electronic Arts, Inc.(a)(b)	27,500		1,606,275
Intuit, Inc.(a)	31,100		983,071
Microsoft Corp.	746,500		26,575,400
Nintendo Co. Ltd. (Japan)	3,500		2,055,032
Novell, Inc.(a)	24,200		166,254
Oracle Corp.(a)	362,500		8,185,250
Symantec Corp.(a)(b)	85,078		1,373,159

			46,840,981

Specialty Retail — 0.7%
Abercrombie & Fitch Co.	8,700		695,739
AutoNation, Inc.(a)(b)	16,974		265,813
AutoZone, Inc.(a)	4,800		575,568
Bed Bath & Beyond, Inc.(a)	26,700		784,713
Belle International Holdings Ltd. (China)	32,000		47,873
Best Buy Co., Inc.(b)	35,225		1,854,596
Circuit City Stores, Inc.	10,000		42,000
Esprit Holdings Ltd. (Hong Kong)	38,800		571,340
GameStop Corp. (Class A Stock)(a)	12,500		776,375
Gap, Inc. (The)(b)	43,200		919,296
Hennes & Mauritz AB (Class B Stock) (Sweden)	1,550		94,369
Hikari Tsushin, Inc. (Japan)	3,800		128,941
Home Depot, Inc.	154,250		4,155,496
Limited Brands, Inc.(b)	31,106		588,837
Lowe’s Cos., Inc.	135,100		3,055,962
Office Depot, Inc.(a)	27,800		386,698
OfficeMax, Inc.	7,500		154,950
RadioShack Corp.(b)	11,200		188,832
Sherwin-Williams Co. (The)(b)	9,500		551,380
Shimachu Co. Ltd. (Japan)	2,700		76,070
Staples, Inc.	67,549		1,558,355
Tiffany & Co.	11,600		533,948
TJX Cos., Inc. (The)	40,600		1,166,438

			19,173,589

SEE NOTES TO FINANCIAL STATEMENTS.

A16


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Textiles, Apparel & Luxury Goods — 0.2%
Coach, Inc.(a)	34,000	$	1,039,720
Jones Apparel Group, Inc.	12,600		201,474
Liz Claiborne, Inc.(b)	10,900		221,815
NIKE, Inc. (Class B Stock)	35,000		2,248,400
Nisshinbo Industries, Inc. (Japan)	15,000		182,902
Polo Ralph Lauren Corp.	5,300		327,487
Swatch Group AG (Switzerland)	6,606		390,064
VF Corp.	8,100		556,146

			5,168,008

Thrifts & Mortgage Finance — 0.3%
Countrywide Financial Corp.(b)	56,200		502,428
Fannie Mae	88,800		3,550,224
Freddie Mac	60,100		2,047,607
Guaranty Financial Group, Inc.(a)	3,233		51,733
Hudson City Bancorp, Inc.	59,500		893,690
MGIC Investment Corp.(b)	8,800		197,384
Sovereign Bancorp, Inc.(b)	38,955		444,087
Washington Mutual, Inc.(b)	81,178		1,104,833

			8,791,986

Tobacco — 0.7%
Altria Group, Inc.	193,500		14,624,730
British American Tobacco (United Kingdom)	15,561		608,674
Imperial Tobacco Group (United Kingdom)	34,579		1,866,754
Reynolds American, Inc.(b)	17,700		1,167,492
UST, Inc.	15,100		827,480

			19,095,130

Trading Companies & Distributors — 0.2%
Itochu Corp. (Japan)	67,000		646,526
Marubeni Corp. (Japan)	86,000		602,603
Mitsubishi Corp. (Japan)	24,000		649,553
Mitsui & Co. Ltd. (Japan)	61,000		1,273,840
Sumitomo Corp. (Japan)	39,200		548,461
W.W. Grainger, Inc.	6,900		603,888

			4,324,871

Transportation Infrastructure
Hopewell Holdings (Hong Kong)	77,000		353,036
Kamigumi Co. Ltd. (Japan)	13,000		93,813

			446,849

Wireless Telecommunication Services — 0.4%
American Tower Corp. (Class A Stock)(a)	34,800		1,482,480
KDDI Corp. (Japan)	97		717,710
Sprint Nextel Corp.	260,077		3,414,811
Vodafone Group PLC (United Kingdom)	1,132,143		4,232,353

			9,847,354

TOTAL COMMON STOCKS (cost $956,454,065)			1,399,137,384

PREFERRED STOCKS
Automobiles
Porsche AG (Germany)	372		751,158

Diversified Financial Services
Istituto Finanziario Industriale SpA (Italy)(a)	1,432		48,782

TOTAL PREFERRED STOCKS (cost $427,189)			799,940

RIGHTS
Real Estate Management & Development
Wharf (Holdings) Ltd. (The) (Hong Kong), expiring 1/8/08 (a) (cost $0)	17,375		23,843

SEE NOTES TO FINANCIAL STATEMENTS.

A17


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS — 35.9%
Aerospace/Defense — 0.2%
BAE Systems Holdings, Inc., 144A
4.75%	08/15/10	Baa2	$	2,000	$	2,014,174
Boeing Capital Corp.(b)
6.10%	03/01/11	A2		975		1,021,960
Goodrich Corp.
6.80%	07/01/36	Baa2		811		866,613
Northrop Grumman Corp.
7.125%	02/15/11	Baa1		1,025		1,092,390
Raytheon Co.
5.50%	11/15/12	Baa1		625		650,746

						5,645,883

Airlines — 0.2%
American Airlines, Inc.(b)
6.817%	05/23/11	Ba1		2,420		2,344,375
Continental Airlines, Inc.
6.648%	09/15/17	Baa2		326		327,384
6.703%	06/15/21	Baa2		168		168,493
Delta Air Lines, Inc., 144A(b)
6.821%	08/10/22	Baa1		500		472,550
Southwest Airlines Co.
6.50%	03/01/12	Baa1		965		999,259

						4,312,061

Asset Backed Securities — 1.2%
American Express Credit Account Master Trust I, 144A(g),
Series 2004-4, Class C
5.4975%	03/15/12	Baa1		1,510		1,486,166
Series 2004-C, Class C
5.5275%	02/15/12	Baa1		502		502,240
Amortizing Residential Collateral Trust(g),
Series 2002-BC9, Class M1
6.515%	12/25/32	Aa2		2,664		2,398,609
Bank of America Credit Card Trust(g),
Series 2006-C5, Class C5
5.4275%	01/15/16	Baa2		4,159		3,851,582
Bank One Issuance Trust,
Series 2003-C1, Class C1
4.54%	09/15/10	Baa2		2,445		2,444,828
CDC Mortgage Capital Trust(g),
Series 2002-HE3, Class M1
6.515%	03/25/33	A1		1,003		796,552
Series 2003-HE1, Class M2
7.79%	08/25/33	Baa2		81		39,560
Centex Home Equity(g),
Series 2005-A, Class M2
5.365%	01/25/35	Aa2		2,250		2,054,964
Citibank Credit Card Issuance Trust(g),
Series 2006-C1, Class C1
5.3488%	02/20/15	Baa2		1,500		1,378,934
Credit-Based Asset Servicing and Securitization LLC,
Series 2005-CB6, Class A3
5.12%	07/25/35	Aaa		1,740		1,730,541
Equity One ABS, Inc.,
Series 2004-3, Class M1
5.70%	07/25/34	Aa2		1,660		1,525,603

SEE NOTES TO FINANCIAL STATEMENTS.

A18


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Asset Backed Securities (continued)
First Franklin Mortgage Loan Trust(g),
Series 2005-FFH1, Class M2
5.385%	06/25/36	Aa2	$	1,800	$	1,611,268
HFC Home Equity Loan Trust(g),
Series 2005-2, Class M2
5.4388%	01/20/35	Aa1		662		579,260
MBNA Master Credit Card Trust,
Series 1999-J, Class A
7.00%	02/15/12	Aaa		2,370		2,481,649
Morgan Stanley ABS Capital I(g),
Series 2004-NC3, Class M2
5.965%	03/25/34	A2		1,183		1,090,030
Morgan Stanley Dean Witter Capital I(g),
Series 2002-HE1, Class M1
5.765%	07/25/32	Aa2		1,721		1,643,423
Series 2002-NC4, Class M1
6.14%	09/25/32	Aaa		1,548		1,500,912
Saxon Asset Securities Trust(g),
Series 2005-2, Class M2
5.305%	10/25/35	Aa2		1,480		1,427,023
Securitized Asset Backed Receivables LLC(g),
Series 2004-OP1, Class M1
5.375%	02/25/34	Aa2		1,660		1,618,409
Series 2006-FR3, Class A3
5.115%	05/25/36	Aaa		1,400		1,092,000
SVO VOI Mortgage Corp.,
Series 2005-AA, Class A, 144A
5.25%	02/20/21	Aaa		771		764,559
WFS Financial Owner Trust,
Series 2004-4, Class D
3.58%	05/17/12	A2		296		294,207

						32,312,319

Automotive — 0.1%
Johnson Controls, Inc.
5.50%	01/15/16	Baa1		235		231,554
Oshkosh Truck Corp., Bank Loan(j)
6.90%	12/06/13	Ba3		1,975		1,893,307

						2,124,861

Banking — 0.7%
Banco Bradesco (Cayman Islands)
8.75%	10/24/13	A2		1,690		1,913,925
Bank of America NA
5.30%	03/15/17	Aa1		850		826,520
6.00%(b)	10/15/36	Aa1		1,300		1,243,353
Bank One Corp.
7.875%	08/01/10	Aa3		2,500		2,696,662
Citigroup, Inc.
5.625%(b)	08/27/12	A1		1,900		1,924,664
6.125%	08/25/36	A1		725		686,205
DEPFA ACS Bank (Ireland), 144A
5.125%	03/16/37	Aaa		1,325		1,309,660
HSBC Bank USA, Senior Notes
3.875%	09/15/09	Aa2		250		247,662
ICICI Bank Ltd. (India), 144A(g)
5.7875%	01/12/10	Baa2		1,880		1,855,748

SEE NOTES TO FINANCIAL STATEMENTS.

A19


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Banking (continued)
ICICI Bank Ltd. (Singapore), 144A
5.75%	11/16/10	Baa2	$	1,670	$	1,656,638
J.P. Morgan Chase & Co.
4.60%	01/17/11	Aa2		975		972,166
6.50%	01/15/09	Aa3		1,100		1,109,854
MUFG Capital Finance Group Ltd. (Cayman Islands)(g)
6.346%	07/29/49	A2		800		757,707
Santander Central Hispano Issuances Ltd. (Cayman Islands)
7.625%	09/14/10	Aa2		805		861,879
Wells Fargo Bank
6.45%	02/01/11	Aa1		90		95,216

						18,157,859

Brokerage — 0.6%
Bear Stearns Companies, Inc. (The)
5.30%	10/30/15	A2		550		503,884
6.40%(c)	10/02/17	A2		270		260,863
Goldman Sachs Group, Inc. (The)
5.45%(b)	11/01/12	Aa3		580		591,287
5.625%	01/15/17	A1		765		747,081
6.45%	05/01/36	A1		1,770		1,662,902
6.75%	10/01/37	A1		678		664,289
Lehman Brothers Holdings, Inc.
5.25%(b)	02/06/12	A1		1,850		1,830,552
6.50%	07/19/17	A2		514		520,095
Merrill Lynch & Co., Inc.
4.25%	02/08/10	A1		1,470		1,441,038
4.79%	08/04/10	A1		375		371,579
5.00%	01/15/15	A1		190		179,175
5.77%	07/25/11	A1		355		356,074
6.40%(b)	08/28/17	A1		1,285		1,305,506
Morgan Stanley Group, Inc.
4.75%	04/01/14	A1		1,510		1,414,650
5.25%, M.T.N.(b)	11/02/12	Aa3		870		869,710
5.45%, M.T.N.	01/09/17	Aa3		670		649,948
5.75%, M.T.N.	10/18/16	Aa3		1,860		1,835,386
5.95%, M.T.N.	12/28/17	Aa3		600		599,572

						15,803,591

Building Materials & Construction — 0.2%
American Standard, Inc.
7.625%	02/15/10	Baa3		1,000		1,050,066
Centex Corp.(b)
6.50%	05/01/16	Ba1		315		279,964
Hanson PLC (United Kingdom)
7.875%	09/27/10	Baa3		1,270		1,377,896
Lafarge SA (France)
6.15%	07/15/11	Baa2		1,100		1,131,539
Ryland Group, Inc.
5.375%	06/01/08	Ba1		201		199,807

						4,039,272

Cable — 0.3%
AT&T Broadband
9.455%	11/15/22	Baa2		115		146,239
Cox Communications, Inc.
6.75%	03/15/11	Baa3		1,195		1,253,620
7.875%	08/15/09	Baa3		1,160		1,213,612

SEE NOTES TO FINANCIAL STATEMENTS.

A20


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31,��2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Cable (continued)
Insight Midwest Holdings LLC, Bank Loan(j)
6.753%	10/06/13	Ba2	$	1,800	$	1,724,999
Tele-Communications, Inc.
9.875%	06/15/22	Baa2		1,440		1,951,921
Time Warner Cable, Inc.
5.40%	07/02/12	Baa2		2,410		2,414,844

						8,705,235

Capital Goods — 0.4%
Caterpillar Financial Service Corp.
5.50%	03/15/16	A2		780		784,778
Caterpillar, Inc.
7.25%	09/15/09	A2		1,000		1,046,765
Erac USA Finance Co., 144A
5.80%	10/15/12	Baa2		460		456,352
6.375%	10/15/17	Baa2		1,198		1,157,403
7.00%	10/15/37	Baa2		470		426,868
7.35%	06/15/08	Baa2		2,450		2,470,910
FedEx Corp.
7.25%	02/15/11	Baa2		480		510,990
General Electric Co.
5.25%	12/06/17	Aaa		115		114,755
Honeywell International, Inc.
6.125%	11/01/11	A2		1,120		1,172,616
Sensata Technologies, Bank Loan(j)
6.93%	04/27/13	Ba3		1,393		1,320,298
United Technologies Corp.(e)
6.35%	03/01/11	A2		810		862,478
8.875%	11/15/19	A2		375		486,244

						10,810,457

Chemicals — 0.1%
Dow Chemical Co.
5.97%	01/15/09	A3		430		435,593
6.125%	02/01/11	A3		690		715,876
ICI Wilmington, Inc.
5.625%	12/01/13	Baa2		780		802,147
Lubrizol Corp.
4.625%	10/01/09	Baa3		1,090		1,094,637
Union Carbide Corp.
7.50%	06/01/25	Ba2		500		518,133

						3,566,386

Collateralized Mortgage Obligations — 0.7%
Bank of America Alternative Loan Trust,
Series 2005-12, Class 3CB1
6.00%	01/25/36	Aaa		3,930		3,762,568
Bank of America Mortgage Securities, Inc.(g),
Series 2005-A, Class 2A1(g)
4.4612%	02/25/35	Aaa		1,272		1,258,769
Series 2005-B, Class 2A1
4.3819%	03/25/35	Aaa		1,191		1,181,409
Chase Mortgage Finance Corp.(g),
Series 2007-A1, Class 1A5
4.356%	02/25/37	Aaa		4,222		4,169,715
Countrywide Alternative Loan Trust,
Pass-Thru Certificates, Series 2004-18CB, Class 3A1
5.25%	09/25/19	Aaa		1,902		1,859,805

SEE NOTES TO FINANCIAL STATEMENTS.

A21


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)		Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Collateralized Mortgage Obligations (continued)
J.P. Morgan Chase Commercial Mortgage Securities Corp.(g),
Series 2007-A1, Class 4A1
4.071%	07/25/35	Aaa		$	2,632	$	2,613,069
Master Alternative Loans Trust,
Pass-Thru Certificates, Series 2004-4, Class 4A1
5.00%	04/25/19	Aaa			496		492,867
Structured Adjustable Rate Mortgage Loan(g),
Series 2004-1, Class 4A3
4.17%	02/25/34	Aaa			1,146		1,167,378
Washington Mutual Alternative Loan Trust,
Mortgage Pass-Thru Certificates, Series 2005-1, Class 3A
5.00%	03/25/20	AAA	(d)		1,118		1,091,784

							17,597,364

Commercial Mortgage Backed Securities — 4.6%
Bank of America Commercial Mortgage, Inc.,
Series 2003-2, Class A3(g)
4.873%	03/11/41	AAA	(d)		3,350		3,355,720
Series 2004-2, Class A4
4.153%	11/10/38	Aaa			3,680		3,618,124
Series 2004-3, Class A4
5.176%	06/10/39	Aaa			2,000		2,025,422
Series 2005-1, Class ASB(g)
4.85%	11/10/42	AAA	(d)		1,100		1,101,273
Series 2006-2 A4(g)
5.7401%	05/10/45	AAA	(d)		4,400		4,547,625
Series 2007-1, Class A4
5.451%	01/15/49	Aaa			3,500		3,517,117
Bear Stearns Commercial Mortgage Securities(g),
Series 2004-T16, Class A6
4.75%	02/13/46	AAA	(d)		3,500		3,444,704
Series 2005-T18, Class AAB
4.823%	02/13/42	Aaa			2,250		2,208,650
Series 2005-T20, Class AAB
5.1387%	10/12/42	Aaa			3,000		3,000,968
Commercial Mortgage Acceptance Corp.(g),
Series 1998-C2, Class F, 144A
5.44%	09/15/30	A-	(d)		890		925,291
Commercial Mortgage Pass-Thru Certificate,
Series 2004-LB2A, Class X2, I/O, 144A(g)
0.935%	03/10/39	AAA	(d)		15,294		309,065
Credit Suisse First Boston Mortgage Securities Corp.,
Series 2004-C4, Class A4
4.283%	10/15/39	Aaa			1,500		1,476,743
Credit Suisse Mortgage Capital Certificates,
Series 2006-C1, Class A4(g)
5.5546%	02/15/39	AAA	(d)		4,330		4,395,627
Series 2006-C5, Class A3
5.311%	12/15/39	Aaa			2,205		2,197,332
DLJ Commercial Mortgage Corp.,
Series 2000-CF1, Class A1B
7.62%	06/10/33	AAA	(d)		3,114		3,290,767
GE Commercial Mortgage Corp.,
Series 2004-C2, Class X2, I/O, 144A(g)
0.574%	03/10/40	Aaa			27,771		422,600

SEE NOTES TO FINANCIAL STATEMENTS.

A22


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)		Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Commercial Mortgage Backed Securities (continued)
GMAC Commercial Mortgage Securities, Inc.,
Series 2005-C1, Class A5
4.697%	05/10/43	AAA	(d)	$	2,610	$	2,490,726
Greenwich Capital Commercial Funding Corp.,
Series 2005-GG5, Class A5(g)
5.224%	04/10/37	Aaa			10,330		10,248,461
Series 2003-C1, Class A4
4.111%	07/05/35	Aaa			5,000		4,818,519
J.P. Morgan Chase Commercial Mortgage Securities Corp.,
Series 2000-C10, Class A2(g)
7.371%	08/15/32	Aaa			5,978		6,242,450
Series 2005-CB13, Class A4(g)
5.2948%	01/12/43	Aaa			2,800		2,799,294
Series 2005-LDP1, Class ASB(g)
4.853%	03/15/46	Aaa			4,000		3,955,742
Series 2005-LDP2, Class ASB
4.659%	07/15/42	Aaa			6,380		6,245,589
Series 2005-LDP5, Class A4(g)
5.1793%	12/15/44	Aaa			3,630		3,614,869
Series 2006-CB16, Class ASB
5.523%	05/12/45	Aaa			2,000		2,023,250
Series 2006-LDP6, Class X2, I/O(g)
0.0772%	04/15/43	Aaa			156,383		730,105
Series 2006-LDP8, Class ASB
5.37%	05/15/45	Aaa			2,000		2,006,315
Keycorp.(g),
Series 2000-C1, Class A2
7.727%	05/17/32	Aaa			10,027		10,519,384
LB-UBS Commercial Mortgage Trust,
Series 2003-C8, Class A3
4.83%	11/15/27	Aaa			2,720		2,725,225
Series 2004-C6, Class A5(g)
4.826%	08/15/29	AAA	(d)		5,000		4,992,277
Series 2005-C3, Class A5
4.739%	07/15/30	Aaa			695		666,435
Ser 2006-C6, AAB
5.341%	09/15/39	Aaa			2,380		2,388,398
Merrill Lynch Mortgage Trust,
Series 2004-Key 2, Class A3
4.615%	08/12/39	Aaa			1,900		1,882,012
Merrill Lynch/Countrywide Commercial Mortgage Trust(g),
Series 2006-2, Class A4
5.9095%	06/12/46	Aaa			2,210		2,306,585
Merrill Lynch/Countrywide Commerical Mortgage Trust,
Series 2007-5, Class A4
5.378%	08/12/48	Aaa			3,400		3,400,633
Morgan Stanley Capital I,
Series 2006-IQ11, Class A4(g)
5.773%	10/15/42	AAA	(d)		2,600		2,678,148
Series 2007-HQ11, Class AAB
5.444%	02/12/44	Aaa			4,400		4,418,695
Series 2007-T27, Class AAB(g)
5.651%	06/11/42	AAA	(d)		1,040		1,060,487

SEE NOTES TO FINANCIAL STATEMENTS.

A23


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Commercial Mortgage Backed Securities (continued)
Wachovia Bank Commercial Mortgage Trust,
Series 2002-C2, Class A4
4.98%	11/15/34	Aaa	$	1,700	$	1,706,316

						123,756,943

Consumer
Whirlpool Corp.
6.125%	06/15/11	Baa2		1,045		1,088,287

Electric — 1.0%
Appalachian Power Co.
4.40%	06/01/10	Baa2		790		784,137
Arizona Public Service Co.
6.25%	08/01/16	Baa2		170		172,989
6.375%	10/15/11	Baa2		1,250		1,293,248
Baltimore Gas & Electric Co.
6.35%	10/01/36	Baa2		530		525,644
Carolina Power & Light Co.
5.25%	12/15/15	A2		660		656,425
CenterPoint Energy Houston Electric LLC
5.70%	03/15/13	Baa2		1,070		1,080,231
6.95%	03/15/33	Baa2		300		327,973
Consolidated Edison, Inc.
5.375%	12/15/15	A1		820		816,883
Consumers Energy Co., First Mortgage Bonds, Series D
5.375%	04/15/13	Baa1		435		433,797
Dominion Resources, Inc.
5.125%	12/15/09	Baa2		1,255		1,266,759
Duke Energy Carolinas LLC
6.10%	06/01/37	A3		920		924,709
El Paso Electric Co.
6.00%	05/15/35	Baa2		845		789,986
Empresa Nacional de Electricidad S.A. (Chile)
8.50%	04/01/09	Baa3		1,350		1,411,263
8.625%	08/01/15	Baa3		1,160		1,338,218
Energy East Corp.
6.75%	09/15/33	Baa2		140		141,488
Exelon Corp.
4.90%	06/15/15	Baa1		195		183,557
Florida Power & Light Co.
5.95%	10/01/33	Aa3		380		384,375
Georgia Power Co., Series B
5.70%	06/01/17	A2		470		482,570
Indiana Michigan Power Co.
5.05%	11/15/14	Baa2		575		551,327
Midamerican Energy Holdings Co.
5.95%	05/15/37	Baa1		450		436,490
Nevada Power Co.
6.50%	05/15/18	Baa3		1,210		1,238,821
NiSource Finance Corp.
5.45%	09/15/20	Baa3		500		447,423
NRG Energy, Bank Loan(j)
6.48%	02/01/13	Ba1		439		418,563
6.58%	02/01/13	Ba1		951		906,577
NSTAR Electric Co.
4.875%	04/15/14	A1		730		712,258

SEE NOTES TO FINANCIAL STATEMENTS.

A24


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Electric (continued)
Oncor Electric Delivery Co.
6.375%	01/15/15	Ba1	$	465	$	476,101
7.00%	09/01/22	Ba1		545		564,589
Pacific Gas & Electric Co.
6.05%	03/01/34	A3		1,610		1,607,324
PPL Electric Utilities Corp.
6.25%	08/15/09	A3		1,900		1,946,179
Public Service Electric & Gas Co., M.T.N.
5.80%	05/01/37	A3		515		503,455
Southern California Edison Co.
4.65%	04/01/15	A2		610		586,222
Texas Competitive Electric Holdings Co. LLC, Bank Loan(j)
8.60%	10/10/14	Ba3		1,000		981,251
Virginia Electric and Power Co.
6.00%	05/15/37	Baa1		715		699,301
Xcel Energy, Inc.
3.40%	07/01/08	Baa1		785		777,978
5.613%	04/01/17	Baa1		263		259,789
6.50%	07/01/36	Baa1		445		441,460

						26,569,360

Energy – Integrated — 0.1%
Lukoil International Finance BV (Netherlands), 144A
6.356%	06/07/17	Baa2		530		501,751
Phillips Petroleum Co.
8.75%	05/25/10	A1		1,900		2,081,562
TNK-BP Finance SA (Luxembourg), 144A
7.50%	07/18/16	Baa2		1,365		1,322,344

						3,905,657

Energy – Other — 0.2%
Devon Energy Corp.
7.875%	09/30/31	Baa1		280		338,647
Halliburton Co.
5.50%	10/15/10	A2		200		205,590
Nexen, Inc. (Canada)
6.40%	05/15/37	Baa2		195		194,673
Pioneer Natural Resources Co.
6.875%	05/01/18	Ba1		1,450		1,402,187
Talisman Energy, Inc. (Canada)
6.25%	02/01/38	Baa2		160		155,929
Valero Energy Corp.
6.125%	06/15/17	Baa3		820		833,337
6.625%	06/15/37	Baa3		250		251,768
Weatherford International, Inc., 144A
6.35%	06/15/17	Baa1		895		925,122
Weatherford International, Inc. (Bermuda)
6.50%	08/01/36	Baa1		25		24,966
Woodside Finance Ltd. (Australia), 144A
5.00%	11/15/13	Baa1		1,660		1,653,942
XTO Energy, Inc.
6.25%	08/01/17	Baa2		565		592,752

						6,578,913

SEE NOTES TO FINANCIAL STATEMENTS.

A25


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Foods — 0.6%
Aramark Corp., Bank Loan(j)
7.036%	01/26/14	Ba3	$	1,658	$	1,574,688
7.036%	01/26/14	Ba3		119		112,544
Bunge Ltd. Finance Corp.
5.35%	04/15/14	Baa2		1,000		968,230
Cadbury Schweppes American Finance, Inc., 144A
3.875%	10/01/08	Baa2		1,050		1,043,639
Cargill, Inc., 144A
6.00%	11/27/17	A2		650		648,515
Coca-Cola Co. (The)
5.35%	11/15/17	Aa3		1,430		1,465,095
ConAgra Foods, Inc.
7.875%	09/15/10	Baa2		585		627,911
Delhaize Group (Belgium)
6.50%	06/15/17	Baa3		460		470,592
Diageo Capital PLC (United Kingdom)(b)
5.75%	10/23/17	A3		970		975,509
HJ Heinz Co., 144A
6.428%	12/01/08	Baa2		1,620		1,649,242
Kellogg Co.
6.60%	04/01/11	A3		1,285		1,361,664
Kraft Foods, Inc.
5.625%	11/01/11	Baa2		965		986,880
6.125%	02/01/18	Baa2		940		947,186
Kroger Co. (The)
6.75%	04/15/12	Baa2		215		228,212
6.80%(b)	04/01/11	Baa2		575		605,124
McDonald’s Corp.
5.80%	10/15/17	A3		690		714,411
Tricon Global Restaurants, Inc.
8.875%	04/15/11	Baa2		235		259,211
Tyson Foods, Inc.
6.85%	04/01/16	Ba1		785		805,532
Whitman Corp.
6.375%	05/01/09	Baa1		1,645		1,695,246

						17,139,431

Foreign Government Bonds — 0.2%
DP World Ltd., 144A
6.85%	07/02/37	A1		1,610		1,530,537
Gaz Capital for Gazprom (Luxembourg), 144A
7.288%	08/16/37	A3		1,200		1,211,160
Pemex Project Funding Master Trust
8.625%	12/01/23	Baa1		350		435,313
Petrobras International Finance Co. (PIFCO)
(Cayman Islands)
8.375%	12/10/18	Baa1		1,140		1,356,600
RSHB Capital SA for OJSC Russian
Agricultural Bank (Luxembourg), 144A
6.299%	05/15/17	A3		2,100		1,989,749

						6,523,359

Gaming
Harrah’s Operating Co., Inc.
5.50%	07/01/10	Baa3		970		902,100
Mandalay Resort Group
9.375%	02/15/10	B1		12		12,420

						914,520

SEE NOTES TO FINANCIAL STATEMENTS.

A26


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Healthcare & Pharmaceutical — 0.7%
Abbott Laboratories
5.875%	05/15/16	A1	$	1,100	$	1,149,004
AmerisourceBergen Corp., Series WI
5.625%	09/15/12	Ba1		915		927,940
AstraZeneca PLC (United Kingdom)
6.45%	09/15/37	A1		480		525,924
Baxter International, Inc.
5.196%	02/16/08	Baa1		1,085		1,084,768
Bristol-Myers Squibb Co.
5.875%	11/15/36	A2		265		263,337
Community Health Systems, Inc., Bank Loans(j)
7.493%	07/25/14	Ba3		81		78,051
7.493%	07/25/14	Ba3		1,615		1,551,920
Covidien International Finance SA (Luxembourg), 144A
6.00%	10/15/17	Baa1		1,100		1,138,207
Genentech, Inc.
4.75%	07/15/15	A1		270		265,694
HCA, Inc.
9.25%	11/15/16	B2		1,925		2,021,251
HCA, Inc., Bank Loan(j)
7.08%	11/17/13	Ba3		1,980		1,905,256
Health Management Associate Term B, Bank Loan(j)
6.62%	02/28/14	Ba3		1,201		1,118,194
Laboratory Corp. of America Holdings
5.625%	12/15/15	Baa3		560		551,140
Merck & Co., Inc.
5.75%	11/15/36	Aa3		65		64,632
5.95%	12/01/28	Aa3		205		209,787
Schering-Plough Corp.
5.55%	12/01/13	Baa1		695		703,186
6.00%	09/15/17	Baa1		1,050		1,087,833
6.55%(b)	09/15/37	Baa1		330		349,653
Teva Pharmaceutical Finance LLC (Israel)
6.15%	02/01/36	Baa2		115		114,202
Wyeth
5.50%	03/15/13	A3		915		941,098
5.50%	02/01/14	A3		210		213,290
5.95%	04/01/37	A3		1,645		1,649,364
6.45%	02/01/24	A3		60		63,650

						17,977,381

Healthcare Insurance — 0.3%
Aetna, Inc.
5.75%	06/15/11	A3		430		441,958
6.625%	06/15/36	A3		480		475,203
Cigna Corp.
6.15%	11/15/36	Baa2		640		593,802
Coventry Health Care, Inc.
6.125%	01/15/15	Ba1		2,200		2,207,662
UnitedHealth Group, Inc.
5.25%	03/15/11	A3		1,470		1,486,445
6.00%, 144A	06/15/17	A3		115		116,151
6.50%, 144A	06/15/37	A3		400		401,551
6.625%, 144A	11/15/37	A3		410		416,138

SEE NOTES TO FINANCIAL STATEMENTS.

A27


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Healthcare Insurance (continued)
WellPoint, Inc.
5.00%	12/15/14	Baa1	$	1,085	$	1,039,333
5.25%	01/15/16	Baa1		335		324,340
5.95%	12/15/34	Baa1		210		197,673

						7,700,256

Insurance — 0.3%
American International Group, Inc.
4.25%(c)	05/15/13	Aa2		1,355		1,288,970
5.05%	10/01/15	Aa2		125		120,716
5.85%, M.T.N.	01/16/18	Aa2		1,620		1,630,607
6.25%	03/15/37	Aa3		260		232,549
AXA SA (France)(c)
8.60%	12/15/30	A3		230		282,020
Berkshire Hathaway, Inc.(b)
4.75%	05/15/12	Aaa		425		430,328
Liberty Mutual Group, 144A
7.00%	03/15/34	Baa2		910		887,505
Lincoln National Corp.
6.30%	10/09/37	A3		476		462,867
Marsh & McLennan Cos., Inc.
5.15%	09/15/10	Baa2		335		334,626
MetLife, Inc.
5.70%	06/15/35	A2		1,185		1,082,084
6.125%	12/01/11	A2		435		451,079
6.375%	06/15/34	A2		85		83,941
St. Paul Travelers Cos., Inc.
6.75%	06/20/36	A3		740		772,238
W.R. Berkley Corp.
5.60%	05/15/15	Baa2		705		682,853
6.15%	08/15/19	Baa2		575		556,457
XL Capital Ltd. (Cayman Islands)
5.25%	09/15/14	A3		110		106,967

						9,405,807

Lodging
Starwood Hotels & Resorts Worldwide, Inc.
6.25%	02/15/13	Baa3		370		370,225

Media & Entertainment — 0.3%
Chancellor Media Corp.
8.00%	11/01/08	Baa3		745		770,023
Idearc, Inc. Bank Loan(j)
6.83%	11/17/14	Ba2		1,485		1,412,776
News America Holdings, Inc.
7.625%	11/30/28	Baa2		1,360		1,507,087
Time Warner, Inc.
6.75%	04/15/11	Baa2		725		755,114
7.25%	10/15/17	Baa2		745		796,892
9.15%	02/01/23	Baa2		625		764,664
Viacom, Inc.
6.875%	04/30/36	Baa3		865		867,358

						6,873,914

Metals — 0.1%
Alcan, Inc. (Canada)
4.50%	05/15/13	A3		255		248,968
5.00%	06/01/15	A3		755		731,387

SEE NOTES TO FINANCIAL STATEMENTS.

A28


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date		Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Metals (continued)
Alcoa, Inc.
5.90%	02/01/27		Baa1	$	110	$	103,868
Peabody Energy Corp.
7.375%	11/01/16		Ba1		1,150		1,178,750
Southern Copper Corp.
7.50%	07/27/35	��	Baa2		120		127,093
United States Steel Corp.
5.65%	06/01/13		Baa3		540		523,083

							2,913,149

Non Captive Finance — 0.3%
Capital One Bank
6.50%	06/13/13		A3		10		9,809
Capital One Financial Corp., M.T.N.
5.70%	09/15/11		A3		570		550,655
CIT Group, Inc.
4.25%	02/01/10		A2		480		461,835
Countrywide Financial Corp., M.T.N.
5.80%	06/07/12		Baa3		1,160		847,379
General Electric Capital Corp., M.T.N.
5.55%	05/04/20		Aaa		1,875		1,928,204
5.625%	09/15/17		Aaa		205		210,325
GMAC LLC(g)
6.1188%	05/15/09		Ba3		640		596,086
Household Finance Corp.
4.75%	05/15/09		Aa3		370		368,771
HSBC Finance Corp.
5.70%	06/01/11		Aa3		585		588,257
International Lease Finance Corp.
3.50%	04/01/09		A1		750		737,172
Residential Capital LLC
7.50%	02/22/11		Ba3		240		149,400
7.875%	06/30/10		Ba3		610		390,400
8.00%	04/17/13		Ba3		910		559,650

							7,397,943

Paper
Plum Creek Timberlands LP
5.875%	11/15/15		Baa3		515		507,771

Pipelines & Other — 0.3%
Atmos Energy Corp.
4.00%	10/15/09		Baa3		1,815		1,788,421
Duke Energy Field Services Corp.
7.875%	08/16/10		Baa2		1,830		1,963,058
Enterprise GP Holdings LP, Bank Loan(j)
7.161%	11/08/14		Ba2		1,000		994,375
Enterprise Products Operating LP
4.625%	10/15/09		Baa3		710		708,883
6.875%	03/01/33		Baa3		140		146,266
Kinder Morgan, Inc., Bank Loan(j)
6.35%	05/30/14		Ba2		1,161		1,152,295
Oneok, Inc.
5.51%	02/16/08		Baa2		1,630		1,628,995
Oneok Partners LP
6.65%	10/01/36		Baa2		455		460,087
Sempra Energy
6.00%	02/01/13		Baa1		80		82,643

SEE NOTES TO FINANCIAL STATEMENTS.

A29


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Pipelines & Other (continued)
Spectra Energy Capital LLC
6.25%	02/15/13	Baa1	$	205	$	212,518

						9,137,541

Railroads — 0.2%
Burlington Northern Santa Fe Corp.
6.70%	08/01/28	Baa1		735		765,131
CSX Corp.
6.15%	05/01/37	Baa3		690		644,820
6.25%	03/15/18	Baa3		375		376,915
Norfolk Southern Corp.
5.59%	05/17/25	Baa1		630		583,748
7.80%	05/15/27	Baa1		24		28,604
Union Pacific Corp.
3.625%	06/01/10	Baa2		1,395		1,354,751
6.625%	02/01/08	Baa2		1,755		1,756,407
6.65%	01/15/11	Baa2		760		790,084

						6,300,460

Real Estate Investments Trusts — 0.2%
Brandywine Operating Partnership LP
5.75%	04/01/12	Baa3		1,405		1,390,826
Mack-Cali Realty Corp.
7.25%	03/15/09	Baa2		1,595		1,637,920
Post Apartment Homes LP
5.45%	06/01/12	Baa3		545		553,452
6.30%	06/01/13	Baa3		650		682,166
Simon Property Group LP
5.75%	05/01/12	A3		1,625		1,634,721

						5,899,085

Retailers — 0.2%
CVS Caremark Corp.
5.75%	08/15/11	Baa2		1,240		1,270,179
5.75%	06/01/17	Baa2		1,580		1,590,169
Federated Retail Holdings, Inc.
5.35%	03/15/12	Baa2		815		794,051
5.90%	12/01/16	Baa2		100		94,180
Home Depot, Inc.
5.875%	12/16/36	Baa1		315		265,829
May Department Stores Co.
6.65%	07/15/24	Baa2		60		55,424
Wal-Mart Stores, Inc.
5.25%	09/01/35	Aa2		235		208,448

						4,278,280

Sovereign — 0.2%
United Mexican States (Mexico)
5.875%, M.T.N.	01/15/14	Baa1		4,050		4,212,000
7.50%	01/14/12	Baa1		1,630		1,789,740

						6,001,740

Structured Notes — 0.1%
CDX North America High Yield,
Series 9-T1, 144A(b)
8.75%	12/29/12	B3		2,200		2,169,750

SEE NOTES TO FINANCIAL STATEMENTS.

A30


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Technology — 0.3%
Electronic Data Systems Corp.
7.45%	10/15/29	Ba1	$	120	$	123,121
First Data Corp., Bank Loans(j)
7.981%	09/24/14	Ba3		1,497		1,424,072
7.981%	09/24/14	Ba3		1,096		1,039,314
Fiserv, Inc.
6.125%	11/20/12	Baa2		960		977,087
Flextronics International Ltd. (Singapore), Bank Loans(j)
7.234%	10/01/14	Ba1		223		217,090
7.474%	10/01/14	Ba1		777		755,588
Freescale Semiconductor, Inc.
8.875%	12/15/14	B2		550		490,875
International Business Machines Corp.
5.70%	09/14/17	A1		500		516,881
Intuit, Inc.
5.40%	03/15/12	Baa2		575		584,000
Jabil Circuit, Inc.
5.875%	07/15/10	Ba1		1,800		1,821,493
Metavante Corp., Bank Loan(j)
6.644%	11/01/14	Ba2		1,000		971,875
Motorola, Inc.
8.00%	11/01/11	Baa1		128		137,979

						9,059,375

Telecommunications — 0.9%
America Movil SA de CV (Mexico)
6.375%	03/01/35	A3		630		622,957
AT&T Corp.
8.00%	11/15/31	A2		1,930		2,370,181
AT&T Wireless Services, Inc.
8.125%	05/01/12	A2		800		889,535
8.75%	03/01/31	A3		1,235		1,600,539
BellSouth Corp.
4.20%	09/15/09	A2		1,365		1,356,874
British Telecommunications PLC (United Kingdom)
9.125%	12/15/30	Baa1		1,415		1,872,929
Cingular Wireless LLC
7.125%	12/15/31	A3		535		590,443
Deutsche Telekom International Finance BV (Netherlands)(c)
8.25%	06/15/30	A3		345		430,474
Embarq Corp.
7.082%	06/01/16	Baa3		350		360,633
7.995%	06/01/36	Baa3		1,645		1,733,560
France Telecom SA (France)
8.50%	03/01/31	A3		360		466,797
Nextel Communications, Inc.(b)
5.95%	03/15/14	Baa3		1,475		1,386,454
PCCW HKT Capital Ltd., 144A
8.00%	11/15/11	Baa2		2,275		2,500,261
Qwest Corp.
8.875%	03/15/12	Ba1		2,000		2,140,000
Royal KPN NV (Netherlands)
8.00%	10/01/10	Baa2		645		691,741
SBC Communications, Inc.
4.125%	09/15/09	A2		1,335		1,326,511
5.30%	11/15/10	A2		1,180		1,200,971

SEE NOTES TO FINANCIAL STATEMENTS.

A31


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Telecommunications (continued)
Telecom Italia Finance (Luxembourg)
5.25%	11/15/13	Baa2	$	170	$	168,016
Telefonica Emisiones SAU (Spain)
7.045%	06/20/36	Baa1		210		234,735
TELUS Corp. (Cananda)
8.00%	06/01/11	Baa1		1,500		1,625,204
US Cellular Corp.
6.70%	12/15/33	Baa3		600		551,050
Verizon Communications, Inc.
6.25%	04/01/37	A3		105		107,676
Vodafone Group PLC (United Kingdom)
6.15%(b)	02/27/37	Baa1		435		429,615
7.75%	02/15/10	Baa1		950		1,002,145

						25,659,301

Tobacco — 0.1%
Altria Group, Inc.
7.65%	07/01/08	Baa1		765		777,294
Reynolds American, Inc.
6.75%	06/15/17	Ba1		910		926,856
7.25%	06/15/37	Ba1		410		414,379

						2,118,529

Mortgage Backed Securities — 15.2%
Federal Home Loan Mortgage Corp.
4.50%	02/01/19-07/01/20			7,511		7,382,884
5.00%	07/01/18-05/01/34			13,494		13,414,484
5.238%(g)	12/01/35			3,684		3,690,578
5.50%	12/01/33-07/01/34			11,169		11,160,929
5.50%	TBA 30 YR			36,500		36,420,138
6.00%	03/01/32-12/01/33			3,338		3,403,360
6.00%	TBA 30 YR			21,000		21,308,448
6.50%	12/01/14-09/01/16			602		620,866
7.00%	05/01/31-09/01/33			5,514		5,786,366
Federal National Mortgage Association
4.00%	06/01/19			2,614		2,507,239
4.366%(g)	11/01/35			4,193		4,181,711
4.50%	11/01/18-01/01/35			17,001		16,519,238
4.96%(g)	07/01/33			1,287		1,293,772
5.00%	10/01/18-02/01/36			8,059		7,965,996
5.00%	TBA 30 YR			55,500		54,147,187
5.50%	03/01/16-04/01/37			63,903		63,981,858
5.50%	TBA 15 YR			9,500		9,621,714
5.50%	TBA 30 YR			38,000		37,952,500
5.914%(g)	06/01/37			6,999		7,126,217
5.977%(g)	07/01/37			5,353		5,440,929
6.00%	04/01/13-09/01/36			32,754		33,346,862
6.00%	TBA 30 YR			11,500		11,676,088
6.50%	07/01/17-01/01/37			12,560		12,938,031
7.00%	08/01/11-07/01/32			1,252		1,316,796
7.50%	05/01/12-05/01/32			973		1,024,927
Government National Mortgage Association
5.50%	08/15/33-04/15/36			15,862		15,982,633
6.00%	11/15/23-07/15/37			6,679		6,838,139
6.00%	TBA 30 YR			8,000		8,190,000
6.50%	10/15/23-09/15/36			7,102		7,364,536
7.00%	09/15/31			166		176,128
8.00%	01/15/24-04/15/25			195		210,384

						412,990,938

SEE NOTES TO FINANCIAL STATEMENTS.

A32


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
U.S. Government Agency Obligations — 1.9%
Federal Farm Credit Bank
4.75%	05/07/10	$	280	$	287,206
4.875%	01/17/17		845		866,862
Federal Home Loan Bank
3.625%	12/17/10		215		215,028
4.375%	10/03/08		7,925		7,921,743
4.50%	10/09/09		4,715		4,787,785
4.75%	06/11/08-04/24/09		11,175		11,227,467
5.00%	10/16/09		10,270		10,332,493
Federal Home Loan Mortgage Corp.
4.75%	01/18/11		180		185,774
5.125%(b)	11/17/17		8,210		8,566,651
5.25%	07/18/11		3,100		3,257,709
Federal National Mortgage Association
5.00%	03/15/16		2,485		2,596,835
6.125%	03/15/12		1,220		1,325,454
Tennessee Valley Authority,
Series B 5.88%	04/01/36		85		97,632

					51,668,639

U.S. Treasury Securities — 2.9%
United States Treasury Bonds
4.75%(b)	02/15/37		10,616		11,110,303
6.625%	02/15/27		1,015		1,288,178
7.875%(b)	02/15/21		1,900		2,555,500
8.125%(b)(c)	05/15/21-08/15/21		2,395		3,292,105
8.875%(b)	08/15/17		3,350		4,609,392
United States Treasury Inflation Index
0.875%(b)	04/15/10		1,764		1,758,569
1.625%	01/15/15		1,209		1,213,841
1.875%	07/15/13-07/15/15		2,355		2,415,065
2.00%(b)	01/15/14-01/15/26		5,691		5,795,365
2.375%	04/15/11-01/15/27		3,473		3,646,670
2.50%	07/15/16		1,024		1,092,176
2.625%	07/15/17		454		489,442
3.00%	07/15/12		1,389		1,503,869
3.375%	01/15/12-04/15/32		730		858,493
3.50%	01/15/11		732		787,499
3.625%	04/15/28		1,072		1,358,241
3.875%	01/15/09-04/15/29		2,201		2,629,674
4.25%	01/15/10		745		795,004
United States Treasury Notes
3.375%	09/15/09		420		422,198
4.25%	11/15/17		605		615,540
4.75%	02/15/10		3,220		3,331,190
4.875%(b)	08/15/16		11,770		12,533,215
United States Treasury Strips
Zero	02/15/19-11/15/21		27,610		15,497,639

					79,599,168

TOTAL LONG-TERM BONDS (cost $976,561,516)					977,581,010

TOTAL LONG-TERM INVESTMENTS (cost $1,933,442,770)					2,377,542,177

SEE NOTES TO FINANCIAL STATEMENTS.

A33


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Description	Maturity Date	Principal Amount (000)		Value (Note 2)

SHORT-TERM INVESTMENTS — 27.7%
U.S. Treasury Security — 0.3%
United States Treasury Bills(c)(f) (cost $7,054,793)
2.90%	03/20/08	$	7,100	$	7,051,542


		Shares
Affiliated Mutual Funds — 27.4%
Dryden Core Investment Fund — Dryden Short-Term Bond Series(i) (cost $154,777,278)			15,510,033		146,414,713
Dryden Core Investment Fund — Taxable Money Market Series (cost $600,361,400; includes $241,495,833 of cash collateral received for securities on loan)(h)(i)			600,361,400		600,361,400

TOTAL AFFILIATED MUTUAL FUNDS (cost $755,138,678)					746,776,113

TOTAL SHORT-TERM INVESTMENTS (cost $762,193,471)					753,827,655

TOTAL INVESTMENTS — 115.0% (cost $2,695,636,241)					3,131,369,832

LIABILITIES IN EXCESS OF OTHER ASSETS(k) — (15.0%)					(409,517,752	)

TOTAL NET ASSETS — 100.0%				$	2,721,852,080

The following abbreviations are used in portfolio descriptions:


144A		Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
I/O		Interest Only
M.T.N.		Medium Term Note
TBA		To Be Announced

(a)	Non-income producing security.

(b)	All or portion of security is on loan. The aggregate market value of such securities is $232,883,257; cash collateral of $241,495,833 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

(c)	Security segregated as collateral for futures contracts.

(d)	Standard & Poor’s rating.

(e)	Increase/decrease in rate variable upon increase/decrease in Moody’s or Standard & Poor’s rating.

(f)	Rate quoted represents yield-to-maturity as of purchase date.

(g)	Indicates a variable rate security.

(h)	Represents security, or a portion thereof, purchased with cash collateral for securities on loan.

(i)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund—Taxable Money Market Series and Dryden Core Investment Fund – Short-Term Bond Series.

(j)	Indicates a security that has been deemed illiquid.

(k)	Liabilities in excess of other assets include unrealized appreciation (depreciation) on financial futures, interest rate swaps and credit default swaps as follows:

Open futures contracts outstanding at December 31, 2007:


Number of Contracts	Type	Expiration Date	Value at Trade Date		Value at December 31, 2007		Unrealized Appreciation/ (Depreciation)
Long Positions:
15	U.S. Treasury 2 Yr. Notes	Mar. 2008	$	3,143,846	$	3,153,750	$	9,904
969	U.S. Treasury 5 Yr. Notes	Mar. 2008		106,705,711		106,862,531		156,820
225	U.S. Treasury 10 Yr. Notes	Mar. 2008		25,467,997		25,512,891		44,894
150	U.S. Treasury 30 Yr. Bond	Mar. 2008		17,417,169		17,456,250		39,081
300	S&P 500 Index	Mar. 2008		111,610,571		110,790,000		(820,571	)

							$	(569,872	)

SEE NOTES TO FINANCIAL STATEMENTS.

A34


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

Interest rate swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)	Fixed Rate		Floating Rate	Unrealized Appreciation/ (Depreciation)
Merrill Lynch Capital Services, Inc.(a)	08/14/2012	6,486	5.20857	%	3 month LIBOR	$	372,723
Morgan Stanley Capital Services, Inc.(a)	09/12/2012	3,510	4.7357	%	3 month LIBOR		125,760
Morgan Stanley Capital Services, Inc.(a)	09/25/2012	3,550	4.94079	%	3 month LIBOR		161,785
Morgan Stanley Capital Services, Inc.(a)	10/23/2012	4,680	4.7945	%	3 month LIBOR		123,012
Morgan Stanley Capital Services, Inc.(a)	12/07/2012	3,250	4.15033	%	3 month LIBOR		2,563
Morgan Stanley Capital Services, Inc.(a)	12/13/2012	3,500	4.34666	%	3 month LIBOR		30,891
Merrill Lynch Capital Services, Inc.(b)	12/14/2012	4,930	4.35284	%	3 month LIBOR		(47,467	)
Morgan Stanley Capital Services, Inc.(b)	12/11/2037	1,650	5.08438	%	3 month LIBOR		(19,881	)
Merrill Lynch Capital Services, Inc.(b)	12/11/2037	4,075	5.08938	%	3 month LIBOR		(62,994	)

						$	686,392

(a)	Portfolio pays the floating rate and receives the fixed rate.

(b)	Portfolio pays the fixed rate and receives the floating rate.

Credit default swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)	Fixed Rate		Reference Entity/Obligation	Unrealized Appreciation/ (Depreciation)
JPMorgan Chase Bank(a)	06/20/2012	3,500	0.30	%	PPG Industries, Inc., 7.05%, 08/15/09	$	1,425
JPMorgan Chase Bank(a)	09/20/2012	2,190	1.52	%	Residential Capital LLC, 6.50%, 04/17/13		1,031,268
Citibank NA(a)	09/20/2012	3,200	0.32	%	Altria Group, Inc., 7.00%, 11/04/13		(1,398	)
Morgan Stanley Capital Services, Inc.(a)	09/20/2012	2,600	0.45	%	Sara Lee Corp., 6.125%, 11/01/32		(15,867	)
Barclays Bank PLC(a)	09/20/2012	2,800	0.595	%	Fortune Brands, Inc., 6.25%, 04/01/08		25,934
JPMorgan Chase Bank(a)	06/20/2014	1,110	0.65	%	Bunge Ltd. Finance Corp., 5.35%, 04/15/14		(767	)
Credit Suisse International(a)	09/20/2017	2,750	0.99	%	Gannett Co., Inc., 6.375%, 04/01/12		19,987
Citibank NA(a)	03/25/2035	1,000	3.00	%	Centex Home Equity, 6.215%, 03/25/35		(1,250	)
Citibank NA(a)	03/25/2035	1,000	3.00	%	Morgan Stanley ABS Capital I, 6.765%, 01/25/35		(1,500	)
Barclays Bank PLC(a)	09/25/2035	1,000	3.35	%	Accredited Mortgage Loan Trust, 7.02%, 09/25/35		460,932
Merrill Lynch Capital Services, Inc.(b)	03/25/2036	1,000	3.72	%	AmeriQuest Mortgage Securities, Inc., 7.82%, 03/25/36		744,827
Merrill Lynch Capital Services, Inc.(a)	03/25/2036	1,000	9.00	%	AmeriQuest Mortgage Securities Inc., 7.82%, 03/25/36		(654,500	)

						$	1,609,091

(a)	The Portfolio pays the fixed rate and receives from the counterparty par in the event that the underlying bond defaults.

(b)	The Portfolio receives the fixed rate and pays the counterparty par in the event that the underlying bond defaults.

SEE NOTES TO FINANCIAL STATEMENTS.

A35


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 were as follows:


Affiliated Mutual Funds (including 8.9% of collateral received for securities on loan)	27.4	%
Mortgage Backed Securities	15.2
Oil, Gas & Consumable Fuels	5.1
Commercial Mortgage Backed Securities	4.6
U.S. Treasury Securities	3.2
Pharmaceuticals	3.1
Commercial Banks	2.5
Insurance	2.5
Diversified Financial Services	2.1
Computers & Peripherals	2.0
U.S. Government Agency Obligations	1.9
Capital Markets	1.7
Diversified Telecommunication Services	1.7
Industrial Conglomerates	1.7
Software	1.7
Aerospace & Defense	1.5
Communications Equipment	1.3
Media	1.3
Asset Backed Securities	1.2
Electric Utilities	1.2
Energy Equipment & Services	1.2
Food & Staples Retailing	1.2
Semiconductors & Semiconductor Equipment	1.2
Beverages	1.1
Chemicals	1.1
Healthcare Providers & Services	1.1
Household Products	1.1
Electric	1.0
Machinery	1.0
Food Products	0.9
Metals & Mining	0.9
Telecommunications	0.9
Healthcare Equipment & Supplies	0.8
Internet Software & Services	0.8
Tobacco	0.8
Banking	0.7
Collateralized Mortgage Obligations	0.7
Healthcare & Pharmaceutical	0.7
Real Estate Investment Trust	0.7
Specialty Retail	0.7
Brokerage	0.6
Foods	0.6
Hotels, Restaurants & Leisure	0.6
Multi-Utilities	0.6
Biotechnology	0.5
Air Freight & Logistics	0.4
Automobiles	0.4
Capital Goods	0.4
Consumer Finance	0.4
Electrical Equipment	0.4
IT Services	0.4
Multiline Retail	0.4
Wireless Telecommunication Services	0.4
Airlines	0.3
Cable	0.3
Healthcare Insurance	0.3
Household Durables	0.3
Media & Entertainment	0.3

SEE NOTES TO FINANCIAL STATEMENTS.

A36


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Non Captive Finance	0.3	%
Pipelines & Other	0.3
Road & Rail	0.3
Technology	0.3
Thrifts & Mortgage Finance	0.3
Auto Components	0.2
Building Materials & Construction	0.2
Building Products	0.2
Commercial Services & Supplies	0.2
Electronic Equipment & Instruments	0.2
Energy – Other	0.2
Foreign Government Bonds	0.2
Internet & Catalog Retail	0.2
Life Sciences Tools & Services	0.2
Railroads	0.2
Retailers	0.2
Sovereign	0.2
Textiles, Apparel & Luxury Goods	0.2
Trading Companies & Distributors	0.2
Automotive	0.1
Construction & Engineering	0.1
Construction Materials	0.1
Distributors	0.1
Diversified Consumer Services	0.1
Energy – Integrated	0.1
Gas Utilities	0.1
Independent Power Producers & Energy Traders	0.1
Leisure Equipment & Products	0.1
Marine	0.1
Metals	0.1
Office Electronics	0.1
Paper & Forest Products	0.1
Personal Products	0.1
Real Estate Management & Development	0.1
Structured Notes	0.1

	115.0
Liabilities in excess of other assets	(15.0	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A37


		*CONSERVATIVE BALANCED PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $232,883,257:
Unaffiliated investments (cost $1,940,497,563)	$	2,384,593,719
Affiliated investments (cost $755,138,678)		746,776,113
Cash		165,829
Foreign currency, at value (cost $21,242)		21,464
Receivable for investments sold		49,039,288
Dividends and interest receivable		9,905,825
Unrealized appreciation on swaps		3,101,107
Premium for swaps purchased		590,000
Receivable for Series shares sold		312,337
Foreign tax reclaim receivable		212,268
Prepaid expenses		30,257

Total Assets		3,194,748,207

LIABILITIES
Collateral for securities on loan		241,495,833
Payable for investments purchased		228,417,844
Management fee payable		1,273,758
Unrealized depreciation on swaps		805,624
Accrued expenses and other liabilities		361,753
Payable for Series shares repurchased		326,852
Due to broker—variation margin		121,465
Payable to custodian		92,369
Transfer agent fee payable		629

Total Liabilities		472,896,127

NET ASSETS	$	2,721,852,080

Net assets were comprised of:
Paid-in capital	$	2,241,152,474
Retained earnings		480,699,606

Net assets, December 31, 2007	$	2,721,852,080

Net asset value and redemption price per share, $2,721,852,080 / 163,109,835 outstanding shares of beneficial interest (authorized 525,000,000 shares)	$	16.69

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Interest	$	39,962,768
Unaffiliated dividend income (net of foreign withholding taxes of $645,661)		31,503,942
Affiliated dividend income		26,021,881
Affiliated income from securities loaned, net		537,541

		98,026,132

EXPENSES
Management fee		15,239,010
Custodian’s fees and expenses		474,000
Shareholders’ reports		290,000
Insurance expenses		60,000
Trustees’ fees		46,000
Audit fee		24,000
Interest expense		20,128
Legal fees and expenses		15,000
Commitment fee on syndicated credit agreement		9,000
Transfer agent’s fee and expenses (including affiliated expense of $3,000) (Note 4)		3,000
Miscellaneous		34,279

Total expenses		16,214,417

NET INVESTMENT INCOME		81,811,715

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		73,478,627
Short sale transactions		(86,484	)
Futures transactions		10,360,031
Swap agreement transactions		7,452,989
Options written transactions		(75,988	)
Foreign currency transactions		(10,876	)

		91,118,299

Net change in unrealized appreciation (depreciation) on:
Investments		(11,397,618	)
Futures		286,234
Swaps		2,317,152
Foreign currencies		9,039

		(8,785,193	)

NET GAIN ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES		82,333,106

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	164,144,821

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	81,811,715		$	80,839,902
Net realized gain (loss) on investment, swap agreement and foreign currency transactions		91,118,299			(105,478,541	)
Net change in unrealized appreciation (depreciation) on investments, swaps and foreign currencies		(8,785,193	)		295,289,511

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		164,144,821			270,650,872

DISTRIBUTIONS		(80,805,076	)		(75,726,414	)
SERIES SHARE TRANSACTIONS:
Series shares sold [894,544 and 1,557,565 shares, respectively]		14,946,386			23,668,066
Series shares issued in reinvestment of distributions [4,870,710 and 5,014,994 shares, respectively]		80,805,076			75,726,414
Series shares repurchased [13,534,553 and 17,938,730 shares, respectively]		(227,819,116	)		(273,531,887	)

NET DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(132,067,654	)		(174,137,407	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		(48,727,909	)		20,787,051
NET ASSETS:
Beginning of year		2,770,579,989			2,749,792,938

End of year	$	2,721,852,080		$	2,770,579,989

SEE NOTES TO FINANCIAL STATEMENTS.

A38


		*DIVERSIFIED BOND PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 97.4% LONG-TERM BONDS — 91.8%	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Airlines — 1.4%
American Airlines, Inc., Pass-Thru Certificates, Series 2001-1(a)	Ba1	6.817%	05/23/11	$	2,750	$	2,664,062
Continental Airlines, Inc., Pass-Thru Certificates, Series 2000-1, Class A-1	Ba1	7.373%	12/15/15		1,134		1,091,384
Continental Airlines, Inc., Pass-Thru Certificates, Series A(a)	Baa1	5.983%	04/19/22		1,850		1,728,992
Continental Airlines, Inc., Series 2000-1, Class A-1	Baa2	6.703%	06/15/21		3		3,179
Continental Airlines, Inc., Series 2000-1, Class A-1	Baa2	7.487%	10/02/10		7,954		8,033,539
Delta Air Lines, Inc., Pass-Thru Certificates, 144A(a)	Baa1	6.821%	08/10/22		1,855		1,753,161
United Airlines, Inc., Pass-Thru Certificates, Series 2007-1, Class A	Baa2	6.636%	07/02/22		1,300		1,220,700

							16,495,017

Asset-Backed Securities — 3.6%
American Express Credit Account Master Trust, Series 2004-C, Class C, 144A(g)	Baa1	5.527%	02/15/12		634		634,273
AmeriQuest Mortgage Securities, Inc., Series 2001-2, Class M3(g)	Baa2	7.79%	10/25/31		725		599,817
AmeriQuest Mortgage Securities, Inc., Series 2003-AR3, Class M6(g)(h)	Baa3	7.835%	10/25/33		1,600		352,630
Amortizing Residential Collateral Trust, Series 2002-BC7, Class M2(g)	BB(f)	6.215%	10/25/32		148		80,153
Bank of America Credit Card Trust, Series 2006-C5, Class C5(g)	Baa2	5.428%	01/15/16		5,750		5,324,980
Bank One Issuance Trust, Series 2003-C1, Class C1	Baa2	4.54%	09/15/10		2,980		2,979,791
CDC Mortgage Capital Trust, Series 2002-HE3, Class M2(g)	Ba3	8.24%	03/25/33		370		100,247
Centex Home Equity, Asset-Backed Certificates, Series 2005-A, Class M4(g)	A1	5.665%	01/25/35		2,400		2,048,274
Citibank Credit Card Issuance Trust, Series 2003-C4, Class C-4	Baa2	5.00%	06/10/15		6,500		6,113,335
Citigroup Mortgage Loan Trust, Inc., Series 2004-RES1, Class M3(g)	Aa3	5.585%	11/25/34		1,240		1,061,877
Countrywide Asset-Backed Certificates, Series 2002-BC3, Class M2(g)	Baa1	6.59%	05/25/32		1,907		1,162,292
Countrywide Asset-Backed Certificates, Series 2004-12, Class MV3(g)	Aa3	5.525%	03/25/35		2,670		2,487,389
CS First Boston Mortgage Securities Corp., Series 2002-HE4, Class M2(g)	Baa3	7.115%	08/25/32		201		79,363
Equity One ABS, Inc., Series 2004-3, Class M1	Aa2	5.70%	07/25/34		2,100		1,929,980
First Franklin Mortgage Loan Asset-Backed Certificates, Series 2005-FF6, Class M2(g)	Aa2	5.305%	05/25/36		2,575		2,343,883
Ford Credit Auto Owner Trust, Series 2006-B, Class C	Baa1	5.68%	06/15/12		2,100		2,087,853
Fremont Home Loan Trust, Series 2003-B, Class M1(g)	Aa1	5.565%	12/25/33		499		473,699
IXIS Real Estate Capital Trust, Series 2006-HE1, Class A4(g)	Aaa	5.165%	03/25/36		3,200		2,902,881
Morgan Stanley ABS Capital I, Series 2002-NC6, Class M2(g)	A2	8.015%	11/25/32		174		47,442
Morgan Stanley ABS Capital I, Series 2003-HE1, Class M1(g)	Aa2	5.665%	05/25/33		2,187		1,968,607
New Century Home Equity Loan Trust, Series 2004-4, Class M1(g)	Aa1	5.375%	02/25/35		3,680		3,316,011
Residential Asset Mortgage Products, Inc., Series 2004-RS12, Class MII2(g)(h)	Aa3	5.665%	12/25/34		2,100		1,815,789
Saxon Asset Securities Trust, Series 2002-3, Class M1(g)	Aaa	5.615%	12/25/32		1,469		1,428,948
Securitized Asset Backed Receivables LLC Trust, Series 2006-FR1, Class M1(g)	Aa2	5.265%	11/25/35		2,000		1,444,655
Structured Asset Securities Corp., Series 2002-HF2, Class M3(g)(h)	BBB(f)	6.865%	07/25/32		1,345		535,531

							43,319,700

Automotive — 0.3%
Ford Motor Credit Co.	B1	6.625%	06/16/08		3,500		3,449,005

Banking — 3.3%
Alfa MTN Markets Ltd. for ABH Financial Ltd. (Cypress), 144A	Ba1	8.20%	06/25/12		2,000		1,870,000
Banco ABN Amro Real SA (Cayman Islands), 144A	NR	16.20%	02/22/10	B	RL4,000		2,410,112
Chuo Mitsui Trust & Banking Co. Ltd. (Japan), 144A(g)	A2	5.506%	12/29/49		3,050		2,804,445
Depfa ACS Bank (Ireland), 144A	Aaa	5.125%	03/16/37		3,065		3,029,517
Dresdner Kleinwort Wasserstein for CJSC (The) (Ukraine)	Ba2	7.75%	09/23/09		1,400		1,417,080
HSBK Europe BV (Netherlands), 144A	Baa3	7.25%	05/03/17		2,230		1,940,100
ICICI Bank Ltd. (India), 144A(a)(g)	Baa2	7.25%	12/31/49		2,380		2,154,014
ICICI Bank Ltd. (Singapore), 144A	Baa2	5.75%	11/16/10		2,500		2,479,998

SEE NOTES TO FINANCIAL STATEMENTS.

A39


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Banking (continued)
Kazkommerts International BV (Netherlands), 144A	Ba1	7.875%	04/07/14		2,610	$	2,225,025
Kazkommerts International BV (Netherlands), 144A	Ba1	8.00%	11/03/15		1,360		1,114,928
KBC Bank Funding Trust III, 144A(g)	A1	9.86%	11/29/49		5,000		5,371,560
Krung Thai Bank PCL (Thailand)(g)	Baa3	7.378%	12/31/49		1,590		1,489,520
Northern Rock PLC (United Kingdom), 144A(a)(g)(h)	B3	6.594%	12/31/49		920		570,400
Resona Bank Ltd., 144A(a)(g)	A2	5.85%	09/29/49		2,900		2,695,991
Russian Standard Finance Bank SA, 144A	Ba2	7.50%	10/07/10		3,000		2,685,000
Sumitomo Mitsui Banking Corp. (Japan), 144A(a)(g)	Aa3	5.625%	07/29/49		6,380		5,957,247

							40,214,937

Brokerage — 1.1%
Goldman Sachs Group, Inc.(a)	A1	6.45%	05/01/36		1,975		1,855,499
Goldman Sachs Group, Inc.	A1	6.75%	10/01/37		2,380		2,331,872
Lehman Brothers Holdings, Inc.	A2	6.50%	07/19/17		1,210		1,224,347
Merrill Lynch & Co., Inc.	A2	6.11%	01/29/37		2,200		1,943,018
Merrill Lynch & Co., Inc., MTN(a)	A1	6.05%	08/15/12		1,500		1,528,793
Morgan Stanley, MTN	Aa3	5.45%	01/09/17		4,435		4,302,264

							13,185,793

Building Materials & Construction — 0.8%
American Standard, Inc.	Baa3	7.625%	02/15/10		3,800		3,990,251
Centex Corp.(a)	Ba1	6.50%	05/01/16		320		284,408
RPM International, Inc.	Baa3	4.45%	10/15/09		5,150		5,100,740
Ryland Group, Inc.	Ba1	5.375%	06/01/08		606		602,404

							9,977,803

Cable — 0.4%
AT&T Broadband	Baa2	9.455%	11/15/22		1,065		1,354,300
TCI Communications, Inc.	Baa2	7.875%	02/15/26		750		847,540
Time Warner Cable, Inc.	Baa2	5.40%	07/02/12		1,545		1,548,105
Time Warner Cable, Inc.	Baa2	5.85%	05/01/17		975		977,406

							4,727,351

Capital Goods — 0.8%
Honeywell International, Inc.	A2	5.70%	03/15/37		370		365,299
Rockwell International Co.	A2	5.20%	01/15/98		6,500		5,236,185
United Technologies Corp.(a)	A2	6.05%	06/01/36		2,055		2,114,361
Waste Management, Inc.	Baa3	7.65%	03/15/11		2,100		2,301,594

							10,017,439

Chemicals — 1.5%
Huntsman International LLC	Ba1	11.625%	10/15/10		2,100		2,226,000
ICI Wilmington, Inc.	Baa2	4.375%	12/01/08		2,040		2,037,191
Lubrizol Corp.	Baa3	4.625%	10/01/09		5,600		5,623,822
Lubrizol Corp.	Baa3	5.875%	12/01/08		550		552,702
Potash Corp. of Saskatchewan (Canada)	Baa1	5.875%	12/01/36		4,545		4,197,489
Union Carbide Chemical & Plastics Co.	Ba2	7.875%	04/01/23		3,058		3,199,751

							17,836,955

Collateralized Mortgage Obligations — 0.6%
Countrywide Alternative Loan Trust, Series 2004-18CB, Class 3A1	Aaa	5.25%	09/25/19		2,353		2,300,285
Master Alternative Loan Trust, Series 2004-4, Class 4A1	Aaa	5.00%	04/25/19		496		492,866
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-1, Class 4A3(g)	Aaa	4.17%	02/25/34		3,209		3,268,658
Washington Mutual Mortgage Pass-Through Certificates, Series 2005-1, Class 3A	AAA(f)	5.00%	03/25/20		1,714		1,674,896

							7,736,705

Commercial Mortgage-Backed Securities — 8.2%
Banc of America Commercial Mortgage, Inc., Series 2005-1, Class ASB(g)	AAA(f)	4.85%	11/10/42		5,950		5,956,888
Banc of America Commercial Mortgage, Inc., Series 2006-2, Class A4(g)	AAA(f)	5.74%	05/10/45		9,400		9,715,381

SEE NOTES TO FINANCIAL STATEMENTS.

A40


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Commercial Mortgage-Backed Securities (continued)
Bear Stearns Commercial Mortgage Securities, Inc., Series 2005-T18, Class AAB(g)	Aaa	4.823%	02/13/42		2,475	$	2,429,515
Bear Stearns Commercial Mortgage Securities, Inc., Series 2005-T20, Class AAB(g)	Aaa	5.138%	10/12/42		3,400		3,401,097
Credit Suisse Mortgage Capital Certificates, Series 2006-C5, Class A3	Aaa	5.311%	12/15/39		2,330		2,321,897
GMAC Commercial Mortgage Securities, Inc., Series 2002-C3, Class A2	Aaa	4.93%	07/10/39		8,500		8,522,104
Greenwich Capital Commercial Funding Corp., Series 2003-C1, Class A4	Aaa	4.111%	07/05/35		12,700		12,239,038
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2003-ML1A, Class A2	Aaa	4.767%	03/12/39		4,969		4,931,258
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2005-CB13, Class A4(g)	Aaa	5.294%	01/12/43		3,275		3,274,174
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP2, Class ASB	Aaa	4.659%	07/15/42		9,300		9,104,072
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A4(g)	Aaa	4.918%	10/15/42		3,700		3,589,682
LB-UBS Commercial Mortgage Trust, Series 2003-C8, Class A3	Aaa	4.83%	11/15/27		3,375		3,381,483
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class A6(g)	Aaa	4.799%	12/15/29		4,200		4,150,594
LB-UBS Commercial Mortgage Trust, Series 2006-C4, Class A4(g)	Aaa	5.883%	06/15/38		6,130		6,397,118
Merrill Lynch/Countrywide Commercial Mortgage Trust, Series 2006-2, Class A4(g)	Aaa	5.909%	06/12/46		2,325		2,426,611
PNC Mortgage Acceptance Corp., Series 2001-C1, Class A1	Aaa	5.91%	03/12/34		2,292		2,307,865
Wachovia Bank Commercial Mortgage Trust, Series 2002-C2, Class A4	Aaa	4.98%	11/15/34		2,500		2,509,288
Wachovia Bank Commercial Mortgage Trust, Series 2003-C3, Class A2	AAA(f)	4.867%	02/15/35		7,330		7,313,045
Wachovia Bank Commercial Mortgage Trust, Series 2003-C9, Class A3	AAA(f)	4.608%	12/15/35		4,750		4,734,107
Wachovia Bank Commercial Mortgage Trust, Series 2005-C18, Class APB	Aaa	4.807%	04/15/42		1,500		1,474,389

							100,179,606

Consumer — 0.1%
Realogy Corp., PIK, 144A(a)	Caa1	11.00%	04/15/14		2,000		1,390,000

Electric — 3.0%
CenterPoint Energy Houston Electric LLC	Baa2	5.70%	03/15/13		2,950		2,978,208
Consumers Energy Co.	Baa1	5.375%	04/15/13		1,000		997,234
EDP Finance BV (Netherlands), 144A	A2	6.00%	02/02/18		1,170		1,141,143
El Paso Electric Co.	Baa2	6.00%	05/15/35		2,325		2,173,631
Empresa Nacional de Electricidad SA (Chile)	Baa3	8.35%	08/01/13		625		708,081
Energy East Corp.	Baa2	6.75%	06/15/12		750		795,632
Energy East Corp.	Baa2	6.75%	09/15/33		1,150		1,162,219
Enersis SA (Chile)	Baa3	7.375%	01/15/14		3,700		3,961,101
Exelon Corp.	Baa1	4.90%	06/15/15		500		470,659
Exelon Generation Co. LLC	A3	6.20%	10/01/17		1,930		1,918,090
Georgia Power Co., Series B	A2	5.70%	06/01/17		1,285		1,319,367
Korea East-West Power Co. Ltd. (South Korea), 144A	A1	4.875%	04/21/11		1,700		1,707,895
NiSource Finance Corp.	Baa3	5.45%	09/15/20		1,345		1,203,567
Northern States Power Co.	A2	8.00%	08/28/12		2,800		3,144,771
Orion Power Holdings, Inc.	B2	12.00%	05/01/10		1,920		2,092,800
Sierra Pacific Power Co., Series P(a)	Baa3	6.75%	07/01/37		2,325		2,403,339
Southern California Edison Co.	A3	7.625%	01/15/10		1,100		1,167,553
Texas Competitive Electric Holdings Co. LLC, 144A	B3	10.25%	11/01/15		2,650		2,623,500
Virginia Electric and Power Co., Series A	Baa1	6.00%	05/15/37		1,720		1,682,236
Xcel Energy, Inc.	Baa1	3.40%	07/01/08		1,330		1,318,103
Xcel Energy, Inc.	Baa1	5.613%	04/01/17		1,947		1,923,229

							36,892,358

SEE NOTES TO FINANCIAL STATEMENTS.

A41


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Emerging Markets — 0.2%
Alfa Diversified Payment Rights Finance Co.,
Series 1A, Class A, 144A(g)	Baa3	6.591%	03/15/11		2,480	$	2,389,983

Energy – Integrated — 0.2%
Suncor Energy, Inc. (Canada)(a)	A3	6.50%	06/15/38		1,900		2,031,518

Energy – Other — 1.4%
EnCana Corp. (Canada)	Baa2	5.90%	12/01/17		2,500		2,557,438
GS Caltex Corp. (South Korea), 144A	Baa1	7.75%	07/25/11		3,250		3,484,444
Halliburton Co.(a)	A2	5.50%	10/15/10		625		642,470
Newfield Exploration Co.	Ba3	6.625%	04/15/16		320		313,600
Nexen, Inc. (Canada)	Baa2	6.40%	05/15/37		1,890		1,886,829
Occidental Petroleum Corp., MTN	A3	4.25%	03/15/10		3,250		3,231,904
Pioneer Natural Resources Co.	Ba1	6.875%	05/01/18		1,750		1,692,294
Talisman Energy, Inc. (Canada)	Baa2	6.25%	02/01/38		230		224,149
Transocean, Inc. (Cayman Islands)	Baa2	6.80%	03/15/38		1,200		1,224,418
Western Oil Sand, Inc. (Canada)	Baa3	8.375%	05/01/12		1,900		2,119,081

							17,376,627

Foods — 1.5%
Cadbury Schweppes US Finance LLC, 144A	Baa2	3.875%	10/01/08		2,600		2,584,249
Delhaize Group (Belgium)	Baa3	6.50%	06/15/17		715		731,464
HJ Heinz Co., 144A	Baa2	6.428%	12/01/08		3,550		3,614,077
Kraft Foods, Inc.	Baa2	5.625%	11/01/11		860		879,500
Kraft Foods, Inc.	Baa2	6.125%	02/01/18		2,770		2,791,177
McDonald’s Corp.(a)	A3	6.30%	10/15/37		1,400		1,451,852
Tyson Foods, Inc.	Ba1	6.85%	04/01/16		1,000		1,026,155
Tyson Foods, Inc.	Ba2	8.25%	10/01/11		2,550		2,770,539
Yum! Brands, Inc.	Baa2	8.875%	04/15/11		1,705		1,880,661

							17,729,674

Gaming — 0.5%
Harrah’s Operating Co., Inc.	Baa3	5.625%	06/01/15		2,500		1,825,000
Mandalay Resorts Group	B1	9.375%	02/15/10		33		34,155
MGM Mirage, Inc.	Ba2	6.875%	04/01/16		3,000		2,827,500
Station Casinos, Inc.	B2	6.00%	04/01/12		1,930		1,717,700

							6,404,355

Health Care & Pharmaceutical — 1.7%
Abbott Laboratories(a)	A1	5.60%	11/30/17		1,950		2,003,471
Accellent, Inc.	Caa3	10.50%	12/01/13		670		562,800
Alliance Imaging, Inc., Sr. Sub. Notes	B3	7.25%	12/15/12		1,500		1,425,000
AmerisourceBergen Corp.	Ba1	5.875%	09/15/15		2,325		2,281,274
Cardinal Health, Inc., 144A	Baa2	6.30%	10/15/16		265		271,606
Community Health Systems, Inc.	B3	8.875%	07/15/15		800		815,000
HCA, Inc., MTN	Caa1	8.70%	02/10/10		1,700		1,704,432
HCA, Inc., PIK(a)	B2	9.625%	11/15/16		2,200		2,326,500
Hospira, Inc.	Baa3	5.55%	03/30/12		2,500		2,542,185
Schering-Plough Corp.	Baa1	5.55%	12/01/13		2,735		2,767,215
Teva Pharmaceutical Finance LLC	Baa2	6.15%	02/01/36		750		744,799
Wyeth(a)(b)	A3	5.45%	04/01/17		1,460		1,476,774
Wyeth(b)	A3	5.95%	04/01/37		2,360		2,366,261

							21,287,317

Health Care Insurance — 1.5%
Aetna, Inc.	A3	6.75%	12/15/37		1,900		1,895,244
Cigna Corp.	Baa2	5.375%	03/15/17		2,125		2,034,226
Cigna Corp.	Baa2	6.15%	11/15/36		2,300		2,133,975
Coventry Health Care, Inc.(a)	Ba1	6.125%	01/15/15		4,025		4,039,019
Health Net, Inc.	Ba2	6.375%	06/01/17		1,315		1,282,387
UnitedHealthcare Group, Inc., 144A	A3	6.00%	06/15/17		3,775		3,812,773
Wellpoint, Inc.(a)	Baa1	5.875%	06/15/17		2,625		2,642,855

							17,840,479

SEE NOTES TO FINANCIAL STATEMENTS.

A42


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Insurance — 1.0%
Ace INA Holdings, Inc.	A3	5.70%	02/15/17		1,135	$	1,124,783
Allied World Insurance Holdings Ltd. (Bermuda)	Baa1	7.50%	08/01/16		1,700		1,779,023
American International Group, Inc.(a)	Aa2	4.25%	05/15/13		1,820		1,731,310
American International Group, Inc.	Aa2	5.05%	10/01/15		315		304,203
Axis Capital Holdings Ltd. (Bermuda)	Baa1	5.75%	12/01/14		3,350		3,283,746
Travelers Cos., Inc., MTN	A3	6.25%	06/15/37		1,890		1,830,677
XL Capital Ltd. (Cayman Islands)(a)(g)	Baa2	6.50%	12/31/49		1,880		1,643,799
XL Capital Ltd., Class A (Cayman Islands)	A3	5.25%	09/15/14		140		136,139

							11,833,680

Lodging — 0.4%
Felcore Lodging LP(g)	Ba3	6.787%	12/01/11		1,800		1,759,500
Royal Caribbean Cruises Ltd. (Liberia), Sr. Notes	Ba1	8.00%	05/15/10		1,730		1,788,517
Starwood Hotels & Resorts Worldwide, Inc.	Baa3	6.25%	02/15/13		980		980,595

							4,528,612

Media & Entertainment — 1.4%
Clear Channel Communications, Inc.	Baa3	8.00%	11/01/08		4,720		4,878,536
Dex Media West LLC, Series B	B1	9.875%	08/15/13		2,560		2,662,400
News America, Inc.	Baa2	7.625%	11/30/28		1,415		1,568,035
RH Donnelley Corp., 144A	B3	8.875%	10/15/17		1,600		1,480,000
Thomson Corp. (Canada)	Baa1	5.75%	02/01/08		2,750		2,753,136
Time Warner, Inc.	Baa2	5.875%	11/15/16		1,595		1,585,200
Viacom, Inc.	Baa3	6.75%	10/05/37		720		714,239
Viacom, Inc.	Baa3	6.875%	04/30/36		1,090		1,092,971

							16,734,517

Metals — 0.5%
Russel Metals, Inc., Sr. Notes (Canada)	Ba2	6.375%	03/01/14		685		634,481
United States Steel Corp.	Baa3	7.00%	02/01/18		2,000		1,986,624
Xstrata Finance Canada Ltd. (Canada), 144A	Baa2	5.50%	11/16/11		3,430		3,489,476

							6,110,581

Non-Captive Finance — 2.3%
Bosphorus Financial Services Ltd. (Cayman Islands), 144A(g)	Baa2	6.6688%	02/15/12		2,225		2,222,998
Capital One Financial Corp.	Baa1	6.15%	09/01/16		700		621,145
CIT Group, Inc.	A2	5.65%	02/13/17		5,650		4,959,801
Countrywide Financial Corp., MTN	Baa3	5.80%	06/07/12		1,775		1,296,636
General Electric Capital Australia Funding Pty Ltd. (Australia), MTN	Aaa	6.00%	04/15/15	AUD	4,440		3,434,116
Nelnet, Inc.(g)	Baa3	7.40%	09/29/36		6,500		6,244,491
Preferred Term Securities X, Class A-1 (Cayman Islands), 144A(g)(h)	Aaa	5.92%	07/03/33		3,863		3,954,015
Residential Capital LLC(a)	Ba3	8.00%	04/17/13		4,270		2,626,050
Residential Capital LLC, MTN	Ba3	9.375%	07/01/14	GBP	2,400		2,723,147

							28,082,399

Non-Corporate Foreign Agency — 1.2%
Credit Suisse First Boston International for CJSC (The) (Ukraine)	Ba2	6.80%	10/04/12		1,400		1,359,540
Gazprom International SA (Luxembourg), 144A	BBB+(f)	7.201%	02/01/20		2,175		2,205,281
Gazprom OAO (Russia)	A3	10.50%	10/21/09		1,685		1,822,580
National Power Corp. (Philippines), 144A(a)(g)	BB-(f)	9.265%	08/23/11		1,530		1,659,438
Petronas Capital Ltd. (Malaysia), 144A	A1	7.00%	05/22/12		7,300		7,936,859

							14,983,698

Non-Corporate Sovereign — 4.9%
Buoni Poliennali Del Tesoro (Italy)	Aa2	4.00%	02/01/37	EUR	2,215		2,771,210
Deutsche Bundesrepublik (Denmark)	Aaa	4.00%	01/04/37	EUR	3,128		4,137,974
Federal Republic of Argentina (Argentina)(g)	B3	3.00%	04/30/13		2,115		1,319,337
Federal Republic of Argentina (Argentina)(g)	B3	5.389%	08/03/12		2,000		1,778,700
Federal Republic of Brazil (Brazil)	Ba1	9.25%	10/22/10		5,325		5,910,750

SEE NOTES TO FINANCIAL STATEMENTS.

A43


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)
Non-Corporate Sovereign (continued)

Federal Republic of Brazil (Brazil)(a)	Ba1	12.50%	01/05/16	BRL	750	$	458,006
Government of Hungary (Hungary)	A2	8.00%	02/12/15	HUF	1,054,880		6,325,170
Government of Jamaica (Jamaica)	B1	11.00%	07/27/12	EUR	995		1,629,311
Peru Government International Bond (Peru), 144A	Ba2	Zero%	05/31/18		1,837		1,267,530
Republic of Panama (Panama)	Ba1	9.375%	07/23/12		1,295		1,508,675
Republic of Poland (Poland)	A2	6.25%	10/24/15	PLN	23,360		9,637,197
Republic of Turkey (Turkey)	Ba3	9.875%	03/19/08		1,845		1,847,399
Republic of Uruguay (Uruguay)	B1	7.25%	02/15/11		660		693,000
Republic of Venezuela (Venezuela)	B2	10.75%	09/19/13		2,385		2,551,950
Russian Government International Bond (Russia), 144A	Baa2	8.25%	03/31/10		2,883		2,991,590
Sweden Government Bond (Sweden)	Aaa	6.50%	05/05/08	SEK	7,810		1,216,768
United Mexican States (Mexico)(g)	Baa1	5.942%	01/13/09		2,090		2,094,180
United Mexican States (Mexico)	Baa1	7.50%	01/14/12		4,250		4,666,500
United Mexican States (Mexico)	Baa1	8.00%	12/24/08	MXN	77,200		7,085,314

							59,890,561

Paper — 0.7%
Catalyst Paper Corp. (Canada)	B2	8.625%	06/15/11		1,800		1,494,000
Graphic Packaging International, Inc.	B2	8.50%	08/15/11		2,970		2,940,300
International Paper Co.	Baa3	4.00%	04/01/10		2,815		2,787,213
Norampac, Inc., Sr. Notes (Canada)	Ba3	6.75%	06/01/13		1,400		1,277,500

							8,499,013

Pipelines & Other — 1.0%
Atmos Energy Corp.(e)	Baa3	4.00%	10/15/09		5,300		5,222,387
CenterPoint Energy Resources Corp.	Baa3	6.125%	11/01/17		1,340		1,363,703
Oneok, Inc.	Baa2	5.51%	02/16/08		6,000		5,996,302

							12,582,392

Railroads — 0.3%
CSX Corp.	Baa3	5.75%	03/15/13		2,600		2,632,219
Union Pacific Corp.	Baa2	5.45%	01/31/13		1,500		1,513,082

							4,145,301

Real Estate Investments Trusts — 0.4%
Equity One, Inc.	Baa3	3.875%	04/15/09		1,450		1,404,226
Post Apartment Homes LP	Baa3	5.45%	06/01/12		2,300		2,335,669
Realty Income Corp.	Baa1	6.75%	08/15/19		1,545		1,593,851

							5,333,746

Retailers — 0.6%
CVS Caremark Corp.(a)	Baa2	6.25%	06/01/27		3,020		3,026,532
Neiman-Marcus Group, Inc., PIK	B2	9.00%	10/15/15		2,750		2,835,938
Target Corp.	A2	6.50%	10/15/37		800		804,081

							6,666,551

Structured Notes — 1.7%
CDX North America High Yield, Ser. 9-T1, 144A(a)	B3	8.75%	12/29/12		2,000		1,972,500
Dow Jones CDX High Yield, 144A	B3	8.25%	12/29/10		8,500		8,776,250
Dow Jones CDX High Yield, 144A(a)	B3	8.625%	06/29/11		10,128		10,444,191

							21,192,941

Technology — 0.8%
Fidelity National Information Services, Inc.	Ba1	4.75%	09/15/08		1,900		1,873,875
Fiserv, Inc.	Baa2	6.125%	11/20/12		1,600		1,628,478
Freescale Semiconductor, Inc., PIK	B2	9.125%	12/15/14		1,600		1,360,000
Freescale Semiconductor, Inc.(a)	B3	10.125%	12/15/16		1,500		1,237,500
Jabil Circuit, Inc.	Ba1	5.875%	07/15/10		2,000		2,023,881
Motorola, Inc.	Baa1	8.00%	11/01/11		121		130,433
SunGard Data Systems, Inc.	B3	3.75%	01/15/09		720		698,400
Xerox Corp.	Baa2	5.50%	05/15/12		870		884,457

							9,837,024

SEE NOTES TO FINANCIAL STATEMENTS.

A44


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM BONDS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Telecommunications — 2.1%
AT&T Corp.	A2	8.00%	11/15/31		2,475	$	3,039,481
Embarq Corp.	Baa3	7.082%	06/01/16		5,600		5,770,133
New Cingular Wireless Services, Inc.	A2	8.125%	05/01/12		1,810		2,012,573
New Cingular Wireless Services, Inc.	A3	8.75%	03/01/31		2,375		3,077,960
Qwest Corp.	Ba1	8.875%	03/15/12		3,300		3,531,000
Sprint Nextel Corp.(a)	Baa3	6.00%	12/01/16		1,335		1,278,654
Telecom Italia Capital (Luxembourg)	Baa2	4.875%	10/01/10		3,400		3,382,283
Telefonica Emisiones SAU (Spain)	Baa1	7.045%	06/20/36		5		5,589
TELUS Corp. (Canada)	Baa1	8.00%	06/01/11		150		162,520
Suncom Wireless, Inc.	Caa2	8.50%	06/01/13		3,200		3,312,000

							25,572,193

Tobacco — 0.4%
Altria Group, Inc.	Baa1	7.65%	07/01/08		1,100		1,117,678
Reynolds American, Inc.	Ba1	6.50%	07/15/10		4,000		4,095,284

							5,212,962

U.S. Government Agency Obligations — 0.2%
Federal Farm Credit Bank	Aaa	4.875%	01/17/17		580		595,006
Federal Home Loan Mortgage Corp.	Aaa	5.50%	07/18/16		120		129,181
Federal National Mortgage Association	Aaa	5.00%	03/15/16		1,685		1,760,831
Federal National Mortgage Association	Aaa	5.625%	07/15/37		165		182,865

							2,667,883

U.S. Government Mortgage-Backed Securities — 38.8%
Federal Home Loan Mortgage Corp.	Aaa	4.50%	02/01/19-07/01/19		15,048		14,791,360
Federal Home Loan Mortgage Corp.	Aaa	5.00%	07/01/19-05/01/34		7,572		7,511,692
Federal Home Loan Mortgage Corp.	Aaa	5.50%	10/01/33-06/01/34		5,268		5,273,151
Federal Home Loan Mortgage Corp.	Aaa	5.50%	TBA 30 YR		47,500		47,396,070
Federal Home Loan Mortgage Corp.	Aaa	6.00%	11/01/33-06/01/34		6,081		6,182,107
Federal Home Loan Mortgage Corp.	Aaa	6.00%	TBA 30 YR		23,500		23,845,168
Federal Home Loan Mortgage Corp.	Aaa	6.50%	07/01/32-09/01/32		3,032		3,134,506
Federal Home Loan Mortgage Corp.	Aaa	7.00%	10/01/32-11/01/33		5,856		6,143,182
Federal National Mortgage Association	Aaa	4.00%	05/01/19-06/01/19		7,191		6,897,898
Federal National Mortgage Association	Aaa	4.50%	06/01/18-02/01/35		29,104		28,386,084
Federal National Mortgage Association	Aaa	5.00%	01/01/19-01/01/20		8,593		8,612,588
Federal National Mortgage Association	Aaa	5.00%	TBA 30 YR		74,000		72,196,250
Federal National Mortgage Association(g)	Aaa	5.228%	10/01/37		11,415		11,507,417
Federal National Mortgage Association(g)	Aaa	5.287%	01/01/36		3,485		3,490,344
Federal National Mortgage Association	Aaa	5.50%	12/01/16-09/01/34		34,108		34,256,223
Federal National Mortgage Association	Aaa	5.50%	TBA 15 YR		10,000		10,128,120
Federal National Mortgage Association	Aaa	5.50%	TBA 30 YR		34,000		33,957,500
Federal National Mortgage Association(g)	Aaa	5.914%	06/01/37		3,999		4,072,124
Federal National Mortgage Association	Aaa	6.00%	09/01/17-02/01/35		22,570		23,008,743
Federal National Mortgage Association	Aaa	6.00%	TBA 30 YR		32,000		32,489,984
Federal National Mortgage Association(g)	Aaa	6.044%	09/01/37		11,226		11,444,012
Federal National Mortgage Association	Aaa	6.50%	11/01/09-10/01/37		23,864		24,575,369
Federal National Mortgage Association	Aaa	7.00%	05/01/32-06/01/32		522		550,046
Federal National Mortgage Association	Aaa	9.00%	10/01/16		3		3,524
Government National Mortgage Association	Aaa	5.50%	01/15/33-01/15/36		16,251		16,342,875
Government National Mortgage Association	Aaa	6.00%	12/15/32-11/15/34		9,717		9,946,912
Government National Mortgage Association	Aaa	6.00%	TBA 30 YR		20,000		20,475,000
Government National Mortgage Association	Aaa	6.50%	09/15/32-11/15/33		5,211		5,401,391
Government National Mortgage Association	Aaa	7.50%	10/15/25-02/15/26		166		177,556

							472,197,196

U.S. Government Treasury Securities — 1.0%
U.S. Treasury Bonds(a)	Aaa	4.75%	02/15/37		11,084		11,600,093

TOTAL LONG-TERM BONDS (cost $1,126,566,844)							1,118,153,965

SEE NOTES TO FINANCIAL STATEMENTS.

A45


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


BANK LOANS — 5.6%	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Aerospace/Defense — 0.2%
Hawker Beechcraft, Inc.(h)	Ba3	7.244%	03/26/14		167	$	158,797
Hawker Beechcraft, Inc.(h)	Ba3	7.244%	03/26/14		1,963		1,862,621

							2,021,418

Automotive — 0.6%
Ford Motor Co.(h)	Ba3	8.00%	12/15/13		3,861		3,567,915
Oshkosh Truck Corp.(h)	Ba3	6.90%	12/06/13		3,629		3,478,950

							7,046,865

Cable — 0.4%
Insight Midwest Holding LLC(h)	Ba3	6.753%	10/06/13		4,750		4,552,082

Capital Goods — 0.3%
Capital Safety Group Ltd.(h)	B1	7.631%	07/20/15		409		395,947
Capital Safety Group Ltd.(h)	B1	8.131%	07/20/16		1,091		1,060,756
Hertz Corp.(h)	Ba1	6.66%	12/21/12		278		272,004
Hertz Corp.(h)	Ba1	6.894%	12/21/12		1,315		1,286,311

							3,015,018

Consumer — 0.2%
Huish Detergents, Inc.(h)	B1	6.878%	04/26/14		2,985		2,590,553

Electric — 0.6%
NRG Energy, Inc.(h)	Ba1	6.48%	02/01/13		1,171		1,116,168
NRG Energy, Inc.(h)	Ba1	6.58%	02/01/13		2,537		2,417,540
Reliant Energy, Inc.(h)	B2	5.105%	06/30/14		2,500		2,350,000
Texas Competitive Electric Holdings Co. LLC(h)	Ba3	8.60%	10/10/14		1,995		1,957,596

							7,841,304

Foods — 0.2%
Supervalu, Inc.(h)	Ba3	6.584%	06/02/11		2,538		2,483,108

Gaming — 0.2%
Las Vegas Sands LLC(h)	Ba3	6.58%	05/23/14		2,189		2,048,705
Las Vegas Sands LLC(h)	Ba3	7.11%	05/23/14		550		514,750

							2,563,455

Health Care & Pharmaceutical — 1.1%
Community Health Systems, Inc.(h)	Ba3	7.493%	07/25/14		135		129,342
Community Health Systems, Inc.(h)	Ba3	7.493%	07/25/14		2,676		2,571,753
HCA, Inc.(h)	Ba3	7.08%	11/17/13		2,475		2,381,569
Health Management Associates Term B(h)	Ba2	6.62%	02/28/14		2,045		1,904,307
Inverness Medical Innovations(h)	B1	7.243%	06/26/14		2,985		2,832,019
PTS Acquisition Corp.(h)	Ba3	7.459%	04/10/14		3,881		3,605,632

							13,424,622

Media & Entertainment — 0.4%
Idearc, Inc.(h)	Ba2	6.33%	11/17/13		1,000		939,250
Idearc, Inc.(h)	Ba2	6.83%	11/17/14		1,733		1,648,238
Univision Communications, Inc.(h)	Ba3	7.207%	09/29/14		2,899		2,639,598
Univision Communications, Inc.(h)	Ba3	7.45%	09/29/14		101		91,653

							5,318,739

Paper — 0.1%
Domtar, Inc.(h)	Ba1	6.4025%	03/05/14		1,608		1,540,329

Pipelines & Other — 0.4%
Enterprise GP Holdings LP(h)	Ba2	7.161%	11/08/14		1,535		1,526,366
Kinder Morgan, Inc.(h)	Ba2	6.35%	05/30/14		2,798		2,777,515

							4,303,881

Technology — 0.8%
First Data Corp.(h)	Ba3	7.981%	09/24/14		1,047		992,977
First Data Corp.(h)	Ba3	7.981%	09/24/14		1,995		1,897,494

SEE NOTES TO FINANCIAL STATEMENTS.

A46


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


BANK LOANS (continued)	Moody’s Rating (Unaudited)	Interest Rate	Maturity Date	Principal Amount (000)#		Value (Note 2)

Technology (continued)
Flextronics International Ltd. (h)	Ba1	7.234%	10/01/14		668	$	651,269
Flextronics International Ltd. (h)	Ba1	7.474%	10/01/14		2,325		2,266,763
Metavante Corp.(h)	Ba2	6.644%	11/01/14		2,500		2,429,687
Sungard Data Systems, Inc.(h)	Ba3	6.897%	02/28/14		1,497		1,443,561

							9,681,751

Telecommunications — 0.1%
Alltel Communications, Inc.(h)	Ba3	7.699	05/16/15		1,596		1,535,928

TOTAL BANK LOANS (cost $70,749,449)							67,919,053

TOTAL LONG-TERM INVESTMENTS (cost $1,197,316,293)							1,186,073,018
				��

SHORT-TERM INVESTMENTS — 25.2%				Shares
Affiliated Mutual Funds
Dryden Core Investment Fund — Short-Term Bond Series(d)					15,922,245		150,305,993

Dryden Core Investment Fund — Taxable Money Market Fund Series (includes $51,702,846 of cash collateral received for securities on loan) (Note 4)(c)(d)					156,711,969		156,711,969

TOTAL AFFILIATED MUTUAL FUNDS (cost $315,303,189)							307,017,962

TOTAL INVESTMENTS, BEFORE SECURITY SOLD SHORT 122.6% (cost $1,512,619,482)							1,493,090,980


SECURITY SOLD SHORT — (0.5)%				Principal Amount (000)#
U.S. Government Mortgage-Backed Security
Federal National Mortgage Association (proceeds $5,371,094)	Aaa	4.50%	TBA 15 YR		5,500		(5,412,341	)

TOTAL INVESTMENTS, NET OF SECURITY SOLD SHORT — 122.1% (cost $1,507,248,388)							1,487,678,639

LIABILITIES IN EXCESS OF OTHER ASSETS(i) — (22.1)%							(269,387,949	)

TOTAL NET ASSETS — 100.0%						$	1,218,290,690

The following abbreviations are used in portfolio descriptions:


144A		Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
MTN		Medium Term Note
NR		Not Rated by Moody’s or Standard & Poor’s
PIK		Payment-in-kind
TBA		To Be Announced
AUD		Australian Dollar
BRL		Brazilian Real
EUR		Euro
GBP		British Pound
HUF		Hungarian Forint
MXN		Mexican Peso
NZD		New Zealand Dollar
PLN		Polish Zloty
SEK		Swedish Krona

#	Principal amount shown in U.S. dollars unless otherwise stated.

(a)	All or portion of security is on loan. The aggregate market value of such securities is $50,482,738; cash collateral of $51,702,846 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

SEE NOTES TO FINANCIAL STATEMENTS.

A47


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

(b)	Increase/decrease in rate variable upon increase/decrease in Moody’s or Standard & Poor’s rating.

(c)	Represents security, or a portion thereof, purchased with cash collateral received for securities on loan.

(d)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund — Taxable Money Market Series and the Dryden Core Investment Fund — Short-Term Bond Series.

(e)	Security segregated as collateral for futures contracts.

(f)	Standard & Poor’s rating.

(g)	Indicates a variable rate security. The maturity date presented for these instruments is the latter of the next date on which the security can be redeemed at par or the next date on which the rate of interest is adjusted. The interest rate shown reflects the rate in effect at December 31, 2007.

(h)	Indicates a security that has been deemed illiquid.

(i)	Liabilities in excess of other assets include net unrealized appreciation (depreciation) on futures contracts, forward foreign currency exchange contracts, interest rate and credit default swap agreements as follows:

Open future contracts outstanding at December 31, 2007:


Number of Contracts	Type	Expiration Date	Value at Trade Date		Value at December 31, 2007		Unrealized Appreciation (Depreciation)
Long Positions:
26	2 Yr. Euro Schatz	Mar. 2008	$	3,956,880	$	3,928,871	$	(28,009	)
5	New Zealand 3 Mo. Bill	Mar. 2008		3,511,109		3,508,765		(2,344	)
872	U.S. 10 Yr. Treasury Notes	Mar. 2008		98,340,815		98,876,625		535,810
395	U.S. 30 Yr. Treasury Bonds	Mar. 2008		45,783,582		45,968,125		184,543

								690,000

Short Positions:
20	Australian 10 Yr. Bond	Mar. 2008		1,646,364		1,645,198		1,166
44	Euro 10 Yr. Bond	Mar. 2008		7,445,087		7,276,401		168,686
8	U.K. 10 Yr. Gilt	Mar. 2008		1,755,455		1,755,395		60
213	U.S. 2 Yr. Treasury Notes	Mar. 2008		44,744,869		44,783,250		(38,381	)
617	U.S. 5 Yr. Treasury Notes	Mar. 2008		67,979,348		68,043,531		(64,183	)

								67,348

							$	757,348

Forward foreign currency exchange contracts outstanding at December 31, 2007:


Foreign Currency Contract		Notional Amount (000)		Value at Settlement Date		Current Value		Unrealized Appreciation/ (Depreciation)
Purchased:
Australian Dollar, expiring 01/18/08	AUD	703		$	609,100	$	616,503	$	7,403
Brazilian Real, expiring 10/23/08	BRL	6,806			2,775,000		3,723,533		948,533
British Pound, expiring 01/25/08	GBP	491			974,500		977,025		2,525
Euro, expiring 01/25/08	EUR	835			1,209,800		1,221,034		11,234
Hungarian Forint, expiring 01/24/08	HUF	231,835			1,312,100		1,338,263		26,163
New Zealand Dollar, expiring 01/18/08	NZD	2,379			1,872,281		1,826,527		(45,754	)
Swedish Krona, expiring 01/24/08	SEK	15,906			2,435,300		2,461,564		26,264

					11,188,081		12,164,449		976,368

Sold:
Australian Dollar, expiring 01/18/08	AUD	1,905			1,684,557		1,671,112		13,445
British Pound, expiring 01/25/08	GBP	1,466	��		2,950,059		2,916,150		33,909
Euro, expiring 01/25/08	EUR	5,512			7,957,584		8,062,268		(104,684	)
Hungarian Forint, expiring 01/24/08	HUF	1,178,283			6,794,617		6,801,614		(6,997	)
Mexican Peso, expiring 01/16/08	MXN	77,280			7,137,383		7,072,593		64,790
Polish Zloty, expiring 01/24/08	PLN	20,822			8,510,291		8,462,141		48,150
Swedish Krona, expiring 01/24/08	SEK	15,845			2,445,728		2,452,189		(6,461	)

					37,480,219		37,438,067		42,152

								$	1,018,520

SEE NOTES TO FINANCIAL STATEMENTS.

A48


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

Interest rate swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Floating Rate	Unrealized Appreciation/ (Depreciation)
Merrill Lynch Capital Services, Inc.(a)	8/14/2012	$	19,829	5.20857	%	3 month LIBOR	$	1,139,594
Morgan Stanley Capital Services(a)	9/12/2012		8,410	4.7357	%	3 month LIBOR		301,323
Morgan Stanley Capital Services(a)	9/25/2012		8,450	4.94079	%	3 month LIBOR		385,094
Morgan Stanley Capital Services(a)	10/23/2012		5,520	4.7945	%	3 month LIBOR		145,092
Morgan Stanley Capital Services(a)	12/7/2012		6,145	4.1503	%	3 month LIBOR		4,845
Morgan Stanley Capital Services(a)	12/13/2012		15,000	4.34666	%	3 month LIBOR		132,391
Merrill Lynch Capital Services(b)	12/14/2012		11,540	4.35284	%	3 month LIBOR		(111,111	)
Merrill Lynch Capital Services, Inc.(a)	8/2/2017		7,500	5.52959	%	3 month LIBOR		633,991
Morgan Stanley Capital Services(b)	12/11/2037		3,115	5.08438	%	3 month LIBOR		(37,533	)
Merrill Lynch Capital Services(b)	12/11/2037		15,280	5.08938	%	3 month LIBOR		(236,208	)

							$	2,357,478

(a)	Portfolio pays the floating rate and receives the fixed rate.

(b)	Portfolio pays the fixed rate and receives the floating rate.

Credit default swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Reference Entity/Obligation	Unrealized Appreciation/ (Depreciation)
Morgan Stanley Capital Services, Inc.(a)	6/20/2009	$	1,334	0.82	%	Tyco International Group SA, 6.00%, due 11/15/13	$	2,001
Morgan Stanley Capital Services, Inc.(a)	6/20/2009		1,333	0.82	%	Tyco Electronics Ltd., 6.00%, due 10/01/12		(577	)
Morgan Stanley Capital Services, Inc.(a)	6/20/2009		1,333	0.82	%	Covidien Ltd., 6.00%, due 10/15/17		2,865
Merrill Lynch Capital Services, Inc.(a)	12/20/2009		4,000	4.55	%	General Motors Corp., 7.125%, 07/15/13		(68,593	)
Morgan Stanley Capital Services, Inc.(b)	12/20/2009		3,295	0.60	%	RPM International, Inc., 6.25%, due 12/15/13		(15,581	)
Morgan Stanley Capital Services, Inc.(b)	12/20/2009		1,855	0.75	%	RPM International, Inc., 6.25%, due 12/15/13		(14,255	)
Morgan Stanley Capital Services, Inc.(b)	9/20/2012		5,600	1.70	%	CIT Group, Inc. 7.75%, due 04/02/12		455,228
Merrill Lynch Capital Services, Inc.(b)	9/20/2012		1,500	3.75	%	American Axle & Manufacturing, Inc., 5.25%, due 02/11/14		2,013
Morgan Stanley Capital Services, Inc.(a)	9/20/2012		1,500	3.70	%	American Axle & Manufacturing, Inc., 5.25%, due 02/11/14		12,350
Morgan Stanley Capital Services, Inc.(a)	12/20/2014		2,500	1.17	%	Nextel Communications, Inc., 7.375%, due 8/1/15		59,413
Citibank, N.A.(b)	3/25/2035		1,000	3.00	%	Centex Home Equity, Ser. 2005-B, Class B, 6.215%, 03/25/35		(1,250	)
Citibank, N.A.(b)	3/25/2035		1,000	3.00	%	Morgan Stanley ABS Capital 1, Ser. 2005-HE2, Class B2, 6.165%, 01/25/35		(1,500	)
Citibank, N.A.(b)	3/25/2035		1,000	3.00	%	Morgan Stanley ABS Capital 1, Ser. 2005-HE2, Class B3, 6.765%, 01/25/35		(1,500	)
Barclays Bank PLC(a)	9/25/2035		1,000	3.35	%	Accredited Mortgage Loan Trust, Ser. 2005-3, Class M9 7.02%, 09/25/35		460,932
Merrill Lynch Capital Services, Inc.(b)	3/25/2036		1,000	3.72	%	Ameriquest Mortgage Securities, Inc. Ser. 2006-R1, Class M9, 7.82%, 03/25/36		744,827

SEE NOTES TO FINANCIAL STATEMENTS.

A49


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Underlying Bond	Unrealized Appreciation/ (Depreciation)
Merrill Lynch Capital Services, Inc.(a)	3/25/2036	$	1,000	9.00	%	Ameriquest Mortgage Securities, Inc. Ser. 2006-R1, Class M9, 7.82%, 03/25/36	$	(654,500	)
Merrill Lynch Capital Services, Inc.(b)	4/25/2036		1,000	2.78	%	Accredited Mortgage Loan Trust, Ser. 2006-1, Class M8, 6.47%, 04/25/36		652,009
Morgan Stanley Capital Services, Inc.(b)	5/25/2036		1,000	3.23	%	Countrywide Asset-Backed Certificates, Ser. 2005-16, Class MV8, 7.57%, 05/25/36		539,289

							$	2,173,171

(a)	The Portfolio receives the fixed rate and pays the counterparty par in the event that the underlying bond defaults.

(b)	The Portfolio pays the fixed rate and receives from the counterparty par in the event that the underlying bond defaults.

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 was as follows:


U.S. Government Mortgage-Backed Securities	38.8	%
Affiliated Mutual Funds (including 4.2% of collateral received for securities on loan)	25.2
Commercial Mortgage – Backed Securities	8.2
Non-Corporate Sovereign	4.9
Asset-Backed Securities	3.6
Electric	3.6
Banking	3.3
Health Care & Pharmaceutical	2.8
Non-Captive Finance	2.3
Telecommunications	2.2
Media & Entertainment	1.8
Foods	1.7
Structured Notes	1.7
Technology	1.6
Chemicals	1.5
Health Care Insurance	1.5
Airlines	1.4
Energy – Other	1.4
Pipelines & Other	1.4
Non-Corporate Foreign Agency	1.2
Brokerage	1.1
Capital Goods	1.1
Insurance	1.0
U.S. Government Treasury Securities	1.0
Automotive	0.9
Building Materials & Construction	0.8
Cable	0.8
Paper	0.8
Gaming	0.7
Collateralized Mortgage Obligations	0.6
Retailers	0.6
Metals	0.5
Lodging	0.4
Real Estate Investment Trusts	0.4
Tobacco	0.4
Consumer	0.3
Railroads	0.3
Aerospace/Defense	0.2
Emerging Markets	0.2
Energy – Integrated	0.2
U.S. Government Agency Obligations	0.2

	122.6
Security Sold Short	(0.5	)
Liabilities in excess of other assets	(22.1	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A50


		*DIVERSIFIED BOND PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $50,482,738:
Unaffiliated investments (cost $1,197,316,293)	$	1,186,073,018
Affiliated investments (cost $315,303,189)		307,017,962
Cash		976,125
Foreign currency, at value (cost $286,527)		286,211
Interest receivable		10,669,861
Unrealized appreciation on swaps		5,673,257
Receivable for investments sold		5,437,840
Unrealized appreciation on forward foreign currency exchange contracts		1,182,416
Premium for swaps purchased		875,925
Due from broker — variation margin		371,490
Receivable for Series shares sold		33,856
Prepaid expenses		12,256

Total Assets		1,518,610,217

LIABILITIES
Payable for investments purchased		240,908,091
Collateral for securities on loan		51,702,846
Securities sold short, at value (proceeds $5,371,094)		5,412,341
Unrealized depreciation on swaps		1,142,608
Management fee payable		412,694
Accrued expenses and other liabilities		315,873
Payable for Series shares repurchased		253,237
Unrealized depreciation on forward foreign currency exchange contracts		163,896
Deferred trustees’ fees		7,242
Transfer agent fee payable		699

Total Liabilities		300,319,527

NET ASSETS	$	1,218,290,690

Net assets were comprised of:
Paid-in capital	$	1,215,813,705
Retained earnings		2,476,985

Net assets, December 31, 2007	$	1,218,290,690

Net asset value and redemption price per share, $1,218,238,977 / 111,811,903 outstanding shares of beneficial interest (authorized 275,000,000 shares)	$	10.90

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Interest	$	57,500,479
Affiliated dividend income		10,447,770
Affiliated income from securities loaned, net		237,953

		68,186,202

EXPENSES
Management fee		4,675,348
Custodian’s fees and expenses		236,000
Shareholders’ reports		80,000
Insurance expenses		33,000
Trustees’ fees		24,000
Audit fee		13,000
Interest expense		9,805
Legal fees and expenses		9,000
Transfer agent’s fee and expenses (including affiliated expense of $3,600) (Note 4)		4,000
Commitment fee on syndicated credit agreement		1,000
Miscellaneous		5,968

Total expenses		5,091,121

NET INVESTMENT INCOME		63,095,081

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		8,117,137
Short sale transactions		(1,418,731	)
Futures transactions		3,753,688
Swap transactions		14,135,672
Options written transactions		4,684
Foreign currency transactions		(2,516,828	)

		22,075,622

Net change in unrealized appreciation (depreciation) on:
Investments		(24,606,666	)
Securities sold short		(178,747	)
Futures		528,332
Swaps		4,177,788
Foreign currencies		616,432

		(19,462,861	)

NET GAIN ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES		2,612,761

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	65,707,842

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	63,095,081		$	60,783,991
Net realized gain (loss) on investment, swap and foreign currency transactions		22,075,622			(9,657,555	)
Net change in unrealized appreciation (depreciation) on investments, swaps and foreign currencies		(19,462,861	)		4,826,702

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		65,707,842			55,953,138

DISTRIBUTIONS		(59,479,872	)		(68,284,295	)

SERIES SHARE TRANSACTIONS:
Series shares sold [12,326,563 and 3,007,043 shares, respectively]		133,636,466			32,538,204
Series shares issued in reinvestment of distributions [5,514,681 and 6,373,024 shares, respectively]		59,479,872			68,284,295
Series shares repurchased [12,074,002 and 15,646,812 shares, respectively]		(131,418,698	)		(168,772,245	)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		61,697,640			(67,949,746	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		67,925,610			(80,280,903	)
NET ASSETS:
Beginning of year		1,150,365,080			1,230,645,983

End of year	$	1,218,290,690		$	1,150,365,080

SEE NOTES TO FINANCIAL STATEMENTS.

A51


		*EQUITY PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 97.6%		Value (Note 2)
COMMON STOCKS	Shares	Value (Note 2)

Aerospace & Defense — 1.9%
Honeywell International, Inc.	374,200	$	23,039,494
Lockheed Martin Corp.	1,326		139,575
Orbital Sciences Corp.*(a)	1,075,700		26,376,164
United Technologies Corp.	454,100		34,756,814

			84,312,047

Air Freight & Logistics
United Parcel Service, Inc. (Class B Stock)	891		63,012

Auto Components
WABCO Holdings, Inc.(a)	10		501

Auto Related — 0.2%
Tenneco, Inc.*(a)	322,000		8,394,540

Beverages — 1.5%
PepsiCo, Inc.(a)	881,123		66,877,236

Biotechnology — 2.6%
Amgen, Inc.*	508,800		23,628,672
Genentech, Inc.*	278,700		18,692,409
Genzyme Corp.*(a)	317,100		23,604,924
Gilead Sciences, Inc.*(a)	1,104,600		50,822,646

			116,748,651

Building Materials — 0.7%
Masco Corp.	1,547,562		33,442,815

Capital Goods — 0.9%
Illinois Tool Works, Inc.	443,100		23,723,574
Parker Hannifin Corp.	189,420		14,265,220

			37,988,794

Capital Markets — 4.1%
Bank of New York Mellon Corp. (The)	523,978		25,549,167
Goldman Sachs Group, Inc. (The)	260,812		56,087,620
Lehman Brothers Holdings, Inc.	161,240		10,551,546
Merrill Lynch & Co., Inc.(a)	654,800		35,149,664
Schwab, (Charles) Corp.	1,098,600		28,069,230
UBS AG(a)	569,100		26,178,600

			181,585,827

Chemicals — 1.3%
Air Products & Chemicals, Inc.	900		88,767
Monsanto Co.	332,500		37,136,925
Potash Corp. of Saskatchewan, Inc. (Canada)(a)	134,200		19,319,432

			56,545,124

Commercial Banks — 1.5%
Bank of America Corp.	421,648		17,397,196
Wells Fargo & Co.	1,605,414		48,467,449

			65,864,645

Commercial Services & Supplies — 1.1%
Monster Worldwide, Inc.*(a)	556,300		18,024,120
Waste Management, Inc.	883,600		28,867,212

			46,891,332

Communication Equipment — 6.5%
Ciena Corp.*(a)	333,300		11,368,863
Cisco Systems, Inc.*(a)	3,063,889		82,939,475


COMMON STOCKS (continued)	Shares	Value (Note 2)

Communication Equipment
Corning, Inc.	1,237,575	$	29,689,424
Motorola, Inc.	1,104,664		17,718,811
Nokia Corp., ADR (Finland)	450,200		17,283,178
QUALCOMM, Inc.	2,033,860		80,032,391
Research In Motion Ltd. (Canada)*(a)	415,800		47,151,720

			286,183,862

Computer Software — 0.6%
Network Appliance, Inc.*	1,112,300		27,763,008

Computers & Peripherals — 3.2%
Apple, Inc.*	256,000		50,708,480
Dell, Inc.*(a)	5,010		122,795
Hewlett-Packard Co.	790,000		39,879,200
Lexmark International, Inc. (Class A Stock)*(a)	752,000		26,214,720
Seagate Technology (Cayman Islands)(a)	1,028,000		26,214,000

			143,139,195

Construction — 0.9%
Toll Brothers, Inc.*(a)	1,940,260		38,921,616

Consumer Finance — 1.4%
American Express Co.	757,168		39,387,879
SLM Corp.	1,132,600		22,810,564

			62,198,443

Consumer Products & Services — 0.4%
Fortune Brands, Inc.(a)	236,600		17,120,376

Diversified Consumer Services — 1.1%
Career Education Corp.*	939,500		23,619,030
H&R Block, Inc.(a)	1,425,700		26,475,249

			50,094,279

Diversified Financial Services — 2.4%
Citigroup, Inc.(a)	415,204		12,223,606
CME Group, Inc.	24,800		17,012,800
JPMorgan Chase & Co.	1,061,547		46,336,526
KKR Private Equity Investors LLP(c)	1,295,700		23,529,912
KKR Private Equity Investors LLP, RDU (cost $7,567,532; purchased 7/18/06-8/3/06)(c)(e)	334,700		6,078,152

			105,180,996

Electric Utilities — 2.2%
Dominion Resources, Inc.(a)	485,400		23,032,230
Entergy Corp.(a)	178,600		21,346,272
Exelon Corp.	326,100		26,622,804
Progress Energy, Inc.	539,200		26,113,456

			97,114,762

Electrical Equipment — 0.8%
ABB Ltd., ADR (Switzerland)	419,500		12,081,600
First Solar, Inc.*(a)	94,200		25,164,588

			37,246,188

Electronic Components — 0.7%
Dolby Laboratories, Inc. (Class A Stock)*	667,058		33,166,124

SEE NOTES TO FINANCIAL STATEMENTS.

A52


		*EQUITY PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Electronic Components (continued)
Tyco Electronics Ltd. (Bermuda)	2,368	$	87,924

			33,254,048

Energy Equipment & Services — 2.4%
BJ Services Co.	3,340		81,028
Cameron International Corp.*	9,720		467,824
Diamond Offshore Drilling, Inc.(a)	274,620		38,996,040
Halliburton Co.	372,400		14,117,684
Schlumberger Ltd.	294,300		28,950,291
Tenaris SA, ADR (Luxembourg)(a)	510,500		22,834,665

			105,447,532

Financial – Bank & Trust — 0.4%
Hudson City Bancorp, Inc.(a)	1,329,500		19,969,090

Food & Staples Retailing — 2.9%
Costco Wholesale Corp.(a)	186,000		12,975,360
CVS / Caremark Corp.	428,400		17,028,900
Kroger Co. (The)	1,035,500		27,658,205
Wal-Mart Stores, Inc.	1,227,292		58,333,189
Whole Foods Market, Inc.(a)	327,800		13,374,240

			129,369,894

Food Products — 2.4%
Cadbury Schweppes PLC, ADR (United Kingdom)	700,800		34,598,496
ConAgra Foods, Inc.(a)	1,198,200		28,505,178
Kellogg Co.(a)	385,515		20,212,551
McCormick & Co., Inc.	572,823		21,715,720

			105,031,945

Healthcare Equipment & Supplies — 1.6%
Alcon, Inc.(a)	172,200		24,631,488
Baxter International, Inc.	472,700		27,440,235
Covidien Ltd. (Bermuda)	2,368		104,879
Medtronic, Inc.	377,086		18,956,113

			71,132,715

Healthcare Providers & Services — 0.9%
Coventry Health Care, Inc.*	348,623		20,655,913
Omnicare, Inc.(a)	770,300		17,570,543

			38,226,456

Hotels, Restaurants & Leisure — 1.0%
Burger King Holdings, Inc.	250,800		7,150,308
McDonald’s Corp.(a)	672,005		39,587,815

			46,738,123

Household Products — 1.8%
Colgate-Palmolive Co.	365,700		28,509,972
Kimberly-Clark Corp.	387,500		26,869,250
Procter & Gamble Co.	318,178		23,360,629

			78,739,851

Independent Power Producers & Energy Traders — 0.7%
NRG Energy, Inc.*(a)	692,200		29,999,948

Industrial Conglomerates — 3.5%
General Electric Co.	2,674,793		99,154,576
Textron, Inc.(a)	756,412		53,932,176
Tyco International Ltd. (Bermuda)	2,368		93,891

			153,180,643


COMMON STOCKS (continued)	Shares	Value (Note 2)

Insurance — 5.0%
AFLAC, Inc.	643,870	$	40,325,578
American International Group, Inc.	1,285,131		74,923,137
Berkshire Hathaway, Inc. (Class A Stock)*	207		29,311,200
Loews Corp.	763,000		38,409,420
MBIA, Inc.(a)	1,188,200		22,136,166
Progressive Corp. (The)	852,200		16,328,152

			221,433,653

Internet & Catalog Retail — 0.5%
Amazon.com, Inc.*(a)	247,200		22,900,608

Internet Software & Services — 1.6%
Akamai Technologies, Inc.*(a)	310,800		10,753,680
Google, Inc. (Class A Stock)*	86,000		59,467,280

			70,220,960

Life Science Tools & Services — 0.7%
Thermo Fisher Scientific, Inc.*	549,000		31,666,320

Media — 4.5%
Comcast Corp. (Class A Stock)*(a)	1,864,250		34,041,205
EchoStar Communications Corp. (Class A Stock)*	504,619		19,034,229
Liberty Global, Inc. (Class C Stock)*	729,150		26,679,598
News Corp. (Class A Stock)	1,443,826		29,583,995
News Corp. (Class B Stock)	1,735,538		36,880,182
Walt Disney Co. (The)(a)	925,000		29,859,000
XM Satellite Radio Holdings, Inc. (Class A Stock)*(a)	1,802,000		22,056,480

			198,134,689

Metals & Mining — 1.4%
Barrick Gold Corp. (Canada)	1,003,274		42,187,672
Freeport-McMoRan Copper & Gold, Inc.(a)	182,500		18,695,300

			60,882,972

Multi-Line Retail — 0.9%
Staples, Inc.(a)	1,667,863		38,477,599

Multi-Utilities — 1.6%
Sempra Energy	1,183,846		73,256,390

Oil, Gas & Consumable Fuels — 11.0%
ConocoPhillips	235,586		20,802,244
Exxon Mobil Corp.	549,228		51,457,171
Hess Corp.	247,500		24,962,850
Marathon Oil Corp.	1,005,900		61,219,074
Murphy Oil Corp.(a)	329,400		27,946,296
Newfield Exploration Co.*(a)	937,380		49,399,926
Nexen, Inc.	1,039,000		33,528,530
Occidental Petroleum Corp.(a)	559,500		43,075,905
Petroleo Brasileiro SA, ADR (Brazil)(a)	411,000		47,363,640
Sandridge Energy, Inc.*(a)	78,730		2,823,258
Suncor Energy, Inc. (Canada)	404,746		44,253,651
Total SA, ADR (France)(a)	628,726		51,932,768
Williams Cos., Inc.	756,600		27,071,148

			485,836,461

SEE NOTES TO FINANCIAL STATEMENTS.

A53


		*EQUITY PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Pharmaceuticals — 5.9%
Abbott Laboratories(a)	1,176,355	$	66,052,333
Elan Corp. PLC, ADR (Ireland)*(a)	2,036,900		44,771,062
Eli Lilly & Co.	1,697		90,603
Merck & Co., Inc.	533,400		30,995,874
Roche Holdings Ltd., ADR (Switzerland)	200,500		17,122,700
Schering-Plough Corp.	1,786,500		47,592,360
Teva Pharmaceutical Industries Ltd., ADR (Israel)(a)	534,300		24,834,264
Wyeth	647,900		28,630,701

			260,089,897

Semiconductors & Semiconductor Equipment — 1.8%
ASML Holding NV (Netherlands)*(a)	994,858		31,129,107
Spansion, Inc. (Class A Stock)*(a)	2,861,500		11,245,695
Texas Instruments, Inc.(a)	1,122,455		37,489,997

			79,864,799

Software — 4.4%
Adobe Systems, Inc.*	1,200,013		51,276,556
Microsoft Corp.	3,250,208		115,707,405
Symantec Corp.*	1,614,410		26,056,577

			193,040,538

Specialty Retail — 0.8%
Bed Bath & Beyond, Inc.*	770		22,630
Best Buy Co., Inc.(a)	663,100		34,912,215

			34,934,845

Telecommunications — 0.3%
Comverse Technology, Inc.*	23,803		410,602
Juniper Networks, Inc.*(a)	375,100		12,453,320

			12,863,922

Textiles, Apparel & Luxury Goods — 0.5%
NIKE, Inc. (Class B Stock)(a)	370,000		23,768,800

Thrifts & Mortgage Finance — 0.7%
Fannie Mae(a)	731,100		29,229,378

Tobacco — 1.4%
Altria Group, Inc.	819,500		61,937,810

Wireless Telecommunication Services — 1.0%
NII Holdings, Inc.*(a)	446,300		21,565,216
Sprint Nextel Corp.	1,856,216		24,372,116

			45,937,332

TOTAL LONG-TERM INVESTMENTS (cost $3,528,659,749)			4,319,244,467


	Shares	Value (Note 2)

SHORT-TERM INVESTMENT — 14.5%
AFFILIATED MONEY MARKET MUTUAL FUND
Dryden Core Investment Fund — Taxable Money Market Series (cost $642,456,158; includes $549,843,233 of cash collateral for securities on loan)(b)(w) (Note 4)	642,456,158	$	642,456,158

TOTAL INVESTMENTS — 112.1% (cost $4,171,115,907)			4,961,700,625

LIABILITIES IN EXCESS OF OTHER ASSETS — (12.1)%			(536,499,233	)

NET ASSETS — 100.0%		$	4,425,201,392

The following abbreviations are used in portfolio descriptions:


ADR		American Depositary Receipt
RDU		Restricted Depositary Unit

*	Non-income producing security.

(a)	All or a portion of security is on loan. The aggregate market value of such securities is $525,086,153; cash collateral of $549,843,233 (included with liabilities) was received with which the portfolio purchased highly liquid short-term investments.

(b)	Represents security, or a portion thereof, purchased with cash collateral received for securities on loan.

(c)	Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

(e)	Indicates a security illiquid and restricted as to resale. The aggregated cost of such security was $7,567,532. The aggregated value of $6,078,152 is approximately 0.14% of net assets.

(w)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund-Taxable Money Market Series.

SEE NOTES TO FINANCIAL STATEMENTS.

A54


		*EQUITY PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 were as follows:


Affiliated Money Market Mutual Fund (12.4% represents investments purchased with collateral from securities on loan)	14.5	%
Oil, Gas & Consumable Fuels	11.0
Communication Equipment	6.5
Pharmaceuticals	5.9
Insurance	5.0
Media	4.5
Software	4.4
Capital Markets	4.1
Industrial Conglomerates	3.5
Computers & Peripherals	3.2
Food & Staples Retailing	2.9
Biotechnology	2.6
Energy Equipment & Services	2.4
Diversified Financial Services	2.4
Food Products	2.4
Electric Utilities	2.2
Aerospace & Defense	1.9
Semiconductors & Semiconductor Equipment	1.8
Household Products	1.8
Multi-Utilities	1.6
Healthcare Equipment & Supplies	1.6
Internet Software & Services	1.6
Beverages	1.5
Commercial Banks	1.5
Consumer Finance	1.4
Tobacco	1.4
Metals & Mining	1.4
Chemicals	1.3
Diversified Consumer Services	1.1
Commercial Services & Supplies	1.1
Hotels, Restaurants & Leisure	1.0
Wireless Telecommunication Services	1.0
Construction	0.9
Multi-Line Retail	0.9
Healthcare Providers & Services	0.9
Capital Goods	0.9
Electrical Equipment	0.8
Specialty Retail	0.8
Building Materials	0.7
Electronic Components	0.7
Life Science Tools & Services	0.7
Independent Power Producers & Energy Traders	0.7
Thrifts & Mortgage Finance	0.7
Computer Software	0.6
Textiles, Apparel & Luxury Goods	0.5
Internet & Catalog Retail	0.5
Financial – Bank & Trust	0.4
Consumer Products & Services	0.4
Telecommunications	0.3
Auto Related	0.2

	112.1
Liabilities in excess of other assets	(12.1	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A55


		*EQUITY PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments at value, including securities on loan of $525,086,153:
Unaffiliated investments (cost $3,528,659,749)	$	4,319,244,467
Affiliated investments (cost $642,456,158)		642,456,158
Cash		8,981,906
Receivable for investments sold		6,956,203
Dividends and interest receivable		6,157,776
Receivable for Series shares sold		240,720
Prepaid expenses		30,912

Total Assets		4,984,068,142

LIABILITIES
Collateral for securities on loan		549,843,233
Payable for investments purchased		5,841,986
Management fee payable		1,705,632
Payable for Series shares repurchased		1,118,432
Accrued expenses and other liabilities		352,932
Transfer agent fees payable		2,091
Deferred trustees’ fees		1,928
Distribution fee payable		322
Administration fee payable		194

Total Liabilities		558,866,750

NET ASSETS	$	4,425,201,392

Net assets were comprised of:
Paid-in capital	$	3,281,472,950
Retained earnings		1,143,728,442

Net assets, December 31, 2007	$	4,425,201,392

Class I:
Net asset value and redemption price per share, $4,423,930,480 / 149,088,920 outstanding shares of beneficial interest (authorized 525,000,000 shares)	$	29.67

Class II:
Net asset value and redemption price per share, $1,270,912 / 42,631 outstanding shares of beneficial interest (authorized 50,000,000 shares)	$	29.81

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated dividend income (net of $1,672,611 foreign withholding tax)	$	66,237,534
Affiliated dividend income		4,641,175
Affiliated income from securities lending, net		1,846,798
Interest		53

		72,725,560

EXPENSES
Management fee		20,151,275
Distribution fee—Class II		4,353
Administration fee—Class II		2,612
Custodian’s fees and expenses		389,000
Insurance expenses		96,000
Shareholders’ reports		90,000
Trustees’ fees		66,000
Audit fee		19,000
Commitment fee on syndicated credit agreement		10,000
Legal fees and expenses		9,000
Transfer agent’s fees and expenses (including affiliated expense of $5,000) (Note 4)		5,000
Miscellaneous		46,736

Total expenses		20,888,976

NET INVESTMENT INCOME		51,836,584

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		385,358,041
Foreign currency transactions		(167,742	)

		385,190,299

Net change in unrealized appreciation (depreciation) on:
Investments		(37,721,616	)
Foreign currencies		1,027

		(37,720,589	)

NET GAIN ON INVESTMENTS AND FOREIGN CURRENCIES		347,469,710

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	399,306,294

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31, 2007			Year Ended December 31, 2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	51,836,584		$	47,026,456
Net realized gain on investment and foreign currency transactions		385,190,299			333,212,503
Net change in unrealized appreciation (depreciation) on investments and foreign currencies		(37,720,589	)		125,859,212

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		399,306,294			506,098,171

Distributions
Class I		(49,976,890	)		(46,000,931	)
Class II		(9,549	)		(11,345	)

TOTAL DISTRIBUTIONS		(49,986,439	)		(46,012,276	)

SERIES SHARE TRANSACTIONS (NOTE 7):
Series shares sold		29,826,206			56,539,838
Series shares issued in reinvestment of distributions		49,986,439			46,012,276
Series shares repurchased		(408,578,092	)		(443,931,719	)

DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(328,765,447	)		(341,379,605	)

TOTAL INCREASE IN NET ASSETS		20,554,408			118,706,290
NET ASSETS:
Beginning of year		4,404,646,984			4,285,940,694

End of year	$	4,425,201,392		$	4,404,646,984

SEE NOTES TO FINANCIAL STATEMENTS.

A56


		*FLEXIBLE MANAGED PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 92.0%
COMMON STOCKS — 64.5%	Shares	Value (Note 2)

Aerospace & Defense — 2.0%
Boeing Co. (The)	188,700	$	16,503,702
European Aeronautic Defence and Space Co. (Netherlands)	32,645		1,041,918
General Dynamics Corp.	15,100		1,343,749
Honeywell International, Inc.	200,000		12,314,000
Lockheed Martin Corp.	174,600		18,378,396
Northrop Grumman Corp.	213,200		16,766,048
Raytheon Co.	43,300		2,628,310
United Technologies Corp.	83,800		6,414,052

			75,390,175

Air Freight & Logistics — 0.2%
Atlas Air Worldwide Holdings, Inc.(a)	9,200		498,824
Pacer International, Inc.	17,200		251,120
TNT NV (Netherlands)	22,436		926,674
United Parcel Service, Inc. (Class B Stock)	61,000		4,313,920

			5,990,538

Airlines — 0.1%
Air France KLM (France)	19,362		680,814
British Airways PLC (United Kingdom)(a)	35,460		218,643
Deutsche Lufthansa AG (Germany)	24,172		642,848
Japan Airlines Corp. (Japan)	47,000		106,585
Qantas Airways Ltd. (Australia)	365,105		1,734,736

			3,383,626

Auto Components — 0.1%
Aisin Seiki Co. Ltd. (Japan)	32,400		1,341,434
Bridgestone Corp. (Japan)	41,100		725,621
Denso Corp. (Japan)	20,500		834,233
NOK Corp. (Japan)	5,700		119,931
Rieter Holding AG (Switzerland)	577		254,825
Tokai Rika Co. Ltd. (Japan)	14,800		456,297
Toyota Industries Corp. (Japan)	16,600		673,026

			4,405,367

Automobiles — 0.4%
Daimler AG (Germany)	13,787		1,334,616
Fiat S.p.A. (Italy)	50,575		1,308,796
Harley-Davidson, Inc.	71,900		3,358,449
Honda Motor Co. Ltd. (Japan)	26,900		888,637
Nissan Motor Co. Ltd. (Japan)	28,700		313,246
Peugeot SA (France)	24,754		1,876,537
Renault SA (France)	7,304		1,035,953
Toyota Motor Corp. (Japan)	99,100		5,277,939
Volkswagen AG (Germany)	1,333		304,869

			15,699,042

Beverages — 1.5%
Anheuser-Busch Cos., Inc.	331,800		17,366,412
Asahi Breweries Ltd. (Japan)	6,400		107,955
Carlsberg A/S (Denmark)	7,400		895,246
Coca-Cola Co. (The)	156,700		9,616,679
Coca-Cola Hellenic Bottling Co. SA (Greece)	19,135		828,101
Coca-Cola West Holdings Co. Ltd. (Japan)	37,000		816,857
Molson Coors Brewing Co. (Class B Stock)(b)	24,200		1,249,204
Pepsi Bottling Group, Inc.	48,400		1,909,864
PepsiCo, Inc.	303,220		23,014,398

			55,804,716

SEE NOTES TO FINANCIAL STATEMENTS.

A57


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Biotechnology — 0.6%
Amgen, Inc.(a)	181,708	$	8,438,520
CSL Limited (Australia)	47,568		1,506,948
Cubist Pharmaceuticals, Inc.(a)(b)	130,500		2,676,555
Millennium Pharmaceuticals, Inc.(a)(b)	108,500		1,625,330
OSI Pharmaceuticals, Inc.(a)(b)	102,600		4,977,126
PDL BioPharma, Inc.(a)(b)	55,900		979,368

			20,203,847

Building Products — 0.1%
Apogee Enterprises, Inc.	11,400		195,054
Asahi Glass Co. Ltd. (Japan)	100,000		1,322,539
Cie de Saint-Gobain (France)	19,285		1,818,339
Nippon Sheet Glass Co. Ltd. (Japan)	211,000		1,065,137
Sanwa Shutter Corp. (Japan)	49,000		240,563

			4,641,632

Capital Markets — 2.5%
3i Group PLC (United Kingdom)	15,656		312,584
Apollo Investment Corp.	44,300		755,315
Charles Schwab Corp. (The)	219,200		5,600,560
Credit Suisse Group (Switzerland)	52,665		3,167,855
Deutsche Bank AG (Germany)	25,177		3,293,767
Franklin Resources, Inc.	45,200		5,172,236
Goldman Sachs Group, Inc. (The)(b)	122,600		26,365,130
Investec PLC (United Kingdom)	46,075		412,956
Janus Capital Group, Inc.(b)	342,400		11,247,840
Lazard Ltd. (Class A Stock) (Bermuda)	77,200		3,140,496
Macquarie Bank Ltd. (Australia)	7,418		496,318
MCG Capital Corp.	27,600		319,884
Merrill Lynch & Co., Inc.(b)	274,200		14,719,056
MF Global Ltd. (Bermuda)(a)	18,100		569,607
Morgan Stanley(b)	223,490		11,869,554
TD Ameritrade Holding Corp.(a)(b)	178,000		3,570,680
UBS AG (Switzerland)	19,523		903,595

			91,917,433

Chemicals — 0.9%
Altana AG (Germany)	14,803		359,270
BASF AG (Germany)	15,021		2,223,820
Daicel Chemical Industries Ltd. (Japan)	17,000		101,656
Dainippon Ink and Chemicals, Inc. (Japan)	124,000		618,205
Dow Chemical Co. (The)	309,800		12,212,317
E. I. du Pont de Nemours & Co.	76,000		3,350,840
Eastman Chemical Co.	55,900		3,414,931
Koninklijke DSM NV (Netherlands)	37,404		1,768,018
Kuraray Co. Ltd. (Japan)	83,500		1,007,370
Mitsubishi Chemical Holdings Corp. (Japan)	205,000		1,564,085
Mitsubishi Gas Chemical Co., Inc. (Japan)	56,000		544,777
Nippon Shokubai Co. Ltd. (Japan)	36,000		344,951
Olin Corp.	139,600		2,698,468
OM Group, Inc.(a)(b)	21,900		1,260,126
Shin-Etsu Chemical Co. Ltd. (Japan)	6,000		373,147
Terra Industries, Inc.(a)(b)	49,800		2,378,448
Tosoh Corp. (Japan)	41,000		174,770
Zeon Corp. (Japan)	34,000		202,810
Zep, Inc.(a)(b)	24,600		341,202

			34,939,211

SEE NOTES TO FINANCIAL STATEMENTS.

A58


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Commercial Banks — 2.6%
Allied Irish Banks PLC (Ireland)	15,749	$	360,838
Alpha Bank A.E. (Greece)	43,288		1,575,904
Australia & New Zealand Banking Group Ltd. (Australia)	3,496		83,664
Banco Bilbao Vizcaya Argentaria SA (Spain)	151,957		3,723,554
Banco BPI SA (Portugal)	45,911		359,786
Banco Espirito Santo SA (Portugal)	74,933		1,643,340
Banco Popolare Scarl (Italy)(a)	6,532		144,780
Banco Santander Central Hispano SA (Spain)	244,950		5,296,739
Barclays PLC (United Kingdom)	136,015		1,364,590
BB&T Corp.(b)	159,500		4,891,865
BNP Paribas (France)	35,500		3,852,230
Central Pacific Financial Corp.	15,100		278,746
Chiba Bank Ltd. (The) (Japan)	57,000		458,643
Comerica, Inc.	55,300		2,407,209
Comerzbank AG (Germany)	57,115		2,195,350
Commonwealth Bank of Australia (Australia)	10,915		562,764
Danske Bank A/S (Denmark)	50,500		1,977,897
Dexia (Belgium)	67,112		1,690,629
DNB NOR ASA (Norway)	129,500		1,979,521
Fifth Third Bancorp	61,300		1,540,469
Hachijuni Bank Ltd. (The) (Japan)	18,000		120,942
HBOS PLC (United Kingdom)	135,366		1,980,532
HSBC Holdings PLC (United Kingdom)	191,011		3,201,514
Huntington Bancshares, Inc.(b)	267,400		3,946,824
Hypo Real Estate Holding AG (Germany)	26,676		1,415,372
Intesa Sanpaolo S.p.A (Italy)	73,808		583,799
Jyske Bank A/S (Denmark)(a)	3,450		271,939
KeyCorp	231,700		5,433,365
Lloyds TSB Group PLC (United Kingdom)	101,341		952,165
Mitsubishi UFJ Financial Group, Inc. (Japan)	28,400		267,810
National Australia Bank Ltd. (Australia)	18,628		613,597
National Bank of Greece SA (Greece)	6,265		430,325
Regions Financial Corp.(b)	167,600		3,963,740
Royal Bank of Scotland Group PLC (United Kingdom)	352,939		3,119,375
Skandinaviska Enskilda Banken AB (Class A Stock) (Sweden)	36,900		944,880
Societe Generale (France)	10,640		1,538,979
Sumitomo Mitsui Financial Group, Inc. (Japan)	136		1,006,438
Svenska Handelbanken (Class A Stock) (Sweden)	46,600		1,492,481
Sydbank A/S (Denmark)	7,756		333,429
U.S. Bancorp	149,732		4,752,494
UniCredito Italiano S.p.A (Italy)	298,052		2,475,160
Wachovia Corp.(b)	119,600		4,548,388
Wells Fargo & Co.	510,700		15,418,034
Westpac Banking Corp. (Australia)	49,528		1,204,371
Zions Bancorporation	14,000		653,660

			97,058,131

Commercial Services & Supplies — 0.4%
Administaff, Inc.	56,900		1,609,132
American Reprographics Co.(a)	23,100		380,688
CRA International, Inc.(a)	14,700		699,867
Downer EDI Ltd. (Australia)	116,025		544,861
Hays PLC (United Kingdom)	45,694		105,057
Herman Miller, Inc.	25,500		825,945
Michael Page International PLC (United Kingdom)	49,957		286,401
PeopleSupport, Inc.(a)(b)	41,000		560,880
Robert Half International, Inc.	140,800		3,807,232
Steelcase, Inc. (Class A Stock)	81,400		1,291,818
Stericycle, Inc.(a)(b)	56,900		3,379,860

SEE NOTES TO FINANCIAL STATEMENTS.

A59


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Commercial Services & Supplies (continued)
TrueBlue, Inc.(a)	108,500	$	1,571,080
Waste Management, Inc.	17,200		561,924

			15,624,745

Communications Equipment — 1.3%
Cisco Systems, Inc.(a)	619,900		16,780,693
CommScope, Inc.(a)	28,400		1,397,564
Juniper Networks, Inc.(a)(b)	419,500		13,927,400
Nokia Corp. OYJ (Finland)	145,344		5,635,515
QUALCOMM, Inc.	218,400		8,594,040
Uniden Corp. (Japan)	12,000		69,323

			46,404,535

Computers & Peripherals — 2.6%
Apple, Inc.(a)	57,000		11,290,560
Dell, Inc.(a)	142,400		3,490,224
Emulex Corp.(a)	17,800		290,496
Hewlett-Packard Co.	647,865		32,704,225
International Business Machines Corp.(b)	315,700		34,127,170
Network Appliance, Inc.(a)	454,700		11,349,312
Seagate Technology (Cayman Islands)	124,200		3,167,100
Wincor Nixdorf AG (Germany)	4,206		397,743

			96,816,830

Construction & Engineering — 0.1%
ACS Actividades de Construccion y Servicios SA (Spain)	19,800		1,176,763
COMSYS Holdings Corp. (Japan)	57,000		463,948
Granite Construction, Inc.(b)	32,300		1,168,614
JGC Corp.	16,000		274,339
Vinci SA (France)	1,312		97,157
YIT OYJ (Finland)	9,597		210,329

			3,391,150

Construction Materials — 0.1%
Cimpor Cimentos de Portugal SGPS SA (Portugal)	20,887		183,227
Holcim Ltd. (Switzerland)	10,060		1,077,841
Italcementi S.p.A (Italy)	14,698		314,388
Lafarge SA (France)	14,955		2,722,192

			4,297,648

Consumer Finance — 0.1%
American Express Co.	30,100		1,565,802
AmeriCredit Corp.(a)(b)	139,500		1,784,205
Capital One Financial Corp.(b)	23,200		1,096,432
Cash America International, Inc.	5,800		187,340
Takefuji Corp. (Japan)	24,170		580,530

			5,214,309

Containers & Packaging — 0.2%
Ball Corp.	40,000		1,800,000
Pactiv Corp.(a)(b)	233,900		6,228,757
Rock-Tenn Co. (Class A Stock)	8,900		226,149

			8,254,906

Distributors
Jardine Cycle & Carriage Ltd.	17,548		262,022
Li & Fung Ltd. (Bermuda)	98,000		390,699
Pacific Brands Ltd. (Australia)	228,356		648,514

			1,301,235

Diversified Consumer Services
ITT Educational Services, Inc.(a)	11,200		955,024

SEE NOTES TO FINANCIAL STATEMENTS.

A60


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Diversified Financial Services — 2.5%
Babcock & Brown Ltd. (Australia)	9,982	$	234,800
Bank of America Corp.	725,782		29,945,765
Challenger Financial Services Group Ltd. (Australia)	85,589		370,731
CIT Group, Inc.(b)	30,400		730,512
Citigroup, Inc.	959,562		28,249,505
Deutsche Boerse AG (Germany)	940		185,534
Fortis (Belgium)	51,208		1,348,387
Hong Kong Exchanges and Clearing Ltd. (Hong Kong)	56,000		1,569,892
ING Groep NV (Netherlands)	82,449		3,224,572
JPMorgan Chase & Co.	576,494		25,163,963
Moody’s Corp.(b)	53,100		1,895,670
OKO Bank PLC (Finland)	36,730		701,875
Singapore Exchange Ltd. (Singapore)	100,000		916,054

			94,537,260

Diversified Telecommunication Services — 2.4%
AT&T, Inc.	1,244,147		51,706,749
Belgacom SA (Belgium)	33,817		1,668,181
BT Group PLC (United Kingdom)	210,438		1,142,546
CenturyTel, Inc.	162,200		6,724,812
France Telecom SA (France)	65,900		2,372,119
Nippon Telegraph & Telephone Corp. (Japan)	183		909,680
Portugal Telecom SGPS SA (Portugal)	16,268		212,397
Swisscom AG (Switzerland)	1,952		762,076
Tele2 AB (Class B Stock) (Sweden)	47,500		951,734
Telecom Corp. of New Zealand Ltd. (New Zealand)	251,523		840,223
Telecom Italia S.p.A (Italy)	850,031		2,020,776
Telefonica SA (Spain)	46,067		1,496,570
Verizon Communications, Inc.	317,388		13,866,682
Windstream Corp.	402,300		5,237,946

			89,912,491

Electrical Equipment — 0.9%
ABB Ltd. (Switzerland)	82,764		2,384,633
Acuity Brands, Inc.(b)	47,300		2,128,500
Alstom (France)	3,811		819,067
Emerson Electric Co.	183,400		10,391,443
First Solar, Inc.(a)(b)	2,400		641,136
Hitachi Cable Ltd. (Japan)	66,000		389,472
Prysmian SpA (Italy)(a)	4,590		113,346
Rockwell Automation, Inc.	151,500		10,447,439
Schneider Electric SA (France)	15,126		2,049,619
Sumitomo Electric Industries Ltd. (Japan)	30,400		479,455
Thomas & Betts Corp.(a)(b)	29,700		1,456,488
Vestas Wind Systems A/S (Denmark)(a)	7,474		808,943

			32,109,541

Electric Utilities — 1.3%
American Electric Power Co., Inc.	177,700		8,273,712
CLP Holdings Ltd. (Hong Kong)	89,500		608,065
Duke Energy Corp.	613,900		12,382,363
E.On AG (Germany)	26,290		5,596,864
Edison International	210,100		11,213,037
Enel S.p.A (Italy)	134,410		1,598,645
Energias de Portugal SA (Portugal)	24,101		157,509
FirstEnergy Corp.	49,600		3,588,064
Hokkaido Electric Power Co., Inc. (Japan)	4,100		88,380
Hong Kong Electric Holdings Ltd. (Hong Kong)	28,000		160,239
Portland General Electric Co.	32,900		913,962
PPL Corp.	10,300		536,527

SEE NOTES TO FINANCIAL STATEMENTS.

A61


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Electric Utilities (continued)
Public Power Corp. SA (Greece)	9,825	$	517,128
Scottish & Southern Energy PLC (United Kingdom)	11,871		387,067
Union Fenosa, SA (Spain)	21,457		1,449,038

			47,470,600

Electronic Equipment & Instruments — 0.5%
Agilent Technologies, Inc.(a)	344,700		12,664,278
FUJIFILM Holdings Corp. (Japan)	8,500		355,772
Hitachi Cable Ltd. (Japan)	72,000		534,913
Jabil Circuit, Inc.	286,500		4,374,855
Kyocera Corp. (Japan)	4,400		388,847
Omron Corp. (Japan)	49,100		1,155,982
Venture Co. Ltd. (Singapore)	22,000		192,953

			19,667,600

Energy Equipment & Services — 1.0%
Halliburton Co.	534,300		20,255,313
Hornbeck Offshore Services, Inc.(a)(b)	121,100		5,443,445
National-Oilwell Varco, Inc.(a)(b)	58,600		4,304,756
Schlumberger Ltd. (Netherlands)	42,700		4,200,399
SEACOR Holdings, Inc.(a)(b)	18,200		1,687,868
Unit Corp.(a)	10,400		481,000
WorleyParsons Ltd. (Australia)	60,044		2,704,946

			39,077,727

Exchange Traded Fund
iShares MSCI EAFE Index Fund	4,800		376,800

Food & Staples Retailing — 1.4%
Casino Guichard-Perrachon SA (France)	12,240		1,331,248
Circle K Sunkus Co. Ltd. (Japan)	8,800		130,073
CVS Caremark Corp.	59,800		2,377,050
FamilyMart Co. Ltd. (Japan)	6,900		216,071
Koninklijke Ahold NV (Netherlands)	12,963		180,618
Kroger Co. (The)	374,100		9,992,210
Matsumotokiyoshi Holdings Co. Ltd. (Japan)	13,000		316,520
Safeway, Inc.	45,300		1,549,713
SUPERVALU, Inc.	66,600		2,498,832
Sysco Corp.	46,400		1,448,144
UNY Co. Ltd. (Japan)	62,000		523,699
Wal-Mart Stores, Inc.	614,600		29,211,937
Wesfarmers Ltd. (Australia)(a)	4,488		160,386
Woolworths Ltd. (Australia)	83,507		2,476,485

			52,412,986

Food Products — 0.9%
Archer-Daniels-Midland Co.	143,200		6,648,775
ConAgra Foods, Inc.	133,300		3,171,207
Danisco A/S (Denmark)	5,850		414,658
East Asiatic Co. Ltd. A/S (Denmark)	8,750		681,979
Ebro Puleva SA (Spain)	20,374		373,540
Futuris Corp. Ltd. (Australia)	144,676		271,386
General Mills, Inc.	179,500		10,231,499
Goodman Fielder Ltd. (Australia)	688,032		1,137,418
Nestle SA (Class B Stock) (Switzerland)	7,935		3,644,570
Pilgrim’s Pride Corp.(b)	71,900		2,081,505
Unilever NV (Netherlands)	28,858		1,061,127
Unilever PLC (United Kingdom)	61,219		2,303,207
Wilmar International Ltd. (Singapore)	306,000		1,137,072

			33,157,943

SEE NOTES TO FINANCIAL STATEMENTS.

A62


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Gas Utilities
AGL Resources, Inc.	10,800	$	406,512
Gas Natural SDG SA (Spain)	10,522		615,656
Nicor, Inc.	5,400		228,690
Southwest Gas Corp.	8,000		238,160

			1,489,018

Healthcare Equipment & Supplies — 1.1%
Analogic Corp.	8,800		595,936
Baxter International, Inc.	168,900		9,804,645
Becton, Dickinson & Co.	136,200		11,383,596
Covidien Ltd. (Bermuda)	85,200		3,773,508
Invacare Corp.	12,800		322,560
Medtronic, Inc.	157,100		7,897,417
Mentor Corp.(b)	53,600		2,095,760
Olympus Corp. (Japan)	23,000		937,365
Stryker Corp.	26,000		1,942,720
Terumo Corp. (Japan)	1,800		93,839

			38,847,346

Healthcare Providers & Services — 1.8%
Cardinal Health, Inc.	4,700		271,425
Chemed Corp.	21,300		1,190,244
Express Scripts, Inc.(a)(b)	238,600		17,417,800
Medco Health Solutions, Inc.(a)	4,600		466,440
Parkway Holdings Ltd. (Singapore)	89,000		241,863
Suzuken Co. Ltd. (Japan)	13,100		466,286
UnitedHealth Group, Inc.	439,200		25,561,440
WellPoint, Inc.(a)	241,900		21,221,887

			66,837,385

Hotels, Restaurants & Leisure — 1.1%
Brinker International, Inc. (Australia)	209,350		4,094,886
Darden Restaurants, Inc.(b)	198,000		5,486,580
Enterprise Inns PLC (United Kingdom)	54,540		528,724
Jack in the Box, Inc.(a)(b)	106,400		2,741,928
McDonald’s Corp.(b)	130,100		7,664,191
OPAP SA (Greece)	1,723		69,074
Panera Bread Co. (Class A Stock)(a)(b)	9,600		343,872
Sonic Corp.(a)(b)	96,700		2,117,730
Wyndham Worldwide Corp.	94,200		2,219,352
Yum! Brands, Inc.	367,900		14,079,533

			39,345,870

Household Durables — 0.3%
Barratt Developments PLC (United Kingdom)	46,780		424,164
Bellway PLC (United Kingdom)	22,614		375,204
Bovis Homes Group PLC (United Kingdom)	9,954		122,057
Harman International Industries, Inc.	29,600		2,181,816
Makita Corp. (Japan)	4,100		171,409
Matsushita Electric Industrial Co. Ltd. (Japan)	49,000		1,004,053
Persimmon PLC (United Kingdom)	2,974		47,360
Sekisui Chemical Co. Ltd. (Japan)	190,000		1,269,114
Sekisui House Ltd. (Japan)	130,000		1,389,488
Stanley Works (The)	36,800		1,784,064
Taylor Wimpey PLC (United Kingdom)	252,607		1,022,024
Whirlpool Corp.	15,800		1,289,754

			11,080,507

Household Products — 1.4%
Clorox Co. (The)(b)	40,100		2,613,317
Kimberly-Clark Corp.	245,400		17,016,036

SEE NOTES TO FINANCIAL STATEMENTS.

A63


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Household Products (continued)
Procter & Gamble Co.	390,905	$	28,700,245
Reckitt Benckiser Group PLC (United Kingdom)	46,355		2,688,878

			51,018,476

Independent Power Producers & Energy Traders — 0.4%
AES Corp. (The)(a)	258,200		5,522,898
Constellation Energy Group, Inc.	74,000		7,587,220

			13,110,118

Industrial Conglomerates — 2.1%
3M Co.	172,200		14,519,904
Cookson Group PLC (United Kingdom)	15,018		208,367
General Electric Co.	1,603,900		59,456,573
Keppel Corp. Ltd. (Singapore)	115,000		1,024,728
Koninklijke (Royal) Philips Electronics NV (Netherlands)	5,309		229,135
Rheinmetall AG (Germany)	932		74,700
SembCorp Industries Ltd. (Singapore)	159,000		631,955
Siemens AG (Germany)	7,405		1,173,809
Wendel (France)	4,135		598,150

			77,917,321

Insurance — 3.3%
ACE Ltd. (Cayman Islands)	182,000		11,243,960
Aegon NV (Netherlands)	44,331		783,604
Allianz AG (Germany)	18,076		3,913,467
Allstate Corp. (The)	289,000		15,094,470
AMBAC Financial Group, Inc.(b)	57,200		1,474,044
American Financial Group, Inc.(b)	120,300		3,474,264
American International Group, Inc.	461,435		26,901,660
Arch Capital Group Ltd. (Bermuda)(a)	20,200		1,421,070
Aviva PLC (United Kingdom)	106,705		1,429,502
AXA SA (France)	52,158		2,088,699
Chubb Corp. (The)	145,100		7,919,558
CNP Assurances (France)	4,013		522,124
Endurance Specialty Holdings Ltd. (Bermuda)	20,200		842,946
Hartford Financial Services Group, Inc.	65,100		5,676,069
Legal & General Group PLC (United Kingdom)	141,000		366,562
MBIA, Inc.(b)	66,000		1,229,580
MetLife, Inc.(b)	62,900		3,875,898
Montpelier Re Holdings Ltd. (Bermuda)	42,700		726,327
Muenchener Rueckversicherungs — Gesellschaft AG (Germany)	14,375		2,792,109
Old Mutual PLC (United Kingdom)	90,996		303,586
PartnerRe Ltd. (Bermuda)	11,900		982,107
Platinum Underwriters Holdings Ltd. (Bermuda)	23,500		835,660
Royal & Sun Alliance Insurance Group (United Kingdom)	464,556		1,370,475
SCOR SE (France)	24,865		636,194
Suncorp-Metway Ltd. (Australia)	32,346		477,427
Swiss Life Holding (Switzerland)	2,430		607,420
Swiss Reinsurance (Switzerland)	25,784		1,832,198
Travelers Cos, Inc. (The)	326,000		17,538,799
XL Capital Ltd. (Class A Stock)	79,400		3,994,614
Zurich Financial Services AG (Switzerland)	6,305		1,851,709

			122,206,102

Internet & Catalog Retail
Home Retail Group (United Kingdom)	221,881		1,448,701

Internet Software & Services — 0.8%
EarthLink, Inc.(a)(b)	322,600		2,280,782
eBay, Inc.(a)	496,100		16,465,559

SEE NOTES TO FINANCIAL STATEMENTS.

A64


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Internet Software & Services (continued)
Google, Inc. (Class A Stock)(a)	14,800	$	10,233,904
Tencent Holdings Ltd. (China)	79,000		590,041

			29,570,286

IT Services — 0.5%
Accenture Ltd. (Class A Stock) (Bermuda)	32,400		1,167,372
Automatic Data Processing, Inc.	313,800		13,973,514
MasterCard, Inc. (Class A Stock)(b)	15,000		3,228,000
SYKES Enterprises, Inc.(a)	30,100		541,800

			18,910,686

Leisure Equipment & Products — 0.1%
Nikon Corp. (Japan)	39,000		1,326,714
Sankyo Co. Ltd. (Japan)	3,300		152,469
Yamaha Corp. (Japan)	14,500		330,839

			1,810,022

Life Sciences, Tools & Services — 0.4%
Applera Corp. – Applied Biosystems Group	43,300		1,468,736
Invitrogen Corp.(a)(b)	21,600		2,017,656
Thermo Fisher Scientific, Inc.(a)	9,500		547,960
Waters Corp.(a)	130,500		10,318,635

			14,352,987

Machinery — 1.0%
Charter PLC (United Kingdom)(a)	45,541		719,340
Cummins, Inc.	22,000		2,802,140
Eaton Corp.	89,500		8,677,025
EnPro Industries, Inc.(a)(b)	16,400		502,660
Illinois Tool Works, Inc.	68,300		3,656,782
Ingersoll-Rand Co. (Class A Stock) (Bermuda)	222,600		10,344,223
Komatsu Ltd. (Japan)	81,800		2,193,808
Komori Corp. (Japan)	30,000		661,091
Konecranes Oyj (Finland)	16,512		569,254
Kubota Corp. (Japan)	36,000		242,263
MAN AG (Germany)	8,304		1,386,003
NSK Ltd. (Japan)	43,000		440,768
Sandvik AB (Sweden)	30,007		516,506
Sumitomo Heavy Industries Ltd. (Japan)	20,000		182,352
Trelleborg AB (Class B Stock) (Sweden)	22,700		475,902
Trinity Industries, Inc.(b)	87,200		2,420,672

			35,790,789

Marine — 0.1%
Cosco Corp (Singapore) Ltd. (Singapore)	70,000		276,355
Kawasaki Kisen Kaisha Ltd. (Japan)	52,000		504,812
Mitsui OSK Lines Ltd. (Japan)	153,000		1,934,271
Neptune Orient Lines Ltd. (Singapore)	71,000		190,861
Nippon Yusen Kabushiki Kaish (Japan)	84,000		661,751
Orient Overseas International Ltd. (Hong Kong)	21,000		153,852
TBS International Ltd. (Class A Stock) (Bermuda)(a)	8,900		294,234

			4,016,136

Media — 2.1%
CBS Corp. (Class B Stock)(b)	362,019		9,865,018
Comcast Corp. (Class A Stock)(a)(b)	111,073		2,028,193
Daily Mail & General Trust (United Kingdom)	30,597		302,553
DIRECTV Group, Inc. (The)(a)	183,300		4,237,896
Gestevision Telecinco SA (Spain)	33,559		859,128
Lagardere SCA (France)	7,997		599,684
Marvel Entertainment, Inc.(a)(b)	97,800		2,612,238
Time Warner, Inc.	1,124,850		18,571,274

SEE NOTES TO FINANCIAL STATEMENTS.

A65


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Media (continued)
Valassis Communications, Inc.(a)(b)	78,600	$	918,834
Viacom, Inc. (Class B Stock)(a)	324,900		14,269,608
Vivendi Universal SA (France)	68,790		3,156,031
Walt Disney Co.	676,000		21,821,280
Yell Group PLC (United Kingdom)	17,095		136,458

			79,378,195

Metals & Mining — 1.4%
Acerinox SA (Spain)	20,192		496,851
Alcoa, Inc.	424,800		15,526,440
Anglo American PLC (United Kingdom)	7,561		463,570
ArcelorMittal (Luxembourg)	11,115		893,789
BHP Billiton Ltd. (Australia)	105,439		3,685,940
BHP Billiton PLC (United Kingdom)	99,994		3,077,290
Boliden AB (Sweden)	13,100		164,682
Kobe Steel Ltd. (Japan)	217,000		699,577
Mitsubishi Materials Corp. (Japan)	150,000		633,384
Newmont Mining Corp.	186,600		9,111,678
Nippon Steel Corp. (Japan)	84,000		514,159
Nisshin Steel Co. Ltd. (Japan)	97,000		335,149
Nucor Corp.	8,000		473,760
Outokumpu OYJ (Finland)	26,454		820,342
Rio Tinto PLC (United Kingdom)	39,715		4,203,453
Salzgitter AG (Germany)	9,598		1,420,819
Sumitomo Metal Mining Co. Ltd. (Japan)	29,000		490,289
Thyssenkrupp AG (Germany)	40,662		2,280,501
United States Steel Corp.	45,900		5,549,769
Voestalpine AG (Austria)	9,193		664,640
Yamato Kogyo Co. Ltd. (Japan)	6,000		242,923

			51,749,005

Multiline Retail — 0.2%
Big Lots, Inc.(a)(b)	84,600		1,352,754
Dollar Tree Stores, Inc.(a)	45,500		1,179,360
J.C. Penney Co., Inc.	98,800		4,346,212
Marks & Spencer Group PLC (United Kingdom)	113,014		1,259,810
Next PLC (United Kingdom)	8,270		267,348
Ryohin Keikaku Co. Ltd. (Japan)	1,200		72,034

			8,477,518

Multi-Utilities — 0.4%
AGL Energy Ltd. (Australia)	10,777		125,456
Centerpoint Energy, Inc.	38,800		664,644
Centrica PLC (United Kingdom)	302,580		2,160,812
Consolidated Edison, Inc.	132,300		6,462,855
Integrys Energy Group, Inc.	8,100		418,689
National Grid PLC (United Kingdom)	150,205		2,493,649
NiSource, Inc.	61,300		1,157,957
RWE AG (Germany)	3,184		448,992
Suez SA (France)	13,041		887,933

			14,820,987

Office Electronics — 0.4%
Canon, Inc. (Japan)	20,700		947,368
Konica Minolta Holdings, Inc. (Japan)	21,000		368,151
Ricoh Co. Ltd. (Japan)	102,000		1,862,147
Xerox Corp.	763,500		12,361,065

			15,538,731

SEE NOTES TO FINANCIAL STATEMENTS.

A66


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Oil, Gas & Consumable Fuels — 6.8%
BP PLC (United Kingdom)	521,181	$	6,380,411
Chesapeake Energy Corp.	292,000		11,446,400
Chevron Corp.	464,856		43,385,010
ConocoPhillips (Class B Stock)	348,434		30,766,722
EFG Eurobank Ergasias (Greece)	5,761		202,823
ENI S.p.A (Italy)	57,232		2,096,088
Exxon Mobil Corp.	983,716		92,164,352
Holly Corp.	28,400		1,445,276
Idemitsu Kosan Co. Ltd. (Japan)	2,400		252,780
Marathon Oil Corp.(b)	246,300		14,989,818
Nippon Oil Corp. (Japan)	249,000		2,013,009
Occidental Petroleum Corp.	124,600		9,592,954
OMV AG (Austria)	21,788		1,765,415
Repsol YPF SA (Spain)	48,540		1,730,200
Royal Dutch Shell PLC (Class B Stock) (United Kingdom)	90,079		3,747,613
Royal Dutch Shell PLC (United Kingdom)	55,023		2,312,158
Singapore Petroleum Co. Ltd. (Singapore)	220,000		1,148,527
Sunoco, Inc.	39,000		2,825,160
Swift Energy Co.(a)	10,900		479,927
Total SA (France)	53,410		4,437,754
Valero Energy Corp.	248,100		17,374,443
Williams Cos., Inc. (The)	88,700		3,173,686

			253,730,526

Paper & Forest Products — 0.2%
International Paper Co.	151,400		4,902,332
Mondi Ltd. (South Africa)	4,889		46,141
Mondi PLC (United Kingdom)	58,887		498,188
Sonae Industria SGPS SA (Portugal)(a)	36,170		351,668

			5,798,329

Personal Products
Herbalife Ltd. (Cayman Islands)	17,100		688,788
Oriflame Cosmetics SA (Sweden)	8,200		523,982

			1,212,770

Pharmaceuticals — 3.9%
Abbott Laboratories	180,500		10,135,075
Astellas Pharma, Inc. (Japan)	17,900		776,334
AstraZeneca PLC (United Kingdom)	60,598		2,610,361
Bristol-Myers Squibb Co.	40,000		1,060,800
Eli Lilly & Co.	279,400		14,917,166
GlaxoSmithKline PLC (United Kingdom)	152,103		3,872,516
H Lundbeck A/S (Denmark)	9,600		259,762
Johnson & Johnson	523,998		34,950,667
King Pharmaceuticals, Inc.(a)	308,600		3,160,064
Kyowa Hakko Kogyo Co. Ltd. (Japan)	53,000		566,044
Merck & Co., Inc.	298,700		17,357,457
Novartis AG (Switzerland)	24,679		1,353,677
Pfizer, Inc.	1,525,565		34,676,092
Roche Holding AG-Genusshein (Switzerland)	9,449		1,632,491
Sanofi-Aventis (France)	35,875		3,303,372
Shire PLC (United Kingdom)	18,472		422,492
Takeda Pharmaceutical Co. Ltd. (Japan)	11,100		648,471
Wyeth	279,300		12,342,267

			144,045,108

Real Estate Investment Trusts — 0.4%
Annaly Capital Management, Inc.(b)	221,400		4,025,053
Ashford Hospitality Trust, Inc.	81,600		586,704

SEE NOTES TO FINANCIAL STATEMENTS.

A67


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Real Estate Investment Trusts (continued)
Brandywine Realty Trust	87,400	$	1,567,082
CBL & Associates Properties, Inc.	32,000		765,120
Centro Properties Group	15,744		13,771
First Industrial Realty Trust, Inc.(b)	47,000		1,626,200
Host Hotels & Resorts, Inc.	123,700		2,107,848
ING Industrial Fund (Australia)	386,508		856,334
Mirvac Group (Australia)	149,661		782,140
NorthStar Realty Finance Corp.(b)	87,400		779,608
Strategic Hotels & Resorts, Inc.(b)	39,200		655,816
Sunstone Hotel Investors, Inc.	9,300		170,097
Westfield Group (Australia)	4,445		81,266

			14,017,039

Real Estate Management & Development — 0.1%
Cheung Kong Holdings Ltd. (Hong Kong)	57,000		1,041,359
City Developments Ltd. (Singapore)	25,000		243,470
Jones Lang LaSalle, Inc.	9,100		647,556
K.K. DaVinci Advisors (Japan)(a)	404		350,006
Leopalace21 Corp. (Japan)	16,400		440,631
Swire Pacific Ltd. (Hong Kong)	40,000		548,125
Wharf (Holdings) Ltd. (The) (Hong Kong)(a)	241,000		1,246,698

			4,517,845

Road & Rail — 0.2%
Nippon Express Co. Ltd. (Japan)	19,000		96,940
Ryder System, Inc.	12,000		564,120
Seino Holdings Co. Ltd. (Japan)	39,000		262,421
Union Pacific Corp.	40,300		5,062,487

			5,985,968

Semiconductors & Semiconductor Equipment — 1.4%
ASML Holding NV (Netherlands)	7,334		232,254
Integrated Device Technology, Inc.(a)	58,400		660,504
Intel Corp.	832,700		22,199,782
Lam Research Corp.(a)	121,100		5,235,153
Linear Technology Corp.(b)	182,500		5,808,975
NVIDIA Corp.(a)(b)	340,600		11,587,212
Semtech Corp.(a)(b)	46,000		713,920
Texas Instruments, Inc.(b)	25,300		845,020
Varian Semiconductor Equipment Associates, Inc.(a)	59,700		2,208,900
Zoran Corp.(a)(b)	135,400		3,047,854

			52,539,574

Software — 2.6%
Adobe Systems, Inc.(a)	150,800		6,443,684
Advent Software, Inc.(a)(b)	18,000		973,800
BMC Software, Inc.(a)	56,200		2,002,968
Intuit, Inc.(a)	193,500		6,116,535
Lawson Software, Inc.(a)	27,200		278,528
Microsoft Corp.	1,703,100		60,630,360
Nintendo Co. Ltd. (Japan)	5,700		3,346,766
Oracle Corp.(a)	203,000		4,583,740
Symantec Corp.(a)(b)	701,100		11,315,754

			95,692,135

Specialty Retail — 1.1%
AnnTaylor Stores Corp.(a)(b)	44,300		1,132,308
Asbury Automotive Group	58,500		880,425
Belle International Holdings Ltd. (China)	51,000		76,298
Best Buy Co., Inc.(b)	220,200		11,593,530
Christopher & Banks Corp.	31,900		365,255
Esprit Holdings Ltd. (Hong Kong)	65,400		963,032

SEE NOTES TO FINANCIAL STATEMENTS.

A68


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Specialty Retail (continued)
Group 1 Automotive, Inc.(b)	14,200	$	337,250
Gymboree Corp.(a)(b)	129,000		3,929,340
Hennes & Mauritz AB (Class B Stock) (Sweden)	5,200		316,592
Hikari Tsushin, Inc. (Japan)	3,200		108,582
Home Depot, Inc.	496,750		13,382,446
Limited Brands, Inc.(b)	317,000		6,000,810
Rent-A-Center, Inc.(a)	177,400		2,575,848
Shimachu Co. Ltd. (Japan)	2,900		81,705

			41,743,421

Textiles, Apparel & Luxury Goods — 0.3%
Jones Apparel Group, Inc.(b)	196,100		3,135,639
Liz Claiborne, Inc.(b)	45,800		932,030
Nisshinbo Industries, Inc. (Japan)	21,000		256,062
Swatch Group AG (Switzerland)	11,058		652,941
VF Corp.	40,900		2,808,194
Warnaco Group, Inc. (The)(a)(b)	97,900		3,406,921

			11,191,787

Thrifts & Mortgage Finance — 0.3%
Hudson City Bancorp, Inc.	617,300		9,271,846
Washington Mutual, Inc.(b)	41,300		562,093

			9,833,939

Tobacco — 0.9%
Altria Group, Inc.	187,100		14,141,017
British American Tobacco PLC (United Kingdom)	21,293		832,884
Imperial Tobacco Group PLC (United Kingdom)	55,194		2,979,659
Reynolds American, Inc.(b)	210,600		13,891,176

			31,844,736

Trading Companies & Distributors — 0.2%
Itochu Corp. (Japan)	119,000		1,148,307
Marubeni Corp. (Japan)	146,000		1,023,023
Mitsubishi Corp. (Japan)	33,000		893,135
Mitsui & Co. Ltd. (Japan)	93,000		1,942,086
Sumitomo Corp. (Japan)	66,100		924,830

			5,931,381

Transportation Infrastructure
Hopewell Holdings (Hong Kong)	119,000		545,602
Kamigumi Co. Ltd. (Japan)	31,000		223,708

			769,310

Wireless Telecommunication Services — 0.5%
KDDI Corp. (Japan)	96		710,311
Sprint Nextel Corp.	959,100		12,592,983
Vodafone Group PLC (United Kingdom)	1,794,633		6,708,975

			20,012,269

TOTAL COMMON STOCKS (cost $2,104,931,744)			2,396,999,371

PREFERRED STOCK — 0.1%
Automobiles — 0.1%
Porsche AG (Germany) (cost $685,818)	649		1,310,487

RIGHTS
Real Estate Management & Development
Wharf (Holdings) Ltd. (The) (Hong Kong)(a) (cost $0)	30,125		41,339

SEE NOTES TO FINANCIAL STATEMENTS.

A69


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS — 27.4%
Aerospace & Defense — 0.2%
BAE Systems Holdings, Inc.,
Notes, 144A
4.75%	08/15/10	Baa2	$	2,150	$	2,165,237
Boeing Capital Corp.,(b)
Sr. Notes
6.10%	03/01/11	A2		925		969,552
Goodrich Corp.,
Notes
6.80%	07/01/36	Baa2		848		906,150
Northrop Grumman Corp.,
Gtd. Notes
7.125%	02/15/11	Baa1		3,500		3,730,111
Raytheon Co.,
Sr. Notes
5.50%	11/15/12	Baa1		595		619,510

						8,390,560

Airlines — 0.1%
American Airlines, Inc.,
Pass-thru Certs., Ser. 01-1
6.817%	05/23/11	Ba1		2,520		2,441,249
Continental Airlines, Inc.,
Pass-thru Certs., Ser. 981A
6.648%	09/15/17	Baa2		357		358,729
Delta Air Lines, Inc.,(b)
Pass-thru Certs., 144A
6.821%	08/10/22	Baa1		520		491,452
Southwest Airlines Co.,
Notes
6.50%	03/01/12	Baa1		1,005		1,040,680

						4,332,110

Asset Backed Securities — 0.7%
American Express Credit Account Master Trust,(g)
Ser. 2004-4, Class C, 144A
5.4975%	03/15/12	Baa1		1,170		1,151,533
Ser. 2004-C, Class C, 144A
5.5275%	02/15/12	Baa1		386		385,741
Amortizing Residential Collateral Trust,(g)
Ser. 2002-BC7, Class M2
6.215%	10/25/32	BB(f)		118		63,890
Ser. 2002-BC9, Class M1
6.515%	12/25/32	Aa2		2,498		2,248,696
Bank of America Credit Card Trust,(g)
Ser. 2006-C5, Class C5
5.4275%	01/15/16	Baa2		3,209		2,971,802
Bank One Issuance Trust,
Ser. 2003-C1, Class C1
4.54%	09/15/10	Baa2		1,820		1,819,872
CDC Mortgage Capital Trust,(g)
Ser. 2002-HE3, Class M1
6.515%	03/25/33	A1		796		632,263
Centex Home Equity,(g)
Ser. 2005-A, Class M2
5.365%	01/25/35	Aa2		1,790		1,634,838
Citibank Credit Card Insurance Trust,(g)
Ser. 2006-C1, Class C1
5.3488%	02/20/15	Baa2		1,350		1,241,041

SEE NOTES TO FINANCIAL STATEMENTS.

A70


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Asset Backed Securities (continued)
Credit-Based Asset Servicing and Securitization LLC,
Ser. 2005-CB6, Class A3
5.12%	07/25/35	Aaa	$	1,400	$	1,392,390
Equity One ABS, Inc.,
Ser. 2004-3, Class M1
5.70%	07/25/34	Aa2		1,280		1,176,369
First Franklin Mortgage Loan Trust,(g)
Ser. 2005-FFH1, Class M2
5.385%	06/25/36	Aa2		1,450		1,297,966
Household Home Equity Loan Trust,(g)
Ser. 2005-2, Class M2
5.4388%	01/20/35	Aa1		534		467,864
MBNA Master Credit Card Trust,
Ser. 1999-J, Class A
7.00%	02/15/12	Aaa		1,830		1,916,209
Morgan Stanley ABS Capital I,(g)
Ser. 2004-NC3, Class M2
5.965%	03/25/34	A2		959		884,135
Morgan Stanley Dean Witter Capital I,(g)
Ser. 2002-HE1, Class M1
5.765%	07/25/32	Aa2		1,585		1,513,679
Ser. 2002-NC2, Class M2, 144A
7.19%	04/25/32	A(f)		381		136,622
Ser. 2002-NC4, Class M1
6.14%	09/25/32	Aaa		1,179		1,143,552
Saxon Asset Securities Trust,(g)
Ser. 2005-2, Class M2
5.305%	10/25/35	Aa2		1,170		1,128,119
Securitized Asset Backed Receivables LLC,(g)
Ser. 2004-OP1, Class M1
5.375%	02/25/34	Aa2		1,325		1,291,039
Ser. 2006-FR3, Class A3
5.115%	05/25/36	Aaa		1,100		858,000
SVO VOI Mortgage Corp.,
Ser. 2005-AA, Class A, 144A
5.25%	02/20/21	Aaa		617		611,647
WFS Financial Owner Trust,
Ser. 2004-4, Class D
3.58%	05/17/12	A2		236		234,065

						26,201,332

Automotive — 0.1%
Johnson Controls, Inc.,
Sr. Notes
5.50%	01/15/16	Baa1		245		241,408
Oshkosh Truck Corp.,(h)
Bank Loan
6.90%	12/06/13	Ba3		1,975		1,893,306

						2,134,714

Banking — 0.6%
Banco Bradesco (Cayman Islands),
Notes
8.75%	10/24/13	A2		1,760		1,993,200
Bank of America Corp.,(b)
Sub. Notes
5.75%	08/15/16	Aa2		1,775		1,778,165

SEE NOTES TO FINANCIAL STATEMENTS.

A71


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Banking (continued)
Bank of America NA,
Sub. Notes
5.30%(b)	03/15/17	Aa1	$	930	$	904,310
6.00%	10/15/36	Aa1		410		392,134
Bank One Corp.,
Sub. Notes
7.875%	08/01/10	Aa3		2,250		2,426,995
Citigroup, Inc.,
Sub. Notes
5.00%	09/15/14	A1		454		432,591
5.625%(b)	08/27/12	A1		2,800		2,836,346
6.125%	08/25/36	A1		570		539,499
DEPFA ACS Bank (Ireland),
Notes, 144A
5.125%	03/16/37	Aaa		1,380		1,364,024
First Union National Bank,
Sub. Notes
7.80%	08/18/10	Aa2		2,100		2,263,212
HSBC Bank USA,
Sr. Notes
3.875%	09/15/09	Aa2		250		247,662
ICICI Bank Ltd. (India),(g)
Notes, 144A
5.7875%	01/12/10	Baa2		2,385		2,354,234
ICICI Bank Ltd. (Singapore),
Notes, 144A
5.75%	11/16/10	Baa2		1,410		1,398,719
JPMorgan Chase & Co.,
Sub. Notes
4.60%	01/17/11	Aa2		720		717,907
6.50%	01/15/09	Aa3		1,100		1,109,854
MUFG Capital Finance 1 Ltd., (Cayman Islands),(g)
Gtd. Notes
6.346%	07/25/49	A2		800		757,707
Santander Central Hispano Issuances (Cayman Islands),
Bank Gtd. Notes
7.625%	09/14/10	Aa2		695		744,107
Wells Fargo Bank,
Sub. Notes
4.75%	02/09/15	Aa1		585		558,743
6.45%	02/01/11	Aa1		65		68,767


						22,888,176

Brokerage — 0.4%
Bear Stearns Co., Inc. (The),
Sr. Unsec. Notes
6.40%	10/02/17	A2		330		318,833
Unsec. Notes
5.30%	10/30/15	A2		515		471,818
Goldman Sachs Group, Inc. (The),
Sr. Notes(b)
5.45%	11/01/12	Aa3		600		611,677
Sub. Notes
5.625%	01/15/17	A1		1,190		1,162,126
6.45%	05/01/36	A1		1,615		1,517,281
6.75%	10/01/37	A1		694		679,966

SEE NOTES TO FINANCIAL STATEMENTS.

A72


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Brokerage (continued)
Lehman Brothers Holdings, Inc.,
Sr. Notes(b)
5.25%	02/06/12	A1	$	1,715	$	1,696,972
Sub. Notes
6.50%	07/19/17	A2		582		588,901
Merrill Lynch & Co., Inc.,
Notes
4.25%	02/08/10	A1		1,170		1,146,949
4.79%	08/04/10	A1		295		292,309
5.00%	01/15/15	A1		615		579,960
Notes, M.T.N
5.77%	07/25/11	A1		520		521,573
Sr. Unsec. Notes(b)
6.40%	08/28/17	A1		1,100		1,117,554
Morgan Stanley,
Notes
5.30%	03/01/13	Aa3		845		842,874
5.45%, M.T.N.	01/09/17	Aa3		1,045		1,013,724
Sr. Notes, M.T.N.(b)
5.25%	11/02/12	Aa3		930		929,690
Sr. Unsec. Notes, M.T.N.
5.75%	10/18/16	Aa3		1,300		1,282,797
5.95%	12/28/17	Aa3		620		619,558
Sub. Notes
4.75%	04/01/14	A1		1,170		1,096,119

						16,490,681

Building Materials & Construction — 0.1%
American Standard, Inc.,
Gtd. Notes
7.625%	02/15/10	Baa3		770		808,551
Centex Corp.,(b)
Sr. Unsec. Notes
6.50%	05/01/16	Ba1		325		288,852
Hanson PLC (United Kingdom),
Sr. Unsub. Notes
7.875%	09/27/10	Baa3		1,000		1,084,956
Lafarge SA (France),
Notes
6.15%	07/15/11	Baa2		910		936,091
Ryland Group, Inc. (The),
Sr. Notes
5.375%	06/01/08	Ba1		160		159,051

						3,277,501

Cable — 0.2%
AT&T Broadband LLC,(e)
Gtd. Notes
9.455%	11/15/22	Baa2		255		324,269
Comcast Corp.,
Gtd. Notes
6.45%	03/15/37	Baa2		220		224,000
Sr. Unsec. Notes
6.50%	11/15/35	Baa2		450		459,198
Cox Communications, Inc.,
Notes, Class A
6.75%	03/15/11	Baa3		950		996,601
7.875%	08/15/09	Baa3		1,275		1,333,927

SEE NOTES TO FINANCIAL STATEMENTS.

A73


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Cable (continued)
Insight Midwest Holdings LLC,(h)
Bank Loan
6.753%	10/06/13	Ba3	$	1,800	$	1,724,999
Time Warner Cable, Inc.,
Sr. Unsec. Notes
5.40%	07/02/12	Baa2		2,510		2,515,045

						7,578,039

Capital Goods — 0.3%
Caterpillar Financial Services Corp.,
Notes, M.T.N.
5.50%	03/15/16	A2		825		830,053
Caterpillar, Inc.,
Debs.
7.25%	09/15/09	A2		700		732,736
ERAC USA Finance Co.,
Gtd. Notes, 144A
5.80%	10/15/12	Baa2		460		456,352
6.375%	10/15/17	Baa2		1,302		1,257,879
7.00%	10/15/37	Baa2		490		445,032
7.35%	06/15/08	Baa2		1,950		1,966,643
FedEx Corp.,
Gtd. Notes
7.25%	02/15/11	Baa2		400		425,825
General Electric Co.,
Sr. Unsec. Notes
5.25%	12/06/17	Aaa		70		69,851
Honeywell International, Inc.,
Sr. Unsec. Notes
5.70%	03/15/37	A2		140		138,221
Sr. Unsub. Notes
6.125%	11/01/11	A2		1,095		1,146,442
Sensata Technologies,(h)
Bank Loan
6.93%	04/27/13	Ba3		1,393		1,320,298
United Technologies Corp.,
Debs.
8.875%	11/15/19	A2		390		505,694
Notes
6.35%	03/01/11	A2		825		878,450

						10,173,476

Chemicals — 0.1%
Dow Chemical Co. (The),
Debs.
5.97%	01/15/09	A3		390		395,072
Sr. Notes
6.125%	02/01/11	A3		685		710,689
ICI Wilmington, Inc.,
Gtd. Notes
5.625%	12/01/13	Baa2		720		740,444
Lubrizol Corp.,
Sr. Notes
4.625%	10/01/09	Baa3		860		863,659
Union Carbide Corp.,
Debs.
7.50%	06/01/25	Ba2		460		476,682

						3,186,546

SEE NOTES TO FINANCIAL STATEMENTS.

A74


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Collateralized Mortgage Obligations — 0.4%
Banc of America Mortgage Securities, Inc.,(g)
Ser. 2005-A, Class 2A1
4.461%	02/25/35	Aaa	$	1,391	$	1,376,255
Ser. 2005-B, Class 2A1
4.382%	03/25/35	Aaa		984		976,632
Bank of America Alternative Loan Trust,
Ser. 2005-12, Class 3CB1
6.00%	01/25/36	Aaa		3,930		3,762,567
Chase Mortgage Finance Corp.,(g)
Ser. 2007-A1, Class 1A5
4.356%	02/25/37	Aaa		4,391		4,336,503
Countrywide Alternative Loan Trust,
Ser. 2004-18CB, Class 3A1
5.25%	09/25/19	Aaa		1,502		1,468,267
JPMorgan Mortgage Trust,(g)
Ser. 2007-A1, Class 4A1
4.071%	07/25/35	Aaa		2,723		2,703,175
Master Alternative Loan Trust,
Ser. 2004-4, Class 4A1
5.00%	04/25/19	Aaa		496		492,866
Structured Adjustable Rate Mortgage Loan,(g)
Ser. 2004-1, Class 4A3
4.17%	02/25/34	Aaa		917		933,902
Washington Mutual Alternative Mortgage,
Pass-Through Certificates, Ser. 2005-1, Class 3A
5.00%	03/25/20	AAA(f)		571		558,299

						16,608,466

Commercial Mortgage Backed Securities — 3.5%
Banc of America Commercial Mortgage, Inc.,
Ser. 2003-2, Class A3(g)
4.873%	03/11/41	AAA(f)		2,500		2,504,269
Ser. 2004-2, Class A4
4.153%	11/10/38	Aaa		2,800		2,752,921
Ser. 2005-1, Class ASB(g)
4.85%	11/10/42	AAA(f)		900		901,042
Ser. 2006-2, Class A4(g)
5.7401%	05/10/45	AAA(f)		2,300		2,377,168
Ser. 2007-1, Class A4
5.451%	01/15/49	Aaa		3,600		3,617,606
Bear Stearns Commercial Mortgage Securities,(g)
Ser. 2004-T16, Class A-6
4.75%	02/13/46	AAA(f)		4,500		4,428,905
Ser. 2005-T18, Class AAB
4.823%	02/13/42	Aaa		1,775		1,742,379
Ser. 2005-T20, Class AAB
5.138%	10/12/42	Aaa		2,400		2,400,774
Commercial Mortgage Acceptance Corp.,(g)
Ser. 1998-C2, Class F, 144A
5.44%	09/15/30	A-(f)		890		925,291
Commercial Mortgage Pass-Through Certificates, I/O,(g)
Ser. 2004-LB2A, Class X2, 144A
0.94%	03/10/39	AAA(f)		11,751		237,482
Credit Suisse Mortgage Capital Certificates,
Ser. 2006-C1, Class A4(g)
5.5546%	02/15/39	AAA(f)		2,700		2,740,922
Ser. 2006-C5, Class A3
5.311%	12/15/39	Aaa		1,790		1,783,775

SEE NOTES TO FINANCIAL STATEMENTS.

A75


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Commercial Mortgage Backed Securities (continued)
CS First Boston Mortgage Securities Corp.,
Ser. 2004-C3, Class A4
4.835%	07/15/36	Aaa	$	880	$	880,274
Ser. 2004-C4, Class A4
4.283%	10/15/39	Aaa		1,400		1,378,294
DLJ Commercial Mortgage Corp.,
Ser. 2000-CF1, Class A1B
7.62%	06/10/33	AAA(f)		2,637		2,786,868
General Electric Capital Commercial Mortgage Corp., I/O,(g)
Ser. 2004-C2, Class X2, 144A
0.57%	03/10/40	Aaa		21,605		328,765
GMAC Commercial Mortgage Securities, Inc.,
Ser. 2005-C1, Class A5
4.697%	05/10/43	AAA(f)		2,720		2,595,699
Greenwich Capital Commercial Funding Corp.,
Ser. 2003-C1, Class A4
4.111%	07/05/35	Aaa		7,700		7,420,519
Ser. 2005-GG5, Class A5(g)
5.224%	04/10/37	Aaa		9,550		9,474,619
GS Mortgage Securities Corp. II,(g)
Ser. 2006-GG6, Class AAB
5.587%	04/10/38	AAA(f)		6,650		6,742,051
JPMorgan Chase & Co.,(g)
Ser. 2005-CB13, Class A4
5.294%	01/12/43	Aaa		2,340		2,339,410
Ser. 2005-LDP5, Class A4
5.1793%	12/15/44	Aaa		5,000		4,979,159
JPMorgan Chase Commercial Mortgage Securities Corp.,
Ser. 2005-LDP1, Class ASB(g)
4.853%	03/15/46	Aaa		4,200		4,153,529
Ser. 2005-LDP2, Class ASB
4.659%	07/15/42	Aaa		6,350		6,216,221
Ser. 2005-LDP4, Class A4(g)
4.918%	10/15/42	Aaa		2,500		2,425,461
Ser. 2006-CB16, Class ASB
5.523%	05/12/45	Aaa		3,900		3,945,338
Ser. 2006-LDP6, Class X2, I/O(g)
0.077%	04/15/43	Aaa		142,166		663,732
Ser. 2006-LDP8, Class ASB
5.37%	05/15/45	Aaa		3,700		3,711,682
JPMorgan Commercial Mortgage Finance Corp.,(g)
Ser. 2000-C10, Class A2
7.371%	08/15/32	Aaa		7,587		7,923,109
Ser. 2003-CB6, Class A2
5.255%	07/12/37	Aaa		2,100		2,130,673
KeyCorp.,(g)
Ser. 2000-C1, Class A2
7.727%	05/17/32	Aaa		8,072		8,468,200
LB-UBS Commercial Mortgage Trust,
Ser. 2003-C8, Class A3
4.83%	11/15/27	Aaa		1,460		1,462,804
Ser. 2004-C6, Class A5(g)
4.826%	08/15/29	AAA(f)		3,910		3,903,960
Ser. 2006-C6, Class AAB
5.341%	09/15/39	Aaa		2,480		2,488,751

SEE NOTES TO FINANCIAL STATEMENTS.

A76


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Commercial Mortgage Backed Securities (continued)
Merrill Lynch Mortgage Trust,
Ser. 2004-KEY2, Class A3
4.615%	08/12/39	Aaa	$	2,000	$	1,981,065
Merrill Lynch/Countrywide Commercial Mortgage Trust,
Ser. 2006-2, Class A4(g)
5.9095%	06/12/46	Aaa		1,795		1,873,448
Ser. 2007-5, Class A4
5.378%	08/12/48	Aaa		3,500		3,500,651
Morgan Stanley Capital I,
Ser. 2006-IQ11, Class A4(g)
5.773%	10/15/42	AAA(f)		2,600		2,678,148
Ser. 2007-HQ11, Class AAB
5.444%	02/12/44	Aaa		4,600		4,619,545
Ser. 2007-T27, AAB(g)
5.65%	06/11/42	AAA(f)		1,105		1,126,767

						128,611,276

Consumer
Whirlpool Corp.,
Notes
6.125%	06/15/11	Baa2		965		1,004,973

Electric — 0.7%
Appalachian Power Co.,
Sr. Notes, Ser. J
4.40%	06/01/10	Baa2		620		615,398
Arizona Public Service Co.,
Sr. Unsec. Notes
6.375%	10/15/11	Baa2		1,305		1,350,150
Unsec. Notes
6.25%	08/01/16	Baa2		175		178,077
Baltimore Gass & Electric Co.,
Sr. Unsec. Notes
6.35%	10/01/36	Baa2		550		545,480
Carolina Power & Light Co.,
First Mtge. Bonds
5.25%	12/15/15	A2		525		522,157
CenterPoint Energy Houston Electric LLC,
Mtge. Bonds, Ser. J2
5.70%	03/15/13	Baa2		740		747,076
Mtge. Bonds, Ser. K2
6.95%	03/15/33	Baa2		590		645,013
Consolidated Edison Co. of New York,
Sr. Unsec. Notes
5.375%	12/15/15	A1		730		727,225
Consumers Energy Co.,
First Mtge. Bonds, Ser. B
5.375%	04/15/13	Baa1		325		324,101
Dominion Resources, Inc.,
Sr. Notes, Ser. D
5.125%	12/15/09	Baa2		970		979,089
Duke Energy Carolinas LLC,
Sr. Unsub. Notes
6.10%	06/01/37	A3		960		964,913
El Paso Electric Co.,
Sr. Unsec. Notes
6.00%	05/15/35	Baa2		670		626,380

SEE NOTES TO FINANCIAL STATEMENTS.

A77


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Electric (continued)
Empresa Nacional de Electricidad S.A. (Chile),
Bonds, Ser. B
8.50%	04/01/09	Baa3	$	1,070	$	1,118,557
Notes
8.625%	08/01/15	Baa3		1,295		1,493,959
Energy East Corp.,
Notes
6.75%	09/15/33	Baa2		145		146,541
Exelon Corp.,
Notes
4.90%	06/15/15	Baa1		155		145,904
Florida Power & Light Co.,
First Mtge. Bonds
5.95%	10/01/33	Aa3		295		298,396
Georgia Power Co.,
Unsub. Notes
5.70%	06/01/17	A2		495		508,239
Indiana Michigan Power Co.,
Sr. Notes
5.05%	11/15/14	Baa2		460		441,061
Midamerican Energy Holdings Co.,
Sr. Unsec. Notes
5.95%	05/15/37	Baa1		420		407,391
National Rural Utilities Cooperative Finance Corp.,
Notes, Ser. C, M.T.N.
7.25%	03/01/12	A2		185		200,444
Nevada Power Co.,
Mtge. Bonds, Ser. O
6.50%	05/15/18	Baa3		1,260		1,290,012
NiSource Finance Corp.,
Gtd. Notes
5.25%	09/15/17	Baa3		245		225,232
5.45%	09/15/20	Baa3		350		313,196
NRG Energy,(h)
Bank Loan
6.48%	02/01/13	Ba1		439		418,563
6.58%	02/01/13	Ba1		951		906,577
NSTAR Electric Co.,
Debs.
4.875%	04/15/14	A1		565		551,268
Oncor Electric Delivery Co.,
Debs.
7.00%	09/01/22	Ba1		475		492,073
Sec. Notes
6.375%	01/15/15	Ba1		345		353,236
Pacific Gas & Electric Co.,
Unsec. Notes
6.05%	03/01/34	A3		1,550		1,547,424
PPL Electric Utilities Corp.,
Sec. Notes
6.25%	08/15/09	A3		1,500		1,536,458
Public Service Electric & Gas Co.,
Mtge. Bonds
5.80%	05/01/37	A3		535		523,007
Southern California Edison Co.,
First Mtge. Bonds
4.65%	04/01/15	A2		470		451,679

SEE NOTES TO FINANCIAL STATEMENTS.

A78


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Electric (continued)
Texas Competitive Electric Holdings Co. LLC,(h)
Bank Loan
8.60%	10/10/14	Ba3	$	998	$	978,798
Virginia Electric Power Co.,
Sr. Unsec. Notes, Ser. A
6.00%	05/15/37	Baa1		795		777,545
Xcel Energy, Inc.,
Sr. Notes
3.40%	07/01/08	Baa1		605		599,588
5.613%	04/01/17	Baa1		199		196,570
6.50%	07/01/36	Baa1		445		441,460

						24,588,237

Energy – Integrated — 0.1%
ConocoPhillips,
Notes
8.75%	05/25/10	A1		1,505		1,648,816
Lukoil International Finance BV (Netherlands),
Gtd Notes, 144A
6.356%	06/07/17	Baa2		560		530,152
TNK-BP Finance SA (Luxembourg),
Gtd. Notes, 144A
7.50%	07/18/16	Baa2		1,425		1,380,469

						3,559,437

Energy – Other — 0.2%
Devon Financing Corp. ULC,
Gtd. Notes
7.875%	09/30/31	Baa1		225		272,127
Halliburton Co.,
Sr. Unsec. Notes
5.50%	10/15/10	A2		150		154,193
Nexen, Inc. (Canada),
Unsec. Notes
6.40%	05/15/37	Baa2		200		199,665
Pioneer Natural Resources Co.,
Bonds
6.875%	05/01/18	Ba1		1,500		1,450,538
Talisman Energy, Inc. (Canada),
Sr. Unsec. Notes
6.25%	02/01/38	Baa2		170		165,675
Valero Energy Corp.,
Sr. Notes
6.125%	06/15/17	Baa3		860		873,988
6.625%	06/15/37	Baa3		255		256,804
Weatherford International, Inc.,
Gtd. Notes, 144A
6.35%	06/15/17	Baa1		970		1,002,646
Western Oil Sands, Inc. (Canada),
Sec. Notes
8.375%	05/01/12	Baa3		360		401,510
Woodside Finance Ltd. (Australia),
Gtd. Notes, 144A
5.00%	11/15/13	Baa1		1,315		1,310,200
XTO Energy, Inc.,
Sr. Unsec. Notes
6.25%	08/01/17	Baa2		585		613,735

						6,701,081

SEE NOTES TO FINANCIAL STATEMENTS.

A79


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date		Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Foods — 0.5%
Aramark Corp.,(h)
Bank Loans
7.036%	01/26/14		Ba3	$	1,658	$	1,574,688
7.036%	01/26/14		Ba3		119		112,544
Bunge Ltd. Finance Corp.,
Notes
5.35%	04/15/14		Baa2		1,040		1,006,959
Cadbury Schweppes U.S. Finance LLC,
Gtd. Notes, 144A
3.875%	10/01/08		Baa2		810		805,093
Cargill, Inc., 144A,
Notes
3.625%	03/04/09		A2		1,875		1,847,524
Sr. Unsec. Notes
6.00%	11/27/17		A2		670		668,470
Coca-Cola Co. (The),
Sr. Unsec. Notes
5.35%	11/15/17		Aa3		1,490		1,526,568
ConAgra Foods, Inc.,
Notes
7.875%	09/15/10		Baa2		430		461,541
Delhaize Group (Belgium),
Notes
6.50%	06/15/17		Baa3		480		491,053
Diageo Capital PLC (United Kingdom),(b)
Gtd. Notes
5.75%	10/23/17		A3		1,005		1,010,707
Heinz Co.,		��
Notes, 144A
6.428%	12/01/08		Baa2		1,290		1,313,285
Kellogg Co.,
Notes, Ser. B
6.60%	04/01/11		A3		1,875		1,986,865
Kraft Foods, Inc.,
Sr. Unsec. Notes
5.625%	11/01/11		Baa2		850		869,273
6.125%	02/01/18		Baa2		980		987,492
Kroger Co. (The),
Gtd. Notes
6.75%	04/15/12		Baa2		45		47,765
6.80%(b)	04/01/11		Baa2		670		705,101
McDonald’s Corp.,
Sr. Unsec. Notes
5.80%	10/15/17		A3		720		745,472
Tricon Global Restaurants,
Sr. Notes.
8.875%	04/15/11		Baa2		180		198,545
Tyson Foods, Inc.,
Sr. Unsec. Notes
6.85%	04/01/16		Ba1		735		754,224
Whitman Corp.,
Notes
6.375%	05/01/09		Baa1		1,530		1,576,732

							18,689,901

SEE NOTES TO FINANCIAL STATEMENTS.

A80


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Gaming
Harrah’s Operating Co., Inc.,
Gtd. Notes
5.50%	07/01/10	Baa3	$	625	$	581,250
Mandalay Resorts Group,
Sr. Sub. Notes
9.375%	02/15/10	B1		10		10,350

						591,600

Healthcare & Pharmaceutical — 0.5%
Abbott Laboratories,(e)
Notes
5.875%	05/15/16	A1		1,145		1,196,009
AmerisourceBergen Corp.,
Gtd. Notes
5.625%	09/15/12	Ba1		915		927,940
AstraZeneca PLC (United Kingdom),
Sr. Unsub. Notes
6.45%	09/15/37	A1		495		542,360
Baxter International, Inc.,
Sr. Unsec. Notes
5.196%	02/16/08	Baa1		860		859,816
Bristol-Myers Squibb Co.,
Unsub. Notes
5.875%	11/15/36	A2		275		273,274
Community Health Systems,(h)
Bank Loan
7.493%	07/25/14	Ba3		81		78,051
7.493%	07/25/14	Ba3		1,615		1,551,920
Covidien International Finance SA (Luxembourg),
Gtd. Notes, 144A
6.00%	10/15/17	Baa1		1,150		1,189,944
Genentech, Inc.,
Sr. Notes
4.75%	07/15/15	A1		280		275,534
HCA, Inc.
Bank Loan(h)
7.08%	11/17/13	Ba3		1,980		1,905,255
Sec. Notes
9.25%	11/15/16	B2		1,925		2,021,249
Health Managment Association,(h)
Bank Loan
6.62%	02/28/14	Ba2		1,201		1,118,194
Laboratory Corp. of America Holdings,
Sr. Unsec. Notes
5.625%	12/15/15	Baa3		580		570,824
Merck & Co., Inc.,
Bonds
5.75%	11/15/36	Aa3		110		109,378
Debs.
5.95%	12/01/28	Aa3		165		168,853
Schering-Plough Corp.,
Sr. Notes
5.55%	12/01/13	Baa1		720		728,481
Sr. Unsec. Notes
6.00%	09/15/17	Baa1		1,090		1,129,274
6.55%(b)	09/15/37	Baa1		340		360,249

SEE NOTES TO FINANCIAL STATEMENTS.

A81


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Healthcare & Pharmaceutical (continued)
Teva Pharmaceutical Finance LLC,
Gtd. Notes
6.15%	02/01/36	Baa2	$	120	$	119,168
Wyeth,
Notes
5.95%	04/01/37	A3		1,715		1,719,550
Unsub. Notes
5.50%	03/15/13	A3		910		935,955
5.50%	02/01/14	A3		255		258,995
6.45%	02/01/24	A3		60		63,650

						18,103,923

Healthcare Insurance — 0.2%
Aetna, Inc.,
Sr. Unsub. Notes
5.75%	06/15/11	A3		390		400,846
6.625%	06/15/36	A3		515		509,853
Cigna Corp.,
Sr. Unsec. Notes
6.15%	11/15/36	Baa2		670		621,636
Coventry Health Care, Inc.,
Sr. Notes
6.125%	01/15/15	Ba1		2,290		2,297,977
UnitedHealth Group, Inc.,
Bonds, 144A
6.00%	06/15/17	A3		195		196,951
6.50%	06/15/37	A3		420		421,628
6.625%	11/15/37	A3		420		426,287
Sr. Unsec. Notes
5.25%	03/15/11	A3		1,350		1,365,103
Wellpoint, Inc.,
Notes
5.00%(b)	12/15/14	Baa1		860		823,804
5.95%	12/15/34	Baa1		635		597,726

						7,661,811

Insurance — 0.2%
American International Group, Inc.,
Jr. Sub. Notes
6.25%	03/15/37	Aa3		420		375,656
Notes
4.25%	05/15/13	Aa2		1,080		1,027,372
Sr. Notes
5.05%	10/01/15	Aa2		180		173,830
Sr. Unsec. Notes, M.T.N.
5.85%	01/16/18	Aa2		1,660		1,670,871
AXA SA (France),
Sub. Notes
8.60%	12/15/30	A3		155		190,057
Berkshire Hathaway Finance Corp.,(b)
Gtd. Notes
4.75%	05/15/12	Aaa		440		445,516
Liberty Mutual Group, Inc.,
Bonds, 144A
7.00%	03/15/34	Baa2		850		828,988
Lincoln National Corp.,
Sr. Unsec. Notes
6.30%	10/09/37	A3		492		478,425

SEE NOTES TO FINANCIAL STATEMENTS.

A82


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Insurance (continued)
Marsh & McLennan Cos., Inc.,
Sr. Unsec. Notes
5.15%	09/15/10	Baa2	$	265	$	264,704
MetLife, Inc.,
Sr. Notes
5.70%	06/15/35	A2		1,020		931,414
6.125%	12/01/11	A2		335		347,383
6.375%	06/15/34	A2		400		395,014
St. Paul Travelers Cos., Inc. (The),
Sr. Unsec. Notes
6.75%	06/20/36	A3		685		714,842
W.R. Berkley Corp.,
Sr. Notes
5.60%	05/15/15	Baa2		555		537,565
6.15%	08/15/19	Baa2		460		445,165
XL Capital Ltd. (Cayman Islands),
Sr. Notes
5.25%	09/15/14	A3		85		82,656

						8,909,458

Lodging
Starwood Hotels & Resorts Worldwide, Inc.,
Sr. Unsec. Notes
6.25%	02/15/13	Baa3		385		385,234

Media & Entertainment — 0.2%
Chancellor Media Corp.,
Gtd. Notes
8.00%	11/01/08	Baa3		575		594,313
Idearc, Inc.(h)
Bank Loan
6.83%	11/17/14	Ba2		1,485		1,412,775
News America, Inc.,
Gtd. Notes
7.625%	11/30/28	Baa2		1,050		1,163,559
Time Warner, Inc.,
Debs.
9.15%	02/01/23	Baa2		505		617,849
Gtd. Notes
6.75%	04/15/11	Baa2		640		666,584
7.25%	10/15/17	Baa2		790		845,027
Viacom, Inc.,
Sr. Notes
6.875%	04/30/36	Baa3		895		897,440

						6,197,547

Metals — 0.1%
Alcan, Inc. (Canada),
Notes
4.50%	05/15/13	A3		115		112,280
5.00%	06/01/15	A3		600		581,234
Alcoa, Inc.,
Sr. Notes
5.90%	02/01/27	Baa1		115		108,590
Peabody Energy Corp.,
Gtd. Notes
7.375%	11/01/16	Ba1		1,200		1,230,000

SEE NOTES TO FINANCIAL STATEMENTS.

A83


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Metals (continued)
Southern Copper Corp.,
Sr. Notes
7.50%	07/27/35	Baa2	$	125	$	132,389
United States Steel Corp.,
Sr. Unsub. Notes
5.65%	06/01/13	Baa3		580		561,830

						2,726,323

Non-Captive Finance — 0.3%
Capital One Bank Corp.,
Sub. Notes
6.50%	06/13/13	A3		20		19,618
Capital One Financial Corp.,
Sr. Notes, M.T.N.
5.70%	09/15/11	A3		600		579,637
CIT Group Funding Co. (Canada),
Gtd. Notes
5.20%	06/01/15	A2		680		582,187
CIT Group, Inc.,
Sr. Notes
4.25%	02/01/10	A2		400		384,863
Countrywide Financial Corp.,
Gtd. Notes, M.T.N.
5.80%	06/07/12	Baa3		1,190		869,294
General Electric Capital Corp.,
Notes
5.55%	05/04/20	Aaa		1,190		1,223,765
Notes, M.T.N.
4.875%	10/21/10	Aaa		1,070		1,085,906
5.50%(b)	04/28/11	Aaa		2,895		2,977,941
Notes, Ser. A, M.T.N
6.125%	02/22/11	Aaa		5		5,227
Sr. Unsec. Notes, M.T.N.
5.625%	09/15/17	Aaa		130		133,377
GMAC LLC,(g)
Unsub. Notes
6.1188%	05/15/09	Ba3		660		614,714
Household Finance Corp.,
Notes
4.75%	05/15/09	Aa3		370		368,771
HSBC Finance Corp.,
Sr. Notes
5.70%	06/01/11	Aa3		440		442,450
International Lease Finance Corp.,
Unsub. Notes
3.50%	04/01/09	A1		580		570,080
Residential Capital LLC,
Gtd. Notes
7.50%	02/22/11	Ba3		410		255,225
7.875%	06/30/10	Ba3		480		307,200
8.00%	04/17/13	Ba3		950		584,250

						11,004,505

Paper
Plum Creek Timberlands LP,
Gtd. Notes
5.875%	11/15/15	Baa3		535		527,491

SEE NOTES TO FINANCIAL STATEMENTS.

A84


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)
				��
LONG-TERM BONDS (continued)
Pipelines & Other — 0.2%
Atmos Energy Corp.,
Notes
4.00%	10/15/09	Baa3	$	1,680	$	1,655,398
Duke Energy Field Services LLC,
Notes
7.875%	08/16/10	Baa2		1,760		1,887,968
Enterprise GP Holdings LP,
Bank Loan(h)
7.161%	11/08/14	Ba2		1,000		994,375
Gtd. Notes, Ser. B
6.875%	03/01/33	Baa3		140		146,266
Sr. Notes
4.625%	10/15/09	Baa3		740		738,836
Kinder Morgan, Inc.,(h)
Bank Loan
6.35%	05/30/14	Ba2		1,158		1,149,316
Oneok Inc.,
Sr. Unsec. Notes
5.51%	02/16/08	Baa2		1,290		1,289,205
Oneok Partners LP,
Notes
6.65%	10/01/36	Baa2		475		480,311
Sempra Energy,
Sr. Unsec. Notes
6.00%	02/01/13	Baa1		90		92,973
Spectra Energy Capital LLC,
Sr. Unsub. Notes
6.25%	02/15/13	Baa1		235		243,618

						8,678,266

Railroads — 0.1%
Burlington Northern Santa Fe Corp.,
Debs.
6.70%	08/01/28	Baa1		670		697,466
CSX Corp.,
Sr. Notes
6.25%	03/15/18	Baa3		395		397,017
Sr. Unsub. Notes
6.15%	05/01/37	Baa3		715		668,183
Norfolk Southern Corp.,
Sr. Notes
7.80%	05/15/27	Baa1		18		21,453
Sr. Unsec. Notes
5.59%	05/17/25	Baa1		525		486,457
Union Pacific Corp.,
Notes
3.625%	06/01/10	Baa2		1,375		1,335,329
6.625%	02/01/08	Baa2		1,390		1,391,114
6.65%	01/15/11	Baa2		750		779,688

						5,776,707

Real Estate Investment Trusts — 0.1%
Brandywine Operating Partners LP,
Gtd. Notes
5.75%	04/01/12	Baa3		1,295		1,281,936
Mack-Cali Realty LP,
Notes
7.25%	03/15/09	Baa2		1,270		1,304,175

SEE NOTES TO FINANCIAL STATEMENTS.

A85


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Real Estate Investment Trusts (continued)
Post Apartment Homes LP,
Notes
6.30%	06/01/13	Baa3	$	660	$	692,661
Sr. Notes
5.45%	06/01/12	Baa3		435		441,746
Simon Property Group LP,
Unsec. Notes
5.75%	05/01/12	A3		1,500		1,508,973

						5,229,491

Retailers — 0.2%
CVS Caremark Corp.,
Sr. Unsec. Notes
5.75%(b)	08/15/11	Baa2		1,000		1,024,338
5.75%	06/01/17	Baa2		1,640		1,650,555
Federated Retail Holdings, Inc.,
Gtd. Notes
5.35%	03/15/12	Baa2		850		828,152
5.90%	12/01/16	Baa2		5		4,709
Home Depot, Inc. (The),
Sr. Unsec. Notes
5.875%	12/16/36	Baa1		325		274,268
May Department Stores Co. (The),
Notes
6.65%	07/15/24	Baa2		135		124,705
Wal-Mart Stores, Inc. (The),
Bonds
5.25%	09/01/35	Aa2		245		217,318

						4,124,045

Structured Note — 0.1%
CDX North America High Yield,(b)
Gtd. Notes, Ser. 9-T1, 144A
8.75%	12/29/12	B3		2,300		2,268,375

Technology — 0.3%
Electronic Data Systems Corp.,
Notes
7.45%	10/15/29	Ba1		120		123,121
First Data Corp.,(h)
Bank Loan
7.981%	09/24/14	Ba3		1,496		1,423,122
7.981%	09/24/14	Ba3		1,197		1,134,831
Fiserv, Inc.,
Gtd. Notes
6.125%	11/20/12	Baa2		1,000		1,017,799
Flextronics International Ltd. (Singapore),(h)
Bank Loans
7.234%	10/01/14	Ba1		289		282,217
7.474%	10/01/14	Ba1		1,007		982,264
Freescale Semiconductor, Inc.,
Sr. Notes
8.875%	12/15/14	B2		550		490,875
International Business Machines Corp.,
Sr. Unsec. Notes
5.70%	09/14/17	A1		500		516,881
Intuit, Inc.,
Sr. Unsec. Notes
5.40%	03/15/12	Baa2		600		609,392

SEE NOTES TO FINANCIAL STATEMENTS.

A86


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Technology (continued)
Jabil Circuit, Inc.,
Sr. Notes
5.875%	07/15/10	Ba1	$	1,875	$	1,897,388
Metavante Corp.,(h)
Bank Loan
6.644%	11/01/14	Ba2		1,000		971,875
Motorola, Inc.,
Sr. Notes
8.00%	11/01/11	Baa1		99		106,718

						9,556,483

Telecommunications — 0.7%
America Movil SAB de CV (Mexico),
Unsec. Notes
6.375%	03/01/35	A3		580		573,516
AT&T Corp.,
Sr. Notes
8.00%	11/15/31	A2		2,035		2,499,128
AT&T Wireless Services, Inc.,
Notes
8.125%	05/01/12	A2		640		711,628
Sr. Notes
8.75%	03/01/31	A3		1,339		1,735,321
AT&T, Inc.,
Notes
4.125%	09/15/09	A2		1,070		1,063,196
5.30%	11/15/10	A2		1,260		1,282,393
BellSouth Corp.,
Notes
4.20%	09/15/09	A2		1,175		1,168,005
British Telecom PLC (United Kingdom),(b)
Bonds
9.125%	12/15/30	Baa1		1,475		1,952,347
Cingular Wireless LLC,
Sr. Notes
7.125%	12/15/31	A3		505		557,334
Deutsche Telekom International Finance BV (Netherlands),
Gtd. Notes
8.25%	06/15/30	A3		295		368,087
Embarq Corp.,
Notes
7.082%	06/01/16	Baa3		350		360,633
7.995%	06/01/36	Baa3		1,600		1,686,138
France Telecom SA (France),
Notes
8.50%	03/01/31	A3		375		486,246
Koninklijke (Royal) KPN NV (Netherlands),
Sr. Unsub. Notes
8.00%	10/01/10	Baa2		530		568,407
Nextel Communications, Inc.,(b)
Sr. Notes, Ser. F
5.95%	03/15/14	Baa3		1,160		1,090,364
PCCW-HKT Capital Ltd.,
Gtd. Notes, 144A
8.00%	11/15/11	Baa2		2,370		2,604,667
Qwest Corp.,
Notes
8.875%	03/15/12	Ba1		2,000		2,140,000

SEE NOTES TO FINANCIAL STATEMENTS.

A87


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Telecommunications (continued)
Telecom Italia Capital SA (Italy),
Gtd. Notes
5.25%	11/15/13	Baa2	$	320	$	316,266
Telefonica Emisiones SAU (Spain),
Gtd. Notes
7.045%	06/20/36	Baa1		210		234,735
TELUS Corp. (Canada),
Notes
8.00%	06/01/11	Baa1		1,255		1,359,754
U.S. Cellular Corp., Sr. Notes
6.70%	12/15/33	Baa3		470		431,656
Vodafone Group PLC (United Kingdom),
Sr. Notes
7.75%	02/15/10	Baa1		800		843,911
Unsec. Notes(b)
6.15%	02/27/37	Baa1		485		478,996

						24,512,728

Tobacco
Altria Group, Inc.,
Debs.
7.75%	01/15/27	Baa1		7		9,019
Notes
7.65%	07/01/08	Baa1		590		599,482
Reynolds American, Inc.,
Bonds
6.75%	06/15/17	Ba1		950		967,596
7.25%	06/15/37	Ba1		410		414,379

						1,990,476

Foreign Government Bonds — 0.4%
DP World Ltd.,
Bonds, 144A
6.85%	07/02/37	A1		1,680		1,597,082
Gaz Capital for Gazprom (Luxembourg),
Sr. Unsec. Notes, 144A
7.288%	08/16/37	A3		1,300		1,312,090
Pemex Project Funding Master Trust (Mexico),
Gtd. Notes
8.625%	12/01/23	Baa1		350		435,313
Petrobras International Finance Co. (Cayman Islands),
Bonds
8.375%	12/10/18	Baa1		1,185		1,410,150
Quebec Province (Canada),
Notes(b)
4.60%	05/26/15	Aa2		735		734,330
Sr. Unsec. Notes
5.75%	02/15/09	Aa2		500		509,060
Republic of Italy (Italy),
Notes
5.375%	06/15/33	A+(f)		800		820,520
RSHB Capital SA for OJSC Russian Agricultural Bank (Russia),
Bonds, 144A
6.299%	05/15/17	A3		2,190		2,075,024

SEE NOTES TO FINANCIAL STATEMENTS.

A88


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Moody’s Rating (Unaudited)	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
Foreign Government Bonds (continued)
United Mexican States Global Bond (Mexico),
Notes
5.875%	01/15/14	Baa1	$	4,245	$	4,414,800
7.50%	01/14/12	Baa1		1,290		1,416,420

						14,724,789

Mortgage Backed Securities — 11.6%
Federal Home Loan Mortgage Corp.,
4.50%	02/01/19-07/01/20			6,403		6,292,932
5.00%	07/01/18-05/01/34			10,856		10,789,796
5.238%(g)	12/01/35			3,422		3,428,138
5.50%	12/01/33-06/01/34			9,105		9,096,982
5.50%	TBA 30 YR			41,000		40,910,292
6.00%	03/01/32-12/01/33			3,338		3,403,359
6.00%	TBA 30 YR			22,000		22,323,136
6.50%	12/01/14			379		392,440
7.00%	01/01/31-11/01/33			4,307		4,518,789
Federal National Mortgage Assn.,
4.00%	06/01/19			1,960		1,880,429
4.50%	11/01/18-01/01/35			13,604		13,231,990
4.366%(g)	11/01/35			4,193		4,181,711
4.96%(g)	07/01/33			1,054		1,060,106
5.00%	10/01/18-05/01/37			10,394		10,218,970
5.00%	TBA 30 YR			55,500		54,147,187
5.50%	03/01/16-04/01/37			67,775		67,830,137
5.50%	TBA 15 YR			20,500		20,762,646
5.50%	TBA 30 YR			50,000		49,937,500
5.914%(g)	06/01/37			13,016		13,252,742
6.00%	04/01/13-09/01/36			25,757		26,227,631
6.00%	TBA 30 YR			12,000		12,183,744
6.50%	07/01/17-09/01/37			13,918		14,327,436
7.00%	08/01/11-07/01/32			1,147		1,206,807
7.50%	06/01/12-05/01/32			901		943,780
Government National Mortgage Assn.,
5.50%	11/15/32-02/15/36			13,800		13,906,440
6.00%	02/15/33-08/15/37			8,149		8,346,705
6.00%	TBA 30 YR			11,000		11,261,250
6.50%	10/15/23-07/15/35			6,118		6,347,256
8.00%	01/15/24-04/15/25			228		246,395

						432,656,726

U.S. Government Agency Obligations — 1.6%
Federal Farm Credit Bank,
4.75%	05/07/10			415		425,680
4.875%	01/17/17			855		877,121
Federal Home Loan Bank,
3.625%	12/17/10			320		320,042
4.375%	10/03/08			8,140		8,136,653
4.50%	10/09/09-05/13/11			5,060		5,139,694
4.75%	06/11/08-04/24/09			13,660		13,724,159
5.00%	10/16/09			14,165		14,251,193
Federal Home Loan Mortgage Corp.,
4.75%	01/18/11			325		335,425
5.125%(b)	11/17/17			6,850		7,147,571
5.25%	07/18/11			4,300		4,518,758

SEE NOTES TO FINANCIAL STATEMENTS.

A89


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Interest Rate	Maturity Date	Principal Amount (000)		Value (Note 2)

LONG-TERM BONDS (continued)
U.S. Government Agency Obligations (continued)
Federal National Mortgage Assn.,
5.00%	03/15/16	$	2,505	$	2,617,735
6.125%	03/15/12		1,275		1,385,208

					58,879,239

U.S. Government Treasury Obligations — 2.4%
United States Treasury Bonds,
4.75%(b)	02/15/37		9,981		10,445,734
6.625%	02/15/27		1,155		1,465,858
6.875%	08/15/25		545		700,751
7.875%(b)	02/15/21		2,290		3,080,050
8.125%(b)	08/15/21		3,665		5,048,252
8.75%	08/15/20		1,270		1,808,262
8.875%(b)	08/15/17		5,505		7,574,538
9.00%	11/15/18		987		1,395,525
9.125%	05/15/18		730		1,032,323
United States Treasury Inflation Index Bonds,
0.875%(b)	04/15/10		2,018		2,011,363
1.625%	01/15/15		1,439		1,444,526
1.875%	07/15/13-07/15/15		2,787		2,858,290
2.00%(b)	01/15/14-01/15/26		6,742		6,865,245
2.375%	04/15/11-01/15/27		4,006		4,204,691
2.50%	07/15/16		1,216		1,296,269
2.625%	07/15/17		534		576,454
3.00%	07/15/12		1,644		1,780,732
3.375%	01/15/12-04/15/32		853		1,004,461
3.50%	01/15/11		846		910,142
3.625%	04/15/28		1,272		1,611,889
3.875%	01/15/09-04/15/29		2,614		3,120,668
4.25%	01/15/10		820		874,505
United States Treasury Notes,
4.25%	11/15/17		650		661,324
4.75%	02/15/10		520		537,956
4.875%(b)	08/15/16		15,710		16,728,698
United States Treasury Strips, I/O,
Zero	11/15/18-05/15/20		18,435		11,038,894

					90,077,400

TOTAL LONG-TERM BONDS (cost $1,016,624,918)					1,018,999,123

TOTAL LONG-TERM INVESTMENTS (cost $3,122,242,480)					3,417,350,320

SHORT-TERM INVESTMENTS — 22.5%
U.S. Government Treasury Obligation — 0.2%
United States Treasury Bill(e) (cost $7,452,501) 2.90%	03/20/08		7,500		7,448,813

SEE NOTES TO FINANCIAL STATEMENTS.

A90


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


	Shares	Value (Note 2)

Affiliated Mutual Funds — 22.3%
Dryden Core Investment Fund — Short-Term Bond Series(d)	17,757,821	$	167,633,826
Dryden Core Investment Fund — Taxable Money Market Series (cost $660,990,589; includes $339,524,711 of cash collateral received for securities on loan)(c)(d)	660,990,589		660,990,589

TOTAL AFFILIATED MUTUAL FUNDS (cost $838,214,760)			828,624,415

TOTAL SHORT-TERM INVESTMENTS (cost $845,667,261)			836,073,228

TOTAL INVESTMENTS — 114.5% (cost $3,967,909,741)			4,253,423,548
LIABILITIES IN EXCESS OF OTHER ASSETS(i) — (14.5%)			(537,099,684	)

TOTAL NET ASSETS — 100.0%		$	3,716,323,864

The following abbreviations are used in portfolio descriptions:


144A		Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
I/O		Interest Only
M.T.N.		Medium Term Note
TBA		To Be Announced

(a)	Non income-producing security.

(b)	All or portion of security is on loan. The aggregate market value of such securities is $327,959,761; cash collateral of $339,524,711 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

(c)	Represents security, or portion thereof, purchased with cash collateral received for securities on loan.

(d)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund–Taxable Money Market Series and the Dryden Core Investment Fund–Short-Term Bond Series.

(e)	Security segregated as collateral for futures contracts.

(f)	Standard & Poor’s rating.

(g)	Indicates a variable rate security.

(h)	Indicates a security that has been deemed illiquid.

(i)	Liabilities in excess of other assets include net unrealized appreciation (depreciation) on financial futures, interest rate and credit default swap agreements as follows:

Open futures contracts outstanding at December 31, 2007:


Number of Contracts	Type	Expiration Date	Value at December 31, 2007		Value at Trade Date		Unrealized Appreciation (Depreciation)
Long Positions:
44	2-Yr. U.S. T-Notes	Mar. 08	$	9,251,000	$	9,222,007	$	28,993
1,043	5-Yr. U.S. T-Notes	Mar. 08		115,023,344		114,858,697		164,647
96	10-Yr. U.S. T-Notes	Mar. 08		10,885,500		10,849,938		35,562
250	S&P 500 Index	Mar. 08		92,325,000		93,280,754		(955,754	)
228	U.S. Long Bond	Mar. 08		26,533,500		26,545,011		(11,511	)

							$	(738,063	)

SEE NOTES TO FINANCIAL STATEMENTS.

A91


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

Interest rate swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Floating Rate	Unrealized Appreciation (Depreciation)
Merrill Lynch Capital Services, Inc.(a)	08/14/2012	$	6,850	5.20857	%	3 month LIBOR	$	393,694
Morgan Stanley Capital Services, Inc.(a)	09/12/2012		3,660	4.7357	%	3 month LIBOR		131,134
Morgan Stanley Capital Services, Inc.(a)	09/25/2012		3,700	4.94079	%	3 month LIBOR		168,621
Morgan Stanley Capital Services, Inc.(a)	10/23/2012		4,880	4.7945	%	3 month LIBOR		128,269
Morgan Stanley Capital Services, Inc.(a)	12/07/2012		3,500	4.15033	%	3 month LIBOR		2,760
Morgan Stanley Capital Services, Inc.(a)	12/13/2012		3,900	4.34666	%	3 month LIBOR		34,422
Merrill Lynch Capital Services, Inc.(b)	12/14/2012		5,125	4.35284	%	3 month LIBOR		(49,345	)
Morgan Stanley Capital Services, Inc.(b)	12/11/2037		1,775	5.08438	%	3 month LIBOR		(21,387	)
Merrill Lynch Capital Services, Inc.(b)	12/11/2037		4,240	5.08938	%	3 month LIBOR		(65,545	)

							$	722,623

(a)	The Portfolio pays the floating rate and receives the fixed rate.

(b)	The Portfolio pays the fixed rate and receives the floating rate.

Credit default swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Reference Entity/Obligation	Unrealized Appreciation (Depreciation)
JPMorgan Chase Bank(a)	06/20/2012	$	3,500	0.30	%	PPG Industries, Inc., 7.05%, 08/15/09	$	1,425
Citibank NA(a)	09/20/2012		3,200	0.32	%	Altria Group, Inc., 7.00%, 11/04/13		(1,398	)
Morgan Stanley Capital Services, Inc.(a)	09/20/2012		2,700	0.45	%	Sara Lee Corp., 6.125%, 11/01/32		(16,477	)
Barclays Bank PLC(a)	09/20/2012		2,900	0.595	%	Fortune Brands, Inc., 6.25%, 04/01/08		26,861
JPMorgan Chase Bank(a)	09/20/2012		2,275	1.52	%	Residential Capital LLC, 6.50%, 04/17/13		1,071,294
JPMorgan Chase Bank(a)	06/20/2014		1,150	0.65	%	Bunge Ltd. Finance Corp., 5.35%, 04/15/14		(795	)
Credit Suisse International(a)	09/20/2017		3,000	0.99	%	Gannett Co., Inc., 6.375%, 04/01/12		21,804
Barclays Bank PLC(a)	09/25/2035		1,000	3.35	%	Accredited Mortgage Loan Trust, Ser. 2005-3, Class M9, 7.02%, 09/25/35		460,932
Merrill Lynch Capital Services(b)	03/25/2036		1,000	3.72	%	Ameriquest Mortgage Securities, Inc., Ser. 2006-R1, Class M9 7.82%, 03/25/36		744,827
Merrill Lynch Capital Services(a)	03/25/2036		1,000	9.00	%	AmeriQuest Mortgage Securities, Inc., Ser. 2006-R1, Class M9, 7.82%, 03/25/36		(654,500	)
Citibank, NA(a)	03/25/2035		1,000	3.00	%	Centex Home Equity, Ser. 2005-B, Class MB, 6.215%, 03/25/35		(1,250	)
Citibank, NA(a)	03/25/2035		1,000	3.00	%	Morgan Stanley ABS Capital I, Ser. 2005-HE2, Class B3, 6.765%, 01/25/35		(1,500	)

							$	1,651,223

(a)	The Portfolio pays the fixed rate and receives from the counterparty par in the event that the underlying bond defaults.

(b)	The Portfolio receives the fixed rate and pays the counterparty par in the event that the underlying bond defaults.

SEE NOTES TO FINANCIAL STATEMENTS.

A92


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 was as follows:


Affiliated Money Market Mutual Funds (including 9.1% of collateral received for securities on loan	22.3	%
Mortgage Backed Securities	11.6
Oil, Gas & Consumable Fuels	6.8
Pharmaceuticals	3.9
Commercial Mortgage Backed Securities	3.5
Insurance	3.5
Commercial Banks	2.6
Computers & Peripherals	2.6
Software	2.6
U.S. Government Treasury Obligations	2.6
Capital Markets	2.5
Diversified Financial Services	2.5
Diversified Telecommunication Services	2.4
Aerospace & Defense	2.2
Industrial Conglomerates	2.1
Media	2.1
Healthcare Providers & Services	1.8
U.S. Government Agency Obligations	1.6
Beverages	1.5
Food & Staples Retailing	1.4
Household Products	1.4
Metals & Mining	1.4
Semiconductors & Semiconductor Equipment	1.4
Communications Equipment	1.3
Electric Utilities	1.3
Healthcare Equipment & Supplies	1.1
Hotels, Restaurants & Leisure	1.1
Specialty Retail	1.1
Chemicals	1.0
Energy Equipment & Services	1.0
Machinery	1.0
Electrical Equipment	0.9
Food Products	0.9
Tobacco	0.9
Internet Software & Services	0.8
Asset Backed Securities	0.7
Electric	0.7
Telecommunications	0.7
Banking	0.6
Biotechnology	0.6
Automobiles	0.5
Electronic Equipment & Instruments	0.5
Foods	0.5
Healthcare & Pharmaceutical	0.5
IT Services	0.5
Real Estate Investment Trusts	0.5
Wireless Telecommunication Services	0.5
Brokerage	0.4
Collateralized Mortgage Obligations	0.4
Commercial Services & Supplies	0.4
Foreign Government Bonds	0.4
Independent Power Producers & Energy Traders	0.4
Life Sciences, Tools & Services	0.4
Multi-Utilities	0.4
Office Electronics	0.4
Capital Goods	0.3
Household Durables	0.3
Non Captive Finance	0.3
Technology	0.3

SEE NOTES TO FINANCIAL STATEMENTS.

A93


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Textiles, Apparel & Luxury Goods	0.3	%
Thrifts & Mortgage Finance	0.3
Air Freight & Logistics	0.2
Airlines	0.2
Cable	0.2
Containers & Packaging	0.2
Energy – Other	0.2
Healthcare Insurance	0.2
Media & Entertainment	0.2
Multiline Retail	0.2
Paper & Forest Products	0.2
Pipelines & Other	0.2
Retailers	0.2
Road & Rail	0.2
Trading Companies & Distributors	0.2
Auto Components	0.1
Automotive	0.1
Building Materials & Construction	0.1
Building Products	0.1
Construction & Engineering	0.1
Construction Materials	0.1
Consumer Finance	0.1
Energy – Integrated	0.1
Leisure Equipment & Products	0.1
Marine	0.1
Metals	0.1
Railroads	0.1
Real Estate Management & Development	0.1
Structured Note	0.1

	114.5
Liabilities in excess of other assets	(14.5	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A94


		*FLEXIBLE MANAGED PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $327,959,761:
Unaffiliated investments (cost $3,129,694,981)	$	3,424,799,133
Affiliated investments (cost $838,214,760)		828,624,415
Foreign currency, at value (cost $24,896)		25,132
Receivable for investments sold		55,537,930
Dividends and interest receivable		12,270,196
Unrealized appreciation on swaps		3,186,043
Premium for swaps purchased		590,000
Foreign tax reclaim receivable		351,180
Receivable for Series shares sold		228,207
Due from broker—variation margin		2,327
Prepaid expenses		41,439

Total Assets		4,325,656,002

LIABILITIES
Collateral for securities on loan		339,524,711
Payable for investments purchased		266,467,119
Management fee payable		1,892,636
Unrealized depreciation on swaps		812,197
Accrued expenses and other liabilities		421,046
Payable for Series shares repurchased		203,469
Payable to custodian		10,330
Transfer agent fee payable		630

Total Liabilities		609,332,138

NET ASSETS	$	3,716,323,864

Net assets were comprised of:
Paid-in capital	$	3,098,697,814
Retained earnings		617,626,050

Net assets, December 31, 2007	$	3,716,323,864

Net asset value and redemption price per share, $3,716,323,864 / 203,028,780 outstanding shares of beneficial interest (authorized 600,000,000 shares)	$	18.30

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated dividend income (net of foreign withholding taxes of $1,041,084)	$	50,986,587
Unaffiliated Interest		39,419,396
Affiliated dividend income		27,564,769
Affiliated income from securities loaned, net		899,705

		118,870,457

EXPENSES
Management fee		22,616,106
Custodian’s fees and expenses		600,000
Shareholders’ reports		180,000
Insurance expenses		102,000
Trustees’ fees		58,000
Interest expense		32,816
Audit fee		24,000
Legal fees and expenses		18,000
Commitment fee on syndicated credit agreement		12,000
Transfer agent’s fee and expenses (including affiliated expense of $3,000) (Note 4)		3,000
Miscellaneous		30,852

Total expenses		23,676,774

NET INVESTMENT INCOME		95,193,683

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		236,563,126
Futures transactions		15,655,198
Swap agreement transactions		7,447,348
Short sale transactions		(1,182,871	)
Written options transactions		(80,697	)
Foreign currency transactions		(21,990	)

		258,380,114

Net change in unrealized appreciation (depreciation) on:
Investments		(125,723,550	)
Futures		668,156
Swaps		2,396,211
Foreign currencies		16,009

		(122,643,174	)

NET GAIN ON INVESTMENTS, SWAPS AND FOREIGN CURRENCIES		135,736,940

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	230,930,623

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	95,193,683		$	88,775,653
Net realized gain on investment, swap and foreign currency transactions		258,380,114			142,489,644
Net change in unrealized appreciation (depreciation) on investments, swaps and foreign currencies		(122,643,174	)		186,244,474

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		230,930,623			417,509,771

DISTRIBUTIONS		(231,155,961	)		(122,314,562	)

SERIES SHARE TRANSACTIONS:
Series shares sold [986,911 and 1,352,364 shares, respectively]		18,632,642			23,240,485
Series shares issued in reinvestment of distributions [12,679,976 and 7,199,209 shares, respectively]		231,155,961			122,314,562
Series shares repurchased [13,414,705 and 15,165,926 shares, respectively]		(256,790,391	)		(261,128,310	)

NET DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(7,001,788	)		(115,573,263	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		(7,227,126	)		179,621,946
NET ASSETS:
Beginning of year		3,723,550,990			3,543,929,044

End of year	$	3,716,323,864		$	3,723,550,990

SEE NOTES TO FINANCIAL STATEMENTS.

A95


		*GLOBAL PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 96.3% COMMON STOCKS	Shares	Value (Note 2)

Australia — 3.4%
AWB Ltd.	271,500	$	694,230
BHP Billiton Ltd.	88,300		3,086,794
BlueScope Steel Ltd.	218,400		1,833,311
Commonwealth Bank of Australia	25,700		1,325,061
CSR Ltd.	173,200		468,999
Macquarie Bank Ltd.	45,200		3,024,208
OneSteel Ltd.	100,400		538,469
Pacific Brands Ltd.	460,600		1,308,071
QBE Insurance Group Ltd.	110,000		3,193,605
Quantas Airways Ltd.	582,700		2,768,605
Santos Ltd.	82,000		1,007,635
Telstra Corp. Ltd.	341,300		1,398,688
Toll Holdings Ltd.	185,900		1,856,047
Woolworths Ltd.	205,300		6,088,380
WorleyParsons Ltd.	86,100		3,878,752
Zinifex Ltd.	84,000		901,045

			33,371,900

Austria — 0.2%
Raiffeisen International Bank Holding AG	11,858		1,796,115
Voestalpine AG	9,500		686,836

			2,482,951

Belgium — 0.7%
AGFA-Gevaert NV	62,200		953,957
Fortis	74,100		1,951,169
InBev NV	44,000		3,666,827

			6,571,953

Bermuda — 0.6%
Covidien Ltd.	52,300		2,316,367
Tyco Electronics Ltd.	50,200		1,863,926
Tyco International Ltd.	55,000		2,180,750

			6,361,043

Brazil — 1.8%
Bolsa de Mercadorias e Futuros — BM&F	19,600		275,281
Bovespa Holding SA	86,900		1,674,534
Cia Vale do Rio Doce, ADR(b)	153,600		5,018,112
Net Servicos de Comunicacao SA(a)	99,500		1,213,006
Petroleo Brasileiro SA, ADR (Common Shares)	65,553		7,554,327
Petroleo Brasilerio SA, ADR (Preference Shares)(b)	16,300		1,568,386

			17,303,646

Canada — 1.5%
AbitibiBowater, Inc.(b)	24,200		498,762
Agnico-Eagle Mines Ltd.	51,189		2,796,455
Brookfield Asset Management, Inc. (Class A Stock)	76,100		2,733,416
Research In Motion Ltd.(a)	18,500		2,097,900
Rogers Communications, Inc.	83,000		3,783,546
Shoppers Drug Mart Corp.	46,600		2,514,733

			14,424,812

Chile — 0.1%
Cencosud SA, ADR, 144A	21,600		1,303,938

China — 1.3%
China Communications Construction Co. Ltd. (Class H Stock)	1,023,600		2,646,291
China Merchants Bank Co. Ltd. (Class H Stock)	264,500		1,064,151
China Oilfield Services Ltd. (Class H Stock)	528,000		1,179,182

SEE NOTES TO FINANCIAL STATEMENTS.

A96


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

China (continued)
Country Garden Holdings Co. Ltd.(a)	545,000	$	621,046
Industrial & Commercial Bank of China	9,354,000		6,640,394
Shandong Weigao Group Medical Polymer Co. Ltd. (Class H Stock)	412,000		943,565

			13,094,629

Denmark — 0.4%
Danske Bank A/S	36,600		1,433,486
H Lundbeck A/S	78,800		2,132,214

			3,565,700

Egypt — 0.3%
Egyptian Financial Group — Hermes Holding Co.	228,300		2,730,288

Finland — 0.6%
Nokia Oyj	83,400		3,233,722
Rautaruukki Oyj	31,500		1,365,520
Tietoenator Oyj	56,200		1,262,090

			5,861,332

France — 6.0%
Arkema(a)	530		34,823
AXA SA	63,500		2,542,897
BNP Paribas	41,600		4,514,163
Cie Generale D’Optique Essilor International SA	39,800		2,539,980
Ciments Francais SA	5,200		894,911
Compagnie Generale des Etablissements Michelin (Class B Stock)	20,200		2,318,377
Credit Agricole SA	41,000		1,382,912
Eurazeo	14,152		1,815,632
Iliad SA	14,500		1,560,302
L’Oreal SA	39,200		5,615,474
Natixis	57,000		1,095,048
Peugeot SA	33,400		2,531,968
Rallye SA	13,400		950,188
Renault SA	11,800		1,673,638
Sanofi-Aventis SA	51,500		4,742,123
Schneider Electric SA	42,700		5,785,979
Societe Generale	5,300		766,596
Thales SA	13,700		816,227
Thomson	80,000		1,138,062
Total SA	29,100		2,417,874
Total SA, ADR	75,400		6,228,039
Valeo SA	30,700		1,265,757
Veolia Environnement	56,275		5,138,199
Vivendi	38,000		1,743,410

			59,512,579

Germany — 3.6%
BASF AG	39,300		5,818,264
Beiersdorf AG	34,600		2,674,535
Daimler AG	31,900		3,087,999
Deutsche Bank AG	30,000		3,924,734
Deutsche Boerse AG	25,600		5,052,853
Hannover Rueckversicherung AG	25,500		1,182,223
Heidelberger Druckmaschinen AG	61,200		2,063,354
Muenchener Rueckversicherungs AG	13,900		2,699,848
Q-Cells AG(a)	20,700		2,961,380
ThyssenKrupp AG	60,200		3,376,277
TUI AG(a)	26,800		751,138
Volkswagen AG	6,600		1,509,478

			35,102,083

SEE NOTES TO FINANCIAL STATEMENTS.

A97


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Greece — 0.3%
National Bank of Greece SA, ADR(b)	202,800	$	2,796,612

Hong Kong — 2.0%
Chaoda Modern Agriculture	1,218,645		1,090,243
China Mobile Ltd.	407,500		7,096,411
China Mobile Ltd., ADR(b)	7,200		625,464
Citic Pacific Ltd.	523,500		2,894,239
Esprit Holdings Ltd.	212,000		3,121,756
HongKong Electric Holdings	312,500		1,788,383
Li & Fung Ltd.	749,600		2,988,447

			19,604,943

India — 0.3%
HDFC Bank Ltd., ADR	22,000		2,869,900

Indonesia — 0.1%
Bank Rakyat Indonesia	1,818,500		1,413,639

Ireland — 0.3%
Allied Irish Banks PLC	77,300		1,771,084
Irish Life & Permanent PLC	86,900		1,513,194

			3,284,278

Italy — 1.7%
ENI SpA	121,400		4,446,204
Finmeccanica SpA	35,500		1,140,306
Fondiaria-Sai SpA	26,800		1,104,961
Geox SpA	57,400		1,153,925
Indesit Co. SpA	51,100		793,430
Intesa Sanpaolo SpA	237,900		1,881,719
Saipem SpA	137,200		5,502,281
Unione di Banche Italiane Scpa	33,200		913,040

			16,935,866

Japan — 8.8%
Aeon Mall Co. Ltd.	52,000		1,364,657
Alpine Electronics, Inc.	41,600		697,027
Alps Electric Co. Ltd.	49,700		642,080
Asahi Kasei Corp.	226,100		1,492,141
Circle K Sunkus Co. Ltd.	89,500		1,322,898
Cosmo Oil Co. Ltd.	303,300		1,121,115
Daiwa Securities Group, Inc.	75,400		676,915
Denki Kagaku Kogyo K K	224,900		972,113
Fanuc Ltd.	35,300		3,422,269
Fuji Heavy Industries Ltd.	347,000		1,607,284
Fukuoka Financial Group, Inc.	433,000		2,528,730
Hokkaido Electric Power Co., Inc.	18,400		396,631
Honda Motor Co. Ltd.	95,400		3,151,524
Jupiter Telecommunications Co.(a)	2,190		1,842,499
KK DaVinci Advisors(a)	941		815,237
Komatsu Ltd.	112,700		3,022,521
Kurabo Industries Ltd.	173,100		388,314
Kyushu Electric Power Co., Inc.	8,700		213,575
Marubeni Corp.	248,700		1,742,643
Matsushita Electric Industrial Co., Ltd.	74,000		1,516,325
Mitsubishi Chemical Holdings Corp.	162,000		1,236,008
Mitsubishi Tanabe Pharma Corp.	85,600		795,159
Mitsui & Co. Ltd.	176,000		3,675,345
Mitsui Chemicals, Inc.	148,000		960,793
NGK Insulators Ltd.	125,000		3,351,414
Nifco, Inc.	33,400		775,079
Nintendo Co. Ltd.	11,900		6,987,108

SEE NOTES TO FINANCIAL STATEMENTS.

A98


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

Japan (continued)
Nippon Electric Glass Co. Ltd.	84,000	$	1,366,432
Nippon Oil Corp.	185,600		1,500,460
Nippon Paper Group, Inc.	400		1,204,917
Nippon Shokubai Co. Ltd.	85,000		814,467
Nippon Telegraph and Telephone Corp.	600		2,982,559
Nipro Corp.	57,000		1,140,699
Nissan Motor Co. Ltd.	317,000		3,459,895
Nomura Holdings, Inc.	75,600		1,266,667
NTT DoCoMo, Inc.	1,600		2,634,096
OJI Paper Co. Ltd.	37,000		181,781
Okasan Holdings, Inc.	63,100		355,386
Promise Co. Ltd.	5,100		125,572
Ricoh Co. Ltd.	95,600		1,745,306
Santen Pharmaceutical Co. Ltd.	26,700		658,423
Sanwa Holdings Corp.	281,000		1,379,553
Seiko Epson Corp.	5,600		119,274
Shin-Etsu Chemical Co. Ltd.	34,600		2,151,816
Sumitomo Corp.	115,400		1,614,605
Sumitomo Realty & Development Co. Ltd.	90,000		2,201,047
Sumitomo Trust & Banking Co. Ltd. (The)	194,000		1,278,605
Suruga Bank Ltd.	187,000		2,034,323
Takefuji Corp.	19,000		456,354
Toppan Printing Co. Ltd.	85,000		833,583
Toyota Motor Corp.	42,900		2,284,799
Toyota Motor Corp., ADR	45,817		4,864,390
Yokohama Rubber Co. Ltd. (The)	174,300		1,030,125

			86,402,538

Mexico — 0.8%
America Movil — Ser. L, ADR	128,309		7,876,890

Netherlands — 1.6%
Aegon NV	56,800		1,004,009
CSM	40,200		1,357,691
Heineken NV, ADR	132,745		4,291,115
ING Groep NV	87,500		3,422,116
OCE NV	85,700		1,551,188
Royal Dutch Shell PLC, ADR	29,600		2,492,320
Royal KPN NV	114,200		2,077,062

			16,195,501

New Zealand — 0.2%
Air New Zealand Ltd.	737,900		1,063,574
Fisher & Paykel Appliances Holdings Ltd.	319,700		842,116

			1,905,690

Norway — 0.2%
Norsk Hydro ASA	54,500		778,880
StatoilHydro ASA	46,989		1,462,497

			2,241,377

Russia — 0.2%
PIK Group, GDR, 144A(a)	65,400		1,912,950

Singapore — 1.0%
CapitaLand Ltd.	759,000		3,265,525
MobileOne Ltd.	390,330		513,206
Neptune Orient Lines Ltd.	313,800		843,550
Singapore Airlines Ltd.	178,266		2,141,547
Wilmar International Ltd.	810,100		3,010,268

			9,774,096

SEE NOTES TO FINANCIAL STATEMENTS.

A99


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

South Africa — 0.4%
MTN Group Ltd.	149,000	$	2,791,917
Naspers Ltd.	45,600		1,080,893

			3,872,810

South Korea — 0.2%
Samsung Electronics Co. Ltd., GDR	5,050		1,478,388

Spain — 1.7%
Banco Bilbao Vizcaya Argentaria SA	137,000		3,357,048
Banco Santander SA	241,900		5,230,786
Inditex SA	57,100		3,507,964
Repsol YPF SA	93,200		3,322,099
Telefonica SA	55,700		1,809,515

			17,227,412

Sweden — 0.6%
Electrolux AB, Ser. B	83,600		1,403,422
Nordea Bank AB	244,700		4,088,935
Volvo AB (Class B Stock)	44,800		752,073

			6,244,430

Switzerland — 4.6%
ABB Ltd.	286,300		8,249,000
Actelion Ltd.(a)	27,200		1,250,506
Baloise Holding AG	13,600		1,339,398
Ciba Specialty Chemicals AG	11,600		537,915
Credit Suisse Group	68,700		4,132,376
EFG International	32,600		1,310,162
Geberit AG	7,200		988,915
Georg Fischer AG(a)	2,500		1,539,107
Julius Baer Holding AG	28,700		2,372,760
Kuehne & Nagel International AG	22,700		2,175,463
Nestle SA	11,100		5,098,264
Rieter Holding AG	2,200		971,603
Roche Holdings AG	14,750		2,548,337
SGS SA	1,470		1,751,561
Sonova Holding AG	10,480		1,183,935
Swiss Reinsurance	35,300		2,508,400
Swisscom AG	6,200		2,420,527
UBS AG	19,400		897,902
Verwalt & Privat-Bank AG	2,578		638,153
Zurich Financial Services AG	10,400		3,054,366

			44,968,650

Taiwan — 0.4%
HON HAI Precision Industry Co. Ltd., GDR	197,678		2,451,207
MediaTek, Inc.	114,000		1,461,235

			3,912,442

United Arab Emirates — 0.1%
DP World Ltd.(a)	494,700		588,693

United Kingdom — 10.5%
Alliance & Leicester PLC(a)	76,000		980,333
AstraZeneca PLC	90,900		3,915,670
Aviva PLC(a)	60,000		803,806
Barclays PLC	299,200		3,001,768
Beazley Group PLC	411,400		1,332,816
BG Group PLC	267,100		6,114,440
BP PLC	452,600		5,540,827
Bradford & Bingley PLC(a)	178,100		950,131
Brit Insurance Holdings PLC	227,200		1,035,688

SEE NOTES TO FINANCIAL STATEMENTS.

A100


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

United Kingdom (continued)
British Sky Broadcasting PLC	273,200	$	3,366,327
BT Group PLC	756,400		4,106,778
Capita Group PLC	186,083		2,585,515
Carphone Warehouse Group PLC	158,100		1,084,192
Davis Service Group PLC	69,100		707,011
Drax Group PLC	43,281		521,240
DS Smith PLC	308,000		1,282,925
DSG International PLC	566,000		1,118,232
GKN PLC	302,000		1,695,278
GlaxoSmithKline PLC	55,000		1,400,291
HBOS PLC	210,900		3,085,666
Legal & General Group PLC	498,500		1,295,965
Lloyds TSB Group PLC	346,200		3,252,775
Man Group PLC	209,875		2,377,157
Northern Foods PLC	211,500		395,752
Old Mutual PLC	319,100		1,064,598
Reckitt Benckiser Group PLC	110,000		6,380,683
Rolls-Royce Group PLC(a)	488,787		5,312,479
Rolls-Royce Group PLC (Class B Stock)(a)	21,237,754		42,276
Rotork PLC	48,800		939,358
Royal & Sun Alliance Insurance Group PLC	300,200		885,613
Royal Bank of Scotland Group PLC (The)(a)	257,100		2,272,323
Royal Dutch Shell PLC (Class B Stock)	211,400		8,795,007
Standard Chartered PLC	53,700		1,971,152
Tate & Lyle PLC	71,300		631,589
Taylor Wimpey PLC	148,300		600,007
Tesco PLC(a)	698,100		6,632,060
Tomkins PLC	113,100		397,930
Tullow Oil PLC	165,500		2,146,334
Vedanta Resources PLC	77,600		3,160,475
Vodafone Group PLC	1,716,200		6,415,765
Xstrata PLC	55,600		3,929,055

			103,527,287

United States — 39.8%
3M Co.	24,600		2,074,272
Air Products & Chemicals, Inc.	25,309		2,496,227
Altria Group, Inc.	20,400		1,541,832
American Express Co.	32,000		1,664,640
American International Group, Inc.	60,400		3,521,320
Ameriprise Financial, Inc.	33,500		1,846,185
Amgen, Inc.(a)	28,800		1,337,472
Amylin Pharmaceuticals, Inc.(a)(b)	69,351		2,565,987
Anheuser-Busch Cos., Inc.	78,300		4,098,222
Apple, Inc.(a)	50,725		10,047,608
AT&T, Inc.	261,037		10,848,698
Avon Products, Inc.	56,100		2,217,633
Baker Hughes, Inc.	61,600		4,995,760
Bank of America Corp.	101,300		4,179,638
Bank of New York Mellon Corp. (The)	64,300		3,135,268
Boeing Co.	21,418		1,873,218
Boston Scientific Corp.(a)(b)	68,600		797,818
Cablevision Systems Corp. (Class A Stock)(a)	49,300		1,207,850
Cameron International Corp.(a)	36,788		1,770,606
CBS Corp. (Class B Stock)(b)	30,700		836,575
Chevron Corp.	64,900		6,057,117
Citigroup, Inc.	77,400		2,278,656
Coca-Cola Co. (The)	61,836		3,794,875
Comcast Corp. (Class A Stock)(a)(b)	48,300		881,958

SEE NOTES TO FINANCIAL STATEMENTS.

A101


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

United States (continued)
CVS Caremark Corp.	56,675	$	2,252,831
Dell, Inc.(a)	72,000		1,764,720
Duke Energy Corp.	70,200		1,415,934
E.I. du Pont de Nemours & Co.	53,200		2,345,588
Entergy Corp.	25,200		3,011,904
Exxon Mobil Corp.	68,000		6,370,920
Fannie Mae	39,600		1,583,208
FedEx Corp.	6,236		556,064
Fifth Third Bancorp	61,400		1,542,982
Genentech, Inc.(a)	107,686		7,222,500
General Dynamics Corp.	85,774		7,633,028
General Electric Co.	181,700		6,735,619
General Mills, Inc.	30,600		1,744,200
General Motors Corp.(b)	40,700		1,013,023
Genworth Financial, Inc.	114,900		2,924,205
Goldman Sachs Group, Inc. (The)(b)	49,085		10,555,729
Google, Inc. (Class A Stock)(a)	10,116		6,995,012
H&R Block, Inc.	105,400		1,957,278
Hartford Financial Services Group, Inc.	10,500		915,495
Hess Corp.	24,526		2,473,692
Hewlett-Packard Co.	69,827		3,524,867
Home Depot, Inc. (The)	131,500		3,542,610
Illinois Tool Works, Inc.	54,200		2,901,868
Intel Corp.	313,104		8,347,353
International Business Machines Corp.	27,800		3,005,180
International Paper Co.	89,900		2,910,962
Johnson & Johnson	50,600		3,375,020
JPMorgan Chase & Co.	123,500		5,390,775
Kraft Foods, Inc. (Class A Stock)	36,500		1,190,995
Las Vegas Sands Corp.(a)(b)	66,250		6,827,063
Lehman Brothers Holdings, Inc.(b)	90,147		5,899,220
Liberty Media Holdings Corp. — Capital (Class A Stock)(a)	17,100		1,991,979
Liberty Media Holdings Corp. — Interactive (Class A Stock)(a)	80,100		1,528,308
Lincoln National Corp.	25,000		1,455,500
Lockheed Martin Corp.	80,170		8,438,694
Lowe’s Cos., Inc.	177,308		4,010,707
Marsh & McLennan Cos., Inc.	135,500		3,586,685
Mastercard, Inc. (Class A Stock)(b)	40,278		8,667,826
McDonald’s Corp.	212,737		12,532,336
Merck & Co., Inc.	242,386		14,085,049
Merrill Lynch & Co., Inc.(b)	68,266		3,664,519
MGM Mirage(a)	38,574		3,240,987
Microsoft Corp.	295,376		10,515,386
Monsanto Co.	89,813		10,031,214
Morgan Stanley	36,500		1,938,515
Murphy Oil Corp.	44,000		3,732,960
New York Times Co. (The) (Class A Stock)(b)	62,200		1,090,366
Newell Rubbermaid, Inc.	92,700		2,399,076
NiSource, Inc.	76,300		1,441,307
Nucor Corp.	10,500		621,810
Pfizer, Inc.	141,300		3,211,749
Praxair, Inc.	91,780		8,141,804
Procter & Gamble Co.	13,500		991,170
QUALCOMM, Inc.	44,566		1,753,672
Qwest Communications International, Inc.(a)(b)	149,100		1,045,191
Raytheon Co.	41,000		2,488,700
Schering-Plough Corp.(b)	156,497		4,169,080
Schlumberger Ltd.	85,370		8,397,847
Southwest Airlines Co.	184,900		2,255,780

SEE NOTES TO FINANCIAL STATEMENTS.

A102


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS (continued)	Shares	Value (Note 2)

United States (continued)
Spectra Energy Corp.	67,000	$	1,729,940
Sprint Nextel Corp.	159,800		2,098,174
St. Joe Co. (The)(b)	21,400		759,914
State Street Corp.	36,700		2,980,040
Time Warner, Inc.	241,100		3,980,561
Transocean, Inc.(a)(b)	61,385		8,787,263
U.S. Bancorp	98,800		3,135,912
Union Pacific Corp.	75,222		9,449,388
UnitedHealth Group, Inc.	210,016		12,222,931
Verizon Communications, Inc.	44,100		1,926,729
Viacom, Inc. (Class B Stock)(a)	23,000		1,010,160
Wal-Mart Stores, Inc.	57,400		2,728,222
Walt Disney Co. (The)	52,700		1,701,156
Waste Management, Inc.	77,200		2,522,124
Wyeth	52,500		2,319,975
Wynn Resorts Ltd.(a)	71,544		8,022,229
Yum! Brands, Inc.	132,140		5,056,998

			391,859,213

TOTAL LONG-TERM INVESTMENTS (cost $780,759,091)			948,580,459

SHORT-TERM INVESTMENTS — 6.9%
Affiliated Money Market Mutual Fund
Dryden Core Investment Fund — Taxable Money Market Series (cost $68,236,783; includes $42,679,550 of cash collateral received for securities on loan)(Note 4)(c)(d)	68,236,783		68,236,783


	Principal Amount (000)
U.S. Government Treasury Obligations
United States
United States Treasury Bill 2.80%, 03/13/08(e) (cost $298,343)	$300		298,181

TOTAL SHORT-TERM INVESTMENTS (cost $68,535,126)			68,534,964

TOTAL INVESTMENTS(f) — 103.2% (cost $849,294,217)			1,017,115,423
LIABILITIES IN EXCESS OF OTHER ASSETS — (3.2%)			(32,106,030	)

NET ASSETS — 100.0%		$	985,009,393

The following abbreviations are used in portfolio descriptions:


ADR		American Depositary Receipt
GDR		Global Depositary Receipt
144A		Security was purchased pursuant to rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

(a)	Non-income producing security.

(b)	All or a portion of security is on loan. The aggregate market value of such securities is $41,229,381; cash collateral of $42,679,550 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

(c)	Represents security, or a portion thereof, purchased with cash collateral for securities on loan.

(d)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund — Taxable Money Market Series.

(e)	Rate quoted represents yield-to-maturity at purchase date.

(f)	As of December 31, 2007, 88 securities representing $158,514,607 and 16.1% of net assets were fair valued in accordance with policies adopted by the Board of Trustees.

SEE NOTES TO FINANCIAL STATEMENTS.

A103


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 were as follows:


Oil, Gas & Consumable Fuels	8.1	%
Affiliated Money Market Mutual Fund (including 4.3% of collateral received for securities on loan)	6.9
Commercial Banks	6.5
Capital Markets	5.7
Pharmaceuticals	4.7
Chemicals	3.8
Hotels, Restaurants & Leisure	3.7
Insurance	3.5
Diversified Financial Services	3.4
Diversified Telecommunication	3.4
Wireless Telecommunication Services	3.1
Energy Equipment & Services	3.0
Metals & Mining	2.9
Aerospace & Defense	2.6
Automobiles	2.6
Food & Staples Retailing	2.5
Media	2.2
Computers & Peripherals	1.9
Machinery	1.9
Electrical Equipment	1.8
Software	1.8
Industrial Conglomerates	1.7
Specialty Retail	1.7
Beverages	1.6
Food Products	1.5
Health Care Providers & Services	1.2
Real Estate Management & Development	1.2
Household Durables	1.1
Personal Products	1.1
Semiconductors & Semiconductor Equipment	1.1
Biotechnology	1.0
IT Services	1.0
Road & Rail	1.0
Commercial Services & Supplies	0.9
Health Care Equipment & Supplies	0.9
Airlines	0.8
Auto Components	0.7
Communications Equipment	0.7
Electric Utilities	0.7
Electronic Equipment & Instruments	0.7
Household Products	0.7
Internet Software & Services	0.7
Multi-Utilities	0.7
Trading Companies & Distributors	0.7
Paper & Forest Products	0.6
Distributors	0.4
Construction & Engineering	0.3
Marine	0.3
Office Electronics	0.3
Thrifts & Mortgage Finance	0.3
Air Freight & Logistics	0.2
Building Products	0.2
Internet & Catalog Retail	0.2
Textiles, Apparel & Luxury Goods	0.2
Tobacco	0.2
Construction Materials	0.1
Consumer Finance	0.1
Health Care Technology	0.1

SEE NOTES TO FINANCIAL STATEMENTS.

A104


		*GLOBAL PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Independent Power Producers & Energy Traders	0.1	%
Transportation Infrastructure	0.1
Water Utilities	0.1

	103.2
Liabilities in excess of other assets	(3.2	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A105


		*GLOBAL PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $41,229,381:
Unaffiliated investments (cost $781,057,434)	$	948,878,640
Affiliated investments (cost $68,236,783)		68,236,783
Cash		440,876
Foreign currency, at value (cost $8,074,610)		8,200,987
Receivable for investments sold		4,308,808
Dividends and interest receivable		780,184
Foreign tax reclaim receivable		587,565
Receivable for Series shares sold		313,455
Prepaid expenses		10,795

Total Assets		1,031,758,093

LIABILITIES
Collateral for securities on loan		42,679,550
Payable for investments purchased		3,046,829
Management fee payable		633,098
Accrued expenses and other liabilities		271,002
Payable for Series shares repurchased		117,342
Transfer agent fee payable		879

Total Liabilities		46,748,700

NET ASSETS	$	985,009,393

Net assets were comprised of:
Paid-in capital	$	758,331,291
Retained earnings		226,678,102

Net assets, December 31, 2007	$	985,009,393

Net asset value and redemption price per share, $985,009,393 / 40,014,249 outstanding shares of beneficial interest (authorized 125,000,000 shares)	$	24.62

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated dividend income (net of foreign withholding taxes of $1,209,389)	$	20,115,894
Affiliated dividend income		1,533,729
Affiliated income from securities loaned, net		210,276
Interest		112,942

		21,972,841

EXPENSES
Management fee		7,345,354
Custodian’s fees and expenses		312,000
Shareholders’ reports		181,000
Audit fee		24,000
Trustees’ fees		20,000
Insurance expenses		20,000
Interest expense		19,797
Legal fees and expenses		9,000
Transfer agent’s fees and expenses (including affiliated expense of $4,600) (Note 4)		5,000
Miscellaneous		16,268

Total expenses		7,952,419

NET INVESTMENT INCOME		14,020,422

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		64,048,253
Futures transactions		71,128
Foreign currency transactions		(219,166	)

		63,900,215

Net change in unrealized appreciation (depreciation) on:
Investments		17,935,646
Foreign currencies		29,281

		17,964,927

NET GAIN ON INVESTMENTS AND FOREIGN CURRENCIES		81,865,142

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	95,885,564

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS OPERATIONS:
Net investment income	$	14,020,422		$	10,692,630
Net realized gain on investment and foreign currency transactions		63,900,215			32,439,736
Net change in unrealized appreciation (depreciation) on investments, futures and foreign currencies		17,964,927			112,256,288

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		95,885,564			155,388,654

DISTRIBUTIONS		(10,692,295	)		(5,516,655	)

SERIES SHARE TRANSACTIONS:
Series shares sold [1,809,090 and 2,609,905 shares, respectively]		43,514,915			53,367,041
Series shares issued in reinvestment of distributions [435,886 and 272,832 shares, respectively]		10,692,295			5,516,655
Series shares repurchased [3,630,416 and 4,426,740 shares, respectively]		(87,249,982	)		(90,036,644	)

NET DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(33,042,772	)		(31,152,948	)

TOTAL INCREASE IN NET ASSETS		52,150,497			118,719,051
NET ASSETS:
Beginning of year		932,858,896			814,139,845

End of year	$	985,009,393		$	932,858,896

SEE NOTES TO FINANCIAL STATEMENTS.

A106


		*GOVERNMENT INCOME PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 91.2%	Interest Rate	Maturity Date	Principal Amount (000)		Value (Note 2)

Asset Backed Securities — 3.5%
Citibank Credit Card Issuance Trust,
Series 2007-A8, Class A8	5.65%	09/20/19	$	1,500	$	1,501,501
Small Business Administration Participation Certificates,
Series 1996-20J, Class 1	7.20%	10/01/16		3,169		3,291,124
Series 1997-20A, Class 1	7.15%	01/01/17		3,235		3,356,743
Series 1997-20G, Class 1	6.85%	07/01/17		1,184		1,226,355
Series 1998-20I, Class 1	6.00%	09/01/18		2,452		2,518,025

						11,893,748

Collateralized Mortgage Obligations — 6.8%
Federal Home Loan Mortgage Corp.,
Series 2496, Class PM	5.50%	09/15/17		2,819		2,840,987
Series 2501, Class MC	5.50%	09/15/17		1,851		1,883,525
Series 2513, Class HC	5.00%	10/15/17		2,339		2,333,691
Series 2518, Class PV	5.50%	06/15/19		1,920		1,922,128
Federal National Mortgage Association,
Series 2002-18, Class PC	5.50%	04/25/17		5,000		5,098,177
Series 2002-57, Class ND	5.50%	09/25/17		2,115		2,152,482
Series 2002-94, Class HQ	4.50%	01/25/18		6,419		6,226,330
Merrill Lynch Mortgage Investors, Inc.,
Series 2003-E, Class A1(a)	5.175%	10/25/28		156		155,411
Structured Adjustable Rate Mortgage Loan,
Series 2004-1, Class 4A-3(a)	4.17%	02/25/34		527		536,993

						23,149,724

Commercial Mortgage Backed Securities — 7.4%
Bear Stearns Commercial Mortgage Securities, Inc.,
Series 2000-WF1, Class A1	7.64%	02/15/32		366		369,116
Series 2004-T16, Class A5	4.60%	02/13/46		4,200		4,134,532
Series 2006-PW11, Class A4(a)	5.457%	03/11/39		860		872,819
Series 2006-T22, Class A4(a)	5.465%	04/12/38		2,700		2,755,827
First Union National Bank Commercial Mortgage Trust,
Series 2000-C1, Class A1	7.739%	05/17/32		84		83,652
GS Mortgage Securities Corp. II,
Series 2003-C1, Class A3	4.608%	01/10/40		6,800		6,718,658
Merrill Lynch Mortgage Trust,
Series 2006-C1, Class ASB(a)	5.659%	05/12/39		1,500		1,534,238
Merrill Lynch/Countrywide Commercial Mortgage Trust,
Series 2007-5, Class A4	5.378%	08/12/48		2,000		2,000,372
Morgan Stanley Capital I,
Series 2005-IQ9, Class AAB	4.51%	07/15/56		2,500		2,444,488
Series 2005-T19, Class AAB	4.852%	06/12/47		1,375		1,353,261
Series 2006-IQ11, Class A4(a)	5.773%	10/15/42		2,800		2,884,159
Morgan Stanley Dean Witter I,
Series 2001-TOP1, Class A2	6.32%	02/15/33		71		71,007

						25,222,129

Corporate Bond — 0.5%
DEPFA ACS Bank, 144A(b)	5.125%	03/16/37		1,520		1,502,403

Foreign Government Bonds — 0.7%
Hungary Government Bonds	8.00%	02/12/15	HUF	198,540		1,190,467
Poland Government Bond, Series 1015	6.25%	10/24/15	PLN	2,660		1,097,386
Sweden Government Bond, Series 1040	6.50%	05/05/08	SEK	1,080		168,260

						2,456,113

Mortgage Backed Securities — 56.3%
Federal Home Loan Mortgage Corp.(a)	3.531%	05/01/34	$	1,681		1,696,967
Federal Home Loan Mortgage Corp.(a)	3.788%	06/01/34		3,917		3,871,818
Federal Home Loan Mortgage Corp.	5.00%	06/01/33-05/01/34		10,048		9,816,810

SEE NOTES TO FINANCIAL STATEMENTS.

A107


		*GOVERNMENT INCOME PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS (continued)	Interest Rate	Maturity Date	Principal Amount (000)		Value (Note 2)

Mortgage Backed Securities (continued)
Federal Home Loan Mortgage Corp.	5.50%	TBA 30 YR	$	4,500	$	4,490,154
Federal Home Loan Mortgage Corp.	6.00%	09/01/34		619		629,236
Federal Home Loan Mortgage Corp.	6.00%	TBA 30 YR		10,000		10,146,880
Federal Home Loan Mortgage Corp.	6.50%	06/01/08-09/01/32		748		770,310
Federal Home Loan Mortgage Corp.	7.00%	08/01/11-10/01/32		573		587,211
Federal National Mortgage Association(a)	3.496%	06/01/34		11,492		11,633,147
Federal National Mortgage Association(a)	3.592%	07/01/33		5,445		5,437,755
Federal National Mortgage Association(a)	3.789%	04/01/34		688		678,068
Federal National Mortgage Association(a)	4.046%	08/01/33		2,810		2,800,103
Federal National Mortgage Association(a)	4.241%	04/01/34		1,922		1,915,225
Federal National Mortgage Association(a)	4.479%	06/01/34		1,553		1,562,690
Federal National Mortgage Association(a)	4.869%	10/01/34		2,584		2,568,497
Federal National Mortgage Association(a)	4.986%	06/01/36		3,940		3,977,652
Federal National Mortgage Association	5.00%	07/01/18-12/01/31		8,700		8,715,572
Federal National Mortgage Association	5.00%	TBA 30 YR		5,500		5,365,938
Federal National Mortgage Association	5.50%	01/01/17-04/01/36		43,820		43,820,592
Federal National Mortgage Association	5.50%	TBA 15 YR		4,500		4,557,654
Federal National Mortgage Association	5.50%	TBA 30 YR		23,500		23,470,625
Federal National Mortgage Association	6.00%	11/01/14-01/01/36		8,695		8,850,127
Federal National Mortgage Association	6.00%	TBA 30 YR		6,900		7,005,653
Federal National Mortgage Association	6.276%	03/01/11		1,146		1,198,216
Federal National Mortgage Association	6.50%	11/01/09-10/01/37		7,190		7,414,552
Federal National Mortgage Association	7.00%	02/01/12-01/01/36		1,801		1,887,258
Federal National Mortgage Association	7.50%	05/01/08-10/01/12		166		171,440
Federal National Mortgage Association	8.00%	03/01/22-02/01/26		51		54,448
Federal National Mortgage Association	9.00%	02/01/25-04/01/25		217		236,337
Government National Mortgage Association	5.00%	07/15/33-04/15/34		3,956		3,899,294
Government National Mortgage Association	5.50%	03/15/34-03/15/36		4,250		4,282,477
Government National Mortgage Association	6.00%	TBA 30 YR		4,000		4,095,000
Government National Mortgage Association	6.50%	07/15/32-08/15/32		837		867,594
Government National Mortgage Association	7.00%	03/15/23-08/15/28		1,920		2,038,801
Government National Mortgage Association	7.50%	12/15/25-02/15/26		365		389,440
Government National Mortgage Association	8.50%	09/15/24-04/15/25		478		521,962

						191,425,503

U.S. Government Agency Obligations — 13.1%
Federal Farm Credit Bank	4.875%	01/17/17		980		1,005,355
Federal Home Loan Bank	3.625%	12/17/10		2,595		2,595,340
Federal Home Loan Bank	4.625%	10/10/12		9,530		9,808,571
Federal Home Loan Mortgage Corp.	5.35%	11/14/11		1,210		1,221,117
Federal National Mortgage Association	5.00%	03/15/16		2,870		2,999,161
Federal National Mortgage Association	5.30%	02/22/11		14,630		14,636,540
FICO Strip Principal	Zero	05/11/18		4,000		2,487,216
Tennessee Valley Authority, Series B	4.375%	06/15/15		9,850		9,862,815

						44,616,115

U.S. Government Treasury Securities — 2.9%
United States Treasury Bonds(c)	4.75%	02/15/37		355		371,530
United States Treasury Bonds	6.25%	08/15/23		2,500		2,993,165
United States Treasury Notes	3.625%	12/31/12		15		15,113
United States Treasury Notes	4.125%	08/15/08		15		15,063
United States Treasury Notes	4.875%	08/15/16		900		958,360
United States Treasury Strips(b)	Zero	05/15/20-05/15/21		10,100		5,560,008

						9,913,239

TOTAL LONG-TERM INVESTMENTS (cost $307,402,062)						310,178,974

SEE NOTES TO FINANCIAL STATEMENTS.

A108


		*GOVERNMENT INCOME PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


SHORT-TERM INVESTMENTS — 25.5%	Interest Rate	Maturity Date	Principal Amount (000)	Value (Note 2)

U.S. Government Agency Obligation — 5.1%
Federal Home Loan Mortgage Corp., Discount Note (cost $17,326,910)	Zero	02/19/08	$ 17,500	$	17,403,873

			Shares

Affiliated Mutual Funds — 20.4%
Dryden Core Investment Fund — Short-Term Bond Series (cost $50,892,138)(e)			5,119,361		48,326,772
Dryden Core Investment Fund — Taxable Money Market Series (cost $21,203,483; includes $350,649 of cash collateral received for securities on loan) (Note 4)(d)(e)			21,203,483		21,203,483


TOTAL AFFILIATED MUTUAL FUNDS (cost $72,095,621)					69,530,255


OUTSTANDING OPTION PURCHASED			Contracts
Call Option
Iceland Krona, expiring 08/05/08 @ $67.75 (cost $18,866)			336,900		20,888

TOTAL SHORT-TERM INVESTMENTS (cost $89,441,397)					86,955,016

TOTAL INVESTMENTS 116.7% (cost $396,843,459)					397,133,990
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS(f) (16.7%)					(56,826,576	)

TOTAL NET ASSETS 100.0%				$	340,307,414

The following abbreviations are used in portfolio descriptions:


144A		Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
AUD		Australian Dollar
EUR		Euro
FICO		Financing Corporation
GBP		British Pound
HUF		Hungarian Forint
ISK		Iceland Krona
NZD		New Zealand Dollar
PLN		Polish Zloty
SEK		Swedish Krona
TBA		To be announced

(a)	Indicates a variable rate security. The maturity date presented for these instruments is the later of the next date on which the security can be redeemed at par or the next date on which the rate of interest is adjusted. The interest rate shown reflects the rate in effect at December 31, 2007.

(b)	Security segregated as collateral for futures contracts.

(c)	All or portion of security is on loan. The aggregate market value of such securities is $346,006; cash collateral of $350,649 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

(d)	Represents security, or a portion thereof, purchased with cash collateral received for securities on loan.

(e)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund — Taxable Money Market Series and the Dryden Core Investment Fund — Short-Term Bond Series.

(f)	Other liabilities in excess of other assets include net unrealized appreciation (depreciation) on financial futures contracts, forward foreign currency contracts and interest rate swap agreements as follows:

SEE NOTES TO FINANCIAL STATEMENTS.

A109


		*GOVERNMENT INCOME PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

Open futures contracts outstanding at December 31, 2007:


Number of Contracts	Type	Expiration Date	Value at December 31, 2007		Value at Trade Date		Unrealized Appreciation (Depreciation)
Long Positions:
6	Australian 10 Yr. Bond	Mar. 08	$	493,560	$	493,938	$	(378	)
13	2 Yr. Euro Schatz	Mar. 08		1,964,435		1,978,449		(14,014	)
9	Euro Bund	Mar. 08		1,488,355		1,523,160		(34,805	)
2	Long-Term U.K. Gilt	Mar. 08		438,849		438,992		(143	)
1	New Zealand 3 Mo. Bill	Mar. 08		701,753		702,222		(469	)
222	U.S. 30 Yr. Bond	Mar. 08		25,835,250		25,807,087		28,163

								(21,646	)

Short Positions:
31	U.S. Treasury 2 Yr. Notes	Mar. 08		6,517,750		6,521,026		3,276
190	U.S. Treasury 5 Yr. Notes	Mar. 08		20,953,437		20,883,561		(69,876	)
25	U.S. Treasury 10 Yr. Notes	Mar. 08		2,834,766		2,808,235		(26,531	)

								(93,131	)

							$	(114,777	)

Open forward foreign currency exchange contracts outstanding at December 31, 2007:


Purchase Contracts:	Notional Amount (000)		Payable at Statement Date		Value at December 31, 2007		Unrealized Appreciation (Depreciation)
Australian Dollar expiring 01/18/08	AUD	474,841	$	417,090	$	416,503	$	(587	)
Euro expiring 01/25/08	EUR	521,185		753,451		762,362		8,911
Hungarian Forint expiring 01/24/08	HUF	29,524,899		167,100		170,432		3,332
Iceland Krona expiring 01/16/08	ISK	22,045,836		355,732		350,014		(5,718	)
Iceland Krona expiring 01/18/08	ISK	13,056,227		203,900		207,182		3,282
New Zealand Dollar expiring 01/18/08	NZD	669,906		520,553		514,398		(6,155	)
Pound Sterling expiring 01/25/08	GBP	244,021		488,264		485,386		(2,878	)
Swedish Krona expiring 01/24/08	SEK	2,223,234		340,400		344,071		3,671

							$	3,858


Sales Contracts:	Notional Amount (000)		Receivable at Statement Date		Value at December 31, 2007		Unrealized Appreciation (Depreciation)
Euro expiring 01/25/08	EUR	234,937	$	339,100	$	343,654	$	(4,554	)
Hungarian Forint expiring 01/24/08	HUF	218,676,559		1,263,312		1,262,306		1,006
Iceland Krona expiring 01/16/08	ISK	13,160,726		203,900		208,948		(5,048	)
New Zealand Dollar expiring 01/18/08	NZD	218,758		170,500		167,977		2,523
Polish Zloty expiring 01/24/08	PLN	1,872,293		765,232		760,902		4,330
Pound Sterling expiring 01/25/08	GBP	83,043		167,100		165,182		1,918
Swedish Krona expiring 01/24/08	SEK	2,215,372		341,951		342,854		(903	)

								(728	)

							$	3,130

SEE NOTES TO FINANCIAL STATEMENTS.

A110


		*GOVERNMENT INCOME PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

Interest rate swap agreements outstanding at December 31, 2007:


Counterparty	Termination Date	Notional Amount (000)		Fixed Rate		Floating Rate	Unrealized Appreciation (Depreciation)
Merrill Lynch Capital Services(1)	08/14/12	$	3,410	5.20857	%	3 month LIBOR	$	195,908
Deutsche Bank AG(1)	11/16/12		13,500	4.65517	%	3 month LIBOR		273,624
Morgan Stanley Capital Services(1)	12/07/12		2,145	4.15033	%	3 month LIBOR		1,691
Morgan Stanley Capital Services(1)	12/11/12		7,500	4.37022	%	3 month LIBOR		75,863
Merrill Lynch Capital Services(2)	12/14/12		4,040	4.35284	%	3 month LIBOR		(38,898	)
Merrill Lynch Capital Services(1)	08/02/17		2,250	5.52959	%	3 month LIBOR		190,197
Deutsche Bank AG(1)	11/19/17		28,840	5.585	%	3 month LIBOR		96,880
Deutsche Bank AG(2)	11/19/27		12,320	5.69	%	3 month LIBOR		(43,432	)
Morgan Stanley Capital Services(2)	12/11/37		1,090	5.08438	%	3 month LIBOR		(13,133	)
Merrill Lynch Capital Services(2)	12/11/37		6,385	5.08938	%	3 month LIBOR		(98,703	)

							$	639,997

(1)	The Portfolio pays the floating rate and receives the fixed rate.

(2)	The Portfolio pays the fixed rate and receives the floating rate.

The industry classification of portfolio holdings and other liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 were as follows:


Mortgage Backed Securities	56.3	%
Affiliated Mutual Funds (including 0.1% of collateral received for securities on loan)	20.4
U.S. Government Agency Obligations	18.2
Commercial Mortgage Backed Securities	7.4
Collateralized Mortgage Obligations	6.8
Asset Backed Securities	3.5
U.S. Government Treasury Securities	2.9
Foreign Government Bonds	0.7
Corporate Bond	0.5

	116.7
Other liabilities in excess of other assets	(16.7	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A111


		*GOVERNMENT INCOME PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $346,006:
Unaffiliated investments (cost $324,747,838)	$	327,603,735
Affiliated investments (cost $72,095,621)		69,530,255
Foreign currency (cost $22)		22
Receivable for investments sold		121,320,939
Interest receivable		1,969,659
Unrealized appreciation on swaps		834,163
Due from broker — variation margin		54,812
Unrealized appreciation on forward currency contracts		28,973
Receivable for Series shares sold		24,899
Prepaid expenses		3,666

Total Assets		521,371,123

LIABILITIES
Payable for investments purchased		180,102,861
Collateral for securities on loan		350,649
Unrealized depreciation on swaps		194,166
Accrued expenses and other liabilities		140,941
Payable for Series shares repurchased		125,241
Management fee payable		115,450
Unrealized depreciation on forward currency contracts		25,843
Payable to custodian		4,792
Deferred trustees’ fees		3,206
Transfer agent fee payable		560

Total Liabilities		181,063,709

NET ASSETS	$	340,307,414

Net assets were comprised of:
Paid-in capital	$	345,517,435
Retained earnings		(5,210,021	)

Net assets, December 31, 2007	$	340,307,414

Net asset value and redemption price per share, ($340,307,414 / 29,903,156 outstanding shares of beneficial interest (authorized 100,000,000 shares)	$	11.38

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated interest income	$	13,665,484
Affiliated dividend income		3,883,421
Affiliated income from securities loaned, net		67,551

		17,616,456

EXPENSES
Management fee		1,372,156
Shareholders’ reports		140,000
Interest expense		104,905
Custodian’s fees and expenses		94,000
Audit fee		22,000
Trustees’ fees		14,000
Insurance expenses		8,000
Legal fees and expenses		8,000
Transfer agent’s fees and expenses (including affiliated expense of $2,700) (Note 4)		3,000
Miscellaneous		9,508

Total expenses		1,775,569

NET INVESTMENT INCOME		15,840,887

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on:
Investment transactions		(13,554	)
Foreign currency transactions		(105,672	)
Futures transactions		(842,040	)
Short sale transactions		(106,461	)
Swap transactions		430,047
Options written transactions		19,009

		(618,671	)

Net change in unrealized appreciation (depreciation) on:
Investments		3,002,493
Foreign currencies		(159	)
Futures		(102,540	)
Short sales		(3,281	)
Swaps		684,435

		3,580,948

NET GAIN ON INVESTMENTS AND FOREIGN CURRENCIES		2,962,277

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	18,803,164

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	15,840,887		$	17,134,336
Net realized loss on investments and foreign currency transactions		(618,671	)		(2,865,056	)
Net change in unrealized appreciation (depreciation) on investments and foreign currencies		3,580,948			(1,250,146	)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		18,803,164			13,019,134

DISTRIBUTIONS		(15,181,670	)		(17,558,195	)

SERIES SHARE TRANSACTIONS:
Series share sold [722,847 and 1,318,889 shares, respectively]		8,166,048			14,867,273
Series share issued in reinvestment of distributions [1,353,614 and 1,568,051 shares, respectively]		15,181,670			17,558,195
Series share repurchased [3,624,503 and 4,593,356 shares, respectively]		(40,920,583	)		(51,789,971	)

NET DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(17,572,865	)		(19,364,503	)

TOTAL DECREASE IN NET ASSETS		(13,951,371	)		(23,903,564	)
NET ASSETS:
Beginning of year		354,258,785			378,162,349

End of year	$	340,307,414		$	354,258,785

SEE NOTES TO FINANCIAL STATEMENTS.

A112


		*STOCK INDEX PORTFOLIO*

SCHEDULE OF INVESTMENTS

December 31, 2007


LONG-TERM INVESTMENTS — 98.3%		Value (Note 2)
COMMON STOCKS	Shares	Value (Note 2)

Aerospace/Defense — 2.9%
Boeing Co.	189,636	$	16,585,565
General Dynamics Corp.	96,100		8,551,939
Goodrich Corp.	28,600		2,019,446
Honeywell International, Inc.	178,750		11,005,638
L-3 Communications Holdings, Inc.	30,700		3,252,358
Lockheed Martin Corp.	85,698		9,020,571
Northrop Grumman Corp.	85,626		6,733,629
Precision Castparts Corp.	33,500		4,646,450
Raytheon Co.	108,318		6,574,903
Rockwell Collins, Inc.	41,500		2,986,755
United Technologies Corp.	240,500		18,407,870

			89,785,124

Air Freight & Logistics — 0.9%
C.H. Robinson Worldwide, Inc.	36,800		1,991,616
Expeditors International of Washington, Inc.	45,200		2,019,536
FedEx Corp.	74,240		6,619,981
United Parcel Service, Inc. (Class B Stock)	248,300		17,559,776

			28,190,909

Airlines — 0.1%
Southwest Airlines Co.	176,637		2,154,971

Auto Components — 0.2%
Goodyear Tire & Rubber Co.(a)(b)	44,200		1,247,324
Johnson Controls, Inc.	138,300		4,984,332

			6,231,656

Automobiles — 0.3%
Ford Motor Co.(a)(b)	471,545		3,173,498
General Motors Corp.(b)	131,100		3,263,079
Harley-Davidson, Inc.	63,100		2,947,401

			9,383,978

Beverages — 2.4%
Anheuser-Busch Cos., Inc.	185,900		9,730,006
Brown-Forman Corp. (Class B Stock)	16,200		1,200,582
Coca-Cola Co. (The)	470,900		28,899,133
Coca-Cola Enterprises, Inc.(b)	71,800		1,868,954
Constellation Brands, Inc. (Class A Stock)(a)(b)	38,200		903,048
Molson Coors Brewing Co. (Class B Stock)(b)	31,600		1,631,192
Pepsi Bottling Group, Inc.	33,600		1,325,856
PepsiCo, Inc.	382,640		29,042,376

			74,601,147

Biotechnology — 1.1%
Amgen, Inc.(a)(b)	263,164		12,221,336
Biogen Idec, Inc.(a)	64,525		3,672,763
Celgene Corp.(a)	87,200		4,029,512
Genzyme Corp.(a)	58,600		4,362,184
Gilead Sciences, Inc.(a)(b)	219,800		10,112,998

			34,398,793

Building Products — 0.1%
Masco Corp.	81,300		1,756,893
Trane, Inc.	38,900		1,817,019

			3,573,912

Capital Markets — 3.4%
American Capital Strategies Ltd.(b)	40,400		1,331,584
Ameriprise Financial, Inc.	59,800		3,295,578

SEE NOTES TO FINANCIAL STATEMENTS.

A113


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Capital Markets (continued)
Bank of New York Mellon Corp. (The)(b)	267,589	$	13,047,640
Bear Stearns Cos., Inc.(b)	29,610		2,613,083
Charles Schwab Corp.	238,000		6,080,900
E*Trade Financial Corp.(a)(b)	106,800		379,140
Federated Investors, Inc. (Class B Stock)	22,600		930,216
Franklin Resources, Inc.	39,900		4,565,757
Goldman Sachs Group, Inc.(b)	97,600		20,988,880
Janus Capital Group, Inc.(b)	54,200		1,780,470
Legg Mason, Inc.	32,800		2,399,320
Lehman Brothers Holdings, Inc.(b)	128,500		8,409,040
Merrill Lynch & Co., Inc.(b)	209,400		11,240,592
Morgan Stanley	254,010		13,490,471
Northern Trust Corp.	44,700		3,423,126
State Street Corp.	94,000		7,632,800
T. Rowe Price Group, Inc.	62,600		3,811,088

			105,419,685

Chemicals — 1.8%
Air Products & Chemicals, Inc.	50,800		5,010,404
Ashland, Inc.	16,000		758,880
Dow Chemical Co.	229,961		9,065,063
E.I. du Pont de Nemours & Co.	220,291		9,712,630
Eastman Chemical Co.	20,900		1,276,781
Ecolab, Inc.	43,600		2,232,756
Hercules, Inc.	27,900		539,865
International Flavors & Fragrances, Inc.	18,700		900,031
Monsanto Co.	128,696		14,374,056
PPG Industries, Inc.	41,000		2,879,430
Praxair, Inc.	75,200		6,670,992
Rohm and Haas Co.(b)	30,300		1,608,021
Sigma-Aldrich Corp.(b)	25,600		1,397,760

			56,426,669

Commercial Banks — 3.1%
BB&T Corp.(b)	136,000		4,171,120
Comerica, Inc.	43,250		1,882,673
Commerce Bancorp, Inc.	41,700		1,590,438
Fifth Third Bancorp	138,949		3,491,788
First Horizon National Corp.(b)	29,600		537,240
Huntington Bancshares, Inc.	103,475		1,527,291
KeyCorp.(b)	105,500		2,473,975
M&T Bank Corp.	20,100		1,639,557
Marshall & Ilsley Corp.(b)	58,698		1,554,323
National City Corp.(b)	152,500		2,510,150
PNC Financial Services Group, Inc.	84,300		5,534,295
Regions Financial Corp.	184,712		4,368,439
SunTrust Banks, Inc.	85,100		5,317,899
Synovus Financial Corp.(b)	71,900		1,731,352
US Bancorp	411,181		13,050,885
Wachovia Corp.(b)	471,455		17,929,434
Wells Fargo & Co.	800,620		24,170,718
Zions Bancorporation	27,700		1,293,313

			94,774,890

Commercial Services & Supplies — 0.5%
Allied Waste Industries, Inc.(a)(b)	71,800		791,236
Avery Dennison Corp.(b)	25,400		1,349,756
Cintas Corp.(b)	28,500		958,170

SEE NOTES TO FINANCIAL STATEMENTS.

A114


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Commercial Services & Supplies (continued)
Equifax, Inc.	31,100	$	1,130,796
Monster Worldwide, Inc.(a)	22,900		741,960
Pitney Bowes, Inc.	47,900		1,822,116
R.R. Donnelley & Sons Co.	54,200		2,045,508
Robert Half International, Inc.	43,200		1,168,128
Waste Management, Inc.	126,130		4,120,667

			14,128,337

Communications Equipment — 2.5%
Ciena Corp.(a)(b)	19,657		670,500
Cisco Systems, Inc.(a)	1,461,300		39,557,391
Corning, Inc.	371,500		8,912,285
JDS Uniphase Corp.(a)(b)	29,387		390,847
Juniper Networks, Inc.(a)	128,900		4,279,480
Motorola, Inc.	549,595		8,815,504
QUALCOMM, Inc.	396,100		15,586,535
Tellabs, Inc.(a)	88,000		575,520

			78,788,062

Computers & Peripherals — 4.4%
Apple, Inc.(a)	206,600		40,923,328
Dell, Inc.(a)	533,000		13,063,830
EMC Corp.(a)(b)	503,674		9,333,079
Hewlett-Packard Co.	621,116		31,353,936
International Business Machines Corp.	327,100		35,359,510
Lexmark International, Inc.(a)(b)	23,614		823,184
Network Appliance, Inc.(a)	92,100		2,298,816
QLogic Corp.(a)	36,100		512,620
SanDisk Corp.(a)(b)	47,800		1,585,526
Sun Microsystems, Inc.(a)(b)	204,450		3,706,679

			138,960,508

Construction & Engineering — 0.2%
Fluor Corp.	22,700		3,307,844
Jacobs Engineering Group, Inc.(a)(b)	25,100		2,399,811

			5,707,655

Construction Materials — 0.1%
Vulcan Materials Co.	22,800		1,803,252

Consumer Finance — 0.7%
American Express Co.	278,700		14,497,974
Capital One Financial Corp.(b)	98,069		4,634,741
Discover Financial Services	127,405		1,921,267
SLM Corp.(b)	98,400		1,981,776

			23,035,758

Containers & Packaging — 0.1%
Ball Corp.	23,400		1,053,000
Bemis Co.	22,900		627,002
Pactiv Corp.(a)	33,000		878,790
Sealed Air Corp.	39,820		921,435

			3,480,227

Distributors — 0.1%
Genuine Parts Co.(b)	37,325		1,728,148

Diversified Consumer Services — 0.1%
Apollo Group, Inc. (Class A Stock)(a)(b)	31,300		2,195,695
H&R Block, Inc.	79,500		1,476,315

			3,672,010

SEE NOTES TO FINANCIAL STATEMENTS.

A115


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Diversified Financial Services — 4.4%
Bank of America Corp.	1,058,907	$	43,690,503
CIT Group, Inc.(b)	52,300		1,256,769
Citigroup, Inc.	1,200,776		35,350,845
CME Group, Inc.	12,870		8,828,820
IntercontinentalExchange, Inc.(a)	15,700		3,022,250
JPMorgan Chase & Co.	804,385		35,111,405
Leucadia National Corp.(b)	38,500		1,813,350
Moody’s Corp.(b)	58,420		2,085,594
NYSE Euronext	61,700		5,415,409

			136,574,945

Diversified Telecommunication Services — 3.2%
AT&T, Inc.	1,454,711		60,457,789
CenturyTel, Inc.	30,000		1,243,800
Citizens Communications Co.(b)	90,300		1,149,519
Embarq Corp.	35,176		1,742,267
Qwest Communications International, Inc.(a)(b)	391,647		2,745,445
Verizon Communications, Inc.	688,438		30,077,856
Windstream Corp.	117,565		1,530,696

			98,947,372

Electric Utilities — 2.0%
Allegheny Energy, Inc.	37,600		2,391,736
American Electric Power Co., Inc.	96,640		4,499,558
Duke Energy Corp.	303,482		6,121,232
Edison International	79,300		4,232,241
Entergy Corp.	45,600		5,450,112
Exelon Corp.	156,550		12,780,742
FirstEnergy Corp.	72,336		5,232,786
FPL Group, Inc.	95,700		6,486,546
Pepco Holdings, Inc.	39,400		1,155,602
Pinnacle West Capital Corp.	26,000		1,102,660
PPL Corp.	90,500		4,714,145
Progress Energy, Inc.	59,414		2,877,420
Southern Co.	179,100		6,940,125

			63,984,905

Electrical Equipment — 0.5%
Cooper Industries, Ltd. (Class A Stock)	46,000		2,432,480
Emerson Electric Co.	188,400		10,674,744
Rockwell Automation, Inc.	42,000		2,896,320

			16,003,544

Electronic Equipment & Instruments — 0.3%
Agilent Technologies, Inc.(a)	101,382		3,724,775
Jabil Circuit, Inc.	44,000		671,880
Molex, Inc.	26,600		726,180
Tyco Electronics Ltd.	120,960		4,491,245

			9,614,080

Energy Equipment & Services — 2.5%
Baker Hughes, Inc.	73,630		5,971,393
BJ Services Co.	59,300		1,438,618
ENSCO International, Inc.	32,200		1,919,764
Halliburton Co.	216,600		8,211,306
Nabors Industries Ltd.(a)	65,600		1,796,784
National-Oilwell Varco, Inc.(a)(b)	86,400		6,346,944
Noble Corp.	60,600		3,424,506
Rowan Cos., Inc.(b)	17,100		674,766

SEE NOTES TO FINANCIAL STATEMENTS.

A116


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Energy Equipment & Services (continued)
Schlumberger Ltd.	282,900	$	27,828,873
Smith International, Inc.	43,900		3,242,015
Transocean, Inc.	72,836		10,426,473
Weatherford International Ltd.(a)	77,500		5,316,500

			76,597,942

Food & Staples Retailing — 2.3%
Costco Wholesale Corp.	104,432		7,285,176
CVS Caremark Corp.(b)	355,138		14,116,736
Kroger Co.	178,000		4,754,380
Safeway, Inc.	103,900		3,554,419
SUPERVALU, Inc.	50,508		1,895,060
Sysco Corp.	144,300		4,503,603
Walgreen Co.(b)	230,300		8,769,824
Wal-Mart Stores, Inc.	571,900		27,182,407
Whole Foods Market, Inc.(b)	28,300		1,154,640

			73,216,245

Food Products — 1.4%
Archer-Daniels-Midland Co.	154,938		7,193,771
Campbell Soup Co.	48,800		1,743,624
ConAgra Food, Inc.	114,000		2,712,060
Dean Foods Co.	31,800		822,348
General Mills, Inc.	78,500		4,474,500
H.J. Heinz Co.	77,350		3,610,698
Hershey Co. (The)(b)	43,300		1,706,020
Kellogg Co.(b)	59,000		3,093,370
Kraft Foods, Inc.	372,611		12,158,297
McCormick & Co., Inc.	31,300		1,186,583
Sara Lee Corp.	176,400		2,832,984
Tyson Foods, Inc. (Class A Stock)(b)	49,800		763,434
Wm. Wrigley Jr. Co.	49,100		2,874,805

			45,172,494

Gas Utilities — 0.1%
Nicor, Inc.	12,200		516,670
Questar Corp.	39,800		2,153,180

			2,669,850

Healthcare Equipment & Supplies — 1.7%
Baxter International, Inc.	156,500		9,084,825
Becton Dickinson & Co.	57,700		4,822,566
Boston Scientific Corp.(a)(b)	289,799		3,370,362
C.R. Bard, Inc.	24,600		2,332,080
Covidien Ltd.	113,960		5,047,288
Hospira, Inc.(a)(b)	39,920		1,702,189
Medtronic, Inc.	277,700		13,959,979
St. Jude Medical, Inc.(a)	83,100		3,377,184
Stryker Corp.	57,500		4,296,400
Varian Medical Systems, Inc.(a)(b)	23,200		1,210,112
Zimmer Holdings, Inc.(a)	57,286		3,789,469

			52,992,454

Healthcare Providers & Services — 2.4%
Aetna, Inc.	121,448		7,011,193
AmerisourceBergen Corp.	46,200		2,072,994
Cardinal Health, Inc.	87,975		5,080,556
CIGNA Corp.	71,700		3,852,441
Coventry Health Care, Inc.(a)	38,450		2,278,163

SEE NOTES TO FINANCIAL STATEMENTS.

A117


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Healthcare Providers & Services (continued)
Express Scripts, Inc.(a)	64,000	$	4,672,000
Humana, Inc.(a)	40,800		3,072,648
Laboratory Corp. of America Holdings(a)(b)	27,600		2,084,628
McKesson Corp.	68,107		4,461,690
Medco Health Solutions, Inc.(a)	64,296		6,519,614
Patterson Cos., Inc.(a)(b)	24,300		824,985
Quest Diagnostics, Inc.(b)	38,300		2,026,070
Tenet Healthcare Corp.(a)(b)	90,000		457,200
UnitedHealth Group, Inc.	314,900		18,327,180
WellPoint, Inc.(a)	140,700		12,343,611

			75,084,973

Healthcare Technology
IMS Health, Inc.	51,320		1,182,413

Hotels, Restaurants & Leisure — 1.4%
Carnival Corp.	103,800		4,618,062
Darden Restaurants, Inc.(b)	38,650		1,070,992
Harrah’s Entertainment, Inc.	41,950		3,723,063
International Game Technology	73,000		3,206,890
Marriott International, Inc. (Class A Stock)(b)	72,600		2,481,468
McDonald’s Corp.(b)	282,300		16,630,293
Starbucks Corp.(a)	167,100		3,420,537
Starwood Hotels & Resorts Worldwide, Inc.	48,500		2,135,455
Wendy’s International, Inc.	21,700		560,728
Wyndham Worldwide Corp.	44,763		1,054,616
Yum! Brands, Inc.(b)	124,600		4,768,442

			43,670,546

Household Durables — 0.4%
Black & Decker Corp.	16,500		1,149,225
Centex Corp.	24,600		621,396
D.R. Horton, Inc.(b)	52,200		687,474
Fortune Brands, Inc.	33,000		2,387,880
Harman International Industries, Inc.	14,100		1,039,311
KB Home(b)	17,232		372,211
Leggett & Platt, Inc.	44,300		772,592
Lennar Corp. (Class A Stock)(b)	29,000		518,810
Newell Rubbermaid, Inc.	64,649		1,673,116
Pulte Homes, Inc.	35,700		376,278
Snap-On, Inc.	12,300		593,352
Stanley Works	19,100		925,968
Whirlpool Corp.	17,507		1,429,096

			12,546,709

Household Products — 2.4%
Clorox Co.(b)	32,600		2,124,542
Colgate-Palmolive Co.	120,200		9,370,792
Kimberly-Clark Corp.	108,588		7,529,492
Procter & Gamble Co.	745,781		54,755,241

			73,780,067

Independent Power Producers & Energy Traders — 0.3%
AES Corp.(a)	159,700		3,415,983
Constellation Energy Group, Inc.	43,450		4,454,929
Dynegy, Inc.(a)	87,800		626,892

			8,497,804

SEE NOTES TO FINANCIAL STATEMENTS.

A118


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Industrial Conglomerates — 3.6%
3M Co.	170,200	$	14,351,264
General Electric Co.	2,421,500		89,765,004
Textron, Inc.	57,800		4,121,140
Tyco International Ltd.	120,960		4,796,064

			113,033,472

Insurance — 4.0%
ACE Ltd.	81,700		5,047,426
AFLAC, Inc.	114,700		7,183,661
Allstate Corp.	143,488		7,494,378
Ambac Financial Group, Inc.(b)	31,800		819,486
American International Group, Inc.(b)	610,987		35,620,542
Aon Corp.(b)	66,925		3,191,653
Assurant, Inc.(b)	24,500		1,639,050
Chubb Corp.	99,300		5,419,794
Cincinnati Financial Corp.	43,228		1,709,235
Genworth Financial, Inc. (Class A Stock)	112,300		2,858,035
Hartford Financial Services Group, Inc.	78,300		6,826,977
Lincoln National Corp.	68,063		3,962,628
Loews Corp.	105,800		5,325,972
Marsh & McLennan Co., Inc.	123,100		3,258,457
MBIA, Inc.(b)	36,550		680,927
MetLife, Inc.	180,500		11,122,410
Principal Financial Group, Inc.	61,300		4,219,892
Progressive Corp.	165,100		3,163,316
SAFECO Corp.	26,600		1,481,088
Torchmark Corp.	24,100		1,458,773
Travelers Cos., Inc	160,398		8,629,412
UnumProvident Corp.	86,456		2,056,788
XL Capital Ltd. (Class A Stock)	46,300		2,329,353

			125,499,253

Internet & Catalog Retail — 0.3%
Amazon.Com, Inc.(a)(b)	69,500		6,438,480
Expedia, Inc.(a)(b)	40,400		1,277,448
IAC/InterActiveCorp(a)(b)	45,200		1,216,784

			8,932,712

Internet Software & Services — 1.8%
Akamai Technologies, Inc.(a)(b)	30,400		1,051,840
eBay, Inc.(a)(b)	277,100		9,196,949
Google, Inc. (Class A Stock)(a)	54,750		37,858,530
VeriSign, Inc.(a)(b)	47,500		1,786,475
Yahoo!, Inc.(a)	310,900		7,231,534

			57,125,328

IT Services — 0.8%
Affiliated Computer Services, Inc. (Class A Stock)(a)	25,300		1,141,030
Automatic Data Processing, Inc.	136,000		6,056,080
Cognizant Technology Solutions Corp. (Class A Stock)(a)	64,600		2,192,524
Computer Sciences Corp.(a)	42,700		2,112,369
Convergys Corp.(a)	37,600		618,896
Electronic Data Systems Corp.	123,300		2,556,009
Fidelity National Information Services, Inc.	34,400		1,430,696
Fiserv, Inc.(a)(b)	36,700		2,036,483
Paychex, Inc.	78,950		2,859,569
Unisys Corp.(a)(b)	67,000		316,910
Western Union Co.	172,404		4,185,969

			25,506,535

SEE NOTES TO FINANCIAL STATEMENTS.

A119


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Leisure Equipment & Products — 0.1%
Brunswick Corp.(b)	21,300	$	363,165
Eastman Kodak Co.(b)	57,000		1,246,590
Hasbro, Inc.	42,650		1,090,987
Mattel, Inc.	92,881		1,768,454

			4,469,196

Life Sciences, Tools & Services — 0.4%
Applera Corp.-Applied Biosystems Group	39,600		1,343,232
Millipore Corp.(a)(b)	10,800		790,344
PerkinElmer, Inc.	31,000		806,620
Thermo Fisher Scientific, Inc.(a)	103,500		5,969,880
Waters Corp.(a)	27,600		2,182,332

			11,092,408

Machinery — 1.9%
Caterpillar, Inc.(b)	153,300		11,123,448
Cummins, Inc.	24,800		3,158,776
Danaher Corp.	55,800		4,895,892
Deere & Co.	106,800		9,945,216
Dover Corp.	50,500		2,327,545
Eaton Corp.	35,500		3,441,725
Illinois Tool Works, Inc.	99,100		5,305,814
Ingersoll-Rand Co. Ltd. (Class A Stock)	76,100		3,536,367
ITT Corp.	43,500		2,872,740
Manitowoc Co., Inc. (The)(b)	22,900		1,118,207
PACCAR, Inc.	88,228		4,806,661
Pall Corp.(b)	23,200		935,424
Parker Hannifin Corp.	42,187		3,177,103
Terex Corp.(a)	24,200		1,586,794

			58,231,712

Media — 2.8%
CBS Corp. (Class B Stock)(b)	181,368		4,942,278
Clear Channel Communications, Inc.	114,100		3,938,732
Comcast Corp. (Class A Stock)(a)(b)	738,045		13,476,702
DIRECTV Group, Inc. (The)(a)	181,500		4,196,280
E.W. Scripps Co. (The) (Class A Stock)	16,700		751,667
Gannett Co., Inc.(b)	59,100		2,304,900
Interpublic Group of Cos., Inc.(a)	84,700		686,917
McGraw-Hill Cos., Inc.	77,700		3,404,037
Meredith Corp.	11,000		604,780
New York Times Co. (Class A Stock)(b)	36,500		639,845
News Corp. (Class A Stock)	536,000		10,982,640
Omnicom Group, Inc.	80,600		3,830,918
Time Warner, Inc.	891,020		14,710,740
Viacom, Inc. (Class B Stock)(a)	166,768		7,324,451
Walt Disney Co. (The)	460,901		14,877,884
Washington Post Co. (The) (Class B Stock)	600		474,858

			87,147,629

Metals & Mining — 1.0%
Alcoa, Inc.	211,476		7,729,448
Allegheny Technologies, Inc.(b)	22,640		1,956,096
Freeport-McMoRan Copper & Gold, Inc. (Class B Stock)	89,006		9,117,775
Newmont Mining Corp.	107,703		5,259,137
Nucor Corp.	70,700		4,186,854
Titanium Metals Corp.(b)	7,100		187,795
United States Steel Corp.	27,740		3,354,043

			31,791,148

SEE NOTES TO FINANCIAL STATEMENTS.

A120


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Multiline Retail — 0.7%
Big Lots, Inc.(a)(b)	26,200	$	418,938
Dillard’s, Inc.	4,650		87,327
Family Dollar Stores, Inc.(b)	37,100		713,433
J.C. Penney Co., Inc.	54,400		2,393,056
Kohl’s Corp.(a)	77,500		3,549,500
Macy’s, Inc.	103,420		2,675,475
Nordstrom, Inc.	48,000		1,763,040
Sears Holdings Corp.(a)(b)	15,812		1,613,615
Target Corp.	194,168		9,708,400

			22,922,784

Multi-Utilities — 1.1%
Ameren Corp.(b)	47,100		2,553,291
CenterPoint Energy, Inc.	79,010		1,353,441
CMS Energy Corp.(b)	43,000		747,340
Consolidated Edison, Inc.(b)	62,800		3,067,780
Dominion Resources, Inc.	138,884		6,590,046
DTE Energy Co.(b)	39,200		1,723,232
Integrys Energy Group, Inc.	17,750		917,498
NiSource, Inc.	73,000		1,378,970
PG&E Corp.	80,600		3,473,054
Public Service Enterprise Group, Inc.	60,300		5,923,872
Sempra Energy	60,754		3,759,458
TECO Energy, Inc.	42,100		724,541
Xcel Energy, Inc.	104,895		2,367,480

			34,580,003

Office Electronics — 0.1%
Xerox Corp.	246,892		3,997,181

Oil, Gas & Consumable Fuels — 10.1%
Anadarko Petroleum Corp.(b)	112,226		7,372,126
Apache Corp.	78,750		8,468,775
Chesapeake Energy Corp.	104,700		4,104,240
Chevron Corp.	507,992		47,410,893
ConocoPhillips	387,079		34,179,076
Consol Energy, Inc.	40,000		2,860,800
Devon Energy Corp.	107,200		9,531,152
El Paso Corp.	168,611		2,906,854
EOG Resources, Inc.(b)	59,700		5,328,225
Exxon Mobil Corp.	1,307,770		122,524,970
Hess Corp.	66,000		6,656,760
Marathon Oil Corp.	172,094		10,473,641
Murphy Oil Corp.	43,100		3,656,604
Noble Energy, Inc.	37,300		2,966,096
Occidental Petroleum Corp.	199,600		15,367,204
Peabody Energy Corp.(b)	57,300		3,531,972
Range Resources Corp.	27,600		1,417,536
Spectra Energy Corp.	154,242		3,982,528
Sunoco, Inc.	27,000		1,955,880
Tesoro Corp.	27,100		1,292,670
Valero Energy Corp.	133,900		9,377,017
Williams Cos., Inc.	150,000		5,367,000
XTO Energy, Inc.	112,500		5,778,000

			316,510,019

SEE NOTES TO FINANCIAL STATEMENTS.

A121


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Paper & Forest Products — 0.3%
International Paper Co.	107,267	$	3,473,305
MeadWestvaco Corp.(b)	45,589		1,426,936
Weyerhaeuser Co.	48,000		3,539,520

			8,439,761

Personal Products — 0.2%
Avon Products, Inc.	104,100		4,115,073
Estee Lauder Cos., Inc. (The)(b)	25,500		1,112,055

			5,227,128

Pharmaceuticals — 6.2%
Abbott Laboratories	367,200		20,618,280
Allergan, Inc.(b)	68,800		4,419,712
Barr Pharmaceuticals, Inc.(a)(b)	19,900		1,056,690
Bristol-Myers Squibb Co.	475,660		12,614,503
Eli Lilly & Co.	242,300		12,936,397
Forest Laboratories, Inc.(a)	76,500		2,788,425
Johnson & Johnson	687,771		45,874,326
King Pharmaceuticals, Inc.(a)	62,033		635,218
Merck & Co., Inc.	518,100		30,106,791
Mylan Laboratories, Inc.(b)	50,500		710,030
Pfizer, Inc.	1,653,408		37,581,964
Schering-Plough Corp.(b)	379,600		10,112,544
Watson Pharmaceuticals, Inc.(a)(b)	27,900		757,206
Wyeth	318,900		14,092,191

			194,304,277

Real Estate Investment Trust — 1.0%
Apartment Investment & Management Co. (Class A Stock)(b)	23,100		802,263
AvalonBay Communities, Inc.(b)	17,900		1,685,106
Boston Properties, Inc.(b)	27,600		2,533,956
Developers Diversified Realty Corp.	26,400		1,010,856
Equity Residential Properties Trust(b)	66,700		2,432,549
General Growth Properties, Inc.(b)	56,400		2,322,552
Host Hotels & Resorts, Inc.(b)	129,000		2,198,160
Kimco Realty Corp.(b)	57,100		2,078,440
Plum Creek Timber Co., Inc.(b)	37,000		1,703,480
ProLogis(b)	63,000		3,992,940
Public Storage, Inc.	28,700		2,106,867
Simon Property Group, Inc.(b)	52,800		4,586,208
Vornado Realty Trust	30,400		2,673,680

			30,127,057

Real Estate Management & Development
CB Richard Ellis Group, Inc. (Class A Stock)(a)(b)	45,100		971,905

Road & Rail — 0.8%
Burlington Northern Santa Fe Corp.	69,826		5,811,618
CSX Corp.(b)	103,624		4,557,384
Norfolk Southern Corp.(b)	91,600		4,620,304
Ryder System, Inc.	12,800		601,728
Union Pacific Corp.	62,900		7,901,498

			23,492,532

Semiconductors & Semiconductor Equipment — 2.6%
Advanced Micro Devices, Inc.(a)(b)	106,900		801,750
Altera Corp.(b)	82,700		1,597,764
Analog Devices, Inc.	75,700		2,399,690
Applied Materials, Inc.(b)	304,500		5,407,920
Broadcom Corp. (Class A Stock)(a)(b)	103,550		2,706,797

SEE NOTES TO FINANCIAL STATEMENTS.

A122


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS		Value (Note 2)
(continued)	Shares	Value (Note 2)

Semiconductors & Semiconductor Equipment (continued)
Intel Corp.	1,402,800	$	37,398,648
KLA-Tencor Corp.(b)	42,400		2,041,984
Linear Technology Corp.(b)	56,800		1,807,944
LSI Logic Corp.(a)(b)	135,700		720,567
MEMC Electronic Materials, Inc.(a)	51,000		4,512,990
Microchip Technology, Inc.(b)	44,200		1,388,764
Micron Technology, Inc.(a)(b)	154,900		1,123,025
National Semiconductor Corp.(b)	60,700		1,374,248
Novellus Systems, Inc.(a)	30,400		838,128
NVIDIA Corp.(a)(b)	129,850		4,417,497
Teradyne, Inc.(a)(b)	40,800		421,872
Texas Instruments, Inc.(b)	343,100		11,459,540
Xilinx, Inc.	75,700		1,655,559

			82,074,687

Software — 3.8%
Adobe Systems, Inc.(a)	141,700		6,054,841
Autodesk, Inc.(a)(b)	50,400		2,507,904
BMC Software, Inc.(a)	57,900		2,063,556
CA, Inc.	105,773		2,639,036
Citrix Systems, Inc.(a)(b)	35,900		1,364,559
Compuware Corp.(a)(b)	78,400		696,192
Electronic Arts, Inc.(a)(b)	68,200		3,983,562
Intuit, Inc.(a)	91,600		2,895,476
Microsoft Corp.(b)	1,928,400		68,651,040
Novell, Inc.(a)	73,100		502,197
Oracle Corp.(a)	951,320		21,480,806
Symantec Corp.(a)	238,111		3,843,112
Teradata Corp.(a)	46,300		1,269,083

			117,951,364

Specialty Retail — 1.5%
Abercrombie & Fitch Co.	20,500		1,639,385
AutoNation, Inc.(a)(b)	40,589		635,624
AutoZone, Inc.(a)	11,700		1,402,947
Bed Bath & Beyond, Inc.(a)	59,100		1,736,949
Best Buy Co., Inc.	91,925		4,839,851
Circuit City Stores, Inc.	12,000		50,400
GameStop Corp. (Class A Stock)(a)	31,900		1,981,309
Gap, Inc.(b)	115,587		2,459,692
Home Depot, Inc.	400,219		10,781,900
Limited Brands, Inc.(b)	76,796		1,453,748
Lowe’s Cos., Inc.	342,000		7,736,040
Office Depot, Inc.(a)(b)	68,800		957,008
OfficeMax, Inc.	16,786		346,799
RadioShack Corp.(b)	31,760		535,474
Sherwin-Williams Co.(b)	27,000		1,567,080
Staples, Inc.	163,000		3,760,410
Tiffany & Co.	28,300		1,302,649
TJX Cos., Inc.	107,100		3,076,983

			46,264,248

Textiles, Apparel & Luxury Goods — 0.4%
Coach, Inc.(a)	84,200		2,574,836
Jones Apparel Group, Inc.(b)	28,000		447,720
Liz Claiborne, Inc.(b)	26,400		537,240
NIKE, Inc., (Class B Stock)	88,600		5,691,664
Polo Ralph Lauren Corp.	13,200		815,628
V.F. Corp.	22,536		1,547,322

			11,614,410

SEE NOTES TO FINANCIAL STATEMENTS.

A123


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


COMMON STOCKS			Value (Note 2)
(continued)	Shares		Value (Note 2)

Thrifts & Mortgage Finance — 0.7%
Countrywide Financial Corp.(b)		151,098	$	1,350,816
Fannie Mae		230,000		9,195,400
Freddie Mac		149,300		5,086,651
Hudson City Bancorp, Inc.		145,800		2,189,916
MGIC Investment Corp.(b)		23,600		529,348
Sovereign Bancorp, Inc.(b)		87,405		996,417
Washington Mutual, Inc.(b)		218,126		2,968,695

				22,317,243

Tobacco — 1.4%
Altria Group, Inc.		500,000		37,790,000
Reynolds American, Inc.(b)		46,400		3,060,544
UST, Inc.		37,400		2,049,520

				42,900,064

Trading Companies & Distributors
W.W. Grainger, Inc.		14,800		1,295,296

Wireless Telecommunication Services — 0.4%
American Tower Corp. (Class A Stock)(a)		88,000		3,748,800
Sprint Nextel Corp.		688,522		9,040,294

				12,789,094

TOTAL LONG-TERM INVESTMENTS (cost $1,632,553,686)				3,067,390,480


SHORT-TERM INVESTMENTS — 15.3%
Affiliated Money Market Mutual Fund — 15.2%
Dryden Core Investment Fund — Taxable Money Market Series (cost $476,101,440; includes $428,571,796 of cash collateral received for securities on loan) (Note 4)(c)(f)		476,101,440		476,101,440


	Principal Amount (000)
U.S. Government Obligation — 0.1%
United States Treasury Bills(d)(e) 2.84%, 03/20/2008 (cost $ 2,981,303)	$	3,000		2,979,525
TOTAL SHORT-TERM INVESTMENTS (cost $479,082,743)				479,080,965

TOTAL INVESTMENTS — 113.6% (cost $2,111,636,429)				3,546,471,445
LIABILITIES IN EXCESS OF OTHER ASSETS(g) — (13.6%)				(424,075,228	)

NET ASSETS — 100.0%			$	3,122,396,217

(a)	Non income-producing security.

(b)	All or portion of security is on loan. The aggregate market value of such securities is $411,116,874 cash collateral of $428,571,796 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.

(c)	Represents security, or portion thereof, purchased with cash collateral received for securities on loan.

(d)	Security segregated as collateral for futures contracts.

(e)	Rate quoted represents yield-to-maturity at purchase date.

(f)	Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Dryden Core Investment Fund — Taxable Money Market Series.

SEE NOTES TO FINANCIAL STATEMENTS.

A124


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007

(g)	Liabilities in excess of other assets include net unrealized appreciation on financial futures as follows:

Open futures contract outstanding at December 31, 2007:


Number of Contracts	Type	Expiration Date	Value at December 31, 2007		Value at Trade Date		Unrealized Appreciation
Long Position:
145	S&P 500 Index	Mar. 2008	$	53,548,500	$	53,023,450	$	525,050

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of December 31, 2007 was as follows:


Affiliated Money Market Mutual Fund (including 13.7% of collateral received for securities on loan)	15.2	%
Oil, Gas & Consumable Fuels	10.1
Pharmaceuticals	6.2
Computers & Peripherals	4.4
Diversified Financial Services	4.4
Insurance	4.0
Software	3.8
Industrial Conglomerates	3.6
Capital Markets	3.4
Diversified Telecommunication Services	3.2
Commercial Banks	3.1
Aerospace/Defense	2.9
Media	2.8
Semiconductors & Semiconductor Equipment	2.6
Communications Equipment	2.5
Energy Equipment & Services	2.5
Beverages	2.4
Healthcare Providers & Services	2.4
Household Products	2.4
Food & Staples Retailing	2.3
Electric Utilities	2.0
Machinery	1.9
Chemicals	1.8
Internet Software & Services	1.8
Healthcare Equipment & Supplies	1.7
Specialty Retail	1.5
Food Products	1.4
Hotels, Restaurants & Leisure	1.4
Tobacco	1.4
Biotechnology	1.1
Multi-Utilities	1.1
Metals & Mining	1.0
Real Estate Investment Trust	1.0
Air Freight & Logistics	0.9
IT Services	0.8
Road & Rail	0.8
Consumer Finance	0.7
Multiline Retail	0.7
Thrifts & Mortgage Finance	0.7
Commercial Services & Supplies	0.5
Electrical Equipment	0.5
Household Durables	0.4
Life Sciences, Tools & Services	0.4
Textiles, Apparel & Luxury Goods	0.4
Wireless Telecommunication Services	0.4
Automobiles	0.3
Electronic Equipment & Instruments	0.3
Independent Power Producers & Energy Traders	0.3
Internet & Catalog Retail	0.3
Paper & Forest Products	0.3
Auto Components	0.2

SEE NOTES TO FINANCIAL STATEMENTS.

A125


		*STOCK INDEX PORTFOLIO (Continued)*

SCHEDULE OF INVESTMENTS

December 31, 2007


Construction & Engineering	0.2	%
Personal Products	0.2
Airlines	0.1
Building Products	0.1
Construction Materials	0.1
Containers & Packaging	0.1
Distributors	0.1
Diversified Consumer Services	0.1
Gas Utilities	0.1
Leisure Equipment & Products	0.1
Office Electronics	0.1
U.S. Government Obligation	0.1

	113.6
Liabilities in excess of other assets	(13.6	)

	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS.

A126


		*STOCK INDEX PORTFOLIO (Continued)*

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2007


ASSETS
Investments, at value including securities on loan of $411,116,874:
Unaffiliated investments (cost $1,635,534,989)	$	3,070,370,005
Affiliated investments (cost $476,101,440)		476,101,440
Cash		354,725
Dividends receivable		4,811,425
Receivable for investments sold		4,284,034
Receivable for Series shares sold		59,056
Prepaid expenses		36,474

Total Assets		3,556,017,159

LIABILITIES
Collateral for securities on loan		428,571,796
Payable for investments purchased		2,577,225
Management fee payable		937,923
Payable for Series shares repurchased		790,890
Accrued expenses		446,254
Due to broker-variation margin		296,225
Transfer agent fee payable		629

Total Liabilities		433,620,942

NET ASSETS	$	3,122,396,217

Net assets were comprised of:
Paid-in capital	$	1,689,955,955
Retained earnings		1,432,440,262

Net assets, December 31, 2007	$	3,122,396,217

Net asset value and redemption price per share, $3,122,396,217 / 84,766,386 outstanding shares of beneficial interest (authorized 275,000,000 shares)	$	36.84

STATEMENT OF OPERATIONS

Year Ended December 31, 2007


INVESTMENT INCOME
Unaffiliated dividend income	$	65,139,259
Affiliated dividend income		2,788,704
Affiliated income from securities loaned, net		946,420
Interest		155,761

		69,030,144

EXPENSES
Management fee		11,519,701
Custodian’s fees and expenses		324,000
Insurance expenses		71,000
Trustees’ fees		53,000
Shareholders’ reports		37,000
Legal fees and expenses		18,000
Audit fee		16,000
Commitment fee on syndicated credit agreement		12,000
Transfer agent’s fee and expenses (including affiliated expense of $4,300) (Note 4)		5,000
Miscellaneous		14,500

Total expenses		12,070,201

NET INVESTMENT INCOME		56,959,943

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Investment transactions		76,496,272
Futures transactions		263,093

		76,759,365

Net change in unrealized appreciation (depreciation) on:
Investments		34,182,519
Futures		419,812

		34,602,331

NET GAIN ON INVESTMENTS		111,361,696

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	168,321,639

STATEMENT OF CHANGES IN NET ASSETS


	Year Ended December 31,
	2007			2006
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income	$	56,959,943		$	51,532,817
Net realized gain (loss) on investment transactions		76,759,365			(66,612,227	)
Net change in unrealized appreciation (depreciation) on investments		34,602,331			477,113,399

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		168,321,639			462,033,989

DISTRIBUTIONS		(51,529,141	)		(59,982,933	)

SERIES SHARE TRANSACTIONS:
Series shares sold [1,884,280 and 2,413,005 shares, respectively]		70,200,353			80,048,346
Series shares issued in reinvestment of distributions [1,400,248 and 1,700,891 shares, respectively]		51,529,141			59,982,933
Series shares repurchased [11,303,103 and 13,622,829 shares, respectively]		(422,534,751	)		(448,417,431	)

NET DECREASE IN NET ASSETS RESULTING FROM SERIES SHARE TRANSACTIONS		(300,805,257	)		(308,386,152	)

TOTAL INCREASE (DECREASE) IN NET ASSETS		(184,012,759	)		93,664,904
NET ASSETS:
Beginning of year		3,306,408,976			3,212,744,072

End of year	$	3,122,396,217		$	3,306,408,976

SEE NOTES TO FINANCIAL STATEMENTS.

A127

NOTES TO THE FINANCIAL STATEMENTS OF

THE PRUDENTIAL SERIES FUND

Note 1:

General

The Prudential Series Fund (“Series Fund”), organized as a Delaware statutory trust, is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended. On January 2, 2006, each Portfolio of the Fund changed its federal income tax status from a regulated investment company to a partnership. As a result of that conversion, the Series Fund was reorganized from a Maryland corporation to a Delaware statutory trust. Pursuant to this reorganization, the Fund has been renamed “The Prudential Series Fund.” The Series Fund is composed of thirty-two Portfolios (“Portfolio” or “Portfolios”), each with separate series shares. The information presented in these financial statements pertains to seven Portfolios: Conservative Balanced Portfolio, Diversified Bond Portfolio, Equity Portfolio, Flexible Managed Portfolio, Global Portfolio, Government Income Portfolio and Stock Index Portfolio.

The Portfolios of the Series Fund have the following as investment objectives:

Conservative Balanced Portfolio: Total investment return consistent with a conservatively managed diversified portfolio by investing in a mix of equity-related securities, debt obligations and money market instruments.

Diversified Bond Portfolio: High level of income over a longer term while providing reasonable safety of capital by investing in intermediate and long-term debt obligations that are rated investment grade and high quality money market instruments. The types of debt obligations in which the Portfolio can invest include U.S. government securities, mortgage-related securities and corporate bonds.

Equity Portfolio: Capital appreciation by investing primarily in stocks of major, established corporations as well as small companies.

Flexible Managed Portfolio: High total return consistent with an aggressively managed diversified portfolio by investing in a mix of equity and equity-related securities, debt obligations and money market instruments.

Global Portfolio: Long-term growth of capital by investing primarily in equity and equity-related securities of foreign and U.S. companies.

Government Income Portfolio: High level of income over the long-term consistent with the preservation of capital by investing primarily in intermediate and long-term U.S. government securities, including U.S. treasuries, government agency and mortgage-related securities.

Stock Index Portfolio: Investment results that generally correspond to the price and yield performance of the S&P 500 Index by investing primarily in stocks in the S&P 500 Index.

The ability of issuers of debt securities (other than those issued or guaranteed by the U.S. Government) held by the Portfolios to meet their obligations may be affected by the economic or political developments in a specific industry, region or country.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability or the level of governmental supervision and regulation of foreign securities markets.

Note 2:

Accounting Policies

The following is a summary of significant accounting policies followed by the Series Fund and the Portfolios in preparation of their financial statements.

prices on such exchange, or at the last bid price in the absence of an asked price. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Securities for which reliable market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign market and before the Series Fund’s normal pricing time, are valued at fair value in accordance with Board of Trustees approved fair valuation procedures. When determining the fair value of securities, some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment advisor regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values. As of December 31, 2007, the Global Portfolio held foreign securities whose value required adjustment in accordance with such procedures.

Investments in mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.

The Conservative Balanced and Flexible Managed Portfolios use amortized cost to value their short-term debt securities. Short-term debt securities that are held in the other Portfolios which mature in more than 60 days are valued at current market quotations and those short-term debt securities which mature in 60 days or less are valued at amortized cost which approximates market value. The amortized cost method involves valuing a security at its cost at the time of purchase and thereafter assumes a constant amortization to maturity of any discount or premium.

The Diversified Bond may hold up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Certain issues of restricted securities held by these portfolios at December 31, 2007 include registration rights, under which the portfolios may demand registration by the issuer, of which the portfolios may bear the cost of such registration. Restricted securities, including private placements, are valued pursuant to the valuation procedures noted above.

Repurchase Agreements: In connection with transactions in repurchase agreements with United States financial institutions, it is the Series Fund’s policy that its custodian or designated subcustodians, as the case may be, under triparty repurchase agreements, take possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked to market on a daily basis to ensure the adequacy of the collateral. If the seller defaults and the value of the collateral declines, or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Series Fund may by delayed or limited.

Foreign Currency Translation: The books and records of the Series Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

(i) market value of investment securities, other assets and liabilities at the current daily rates of exchange.

(ii) purchases and sales of investment securities, income and expenses at the rates of exchange prevailing on the respective dates of such transactions.

Although the net assets of the Series Fund are presented at the foreign exchange rates and market values at the close of the period, the Series Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at the end of the period. Similarly, the Series Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the period. Accordingly, these realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the holding of foreign currencies, currency gains (losses) realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on investments and foreign currencies.

Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Certain Portfolios of the Series Fund may enter into forward currency contracts in order to hedge their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings or on specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current forward exchange rates and any unrealized gain (loss) is included in net unrealized appreciation (depreciation) on investments and foreign currencies. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

Short Sales: Certain portfolios of the Series Fund may sell a security it does not own in anticipation of a decline in the market value of that security (short sale). When a Portfolio makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the transaction. The Portfolio may have to pay a fee to borrow the particular security and may be obligated to remit any interest or dividends received on such borrowed securities. Dividends declared on short positions open are recorded on the ex-date and interest payable is accrued daily on fixed income securities sold short, both of which are recorded as an expense. A gain, limited to the price at which the Portfolio sold the security short, or a loss, unlimited in magnitude, will be recognized upon the termination of a short sale if the market price at termination is less than or greater than, respectively, the proceeds originally received.

Options: The Series Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates or currencies with respect to securities which the Series Fund currently owns or intends to purchase. The Series Fund’s principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Series Fund realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost basis of the purchase, in determining whether the Series Fund has realized a gain (loss). The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain (loss). Gains (losses) on purchased options are included in net realized gains (losses) on investment transactions. Gains (losses) on written options are presented separately as net realized gains (losses) on written option transactions.

The Series Fund, as writer of an option, may have no control over whether the contract may be exercised. As a result, the Series Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. The Series Fund, as purchaser of an over-the-counter option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts.

Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the initial margin . Subsequent payments, known as variation margin, are made or received by the Series Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on financial futures contracts.

The Series Fund invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series Fund intends to purchase, against fluctuations in value caused by changes in prevailing rates or market conditions. Under a variety of circumstances, the Series Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts and the underlying hedged assets.

Swap Agreements: The Portfolios may enter into interest rate swap agreements, forward swap spread lock agreements, credit default swap agreements and total return swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Interest rate swap agreements involve the exchange by the Portfolio with another party of their respective commitments to pay or receive interest. Forward spread lock swap agreements involve commitments to pay or receive a settlement amount calculated as the difference between the swap spread and a fixed spread, multiplied by the notional amount times the duration of the swap. The swap spread is the difference between the benchmark swap rate (market rate) and the specific treasury rate. In a credit default swap agreement, one party (the protection buyer) makes a stream of payments to another party (the protection seller) in exchange for the right to receive a specified payment in the event of a default by a third party, typically corporate issues or sovereign issues of an emerging country, on its obligation. The maximum amount of the payment may equal the notional, at par, of the underlying index or security as a result of a default (or “credit event”). In addition to bearing the risk that the credit event will occur, the Portfolios could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index, the possibility that the fund may be unable to close out its position at the same time or at the same price as if it had purchased comparable publicly traded securities, or that the counterparty may default on it s obligation to perform. Total return swap agreements are contracts in which one party agrees to make periodic payments based on the change in market value of the underlying assets, which may include a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market. The swaps are valued daily at current market value and any change in value is included in net unrealized appreciation or depreciation on investments. Payments received or paid by the Portfolio are recorded as realized gains or losses. Risk of loss may exceed amounts recognized on the statements of assets and liabilities. Swap agreements outstanding at period end, if any, are listed on the Schedule of Investments.

Forward currency contracts, written options, short sales, swaps and financial futures contracts may involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities.

Securities Lending: Each Portfolio of the Series Fund may lend its portfolio securities to broker-dealers. The loans are secured by collateral at least equal at all times to the market value of the securities loaned. Loans are subject to termination at the option of the borrower or the Portfolio. Upon termination of the loan, the borrower will return to the Portfolio securities identical to the loaned securities. Should the borrower of the securities fail financially, the Portfolio has the right to repurchase the securities using the collateral in the open market. The Portfolio recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The Portfolio also continues to receive interest and dividends or amounts equivalent thereto on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.

Dollar Rolls: The Fund enters into mortgage dollar rolls in which the Fund sells mortgage securities for delivery in the current month, realizing a gain (loss), and simultaneously contracts to repurchase somewhat similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund is compensated by the interest earned on the cash proceeds of the initial sale and by the lower repurchase price at the future date. The difference between the sales proceeds and the lower repurchase price is recorded as a realized gain. The Fund maintains a segregated account, the dollar value of which is a least equal to its obligations, with respect to dollar rolls.

When-Issued/Delayed Delivery Securities: Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after trade date; interest income is not accrued until settlement date. At the time a Portfolio enters into such transactions, it instructs the custodian to segregate assets with a current value at least equal to the amount of its when-issued or delayed-delivery purchase commitments.

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date; interest income, which is comprised of four elements: stated coupon, original issue discount, market discount and market premium, is recorded on the accrual basis. Expenses are recorded on the accrual basis. The Series Fund’s expenses are allocated to the respective Portfolios on the basis of relative net assets except for Portfolio specific expenses which are attributable directly to a Portfolio or class level.

For Portfolios with multiple classes of shares, net investment income (loss) (other than administration and distribution fees, which are charged to the respective class) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.

Taxes: For federal income tax purposes, each Portfolio in the Series is treated as a separate taxpaying entity. The Portfolios are treated as partnerships for tax purposes. No provision has been made in the financial statements for U.S. federal, state, or local taxes, as any tax liability arising from operations of the Portfolios are the responsibility of their partners. The Portfolios are not subject to income tax. Partners of each Portfolio are subject to taxes on their distributive share of partnership earnings.

Withholding taxes on foreign dividends, interest and capital gains have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and regulations.

Distributions: Distributions from each Portfolio are made in cash and automatically reinvested in additional shares of the same Portfolio. The Diversified Bond and Government Income Portfolios make distributions, if any, quarterly. All other Portfolios’ distributions are generally made on an annual basis. Distributions are recorded on the ex-date.

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

Note 3:

Agreements

The Series Fund has a management agreement with PI. Pursuant to this agreement PI has responsibility for all investment advisory services and supervises the subadvisors performance of such services. PI has entered into subadvisory agreements with Prudential Investment Management, Inc. (“PIM”), Jennison Associates LLC (“Jennison”), LSV Asset Management (“LSV”), Marsico Capital Management, LLC (“Marsico”), Quantitative Management Associates LLC (“QMA”), ClearBridge Advisors LLC (“ClearBridge”), T. Rowe Price Associates, Inc. (“T. Rowe”) and William Blair & Company, L.L.C. (“William Blair”) (collectively, the “Subadvisors”), under which each provides investment advisory services for certain Portfolios of the Series Fund. PI pays for the services of the Subadvisors, compensation of officers of the Series Fund, occupancy and certain clerical and administrative expenses of the Series Fund. The Portfolios bear all other costs and expenses.

The management fee paid to PI is computed daily and payable monthly, at the annual rates specified below, of the value of each of the Portfolio’s average daily net assets.


Portfolio	Management Fee	Effective Management Fee
Conservative Balanced Portfolio	0.55%	0.55	%
Diversified Bond Portfolio	0.40	0.40
Equity Portfolio	0.45	0.45
Flexible Managed Portfolio	0.60	0.60
Global Portfolio	0.75	0.75
Government Income Portfolio	0.40	0.40
Stock Index Portfolio	0.35% up to $4 billion 0.30% over $4 billion	0.35

At December 31, 2007, the Subadvisors that provide investment advisory services to the Portfolios are as follows. Where more than one Subadvisor is listed, each Subadvisor provides services to a segment of the Portfolio:


Portfolio		Subadvisor(s)
Conservative Balanced Portfolio		PIM, QMA
Diversified Bond Portfolio		PIM
Equity Portfolio		Jennison, ClearBridge
Flexible Managed Portfolio		PIM, QMA
Global Portfolio		LSV, Marsico, T. Rowe & William Blair
Government Income Portfolio		PIM
Stock Index Portfolio		QMA

The Series Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class I and Class II shares of the Series Fund. The Series Fund compensates PIMS for distributing and servicing the Series Fund’s Class II shares pursuant to a plan of distribution (the “Class II Plan”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class I shares of the Series Fund. Pursuant to the Class II Plan, the Class II shares of each Portfolio compensate PIMS for distribution-related activities at an annual rate of 0.25% of the average daily net assets of the Class II shares.

The Series Fund has an administration agreement with PI which acts as the administrator of the Class II shares of the Series Fund. The administration fee paid to PI is accrued daily and payable monthly, at the annual rate of 0.15% of the average daily net assets of the Class II shares.

PI has agreed to reimburse each Portfolio (other than Global Portfolio) the portion of the management fee for that Portfolio equal to the amount that the aggregate annual ordinary operating expenses (excluding interest, taxes, and brokerage commissions) exceed the percentage stated below.


Portfolio	Class I Expense Limit		Class II Expense Limit
Conservative Balanced Portfolio	0.75	%*	N/A
Diversified Bond Portfolio	0.75	*	N/A
Equity Portfolio	0.75	*	1.15	%*
Flexible Managed Portfolio	0.75	*	N/A
Government Income Portfolio	0.75		N/A
Stock Index Portfolio	0.75		N/A

N/A – Not applicable – There are no Class II shares outstanding for this Portfolio.

PIMS, PI, PIM, QMA and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

* Effective July 1, 2007, the expense limitation was removed.

Note 4:

Other Transactions with Affiliates

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Series Fund’s transfer agent. Transfer agent’s fees and expenses in the Statements of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

PIM also serves as the Series Fund’s security lending agent. For the year ended December 31, 2007, PIM was compensated as follows for these services by the Series Fund Portfolios:


Portfolio	PIM
Conservative Balanced Portfolio	$	230,375
Diversified Bond Portfolio		101,608
Equity Portfolio		795,224
Flexible Managed Portfolio		385,184
Global Portfolio		90,118
Government Income Portfolio		28,951
Stock Index Portfolio		405,608

Pursuant to an exemptive order received from the Securities and Exchange Commission, certain Portfolios invest in the Taxable Money Market Series and Short-Term Bond Series, both registered under the Investment Company Act of 1940, as amended, and managed by PI and both of which are portfolios of Dryden Core Investment Fund.

Note 5:

Portfolio Securities

The aggregate cost of purchases and the proceeds from the sales of securities (excluding government securities and short-term issues) for the year ended December 31, 2007 were as follows:

Cost of Purchases:


Portfolio
Conservative Balanced Portfolio	$	539,110,792
Diversified Bond Portfolio		721,092,875
Equity Portfolio		2,479,277,686
Flexible Managed Portfolio		2,299,279,757
Global Portfolio		450,420,343
Government Income Portfolio		4,913,674,626
Stock Index Portfolio		106,087,187

Proceeds from Sales:


Portfolio
Conservative Balanced Portfolio	$	737,650,431
Diversified Bond Portfolio		789,737,347
Equity Portfolio		2,854,047,095
Flexible Managed Portfolio		2,459,530,154
Global Portfolio		485,346,725
Government Income Portfolio		4,904,138,704
Stock Index Portfolio		391,257,978

The Conservative Balanced, Diversified Bond, Flexible Managed and Government Income Portfolios’ written options activity for the year ended December 31, 2007 were as follows:


Conservative Balanced Portfolio
	Contracts		Premiums
Balance as of December 31, 2006	—		$	—
Options written	365			100,360
Options terminated in closing purchase transactions	(115	)		(60,375	)
Options expired	(250	)		(39,985	)

Balance as of December 31, 2007	—		$	—

Diversified Bond Portfolio
	Contracts		Premiums
Balance as of December 31, 2006	—		$	—
Options written	932			316,838
Options terminated in closing purchase transactions	(314	)		(204,566	)
Options expired	(618	)		(112,272	)

Balance as of December 31, 2007	—		$	—


Flexible Managed Portfolio
	Contracts		Premiums
Balance as of December 31, 2006	—		$	—
Options written	380			104,326
Options terminated in closing purchase transactions	(120	)		(62,742	)
Options expired	(260	)		(41,584	)

Balance as of December 31, 2007	—		$	—

Government Income Portfolio
	Contracts		Premiums
Balance as of December 31, 2006	—		$	—
Options written	324			114,824
Options terminated in closing purchase transactions	(97	)		(63,357	)
Options expired	(227	)		(51,467	)

Balance as of December 31, 2007	—		$	—

Note 6:

Tax Information

For federal income tax purposes, each Portfolio in the Trust is treated as a separate taxpaying entity. After January 2, 2006, the Portfolios are treated as partnerships for tax purposes. No provision has been made in the financial statements for U.S. Federal, state, or local taxes, as any tax liability arising from operations of the Portfolios are the responsibility of their partners. The Portfolios are not subject to tax. Partners of each Portfolio are subject to taxes on their distributive share of partnership items. The Portfolios’ federal and state income tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Prior to January 2, 2006 each Portfolio qualified as a regulated investment company under the Internal Revenue Code and distributed all of its taxable income, including any net realized gains on investments, to shareholders.

With respect to the Portfolios, book cost of assets differs from tax cost of assets as a result of each Portfolio’s adoption of a mark to market method of accounting for tax purposes. Under this method, tax cost of assets will approximate its fair market value.

Note 7:

Capital

The Series Fund offers Class I and Class II shares. Neither Class I nor Class II shares of a Portfolio are subject to any sales charge or redemption charge and are sold at the net asset value of the Portfolio. Class I shares are sold only to certain separate accounts of Prudential to fund benefits under certain variable life insurance and variable annuity contracts (“contracts”). Class II shares are sold only to separate accounts of non-Prudential insurance companies as investment options under certain contracts. The separate accounts invest in shares of the Series Fund through subaccounts that correspond to the Portfolios. The separate accounts will redeem shares of the Series Fund to the extent necessary to provide benefits under the contracts or for such other purposes as may be consistent with the contracts. As of December 31, 2007, the Equity Portfolio had Class II shares outstanding.

Transactions in shares of beneficial interest of the Equity Portfolio was as follows:



Equity Portfolio:
Class I	Shares		Amount
Year ended December 31, 2007:
Series shares sold	1,031,862		$	29,740,507
Series shares issued in reinvestment of distributions	1,691,265			49,976,890
Series shares repurchased	(14,024,490	)		(407,692,362	)

Net increase (decrease) in shares outstanding	(11,301,363	)	$	(327,974,965	)

Year ended December 31, 2006:
Series shares sold	2,168,346		$	55,202,137
Series shares issued in reinvestment of distributions	1,669,920			46,000,931
Series shares repurchased	(17,323,133	)		(442,264,123	)

Net increase (decrease) in shares outstanding	(13,484,867	)	$	(341,061,055	)


Class II
Year ended December 31, 2007:
Series shares sold	2,870		$	85,699
Series shares issued in reinvestment of distributions	322			9,549
Series shares repurchased	(29,757	)		(885,730	)

Net increase (decrease) in shares outstanding	(26,565	)	$	(790,482	)

Year ended December 31, 2006:
Series shares sold	50,883		$	1,337,701
Series shares issued in reinvestment of distributions	409			11,345
Series shares repurchased	(65,345	)		(1,667,596	)

Net increase (decrease) in shares outstanding	(14,053	)	$	(318,550	)

Note 8:

Borrowings

The Series Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with two banks. The SCA provides for a commitment of $500 million. Interest on any borrowings under the SCA is incurred at contracted market rates and a commitment fee for the unused amount is accrued daily and paid quarterly. Effective October 26, 2007, the Funds renewed the SCA with the banks. The Funds pay a commitment fee of .06 of 1% of the unused portion of the renewed SCA. The expiration date of the renewed SCA will be October 24, 2008. For the period from October 27, 2006 through October 26, 2007, the Funds paid a commitment fee of .07 of 1% of the unused portion of the agreement. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The Portfolios did not borrow any amounts pursuant to the SCA during the year ended December 31, 2007.

Note 9:

Ownership and Affiliates

As of December 31, 2007, all of Class I shares of each Portfolio were owned of record by the Prudential Insurance Company of America (“PICA”) on behalf of the owners of the variable insurance products issued by PICA.

Note 10:

New Accounting Pronouncements

On September 20, 2006, the Financial Accounting Standard Board (“FASB”) released Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (FAS 157). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact, if any, in the financial statements has not yet been determined.

Financial Highlights


	Conservative Balanced Portfolio
	Year Ended December 31,
	2007(c)			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	16.21		$	15.09		$	15.10		$	14.34		$	12.43

Income From Investment Operations:
Net investment income		.50			.48			.38			.34			.28
Net realized and unrealized gain on investments		.49			1.06			.11			.78			1.99

Total from investment operations		.99			1.54			.49			1.12			2.27

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.35	)		(.28	)		(.36	)
Distributions from net realized gains		—			—			(.15	)		(.08	)		—
Distributions		(.51	)		(.42	)		—			—			—

Total dividends and distributions		(.51	)		(.42	)		(.50	)		(.36	)		(.36	)

Net Asset Value, end of year	$	16.69		$	16.21		$	15.09		$	15.10		$	14.34

Total Return(a)		6.12	%		10.44	%		3.43	%		8.04	%		18.77	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	2,721.9		$	2,770.6		$	2,749.8		$	2,893.6		$	2,895.0
Ratios to average net assets(b):
Expenses		.59	%		.57	%		.58	%		.59	%		.58	%
Net investment income		2.95	%		2.97	%		2.45	%		2.27	%		2.02	%
Portfolio turnover rate		178	%		114	%		110	%		153	%		248	%

(a)

Total return is calculated assuming a purchase of a share 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 return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to generally accepted accounting principles.

(b)	Does not include expenses of the underlying portfolios in which the Portfolio invests.

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


	Diversified Bond Portfolio
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	10.85		$	10.96		$	11.28		$	11.17		$	10.82

Income From Investment Operations:
Net investment income		.58			.57			.55			.52			.45
Net realized and unrealized gain (loss) on investments		.02			(.05	)		(.20	)		.09			.35

Total from investment operations		.60			.52			.35			.61			.80

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.59	)		(.50	)		(.45	)
Distributions from net realized gains		—			—			(.08	)		—			—
Distributions		(.55	)		(.63	)		—			—			—

Total dividends and distributions		(.55	)		(.63	)		(.67	)		(.50	)		(.45	)

Net Asset Value, end of year	$	10.90		$	10.85		$	10.96		$	11.28		$	11.17

Total Return(a)		5.71	%		4.98	%		3.28	%		5.59	%		7.49	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	1,218.3		$	1,150.4		$	1,230.6		$	1,283.7		$	1,418.0
Ratios to average net assets(b):
Expenses		.44	%		.45	%		.45	%		.45	%		.44	%
Net investment income		5.39	%		5.18	%		4.81	%		4.57	%		4.02	%
Portfolio turnover rate		476	%		393	%		278	%		382	%		706	%

(a)

(b)	Does not include expenses of the underlying portfolios in which the Portfolio invests.

SEE NOTES TO FINANCIAL STATEMENTS.

Financial Highlights


	Equity Portfolio Class I
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	27.45		$	24.64		$	22.31		$	20.55		$	15.75

Income From Investment Operations:
Net investment income		.35			.30			.24			.28			.17
Net realized and unrealized gain on investments		2.21			2.80			2.32			1.75			4.81

Total from investment operations		2.56			3.10			2.56			2.03			4.98

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.23	)		(.27	)		(.18	)
Distributions		(.34	)		(.29	)		—			—			—

Total dividends and distributions		(.34	)		(.29	)		(.23	)		(.27	)		(.18	)

Net Asset Value, end of year	$	29.67		$	27.45		$	24.64		$	22.31		$	20.55

Total Return(a)		9.32	%		12.57	%		11.47	%		9.93	%		31.65	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	4,423.9		$	4,402.7		$	4,283.9		$	4,135.7		$	4,012.3
Ratios to average net asset(b):
Expenses		.47	%		.47	%		.47	%		.48	%		.49	%
Net investment income		1.16	%		1.10	%		1.01	%		1.29	%		.96	%
Portfolio turnover rate		57	%		60	%		77	%		50	%		54	%

(a)

(b)	Does not include expenses of the underlying portfolio in which the Portfolio invests.


	Equity Portfolio Class II
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	27.52		$	24.69		$	22.34		$	20.58		$	15.76

Income From Investment Operations:
Net investment income		.28			.19			.12			.20			.08
Net realized and unrealized gain on investments		2.20			2.80			2.35			1.74			4.83

Total from investment operations		2.48			2.99			2.47			1.94			4.91

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.12	)		(.18	)		(.09	)
Distributions		(.19	)		(.16	)		—			—			—

Total dividends and distributions		(.19	)		(.16	)		(.12	)		(.18	)		(.09	)

Net Asset Value, end of year	$	29.81		$	27.52		$	24.69		$	22.34		$	20.58

Total Return(a)		8.91	%		12.13	%		11.04	%		9.51	%		31.11	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	1.3		$	1.9		$	2.1		$	1.1		$	0.8
Ratios to average net asset(b):
Expenses		.87	%		.87	%		.87	%		.88	%		.89	%
Net investment income		.74	%		.71	%		.64	%		.91	%		.54	%
Portfolio turnover rate		57	%		60	%		77	%		50	%		54	%

(a)

(b)	Does not include expenses of the underlying portfolio in which the Portfolio invests.

SEE NOTES TO FINANCIAL STATEMENTS.

Financial Highlights


	Flexible Managed Portfolio
	Year Ended December 31,
	2007			2006			2005(b)			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	18.36		$	16.92		$	16.58		$	15.19		$	12.55

Income From Investment Operations:
Net investment income		.50			.44			.32			.29			.22
Net realized and unrealized gain on investments		.65			1.59			.34			1.32			2.70

Total from investment operations		1.15			2.03			.66			1.61			2.92

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.32	)		(.22	)		(.28	)
Distributions		(1.21	)		(.59	)		—			—			—

Total dividends and distributions		(1.21	)		(.59	)		(.32	)		(.22	)		(.28	)

Net Asset Value, end of year	$	18.30		$	18.36		$	16.92		$	16.58		$	15.19

Total Return(a)		6.30	%		12.17	%		4.16	%		10.74	%		23.76	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	3,716.3		$	3,723.6		$	3,543.9		$	3,883.5		$	3,693.6
Ratios to average net asset(c):
Expenses		.63	%		.62	%		.63	%		.62	%		.62	%
Net investment income		2.53	%		2.48	%		1.95	%		1.83	%		1.55	%
Portfolio turnover rate		212	%		153	%		126	%		150	%		204	%

(a)

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

(c)	Does not include expenses of the underlying portfolios in which the Portfolio invests.


	Global Portfolio
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	22.53		$	18.96		$	16.43		$	15.14		$	11.35

Income From Investment Operations:
Net investment income		.36			.26			.13			.11			.10
Net realized and unrealized gain on investments		2.00			3.44			2.50			1.33			3.74

Total from investment operations		2.36			3.70			2.63			1.44			3.84

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.10	)		(.15	)		(.05	)
Distributions		(.27	)		(.13	)		—			—			—

Total dividends and distributions		(.27	)		(.13	)		(.10	)		(.15	)		(.05	)

Net Asset Value, end of year	$	24.62		$	22.53		$	18.96		$	16.43		$	15.14

Total Return(a)		10.48	%		19.65	%		16.06	%		9.59	%		34.07	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	985.0		$	932.9		$	814.1		$	691.1		$	665.6
Ratios to average net asset(b):
Expenses		.81	%		.84	%		.82	%		.84	%		.87	%
Net investment income		1.43	%		1.24	%		.77	%		.67	%		.78	%
Portfolio turnover rate		48	%		50	%		155	%		128	%		88	%

(a)

Total return is calculated assuming a purchase of a share 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 return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown, Performance figures may reflect voluntary fee waivers and/or expense reimbursements. In the absence of voluntary fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to generally accepted accounting principles.

(b)	Does not include expenses of the underlying portfolio in which the Portfolio invests.

SEE NOTES TO FINANCIAL STATEMENTS.

Financial Highlights


	Government Income Portfolio
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	11.26		$	11.40		$	11.65		$	11.92		$	12.50

Income From Investment Operations:
Net investment income		.53			.54			.49			.49			.46
Net realized and unrealized gain (loss) on investments		.10			(.13	)		(.20	)		(.13	)		(.15	)

Total from investment operations		.63			.41			.29			.36			.31

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.54	)		(.44	)		(.46	)
Distributions from net realized gains		—			—			—			(.19	)		(.43	)
Distributions		(.51	)		(.55	)		—			—			—

Total dividends and distributions		(.51	)		(.55	)		(.54	)		(.63	)		(.89	)

Net Asset Value, end of year	$	11.38		$	11.26		$	11.40		$	11.65		$	11.92

Total Return(a)		5.70	%		3.74	%		2.51	%		3.12	%		2.46	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	340.3		$	354.3		$	378.2		$	420.2		$	461.5
Ratios to average net asset(b):
Expenses		.52	%		.50	%		.47	%		.47	%		.46	%
Net investment income		4.62	%		4.75	%		4.16	%		4.07	%		3.76	%
Portfolio turnover rate		2377	%		734	%		507	%		617	%		695	%

(a)

Total return is calculated assuming a purchase of a share 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 return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect voluntary fee waivers and/or expense reimbursements. In the absense of voluntary fee waivers and /or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to generally accepted accounting principles.

(b)	Does not include expenses of the underlying portfolios in which the Portfolio invests.


	Stock Index Portfolio
	Year Ended December 31,
	2007			2006			2005			2004			2003
Per Share Operating Performance:
Net Asset Value, beginning of year	$	35.64		$	31.41		$	31.29		$	29.29		$	24.09

Income From Investment Operations:
Net investment income		.68			.56			.48			.50			.36
Net realized and unrealized gain on investments		1.14			4.31			.88			2.50			6.14

Total from investment operations		1.82			4.87			1.36			3.00			6.50

Less Dividends and Distributions:
Dividends from net investment income		—			—			(.47	)		(.49	)		(.37	)
Distributions from net realized gains		—			—			(.77	)		(.51	)		(.93	)
Distributions		(.62	)		(.64	)		—			—			—

Total dividends and distributions		(.62	)		(.64	)		(1.24	)		(1.00	)		(1.30	)

Net Asset Value, end of year	$	36.84		$	35.64		$	31.41		$	31.29		$	29.29

Total Return(a)		5.10	%		15.54	%		4.54	%		10.45	%		28.18	%
Ratios/Supplemental Data:
Net assets, end of year (in millions)	$	3,122.4		$	3,306.4		$	3,212.7		$	3,094.7		$	2,940.9
Ratios to average net assets(b):
Expenses		.37	%		.37	%		.38	%		.38	%		.37	%
Net investment income		1.73	%		1.61	%		1.52	%		1.64	%		1.42	%
Portfolio turnover rate		3	%		3	%		7	%		3	%		2	%

(a)

(b)	Does not include expenses of the underlying portfolio in which the Portfolio invests.

SEE NOTES TO FINANCIAL STATEMENTS.

Report Of Independent Registered Public Accounting Firm

THE BOARD OF TRUSTEES AND SHAREHOLDERS OF THE PRUDENTIAL SERIES FUND:

We have audited the accompanying statements of assets and liabilities of The Prudential Series Fund (comprised of Conservative Balanced Portfolio, Diversified Bond Portfolio, Equity Portfolio, Flexible Managed Portfolio, Global Portfolio, Government Income Portfolio and Stock Index Portfolio, hereafter referred to as the “Funds”), including the portfolios of investments, as of December 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the four-year period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended December 31, 2003 were audited by another independent registered public accounting firm, whose report dated February 20, 2004, expressed an unqualified opinion thereon. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Funds as of December 31, 2007, and the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the four-year period then ended, in conformity with U.S. generally accepted accounting principles.

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New York, New York

February 19, 2008

MANAGEMENT OF THE FUND

(Unaudited)

Information pertaining to the Trustees of the Fund is set forth below. Trustees who are not deemed to be “interested persons” of the Fund as defined in the Investment Company Act are referred to as “Independent Trustees.” Trustees who are deemed to be “interested persons” of the Fund are referred to as “Interested Trustees.” “Fund Complex” consists of the Fund and any other investment companies managed by PI.


Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Number of Portfolios In Fund Complex Overseen by Trustee	Other Directorships Held by the Trustee****

Saul K. Fenster, Ph.D. (74)	Trustee, Since 1983	87	Member (since 2006), Board of The Ridgefield Foundation and The Leir Foundation; Board of Directors of IDT Corporation (2000-2006)

Principal Occupations During Past 5 Years – Currently President Emeritus of New Jersey Institute of Technology (since 2002); formerly President (1978-2002) of New Jersey Institute of Technology; Commissioner (1998-2002) of the Middle States Association Commission on Higher Education; Commissioner (1985-2002) of the New Jersey Commission on Science and Technology; formerly Director (1998-2005) of Society of Manufacturing Engineering Education Foundation; formerly Director of Prosperity New Jersey; formerly a director or trustee of Liberty Science Center, Research and Development Council of New Jersey, New Jersey State Chamber of Commerce, and National Action Council for Minorities in Engineering.

Delayne Dedrick Gold (69)	Trustee, Since 2001	86	—

Principal Occupations During Past 5 Years – Marketing Consultant (1982-present); formerly Senior Vice President and Member of the Board of Directors, Prudential Bache Securities, Inc.

W. Scott McDonald, Jr. (70)	Independent Vice Chair since 2004 and Trustee, Since 1983	87	—

Principal Occupations During Past 5 Years – Formerly Management Consultant (1997-2004) and of Counsel (2004-2005) at Kaludis Consulting Group, Inc. (company serving higher education); Formerly principal (1995-1997), Scott McDonald & Associates; Chief Operating Officer (1991-1995), Fairleigh Dickinson University; Executive Vice President and Chief Operating Officer (1975-1991), Drew University; interim President (1988-1990), Drew University; formerly Director of School, College and University Underwriters Ltd.

Thomas T. Mooney (66)	Independent Chair and Trustee, Since 2001	86	—

Principal Occupations During Past 5 Years – Formerly Chief Executive Officer, Excell Partners, Inc.; formerly President of the Greater Rochester Metro Chamber of Commerce, Rochester City Manager; formerly Deputy Monroe County Executive.

Thomas M. O’Brien (57)	Trustee, Since 2003	86	Formerly Director (December 1996-May 2000) of North Fork Bancorporation, Inc.; Formerly Director (May 2000-April 2006) of Atlantic Bank of New York; Director (since November 2006) of State Bancorp, Inc. (NASDAQ: STBC) and State Bank of Long Island.

Principal Occupations During Past 5 Years – President and COO (since November 2006) and CEO (since April 2007) of State Bancorp, Inc. and State Bank; Vice Chairman (January 1997-April 2000) of North Fork Bank; President and Chief Executive Officer (December 1984-December 1996) of North Side Savings Bank; formerly President and Chief Executive Officer (May 2000-June 2006) Atlantic Bank of New York.

John A. Pileski (68)	Trustee, Since 2003	86	Director (since April 2001) of New York Bank Corp; Director (since May 1980) of Surf Club of Quogue, Inc.

Principal Occupations During Past 5 Years – Retired (June 2000) Tax Partner of KPMG, LLP.

F. Don Schwartz (72)	Trustee, Since 2003	86	—

Principal Occupations During Past 5 Years – Management Consultant (since April 1985).



Interested Trustees
Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Number of Portfolios In Fund Complex Overseen by Trustee	Other Directorships Held by the Trustee****

*David R. Odenath (50)	President since 2002 and Trustee Since 1999	86	—

Principal Occupations During Past 5 Years – President of Prudential Annuities (since August 2002); Senior Vice President (since June 1999) of Prudential; Director (since June 2005) and Executive Vice President (since March 2006) of AST Investment Services, Inc; formerly Executive Vice President (May 2003-November 2007) of Prudential Investment Management Services LLC; formerly President, Chief Executive Officer, Chief Operating Officer and Officer in Charge (June 2005-March 2006) of AST Investment Services, Inc.

*Robert F. Gunia (61)	Vice President and Trustee Since 2001	149	Vice President and Director (since May 1989); Treasurer (since 1999) of The Asia Pacific Fund, Inc. and Vice President (since January 2007) of The Greater China Fund, Inc.

Principal Occupations During Past 5 Years – Chief Administrative Officer (since September 1999) and Executive Vice President (since December 1996) of Prudential Investments LLC; President (since April 1999) of Prudential Investment Management Services LLC; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; Chief Administrative Officer, Executive Vice President and Director (since May 2003) of AST Investment Services, Inc.



Officers
Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Principal Occupations During Past 5 Years

Grace C. Torres (48)	Treasurer and Principal Financial and Accounting Officer Since 1997	Assistant Treasurer (since March 1999) and Senior Vice President (since September 1999) of PI; Assistant Treasurer (since May 2003) and Vice President (since June 2005) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (since May 2003) of Prudential Annuities Advisory Services, Inc.; formerly Senior Vice President (May 2003-June 2005) of AST Investment Services, Inc.

Kathryn L. Quirk (55)	Chief Legal Officer Since 2005	Vice President and Corporate Counsel (since September 2004) of Prudential; Executive Vice President, Chief Legal Officer and Secretary (since July 2005) of PI and Prudential Mutual Fund Services LLC; Vice President and Corporate Counsel (since June 2005) and Secretary (since February 2006) of AST Investment Services, Inc.; formerly Senior Vice President and Assistant Secretary (November 2004-August 2005) of PI; formerly Assistant Secretary (June 2005-February 2006) of AST Investment Services, Inc.; formerly Managing Director, General Counsel, Chief Compliance Officer, Chief Risk Officer and Corporate Secretary (1997-2002) of Zurich Scudder Investments, Inc.

Deborah A. Docs (50)	Secretary Since 2005	Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of PI; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Jonathan D. Shain (49)	Assistant Secretary Since 2005	Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of PI; Vice President and Assistant Secretary (since February 2001) of PMFS; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

Claudia DiGiacomo (33)	Assistant Secretary Since 2005	Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1999-2004).

John P. Schwartz (36)	Assistant Secretary Since 2006	Vice President and Corporate Counsel (since April 2005) of Prudential; Vice President and Assistant Secretary of PI (since December 2005); Associate at Sidley Austin Brown & Wood LLP (1997-2005).

Timothy J. Knierim (49)	Chief Compliance Officer Since 2007	Chief Compliance Officer of Prudential Investment Management, Inc. (since July 2007); formerly Chief Risk Officer of PIM and PI (2002-2007) and formerly Chief Ethics Officer of PIM and PI (2006-2007).


Name, Address**, and Age	Position with Fund* Term of Office*** Length of Time Served	Principal Occupations During Past 5 Years

Valerie M. Simpson (49)	Deputy Chief Compliance Officer Since 2007	Chief Compliance Officer (since April 2007) of PI and AST Investment Services, Inc.; formerly Vice President-Financial Reporting (June 1999-March 2006) for Prudential Life and Annuities Finance.

M. Sadiq Peshimam (44)	Assistant Treasurer Since 2006	Vice President (since 2005) and Director (2000-2005) within Prudential Mutual Fund Administration.

Peter Parrella (49)	Assistant Treasurer Since 2007	Vice President (since 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004).

Alan Fu (51)	Assistant Treasurer Since 2006	Vice President – Tax, The Prudential Insurance Company of America (1999-October 2003); Vice President and Corporate Counsel – Tax, Prudential Financial, Inc. (since October 2003).

Andrew R. French (45)	Assistant Secretary Since 2006	Director and Corporate Counsel (since May 2006) of Prudential; Vice President and Assistant Secretary (since January 2007) of PI; Vice President and Assistant Secretary (since January 2007) of PMFS; formerly Senior Legal Analyst of Prudential Mutual Fund Law Department (1997-2006).

Noreen M. Fierro (43)	Anti-Money Laundering Compliance Officer Since 2006	Vice President, Corporate Compliance (since May 2006) of Prudential; formerly Corporate Vice President, Associate General Counsel (April 2002-May 2005) of UBS Financial Services, Inc., in their Money Laundering Prevention Group; Senior Manager (May 2005-May 2006) of Deloitte Financial Advisory Services, LLP, in their Forensic and Dispute Services, Anti-Money Laundering Group.

* “Interested” Trustee, as defined in the Investment Company Act, by reason of employment with the Manager (as defined below), and/or the Distributor (as defined below).

** Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102.

*** There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy, which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75. The table shows how long they have served as Trustee and/or Officer.

The Prudential Series Fund

Approval of Advisory Agreements

At meetings of the Board held on September 12-13, 2007, the Trustees, including the Independent Trustees, unanimously approved the recommendations by Prudential Investments LLC (PI) to appoint Marsico Capital Management LLC (“Marsico”) as a subadviser with respect to the Global Portfolio and the SP International Growth Portfolio (each, a Portfolio, and collectively, the Portfolios) and to approve new subadvisory agreements between PI and Marsico (the “Subadvisory Agreements”).

The Board considered that, on June 14, 2007, Marsico and Bank of America Corporation (BAC) announced they had signed a definitive agreement by which Marsico would acquire ownership of the firm from BAC (the Transaction). The Transaction was completed on December 14, 2007, at which time Marsico began operating as an independent entity under the leadership of Thomas F. Marsico. The Board also considered that, although there were no changes in the Marsico portfolio management teams as a result of the Transaction, each Portfolio’s prior subadvisory agreement with Marsico would be automatically terminated as a result of a change in control.

Board Consideration of Subadvisory Agreement:

The Board of Trustees considered whether the approval of the Subadvisory Agreements with Marsico was in the best interests of each Portfolio and its shareholders. Before approving the Subadvisory Agreements, the Trustees reviewed performance, compliance and organization materials regarding Marsico and received presentations from PI. The Board also received materials relating to the Subadvisory Agreements and had the opportunity to ask questions and request further information in connection with its consideration. In making the determination to retain Marsico as a subadviser, the Trustees, including the Independent Trustees advised by independent legal counsel, considered the following information:

Nature, Quality and Extent of Services. The Board received and considered information regarding the nature and extent of services to be provided to each Portfolio by Marsico under the Subadvisory Agreements, namely, that Marsico would provide day-to-day portfolio management services and comply with all Portfolio policies and applicable rules and regulations. The Board also noted that the nature and extent of services provided to each Portfolio under the prior subadvisory agreement with Marsico were identical in all material respects to those to be provided by Marsico under the Subadvisory Agreements and generally similar to those provided by the other current subadvisers under their subadvisory agreements.

With respect to the quality of services, the Board considered, among other things, the background and experience of Marsico’s portfolio management team, which was not affected by the Transaction. In connection with the recent annual review of advisory agreements, the Board had reviewed the qualifications, backgrounds and responsibilities of the portfolio managers who are responsible for the day-to-day management of each Portfolio, and the Board was provided with information pertaining to Marsico’s organizational structure, senior management, investment operations, and other relevant information pertaining to Marsico. The Board noted that it received a favorable compliance report from the Trust’s Chief Compliance Officer (CCO) as to Marsico.

The Board concluded that it was satisfied with the nature, extent and quality of the investment subadvisory services provided to each Portfolio by Marsico under the prior subadvisory agreement and that there was a reasonable basis on which to conclude that the quality of investment subadvisory services to be provided by Marsico under the Subadvisory Agreements should equal the quality of similar services provided by Marsico under the prior subadvisory agreements.

Performance of Marsico. The Board noted that at its June 2007 meetings, it had reviewed the performance of each of the Portfolios subadvised by Marsico in connection with its annual consideration of the renewal of the Portfolios’ subadvisory agreements. As part of that review, the Board reviewed the performance record of each Portfolio, and at that time reached the following conclusions:

•

With respect to the SP International Growth Portfolio, the Board noted that Marsico had assumed responsibility for a portion of the Portfolio’s assets in late 2006, and that in light of Marsico’s limited performance record, it was reasonable to approve Marsico’s subadvisory agreement.

•

With respect to the Global Portfolio, the Board noted that Marsico had assumed responsibility for a portion of the Portfolio’s assets in December 2005, and that in light of the limited performance history, it was reasonable to approve Marsico’s subadvisory agreement.

Investment Subadvisory Fee Rate. The Board also considered, among other things, that the proposed fee rates payable under the Subadvisory Agreements are identical to the fee rates payable under the prior subadvisory agreement. The Board noted that it had recently reviewed the fee rates paid to Marsico in connection with the recent annual review of advisory agreements and determined that the fee rates were reasonable. The Board concluded that Marsico’s proposed subadvisory fee rates under the Subadvisory Agreements were reasonable.

Profitability. In connection with its recent annual review of advisory agreements, the Board considered the profitability of PI and subadvisers affiliated with PI. The Board concluded that the level of profitability of a subadviser not affiliated with PI, such as Marsico, may not be as significant as PI’s profitability given the arm’s length nature of the process by which the subadvisory fee rates were negotiated by PI and the unaffiliated subadvisers, as well as the fact that PI compensates the subadvisers out of its management fee.

Economies of Scale. In connection with its recent annual review of advisory agreements, the Board considered economies of scale. The Board noted that there was no proposed change in fee rates and breakpoints and that it would again review economies of scale at the next annual review of advisory agreements.

Other Benefits to the Subadviser or its Affiliates from Serving as Subadviser. The Board considered potential “fall-out” or ancillary benefits anticipated to be received by Marsico and its affiliates as a result of Marsico’s relationship with the Portfolios. The Board concluded that any potential benefits to be derived by Marsico included its ability to use soft dollar credits, brokerage commissions received by affiliates of Marsico, potential access to additional research resources, larger assets under management and benefits to the reputation, which were consistent with those generally derived by subadvisers to mutual funds.

The toll-free number shown below can be used to make transfers and reallocations, review how your premiums are being allocated, and receive current investment option values in your contract. Unit values for each investment option are available to all participants from the toll-free number. The phone lines are open each business day during the hours shown. Please be sure to have your contract number available when you call.

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In the past, participants who held several variable contracts at the same address received multiple copies of annual and semiannual reports. In an effort to lessen waste and reduce expenses of postage and printing, we will attempt to mail only one copy of this report, based on our current records for participants with the same last name and same address. No action on your part is necessary. Upon request, we will furnish you with additional reports. The toll-free number listed on the inside back cover should be used to request additional copies. Proxy material and tax information will continue to be sent for each account of record.

The Prudential Insurance Company of America

751 Broad Street

Newark NJ 07102-3777

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Presorted

Standard

U.S. Postage

PAID

Prudential

IFS-A114833 MD.RS.011 Ed. 2/28/2008

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Item 2 – Code of Ethics — See Exhibit (a)

As of the end of the period covered by this report, the registrant has adopted a code of ethics (the “Section 406 Standards for Investment Companies – Ethical Standards for Principal Executive and Financial Officers”) that applies to the registrant’s Principal Executive Officer and Principal Financial Officer; the registrant’s Principal Financial Officer also serves as the Principal Accounting Officer.

The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant 973-367-7521, and ask for a copy of the Section 406 Standards for Investment Companies—Ethical Standards for Principal Executive and Financial Officers.

Item 3 – Audit Committee Financial Expert –

The registrant’s Board has determined that Mr. David E. A. Carson, member of the Board’s Audit Committee is an “audit committee financial expert,” and that he is “independent,” for purposes of this Item.

Item 4 – Principal Accountant Fees and Services –

(a)	Audit Fees

For the fiscal years ended December 31, 2007 and December 31, 2006 KPMG LLP (“KPMG”), the Registrant’s principal accountant, billed the Registrant $15,935 and $13,400 respectively, for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings.

(b)	Audit-Related Fees

None.

(c)

Tax Fees

None.

(d)	All Other Fees

None.

(e)(1)

Audit Committee Pre-Approval Policies and Procedures

THE PRUDENTIAL MUTUAL FUNDS

AUDIT COMMITTEE POLICY

Pre-Approval of Services Provided by the Independent Accountants

The Audit Committee of each Prudential Mutual Fund is charged with the responsibility to monitor the independence of the Fund’s independent accountants. As part of this responsibility, the Audit Committee must pre-approve any independent accounting firm’s engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants, the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant’s independence. The Committee’s evaluation will be based on:

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a review of the nature of the professional services expected to be provided,

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a review of the safeguards put into place by the accounting firm to safeguard independence, and

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periodic meetings with the accounting firm.

Policy for Audit and Non-Audit Services Provided to the Funds

On an annual basis, the scope of audits for each Fund, audit fees and expenses, and audit-related and non-audit services (and fees proposed in respect thereof) proposed to be performed by the Fund’s independent accountants will be presented by the Treasurer and the independent accountants to the Audit Committee for review and, as appropriate, approval prior to the initiation of such services. Such presentation shall be accompanied by confirmation by both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants. Proposed services shall be described in sufficient detail to enable the Audit Committee to assess the appropriateness of such services and fees, and the compatibility of the provision of such services with the auditor’s independence. The Committee shall receive periodic reports on the progress of the audit and other services which are approved by the Committee or by the Committee Chair pursuant to authority delegated in this Policy.

The categories of services enumerated under “Audit Services”, “Audit-related Services”, and “Tax Services” are intended to provide guidance to the Treasurer and the independent accountants as to those categories of services which the Committee believes are generally consistent with the independence of the independent accountants and which the Committee (or the Committee Chair) would expect upon the presentation of specific proposals to pre-approve. The enumerated categories are not intended as an exclusive list of audit, audit-related or tax services, which the Committee (or the Committee Chair) would consider for pre-approval.

Audit Services

The following categories of audit services are considered to be consistent with the role of the Fund’s independent accountants:

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Annual Fund financial statement audits

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Seed audits (related to new product filings, as required)

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SEC and regulatory filings and consents

Audit-related Services

The following categories of audit-related services are considered to be consistent with the role of the Fund’s independent accountants:

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Accounting consultations

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Fund merger support services

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Agreed Upon Procedure Reports

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Attestation Reports

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Other Internal Control Reports

Individual audit-related services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

Tax Services

The following categories of tax services are considered to be consistent with the role of the Fund’s independent accountants:

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Tax compliance services related to the filing or amendment of the following:

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Federal, state and local income tax compliance; and,

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Sales and use tax compliance

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Timely RIC qualification reviews

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Tax distribution analysis and planning

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Tax authority examination services

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Tax appeals support services

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Accounting methods studies

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Fund merger support services

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Tax consulting services and related projects

Individual tax services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000.

Other Non-audit Services

Certain non-audit services that the independent accountants are legally permitted to render will be subject to pre-approval by the Committee or by one or more Committee members to whom the Committee has delegated this authority and who will report to the full Committee any pre-approval

decisions made pursuant to this Policy. Non-audit services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Proscribed Services

The Fund’s independent accountants will not render services in the following categories of non-audit services:

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Bookkeeping or other services related to the accounting records or financial statements of the Fund

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Financial information systems design and implementation

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Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

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Actuarial services

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Internal audit outsourcing services

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Management functions or human resources

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Broker or dealer, investment adviser, or investment banking services

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Legal services and expert services unrelated to the audit

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Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval of Non-Audit Services Provided to Other Entities Within the Prudential Fund Complex

Certain non-audit services provided to Prudential Investments LLC or any of its affiliates that also provide ongoing services to the Prudential Mutual Funds will be subject to pre-approval by the Audit Committee. The only non-audit services provided to these entities that will require pre-approval are those related directly to the operations and financial reporting of the Funds. Individual projects that are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $50,000. Services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Although the Audit Committee will not pre-approve all services provided to Prudential Investments LLC and its affiliates, the Committee will receive an annual report from the Fund’s independent accounting firm showing the aggregate fees for all services provided to Prudential Investments and its affiliates.

(e)(2)

Percentage of services referred to in 4(b)- (4)(d) that were approved by the audit committee –

Not applicable.

(f)	Percentage of hours expended attributable to work performed by other than full time employees of principal accountant if greater than 50%.

Not applicable.

(g)	Non-Audit Fees

Not applicable to Registrant for the fiscal years 2007 and 2006. The aggregate non-audit fees billed by KPMG for services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant for the fiscal years 2007 and 2006 was $57,200 and $317,300, respectively.

(h)	Principal Accountant’s Independence

Not applicable as KPMG has not provided non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.

Item 5 – Audit Committee of Listed Registrants – Not applicable.

Item 6 – Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.

Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not applicable.

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

Item 10 – Submission of Matters to a Vote of Security Holders – Not applicable.

Item 11 – Controls and Procedures

(a)

It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b)

There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits


(a)	(1)	Code of Ethics – Attached hereto as Exhibit EX-99.CODE-ETH

	(2)	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.

	(3)	Any written solicitation to purchase securities under Rule 23c-1. – Not applicable.

(b)	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)		The Prudential Variable Contract Account—11



By (Signature and Title)*		/s/ Deborah A. Docs
		Deborah A. Docs
		Secretary



Date		February 20, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)*		/s/ Judy A. Rice
		Judy A. Rice
		President and Principal Executive Officer



Date		February 20, 2008



By (Signature and Title)*		/s/ Grace C. Torres
		Grace C. Torres
		Treasurer and Principal Financial Officer



Date		February 20, 2008

*	Print the name and title of each signing officer under his or her signature.

Prudential Variable Contract Account 11 N-CSRCertified annual shareholder report (management investment company)