AS FILED WITH THE SEC ON APRIL 21, 2006
REGISTRATION NO. 333-103474
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 6
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PRUCO LIFE INSURANCE COMPANY
(Exact Name of Registrant)
ARIZONA
(State or other jurisdiction of incorporation or organization)
22-194455
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-7333
(Address and telephone number of principal executive offices)
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name, address, and telephone number of agent for service)
Copies to:
C. CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-6997
Approximate date of commencement of proposed sale to the public--May 1, 2006
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH AMOUNT PROPOSED PROPOSED AMOUNT OF
CLASS OF SECURITIES TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED* PRICE PER UNIT* OFFERING PRICE FEE**
- -------------------------- ------------ ---------------- ----------------- ------------
Market-value adjustment
annuity contracts
(or modified guaranteed
annuity contracts) $200,000,000 $200,000,000 $-0-
- ----------
* Securities are not issued in predetermined units.
** Registration fee for these securities was paid at the time they were
originally registered on Form S-3 as filed by Pruco Life Insurance Company
on February 27, 2003.
STRATEGIC PARTNERS(SM)
FLEXELITE
VARIABLE ANNUITY
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PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH
YOUR REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. PLEASE NOTE THAT SELLING
BROKER-DEALER FIRMS THROUGH WHICH THE CONTRACT IS SOLD MAY DECLINE TO MAKE
AVAILABLE TO THEIR CUSTOMERS CERTAIN OF THE OPTIONAL FEATURES OFFERED GENERALLY
UNDER THE CONTRACT. ALTERNATIVELY, SUCH FIRMS MAY RESTRICT THE AVAILABILITY OF
THE OPTIONAL BENEFITS THAT THEY DO MAKE AVAILABLE TO THEIR CUSTOMERS (E.G.,
IMPOSING A LOWER MAXIMUM ISSUE AGE FOR CERTAIN OPTIONAL BENEFITS THAN WHAT IS
PRESCRIBED GENERALLY UNDER THE CONTRACT). PLEASE SPEAK TO YOUR REGISTERED
REPRESENTATIVE FOR FURTHER DETAILS. EACH ANNUITY HAS DIFFERENT FEATURES AND
BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR FINANCIAL SITUATION, YOUR
AGE AND HOW YOU INTEND TO USE THE ANNUITY. THE DIFFERENT FEATURES AND BENEFITS
INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION AND THE ABILITY TO ACCESS YOUR
ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES UNDER THE ANNUITY CONTRACT AND
THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE DIFFERENT AMONG EACH
ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A REPLACEMENT FOR EXISTING
VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER, AMONG OTHER
THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN REPLACING YOUR
EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
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Strategic Partners FlexElite offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds.
Currently, portfolios within the following underlying mutual funds are being
offered: The Prudential Series Fund, American Skandia Trust, Gartmore Variable
Insurance Trust, and Janus Aspen Series (see next page for list of each
portfolio currently offered).
PLEASE READ THIS PROSPECTUS
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Please read this prospectus before purchasing a Strategic Partners FlexElite
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference. The Risk Factors section relating to the market value
adjustment option appears in the Summary.
TO LEARN MORE ABOUT STRATEGIC PARTNERS FLEXELITE
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To learn more about the Strategic Partners FlexElite variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
offices, and can also be obtained from the SEC's Public Reference Section, 100 F
Street, N.E., Washington, D.C. 20549. (See SEC file numbers 333-75702 and
333-103474.) You may obtain information on the operation of the Public Reference
Room by calling the SEC at (202) 551-8090. The SEC also maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners FlexElite SAI,
material incorporated by reference, and other information regarding registrants
that file electronically with the SEC. The Table of Contents of the SAI is set
forth in Section 11 of this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
YOU MAY ELECT BEFORE YOUR 3RD AND 6TH CONTRACT ANNIVERSARIES TO HAVE A CREDIT
ADDED TO YOUR CONTRACT VALUE. IF YOU MAKE A CREDIT ELECTION, YOUR CHARGES MAY BE
HIGHER THAN IF YOU HAD NOT MADE THE ELECTION AND THEY COULD EXCEED YOUR CREDIT
AMOUNT IF YOU MAKE A WITHDRAWAL WITHIN 3 YEARS OF YOUR ELECTION.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS FLEXELITE IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ORD01091
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small Cap Growth Portfolio
SP Small-Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
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2
CONTENTS
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<Table>
PART I: STRATEGIC PARTNERS FLEXELITE PROSPECTUS
-----------------------------------------------------------------
SUMMARY
-----------------------------------------------------------------
Glossary................................................ 6
Summary................................................. 11
Risk Factors............................................ 15
Summary Of Contract Expenses............................ 16
Expense Examples........................................ 21
PART II: STRATEGIC PARTNERS FLEXELITE PROSPECTUS
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SECTIONS 1-11
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Section 1: What Is The Strategic Partners FlexElite Variable
Annuity?................................................... 26
Short Term Cancellation Right Or "Free Look"............ 26
Section 2: What Investment Options Can I Choose?............. 27
Variable Investment Options............................. 27
Fixed Interest Rate Options............................. 42
Market Value Adjustment Option.......................... 43
Transfers Among Options................................. 45
Additional Transfer Restrictions........................ 46
Dollar Cost Averaging................................... 47
Asset Allocation Program................................ 48
Auto-Rebalancing........................................ 48
Scheduled Transactions.................................. 48
Voting Rights........................................... 49
Substitution............................................ 49
Section 3: What Kind Of Payments Will I Receive During The
Income Phase? (Annuitization).............................. 50
Payment Provisions...................................... 50
Payment Provisions Without The Guaranteed Minimum Income
Benefit............................................... 50
Option 1: Annuity Payments For A Fixed Period....... 50
Option 2: Life Income Annuity Option................ 50
Option 3: Interest Payment Option................... 51
Other Annuity Options............................... 51
Tax Considerations...................................... 51
Guaranteed Minimum Income Benefit....................... 51
GMIB Roll-Up........................................ 52
GMIB Option 1 -- Single Life Payout Option.......... 54
GMIB Option 2 -- Joint Life Payout Option........... 54
How We Determine Annuity Payments....................... 55
Section 4: What Is The Death Benefit?........................ 57
Beneficiary............................................. 57
Calculation Of The Death Benefit........................ 57
Guaranteed Minimum Death Benefit........................ 57
GMDB Roll-Up........................................ 58
GMDB Step-Up........................................ 58
Highest Daily Value Death Benefit....................... 59
Calculation Of The Highest Daily Value Death Benefit.... 60
Payout Options.......................................... 61
Earnings Appreciator Benefit............................ 61
Spousal Continuance Benefit............................. 62
Section 5: What Is The Lifetime Five(SM) Income Benefit?..... 65
Lifetime Five Income Benefit............................ 65
Spousal Lifetime Five Income Benefit.................... 71
</Table>
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3
CONTENTS CONTINUED
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<Table>
Section 6: What Is The Income Appreciator Benefit?........... 77
Income Appreciator Benefit.............................. 77
Calculation Of The Income Appreciator Benefit........... 77
Income Appreciator Benefit Options During The
Accumulation Phase.................................... 78
Section 7: How Can I Purchase A Strategic Partners FlexElite
Contract? ................................................. 81
Purchase Payments....................................... 81
Allocation Of Purchase Payments......................... 81
Credit Election......................................... 81
Calculating Contract Value.............................. 82
Section 8: What Are The Expenses Associated With The
Strategic Partners FlexElite Contract?..................... 83
Insurance And Administrative Charges.................... 83
Withdrawal Charge....................................... 84
Waiver Of Withdrawal Charge For Critical Care........... 85
Minimum Distribution Requirements....................... 85
Contract Maintenance Charge............................. 85
Guaranteed Minimum Income Benefit Charge................ 85
Income Appreciator Benefit Charge....................... 86
Earnings Appreciator Benefit Charge..................... 86
Taxes Attributable To Premium........................... 87
Transfer Fee............................................ 87
Company Taxes........................................... 87
Underlying Mutual Fund Fees............................. 88
Section 9: How Can I Access My Money?........................ 89
Withdrawals During The Accumulation Phase............... 89
Automated Withdrawals................................... 89
Suspension Of Payments Or Transfers..................... 89
Section 10: What Are The Tax Considerations Associated With
The Strategic Partners FlexElite Contract?................. 91
Contracts Owned By Individuals (Not Associated With
Tax-Favored Retirement Plans)......................... 91
Contracts Held By Tax Favored Plans..................... 94
Section 11: Other Information................................ 98
Pruco Life Insurance Company............................ 98
The Separate Account.................................... 98
Sale And Distribution Of The Contract................... 98
Litigation.............................................. 99
Assignment.............................................. 100
Financial Statements.................................... 100
Statement Of Additional Information..................... 100
Householding............................................ 100
Market-Value Adjustment Formula......................... 101
Appendix A................................................... 104
Accumulation Unit Values................................ 104
Appendix B................................................... 116
Selecting The Variable Annuity That's Right For You..... 116
</Table>
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4
PART I SUMMARY
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STRATEGIC PARTNERS FLEXELITE PROSPECTUS
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5
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes,
withdrawal charge and credit election withdrawal charge.
ADJUSTED PURCHASE PAYMENT
Your invested purchase payment is adjusted for any subsequent withdrawals. The
adjusted purchase payment is used only for calculations of the Earnings
Appreciator Benefit.
ANNUAL INCOME AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as the annuitant lives. The annual income amount is
set initially as a percentage of the Protected Withdrawal Value, but will be
adjusted to reflect subsequent purchase payments, withdrawals, and any step-up.
Under the Spousal Lifetime Five Income Benefit, the annual income amount is paid
until the later death of two natural persons who are each other's spouses at the
time of election and at the first death of one of them.
ANNUAL WITHDRAWAL AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining. The
Annual Withdrawal Amount is set initially to equal 7% of the initial Protected
Withdrawal Value, but will be adjusted to reflect subsequent purchase payments,
withdrawals, and any step-up.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirement for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
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6
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PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CREDIT
The amount we add to your contract value if you make a credit election.
CREDIT ELECTION
Your election to have a credit added to your contract value. At least 30
calendar days prior to your 3rd and 6th contract anniversaries, we will notify
you of your option to make a credit election. We will give you notice only if
the credit election is available under your contract and you have not previously
declined to receive a credit. We must receive the credit election in good order
no later than the applicable contract anniversary.
DAILY VALUE
For purposes of the Highest Daily Value Death Benefit, which we describe below,
the contract value as of the end of each business day. The Daily Value on the
contract date is equal to your purchase payment.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit, or Highest Daily Value Death Benefit, is
available for an additional charge. See Section 4, "What Is The Death Benefit?"
DEATH BENEFIT TARGET DATE
With respect to the Highest Daily Value Death Benefit, the later of the contract
anniversary on or after the 80th birthday of the current contract owner the
older of either joint owner or (if owned by an entity) the annuitant, or five
years after the contract date.
DESIGNATED LIFE
For purposes of the Spousal Lifetime Five Income Benefit, a Designated Life
refers to each of two natural persons who are each other's spouses at the time
of election of the Spousal Lifetime Five Income Benefit and at the first death
of one of them.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
EARNINGS APPRECIATOR BENEFIT (EAB)
An optional feature available for an additional charge that may provide a
supplemental death benefit based on earnings under the contract.
EXCESS INCOME/EXCESS WITHDRAWAL
Under the Spousal Lifetime Five Income Benefit and Lifetime Five Income Benefit,
Excess Income refers to cumulative withdrawals that exceed the Annual Income
Amount. Under the Lifetime Five Income Benefit, Excess Withdrawal refers to
cumulative withdrawals that exceed the Annual Withdrawal Amount.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
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7
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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GUARANTEE PERIOD
A period of time during which your invested purchase payment in the market value
adjustment option earns interest at the declared rate. We may offer one or more
guarantee periods.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value. The GMDB is a different death benefit than the Highest Daily
Value Death Benefit, which we describe below.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which may
equal the GMDB roll-up value, the GMDB step-up value, or the greater of the two.
The GMDB protected value will be subject to certain age restrictions and time
durations, however, it will still increase by subsequent invested purchase
payments and reduce proportionally by withdrawals.
GMDB ROLL-UP
We use the GMDB roll-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. The GMDB roll-up is equal to the invested
purchase
payments compounded daily at an effective annual interest rate starting on the
date that each invested purchase payment is made, subject to a cap (for certain
contracts), and reduced by the effect of withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant, number of contract anniversaries or
number of years since last GMIB reset. At such point, the GMIB protected value
will be increased by any subsequent invested purchase payments, and any
withdrawals will proportionally reduce the GMIB protected value. The GMIB
protected value is not available as a cash surrender benefit or a death benefit,
nor is it used to calculate the cash surrender value or death benefit.
GMIB RESET
You may elect to "step-up" or "reset" your GMIB protected value if your contract
value is greater than the current GMIB protected value. Upon exercise of the
reset provision, your GMIB protected value will be reset to equal your current
contract value. You are limited to two resets over the life of your contract,
provided that certain annuitant age requirements are met.
GMIB ROLL-UP
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual interest rate starting on the date each
invested purchase payment is made, subject to a cap, and reduced proportionally
by withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT
An optional death benefit available for an additional charge that can provide a
death benefit that exceeds the contract value on the date of death. The amount
of the death benefit is determined with reference to the Highest Daily Value, as
defined below.
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8
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PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
HIGHEST DAILY VALUE
An amount equal to the highest of all previous "Daily Values" less proportional
withdrawals since such date and plus any purchase payments since such date.
INCOME APPRECIATOR BENEFIT (IAB)
An optional feature that may be available for an additional charge that provides
a supplemental living benefit based on earnings under the contract.
IAB AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
A series of payments consisting of a portion of your contract value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB CREDIT
An amount we add to your contract value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the Income
Appreciator Benefit during the accumulation phase.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on your contract value, subject to our rules regarding the timing
and amount of withdrawals. There are two options -- one is designed to provide
an
annual withdrawal amount for life and the other is designed to provide a greater
annual withdrawal amount (than the first option) as long as there is Protected
Withdrawal Value. We also offer a variant of the Lifetime Five Income Benefit to
certain spousal owners -- see "Spousal Lifetime Five Income Benefit."
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
An investment option for contracts sold on or after May 1, 2003, or upon
subsequent state approval. This investment option may offer various guarantee
periods and pays a fixed rate of interest with respect to each guarantee period.
We impose a market value adjustment on withdrawals that you make from this
option prior to the end of its guarantee period.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PROPORTIONAL WITHDRAWALS
A method that involves calculating the percentage of your contract value that
each prior withdrawal represented when withdrawn. Proportional withdrawals
result in a reduction to the applicable benefit value by reducing such value in
the same proportion as the contract value was reduced by the withdrawal as of
the date the withdrawal occurred.
PROTECTED WITHDRAWAL VALUE
Under the Lifetime Five Income Benefit, we guarantee an amount that you can
withdraw each year until those annual withdrawals, when added together, reach an
aggregate limit. We call that aggregate limit the Protected Withdrawal Value.
Purchase payments and withdrawals you make will result in an adjustment to the
Protected Withdrawal Value. In addition, you may elect to step-up your Protected
Withdrawal Value under certain circumstances. Under the Spousal Lifetime Five
Income Benefit, Protected Withdrawal Value refers to a value that is used
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9
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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to determine the Annual Income Amount. The initial Protected Withdrawal Value is
equal to the greater of three specified amounts. (See "Initial Protected
Withdrawal Value" within the section describing the Spousal Lifetime Five Income
Benefit.)
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA, 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The phone number is (888)
PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees the
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on the contract value, subject to our rules regarding the timing and
amount of withdrawals. Under the Spousal Lifetime Five Income Benefit, an annual
income amount is paid until the later death of two natural persons who are each
other's spouses at the time of election and at the first death of one of them.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners FlexElite variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 10, "What Are The Tax Considerations Associated With The Strategic
Partners FlexElite Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
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10
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11
- --------------------------------------------------------------------------------
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS FLEXELITE VARIABLE ANNUITY?
The Strategic Partners FlexElite Variable Annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company (Pruco Life,
we or us). The contract allows you to invest on a tax-deferred basis in variable
investment options, fixed interest rate options, and the market value adjustment
option. The contract is intended for retirement savings or other long-term
investment purposes and provides for a death benefit.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in Prudential Money Market Portfolio variable investment
option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum interest
rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed to
be at least the minimum interest rate dictated by applicable state law.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments such as age,
gender and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
There are certain state variations to this contract that are referred to in
this prospectus. Please see your contract for further information on these and
other variations.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners FlexElite, you may
cancel your contract within 10 days after receiving it (or whatever time period
is required under applicable law). This time period is referred to as the "Free
Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also allocate your money to fixed interest rate options or in a
market value adjustment option.
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11
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
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SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income payments
will be no less than a value that is based on a certain "GMIB protected value"
applied to the GMIB guaranteed annuity purchase rates. See Section 3, "What Kind
Of Payments Will I Receive During The Income Phase?"
The Lifetime Five Income Benefit, the Spousal Lifetime Five Income Benefit
(discussed in Section 5) and the Income Appreciator Benefit (discussed in
Section 6) each may provide an additional amount upon which your annuity
payments are based.
SECTION 4
WHAT IS THE DEATH BENEFIT?
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL,
in general, if the sole owner or first to die of the owner and joint owner dies
before the income phase of the contract begins, the person(s) or entity that you
have chosen as your beneficiary will receive at a minimum, the greater of (i)
the contract value, (ii) either the base death benefit or, for a higher
insurance charge, a potentially larger Guaranteed Minimum Death Benefit (GMDB),
or Highest Daily Value Death Benefit.
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal to
a "GMDB protected value" that depends upon which of the following Guaranteed
Minimum Death Benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we call
the "GMDB step-up value";
- - the total amount you invest increased by a guaranteed rate of return, which
we call the "GMDB roll-up value"; or
- - the greater of the GMDB step-up value and GMDB roll-up value.
The Highest Daily Value Death Benefit provides a death benefit equal to the
greater of the base death benefit or the highest daily value less proportional
withdrawals.
FOR ALL OTHER CONTRACTS, THE DEATH BENEFIT OPTIONS ARE MORE LIMITED, AND THE
DEATH BENEFIT WILL BE PAID UPON THE DEATH OF THE SOLE OWNER OR IF SPOUSAL JOINT
OWNERS, THE LAST SURVIVING OWNER.
On the date we receive proof of death in good order, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe,
in Section 4, below are met.
For an additional fee, you may also choose, if it is available under your
contract, the Earnings Appreciator supplemental death benefit, which provides a
benefit payment upon the death of the sole owner, or first to die of the owner
or joint owner, during the accumulation period.
SECTION 5
WHAT IS THE LIFETIME FIVE(SM) INCOME BENEFIT?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your contract value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options -- one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
- --------------------------------------------------------------------------------
12
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PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the contract value allocated to the variable investment
options. This charge is in addition to the charge for the applicable death
benefit.
In addition to the Lifetime Five Income Benefit, we offer a benefit called
the Spousal Lifetime Five Income Benefit. The Spousal Lifetime Five Income
Benefit is similar to the Lifetime Five Income Benefit, except that it is
offered only to those who are each other's spouses at the time the benefit is
elected, and the benefit offers only a Life Income Benefit (not the Withdrawal
Benefit). The charge for the Spousal Lifetime Five Income Benefit is a daily fee
equal on an annual basis to 0.75% of the contract value allocated to the
variable investment options. The charge is in addition to the charge for the
applicable death benefit.
SECTION 6
WHAT IS THE INCOME APPRECIATOR BENEFIT?
The Income Appreciator Benefit is an optional benefit, available for an
additional charge, that provides an additional income amount during the
accumulation period or upon annuitization. The Income Appreciator Benefit is
designed to provide you with additional funds that can be used to help defray
the impact taxes may have on distributions from your contract. You can activate
this benefit in one of three ways, as described in Section 6. Note, however,
that the annuitization options within this benefit are limited.
SECTION 7
HOW CAN I PURCHASE A STRATEGIC PARTNERS FLEXELITE CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $500
($100 if made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. In
addition, certain age limits apply to certain features and benefits described
herein.
SECTION 8
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge if
your contract value is less than $100,000. This charge is currently equal to
the lesser of $50 or 2% of your contract value. We do not impose the contract
maintenance charge if your contract value is $50,000 or more. We may impose
lesser charges in certain states.
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit (or other) option that you choose.
The daily cost is equivalent to an annual charge as follows:
- 1.65% if you choose the base death benefit,
- 1.90% if you choose either the roll-up or the step-up Guaranteed Minimum
Death Benefit option (i.e., 0.25% in addition to the base death benefit
charge),
- 2.00% if you choose the greater of the roll-up and step-up Guaranteed
Minimum Death Benefit option (i.e., 0.35% in addition to the base death
benefit charge),
- 2.15% if you choose the Highest Daily Value Death Benefit (i.e., 0.50% in
addition to the base death benefit charge),
- 0.60% if you choose the Lifetime Five Income Benefit. This charge is in
addition to the charge for the applicable death benefit, or
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13
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
- --------------------------------------------------------------------------------
- 0.75% if you choose the Spousal Lifetime Five Income Benefit. This charge
is in addition to the charge for the applicable death benefit.
The 1.65%, 1.90%, and 2.00% charges referenced immediately above apply to
any Strategic Partners FlexElite contract sold on or after May 1, 2003, or
upon subsequent state approval.
For all other contracts, those charges are 1.60%, 1.80%, and 1.90%,
respectively. We reserve the right to impose an additional insurance
charge of 0.10% annually of average contract value for contracts issued to
those aged 76 or older.
The Highest Daily Value Death Benefit is available only with respect to
the version of the contract sold on or after May 1, 2003 or upon
subsequent state approval.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts), of the
average GMIB protected value.
- - We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your contract value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your contract value.
- - We will deduct an additional charge if you choose the Earnings Appreciator
supplemental death benefit. We deduct this charge from your contract value on
the contract anniversary and upon certain other events. The charge for this
benefit is based on an annual rate of 0.30% of your contract value.
- - There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states,
we deduct a charge designed to approximate this tax, which can range from
0-3.5% of your contract value.
- - There are also expenses associated with the mutual funds. For 2006, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable arrangements.
In general, these expense waivers and comparable arrangements are not
guaranteed, and may be terminated at any time.
- - If you withdraw money within three years of the contract date or a credit
election, you may have to pay a withdrawal charge up to 7% on all or part of
the withdrawal.
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 8, "What Are The
Expenses Associated With The Strategic Partners FlexElite Contract?"
SECTION 9
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. If you withdraw money within three
years of the contract date or a credit election, we may impose a withdrawal
charge.
Under the market value adjustment option, you will be subject to a market
value adjustment if you make a withdrawal prior to the end of a guarantee
period.
We offer an optional benefit, called the Lifetime Five Income Benefit, under
which we guarantee that certain amounts will be available to you for withdrawal,
regardless of market-related declines in your contract value. You need not
participate in this benefit in order to withdraw some or all of your money. We
also offer a Spousal Lifetime Five Income Benefit. You also may access your
Income Appreciator Benefit through withdrawals.
SECTION 10
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS FLEXELITE
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase,
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14
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PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
the tax laws treat the withdrawals as a withdrawal of earnings, which are taxed
as ordinary income. If you are younger than age 59 1/2 when you take money out,
you may be charged a 10% federal tax penalty on the earnings in addition to
ordinary taxation. A portion of the payments you receive during the income phase
is considered a partial return of your original investment and therefore will
not be taxable as income. Generally, all amounts withdrawn from an Individual
Retirement Annuity (IRA) contract (excluding Roth IRAs) are taxable and subject
to the 10% penalty if withdrawn prior to age 59 1/2.
SECTION 11
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the market value
adjustment option that we summarize below.
ISSUER RISK. The market value adjustment option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life, and thus backed by the financial strength of that company.
If Pruco Life were to experience significant financial adversity, it is possible
that Pruco Life's ability to pay interest and principal under the market value
adjustment option and fixed interest rate options and to fulfill its insurance
guarantees could be impaired.
RISKS RELATED TO CHANGING INTEREST RATES. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life
holds to support the market value adjustment option. Nonetheless, the market
value adjustment formula reflects the effect that prevailing interest rates have
on those bonds and other instruments. If you need to withdraw your money prior
to the end of a guarantee period and during a period in which prevailing
interest rates have risen above their level when you made your purchase, you
will experience a "negative" market value adjustment. When we impose this market
value adjustment, it could result in the loss of both the interest you have
earned and a portion of your purchase payments. Thus, before you commit to a
particular guarantee period, you should consider carefully whether you have the
ability to remain invested throughout the guarantee period. In addition, we
cannot, of course, assure you that the market value adjustment option will
perform better than another investment that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
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15
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS FLEXELITE. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see, Section 8, "What Are The Expenses Associated With The
Strategic Partners FlexElite Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
<Table>
WITHDRAWAL CHARGE(1)
- ---------------------------------------------------------------------------
FULL CONTRACT YEARS
- ---------------------------------------------------------------------------
0 7%
1 7%
2 7%
3 0%
</Table>
<Table>
<Caption>
CREDIT ELECTION WITHDRAWAL CHARGE(2)
- ---------------------------------------------------------------------------
FULL CONTRACT YEARS
- ---------------------------------------------------------------------------
3 7%
4 7%
5 7%
6 7%
7 7%
8 7%
9 0%
</Table>
<Table>
MAXIMUM TRANSFER FEE
- --------------------------------------------------------------------
Each transfer after 12(3) $ 30.00
CHARGE FOR PREMIUM TAX IMPOSED ON US BY CERTAIN STATES/JURISDICTIONS
- --------------------------------------------------------------------
Up to 3.5% of contract value
</Table>
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" in Section 8. In certain states reduced withdrawal charges may apply.
Your contract contains the applicable charges.
2: We impose these withdrawal charges only if you elect to have the credit added
to your contract value prior to your 3rd and 6th contract anniversaries. These
charges may be lower in certain states.
3: Currently, we charge $10 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but we have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing or transfers
from the market value adjustment option at the end of a guarantee period, and do
not count them toward the limit of 12 free transfers per year.
- --------------------------------------------------------------------------------
16
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PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including underlying mutual fund
fees and expenses.
PERIODIC ACCOUNT EXPENSES
<Table>
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGE AND CONTRACT
CHARGE UPON FULL WITHDRAWAL(4)
- -------------------------------------------------------------------------------------------------
$60.00
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED BENEFITS(5)
-----------------------------------------------------------------------------------------------
AS A PERCENTAGE OF ACCOUNT VALUE IN VARIABLE
INVESTMENT OPTIONS:
Base Death Benefit 1.65% (1.70% for contracts sold
prior to May 1, 2003, or upon
subsequent state approval, and if
you are aged 76 or older)
Base Death Benefit with Lifetime Five Income Benefit 2.25%
Base Death Benefit with Spousal Lifetime Five Income
Benefit 2.40%
Guaranteed Minimum Death Benefit Option -- Roll-Up or
Step-Up 1.90%
Guaranteed Minimum Death Benefit Option -- Roll-Up or
Step-Up with Lifetime Five Income Benefit 2.50%
Guaranteed Minimum Death Benefit Option -- Greater of
Roll-Up or Step-Up 2.00%
Guaranteed Minimum Death Benefit Option -- Greater of
Roll-Up or Step-Up with Lifetime Five Income Benefit 2.60%
Highest Daily Value Death Benefit 2.15%
Highest Daily Value Death Benefit with Lifetime Five
Income Benefit 2.75%
</Table>
<Table>
ANNUAL GUARANTEED MINIMUM INCOME BENEFIT CHARGE AND CHARGE
UPON CERTAIN WITHDRAWALS(6) (for contracts sold on or after
January 20, 2004, or upon subsequent state approval)
- -------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF AVERAGE GMIB PROTECTED VALUE 0.50%
ANNUAL INCOME APPRECIATOR BENEFIT CHARGE AND CHARGE
UPON CERTAIN WITHDRAWALS/ANNUITIZATIONS(7)
- -------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.25%
</Table>
<Table>
ANNUAL EARNINGS APPRECIATOR CHARGE AND CHARGE
UPON CERTAIN TRANSACTIONS(8)
- -------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.30%
Possible Additional Charge if 66 or older 0.10%
(i.e., 0.40% total charge if 66
or older, for certain contracts)
</Table>
4: Currently, we waive this fee if your contract value is greater than or equal
to $100,000. If your contract value is less than $100,000, we currently charge
the lesser of $50 or 2% of your contract value. This is a single fee that we
assess (a) annually or (b) upon a full withdrawal made on a date other than a
contract anniversary. As shown in the table, we can increase this fee in the
future up to a maximum of $60, but we have no current intention to do so.
5: The 1.65%, 1.90%, and 2.00% charges listed here apply to any Strategic
Partners FlexElite contract sold on or after May 1, 2003, or upon subsequent
state approval. For all other contracts, these charges are 1.60%, 1.80%, and
1.90%, respectively, (if the Lifetime Five Income Benefit is elected, total
charges are 2.20%, 2.40%, and 2.50%, respectively.) We also reserve the right to
impose an additional insurance charge of 0.10% annually of average contract
value for contracts issued to those aged 76 or older, under which the Guaranteed
Minimum Death Benefit has been selected for contracts sold prior to May 1, 2003,
or upon subsequent state approval. The Highest Daily Value Death Benefit is
available only with respect to the version of the contract sold on or after May
1, 2003, or upon subsequent state approval.
6: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after January
20, 2004, or upon subsequent state approval (0.45% for all other contracts) of
the average GMIB protected value, which is calculated daily and generally is
equal to the GMIB roll-up value. Subject to certain age restrictions, the
roll-up value is the total of all invested purchase payments (after a reset, the
contract value at the time of the reset) compounded daily at an effective annual
rate of 5%, subject to a cap of 200% of all invested purchase payments.
Withdrawals reduce both the roll-up value and the 200% cap. The reduction is
equal to the amount of the withdrawal for the first 5% of the roll-up value,
calculated as of the latest contract anniversary (or contract date). The amount
of the withdrawal in excess of 5% of the roll-up value further reduces the
roll-up value and 200% cap proportionally to the additional reduction in
contract value after the first 5% withdrawal occurs. We assess this fee each
contract anniversary and when you begin the income phase of your contract. We
also assess this fee if you make a full withdrawal, but prorate the fee based on
the portion of the contract year that has elapsed since the full annual fee was
most recently deducted. If you make a partial
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17
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
withdrawal, we will assess the prorated fee if the remaining contract value
after the withdrawal would be less than the amount of the prorated fee;
otherwise we will not assess the fee at that time.
7: We impose this charge only if you choose the Income Appreciator Benefit. The
charge for this benefit is based on an annual rate of 0.25% of your contract
value. The Income Appreciator Benefit charge is calculated: on each contract
anniversary, on the annuity date, if a death benefit is payable, upon the death
of the sole owner or first to die of the owner or joint owner prior to the
annuity date, upon a full or partial withdrawal, and upon a subsequent purchase
payment. The fee is based on the contract value at the time of the calculation,
and is prorated based on the portion of the contract year since the date that
the charge was last deducted. Although it may be calculated more often, it is
deducted only: on each contract anniversary, on the annuity date, if a death
benefit is payable, upon the death of the sole owner or first to die of the
owner or joint owners prior to the annuity date, upon a full withdrawal, and
upon a partial withdrawal if the contract value remaining after such partial
withdrawal is not enough to cover the then-applicable charge. With respect to
full and partial withdrawals, we prorate the fee based on the portion of the
contract year that has elapsed since the full annual fee was most recently
deducted. We reserve the right to calculate and deduct the fee more frequently
than annually, such as quarterly.
8: We impose this charge only if you choose the Earnings Appreciator Benefit. We
deduct this charge annually. We also deduct this charge if you make a full
withdrawal or enter the income phase of your contract, or if a death benefit is
payable, but prorate the fee to reflect a partial rather than full year. If you
make a partial withdrawal, we will deduct the prorated fee if the remaining
contract value after the withdrawal would be less than the amount of the
prorated fee; otherwise we will not deduct the fee at that time. The fee is also
calculated when you make any purchase payment or withdrawal but we do not deduct
it until the next deduction date. For contracts sold prior to May 1, 2003, or
upon subsequent state approval, we reserve the right to impose an additional
charge of 0.10% annually of account value for contracts issued to those aged 66
or older, under which the Earnings Appreciator Benefit has been selected.
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners FlexElite contract, and
may vary from year to year.
<Table>
<Caption>
Minimum Maximum
------- -------
Total Annual Underlying Mutual Fund Operating Expenses* 0.38% 1.67%
</Table>
* See, "Summary of Contract Expenses" -- "Underlying Mutual Fund Portfolio
Annual Expenses" for more detail on the expenses of the underlying mutual funds.
- --------------------------------------------------------------------------------
18
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
THE PRUDENTIAL SERIES FUND(2)
- -------------------------------------------------------------------------------------------------------------------------------
Jennison Portfolio 0.60% 0.03% -- 0.63%
Prudential Equity Portfolio(3) 0.45% 0.02% -- 0.47%
Prudential Global Portfolio(4) 0.75% 0.07% -- 0.82%
Prudential Money Market Portfolio 0.40% 0.05% -- 0.45%
Prudential Stock Index Portfolio 0.35% 0.03% -- 0.38%
Prudential Value Portfolio 0.40% 0.03% -- 0.43%
SP Aggressive Growth Asset Allocation
Portfolio(5,6) 0.84% 0.11% -- 0.95%
SP AIM Core Equity Portfolio 0.85% 0.15% -- 1.00%
SP Balanced Asset Allocation Portfolio(5,6) 0.76% 0.09% -- 0.85%
SP Conservative Asset Allocation Portfolio(5,6) 0.72% 0.08% -- 0.80%
SP Davis Value Portfolio 0.75% 0.07% -- 0.82%
SP Growth Asset Allocation Portfolio(5,6) 0.81% 0.10% -- 0.91%
SP Large Cap Value Portfolio(5) 0.80% 0.03% -- 0.83%
SP LSV International Value Portfolio 0.90% 0.16% -- 1.06%
SP Mid Cap Growth Portfolio 0.80% 0.20% -- 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.07% -- 0.67%
SP PIMCO Total Return Portfolio 0.60% 0.02% -- 0.62%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% -- 0.80%
SP Small Cap Growth Portfolio 0.95% 0.10% -- 1.05%
SP Small-Cap Value Portfolio (formerly SP Goldman
Sachs Small Cap Value Portfolio)(7) 0.90% 0.07% -- 0.97%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.17% -- 1.07%
SP T. Rowe Price Large-Cap Growth Portfolio
(formerly SP AllianceBernstein Large-Cap Growth
Portfolio)(8,9) 0.90% 0.16% -- 1.06%
SP William Blair International Growth Portfolio 0.85% 0.13% -- 0.98%
AMERICAN SKANDIA TRUST(2,10)
- -------------------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio 0.85% 0.18% 1.03%
AST Aggressive Asset Allocation Portfolio(11) 1.04% 0.29% -- 1.33%
AST AllianceBernstein Core Value Portfolio 0.75% 0.19% -- 0.94%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.13% -- 0.88%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.17% -- 0.77%
AST American Century Income & Growth Portfolio 0.75% 0.18% -- 0.93%
AST American Century Strategic Balanced Portfolio 0.85% 0.23% -- 1.08%
AST Balanced Asset Allocation Portfolio(11) 0.95% 0.20% -- 1.15%
AST Capital Growth Asset Allocation Portfolio(11) 1.00% 0.20% -- 1.20%
AST Cohen & Steers Realty Portfolio 1.00% 0.18% -- 1.18%
AST Conservative Asset Allocation Portfolio(11) 0.94% 0.24% -- 1.18%
AST DeAM Large-Cap Value Portfolio 0.85% 0.22% -- 1.07%
AST DeAM Small-Cap Growth Portfolio 0.95% 0.20% -- 1.15%
AST DeAM Small-Cap Value Portfolio 0.95% 0.24% -- 1.19%
AST Federated Aggressive Growth Portfolio 0.95% 0.17% -- 1.12%
AST First Trust Balanced Target Portfolio 0.85% 0.19% -- 1.04%
AST First Trust Capital Appreciation Target
Portfolio 0.85% 0.19% -- 1.04%
AST Global Allocation Portfolio 0.86% 0.23% -- 1.09%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.16% -- 1.06%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.18% -- 1.18%
AST High Yield Portfolio (formerly, AST Goldman
Sachs High Yield Portfolio)(12) 0.75% 0.19% -- 0.94%
AST JPMorgan International Equity Portfolio 0.88% 0.19% -- 1.07%
AST Large-Cap Value Portfolio (formerly AST
Hotchkis and Wiley Large-Cap Value
Portfolio)(13,14,15) 0.75% 0.16% -- 0.91%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.17% -- 0.97%
</Table>
- --------------------------------------------------------------------------------
19
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
AST Marsico Capital Growth Portfolio 0.90% 0.13% -- 1.03%
AST MFS Global Equity Portfolio 1.00% 0.26% -- 1.26%
AST MFS Growth Portfolio 0.90% 0.18% -- 1.08%
AST Mid Cap Value Portfolio (formerly, AST Gabelli
All-Cap Value Portfolio)(16) 0.95% 0.22% -- 1.17%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.18% -- 1.08%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.14% -- 1.03%
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.15% -- 0.80%
AST Preservation Asset Allocation Portfolio(11) 0.89% 0.38% -- 1.27%
AST Small-Cap Value Portfolio(13,17) 0.90% 0.17% -- 1.07%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.23% -- 1.08%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.21% -- 1.01%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.18% -- 1.08%
GARTMORE VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------------------------
GVIT Developing Markets Fund(18,19) 1.05% 0.37% 0.25% 1.67%
JANUS ASPEN SERIES
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio -- Service Shares(19) 0.64% 0.02% 0.25% 0.91%
</Table>
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
- --------------------------------------------------------------------------------
20
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- ---------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE
COST OF INVESTING IN THE CONTRACT WITH THE COST OF
INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS.
THESE COSTS INCLUDE CONTRACT OWNER TRANSACTION
EXPENSES, CONTRACT FEES, SEPARATE ACCOUNT ANNUAL
EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND
EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE
CONTRACT FOR THE TIME PERIODS INDICATED. THE
EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR AND ASSUME THE MAXIMUM FEES AND
EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH DO NOT
REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS.
ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER,
BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXPENSE EXAMPLES FOR SUBSEQUENT VERSION OF STRATEGIC PARTNERS FLEXELITE SOLD ON
OR AFTER MAY 1, 2003
EXAMPLE 1A: Highest Daily Value Death Benefit; Guaranteed Minimum Income
Benefit, Earnings Appreciator Benefit, Income Appreciator Benefit, Credit
Elections, and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract;
- - You choose the Highest Daily Value Death Benefit;
- - You choose the Earnings Appreciator Benefit;
- - You choose the Guaranteed Minimum Income Benefit (for contracts sold
beginning January 20, 2004);
- - You choose the Income Appreciator Benefit;
- - You make credit elections prior to your 3(rd) and 6(th) contract
anniversaries;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
- --------------------------------------------------------------------------------
21
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
EXAMPLE 1b: Highest Daily Value Death Benefit, Guaranteed Minimum Income
Benefit, Earnings Appreciator Benefit, Income Appreciator Benefit, Credit
Elections, and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 2a: Base Death Benefit and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract;
- - You choose the Base Death Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year;
- - You do not make a credit election; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Base Death Benefit and You Do Not Withdraw All Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXPENSE EXAMPLES FOR ORIGINAL VERSION OF STRATEGIC PARTNERS FLEXELITE
EXAMPLE 3a: Greater of roll-up and step-up GMDB; Earnings Appreciator Benefit;
Credit Elections and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract;
- - You choose the Greater of roll-up and step-up GMDB;
- - You choose the Earnings Appreciator Benefit;
- - You make credit elections prior to your 3(rd) and 6(th) contract
anniversaries;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 3b: Greater of roll-up and step-up GMDB; Earnings Appreciator Benefit;
Credit Elections; and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 3a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
- --------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXAMPLE 4a: Base Death Benefit and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract;
- - You choose the Base Death Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year;
- - You do not make a credit election; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 4b: Base Death Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 4a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Note that withdrawal charges (which are reflected in Examples 1a, 2a, 3a, and
4a) are assessed in connection with some annuity options, but not others.
The values shown in the 10 year column are the same for the examples with
withdrawal charges and the examples without withdrawal charges. This is because,
if 3 or more years have elapsed since your last credit election before your 6th
contract anniversary, no withdrawal charges apply.
The examples use an average contract maintenance charge, which we calculated
based on our estimate of the total contract fees we expect to collect in 2006.
Your actual fees will vary based on the amount of your contract and your
specific allocation among the investment options.
Premium taxes are not reflected in the examples. We deduct a charge to
approximate premium taxes that may be imposed on us in your state. This charge
is generally deducted from the amount applied to an annuity payout option.
The table of accumulation unit values appears in Appendix A to this prospectus.
- --------------------------------------------------------------------------------
23
PART I STRATEGIC PARTNERS FLEXELITE PROSPECTUS SUMMARY
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
<Table>
<Caption>
HIGHEST DAILY VALUE DEATH BENEFIT; GUARANTEED MINIMUM INCOME BENEFIT;
EARNINGS APPRECIATOR BENEFIT; INCOME APPRECIATOR BENEFIT; CREDIT ELECTIONS
- --------------------------------------------------------------------------------
EXAMPLE 1A: EXAMPLE 1B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- --------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- --------------------------------------------------------------------------------
$1,166 $2,232 $3,298 $5,324 $536 $1,602 $2,668 $5,324
</Table>
<Table>
<Caption>
BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 2A: EXAMPLE 2B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- ---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- ---------------------------------------------------------------------------
$1,014 $1,796 $1,967 $4,053 $384 $1,166 $1,967 $4,053
</Table>
<Table>
<Caption>
GREATER OF ROLL-UP AND STEP-UP GUARANTEED MINIMUM DEATH BENEFIT; EARNINGS
APPRECIATOR BENEFIT; CREDIT ELECTIONS
- --------------------------------------------------------------------------------
EXAMPLE 3A: EXAMPLE 3B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- --------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- --------------------------------------------------------------------------------
$1,068 $1,953 $2,856 $4,556 $438 $1,323 $2,226 $4,556
</Table>
<Table>
<Caption>
BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 4A: EXAMPLE 4B:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
- ---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- ---------------------------------------------------------------------------
$1,009 $1,782 $1,944 $4,010 $379 $1,152 $1,944 $4,010
</Table>
- --------------------------------------------------------------------------------
24
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
PART II SECTIONS 1-11
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS FLEXELITE PROSPECTUS
- --------------------------------------------------------------------------------
25
1:
WHAT IS THE STRATEGIC PARTNERS FLEXELITE
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
THE STRATEGIC PARTNERS FLEXELITE VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time after the second contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
Strategic Partners FlexElite is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options, and a market value adjustment
option. If you select variable investment options, the amount of money you are
able to accumulate in your contract during the accumulation phase depends upon
the investment performance of the underlying mutual fund(s) associated with that
variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the income
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners FlexElite, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive, depending on applicable state law:
- - Your full purchase payment less any applicable federal and state income tax
withholding; or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment. We impose neither a withdrawal
charge nor any market value adjustment if you cancel your contract under this
provision.
To the extent dictated by state law, we will include in your refund the
amount of any fees and charges that we deducted.
- --------------------------------------------------------------------------------
26
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, FIXED INTEREST RATE OPTIONS, AND A MARKET VALUE
ADJUSTMENT OPTION.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/sub-adviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect, wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
sub-advisers to manage specific portions of a portfolio, and the portion managed
by a sub-adviser may vary from 0% to 100% of the portfolio's assets. The
sub-advisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker dealer firms' registered
representatives and creating marketing material discussing the contract and
available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is
- --------------------------------------------------------------------------------
27
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
designed to be a stable investment option, it is possible to lose money in that
portfolio. For example, when prevailing short-term interest rates are very low,
the yield on the Prudential Money Market Portfolio may be so low that, when
separate account and contract charges are deducted, you experience a negative
return.
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those portfolios. However, a contract owner
who had contract value allocated to a Prudential Series Fund Asset Allocation
Portfolio prior to December 5, 2005 may continue to allocate purchase payments
to that Portfolio after that date. In addition, after December 5, 2005, we
ceased offering the Prudential Series Fund SP Large Cap Value Portfolio to new
purchasers and to existing contract owners who had not previously invested in
that Portfolio. However, a contract owner who had contract value allocated to
the SP Large Cap Value Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date.
- --------------------------------------------------------------------------------
28
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP JENNISON PORTFOLIO: seeks long-term growth of capital. The Jennison Associates
GROWTH Portfolio invests primarily in equity securities of major, LLC
established corporations that the Sub-adviser believes offer
above-average growth prospects. The Portfolio may invest up
to 30% of its total assets in foreign securities. Stocks are
selected on a company-by-company basis using fundamental
analysis. Normally 65% of the Portfolio's total assets are
invested in common stocks and preferred stocks of companies
with capitalization in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of Jennison Associates
BLEND capital. The Portfolio invests at least 80% of its net LLC; Salomon Brothers
assets plus borrowings for investment purposes in common Asset Management Inc
stocks of major established corporations as well as smaller
companies that the Sub-advisers believe offer attractive
prospects of appreciation.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of LSV Asset Management;
EQUITY capital. The Portfolio invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign and U.S. companies. Each Management, LLC;
Sub-adviser for the Portfolio generally will use either a T. Rowe Price
"growth" approach or a "value" approach in selecting either Associates, Inc.;
foreign or U.S. common stocks. William Blair &
Company, LLC
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current Prudential Investment
income consistent with the stability of capital and the Management, Inc.
maintenance of liquidity. The Portfolio invests in
high-quality short-term money market instruments issued by
the U.S. Government or its agencies, as well as by
corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in
thirteen months or less, and which are denominated in U.S.
dollars.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment results Quantitative
BLEND that generally correspond to the performance of Management Associates
publicly-traded common stocks. With the price and yield LLC
performance of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) as the benchmark, the Portfolio
normally invests at least 80% of investable assets in S&P
500 stocks. The S&P 500 represents more than 70% of the
total market value of all publicly-traded common stocks and
is widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to
select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL VALUE PORTFOLIO: seeks long-term growth of Jennison Associates
VALUE capital through appreciation and income. The Portfolio LLC
invests primarily in common stocks that the Sub-adviser
believes are undervalued -- those stocks that are trading
below their underlying asset value, cash generating ability
and overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the market
as a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
Normally at least 65% of the Portfolio's total assets is
invested in the common stock and convertible securities of
companies that the Sub-adviser believes will provide
investment returns above those of the S&P 500 or the New
York Stock Exchange (NYSE) Composite Index. Most of the
investments will be securities of large capitalization
companies. The Portfolio may invest up to 25% of its total
assets in real estate investment trusts (REITs) and up to
30% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with Investments LLC
BALANCED the specified level of risk tolerance. The Portfolio may
invest in any other Portfolio of the Fund (other than
another SP Asset Allocation Portfolio), the AST Marsico
Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the
Underlying Portfolios). Under normal circumstances, the
Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying
Portfolios. (Effective December 5, 2005, this Portfolio was
closed to new purchasers and to existing contract owners who
had not previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND SP AIM CORE EQUITY PORTFOLIO: seeks long-term growth of AIM Capital
capital. The Portfolio normally invests at least 80% of Management, Inc.
investable assets in equity securities, including
convertible securities of established companies that have
long-term above-average growth in earnings and growth
companies that the Sub-adviser believes have the potential
for above-average growth in earnings. The Portfolio may
invest up to 20% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
ALLOCATION/ highest potential total return consistent with the specified Investments LLC
BALANCED level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). The Portfolio will invest in equity and
fixed-income Underlying Portfolios. (Effective December 5,
2005, this Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in
the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
30
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to obtain Prudential
the highest potential total return consistent with the Investments LLC
specified level of risk tolerance. The Portfolio may invest
in any other Portfolio of the Fund (other than another SP
Asset Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on fixed-income Underlying Portfolios
but will also invest in equity Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The Davis Selected
Portfolio invests primarily in common stocks of U.S. Advisers, L.P.
companies with market capitalizations of at least $5
billion. It may also invest in stocks of foreign companies
and U.S. companies with smaller capitalizations. The
Sub-adviser attempts to select common stocks of businesses
that possess characteristics that the Sub-adviser believe
foster the creation of long-term value, such as proven
management, a durable franchise and business model, and
sustainable competitive advantages. The Sub-adviser aims to
invest in such businesses when they are trading at a
discount to their intrinsic worth. There is a risk that
"value" stocks can perform differently from the market as a
whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
highest potential total return consistent with the specified Investments LLC
level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on equity Underlying Portfolios but
will also invest in fixed-income Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of Hotchkis and Wiley
capital. The Portfolio normally invests at least 80% of Capital Management,
investable assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are believed Investment Management
to be undervalued and have an above-average potential to Inc., Dreman Value
increase in price, given the company's sales, earnings, book Management LLC
value, cash flow and recent performance. The Portfolio seeks
to achieve its objective through investments primarily in
equity securities of large capitalization companies.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
31
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP LSV INTERNATIONAL VALUE PORTFOLIO: seeks capital growth. LSV Asset Management
The Portfolio pursues its objective by primarily investing
at least 80% of the value of its assets in the equity
securities of companies in developed non-U.S. countries that
are represented in the MSCI EAFE Index. The target of this
Portfolio is to outperform the unhedged US Dollar total
return (net of foreign dividend withholding taxes) of the
MSCI EAFE Index. The Sub-adviser uses proprietary
quantitative models to manage the Portfolio in a bottom-up
security selection approach combined with overall portfolio
risk management.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of Calamos Advisors LLC
capital. The Portfolio normally invests at least 80% of
investable assets in common stocks and related securities,
such as preferred stocks, convertible securities and
depositary receipts for those securities. These securities
typically are of medium market capitalizations, which the
Sub-adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the
Portfolio as companies with market capitalizations equaling
or exceeding $250 million but not exceeding the top of the
Russell Mid Cap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or traded
in the over-the-counter markets. The Sub-adviser uses a
bottom-up and top-down analysis in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis, as well as a top-down approach to
diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging markets
securities).
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO HIGH YIELD PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a two- to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO TOTAL RETURN PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a three-to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks Jennison Associates
long-term capital appreciation. The Portfolio normally LLC
invests at least 80% of investable assets in equity
securities of small and medium sized U.S. companies that the
Sub-adviser believes have the potential for above-average
earnings growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
32
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH SP SMALL CAP GROWTH PORTFOLIO: seeks long-term capital Eagle Asset
growth. The Portfolio pursues its objective by primarily Management; Neuberger
investing in the common stocks of small-capitalization Berman Management,
companies, which is defined as a company with a market Inc.
capitalization, at the time of purchase, no larger than the
largest capitalized company included in the Russell 2000
Index during the most recent 11-month period (based on
month-end data) plus the most recent data during the current
month.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE SP SMALL-CAP VALUE PORTFOLIO(formerly SP Goldman Sachs Small Goldman Sachs Asset
Cap Value Portfolio): seeks long-term capital growth. The Management, L.P.;
Portfolio normally invests at least 80% its net assets plus Salomon Brothers
borrowings for investment purposes in the equity securities Asset Management Inc
of small capitalization companies. The Portfolio focuses on
equity securities that are believed to be undervalued in the
market place.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks Alliance Bernstein
long-term growth of capital. The Portfolio normally invests L.P.; Jennison
at least 65% of total assets in equity-related securities of Associates LLC
U.S. companies that the Sub-advisers believe to have strong
capital appreciation potential. The Portfolio's strategy is
to combine the efforts of two Sub-advisers and to invest in
the favorite stock selection ideas of three portfolio
managers (two of whom invest as a team). Each Sub-adviser to
the Portfolio utilizes a growth style to select
approximately 20 securities. The portfolio managers build a
portfolio with stocks in which they have the highest
confidence and may invest more than 5% of the Portfolio's
assets in any one issuer. The Portfolio is nondiversified,
meaning it can invest a relatively high percentage of its
assets in a small number of issuers. Investing in a
nondiversified portfolio, particularly a portfolio investing
in approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of an on diversified portfolio.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (formerly SP T. Rowe Price
AllianceBernstein Large-Cap Growth Portfolio): seeks Associates, Inc.
long-term capital growth. Under normal circumstances, the
Portfolio invests at least 80% of its net assets plus
borrowings for investment purposes in the equity securities
of large-cap companies. The Sub-adviser generally looks for
companies with an above-average rate of earnings and cash
flow growth and a lucrative niche in the economy that gives
them the ability to sustain earnings momentum even during
times of slow economic growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
33
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO: seeks William Blair &
long-term capital appreciation. The Portfolio invests Company, LLC
primarily in stocks of large and medium-sized companies
located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index. Under normal
market conditions, the portfolio invests at least 80% of its
net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six
different countries and will not concentrate investments in
any particular industry. The Portfolio seeks companies that
historically have had superior growth, profitability and
quality relative to local markets and relative to companies
within the same industry worldwide, and that are expected to
continue such performance.
- -----------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST ADVANCED STRATEGIES PORTFOLIO: seeks a high level of Marsico Capital
absolute return. The Portfolio invests primarily in a Management, LLC; T.
diversified portfolio of equity and fixed income securities Rowe Price
across different investment categories and investment Associates, Inc.; LSV
managers. The Portfolio pursues a combination of traditional Asset Management;
and non-traditional investment strategies. William Blair &
Company, L.L.C.;
Pacific Investment
Management Company
LLC (PIMCO)
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
92.5% to 100% of its net assets to underlying portfolios
investing primarily in equity securities, and 0% to 7.5% of
its net assets to underlying portfolios investing primarily
in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO: seeks long-term AllianceBernstein
capital growth by investing primarily in common stocks. The L.P.
Sub-adviser expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued. Among other things,
the Portfolio seeks to identify compelling buying
opportunities created when companies are undervalued on the
basis of investor reactions to near-term problems or
circumstances even though their long-term prospects remain
sound. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
34
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO: seeks AllianceBernstein
long-term growth of capital and income while attempting to L.P.
avoid excessive fluctuations in market value. The Portfolio
normally will invest in common stocks (and securities
convertible into common stocks). The Sub-adviser will take a
value-oriented approach, in that it will try to keep the
Portfolio's assets invested in securities that are selling
at reasonable valuations in relation to their fundamental
business prospects. The stocks that the Portfolio will
normally invest in are those of seasoned companies.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO (AST AllianceBernstein
AllianceBernstein Growth + Value Portfolio merged into this L.P.
Portfolio): seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P (R) 500") through
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest,
under normal circumstances, at least 80% of its net assets
in securities included in the S&P(R) 500.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO: seeks American Century
capital growth with current income as a secondary objective. Investment
The Portfolio invests primarily in common stocks that offer Management, Inc.
potential for capital growth, and may, consistent with its
investment objective, invest in stocks that offer potential
for current income. The Sub-adviser utilizes a quantitative
management technique with a goal of building an equity
portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and
while attempting to create a dividend yield that will be
greater than the S&P 500 Index.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO: seeks American Century
BALANCED capital growth and current income. The Sub-adviser intends Investment
to maintain approximately 60% of the Portfolio's assets in Management, Inc.
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed
income investments will fluctuate in value. The equity
securities will fluctuate depending on the performance of
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST BALANCED ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in equity securities, and 27.5% to 42.5%
of its net assets to underlying portfolios investing
primarily in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
35
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 72.5% to 87.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
12.5% to 27.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST COHEN & STEERS REALTY PORTFOLIO: seeks to maximize total Cohen & Steers
return through investment in real estate securities. The Capital Management,
Portfolio pursues its investment objective by investing, Inc.
under normal circumstances, at least 80% of its net assets
in securities of real estate issuers. Under normal
circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate
companies, i.e., a company that derives at least 50% of its
revenues from the ownership, construction, financing,
management or sale of real estate or that has at least 50%
of its assets in real estate. Real estate companies may
include real estate investment trusts or REITs.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 47.5% to 62.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
37.5% to 52.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST DEAM LARGE-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
capital by investing primarily in the value stocks of larger Management, Inc.
companies. The Portfolio pursues its objective, under normal
market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 1000(R) Value Index, but which attempts to
outperform the Russell 1000(R) Value Index through active
stock selection.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST DEAM SMALL-CAP GROWTH PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital from a portfolio of growth stocks of Management, Inc.
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Growth
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Growth Index, but which attempts to
outperform the Russell 2000(R) Growth Index.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
36
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST DEAM SMALL-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital. The Portfolio pursues its objective, Management, Inc.
under normal market conditions, by primarily investing at
least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Value Index, but which attempts to
outperform the Russell 2000(R) Value Index.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO: seeks capital Federated Equity
growth. The Portfolio pursues its investment objective by Management Company of
investing primarily in the stocks of small companies that Pennsylvania;
are traded on national security exchanges, NASDAQ stock Federated Global
exchange and the over-the-counter-market. Small companies Investment Management
will be defined as companies with market capitalizations Corp.
similar to companies in the Russell 2000 Growth Index. Up to
25% of the Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST BALANCED TARGET PORTFOLIO: seeks long-term First Trust Advisors
capital growth balanced by current income. The Portfolio L.P.
normally invests approximately 65% of its total assets in
equity securities and 35% in fixed income securities.
Depending on market conditions, the equity portion may range
between 60-70% and the fixed income portion between 30-40%.
The Portfolio allocates its assets across a number of
uniquely specialized investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO: seeks First Trust Advisors
long-term growth of capital. The Portfolio normally invests L.P.
approximately 80% of its total assets in equity securities
and 20% in fixed income securities. Depending on market
conditions, the equity portion may range between 75-85% and
the fixed income portion between 15-25%. The Portfolio
allocates its assets across a number of uniquely specialized
investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST GLOBAL ALLOCATION PORTFOLIO: seeks to obtain the highest Prudential
potential total return consistent with a specified level of Investments LLC
risk tolerance. The Portfolio seeks to achieve its
investment objective by investing in several other AST
Portfolios ("Underlying Portfolios"). The Portfolio intends
its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an
investor could otherwise achieve only by holding numerous
investments. It is expected that the investment objectives
of such AST Portfolios will be diversified.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
37
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO: seeks Goldman Sachs Asset
growth of capital in a manner consistent with the Management, L.P.
preservation of capital. Realization of income is not a
significant investment consideration and any income realized
on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity
securities of companies that the Sub-adviser believes have
the potential to achieve capital appreciation over the
long-term. The Portfolio seeks to achieve its investment
objective by investing, under normal circumstances, in
approximately 30-45 companies that are considered by the
Sub-adviser to be positioned for long-term growth.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO: seeks long-term Goldman Sachs Asset
capital growth. The Portfolio pursues its investment Management, L.P.
objective, by investing primarily in equity securities
selected for their growth potential, and normally invests at
least 80% of the value of its assets in medium
capitalization companies. For purposes of the Portfolio,
medium-sized companies are those whose market
capitalizations (measured at the time of investment) fall
within the range of companies in the Russell Mid Cap Growth
Index. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST HIGH YIELD PORTFOLIO (formerly AST Goldman Sachs High Goldman Sachs Asset
Yield Portfolio): seeks a high level of current income and Management, L.P.;
may also consider the potential for capital appreciation. Pacific Investment
The Portfolio invests, under normal circumstances, at least Management Company
80% of its net assets plus any borrowings for investment LLC (PIMCO)
purposes (measured at time of purchase) in high yield,
fixed-income securities that, at the time of purchase, are
non-investment grade securities. Such securities are
commonly referred to as "junk bonds."
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO: seeks long-term J.P.Morgan Investment
capital growth by investing in a diversified portfolio of Management Inc.
international equity securities. The Portfolio seeks to meet
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a
recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the
issuer is principally based, but may also be traded in other
countries including the United States.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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38
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST LARGE-CAP VALUE PORTFOLIO (formerly AST Hotchkis and Dreman Value
Wiley Large-Cap Value Portfolio): seeks current income and Management LLC,
long-term growth of income, as well as capital appreciation. Hotchkis and Wiley
The Portfolio invests, under normal circumstances, at least Capital Management,
80% of its net assets in common stocks of large cap U.S. LLC; J.P. Morgan
companies. The Portfolio focuses on common stocks that have Investment
a high cash dividend or payout yield relative to the market Management, Inc.
or that possess relative value within sectors.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE PORTFOLIO: seeks high current Lord, Abbett & Co.
income and the opportunity for capital appreciation to LLC
produce a high total return. To pursue its objective, the
Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities
and normally invests primarily in high yield and investment
grade debt securities, securities convertible into common
stock and preferred stocks. The Portfolio may find good
value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have
more than half of its assets invested in those securities.
At least 20% of the Portfolio's assets must be invested in
any combination of investment grade debt securities, U.S.
Government securities and cash equivalents. The Portfolio
may also make significant investments in mortgage-backed
securities. Although the Portfolio expects to maintain a
weighted average maturity in the range of five to twelve
years, there are no restrictions on the overall Portfolio or
on individual securities. The Portfolio may invest up to 20%
of its net assets in equity securities.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MARSICO CAPITAL GROWTH PORTFOLIO: seeks capital growth. Marsico Capital
Income realization is not an investment objective and any Management, LLC
income realized on the Portfolio's investments, therefore,
will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies. In
selecting investments for the Portfolio, the Sub-adviser
uses an approach that combines "top down" economic analysis
with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that may
benefit from the trends the Sub-adviser has observed. The
Sub-adviser then looks for individual companies with
earnings growth potential that may not be recognized by the
market at large, utilizing a "bottom up" stock selection
process. The Portfolio will normally hold a core position of
between 35 and 50 common stocks. The Portfolio may hold a
limited number of additional common stocks at times when the
Portfolio manager is accumulating new positions, phasing out
existing or responding to exceptional market conditions.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST MFS GLOBAL EQUITY PORTFOLIO: seeks capital growth. Under Massachusetts
normal circumstances the Portfolio invests at least 80% of Financial Services
its assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MFS GROWTH PORTFOLIO: seeks long-term capital growth and Massachusetts
future income. Under normal market conditions, the Portfolio Financial Services
invests at least 80% of its total assets in common stocks Company
and related securities, such as preferred stocks,
convertible securities and depositary receipts, of companies
that the Sub-adviser believes offer better than average
prospects for long-term growth. The Sub-adviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE AST MID CAP VALUE PORTFOLIO (formerly AST Gabelli All-Cap EARNEST Partners LLC;
Value Portfolio): seeks to provide capital growth by WEDGE Capital
investing primarily in mid-capitalization stocks that appear Management, LLP
to be undervalued. The Portfolio has a non-fundamental
policy to invest, under normal circumstances, at least 80%
of the value of its net assets in mid-capitalization
companies.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO: (AST Alger Neuberger Berman
All-Cap Growth Portfolio merged into this Portfolio): seeks Management Inc.
capital growth. Under normal market conditions, the
Portfolio primarily invests at least 80% of its net assets
in the common stocks of mid-cap companies. The Sub-adviser
looks for fast-growing companies that are in new or rapidly
evolving industries.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO: seeks capital Neuberger Berman
growth. Under normal market conditions, the Portfolio Management Inc.
primarily invests at least 80% of its net assets in the
common stocks of mid-cap companies. For purposes of the
Portfolio, companies with equity market capitalizations that
fall within the range of the Russell Midcap(R) Index at the
time of investment are considered mid-cap companies. Some of
the Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. Under
the Portfolio's value-oriented investment approach, the
Sub-adviser looks for well-managed companies whose stock
prices are undervalued and that may rise in price before
other investors realize their worth.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST PIMCO LIMITED MATURITY BOND PORTFOLIO: seeks to maximize Pacific Investment
total return consistent with preservation of capital and Management Company
prudent investment management. The Portfolio will invest in LLC (PIMCO)
a diversified portfolio of fixed-income securities of
varying maturities. The average portfolio duration of the
Portfolio generally will vary within a one- to three-year
time frame based on the Sub-adviser's forecast for interest
rates.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST PRESERVATION ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 27.5% to 42.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
40
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST SMALL-CAP VALUE PORTFOLIO: seeks to provide long-term Lee Munder
capital growth by investing primarily in Investments, Ltd;
small-capitalization stocks that appear to be undervalued. J.P. Morgan
The Portfolio will have a non-fundamental policy to invest, Investment
under normal circumstances, at least 80% of the value of its Management, Inc.;
net assets in small capitalization stocks. The Portfolio Salomon Brothers
will focus on common stocks that appear to be undervalued. Asset Management Inc;
Dreman Value
Management LLC
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: seeks a high T. Rowe Price
BALANCED level of total return by investing primarily in a Associates, Inc.
diversified portfolio of fixed income and equity securities.
The Portfolio normally invests approximately 60% of its
total assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-adviser's
outlook for the markets. The Sub-adviser concentrates common
stock investments in larger, more established companies, but
the Portfolio may include small and medium-sized companies
with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND PORTFOLIO: seeks to provide T. Rowe Price
high current income and capital growth by investing in International, Inc.
high-quality foreign and U.S. dollar-denominated bonds. The
Portfolio will invest at least 80% of its total assets in
fixed income securities, including high quality bonds issued
or guaranteed by U.S. or foreign governments or their
agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds
and mortgage and asset-backed securities of U.S. and foreign
issuers. The Portfolio generally invests in countries where
the combination of fixed-income returns and currency
exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-adviser believes that the
currency risk can be minimized through hedging. The
Portfolio may also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk bonds ("junk
bonds"). In addition, the Portfolio may invest up to 30% of
its assets in mortgage-backed (including derivatives, such
as collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
41
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- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: seeks T. Rowe Price
long-term capital growth primarily through the common stocks Associates, Inc.
of companies that own or develop natural resources (such as
energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common
stocks of natural resource companies whose earnings and
tangible assets could benefit from accelerating inflation.
The Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
GARTMORE VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY GVIT DEVELOPING MARKETS FUND: seeks long-term capital Gartmore Global Asset
appreciation, under normal conditions by investing at least Management Trust;
80% of its total assets in stocks of companies of any size Gartmore Global
based in the world's developing economies. Under normal Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- -----------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: LARGE CAP GROWTH PORTFOLIO -- SERVICE Janus Capital
SHARES: seeks long- term growth of capital in a manner Management LLC
consistent with the preservation of capital. The Portfolio
invests at least 80% of its net assets in common stocks of
large-sized companies. Large-sized companies are those whose
market capitalizations fall within the range of companies in
the Russell 1000 Index at the time of purchase.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law.
Payments allocated to the fixed interest rate options become part of Pruco
Life's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment for contracts sold on or after May 1, 2003,
- --------------------------------------------------------------------------------
42
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
or upon subsequent state approval. This higher interest rate will not apply to
amounts transferred from other investment options within the contract or amounts
remaining in this option for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL,
you may allocate all or part of your initial purchase payment to the DCA Fixed
Rate Option (for all other contracts you may allocate all or part of a purchase
payment to the DCA Fixed Rate Option). Under this option, you automatically
transfer amounts over a stated period (currently, six or twelve months) from the
DCA Fixed Rate Option to the variable investment options and/or to the one-year
fixed interest rate option, as you select. We will invest the assets you
allocate to the DCA Fixed Rate Option in our general account until they are
transferred. Transfers to the one-year fixed interest rate option will remain in
the general account.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, if you choose to allocate all or part of a purchase payment to the DCA
Fixed Rate Option, the minimum amount of the purchase payment you may allocate
is $2,000 (for all other contracts, the minimum amount is $5,000). The first
periodic transfer will occur on the date you allocate your purchase payment to
the DCA Fixed Rate Option. Subsequent transfers will occur on the monthly
anniversary of the first transfer. Currently, you may choose to have the
purchase payment allocated to the DCA Fixed Rate Option transferred to the
selected variable investment options or to the one-year fixed interest rate
option in either six or twelve monthly installments, and you may not change that
number of monthly installments after you have chosen the DCA Fixed Rate Option.
You may allocate to both the six-month and twelve-month options. FOR CONTRACTS
SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL, you may
allocate to both the six-month and twelve-month options, but the minimum amount
of your initial purchase payment that may be allocated to one or the other is
$2,000. (In the future, we may make available other numbers of transfers and
other transfer schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the investment options into which the DCA Fixed Rate
Option assets are transferred. You may make a one time transfer of the remaining
value out of your DCA Fixed Rate Option, if you so choose. Transfers from the
DCA Fixed Rate Option do not count toward the maximum number of free transfers
allowed under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
THE MARKET VALUE ADJUSTMENT OPTION IS AVAILABLE TO STRATEGIC PARTNERS FLEXELITE
CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL. THIS
OPTION MAY NOT BE AVAILABLE IN YOUR STATE.
Under the market value adjustment option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will be
no less than the minimum interest rate dictated by
- --------------------------------------------------------------------------------
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
applicable state law with respect to any guarantee period. This option is not
available for contracts issued in some states. Please see your contract. The
market value adjustment option is registered separately from the variable
investment options, and the amount of market value adjustment option securities
registered is stated in that registration statement.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE
30-DAY PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL
BE SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at least
$1,000 if you choose this option.
We refer to interest rates as annual rates, although we credit interest
within each guarantee period on a daily basis. The daily interest that we credit
is equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center until
the earliest to occur of any of the following events: (a) full surrender of the
contract, (b) commencement of annuity payments or settlement, (c) end of the
guarantee period, (d) transfer of value in the guarantee period, (e) payment of
a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a) withdraw or transfer the value of the guarantee period,
(b) allocate the value to another available guarantee period or other investment
option (provided that the new guarantee period ends prior to the annuity
date). You will receive the interest rate applicable on the date we receive
your instruction, or
(c) apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
contract value in your maturing guarantee period, we will reinvest the amount in
the Prudential Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) delineated immediately above,
you will receive the current interest rate applicable to the guarantee period
having the same duration as the guarantee period that just matured, which is
offered on the day immediately following the end of the matured guarantee
period. However, if at that time we do not offer a guarantee period with the
same duration as that which matured, you will then receive the current interest
rate applicable to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed by
us and the interest amount that your money will earn is guaranteed by us to be
at least the minimum interest rate dictated by applicable state law.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life.
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment or transfer contract value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected by changes
in interest rates, among other factors. The market value adjustment that we
assess against your contract value if you withdraw or transfer
- --------------------------------------------------------------------------------
44
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
outside the 30-day period discussed above involves our attributing to you a
portion of our investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in a
reduction of the withdrawal proceeds that you receive.) For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining contract value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above. The laws of certain states may prohibit us from imposing a
market value adjustment on the annuity date.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFITS IN YOUR GUARANTEE PERIOD DOES NOT DEPEND ON THE INVESTMENT
PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE HOLD WITH RESPECT TO YOUR
GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET VALUE ADJUSTMENT, WE DO
NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS AND OTHER INSTRUMENTS
THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. The minimum
transfer amount is the lesser of $250 or the amount in the investment option
from which the transfer is to be made. In addition, you can transfer your
contract value out of a market value adjustment guarantee period into another
market value adjustment guarantee period, into a variable investment option, or
into a one-year fixed interest rate option, although a market value adjustment
will apply to any transfer you make outside the 30-day period discussed above.
You may transfer contract value into the market value adjustment option at any
time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received in good order by us, or by certain entities that we have
specifically designated. Our business day generally closes at 4:00 p.m. Eastern
time. Our business day may close earlier, for example if regular trading on the
New York Stock Exchange closes early. Transfer requests received after the close
of the business day will take effect at the end of the next business day.
With regard to the market value adjustment option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer from
the market value adjustment option, but you do not specify the guarantee period
from which funds are to be taken, then we will transfer funds from the guarantee
period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE
ONE YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
THE PERIOD THAT YOU SELECT. TRANSFERS FROM THE DCA FIXED RATE OPTION CANNOT BE
MADE INTO THE MARKET VALUE ADJUSTMENT OPTION BUT CAN BE MADE INTO THE FIXED RATE
OPTION, AT OUR DISCRETION. WE CURRENTLY ALLOW TRANSFERS INTO THE FIXED RATE
OPTION.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. Currently we charge
$10 for each transfer after the twelfth in a contract year, and we have the
right to increase this charge up to $30. (Dollar Cost Averaging and Auto-
Rebalancing transfers do not count toward the 12 free transfers per year. Nor do
transfers made during the 30-day period immediately following the end of a
guarantee period count against the 12 free transfers.) If a transfer that you
request out of the market value adjustment option will be subject to a transfer
charge, then:
- - We will deduct the transfer charge proportionally from the contract value in
each guarantee period, where you have directed us to transfer funds from
several guarantee periods; and
- - If you have directed us to transfer the full contract value out of a
guarantee period, then we will first deduct the transfer charge and
thereafter transfer the remaining amount; and
- - In any event, we will deduct the applicable transfer charge prior to
effecting the transfer.
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions we may take in the future, we have adopted the following specific
restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio),
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
we track amounts exceeding a certain dollar threshold that were transferred
into the option. If you transfer such amount into a particular variable
investment option, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another variable
investment option, then upon the Transfer Out, the former variable investment
option becomes restricted (the "Restricted Option"). Specifically, we will
not permit subsequent transfers into the Restricted Option for 90 calendar
days after the Transfer Out if the Restricted Option invests in a
non-international fund, or 180 calendar days after the Transfer Out if the
Restricted Option invests in an international fund. For purposes of this
rule, we do not (i) count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals and
(ii) categorize as a transfer the first transfer that you make after the
contract date, if you make that transfer within 30 calendar days after the
contract date. Even if an amount becomes restricted under the foregoing
rules, you are still free to redeem the amount from your contract at any
time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment options (OR FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON
SUBSEQUENT STATE APPROVAL, THE ONE-YEAR FIXED INTEREST RATE OPTION). Under this
feature, you cannot make transfers into the market value adjustment option and
transfers into a fixed rate option are at our discretion. You can have these
automatic transfers occur monthly, quarterly, semiannually or annually. By
investing amounts on a regular basis instead of investing the total amount at
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
one time, dollar cost averaging may decrease the effect of market fluctuation on
the investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against a loss in declining markets.
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you have
designated. The DCA account cannot participate in this feature.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually or annually. The rebalancing will occur on the last calendar day of
the period you have chosen, provided that the New York Stock Exchange is open on
that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code),
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and annuity payments. Scheduled transactions are processed and valued as of the
date they are scheduled, unless the scheduled day is not a business day. In that
case, the transaction will be processed and valued on the next business day,
unless (with respect to required minimum distributions, substantially equal
periodic payments under Section 72(t) of the Code, and annuity payments only),
the next business day falls in the subsequent calendar year, in which case the
transaction will be processed and valued on the prior business day.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. Thus, under "mirror voting," it is
possible that the votes of a small percentage of contract owners who actually
vote will determine the ultimate outcome. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the second contract
anniversary (or as required by state law if different). Annuity payments must
begin no later than the contract anniversary coinciding with or next following
the annuitant's 95th birthday (unless we agree to another date).
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners FlexElite variable annuity contract offers an optional
Guaranteed Minimum Income Benefit, which we describe below. Your annuity options
vary depending upon whether you choose this benefit.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1 for a period
shorter than five years (ten years for contracts sold on or after May 1, 2003,
or upon subsequent state approval), Option 3, or certain other annuity options
that we may make available. We do not deduct a withdrawal charge if you choose
Option 1 for a period of five years (ten years for contracts sold on or after
May 1, 2003, or upon subsequent state approval) or longer or Option 2. For
information about withdrawal charges, see Section 8, "What Are The Expenses
Associated With The Strategic Partners FlexElite Contract?"
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY PAYMENT
OPTIONS DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE THE OPTIONAL
LIFETIME FIVE INCOME BENEFIT, THERE ARE ADDITIONAL ANNUITY PAYMENT OPTIONS THAT
ARE ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS PROSPECTUS FOR
ADDITIONAL DETAILS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 1.50% a year for contracts sold on
or after May 1, 2003, or upon subsequent state approval (and 3% a year for all
other contracts).
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
income annuity option is prohibited by applicable law, then we will pay you a
lump sum in lieu of this option.
OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 1.50% a year for contracts sold on
or after May 1, 2003, or upon subsequent state approval (and 3% a year for all
other contracts). This option is not available if your contract is held in an
IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part or all of the contract value that we are
holding at any time.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked. This feature may not be
available in your state. You may not elect both GMIB and the Lifetime Five
Income Benefit.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the annual
interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described below.
At this point, the GMIB protected value will be increased by any subsequent
invested purchase payments and reduced by the effect of withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 75 or younger in order for you to elect the Guaranteed
Minimum Income Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts) of the average
GMIB protected value, described below.
- - Under the contract terms governing the GMIB, we can require GMIB participants
to invest only in designated underlying mutual funds or can require GMIB
participants to invest according to an asset allocation model.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING PERIOD
IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7TH CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET (AS
DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING WITH THE
DATE OF THE MOST RECENT RESET. IN LIGHT OF THIS WAITING PERIOD UPON RESETS,
IT IS NOT RECOMMENDED THAT YOU RESET YOUR GUARANTEED MINIMUM INCOME BENEFIT
IF THE REQUIRED BEGINNING DATE UNDER IRS MINIMUM DISTRIBUTION REQUIREMENTS
WOULD COMMENCE DURING THE 7 YEAR WAITING PERIOD. SEE "MINIMUM DISTRIBUTION
REQUIREMENTS AND PAYMENT OPTION" IN SECTION 10 FOR ADDITIONAL INFORMATION ON
IRS REQUIREMENTS.
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Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the income
phase with the Guaranteed Minimum Income Benefit by submitting the necessary
forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset, the
contract value at the time of the reset), increased daily at an effective annual
interest rate of 5% starting on the date each invested purchase payment is made,
until the cap is reached (GMIB roll-up cap). We will reduce this amount by the
effect of withdrawals. The GMIB roll-up cap is equal to two times each invested
purchase payment (for a reset, two times the sum of (1) the contract value at
the time of the reset, and (2) any invested purchase payments made subsequent to
the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
- the contract anniversary coinciding with or next following the
annuitant's 80th birthday,
- the 7th contract anniversary, or
- 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced by the effect of withdrawals.
EFFECT OF WITHDRAWALS
In any contract year when the GMIB protected value is increasing at the rate of
5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value, calculated on the contract anniversary (or,
during the first contract year, on the contract date). Any withdrawals made
after the dollar-for-dollar limit has been reached will proportionally reduce
the GMIB protected value. We calculate the proportional reduction by dividing
the contract value after the withdrawal by the contract value immediately
following the withdrawal of any available dollar-for-dollar amount. The
resulting percentage is multiplied by the GMIB protected value after subtracting
the amount of the withdrawal that does not exceed 5%. In each contract year
during which the GMIB protected value has stopped increasing at the 5% rate,
withdrawals will reduce the GMIB protected value proportionally. The GMIB
roll-up cap is reduced by the sum of all reductions described above.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are January 1,
2006; 2.) an initial purchase payment of $250,000; 3.) an initial GMIB protected
value of $250,000; 4.) an initial 200% cap of $500,000; and 5.) an initial
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on February 1, 2006 (in the first contract year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
GMIB protected value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$500,000 to $490,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of
the first contract year is also reduced by the amount withdrawn (from $12,500
to $2,500).
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EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on March 1, 2006 (still within the first
contract year). Immediately before the withdrawal, the contract value is
$220,000 and the GMIB protected value is $241,941.95. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - The GMIB protected value is first reduced by the Remaining Limit (from
$241,941.95 to $239,441.95).
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
- B is the contract value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,441.95 X (1 -
($7,500/$217,500)), or $231,185.33.
- The GMIB 200% cap is reduced by the sum of all reductions above ($490,000
- $2,500 - $8,256.62, or $479,243.38).
- - The Remaining Limit is set to zero (0) for the balance of the first contract
year.
EXAMPLE 3. DOLLAR-FOR-DOLLAR LIMIT IN SECOND CONTRACT YEAR
A $10,000 withdrawal is made on the first anniversary of the contract date,
January 1, 2007 (second contract year). Prior to the withdrawal, the GMIB
protected value is $240,837.69. The dollar-for-dollar limit is equal to 5% of
this amount, or $12,041.88. As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $240,837.69 to $230,837.69).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$479,243.38 to $469,243.38).
- - The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.88 to $2,041.88).
GMIB RESET FEATURE
You may elect to "reset" your GMIB protected value to equal your current
contract value twice over the life of the contract. You may only exercise this
reset option if the annuitant has not yet reached his or her 76th birthday. If
you reset, you must wait a new 7-year period from the most recent reset to
exercise the Guaranteed Minimum Income Benefit. Further, we will reset the GMIB
roll-up cap to equal two times the GMIB protected value as of such date.
Additionally, if you reset, we will determine the GMIB payout amount by using
the GMIB guaranteed annuity purchase rates (specified in your contract) based on
the number of years since the most recent reset. These purchase rates may be
less advantageous than the rates that would have applied absent a reset.
PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
(where applicable) of the annuitant (and, if there is one, the co-annuitant).
After we first deduct a charge for any applicable premium taxes that we are
required to pay, the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value--that is, the value of the contract adjusted for
any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges--as of the date you exercise the GMIB payout option
applied to the current annuity purchase rates then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves lifetime payments with a period certain of ten years. In
calculating the amount of the payments under the
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GMIB, we apply certain assumed interest rates, equal to 2% annually for waiting
a period of 7-9 years, and 2.5% annually for waiting periods of 10 years or
longer for contracts sold on or after January 20, 2004, or upon subsequent state
approval (and 2.5% annually for a waiting period of 7-9 years, 3% annually for a
waiting period of 10-14 years, and 3.5% annually for waiting periods of 15 years
or longer for all other contracts).
GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the later of the contract anniversary coinciding with
or next following the annuitant's attainment of age 95 (age 92 for contracts
used as a funding vehicle for IRAs).
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB, such as the annuity purchase rates, (which include
assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing non-GMIB annuity
payout options. Therefore, you may generate higher income payments if you were
to annuitize a lower contract value at the current annuity purchase rates, than
if you were to annuitize under the GMIB with a higher GMIB protected value than
your contract value but at the annuity purchase rates guaranteed under the GMIB.
TERMINATING THE GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is fully
surrendered, on the date the death benefit is payable to your beneficiary
(unless your surviving spouse elects to continue the contract), or on the date
that your contract value is transferred to begin making annuity payments. The
GMIB may also be terminated if you designate a new annuitant who would not be
eligible to elect the GMIB based on his or her age at the time of the change.
Upon termination of the GMIB, we will deduct the charge from your contract
value for the portion of the
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contract year since the prior contract anniversary (or the contract date if in
the first contract year).
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of the life of the annuitant (and possibly
co-annuitant) (life annuities). There are certain assumptions that are common to
both fixed period annuities and life annuities. In each type of annuity, we
assume that the value you apply at the outset toward your annuity payments earns
interest throughout the payout period. For annuity options within the GMIB, this
interest rate ranges from 2% to 2.5% for contracts sold on or after January 20,
2004, or upon subsequent state approval (and 2.5% to 3.5% for all other
contracts). For non-GMIB annuity options, the guaranteed minimum rate is 3% (or
1.5% depending on the option elected and the version of the contract). The GMIB
guaranteed annuity purchase rates in your contract depict the minimum amounts we
will pay (per $1000 of adjusted contract value). If our current annuity purchase
rates on the annuity date are more favorable to you than the guaranteed rates,
we will make payments based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted contract value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such a
reduced age, we base our calculations on a younger person, who generally would
live longer and therefore draw life annuity payments over a longer time period.
Given the longer pay-out period, the payments made to the younger person would
be less than those made to an older person. We make two such age adjustments:
1. First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by either
(a) four years, for life annuities under the GMIB sold in contracts on or
after January 20, 2004, or upon subsequent state approval or (b) two years,
with respect to guaranteed payments under life annuities not involving GMIB,
as well as GMIB payments under contracts not described in (a) immediately
above. For the reasons explained above in this section, the four year age
reduction causes a greater reduction in the amount of the annuity payments
than does the two-year age reduction.
2. Second, for life annuities under both versions of GMIB as well as guaranteed
payments under life annuities not involving GMIB, we make a further age
reduction according to the table in your contract entitled "Translation of
Adjusted Age." As indicated in the table, the further into the future the
first
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3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
CONTINUED
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
annuity payment is, the longer we expect the person receiving those payments
to live, and the more we reduce the annuitant's (or co-annuitant's) age.
CURRENT ANNUITY PAYMENTS
Immediately above, we have referenced how we determine annuity payments based on
"guaranteed" annuity purchase rates. By "guaranteed" annuity purchase rates, we
mean the minimum annuity purchase rates that are set forth in your annuity
contract and thus contractually guaranteed by us. "Current" annuity purchase
rates, in contrast, refer to the annuity purchase rates that we are applying to
contracts that are entering the annuity phase at a given point in time. These
current annuity purchase rates vary from period to period, depending on changes
in interest rates and other factors. We do not guarantee any particular level of
current annuity purchase rates. When calculating current annuity purchase rates,
we use the actual age of the annuitant (or co-annuitant), rather than any
reduced age.
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4:
WHAT IS THE
DEATH BENEFIT?
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner or last survivor, if there are spousal joint owners, dies. However, if
the contract is jointly owned, the owner must name the joint owner and the joint
owner must name the owner as the beneficiary. For entity-owned contracts, we pay
a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the sole owner dies during the accumulation phase, we will, upon receiving
appropriate proof of death and any other needed documentation in good order
(proof of death), pay a death benefit to the beneficiary designated by the
owner. If there is a sole owner and there is only one beneficiary who is the
owner's spouse, then the surviving spouse may continue the contract under the
Spousal Continuance Benefit. If there are an owner and joint owner of the
contract, and the owner's spouse is both the joint owner and the beneficiary on
the date of death, then, at the death of the first to die, the death benefit
will be paid to the surviving owner, or the surviving owner may continue the
contract under the Spousal Continuance Benefit (FOR CONTRACTS SOLD ON OR AFTER
MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL. FOR ALL OTHER CONTRACTS, if the
owner and joint owner are spouses we will pay this death benefit upon the death
of the last surviving spouse who continues the contract as the sole owner.) If
the contract has an owner and a joint owner and they are not spouses at the time
one dies, we will pay the contract value and the contract will end. Joint
ownership may not be allowed in your state.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order). We impose no market value adjustment on contract value held within
the market value adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or (i) if
you have chosen a Guaranteed Minimum Death Benefit (GMDB), the GMDB protected
value or (ii) if you have chosen the Highest Daily Value Death Benefit, a
death benefit equal to the highest daily value (computed as detailed below in
this section).
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, you may elect (i) the Guaranteed Minimum Death Benefit if you are age
85 or younger when you purchase the contract or (ii) the Highest Daily Value
Death Benefit if you are 79 or younger when you purchase the contract.
FOR ALL OTHER CONTRACTS, you may elect the base death benefit if you are 85
or younger and you may elect a GMDB if you are 79 or younger when you purchase
the contract.
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole owner or the first to die of
the owner or joint owner during the accumulation phase. You cannot elect a GMDB
option if you choose the Highest Daily Value Death Benefit.
The GMDB protected value option can be equal to the:
- GMDB roll-up,
- GMDB step-up, or
- Greater of the GMDB roll-up and the GMDB step-up.
The GMDB protected value is calculated daily.
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WHAT IS THE DEATH BENEFIT? CONTINUED
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
GMDB ROLL-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB roll-up is equal to the invested purchase
payments, increased daily at an effective annual interest rate of 5% (SUBJECT TO
A 200% CAP FOR CONTRACTS SOLD PRIOR TO MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL) starting on the date that each invested purchase payment is made. The
GMDB roll-up value (AND THE CAP FOR CONTRACTS SOLD PRIOR TO MAY 1, 2003, OR UPON
SUBSEQUENT STATE APPROVAL) will increase by subsequent invested purchase
payments and reduce by the effect of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the later of:
- - the contract anniversary coinciding with or next following the sole owner's
or older owner's 80th birthday, or
- - the 5th contract anniversary (APPLICABLE ONLY TO CONTRACTS SOLD ON OR AFTER
MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL).
However, the GMDB protected value will still increase by subsequent invested
purchase payments and reduce by the effect of withdrawals.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, withdrawals will first reduce the GMDB protected value on a
dollar-for-dollar basis up to the first 5% of GMDB protected value calculated on
the contract anniversary (on the contract date in the first contract year), then
proportionally by any amounts exceeding the 5%. FOR ALL OTHER CONTRACTS,
withdrawals will reduce the GMDB protected value and the cap proportionally.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, if the sole owner or the older of the owner and joint owner is between
age 80 and 85 on the contract date, the GMDB roll-up is equal to the invested
purchase payments, increased daily at an effective annual interest rate of 3% of
all invested purchase payments, starting on the date that each invested purchase
payment is made. We will increase the GMDB roll-up by subsequent invested
purchase payments and reduce it by the effect of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the 5th contract anniversary. However we will continue to reduce the GMDB
protected value by the effect of withdrawals.
Withdrawals will first reduce the GMDB protected value on a dollar-for-dollar
basis up to the first 3% of GMDB protected value calculated on the contract
anniversary (on the contract date in the first contract year), then
proportionally by any amounts exceeding the 3%.
GMDB STEP-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB step-up before the first contract anniversary is
the initial invested purchase payment increased by subsequent invested purchase
payments, and proportionally reduced by the effect of withdrawals. The GMDB
step-up on each contract anniversary will be the greater of the previous GMDB
step-up and the contract value as of such contract anniversary. Between contract
anniversaries, the GMDB step-up will increase by invested purchase payments and
reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value
on the later of:
- - the contract anniversary coinciding with or next following the sole or older
owner's 80th birthday, or
- - the 5th contract anniversary (APPLICABLE ONLY TO CONTRACTS SOLD ON OR AFTER
MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL.)
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The new protected value is $60,000, or
75% of what it was before the withdrawal.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB step-up
to the greater of the then current GMDB step-up or the contract value as of that
contract anniversary. Thereafter, we will only increase the GMDB protected value
by subsequent invested purchase payments and proportionally reduce it by
withdrawals.
GREATER OF STEP-UP AND ROLL-UP GUARANTEED MINIMUM DEATH BENEFIT
Under this option, the protected value is equal to the greater of the step-up
value and the roll-up value.
If you have chosen the base death benefit and death occurs after age 80, the
beneficiary will receive the base death benefit described above. If you have
chosen the Guaranteed Minimum Death Benefit option and death occurs on or after
age 80, the beneficiary will receive the greater of: 1) the current contract
value as of the date that due proof of death is received, and 2) the protected
value of the GMDB roll-up or the GMDB step-up reduced proportionally by any
subsequent withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT
The Highest Daily Value Death Benefit (HDV) is a feature under which the death
benefit may be "stepped-up" on a daily basis to reflect increasing contract
value. HDV is currently being offered in those jurisdictions where we have
received regulatory approval, but is not being offered within the original
version of the Strategic Partners FlexElite contracts. Certain terms and
conditions may differ between jurisdictions once approved. The HDV is not
available if you elect the Guaranteed Minimum Death Benefit. Currently, HDV can
only be elected at the time you purchase your contract. Please note that you may
not terminate the HDV death benefit once elected. Moreover, because this benefit
may not be terminated once elected, you must, as detailed below, keep your
contract value allocated to certain Prudential Series Fund asset allocation
portfolios.
Under HDV, the amount of the benefit depends on whether the "target date" is
reached. The target date is reached upon the later of the contract anniversary
coinciding with or next following the elder owner's (or annuitant's, if entity
owned) 80th birthday or five years after the contract date. Prior to the target
date, the death benefit amount is increased on any business day if the contract
value on that day exceeds the most recently determined death benefit amount
under this option. These possible daily adjustments cease on and after the
target date, and instead adjustments are made only for purchase payments and
withdrawals.
IF THE CONTRACT HAS ONE CONTRACT OWNER, the contract owner must be age 79 or
less at the time the HDV is elected. If the contract has joint owners, the older
owner must be age 79 or less. If there are joint owners, death of the owner
refers to the first to die of the joint owners. If the contract is owned by an
entity, the annuitant must be age 79 or less, and death of the contract owner
refers to the death of the annuitant.
Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5, 2005,
must allocate contract value to one or more of the following asset allocation
portfolios of American Skandia Trust: AST Capital Growth Asset Allocation
Portfolio, AST Balanced Asset Allocation Portfolio, AST Conservative Asset
Allocation Portfolio, AST Preservation Asset Allocation Portfolio, and to the
AST Advanced Strategies Portfolio, AST First Trust Balanced Target Portfolio, or
AST First Trust Capital Appreciation Target Portfolio.
The HDV death benefit depends on whether death occurs before or after the
Death Benefit Target Date.
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4:
WHAT IS THE DEATH BENEFIT? CONTINUED
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
IF THE CONTRACT OWNER DIES BEFORE THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV as of the contract owner's date of death.
IF THE CONTRACT OWNER DIES ON OR AFTER THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV on the Death Benefit Target Date plus the sum of all purchase
payments less the sum of all proportional withdrawals since the Death Benefit
Target Date.
The amount determined by this calculation is increased by any purchase payments
received after the contract owner's date of death and decreased by any
proportional withdrawals since such date.
CALCULATION OF THE HIGHEST DAILY VALUE DEATH BENEFIT
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV death benefit is calculated. Each
example assumes an initial purchase payment of $50,000. Each example assumes
that there is one contract owner who is age 70 on the contract date.
EXAMPLE WITH MARKET INCREASE AND DEATH BEFORE DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals have been made. On
the date we receive due proof of death, the contract value is $75,000; however,
the Highest Daily Value was $90,000. Assume as well that the contract owner has
died before the Death Benefit Target Date. The death benefit is equal to the
greater of HDV or the base death benefit. The death benefit would be the Highest
Daily Value ($90,000) because it is greater than the amount that would have been
payable under the base death benefit ($75,000).
EXAMPLE WITH WITHDRAWALS
Assume that the contract value has been increasing due to positive market
performance and the contract owner made a withdrawal of $15,000 in contract year
7 when the contract value was $75,000. On the date we receive due proof of
death, the contract value is $80,000; however, the Highest Daily Value ($90,000)
was attained during the fifth contract year. Assume as well that the contract
owner has died before the Death Benefit Target Date. The Death Benefit is equal
to the greater of the Highest Daily Value (proportionally reduced by the
subsequent withdrawal) or the base death benefit.
Highest Daily Value = $90,000 - [$90,000 * $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Base Death Benefit = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The death benefit therefore is $80,000.
EXAMPLE WITH DEATH AFTER DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals had been made prior
to the Death Benefit Target Date. Further assume that the contract owner dies
after the Death Benefit Target Date, when the contract value is $75,000. The
Highest Daily Value on the Death Benefit Target Date was $80,000; however,
following the Death Benefit Target Date, the contract owner made a purchase
payment of $15,000 and later had taken a withdrawal of $5,000 when the contract
value was $70,000. The death benefit is equal to the greater of the Highest
Daily Value on the Death Benefit Target Date plus purchase payments minus
proportional withdrawals after the Death Benefit Target Date or the base death
benefit.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) * $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Base Death Benefit = max [$75,000, ($50,000 + $15,000) - [($50,000 + $15,000) *
$5,000/$70,000]]
= max [$75,000, $60,357]
= $75,000
The death benefit therefore is $88,214.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
Choice 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option within sixty days, the beneficiary will receive this
payout option.
Choice 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first-to-die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable, fixed interest rate, or the market value adjustment
options; name a beneficiary to receive any remaining death benefit in the
event of the beneficiary's death; and make withdrawals from the contract
value, in which case, any such withdrawals will not be subject to any
withdrawal charges. However, the beneficiary may not make any purchase
payments to the contract.
During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner.
If the owner and joint owner are spouses, any portion of the death benefit
not applied under Choice 3 within one year of the date of death of the first to
die must be distributed within five years of that date of death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 10, "What Are The Tax Considerations Associated With
The Strategic Partners FlexElite Contract?"
EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit (EAB) is an optional, supplemental death
benefit that provides a benefit payment upon the death of the sole owner or
first to die of the owner or joint owner during the accumulation phase. Any
Earnings Appreciator Benefit payment we make will be in addition to any other
death benefit payment we make under the contract. This feature may not be
available in your state.
The Earnings Appreciator Benefit is designed to provide a beneficiary with
additional funds when we pay a death benefit in order to defray the impact taxes
may have on that payment. Because individual circumstances vary, you should
consult with a qualified tax advisor to determine whether it would be
appropriate for you to elect the Earnings Appreciator Benefit.
If you want the Earnings Appreciator Benefit, you generally must elect it at
the time you apply for the contract. If you elect the Earnings Appreciator
Benefit, you may not later revoke it. You may, if you wish, select both the
Earnings Appreciator Benefit and the Highest Daily Value Death Benefit.
Upon our receipt of proof of death in good order, we will determine an
Earnings Appreciator Benefit by multiplying the Earnings Appreciator Benefit
percentage below by the lesser of: (i) the then-existing amount of
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WHAT IS THE DEATH BENEFIT? CONTINUED
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
earnings under the contract, or (ii) an amount equal to 3 times the sum of all
purchase payments previously made under the contract.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, for purposes of computing earnings and purchase payments under the
Earnings Appreciator Benefit, we calculate earnings as the difference between
the contract value and the sum of all purchase payments. Withdrawals reduce
earnings first, then purchase payments, on a dollar-for-dollar basis.
FOR ALL OTHER CONTRACTS, for purposes of computing earnings and purchase
payments under the EAB, we increase the initial purchase payments by any
subsequent purchase payments and reduce it proportionally by any
withdrawals--the total contract value less that resultant sum being earnings.
When determining the amount of 3 times the sum of all purchase payments
mentioned in this section, we exclude purchase payments made both (i) after the
first contract anniversary and (ii) within 12 months of the date of death
(proportionally reduced for withdrawals).
The EAB percentages are as follows:
- - 40% if the owner is age 70 or younger on the date the application is signed.
- - 25% if the owner is between ages 71 and 75 on the date the application is
signed.
- - FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, 15% if the owner is between ages 76 and 79 on the date the
application is signed.
If the contract is owned jointly, the age of the older of the owner or joint
owner determines the EAB percentage.
If the surviving spouse is continuing the contract in accordance with the
Spousal Continuance Benefit (See "Spousal Continuance Benefit" below), the
following conditions apply:
- - In calculating the Earnings Appreciator Benefit, we will use the age of the
surviving spouse at the time that the Spousal Continuance Benefit is
activated to determine the applicable EAB percentage.
- - For the original version of the contract, we will not allow the surviving
spouse to continue the Earnings Appreciator Benefit (or bear the charge
associated with this benefit) if he or she is age 76 or older on the date
that the Spousal Continuance Benefit is activated. FOR CONTRACTS SOLD ON OR
AFTER MAY 1, 2003, OR UPON STATE APPROVAL, we will not allow the surviving
spouse to continue the Earnings Appreciation Benefit (or bear the charge
associated with this benefit) if he or she is age 80 or older on the date the
Spousal Continuance Benefit is activated.
- - If the Earnings Appreciator Benefit is continued, we will calculate any
applicable Earnings Appreciator Benefit payable upon the surviving spouse's
death by treating the contract value (as adjusted under the terms of the
Spousal Continuance Benefit) as the first purchase payment.
TERMINATING THE EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract,
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit,
- - the date the contract terminates, or
- - the date you annuitize the contract.
Upon termination of the Earnings Appreciator Benefit, we cease imposing the
associated charge.
SPOUSAL CONTINUANCE BENEFIT
This benefit is available if, on the date we receive proof of the owner's death
in good order, (1) there is only one owner of the contract and there is only one
beneficiary who is the owner's spouse; or (2) FOR CONTRACTS SOLD ON OR AFTER MAY
1, 2003, OR UPON SUBSEQUENT STATE APPROVAL, there are an owner and joint owner
of the contract, and the joint owner is the owner's spouse and the owner's
beneficiary under the contract. In no event, however, can the annuitant be older
than the maximum age for annuitization on the date of the owner's death, nor can
the surviving spouse be older than 95 on the date of the owner's death. Assuming
the above
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
conditions are present, the surviving spouse can elect the Spousal Continuance
Benefit, but must do so no later than 60 days after furnishing proof of the
owner's death in good order.
Upon activation of the Spousal Continuance Benefit, the contract value is
adjusted to equal the amount of the death benefit to which the surviving spouse
would have been entitled. This contract value will serve as the basis for
calculating any death benefit payable upon the death of the surviving spouse. We
will allocate any increase in the adjusted contract value among the variable,
fixed interest rate and market value adjustment options in the same proportions
that existed immediately prior to the spousal continuance adjustment. We will
waive the $1,000 minimum requirement for the market value adjustment option.
Under the Spousal Continuance Benefit, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the Spousal
Continuance Benefit. In addition, the contract value allocated to the market
value adjustment option will remain subject to a potential market value
adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Benefit, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the sum of all invested purchase payments (adjusted for withdrawals),
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB ROLL-UP, we
will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB roll-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB STEP-UP, we
will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB step-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE HIGHEST DAILY VALUE DEATH BENEFIT, we will adjust the
contract value to equal the greater of:
- - the contract value, or
- - the Highest Daily Value,
plus the amount of any applicable Earnings Appreciator Benefit.
After we have made the adjustment to contract value set out immediately
above, we will continue to compute the GMDB roll-up, the GMDB step-up, or HDV
death benefit (as applicable), under the surviving spousal owner's contract, and
will do so in accordance with the preceding discussion in this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death benefit
payable under the Guaranteed Minimum Death Benefit or Highest Daily Value Death
Benefit provisions of the contract. The contract may not be continued upon the
death of a spouse who had assumed ownership of the contract through the exercise
of the Spousal Continuance Benefit.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be
continued for the surviving spousal owner. All provisions of the Guaranteed
Minimum Income Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will
remain the same as on the date of the owner's death. If the GMIB reset feature
was never exercised, the surviving spousal owner can exercise the GMIB reset
feature twice. If the original owner had previously exercised the GMIB reset
feature once, the surviving spousal owner can exercise the GMIB reset once.
However, the surviving spouse (or new annuitant designated by the surviving
spouse) must be under 76 years of age at the time of reset. If the original
owner had previously exercised the GMIB reset feature twice, the surviving
spousal owner may not exercise the GMIB reset at all. If the attained age of the
surviving spouse at activation of the Spousal Continuance Benefit, when added to
the remainder of the
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
GMIB waiting period to be satisfied, would preclude the surviving spouse from
utilizing the Guaranteed Minimum Income Benefit, we will revoke the Guaranteed
Minimum Income Benefit under the contract at that time and we will no longer
charge for that benefit.
IF YOU ELECTED THE LIFETIME FIVE INCOME BENEFIT, on the owner's death, the
Lifetime Five Income Benefit will end. However, if the owner's surviving spouse
would be eligible to acquire the Lifetime Five Income Benefit as if he/she were
a new purchaser, then the surviving spouse may elect the Lifetime Five Income
Benefit under the Spousal Continuance Benefit. The surviving spouse (or new
annuitant designated by the surviving spouse) must be at least 45 years of age
at the time of election.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death
(or first-to-die, in the case of joint owners), the Income Appreciator Benefit
will end unless the contract is continued by the deceased owner's surviving
spouse under the Spousal Continuance Benefit. If the contract is continued by
the surviving spouse, we will continue to pay the balance of any Income
Appreciator Benefit payments until the earliest to occur of the following: (a)
the date on which 10 years' worth of IAB automatic withdrawal payments or IAB
credits, as applicable, have been paid, (b) the latest date on which annuity
payments would have had to have commenced had the owner not died (i.e., contract
anniversary coinciding with or next following the annuitant's 95th birthday), or
(c) the contract anniversary coinciding with or next following the annuitants'
surviving spouse's 95th birthday.
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force for
7 contract years. If the attained age of the surviving spouse at activation of
the Spousal Continuation Benefit, when added to the remainder of the Income
Appreciator Benefit waiting period to be satisfied, would preclude the surviving
spouse from utilizing the Income Appreciator Benefit, we will revoke the Income
Appreciator Benefit under the contract at that time and we will no longer charge
for that benefit. If the Income Appreciator Benefit has been in force for 7
contract years or more, but the benefit has not been activated, the surviving
spouse may activate the benefit at any time after the contract has been
continued. If the Income Appreciator Benefit is activated after the contract is
continued by the surviving spouse, the Income Appreciator Benefit calculation
will exclude any amount added to the contract at the time of spousal continuance
resulting from any death benefit value exceeding the contract value.
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WHAT IS THE LIFETIME FIVE
INCOME BENEFIT?
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
LIFETIME FIVE INCOME BENEFIT
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an initial
principal value (called the "Protected Withdrawal Value"), regardless of the
impact of market performance on your contract value, subject to our rules
regarding the timing and amount of withdrawals. There are two options -- one is
designed to provide an annual withdrawal amount for life (the "Life Income
Benefit") and the other is designed to provide a greater annual withdrawal
amount (than the first option) as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the Withdrawal Benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the annuity has a contract value and Lifetime Five is in effect. Certain
benefits under Lifetime Five may remain in effect even if the contract value is
zero. The option may be appropriate if you intend to make periodic withdrawals
from your contract and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals -- the guarantees are not lost if you withdraw less than the maximum
allowable amount each year. Lifetime Five is only being offered in those
jurisdictions where we have received regulatory approval and will be offered
subsequently in other jurisdictions when we receive regulatory approval in those
jurisdictions. Certain terms and conditions may differ between jurisdictions
once approved.
Lifetime Five is subject to certain restrictions described below.
- - Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Lifetime Five Income Benefit.
- - The annuitant must be at least 45 years old when Lifetime Five is elected.
- - Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit or Income Appreciator Benefit.
- - Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5,
2005, must allocate contract value to one or more of the following asset
allocation portfolios of the American Skandia Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, AST Preservation Asset Allocation
Portfolio, and to the AST Advanced Strategies Portfolio, AST First Trust
Balanced Target Portfolio, or AST First Trust Capital Appreciation Target
Portfolio.
PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the contract following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Lifetime Five growing at 5% per year from
the date of your election, plus any subsequent purchase payments growing at 5%
per year from the application of the purchase payment to your contract, until
the earlier of the date of your first withdrawal or the 10th anniversary of the
benefit effective date, (B) the contract value as of the date of the first
withdrawal from your contract, prior to the withdrawal, and (C) the highest
contract value on each contract anniversary prior to the first withdrawal or on
the first 10 contract anniversaries after the benefit effective date
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
if earlier than the date of your first withdrawal. With respect to (A) and (C)
above, each value is increased by the amount of any subsequent purchase
payments.
- - If you elect Lifetime Five at the time you purchase your contract, the
contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Lifetime Five Benefit, the
contract value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your contract value is greater than the Protected Withdrawal
Value. If you elected Lifetime Five prior to March 20, 2006 and that original
election remains in effect, then you are eligible to step-up the Protected
Withdrawal Value on or after the 5th anniversary of the first withdrawal under
Lifetime Five. Under contracts with Lifetime Five elected prior to March 20,
2006, the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary following the preceding step-up. If you elected Lifetime Five on or
after March 20, 2006, then you are eligible to step-up the Protected Withdrawal
Value on or after the 3rd anniversary of the first withdrawal under Lifetime
Five. Under contracts with Lifetime Five elected on or after March 20, 2006, the
Protected Withdrawal Value can be stepped up again on or after the 3rd
anniversary following the preceding step-up. In either scenario (i.e., elections
before or after March 20, 2006) if you elect to step-up the Protected Withdrawal
Value, and on the date you elect to step-up, the charges under Lifetime Five
have changed for new purchasers, you may be subject to the new charge going
forward.
An optional automatic step-up (Auto Step-Up) feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary (5th
contract anniversary if the benefit was elected prior to March 20, 2006)
following the later of the first withdrawal under the benefit or the prior
step-up. At this time, your Protected Withdrawal Value will be stepped-up only
if 5% of the contract value exceeds the Annual Income Amount by 5% or more. If
5% of the contract value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive contract
anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd (5th if the benefit was elected prior to March
20, 2006) contract anniversary following the most recent step-up. If, on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current contract value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your contract value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount (as described below) are less than they would be if we
did not reflect the step-up in Protected Withdrawal Value, then we will increase
these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected Withdrawal
Value and on the greater of a "dollar-for-dollar" basis or a pro rata basis for
withdrawals in a contract year in excess of that amount until the Protected
Withdrawal Value is reduced to zero. At that point, the Annual Withdrawal Amount
will be zero until such time (if any) as the contract reflects a Protected
Withdrawal Value
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
(for example, due to a step-up or additional purchase payments being made into
the contract).
ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will not
reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of the
Excess Income to the contract value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of the
withdrawal, including any withdrawal charges that may apply. A withdrawal can be
considered Excess Income under the Life Income Benefit even though it does not
exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect
a step-up, your Annual Income Amount increases to equal 5% of your contract
value after the step-up if such amount is greater than your Annual Income
Amount. Your Annual Income Amount also increases if you make additional purchase
payments. The amount of the increase is equal to 5% of any additional purchase
payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the purchase payment is made. A
determination of whether you have exceeded your Annual Income Amount is made at
the time of each withdrawal; therefore, a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
Excess Withdrawal to the contract value immediately prior to such withdrawal
(see the examples of this calculation below). Reductions include the actual
amount of the withdrawal, including any withdrawal charges that may apply. When
you elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
contract value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional purchase payments. The amount of the increase is equal to 7% of any
additional purchase payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each contract year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income Benefit in any contract year, you cannot carry-over the
unused portion of the Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of $250,000;
3.) the contract value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the contract value is equal to $263,000;
and 5.) the contract value on February 1, 2010 is equal to $280,000. The values
set forth here are purely hypothetical, and do not reflect the charge for
Lifetime Five.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250
- - Annual Income Amount for future contract years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current contract year = $0
- - Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future contract years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/contract value
before Excess Withdrawal X Annual Withdrawal Amount = $6,450/($263,000 -
$18,550) X $18,550 = $489
- - Annual Withdrawal Amount for future contract years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current contract year = $0
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- - Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250
= $623
- - Annual Income Amount for future contract years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater of
a dollar-for-dollar reduction or a proportional reduction.
- - Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal/contract value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
- - Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 3 years, the Protected Withdrawal Value on February 1,
2010 would be reduced to $225,250 [$265,000 - ($13,250 X 3)]. If a step-up is
elected on February 1, 2010, then the following values would result:
- - Protected Withdrawal Value = contract value on February 1, 2010 = $280,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value is
5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000. If the step-up request on February 1, 2010 was due to
the election of the auto step-up feature, we would first check to see if an
auto step-up should occur by checking to see if 5% of the contract value
exceeds the Annual Income Amount by 5% or more. 5% of the contract value is
equal to 5% of $280,000, which is $14,000. 5% of the Annual Income Amount
($13,250) is $662.50, which added to the Annual Income Amount is $13,912.50.
Since 5% of the contract value is greater than $13,912.50, the step-up would
still occur in this scenario, and all of the values would be increased as
indicated above.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value. Current
Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore, the Annual
Withdrawal Amount is increased to $19,600.
BENEFITS UNDER LIFETIME FIVE
- - If your contract value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your contract value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent contract years we make payments that
equal either the Annual Income Amount or the Annual Withdrawal Amount. You
will not be able to change the option after your election and no further
purchase payments will be accepted under your contract. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current contract year that reduced
your contract value to zero are more than the Annual Income Amount but less
than or equal to the Annual Withdrawal
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
Amount and amounts are still payable under the Withdrawal Benefit, you will
receive the payments under the Withdrawal Benefit. In the year of a
withdrawal that reduced your contract value to zero, we will make an
additional payment to equal any remaining Annual Withdrawal Amount and make
payments equal to the Annual Withdrawal Amount in each subsequent year (until
the Protected Withdrawal Value is depleted). Once your contract value equals
zero no further purchase payments will be accepted under your contract.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected Withdrawal
Value, you can elect one of the following three options:
1. apply your contract value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with five
payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the contract value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the contract value or surrender value,
but any withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable withdrawal charges). If you surrender your
contract, you will receive the current contract value, not the Protected
Withdrawal Value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides a
guarantee that if your contract value declines due to market performance, you
will be able to receive your Protected Withdrawal Value or Annual Income
Amount in the form of periodic benefit payments.
ELECTION OF LIFETIME FIVE
WITH RESPECT TO THE SUBSEQUENT VERSION OF STRATEGIC PARTNERS FLEXELITE SOLD ON
OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL, Lifetime Five can be
elected at the time you purchase your contract, or after the contract date. WITH
RESPECT TO THE ORIGINAL VERSION OF STRATEGIC PARTNERS FLEXELITE, Lifetime Five
can be elected only after the contract date. Elections of
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Lifetime Five are subject to our eligibility rules and restrictions. The
contract owner's contract value as of the date of election will be used as the
basis to calculate the initial Protected Withdrawal Value, the initial Annual
Withdrawal Amount, and the initial Annual Income Amount.
TERMINATION OF LIFETIME FIVE
Lifetime Five terminates automatically when your Protected Withdrawal Value and
Annual Income Amount reach zero. You may terminate Lifetime Five at any time by
notifying us. If you terminate Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
- - upon your surrender of the contract,
- - upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five benefit if your spouse elects the spousal continuance option
and your spouse would then be eligible to elect the benefit as if he/she were
a new purchaser),
- - upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
- - upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes the
benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you will only be permitted to
re-elect the benefit or elect the Spousal Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and
prior to March 20, 2006, and you terminate Lifetime Five, there will be no
waiting period before you can re-elect the benefit or elect Spousal Lifetime
Five. However, once you choose to re-elect/elect, the waiting period described
above will apply to subsequent re-elections. If you elected Lifetime Five after
the time you purchased your contract, but prior to March 20, 2006, and you
terminate Lifetime Five, you must wait until the contract anniversary following
your cancellation before you can re-elect the benefit or elect Spousal Lifetime
Five. Once you choose to re-elect/elect, the waiting period described above will
apply to subsequent re-elections. We reserve the right to limit the
re-election/election frequency in the future. Before making any such change to
the re-election/ election frequency, we will provide prior notice to contract
owners who have an effective Lifetime Five Income Benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
The Spousal Lifetime Five Income Benefit (Spousal Lifetime Five) described below
is only being offered in those jurisdictions where we have received regulatory
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
approval and will be offered subsequently in other jurisdictions when we receive
regulatory approval in those jurisdictions. Certain terms and conditions may
differ between jurisdictions once approved. Currently, if you elect Spousal
Lifetime Five and subsequently terminate the benefit, there will be a
restriction on your ability to re-elect Spousal Lifetime Five and Lifetime Five.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit. Spousal Lifetime Five must be elected based on two Designated Lives, as
described below. Each Designated Life must be at least 55 years old when the
benefit is elected. Spousal Lifetime Five is not available if you elect any
other optional living or death benefit. As long as your Spousal Lifetime Five
Income Benefit is in effect, you must allocate your contract value in accordance
with the then permitted and available option(s).
We offer a benefit that guarantees until the later death of two natural
persons that are each other's spouses at the time of election of Spousal
Lifetime Five and at the first death of one of them (the "Designated Lives",
each a "Designated Life") the ability to withdraw an annual amount (Spousal Life
Income Benefit) equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of market performance on
the contract value, subject to our rules regarding the timing and amount of
withdrawals. The Spousal Life Income Benefit may remain in effect even if the
contract value is zero. Spousal Lifetime Five may be appropriate if you intend
to make periodic withdrawals from your annuity, wish to ensure that market
performance will not affect your ability to receive annual payments and you wish
either spouse to be able to continue the Spousal Life Income Benefit after the
death of the first. You are not required to make withdrawals as part of the
benefit--the guarantees are not lost if you withdraw less than the maximum
allowable amount each year under the rules of the benefit.
INITIAL PROTECTED WITHDRAWAL VALUE
The initial Protected Withdrawal Value is used to determine the amount of the
initial annual payment under the Spousal Life Income Benefit. The initial
Protected Withdrawal Value is determined as of the date you make your first
withdrawal under the contract following your election of Spousal Lifetime Five.
The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Spousal Lifetime Five growing at 5% per
year from the date of your election, plus any subsequent purchase payments
growing at 5% per year from the application of the purchase payment to your
contract, until the earlier of the date of your first withdrawal or the 10th
anniversary of the benefit effective date, (B) the contract value as of the date
of the first withdrawal from your contract, prior to the withdrawal, and (C) the
highest contract value on each contract anniversary prior to the first
withdrawal or on the first 10 contract anniversaries after the benefit effective
date if earlier than the date of your first withdrawal. With respect to (A) and
(C) above, each value is increased by the amount of any subsequent purchase
payments.
- - If you elect Spousal Lifetime Five at the time you purchase your contract,
the contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Spousal Lifetime Five
Benefit, the contract value on the date of your election of Spousal Lifetime
Five will be used to determine the initial Protected Withdrawal Value.
ANNUAL INCOME AMOUNT UNDER THE SPOUSAL LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Spousal Lifetime Five, if your cumulative withdrawals in
a contract year are less than or equal to the Annual Income Amount, they will
not reduce your Annual Income Amount in subsequent contract years, but any such
withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in
that contract year. If your cumulative withdrawals are in excess of the
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Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent
years will be reduced (except with regard to required minimum distributions) by
the result of the ratio of the Excess Income to the contract value immediately
prior to such withdrawal (see examples of this calculation below). Reductions
include the actual amount of the withdrawal, including any withdrawal charges
that may apply.
You may elect to step-up your Annual Income Amount if, due to positive market
performance, 5% of your contract value is greater than the Annual Income Amount.
You are eligible to step-up the Annual Income Amount on or after the 3rd
anniversary of the first withdrawal under Spousal Lifetime Five. The Annual
Income Amount can be stepped up again on or after the 3rd anniversary of the
preceding step-up. If you elect to step-up the Annual Income Amount, and on the
date you elect to step-up, the charges under Spousal Lifetime Five have changed
for new purchasers, you may be subject to the new charge at the time of such
step-up. When you elect a step-up, your Annual Income Amount increases to equal
5% of your contract value after the step-up. Your Annual Income Amount also
increases if you make additional purchase payments. The amount of the increase
is equal to 5% of any additional purchase payments. Any increase will be added
to your Annual Income Amount beginning on the day that the step-up is effective
or the purchase payment is made. A determination of whether you have exceeded
your Annual Income Amount is made at the time of each withdrawal; therefore a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
An optional automatic step-up (Auto Step-Up) feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary following
the later of the first withdrawal under the benefit or the prior step-up. At
this time, your Annual Income Amount will be stepped-up only if 5% of the
contract value exceeds the Annual Income Amount by 5% or more. If 5% of the
contract value does not exceed the Annual Income Amount by 5% or more, then an
Auto Step-Up opportunity will occur on each successive contract anniversary
until a step-up occurs. Once a step-up occurs, the next Auto Step-Up opportunity
will occur on the 3rd contract anniversary following the most recent step-up.
If, on the date that we implement an Auto Step-Up to your Annual Income Amount,
the charge for Spousal Lifetime Five has changed for new purchasers, you may be
subject to the new charge at the time of such step-up.
Spousal Lifetime Five does not affect your ability to make withdrawals under
your contract or limit your ability to request withdrawals that exceed the
Annual Income Amount. Under Spousal Lifetime Five, if your cumulative
withdrawals in a contract year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent contract
years, but any such withdrawals will reduce the Annual Income Amount on a
dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount
under Spousal Life Income Benefit in any contract year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent contract years.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Annual Income Amount assume: 1.) the contract date and the
effective date of Spousal Lifetime Five are February 1, 2005; 2.) an initial
purchase payment of $250,000; 3.) the contract value on February 1, 2006 is
equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the
contract value is equal to $263,000; and 5.) the contract value on February 1,
2010 is equal to $280,000. The values set forth here are purely hypothetical,
and do not reflect the charge for the Spousal Lifetime Income Benefit.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484.33
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit
(5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250 Annual Income Amount for future contract years remains at $13,250
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
If $15,000 was withdrawn (more than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
EXAMPLE 3. STEP-UP OF THE ANNUAL INCOME AMOUNT
If a step-up of the Annual Income Amount is requested on February 1, 2010, the
request will be accepted because 5% of the contract value, which is $14,000 (5%
of $280,000), is greater than the Annual Income Amount of $13,250. The new
Annual Income Amount will be equal to $14,000.
If the step-up request was due to the election of the auto step-up feature,
the step-up would still occur because 5% of the contract value would exceed the
Annual Income Amount by more than 5%. (5% of 13,250 = $662.50; $13,250 + $662.50
= $13,912.50; $14,000 . $13,912.50).
BENEFITS UNDER SPOUSAL LIFETIME FIVE
- - To the extent that your contract value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount and amounts are still payable under the Spousal Life Income Benefit,
we will make an additional payment for that contract year equal to the
remaining Annual Income Amount for the contract year, if any. Thus, in that
scenario, the remaining Annual Income Amount would be payable even though
your contract value was reduced to zero. In subsequent contract years we make
payments that equal the Annual Income Amount as described above. No further
purchase payments will be accepted under your contract. We will make payments
until the first of the Designated Lives to die, and will continue to make
payments until the death of the second Designated Life as long as the
Designated Lives were spouses at the time of the first death. To the extent
that cumulative withdrawals in the current contract year that reduced your
contract value to zero are more than the Annual Income Amount, the Spousal
Life Income Benefit terminates and no additional payments will be made.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
1. apply your contract value to any annuity option available; or
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will make
payments until the first of the Designated Lives to die, and will continue
to make payments until the death of the second Designated Life as long as
the Designated Lives were spouses at the time of the first death.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with five payments certain using the same
basis that is used to calculate the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the same basis that is used to calculate
the single life fixed annuity rates guaranteed in your contract; and
2. the contract value.
- - If no withdrawal was ever taken, we will determine an initial Protected
Withdrawal Value and calculate an Annual Income Amount as if you made your
first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Spousal Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Spousal Lifetime Five is in effect will be treated,
for tax purposes, in the same way as any other withdrawals under the
contract. Spousal Lifetime Five does not directly affect the contract value
or surrender value, but any withdrawal will decrease the contract value by
the amount of the withdrawal (plus any applicable withdrawal charges). If you
surrender your contract, you will receive the current surrender value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Spousal Lifetime Five. Spousal Lifetime
Five provides a guarantee that if your contract value declines due to market
performance, you will be able to receive your Annual Income Amount in the
form of periodic benefit payments.
- - You must allocate your contract value in accordance with the then available
option(s) that we may permit in order to elect and maintain Spousal Lifetime
Five.
- - There may be circumstances where you will continue to be charged the full
amount for Spousal Lifetime Five even when the benefit is only providing a
guarantee of income based on one life with no survivorship.
- - In order for the surviving Designated Life to continue Spousal Lifetime Five
upon the death of an owner, the Designated Life must elect to assume
ownership of the contract under the spousal continuation benefit.
ELECTION OF AND DESIGNATIONS OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five can only be elected based on two Designated Lives.
Designated Lives must be natural persons who are each other's spouses at the
time of election of the benefit and at the death of the first of the Designated
Lives to die. Currently, the benefit may only be elected where the contract
owner, annuitant and beneficiary designations are as follows:
- - One contract owner, where the annuitant and the contract owner are the same
person and the beneficiary is the contract owner's spouse. The contract
owner/annuitant and the beneficiary each must be at least 55 years old at the
time of election; or
- - Co-contract owners, where the contract owners are each other's spouses. The
beneficiary designation must be the surviving spouse. The first named
contract owner must be the annuitant. Both contract owners must each be 55
years old at the time of election.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
No ownership changes or annuitant changes will be permitted once this benefit is
elected. However, if the contract is co-owned, the contract owner that is not
the annuitant may be removed without affecting the benefit.
Spousal Lifetime Five can be elected at the time that you purchase your
contract. We also offer existing contract owners the option to elect Spousal
Lifetime Five after the contract date of their contract, subject to our
eligibility rules and restrictions. Your contract value as of the date of
election will be used as a basis to calculate the initial Protected Withdrawal
Value and the Annual Income Amount.
Currently, if you terminate Spousal Lifetime Five, you will only be permitted
to re-elect the benefit or elect the Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit.
TERMINATION OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five terminates automatically when your Annual Income Amount
equals zero. You may terminate Spousal Lifetime Five at any time by notifying
us. If you terminate Spousal Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective and certain
restrictions on re-election of the benefit will apply as described above. We
reserve the right to further limit the frequency election in the future. Spousal
Lifetime Five terminates upon your surrender of the contract, upon the first
Designated Life to die if the contract is not continued, upon the second
Designated Life to die or upon your election to begin receiving annuity
payments.
The charge for Spousal Lifetime Five will no longer be deducted from your
contract value upon termination of the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your contract beginning
after age 70 1/2. Roth IRAs are not subject to these rules during the contract
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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WHAT IS THE
INCOME APPRECIATOR BENEFIT?
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
INCOME APPRECIATOR BENEFIT
THE INCOME APPRECIATOR BENEFIT (IAB) IS AVAILABLE TO STRATEGIC PARTNERS
FLEXELITE CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL. The IAB is an optional, supplemental income benefit that provides an
additional income amount during the accumulation period or upon annuitization.
The Income Appreciator Benefit is designed to provide you with additional funds
that can be used to help defray the impact taxes may have on distributions from
your contract. IAB may be suitable for you in other circumstances as well, which
you can discuss with your registered representative. Because individual
circumstances vary, you should consult with a qualified tax advisor to determine
whether it would be appropriate for you to elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
- - The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
- - If you choose the Income Appreciator Benefit, we will impose an annual charge
equal to 0.25% of your contract value. See Section 8, "What Are The Expenses
Associated With The Strategic Partners FlexElite Contract?"
ACTIVATION OF THE INCOME APPRECIATOR BENEFIT
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN IN
FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must send
us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
-- IAB OPTION 1 at annuitization as part of an annuity payment;
-- IAB OPTION 2 during the accumulation phase through the IAB automatic
withdrawal payment program; or
-- IAB OPTION 3 during the accumulation phase as an Income Appreciator
Benefit credit to your contract over a 10-year period.
Income Appreciator Benefit payments are treated as earnings and may be
subject to tax upon withdrawal. See Section 10, "What Are The Tax Considerations
Associated With The Strategic Partners FlexElite Contract?"
IF YOU DO NOT ACTIVATE THE BENEFIT PRIOR TO THE MAXIMUM ANNUITIZATION AGE YOU
MAY LOSE ALL OR PART OF THE IAB.
CALCULATION OF THE INCOME APPRECIATOR BENEFIT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the annuity
date). We do this by multiplying the current earnings in the contract by the
applicable Income Appreciator Benefit percentage based on the number of years
the Income Appreciator Benefit has been in force. For purposes of calculating
the Income Appreciator Benefit:
- - earnings are calculated as the difference between the contract value and the
sum of all purchase payments;
- - earnings do not include (1) any amount added to the contract value as a
result of the Spousal Continuance Benefit, or (2) if we were to permit you to
elect the Income Appreciator Benefit after the contract date, any earnings
accrued under the contract prior to that election;
- - withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
- - the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has been
in force.
<Table>
<Caption>
NUMBER OF YEARS INCOME
INCOME APPRECIATOR APPRECIATOR
BENEFIT BENEFIT
HAS BEEN IN FORCE PERCENTAGE
------------------ -----------
0-6 0%
7-9 15%
10-14 20%
15+ 25%
</Table>
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
IAB OPTION 1 -- INCOME APPRECIATOR BENEFIT AT ANNUITIZATION
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity date and add it to the adjusted contract value for purposes of
determining the amount available for annuitization. You may apply this amount to
any annuity or settlement option over the lifetime of the annuitant, joint
annuitants, or a period certain of at least 15 years (but not to exceed life
expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES,
WE WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
EFFECT OF INCOME APPRECIATOR BENEFIT ON GUARANTEED MINIMUM INCOME BENEFIT
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we use
to calculate the annuity payout amount will be the greater of:
1. the adjusted contract value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown in
the contract.
If you exercise the Guaranteed Minimum Income Benefit feature and activate
the Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
TERMINATING THE INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract;
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit;
- - the date the Income Appreciator Benefit amount is reduced to zero (generally
ten years after activation) under IAB Options 2 and 3;
- - the date of annuitization; or
- - the date the contract terminates.
Upon termination of the Income Appreciator Benefit, we cease imposing the
associated charge.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
You may choose IAB Option 1 at annuitization, but you may instead choose IAB
Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good order. Under IAB Options 2 and 3, you can
choose to have the Income Appreciator Benefit amounts paid or credited monthly,
quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY REMAINING
PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 -- INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay you
the Income Appreciator Benefit amount in equal installments over a 10-year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
amount from your contract value, in which case each combined payment must be at
least $100.
The maximum automated withdrawal payment amount that you may receive from
your contract value under this Income Appreciator Benefit program in any
contract year during the 10-year period may not exceed 10% of the contract value
as of the date you activate the Income Appreciator Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in contract value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal payment
amounts, but not to amounts attributable to the Income Appreciator Benefit.
After the ten-year payment period has ended, if the remaining contract value
is $2,000 or more, the contract will continue. If the remaining contract value
is less than $2,000 after the end of the 10-year payment period, we will pay you
the remaining contract value and the contract will terminate. If the contract
value falls below the minimum amount required to keep the contract in force due
solely to investment results before the end of the 10-year payment period, we
will continue to pay the Income Appreciator Benefit amount for the remainder of
the 10-year payment period.
DISCONTINUING THE INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT
PROGRAM UNDER IAB OPTION 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the contract value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the contract value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the variable
investment options, fixed interest rate options, or the market value adjustment
option in the same proportions as your most recent purchase payment allocation
percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for the
10-year payment period to the contract value in a lump sum before determining
the adjusted contract value. The adjusted contract value may be applied to any
annuity or settlement option that is paid over the lifetime of the annuitant,
joint annuitants, or a period certain of at least 15 years (but not to exceed
life expectancy).
IAB OPTION 3 -- INCOME APPRECIATOR BENEFIT CREDIT TO CONTRACT VALUE
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your contract value over a 10-year payment period. We
will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate options, or the market value
adjustment option. We will waive the $1,000 minimum requirement for the market
value adjustment option. We will calculate the Income Appreciator Benefit amount
on the date we receive your written request in good order. Once we have
calculated the Income Appreciator Benefit, the Income Appreciator Benefit credit
will not be affected by changes in contract value due to the investment
performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your contract
value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the contract
value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment
period be applied to an annuity or settlement option that is paid over the
lifetime of the annuitants, joint annuitants, or a period certain of at least 15
years (but not to exceed life expectancy).
EXCESS WITHDRAWALS
During the 10-year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is
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withdrawn from your contract value in a contract year that exceeds the sum of
(1) 10% of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated,
that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply a
new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated,
that have not been previously withdrawn, do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year is
less than the excess withdrawal threshold, the difference between the amount
withdrawn and the threshold can be carried over to subsequent years on a
cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
EFFECT OF TOTAL WITHDRAWAL ON INCOME APPRECIATOR BENEFIT
We will not make Income Appreciator Benefit payments after the date you make a
total withdrawal of the contract surrender value.
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HOW CAN I PURCHASE A STRATEGIC PARTNERS
FLEXELITE CONTRACT?
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. Unless we agree otherwise and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $500 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. Certain
age limits apply to certain features and benefits described herein. No
subsequent purchase payments may be made on or after the earliest of the 86th
birthday of:
- - the owner;
- - the joint owner;
- - the annuitant; or
- - the co-annuitant
Currently, the maximum aggregate purchase payment you may make is $20
million. We limit the maximum total purchase payments in any contract year,
other than the first to $2 million absent our prior approval. Depending on the
applicable state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable investment options, fixed interest rate options, or the market value
adjustment option based on the percentages you choose. The percentage of your
allocation to a particular investment option can range in whole percentages from
0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000 for
contracts sold on or after May 1, 2003, or upon subsequent state approval (for
all other contracts $5,000) and, allocations to the market value adjustment
option must be no less than $1,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information.
We will generally credit each subsequent purchase payment as of the business
day we receive it in good order at the Prudential Annuity Service Center. Our
business day generally closes at 4:00 p.m. Eastern time. Our business day may
close earlier, for example if regular trading on the New York Stock Exchange
closes early. Subsequent purchase payments received in good order after the
close of the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CREDIT ELECTION
We will notify you of your option to make a credit election thirty days before
your 3rd and 6th contract anniversaries. If you make a credit election, we will
add to your contract value a credit amount of 1% of the contract value as of the
applicable contract anniversary. The credit will be allocated to the variable or
fixed interest rate options or the market value adjustment
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
option in the same proportion as the contract value on the contract anniversary.
We must receive your credit election in good order by your contract anniversary
in order to add the credit to your contract value. This option is not available
if the annuitant or co-annuitant is 81 or older on the contract date, the
contract is continued under the Spousal Continuance Benefit, or you previously
elected not to take the credit.
After you make a credit election, amounts you withdraw will be subject to a
credit election withdrawal charge of 7% for the first three contract years since
your credit election.
These charges may be lower in certain states.
The credit election withdrawal charges are determined and applied in the same
manner as the withdrawal charges. Credits and related earnings are treated as
earnings under the contract.
We recoup the cost of the credit by assessing withdrawal charges for a longer
period of time. If you make a withdrawal during the credit election withdrawal
charge period you may be in a worse position than if you had declined the
credit. This credit option may not be available in your state.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment option(s) you choose.
To determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment
allocated to a variable investment option by the unit price of the accumulation
unit for that variable investment option. We calculate the unit price for each
variable investment option after the New York Stock Exchange closes each day and
then credit your contract. The value of the accumulation units can increase,
decrease, or remain the same from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments.
We reserve the right to terminate the contract, and pay the contract value to
you, in either of the following scenarios: (i) if immediately prior to the
annuity date, the contract value is less than $2000, or if the contract would
provide annuity payments of less than $20 per month and (ii) if during the
accumulation period, no purchase payment has been received during the
immediately preceding two contract years and each of the following is less than
$2000: (a) the total purchase payments (less withdrawals) made prior to such
period, and (b) the current contract value.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day we make a deduction for the insurance and administrative charges. These
charges cover our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, Highest Daily Value Death Benefit option, or Lifetime Five Income
Benefit option, the insurance and administrative cost also includes a charge to
cover our assumption of the associated risk. The mortality risk portion of the
charge is for assuming the risk that the annuitant(s) will live longer than
expected based on our life expectancy tables. When this happens, we pay a
greater number of annuity payments. We also incur the risk that the death
benefit amount exceeds the contract value. The expense risk portion of the
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract. The administrative
expense portion of the charge compensates us for the expenses associated with
the administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other) option
that you choose.
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE
APPROVAL, the death benefit charge is equal to:
- 1.65% on an annual basis if you choose the base benefit,
- 1.90% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option (i.e., 0.25% in addition to the
base death benefit charge),
- 2.00% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.35% in addition
to the base death benefit charge), or
- 2.15% on an annual basis if you choose the Highest Daily Value Death
Benefit (i.e., 0.50% in addition to the base death benefit charge).
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FOR ALL OTHER CONTRACTS:
- 1.60% on an annual basis if you choose the base benefit, and
- 1.80% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option (i.e., 0.20% in addition to the
base death benefit charge).
- 1.90% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.30% in addition
to the base death benefit charge).
We reserve the right to impose an additional insurance charge of 0.10%
annually of average contract value for contracts issued to those aged 76 or
older.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit. We impose an additional charge of 0.75% annually if you
choose the Spousal Lifetime Five Income Benefit. The 0.60% and 0.75% charges are
in addition to the charge we impose for the applicable death benefit, and are
deducted daily based on the contract value in the variable investment options.
Upon any reset of the amounts guaranteed under these benefits, we reserve the
right to adjust the charge to that being imposed at that time for new elections
of the benefits.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from these charges.
The insurance risk charge for your contract cannot be increased. Any profits
made from these charges may be used by us to pay for the costs of distributing
the contracts.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. When you make a credit
election, a 7% withdrawal charge will be applied to amounts withdrawn for the
three contract years following the credit election. The withdrawal charge may
also apply if you begin the income phase during these periods, depending upon
the annuity option you choose.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn. Full contract years are measured from the contract date with respect
to the initial withdrawal charge and from the date you make a credit election
with respect to the credit election withdrawal charge.
<Table>
<Caption>
FULL CONTRACT YEARS
FROM THE CONTRACT
DATE AND FROM THE
DATE YOU MAKE A
CREDIT ELECTION WITHDRAWAL CHARGE
- --------------------------------------------
0 7%
1 7%
2 7%
3 0%
</Table>
In certain states reduced withdrawal charges may apply for certain ages if a
credit election is made.
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We determine the "charge-free
amount" available to you in a given contract year on the contract anniversary
that begins that year. The charge-free amount in a given contract year is equal
to 10% of the sum of all purchase payments that you have made as of the
applicable contract anniversary. During the first contract year, the charge-free
amount is equal to 10% of the initial purchase payment.
When you make a withdrawal (including a withdrawal under the optional
Lifetime Five Income Benefit), we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all
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purchase payments, additional withdrawals will come from any earnings. We do not
impose withdrawal charges on earnings.
If a withdrawal is taken from a market value adjustment guarantee period
prior to the expiration of the rate guarantee period, we will make a market
value adjustment to the withdrawal amount. We will then apply a withdrawal
charge to the adjusted amount.
Withdrawal charges will never be greater than permitted by applicable law.
WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges and any market value adjustment upon receipt of proof that the owner or
a joint owner is terminally ill, or has been confined to an eligible nursing
home or eligible hospital continuously for at least three months after the
contract date. We will also waive the contract maintenance charge if you
surrender your contract in accordance with the above noted conditions. This
waiver is not available if the owner has assigned ownership of the contract to
someone else.
MINIMUM DISTRIBUTION REQUIREMENTS
FOR CONTRACTS SOLD ON OR AFTER MAY 1, 2003, OR UPON SUBSEQUENT STATE APPROVAL,
if a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 10, "What Are The Tax
Considerations Associated With The Strategic Partners Flex Elite Contract?"
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your contract
value is less than $100,000, we will deduct the lesser of $50 or 2% of your
contract value, for administrative expenses. (This fee may differ in certain
states). While this is what we currently charge, we may increase this charge up
to a maximum of $60. Also, we may raise the level of the contract value at which
we waive this fee. The charge will be deducted proportionately from each of the
contract's variable investment options, fixed interest rate options, and
guarantee periods within the market value adjustment option. This same charge
will also be deducted when you surrender your contract if your contract value is
less than $100,000.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. FOR CONTRACTS SOLD ON OR AFTER JANUARY 20, 2004, OR UPON SUBSEQUENT
STATE APPROVAL, we will deduct a charge equal to 0.50% per year of the average
GMIB protected value for the period the charge applies. FOR ALL OTHER CONTRACTS,
this is an annual charge equal to 0.45% of the average GMIB protected value for
the period the charge applies. We deduct the charge from your contract value on
each of the following events:
- - each contract anniversary,
- - when you begin the income phase of the contract,
- - upon a full withdrawal, and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's contract
value due to market performance. If the GMIB protected value increases, the
dollar amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options, the fixed interest rate options,
and the market value adjustment option. No market value adjustment will
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apply to the portion of the charge deducted from the market value adjustment
option. If you surrender your contract, begin receiving annuity payments under
the GMIB or any other annuity payout option we make available during a contract
year, or the GMIB terminates, we will deduct the charge for the portion of the
contract year since the prior contract anniversary (or the contract date if in
the first contract year). Upon a full withdrawal or if the contract value
remaining after a partial withdrawal is not enough to cover the applicable
Guaranteed Minimum Income Benefit charge, we will deduct the charge from the
amount we pay you.
THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your contract value. The
Income Appreciator Benefit charge is calculated:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or the first to die of the owner or joint
owner prior to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first to die of the owner or joint
owners prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option bears
to the total contract value. No market value adjustment will apply to the
portion of the charge deducted from the market value adjustment option. Upon a
full withdrawal, or if the contract value remaining after a partial withdrawal
is not enough to cover the then-applicable Income Appreciator Benefit charge,
the charge is deducted from the amount paid. The payment of the Income
Appreciator Benefit charge will be deemed to be made from earnings for purposes
of calculating other charges. THE FACT THAT WE IMPOSE THE CHARGE UPON A FULL OR
PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME
OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB charge
during the 10-year payment period contemplated by IAB Options 2 and 3. Moreover,
you should realize that amounts credited to your contract value under IAB Option
3 increase the contract value, and because the IAB fee is a percentage of your
contract value, the IAB fee may increase as a consequence of those additions.
EARNINGS APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Earnings Appreciator
supplemental death benefit. The charge for this benefit is based on an annual
rate of 0.30% of your contract value.
We calculate the charge on each of the following events:
- each contract anniversary,
- on the annuity date,
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- upon death of the sole or first to die of the owner or joint owner prior
to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at time of calculation and is
pro-rated based on the portion of the contract year since the date that the
Earnings Appreciator Benefit charge was last calculated.
Although the Earnings Appreciator Benefit charge may be calculated more
often, it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon death of the sole owner or first to die of the owner or joint owner
prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after the
partial withdrawal is not enough to cover the then applicable charge.
We withdraw this charge from each investment option (including each guarantee
period) in the same proportion that the amount allocated to the investment
option bears to the total contract value. No market value adjustment will apply
to the portion of the charge deducted from the market value adjustment option.
Upon a full withdrawal or if the contract value remaining after a partial
withdrawal is not enough to cover the then-applicable Earnings Appreciator
Benefit charge, we will deduct the charge from the amount we pay you. We will
deem the payment of the Earnings Appreciator Benefit charge as made from
earnings for purposes of calculating other charges.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $10 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made. The
transfer fee is deducted before the market value adjustment, if any, is
calculated.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company
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income taxes in the tax charges you pay under the contract. We reserve the right
to change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2006, the fees of these funds ranged from 0.38%
to 1.67% annually. For certain funds, expenses are reduced pursuant to expense
waivers and comparable arrangements. In general, these expense waivers and
comparable arrangements are not guaranteed, and may be terminated at any time.
For additional information about these fund fees, please consult the
prospectuses for the funds.
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR COMPLETE); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you indicate
that the withdrawal is to originate from the market value adjustment option, but
you do not specify which guarantee period is to be involved, then we will take
the withdrawal from the guarantee period that has the least time remaining until
its maturity date. If you indicate that you wish to make a withdrawal, but do
not specify the investment options to be involved, then we will take the
withdrawal from your contract value on a pro rata basis from each investment
option that you have. In that situation, we will aggregate the contract value in
each of the guarantee periods that you have within the market value adjustment
option for purposes of making that pro rata calculation. The portion of the
withdrawal associated with the market value adjustment option then will be taken
from the guarantee periods with the least amount of time remaining until the
maturity date, irrespective of the original length of the guarantee period. You
should be aware that a withdrawal may avoid a withdrawal charge based on the
charge-free amount that we allow, yet still be subject to a market value
adjustment.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options (other than a guarantee period within the market
value adjustment option). The minimum automated withdrawal amount you can make
is generally $100. An assignment of the contract terminates any automated
withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
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- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
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WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
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The tax considerations associated with the Strategic Partners FlexElite contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan (including contracts held by a
non-natural person, such as a trust, acting as an agent for a natural person),
or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA account, which can hold other permissible assets other than the annuity. The
terms and administration of the trust or custodial account in accordance with
the laws and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract, such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for these benefits could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for the owners
under age 59 1/2, the taxable income attributable to the charge for the benefit
could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option, that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
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TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS has
reserved the right to treat transactions it considers abusive as ineligible for
this favorable partial 1035 exchange treatment. We do not know what transactions
may be considered abusive. For example we do not know how the IRS may view early
withdrawals or annuitizations after a partial exchange. In addition, it is
unclear how the IRS will treat a partial exchange from a life insurance,
endowment, or annuity contract into an immediate annuity. As of the date of this
prospectus, we will accept a partial 1035 exchange from a non-qualified annuity
into an immediate annuity as a "tax-free" exchange for future tax reporting
purposes, except to the extent that we, as a reporting and withholding agent,
believe that we would be expected to deem the transaction to be abusive.
However, some insurance companies may not recognize these partial surrenders as
tax-free exchanges and may report them as taxable distributions to the extent of
any gain distributed as well as subjecting the taxable portion of the
distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
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benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
DIVERSIFICATION AND INVESTOR CONTROL. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
REQUIRED DISTRIBUTIONS UPON YOUR DEATH. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after
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the date of death. However, if a periodic payment option is selected by your
designated beneficiary and if such payments begin within 1 year of your death,
the value of the contract may be distributed over the beneficiary's life or a
period not exceeding the beneficiary's life expectancy. Your designated
beneficiary is the person to whom benefit rights under the contract pass by
reason of death, and must be a natural person in order to elect a periodic
payment option based on life expectancy or a period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
CHANGES IN THE CONTRACT. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS OF WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAS. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater) less any applicable federal and state income
tax withholding.
CONTRIBUTIONS LIMITS/ROLLOVERS. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to a prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law that you may make to an IRA. For 2006, the limit is $4,000, increasing to
$5,000 in 2008. After 2008, the contribution amount will be indexed for
inflation. The tax law also provides for a catch-up provision for individuals
who are age 50 and above, allowing these individuals an additional $1,000
contribution each year. The "rollover" rules under the Code are fairly
technical; however, an individual (or his or her surviving spouse) may generally
"roll over" certain
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distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan into another
Section 401(a) plan.
REQUIRED PROVISIONS. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements".
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
ROTH IRAS. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of a traditional IRA, conduit IRA, or another Roth IRA,
or if you are age 50 or older by making a single contribution consisting of your
Roth IRA contributions and catch-up contributions attributable to the prior year
and the
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current year during the period from January 1 to April 15 of the current year.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000) who are not married filing a separate
return, and who receive certain qualifying distributions from such non-Roth
IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any
part of the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law. In addition, as
of January 1, 2006, an individual receiving an eligible rollover distribution
from a designated Roth account under an employer plan may roll over the
distribution to a Roth IRA even if the individual is not eligible to make
regular or conversion contributions to a Roth IRA. If you are considering
rolling over funds from your Roth account under an employer plan, please contact
your Financial Professional prior to purchase to confirm whether such rollovers
are being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.).
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Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 8, "What Are The Expenses Associated With
The Strategic Partners FlexElite Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 11.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company
which was organized on December 23, 1971 under the laws of the State of Arizona.
It is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York, and therefore, is subject to the
insurance laws and regulations of all the jurisdictions where it is licensed to
do business.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company that has been
doing business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
Pruco Life publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about Pruco Life that is
annually audited by independent accountants. Pruco Life's annual report for the
year ended December 31, 2005, together with subsequent periodic reports that
Pruco Life files with the SEC, are incorporated by reference into this
prospectus. You can obtain copies, at no cost, of any and all of this
information, including the Pruco Life annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at the address or telephone number listed
on the cover. The SEC file number for Pruco Life is 811-07325. You may read and
copy any filings made by Pruco Life with the SEC at the SEC's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling (202) 551-8090. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940, as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
- --------------------------------------------------------------------------------
98
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
8%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the contract. Commissions and
other compensation paid in relation to the contract do not result in any
additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/ dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of benefits, return of
premiums or excessive premium charges and breaching fiduciary duties to
customers. In our annuities operations, we are subject to litigation involving
class action lawsuits and other litigation alleging, among other things, that we
made improper or inadequate disclosures in connection with the sale of annuity
products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. In some of our pending legal and
regulatory actions, parties are seeking large and/or indeterminate amounts,
including
- --------------------------------------------------------------------------------
99
11:
OTHER INFORMATION CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
punitive or exemplary damages. The following is such a pending proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life insurance policy against Pruco Life and Prudential. The
complaint alleges that the Prudential defendants acted in bad faith when they
failed to pay a death benefit on an alleged contract of insurance that was never
delivered. In February 2006, the jury awarded the plaintiffs $1.4 million in
compensatory damages and $35 million in punitive damages. Pruco Life plans to
appeal the verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. If you
do so, we will reset the death benefit to equal the contract value on the date
the assignment occurs. For details, see Section 4, "What Is The Death Benefit?"
We will not be bound by the assignment until we receive written notice. We will
not be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners FlexElite contract, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - State Specific Variations
- - Financial Statements
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
- --------------------------------------------------------------------------------
100
MARKET-VALUE
ADJUSTMENT FORMULA
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
MARKET-VALUE ADJUSTMENT FORMULA
GENERAL FORMULA
The formula under which Pruco Life calculates the market value adjustment
applicable to a full or partial surrender, annuitization, or settlement under
the market value adjustment option is set forth below. The market value
adjustment is expressed as a multiplier factor. That is, the Contract Value
after the market value adjustment ("MVA"), but before any withdrawal charge, is
as follows: Contract Value (after MVA) = Contract Value (before MVA) X (1 +
MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(-------------)to the N/12 power] -1
1 + J + .0025
<Table>
where: I = the guaranteed credited interest rate
(annual effective) for the given
contract at the time of withdrawal or
annuitization or settlement.
J = the current credited interest rate
offered on new money at the time of
withdrawal or annuitization or
settlement for a guarantee period of
equal length to the number of whole
years remaining in the Contract's
current guarantee period plus one
year.
N = equals the remaining number of months
in the contract's current guarantee
period (rounded up) at the time of
withdrawal or annuitization or
settlement.
</Table>
PENNSYLVANIA FORMULA
We use the same MVA formula with respect to contracts issued in Pennsylvania as
the general formula, except that "J" in the formula above uses an interpolated
rate as the current credited interest rate. Specifically, "J" is the
interpolated current credited interest rate offered on new money at the time of
withdrawal, annuitization, or settlement. The interpolated value is calculated
using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of the
current guarantee period.
INDIANA FORMULA
We use the following MVA formula for contracts issued in Indiana:
1 + I
MVA = [(-----------)to the N/12 power] -1
1 + J
The variables I, J and N retain the same definitions as the general formula.
MARKET VALUE ADJUSTMENT EXAMPLE
(ALL STATES EXCEPT INDIANA AND PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05 + 0.0025)]to the (38/12)
power -1 = 0.02274
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.02274 = $253.03
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $253.03 = $11,380.14
- --------------------------------------------------------------------------------
101
MARKET-VALUE ADJUSTMENT FORMULA CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07 + 0.0025)] to the(38/12)
power -1 = -0.03644
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.03644) = -$405.47
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$405.47) = $10,721.64
MARKET VALUE ADJUSTMENT EXAMPLE
(PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 4%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.05] + [((365-61)/365) X 0.04] =
0.0417
</Table>
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the
(38/12) power-1 = 0.04871
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04871 = $542.00
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $542.00 = $11,669.11
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 7%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.08] + [((365 - 61)/365) X 0.07] =
0.0717
</Table>
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the
(38/12) power-1 = -0.04126
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04126) = -$459.10
- --------------------------------------------------------------------------------
102
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$459.10) = $10,668.01
MARKET VALUE ADJUSTMENT EXAMPLE
(INDIANA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05)] to the (38/12) power-1 =
0.03047
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 x 0.03047 = $339.04
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $339.04 = $11,466.15
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07)]to the (38/12) power -1
= -0.02930
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.02930) = -$326.02
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$326.02) = $10,801.09
- --------------------------------------------------------------------------------
103
APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
As we have indicated throughout this prospectus, the Strategic Partners
FlexElite Variable Annuity is a contract that allows you to select or decline
any of several features that carries with it a specific asset-based charge. We
maintain a unique unit value corresponding to each combination of such contract
features. Here we depict the historical unit values corresponding to the
contract features bearing the highest and lowest combinations of asset-based
charges. The remaining unit values appear in the Statement of Additional
Information, which you may obtain free of charge by calling (888) PRU-2888 or by
writing to us at the Prudential Annuity Service Center, P.O. Box 7960,
Philadelphia, PA 19176. As discussed in the prospectus, if you select certain
optional benefits (e.g., Lifetime Five), we limit the investment options to
which you may allocate your contract value. In certain of these accumulation
unit value tables, we set forth accumulation unit values that assume election of
one or more of such optional benefits and allocation of contract value to
portfolios that currently are not permitted as part of such optional benefits.
Such unit values are set forth for general reference purposes only, and are not
intended to indicate that such portfolios may be acquired along with those
optional benefits.
- --------------------------------------------------------------------------------
104
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00649 $0.75325 93,203
1/1/2003 to 12/31/2003 $0.75325 $0.96574 650,728
1/1/2004 to 12/31/2004 $0.96574 $1.04212 519,492
1/1/2005 to 12/31/2005 $1.04212 $1.17505 279,576
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00967 $0.80433 19,194
1/1/2003 to 12/31/2003 $0.80433 $1.04229 135,937
1/1/2004 to 12/31/2004 $1.04229 $1.12776 327,748
1/1/2005 to 12/31/2005 $1.12776 $1.23737 211,784
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00696 $0.78574 122,789
1/1/2003 to 12/31/2003 $0.78574 $1.03683 199,985
1/1/2004 to 12/31/2004 $1.03683 $1.11832 189,864
1/1/2005 to 12/31/2005 $1.11832 $1.27756 35,197
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00000 $0.99920 423,551
1/1/2003 to 12/31/2003 $0.99920 $0.99175 2,261,832
1/1/2004 to 12/31/2004 $0.99175 $0.98636 1,732,006
1/1/2005 to 12/31/2005 $0.98636 $0.99903 2,157,271
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00875 $0.81778 59,882
1/1/2003 to 12/31/2003 $0.81778 $1.03180 1,305,656
1/1/2004 to 12/31/2004 $1.03180 $1.12172 1,441,905
1/1/2005 to 12/31/2005 $1.12172 $1.15421 791,358
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00860 $0.79642 40,410
1/1/2003 to 12/31/2003 $0.79642 $1.00386 239,625
1/1/2004 to 12/31/2004 $1.00386 $1.14926 359,660
1/1/2005 to 12/31/2005 $1.14926 $1.31966 397,306
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00677 $0.79525 312,154
1/1/2003 to 12/31/2003 $0.79525 $1.03928 757,989
1/1/2004 to 12/31/2004 $1.03928 $1.17378 980,943
1/1/2005 to 12/31/2005 $1.17378 $1.27649 900,240
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
105
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00304 $0.78203 96,866
1/1/2003 to 12/31/2003 $0.78203 $0.97382 262,005
1/1/2004 to 12/31/2004 $0.97382 $1.07230 71,567
1/1/2005 to 4/29/2005 $1.07230 $0.98940 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00936 $0.85600 37,745
1/1/2003 to 12/31/2003 $0.85600 $1.04209 156,248
1/1/2004 to 12/31/2004 $1.04209 $1.11577 192,135
1/1/2005 to 12/31/2005 $1.11577 $1.14907 128,530
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00335 $0.88984 2,338,741
1/1/2003 to 12/31/2003 $0.88984 $1.07623 5,502,079
1/1/2004 to 12/31/2004 $1.07623 $1.17676 9,469,017
1/1/2005 to 12/31/2005 $1.17676 $1.24626 8,775,371
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00203 $0.93918 2,345,900
1/1/2003 to 12/31/2003 $0.93918 $1.07673 4,403,658
1/1/2004 to 12/31/2004 $1.07673 $1.15394 2,394,175
1/1/2005 to 12/31/2005 $1.15394 $1.20301 3,179,088
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00676 $0.85482 433,610
1/1/2003 to 12/31/2003 $0.85482 $1.08886 1,349,154
1/1/2004 to 12/31/2004 $1.08886 $1.20600 1,886,439
1/1/2005 to 12/31/2005 $1.20600 $1.30008 1,125,990
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00493 $0.84271 723,141
1/1/2003 to 12/31/2003 $0.84271 $1.06394 1,988,561
1/1/2004 to 12/31/2004 $1.06394 $1.18378 2,586,101
1/1/2005 to 12/31/2005 $1.18378 $1.27280 2,332,131
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
106
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00956 $0.83364 51,159
1/1/2003 to 12/31/2003 $0.83364 $1.04013 401,897
1/1/2004 to 12/31/2004 $1.04013 $1.20534 547,463
1/1/2005 to 12/31/2005 $1.20534 $1.26529 446,285
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00812 $0.81844 208,005
1/1/2003 to 12/31/2003 $0.81844 $1.02601 378,060
1/1/2004 to 12/31/2004 $1.02601 $1.16945 525,090
1/1/2005 to 12/31/2005 $1.16945 $1.30965 660,686
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00460 $0.76575 89,492
1/1/2003 to 12/31/2003 $0.76575 $0.95573 229,832
1/1/2004 to 12/31/2004 $0.95573 $1.05721 184,299
1/1/2005 to 4/29/2005 $1.05721 $0.98737 0
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $0.98986 $0.68122 64,598
1/1/2003 to 12/31/2003 $0.68122 $0.93944 718,763
1/1/2004 to 12/31/2004 $0.93944 $1.10534 1,479,218
1/1/2005 to 12/31/2005 $1.10534 $1.14515 732,774
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $0.99896 $0.97196 257,990
1/1/2003 to 12/31/2003 $0.97196 $1.17106 3,639,912
1/1/2004 to 12/31/2004 $1.17106 $1.26025 2,570,594
1/1/2005 to 12/31/2005 $1.26025 $1.29024 1,129,082
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $0.99996 $1.05757 946,026
1/1/2003 to 12/31/2003 $1.05757 $1.10183 4,014,394
1/1/2004 to 12/31/2004 $1.10183 $1.14172 3,829,364
1/1/2005 to 12/31/2005 $1.14172 $1.15064 2,616,515
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00813 $0.75658 77,973
1/1/2003 to 12/31/2003 $0.75658 $1.05808 234,827
1/1/2004 to 12/31/2004 $1.05808 $1.26419 219,324
1/1/2005 to 12/31/2005 $1.26419 $1.46554 192,853
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
107
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $0.99996 $0.76251 66,083
1/1/2003 to 12/31/2003 $0.76251 $1.01108 571,775
1/1/2004 to 12/31/2004 $1.01108 $0.98594 1,185,252
1/1/2005 to 12/31/2005 $0.98594 $0.99462 379,320
SP SMALL-CAP VALUE PORTFOLIO (FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00401 $0.77921 127,081
1/1/2003 to 12/31/2003 $0.77921 $1.02081 659,327
1/1/2004 to 12/31/2004 $1.02081 $1.21256 906,230
1/1/2005 to 12/31/2005 $1.21256 $1.24863 550,261
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00807 $0.80793 98,858
1/1/2003 to 12/31/2003 $0.80793 $1.00077 79,543
1/1/2004 to 12/31/2004 $1.00077 $1.08939 58,732
1/1/2005 to 12/31/2005 $1.08939 $1.23467 84,874
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00779 $0.78002 83,646
1/1/2003 to 12/31/2003 $0.78002 $0.95090 1,707,961
1/1/2004 to 12/31/2004 $0.95090 $0.99301 1,470,174
1/1/2005 to 12/31/2005 $0.99301 $1.13871 648,886
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00200 $0.68057 2,907
1/1/2003 to 12/31/2003 $0.68057 $0.95387 188,395
1/1/2004 to 12/31/2004 $0.95387 $0.93892 856,847
1/1/2005 to 4/29/2005 $0.93892 $0.83813 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $1.00364 $0.76891 36,399
1/1/2003 to 12/31/2003 $0.76891 $1.05634 992,042
1/1/2004 to 12/31/2004 $1.05634 $1.21164 1,093,796
1/1/2005 to 12/31/2005 $1.21164 $1.38795 239,742
</Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
- --------------------------------------------------------------------------------
108
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99870 $ 9.99781 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.09321 $11.71644 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07954 $10.31589 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05465 10.27041 613
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.04992 $11.32871 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04972 $10.40528 0
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06642 $10.33775 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04186 $10.32060 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99870 $10.01777 709
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99870 $10.00777 0
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.14694 $12.02239 3,255
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99870 $10.02777 5,377
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.08475 $10.71961 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01116 $10.31628 916
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04553 $10.02163 1,790
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99870 $10.96320 484
</Table>
<Table>
** DATE THAT THE FUND FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
109
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01525 $10.62776 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03286 $10.76377 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99870 $10.58316 0
AST HIGH YIELD PORTFOLIO (FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.97664 $ 9.86257 29,224
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.91372 $10.65770 1,055
AST LARGE-CAP VALUE PORTFOLIO (FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07710 $10.56123 1,255
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99870 $ 9.95397 1,234
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.12608 $10.90783 1,433
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.96610 $10.48203 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03677 $10.76384 0
AST MID CAP VALUE PORTFOLIO (FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06487 $10.35723 1,182
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05559 $11.34064 1,721
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02180 $10.88951 3,280
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99870 $10.06112 2,109
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99870 $10.03777 0
AST SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04850 $10.65131 480
</Table>
<Table>
** DATE THAT THE FUND FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
110
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.60) (FOR VERSION OF CONTRACT SOLD PRIOR TO MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02851 $10.35969 145
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.94923 $ 9.45336 317
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.00270 $11.74369 6,423
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.88086 $12.06669 4,825
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002* to 12/31/2002 $ 1.00860 $ 0.77398 8,577
1/1/2003 to 12/31/2003 $ 0.77398 $ 1.00180 86,824
1/1/2004 to 12/31/2004 $ 1.00180 $ 1.02749 87,502
1/1/2005 to 12/31/2005 $ 1.02749 $ 1.05188 67,596
</Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE FUND FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
- --------------------------------------------------------------------------------
111
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(HDV, LIFETIME FIVE 2.75) (FOR VERSION OF CONTRACT SOLD ON OR AFTER MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06117 $11.71852 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04754 $11.00992 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.98571 $11.24606 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99964 $10.02827 0
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05569 $10.29682 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03704 $11.16744 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03144 $10.89452 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 4/29/2005 $10.06839 $ 9.47634 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02472 $10.15397 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.01669 $10.58751 76,778
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.00674 $10.41736 40,172
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02465 $10.54231 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02857 $10.75346 165,231
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07536 $10.39807 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.91175 $10.58053 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05557 $ 9.59656 0
</Table>
<Table>
*** DATE THAT THE FUND AND/OR BENEFIT FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
112
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(HDV, LIFETIME FIVE 2.75) (FOR VERSION OF CONTRACT SOLD ON OR AFTER MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02785 $10.60799 0
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.98851 $10.05567 0
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99777 $10.08669 0
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03536 $11.65286 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02998 $10.42978 0
SP SMALL-CAP VALUE PORTFOLIO (FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05686 $10.42337 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07318 $11.89439 0
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02972 $12.03478 0
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04271 $ 9.58302 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.92593 $11.20713 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99777 $ 9.98918 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/02/2005 $10.09229 $11.62084 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07861 $10.22287 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05372 $10.17785 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04900 $11.23624 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04879 $10.31138 0
</Table>
<Table>
*** DATE THAT THE FUND AND/OR BENEFIT FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
113
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(HDV, LIFETIME FIVE 2.75) (FOR VERSION OF CONTRACT SOLD ON OR AFTER MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06549 $10.24446 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04094 $10.22754 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99777 $10.00913 5,593
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99777 $ 9.99914 90,558
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.14601 $11.91406 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99777 $10.01910 4,195
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.08383 $10.62294 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.01024 $10.22322 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04461 $ 9.93126 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99777 $10.86427 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.01433 $10.53185 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03193 $10.66654 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99777 $10.48770 0
AST HIGH YIELD PORTFOLIO (FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.97572 $ 9.77353 0
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.91280 $10.56143 0
AST LARGE-CAP VALUE PORTFOLIO (FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07618 $10.46601 0
</Table>
<Table>
*** DATE THAT THE FUND AND/OR BENEFIT FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
114
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(HDV, LIFETIME FIVE 2.75) (FOR VERSION OF CONTRACT SOLD ON OR AFTER MAY 1, 2003)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99777 $ 9.86405 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.12516 $10.80945 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.96517 $10.38754 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03584 $10.66678 0
AST MID CAP VALUE PORTFOLIO (FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06394 $10.26369 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05467 $11.23844 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02088 $10.79135 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99777 $ 9.97047 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99777 $10.02910 0
AST SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04758 $10.55522 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02759 $10.26630 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.94831 $ 9.36794 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.00177 $11.63782 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.87994 $11.95787 0
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04371 $10.30638 0
</Table>
*** DATE THAT THE FUND AND/OR BENEFIT FIRST BECAME AVAILABLE WITHIN THIS
ANNUITY.
- --------------------------------------------------------------------------------
115
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
APPENDIX B
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of
New Jersey). Not all of these annuities may be available to you due to state
approval or broker-dealer offerings. You can verify which of these annuities is
available to you by asking your registered representative, or by calling us at
(888) PRU-2888. For comprehensive information about each of these annuities,
please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each Strategic
Partners variable annuity. The availability of optional features, such as those
noted in the chart, may increase the cost of the contract. Therefore, you should
carefully consider which features you plan to use when selecting your annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners FlexElite 2 (i.e., the version of the contract sold on or after May
1, 2003) and the Strategic Partners Annuity One 3/Plus 3 contracts, Strategic
Partners Advisor offers few optional benefits.
- --------------------------------------------------------------------------------
116
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PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- - Strategic Partners FlexElite 2 offers both an array of optional benefits as
well as the "liquidity" to surrender the annuity without any withdrawal
charge after three contract years have passed. FlexElite 2 also is unique in
offering an optional persistency bonus (which, if taken, extends the
withdrawal charge period).
- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- - Strategic Partners Annuity One 3/Plus 3 comes in both a bonus version and a
non-bonus version, each of which offers several optional insurance features.
A bonus is added to your purchase payments under the bonus version, although
the withdrawal charges under the bonus version are higher than those under
the non-bonus version. Although the non-bonus version offers no bonus, it is
accompanied by fixed interest rate options and a market value adjustment
option that may provide higher interest rates than such options accompanying
the bonus version.
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of Strategic
Partners variable annuity products. You should consider the investment
objectives, risks, charges and expenses of an investment in any contract
carefully before investing. Each product prospectus as well as the underlying
portfolio prospectuses contains this and other information about the variable
annuities and underlying investment options. Your registered representative can
provide you with prospectuses for one or more of these variable annuities and
the underlying portfolios and can help you decide upon the product that would be
most advantageous for you given your individual needs. Please read the
prospectuses carefully before investing.
- --------------------------------------------------------------------------------
117
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
APPENDIX B -- SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000 $10,000
- --------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & 85 Qualified & 80 Qualified & 85 85 Qualified &
Non-Qualified Non-Qualified Non-Qualified Non-Qualified
- --------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 3 Years 7 Years (7%, 6%, 7 Years (7%, 6%, 5%,
Schedule (7%, 7%, 7%) 5%, 4%, 3%, 2%, 1%) 4%, 3%, 2%, 1%)
Contract date based Contract date based Payment date based
- --------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross 10% of gross 10% of gross purchase
Withdrawal(2) purchase payments purchase payments payments made as of
made as of last per contract year, last contract
contract cumulative up to 7 anniversary per
anniversary per years or 70% of contract year
contract year gross purchase
payments
- --------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.65% 1.52% 1.40%
Administration Charge
- --------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 The lesser of $50 $30. Waived if The lesser of $35 or
Fee (assessed or 2% of your or 2% of your contract value is 2% of your contract
annually) contract value. contract value. $50,000 or more value. Waived if
Waived if contract Waived if contract contract value is
value is $50,000 or value is $100,000 $75,000 or more
more or more
- --------------------------------------------------------------------------------------------------------------
Contract Credit No Yes No No
1% credit option at
end of 3rd and 6th
contract years.
Election results in
a new 3 year
withdrawal charge
- --------------------------------------------------------------------------------------------------------------
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
Minimum Investment $10,000
- ---------------------
Maximum Issue Age 85 Qualified &
Non-Qualified
- ---------------------
Withdrawal Charge 7 Years (8%, 8%, 8%,
Schedule 8%, 7%, 6%, 5%)
Payment date based
- ---------------------
Annual Charge-Free 10% of gross purchase
Withdrawal(2) payments made as of
last contract
anniversary per
contract year
- ---------------------
Insurance and 1.50%
Administration Charge
- ---------------------
Contract Maintenance The lesser of $35 or
Fee (assessed 2% of your contract
annually) value. Waived if
contract value is
$75,000 or more
- ---------------------
Contract Credit Yes
3%-all amounts ages
81-85
4%-under $250,000
5%-$250,000- $999,999
6%-$1,000,000+
- ---------------------
</Table>
1 THIS COLUMN DEPICTS FEATURES OF THE VERSION OF STRATEGIC PARTNERS FLEXELITE
SOLD ON OR AFTER MAY 1, 2003 OR UPON SUBSEQUENT STATE APPROVAL. IN ONE STATE,
PRUCO LIFE CONTINUES TO SELL A PRIOR VERSION OF THE CONTRACT. UNDER THAT
VERSION, THE CHARGE FOR THE BASE DEATH BENEFIT IS 1.60%, RATHER THAN 1.65%. THE
PRIOR VERSION ALSO DIFFERS IN CERTAIN OTHER RESPECTS (E.G., AVAILABILITY OF
OPTIONAL BENEFITS). THE VALUES ILLUSTRATED BELOW ARE BASED ON THE 1.65% CHARGE,
AND THEREFORE ARE SLIGHTLY LOWER THAN IF THE 1.60% CHARGE WERE USED.
2 WITHDRAWALS OF TAXABLE AMOUNTS WILL BE SUBJECT TO INCOME TAX, AND PRIOR TO AGE
59 1/2, MAY BE SUBJECT TO A 10% FEDERAL INCOME TAX PENALTY.
- --------------------------------------------------------------------------------
118
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes Yes Yes
1-Year 1-Year 1-Year
- --------------------------------------------------------------------------------------------------------------
Market Value No Yes Yes Yes
Adjustment Account 1-10 Years 7-Year 1-10 Years
(MVA)
- --------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No Yes No Yes
Averaging (DCA)
- --------------------------------------------------------------------------------------------------------------
Variable Investment 56 56 56 56/62
Options Available
- --------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A N/A 6-available in
Strategic Partners
Plus 3 only
- --------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: The greater of: Combo: Step/Roll The greater of:
purchase payment(s) purchase payment(s) Withdrawals will purchase payment(s)
minus proportionate minus proportionate proportionately minus proportionate
withdrawal(s) or withdrawal(s) or affect the Death withdrawal(s) or
contract value contract value Benefit contract value
- --------------------------------------------------------------------------------------------------------------
Optional Death Combo: Step/Roll Step-Up N/A Step-Up
Benefit (for an Roll-Up Roll-Up
additional Combo: Step/Roll Combo: Step/Roll
cost),(4,5) Highest Daily Value Highest Daily Value
(HDV) Earnings (HDV) Earnings
Appreciator Benefit Appreciator Benefit
(EAB) (EAB)
- --------------------------------------------------------------------------------------------------------------
Living Benefits (for Lifetime Five Lifetime Five N/A Lifetime Five
an additional Guaranteed Minimum Guaranteed Minimum
cost),(5,6) Income Benefit Income Benefit (GMIB)
(GMIB) Income Income Appreciator
Appreciator Benefit Benefit (IAB)
(IAB)
Spousal Lifetime Spousal Lifetime Five
Five Income Benefit Income Benefit
- --------------------------------------------------------------------------------------------------------------
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
- ------------------------------------------------------------------
Fixed Rate Account Yes(3)
1-Year
- ---------------------
Market Value Yes
Adjustment Account 1-10 Years
(MVA)
- ---------------------
Enhanced Dollar Cost Yes
Averaging (DCA)
- ---------------------
Variable Investment 56/62
Options Available
- ---------------------
Evergreen Funds 6-available in
Strategic Partners
Plus 3 only
- ---------------------
Base Death Benefit: The greater of:
purchase payment(s)
minus proportionate
withdrawal(s) or
contract value
- ---------------------
Optional Death Step-Up
Benefit (for an Roll-Up
additional Combo: Step/Roll
cost),(4,5) Highest Daily Value
(HDV) Earnings
Appreciator Benefit
(EAB)
- ---------------------
Living Benefits (for Lifetime Five
an additional Guaranteed Minimum
cost),(5,6) Income Benefit (GMIB)
Income Appreciator
Benefit (IAB)
Spousal Lifetime Five
Income Benefit
- ---------------------
</Table>
3 MAY OFFER LOWER INTEREST RATES FOR THE FIXED RATE OPTIONS THAN THE INTEREST
RATES OFFERED IN THE CONTRACTS WITHOUT CREDIT.
4 FOR MORE INFORMATION ON THESE BENEFITS, REFER TO SECTION 4, "WHAT IS THE DEATH
BENEFIT?" IN THE PROSPECTUS.
5 NOT ALL OPTIONAL BENEFITS MAY BE AVAILABLE IN ALL STATES.
6 FOR MORE INFORMATION ON THESE BENEFITS, REFER TO SECTION 3, "WHAT KIND OF
PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?"; SECTION 5, "WHAT IS THE
LIFETIME FIVE(SM) Income Benefit?" (discussing Lifetime Five and Spousal
Lifetime Five); and section 6, "What Is The Income Appreciator Benefit?" in the
Prospectus.
- --------------------------------------------------------------------------------
119
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made from the contract.
- - The hypothetical gross rates of return (as of December 31, 2005) are reduced
by the arithmetic average of the fees and expenses of the underlying
portfolios (as of December 31, 2005) and the charges that are deducted from
the contract at the Separate Account level as follows:
-- 0.99% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes
of the illustrations, we do not reflect any expense reimbursements or
expense waivers that might apply and are described in the prospectus fee
table.
-- The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender, while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under a contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
- --------------------------------------------------------------------------------
120
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
0% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ ANNUITY ONE 3/
ADVISOR SELECT FLEXELITE 2 PLUS 3 NON BONUS PLUS 3 BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------------
1 $97,659 $97,659 $97,544 $91,415 $97,419 $91,299 $97,659 $91,522 $101,465 $94,148
2 $95,366 $95,366 $95,141 $90,032 $94,850 $88,910 $95,366 $90,244 $ 98,986 $91,866
3 $93,128 $93,128 $92,798 $88,658 $92,347 $86,582 $93,128 $88,971 $ 96,567 $89,641
4 $90,941 $90,941 $90,512 $87,292 $89,908 $89,908 $90,941 $87,703 $ 94,207 $87,470
5 $88,807 $88,807 $88,283 $85,934 $87,533 $87,533 $88,807 $86,442 $ 91,905 $86,171
6 $86,722 $86,722 $86,109 $84,586 $85,219 $85,219 $86,722 $85,187 $ 89,659 $84,879
7 $84,686 $84,686 $83,988 $83,248 $82,965 $82,965 $84,686 $83,939 $ 87,468 $83,594
8 $82,698 $82,698 $81,919 $81,919 $80,770 $80,770 $82,698 $82,698 $ 85,331 $85,331
9 $80,757 $80,757 $79,902 $79,902 $78,631 $78,631 $80,757 $80,757 $ 83,245 $83,245
10 $78,861 $78,861 $77,934 $77,934 $76,547 $76,547 $78,861 $78,861 $ 81,211 $81,211
11 $77,010 $77,010 $76,014 $76,014 $74,518 $74,518 $77,010 $77,010 $ 79,226 $79,226
12 $75,202 $75,202 $74,142 $74,142 $72,541 $72,541 $75,202 $75,202 $ 77,290 $77,290
13 $73,436 $73,436 $72,282 $72,282 $70,615 $70,615 $73,436 $73,436 $ 75,402 $75,402
14 $71,712 $71,712 $70,468 $70,468 $68,739 $68,739 $71,678 $71,678 $ 73,559 $73,559
15 $70,029 $70,029 $68,698 $68,698 $66,912 $66,912 $69,961 $69,961 $ 71,727 $71,727
16 $68,385 $68,385 $66,972 $66,972 $65,131 $65,131 $68,285 $68,285 $ 69,940 $69,940
17 $66,780 $66,780 $65,288 $65,288 $63,397 $63,397 $66,648 $66,648 $ 68,197 $68,197
18 $65,212 $65,212 $63,646 $63,646 $61,708 $61,708 $65,049 $65,049 $ 66,496 $66,496
19 $63,681 $63,681 $62,044 $62,044 $60,062 $60,062 $63,488 $63,488 $ 64,837 $64,837
20 $62,186 $62,186 $60,482 $60,482 $58,460 $58,460 $61,963 $61,963 $ 63,219 $63,219
21 $60,726 $60,726 $58,958 $58,958 $56,898 $56,898 $60,474 $60,474 $ 61,640 $61,640
22 $59,301 $59,301 $57,472 $57,472 $55,377 $55,377 $59,021 $59,021 $ 60,099 $60,099
23 $57,909 $57,909 $56,022 $56,022 $53,895 $53,895 $57,601 $57,601 $ 58,596 $58,596
24 $56,549 $56,549 $54,608 $54,608 $52,452 $52,452 $56,215 $56,215 $ 57,130 $57,130
25 $55,222 $55,222 $53,229 $53,229 $51,046 $51,046 $54,861 $54,861 $ 55,700 $55,700
- ------------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners FlexElite 2 -2.59%; Strategic Partners Annuity One 3/Plus
3 Non-Bonus -2.35%; Strategic Partners Annuity One 3/Plus 3 Bonus -2.44%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
- --------------------------------------------------------------------------------
121
PART II STRATEGIC PARTNERS FLEXELITE PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
6% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ ANNUITY ONE 3/
ADVISOR SELECT FLEXELITE 2 PLUS 3 NON BONUS PLUS 3 BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ------------------------------------------------------------------------------------------------------------------------
1 $103,502 $103,502 $103,380 $ 96,844 $103,248 $ 96,721 $103,502 $ 96,957 $107,536 $ 99,734
2 $107,136 $107,136 $106,884 $101,071 $106,611 $ 99,849 $107,136 $101,309 $111,203 $103,107
3 $110,899 $110,899 $110,506 $105,481 $110,083 $103,078 $110,899 $105,854 $114,994 $106,596
4 $114,793 $114,793 $114,252 $110,082 $113,669 $113,669 $114,793 $110,602 $118,915 $110,203
5 $118,824 $118,824 $118,124 $114,881 $117,371 $117,371 $118,824 $115,560 $122,970 $115,063
6 $122,997 $122,997 $122,127 $119,885 $121,194 $121,194 $122,997 $120,737 $127,163 $120,134
7 $127,316 $127,316 $126,267 $125,104 $125,141 $125,141 $127,316 $126,143 $131,499 $125,424
8 $131,787 $131,787 $130,546 $130,546 $129,217 $129,217 $131,787 $131,787 $135,982 $135,982
9 $136,415 $136,415 $134,971 $134,971 $133,426 $133,426 $136,415 $136,415 $140,619 $140,619
10 $141,205 $141,205 $139,545 $139,545 $137,771 $137,771 $141,205 $141,205 $145,413 $145,413
11 $146,164 $146,164 $144,275 $144,275 $142,259 $142,259 $146,164 $146,164 $150,371 $150,371
12 $151,297 $151,297 $149,165 $149,165 $146,892 $146,892 $151,297 $151,297 $155,499 $155,499
13 $156,610 $156,610 $154,220 $154,220 $151,676 $151,676 $156,610 $156,610 $160,800 $160,800
14 $162,109 $162,109 $159,447 $159,447 $156,616 $156,616 $162,109 $162,109 $166,283 $166,283
15 $167,802 $167,802 $164,851 $164,851 $161,717 $161,717 $167,802 $167,802 $171,953 $171,953
16 $173,694 $173,694 $170,439 $170,439 $166,985 $166,985 $173,694 $173,694 $177,816 $177,816
17 $179,794 $179,794 $176,215 $176,215 $172,423 $172,423 $179,794 $179,794 $183,879 $183,879
18 $186,108 $186,108 $182,188 $182,188 $178,039 $178,039 $186,108 $186,108 $190,148 $190,148
19 $192,643 $192,643 $188,363 $188,363 $183,838 $183,838 $192,643 $192,643 $196,632 $196,632
20 $199,408 $199,408 $194,747 $194,747 $189,826 $189,826 $199,408 $199,408 $203,336 $203,336
21 $206,411 $206,411 $201,347 $201,347 $196,009 $196,009 $206,411 $206,411 $210,269 $210,269
22 $213,659 $213,659 $208,172 $208,172 $202,393 $202,393 $213,659 $213,659 $217,439 $217,439
23 $221,162 $221,162 $215,227 $215,227 $208,985 $208,985 $221,162 $221,162 $224,853 $224,853
24 $228,928 $228,928 $222,522 $222,522 $215,791 $215,791 $228,928 $228,928 $232,519 $232,519
25 $236,967 $236,967 $230,064 $230,064 $222,820 $222,820 $236,967 $236,967 $240,447 $240,447
- ------------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.51%; Strategic Partners Select 3.39%; Strategic
Partners FlexElite 2 3.26%; Strategic Partners Annuity One 3/Plus 3 Non-Bonus
3.51%; Strategic Partners Annuity One 3/Plus Bonus 3.41%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
- --------------------------------------------------------------------------------
122
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS ORD01091 (05/2006).
---------------------------------------------------------
(print your name)
---------------------------------------------------------
(address)
---------------------------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
ORD01091
STRATEGIC PARTNERS(SM)
ANNUITY ONE 3
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH
YOUR REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS
DIFFERENT FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR
FINANCIAL SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. PLEASE NOTE
THAT SELLING BROKER-DEALER FIRMS THROUGH WHICH THE CONTRACT IS SOLD MAY DECLINE
TO MAKE AVAILABLE TO THEIR CUSTOMERS CERTAIN OF THE OPTIONAL FEATURES OFFERED
GENERALLY UNDER THE CONTRACT. ALTERNATIVELY, SUCH FIRMS MAY RESTRICT THE
AVAILABILITY OF THE OPTIONAL BENEFITS THAT THEY DO MAKE AVAILABLE TO THEIR
CUSTOMERS (E.G., BY IMPOSING A LOWER MAXIMUM ISSUE AGE FOR CERTAIN OPTIONAL
BENEFITS THAN WHAT IS PRESCRIBED GENERALLY UNDER THE CONTRACT). PLEASE SPEAK TO
YOUR REGISTERED REPRESENTATIVE FOR FURTHER DETAILS. THE DIFFERENT FEATURES AND
BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION, AND THE ABILITY TO
ACCESS YOUR ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES UNDER THE ANNUITY
CONTRACT AND THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE DIFFERENT
AMONG EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A REPLACEMENT FOR
EXISTING VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER, AMONG
OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN REPLACING YOUR
EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
- ------------------------------------------------------------
Strategic Partners Annuity One 3 offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds.
Currently, portfolios of the following underlying mutual funds are being
offered: The Prudential Series Fund, American Skandia Trust, Gartmore Variable
Insurance Trust, and Janus Aspen Series. (see next page for list of portfolios
currently offered).
You may choose between two basic versions of Strategic Partners Annuity One
3. One version, the Contract With Credit, provides for a bonus credit that we
add to each purchase payment you make. If you choose this version of Strategic
Partners Annuity One 3, some charges and expenses may be higher than if you
choose the version without the credit. Those higher charges could exceed the
amount of the credit under some circumstances, particularly if you withdraw
purchase payments within a few years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Annuity One 3
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference. The Risk Factors section relating to the market value
adjustment option appears in the Summary.
TO LEARN MORE ABOUT STRATEGIC PARTNERS ANNUITY ONE 3
- ------------------------------------------------------------
To learn more about the Strategic Partners Annuity One 3 variable annuity, you
can request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
offices, and can also be obtained from the SEC's Public Reference Section, 100 F
Street N.E., Washington, D.C. 20549. (See SEC file numbers 333-37728 and
333-103474) You may obtain information on the operation of the Public Reference
Room by calling the SEC at (202) 551-8090. The SEC maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners Annuity One 3 SAI,
material incorporated by reference, and other information regarding registrants
that file electronically with the SEC. The Table of Contents of the SAI is set
forth in Section 11 of this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS ANNUITY ONE 3 IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ORD01142
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small-Cap Growth Portfolio
SP Small Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
CONTENTS
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<Table>
PART I: STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS
-------------------------------------------------
SUMMARY
-------
Glossary........................................... 6
Summary............................................ 11
Risk Factors....................................... 15
Summary Of Contract Expenses....................... 16
Expense Examples................................... 21
PART II: STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS
------------------------------------------------------------
SECTIONS 1-11
------------------------------------------------------------
Section 1: What Is The Strategic Partners Annuity One 3
Variable Annuity? .................................... 27
Short Term Cancellation Right Or "Free Look"....... 28
Section 2: What Investment Options Can I Choose?........ 29
Variable Investment Options........................ 29
Fixed Interest Rate Options........................ 45
Market Value Adjustment Option..................... 46
Transfers Among Options............................ 47
Additional Transfer Restrictions................... 48
Dollar Cost Averaging.............................. 49
Asset Allocation Program........................... 50
Auto-Rebalancing................................... 50
Scheduled Transactions............................. 50
Voting Rights...................................... 51
Substitution....................................... 51
Section 3: What Kind Of Payments Will I Receive During
The Income Phase (Annuitization)?..................... 52
Payment Provisions................................. 52
Payment Provisions Without The Guaranteed Minimum
Income Benefit................................... 52
Option 1: Annuity Payments For A Fixed
Period....................................... 52
Option 2: Life Income Annuity Option........... 52
Option 3: Interest Payment Option.............. 53
Other Annuity Options.......................... 53
Tax Considerations................................. 53
Guaranteed Minimum Income Benefit.................. 53
GMIB Roll-Up................................... 54
GMIB Option 1 -- Single Life Payout Option..... 56
GMIB Option 2 -- Joint Life Payout Option...... 56
How We Determine Annuity Payments.................. 56
Section 4: What Is The Death Benefit?................... 59
Beneficiary........................................ 59
Calculation Of The Death Benefit................... 59
Guaranteed Minimum Death Benefit................... 59
GMDB Roll-Up................................... 59
GMDB Step-Up................................... 60
Special Rules If Joint Owners...................... 61
Highest Daily Value Death Benefit.................. 61
Calculation Of The Highest Daily Value Death
Benefit.......................................... 62
Payout Options..................................... 62
Earnings Appreciator Benefit....................... 63
Spousal Continuance Benefit........................ 64
Section 5: What Is The Lifetime Five(SM) Income
Benefit?.............................................. 67
Lifetime Five Income Benefit....................... 67
Spousal Lifetime Five Income Benefit............... 73
</Table>
3
CONTENTS CONTINUED
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<Table>
Section 6: What Is The Income Appreciator Benefit?...... 79
Income Appreciator Benefit......................... 79
Calculation Of The Income Appreciator Benefit...... 79
Income Appreciator Benefit Options During The
Accumulation Phase............................... 80
Section 7: How Can I Purchase A Strategic Partners
Annuity One 3 Contract?............................... 83
Purchase Payments.................................. 83
Allocation Of Purchase Payments.................... 83
Credits............................................ 83
Calculating Contract Value......................... 84
Section 8: What Are The Expenses Associated With The
Strategic Partners Annuity One 3 Contract?............ 85
Insurance And Administrative Charges............... 85
Withdrawal Charge.................................. 86
Waiver Of Withdrawal Charges For Critical Care..... 87
Contract Maintenance Charge........................ 87
Guaranteed Minimum Income Benefit Charge........... 87
Income Appreciator Benefit Charge.................. 88
Earnings Appreciator Benefit Charge................ 88
Taxes Attributable To Premium...................... 89
Transfer Fee....................................... 89
Company Taxes...................................... 89
Underlying Mutual Fund Fees........................ 89
Section 9: How Can I Access My Money?................... 90
Withdrawals During The Accumulation Phase.......... 90
Automated Withdrawals.............................. 90
Suspension Of Payments Or Transfers................ 90
Section 10: What Are The Tax Considerations Associated
With The Strategic Partners Annuity One 3 Contract?... 92
Contracts Owned By Individuals (Not Associated With
Tax-Favored Retirement Plans).................... 92
Contracts Held By Tax-Favored Plans................ 95
Section 11: Other Information........................... 99
Pruco Life Insurance Company....................... 99
The Separate Account............................... 99
Sale And Distribution Of The Contract.............. 99
Litigation......................................... 100
Assignment......................................... 101
Financial Statements............................... 101
Statement Of Additional Information................ 101
Householding....................................... 101
Market Value Adjustment Formula.................... 102
Appendix A.............................................. 105
Accumulation Unit Values........................... 105
Appendix B.............................................. 116
Selecting The Variable Annuity That's Right For
You.............................................. 116
</Table>
4
PART I SUMMARY
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STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS
5
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges.
ADJUSTED PURCHASE PAYMENT
Your invested purchase payment is adjusted for any subsequent withdrawals. The
adjusted purchase payment is used only for calculations of the Earnings
Appreciator Benefit.
ANNUAL INCOME AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as the annuitant lives. The annual income amount is
set initially as a percentage of the Protected Withdrawal Value, but will be
adjusted to reflect subsequent purchase payments, withdrawals, and any step-up.
Under the Spousal Lifetime Five Income Benefit, the annual income amount is paid
until the later death of two natural persons who are each other's spouses at the
time of election and at the first death of one of them.
ANNUAL WITHDRAWAL AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining. The
Annual Withdrawal Amount is set initially to equal 7% of the initial Protected
Withdrawal Value, but will be adjusted to reflect subsequent purchase payments,
withdrawals, and any step-up.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
6
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PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make and has higher withdrawal charges and insurance
and administrative costs than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges and insurance and administrative costs than the Contract With
Credit.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Bonus credits generally are
not recaptured once the free look period expires. Our reference in the preceding
sentence to "generally are not recaptured" refers to the fact that we have the
contractual right to deduct, from the death benefit we pay, the amount of any
credit corresponding to a purchase payment made within one year of death.
DAILY VALUE
For purposes of the Highest Daily Value Death Benefit, which we describe below,
the contract value as of the end of each business day. The Daily Value on the
contract date is equal to your purchase payment.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit, or Highest Daily Value Death Benefit, is
available for an additional charge. See Section 4, "What Is The Death Benefit?"
DEATH BENEFIT TARGET DATE
With respect to the Highest Daily Value Death Benefit, the later of the contract
anniversary on or after the 80th birthday of the current contract owner, the
older of either joint owner or (if owned by an entity) the annuitant, or five
years after the contract date.
DESIGNATED LIFE
For purposes of the Spousal Lifetime Five Income Benefit, a Designated Life
refers to each of two natural persons who are each other's spouses at the time
of election of the Spousal Lifetime Five Income Benefit and at the first death
of one of them.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
EARNINGS APPRECIATOR BENEFIT (EAB)
An optional feature available for an additional charge that may provide a
supplemental death benefit based on earnings under the contract.
EXCESS INCOME/EXCESS WITHDRAWAL
Under the Spousal Lifetime Five Income Benefit and Lifetime Five Income Benefit,
Excess Income refers to cumulative withdrawals that exceed the Annual Income
Amount. Under the Lifetime Five Income Benefit, Excess Withdrawal refers to
cumulative withdrawals that exceed the Annual Withdrawal Amount.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
7
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEE PERIOD
A period of time during which your invested purchase payment in the market value
adjustment option earns interest at the declared rate. We may offer one or more
guarantee periods.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value. The GMDB is a different death benefit than the Highest Daily
Value Death Benefit, which we describe below.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which may
equal the GMDB roll-up value, the GMDB step-up value, or the greater of the two.
The GMDB protected value will be subject to certain age restrictions and time
durations, however, it will still increase by subsequent invested purchase
payments and reduce proportionally by withdrawals.
GMDB ROLL-UP
We use the GMDB roll-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. The GMDB roll-up is equal to the invested
purchase payments compounded daily at an effective annual interest rate starting
on the date that each invested purchase payment is made, subject to a cap, and
reduced by the effect of withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant, number of contract anniversaries or
number of years since last GMIB reset. At such point, the GMIB protected value
will be increased by any subsequent invested purchase payments, and any
withdrawals will proportionally reduce the GMIB protected value. The GMIB
protected value is not available as a cash surrender benefit or a death benefit,
nor is it used to calculate the cash surrender value or death benefit.
GMIB RESET
You may elect to "step-up" or "reset" your GMIB protected value if your contract
value is greater than the current GMIB protected value. Upon exercise of the
reset provision, your GMIB protected value will be reset to equal your current
contract value. You are limited to two resets over the life of your contract,
provided that certain annuitant age requirements are met.
GMIB ROLL-UP
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual
8
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PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
interest rate starting on the date each invested purchase payment is made,
subject to a cap, and reduced proportionally by withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT
An optional death benefit available for an additional charge that can provide a
death benefit that exceeds the contract value on the date of death. The amount
of the death benefit is determined with reference to the Highest Daily Value, as
defined below.
HIGHEST DAILY VALUE
An amount equal to the highest of all previous "Daily Values" less proportional
withdrawals since such date and plus any purchase payments since such date.
INCOME APPRECIATOR BENEFIT (IAB)
An optional feature that may be available for an additional charge that provides
a supplemental living benefit based on earnings under the contract.
IAB AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
A series of payments consisting of a portion of your contract value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB CREDIT
An amount we add to your contract value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the Income
Appreciator Benefit during the accumulation phase.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on your contract value, subject to our rules regarding the timing
and amount of withdrawals. There are two options -- one is designed to provide
an annual withdrawal amount for life and the other is designed to provide a
greater annual withdrawal amount (than the first option) as long as there is
Protected Withdrawal Value. We also offer a variant of the Lifetime Five Income
Benefit to certain spousal owners -- see "Spousal Lifetime Five Income Benefit."
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
This investment option may offer various guarantee periods and pays a fixed rate
of interest with respect to each guarantee period. We impose a market value
adjustment on withdrawals or transfers that you make from this option prior to
the end of its guarantee period.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
9
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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PROPORTIONAL WITHDRAWALS
A method that involves calculating the percentage of your contract value that
each prior withdrawal represented when withdrawn. Proportional withdrawals
result in a reduction to the applicable benefit value by reducing such value in
the same proportion as the contract value was reduced by the withdrawal as of
the date the withdrawal occurred.
PROTECTED WITHDRAWAL VALUE
Under the Lifetime Five Income Benefit, we guarantee an amount that you can
withdraw each year until those annual withdrawals, when added together, reach an
aggregate limit. We call that aggregate limit the Protected Withdrawal Value.
Purchase payments and withdrawals you make will result in an adjustment to the
Protected Withdrawal Value. In addition, you may elect to step-up your Protected
Withdrawal Value under certain circumstances. Under the Spousal Lifetime Five
Income Benefit, Protected Withdrawal Value refers to a value that is used to
determine the Annual Income Amount. The initial Protected Withdrawal Value is
equal to the greatest of three specified amounts. (See "Initial Protected
Withdrawal Value" within the section describing the Spousal Lifetime Five Income
Benefit.)
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
(888) PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees the
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on the contract value, subject to our rules regarding the timing and
amount of withdrawals. Under the Spousal Lifetime Five Income Benefit, an annual
income amount is paid until the later death of two natural persons who are each
other's spouses at the time of election and at the first death of one of them.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Annuity One 3 variable annuity. We have filed the Statement of
Additional Information with the Securities and Exchange Commission and it is
legally a part of this prospectus. To learn how to obtain a copy of the
Statement of Additional Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 10, "What Are The Tax Considerations Associated With The Strategic
Partners Annuity One 3 Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
10
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE 3 VARIABLE ANNUITY?
The Strategic Partners Annuity One 3 variable annuity is a contract between you,
the owner, and us, the insurance company, Pruco Life Insurance Company (Pruco
Life, we or us). The contract allows you to invest on a tax-deferred basis in
variable investment options, fixed interest rate options, and the market value
adjustment option. The contract is intended for retirement savings or other
long-term investment purposes and provides for a death benefit.
There are two basic versions of the Strategic Partners Annuity One 3 variable
annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide lower interest rates for fixed interest rate options and the
market value adjustment option than the Contract Without Credit, and
- - may provide fewer available market value adjustment guarantee periods than
the Contract Without Credit.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide higher interest rates for fixed interest rate options and the
market value adjustment option than the Contract With Credit, and
- - may provide more available market value adjustment guarantee periods than the
Contract With Credit.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum interest
rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
the minimum interest rate dictated by applicable state law.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
There are certain state variations to this contract that are referred to in
this prospectus. Please see your contract for further information on these and
other variations.
11
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
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We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Annuity One 3, you
may cancel your contract within 10 days after receiving it (or whatever period
is required under applicable law). This time period is referred to as the "Free
Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options or in a market
value adjustment option.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income payments
will be no less than a value that is based on a certain "GMIB protected value"
applied to the GMIB guaranteed annuity purchase rates. See Section 3, "What Kind
Of Payments Will I Receive During The Income Phase?"
The Lifetime Five Income Benefit, the Spousal Lifetime Five Income Benefit
(discussed in Section 5) and the Income Appreciator Benefit (discussed in
Section 6) each may provide an additional amount upon which your annuity
payments are based.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner or first-to-die of the owner or joint owner dies
before the income phase of the contract begins, the person(s) or entity that you
have chosen as your beneficiary will receive, at a minimum, the greater of (i)
the contract value, (ii) either the base death benefit or, for a higher
insurance and administrative cost, a potentially larger Guaranteed Minimum Death
Benefit (GMDB), or Highest Daily Value Death Benefit.
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal to
a "GMDB protected value" that depends upon which of the following Guaranteed
Minimum Death Benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we call
the "GMDB step-up value;"
- - the total amount you invest increased by a guaranteed rate of return, which
we call the "GMDB roll-up value;" or
- - the greater of the GMDB step-up value and GMDB roll-up value.
The Highest Daily Value Death Benefit provides a death benefit equal to the
greater of the base death benefit or the highest daily value less proportional
withdrawals.
On the date we receive proof of death in good order, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe,
in Section 4, are met.
For an additional fee, you may also choose, if it is available in your
contract, the Earnings Appreciator
12
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
supplemental death benefit, which provides a benefit payment upon the death of
the sole owner, or first to die of the owner or joint owner, during the
accumulation phase.
SECTION 5
WHAT IS THE LIFETIME FIVE(SM) INCOME BENEFIT?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your contract value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options -- one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the contract value allocated to the variable investment
options. This charge is in addition to the charge for the applicable death
benefit.
In addition to the Lifetime Five Income Benefit, we offer a benefit called
the Spousal Lifetime Five Income Benefit. The Spousal Lifetime Five Income
benefit is similar to the Lifetime Five Income Benefit, except that it is
offered only to those who are each other's spouses at the time the benefit is
elected, and the benefit offers only a Life Income Benefit (not the Withdrawal
Benefit). The charge for the Spousal Lifetime Five Income Benefit is a daily fee
equal on an annual basis to 0.75% of the contract value allocated to the
variable investment options. The charge is in addition to the charge for the
applicable death benefit.
SECTION 6
WHAT IS THE INCOME APPRECIATOR BENEFIT?
The Income Appreciator Benefit is an optional benefit, available for an
additional charge, that provides an additional income amount during the
accumulation period or upon annuitization. The Income Appreciator Benefit is
designed to provide you with additional funds that can be used to help defray
the impact taxes may have on distributions from your contract. You can activate
this benefit in one of three ways, as described in Section 6. Note, however,
that the annuitization options within this benefit are limited.
SECTION 7
HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY ONE 3 CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $500
($100 if made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. In
addition, certain age limits apply to certain features and benefits described
herein.
SECTION 8
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE 3
CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge if
your contract value is less than $75,000. This charge is currently equal to
the lesser of $35 or 2% of your contract value. We do not impose the contract
maintenance charge if your contract value is $75,000 or more. We may impose
lesser charges in certain states.
13
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
- --------------------------------------------------------------------------------
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit (or other) option that you choose.
The daily cost is equivalent to an annual charge as follows:
-- 1.40% if you choose the base death benefit,
-- 1.65% if you choose the roll-up or step-up Guaranteed Minimum Death
Benefit option (i.e., 0.25% in addition to the base death benefit
charge),
-- 1.75% if you choose the greater of the roll-up and step-up Guaranteed
Minimum Death Benefit option (i.e., 0.35% in addition to the base death
benefit charge),
-- 1.90% if you choose the Highest Daily Value Death Benefit (i.e., 0.50%
in addition to the base death benefit charge),
-- 0.60% if you choose the Lifetime Five Income Benefit. This charge is in
addition to the charge for the applicable death benefit, or
-- 0.75% if you choose the Spousal Lifetime Five Income Benefit. This
charge is in addition to the charge for the applicable death benefit.
- - We impose an additional insurance and administrative charge of 0.10% annually
for the Contract With Credit.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts), of the
average GMIB protected value. (In some states this fee may be lower.)
- - We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your contract value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your contract value.
- - We will deduct an additional charge if you choose the Earnings Appreciator
supplemental death benefit. We deduct this charge from your contract value on
the contract anniversary and upon certain other events. The charge for this
benefit is based on an annual rate of 0.30% of your contract value.
- - There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states,
we deduct a charge designed to approximate this tax, which can range from
0-3.5% of your contract value.
- - There are also expenses associated with the mutual funds. For 2005, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable arrangements.
In general, these expense waivers and comparable arrangements are not
guaranteed, and may be terminated at any time.
- - If you withdraw money (or you begin the income phase) less than seven
contract anniversaries after making a purchase payment, then you may have to
pay a withdrawal charge on all or part of the withdrawal. This charge ranges
from 1-7% for the Contract Without Credit and 5-8% for the Contract With
Credit. (In certain states reduced withdrawal charges may apply for certain
ages. Your contract contains the applicable charges.)
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 8, "What Are The
Expenses Associated With The Strategic Partners Annuity One 3 Contract?"
SECTION 9
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. For the Contract Without Credit, if
you withdraw money less than seven contract anniversaries after making a
purchase pay-
14
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
ment, we may impose a withdrawal charge ranging from 1-7%. For the Contract With
Credit, we may impose a withdrawal charge ranging from 5-8%. (In certain states
reduced withdrawal charges may apply for certain ages. Your contract contains
the applicable charges.)
Under the Market Value Adjustment Option, you will be subject to a market
value adjustment if you make a withdrawal or transfer from the option prior to
the end of a guarantee period.
We offer an optional benefit, called the Lifetime Five Income Benefit, under
which we guarantee that certain amounts will be available to you for withdrawal,
regardless of market-related declines in your contract value. You need not
participate in this benefit in order to withdraw some or all of your money. We
also offer a Spousal Lifetime Five Income Benefit. You also may access your
Income Appreciator Benefit through withdrawals.
SECTION 10
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY
ONE 3 CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as a withdrawal
of earnings, which are taxed as ordinary income. If you are younger than age
59 1/2 when you take money out, you may be charged a 10% federal tax penalty on
the earnings in addition to ordinary taxation. A portion of the payments you
receive during the income phase is considered a partial return of your original
investment and therefore will not be taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contract (excluding Roth
IRAs) are taxable and subject to the 10% penalty if withdrawn prior to age
59 1/2.
SECTION 11
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the Market Value
Adjustment Option that we summarize below.
ISSUER RISK. The Market Value Adjustment Option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life, and thus backed by the financial strength of that company.
If Pruco Life were to experience significant financial adversity, it is possible
that Pruco Life's ability to pay interest and principal under the Market Value
Adjustment Option and fixed interest rate options and to fulfill its insurance
guarantees could be impaired.
RISKS RELATED TO CHANGING INTEREST RATES. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life
holds to support the Market Value Adjustment Option. Nonetheless, the market
value adjustment formula reflects the effect that prevailing interest rates have
on those bonds and other instruments. If you need to withdraw your money prior
to the end of a guarantee period and during a period in which prevailing
interest rates have risen above their level when you made your purchase, you
will experience a "negative" market value adjustment. When we impose this market
value adjustment, it could result in the loss of both the interest you have
earned and a portion of your purchase payments. Thus, before you commit to a
particular guarantee period, you should consider carefully whether you have the
ability to remain invested throughout the guarantee period. In addition, we
cannot, of course, assure you that the market value adjustment option will
perform better than another investment that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
15
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS ANNUITY ONE 3. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see Section 8, "What Are The Expenses Associated With The
Strategic Partners Annuity One 3 Contract?" The individual fund prospectuses
contain detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
<Table>
<Caption>
WITHDRAWAL CHARGE(1)
- -------------------------------------------
NUMBER OF CONTRACT CONTRACT CONTRACT
ANNIVERSARIES SINCE WITH WITHOUT
PURCHASE PAYMENT CREDIT CREDIT
------------------- -------- --------
0 8% 7%
1 8% 6%
2 8% 5%
3 8% 4%
4 7% 3%
5 6% 2%
6 5% 1%
7 0% 0%
</Table>
<Table>
<Caption>
MAXIMUM TRANSFER FEE
- --------------------------------------------------------------
Each transfer after 12(2) $30.00
CHARGE FOR PREMIUM TAX IMPOSED ON US BY CERTAIN
STATES/JURISDICTIONS
- --------------------------------------------------------------
Up to 3.5% of contract value
</Table>
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" in Section 8. In certain states reduced withdrawal charges may apply
under the Contract with Credit. Your contract contains the applicable charges.
2: Currently, we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing or transfers
from the market value adjustment option at the end of a guarantee period, and do
not count them toward the limit of 12 free transfers per year.
16
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
The next table describes the fees and expenses you will pay periodically during
the time that you own the contract, not including underlying mutual fund fees
and expenses.
PERIODIC ACCOUNT EXPENSES
<Table>
MAXIMUM CONTRACT MAINTENANCE CHARGE AND CONTRACT CHARGE
UPON FULL WITHDRAWAL(3) $60.00
- ----------------------------------------------------------------------------------
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED
BENEFITS
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF ACCOUNT VALUE IN VARIABLE
INVESTMENT OPTIONS:
</Table>
<Table>
<Caption>
CONTRACT CONTRACT
WITH WITHOUT
CREDIT CREDIT
-------- --------
Base Death Benefit 1.50% 1.40%
Base Death Benefit with Lifetime Five Income Benefit 2.10% 2.00%
Base Death Benefit with Spousal Lifetime Five Income
Benefit 2.25% 2.15%
Guaranteed Minimum Death Benefit Option--Roll-Up or
Step-Up 1.75% 1.65%
Guaranteed Minimum Death Benefit Option--Roll-Up or
Step-Up with Lifetime Five Income Benefit 2.35% 2.25%
Guaranteed Minimum Death Benefit Option--Greater of
Roll-Up or Step-Up 1.85% 1.75%
Guaranteed Minimum Death Benefit Option--Greater of
Roll-Up or Step-Up with Lifetime Five
Income Benefit 2.45% 2.35%
Highest Daily Value Death Benefit 2.00% 1.90%
Highest Daily Value Death Benefit with Lifetime Five
Income Benefit 2.60% 2.50%
ANNUAL GUARANTEED MINIMUM INCOME BENEFIT CHARGE AND CHARGE
UPON CERTAIN WITHDRAWALS(4) (FOR CONTRACTS SOLD ON OR
AFTER JANUARY 20, 2004, OR UPON SUBSEQUENT STATE APPROVAL)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF AVERAGE GMIB PROTECTED VALUE 0.50%
ANNUAL INCOME APPRECIATOR BENEFIT CHARGE AND CHARGE UPON
CERTAIN WITHDRAWALS(5)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.25%
ANNUAL EARNINGS APPRECIATOR BENEFIT CHARGE AND CHARGE UPON
CERTAIN TRANSACTIONS(6)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.30%
</Table>
3: Currently, we waive this fee if your contract value is greater than or equal
to $75,000. If your contract value is less than $75,000, we currently charge the
lesser of $35 or 2% of your contract value. This is a single fee that we assess
(a) annually or (b) upon full withdrawal made on a date other than a contract
anniversary. As shown in the table, we can increase this fee in the future up to
a maximum of $60, but we have no current intention to do so. This charge may be
lower in certain states.
4: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after January
20, 2004, or upon subsequent state approval (0.45% for all other contracts) of
the average GMIB protected value, which is calculated daily and generally is
equal to the GMIB roll-up value. In some states this charge is 0.30%, see your
contract for details. Subject to certain age or duration restrictions, the
roll-up value is the total of all invested purchase payments (after a reset, the
contract value at the time of the reset) compounded daily at an effective annual
rate of 5%, subject to a cap of 200% of all invested purchase payments.
Withdrawals reduce both the roll-up value and the 200% cap. The reduction is
equal to the amount of the withdrawal for the first 5% of the roll-up value,
calculated as of the latest contract anniversary (or contract date). The amount
of the withdrawal in excess of 5% of the roll-up value further reduces the
roll-up value and 200% cap proportionally to the additional reduction in
contract value after the first 5% withdrawal occurs. We assess this fee each
contract anniversary and when you begin the income phase of your contract. We
also assess this fee if you make a full withdrawal, but prorate the fee based on
the portion of the contract year that has elapsed since the full annual fee was
most recently deducted. If you make a partial withdrawal, we will assess the
prorated fee if the remaining contract value after the withdrawal would be less
than the amount of the prorated fee; otherwise we will not assess the fee at
that time.
5: We impose this charge only if you choose the Income Appreciator Benefit. The
charge for this benefit is based on an annual rate of 0.25% of your contract
value. The Income Appreciator Benefit charge is calculated: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full or
partial withdrawal, and upon a subsequent purchase payment. The fee is based on
the contract value at the time of the calculation, and is prorated based on the
portion of the contract year since the date that the charge was last deducted.
Although it may be calculated more often, it is deducted only: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full
withdrawal, and upon a partial withdrawal if the contract value remaining after
such partial withdrawal is not enough to cover the then-applicable charge. With
respect to full and partial withdrawals, we prorate the fee based on the portion
of the contract year that has elapsed since the full annual fee was most
recently deducted. We reserve the right to calculate and deduct the fee more
frequently than annually, such as quarterly.
6: We impose this charge only if you choose the Earnings Appreciator Benefit.
The charge for this benefit is based on an annual rate of 0.30% of your contract
value. Although the charge may be calculated more often, it is deducted only: on
each contract anniversary, on the annuity date, upon the death of the sole owner
or first to die of the owner or joint owner prior to the annuity date, upon a
full withdrawal, and upon a partial withdrawal if the contract value remaining
after such partial withdrawal is not enough to cover the then-applicable
earnings appreciator charge. We reserve the right to calculate and deduct the
fee more frequently than annually, such as quarterly.
17
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners Annuity One 3 contract,
and may vary from year to year.
<Table>
<Caption>
MINIMUM MAXIMUM
------- -------
Total Annual Underlying Mutual Fund Operating Expenses* 0.38% 1.67%
* See "Summary of Contract Expenses" -- Underlying Mutual Fund Portfolio Annual
Expenses for more detail on the expenses of the underlying mutual funds.
</Table>
18
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
THE PRUDENTIAL SERIES FUND (2)
- -------------------------------------------------------------------------------------------------------------------------------
Jennison Portfolio 0.60% 0.03% None 0.63%
Prudential Equity Portfolio(3) 0.45% 0.02% None 0.47%
Prudential Global Portfolio(4) 0.75% 0.07% None 0.82%
Prudential Money Market Portfolio 0.40% 0.05% None 0.45%
Prudential Stock Index Portfolio 0.35% 0.03% None 0.38%
Prudential Value Portfolio 0.40% 0.03% None 0.43%
SP Aggressive Growth Asset Allocation
Portfolio(5,6) 0.84% 0.11% None 0.95%
SP AIM Core Equity Portfolio 0.85% 0.15% None 1.00%
SP Balanced Asset Allocation Portfolio(5, 6) 0.76% 0.09% None 0.85%
SP Conservative Asset Allocation Portfolio(5,6) 0.72% 0.08% None 0.80%
SP Davis Value Portfolio 0.75% 0.07% None 0.82%
SP Growth Asset Allocation Portfolio(5, 6) 0.81% 0.10% None 0.91%
SP Large Cap Value Portfolio(5) 0.80% 0.03% None 0.83%
SP LSV International Value Portfolio 0.90% 0.16% None 1.06%
SP Mid Cap Growth Portfolio 0.80% 0.20% None 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.07% None 0.67%
SP PIMCO Total Return Portfolio 0.60% 0.02% None 0.62%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% None 0.80%
SP Small Cap Growth Portfolio 0.95% 0.10% None 1.05%
SP Small Cap Value Portfolio
(formerly SP Goldman Sachs Small Cap Value
Portfolio)(7) 0.90% 0.07% None 0.97%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.17% None 1.07%
SP T. Rowe Price Large-Cap Growth Portfolio
(formerly SP AllianceBernstein Large-Cap Growth
Portfolio)(8,9) 0.90% 0.16% None 1.06%
SP William Blair International Growth Portfolio 0.85% 0.13% None 0.98%
AMERICAN SKANDIA TRUST(2,10)
- -------------------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio 0.85% 0.18% None 1.03%
AST Aggressive Asset Allocation Portfolio(11) 1.04% 0.29% None 1.33%
AST AllianceBernstein Core Value Portfolio 0.75% 0.19% None 0.94%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.13% None 0.88%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.17% None 0.77%
AST American Century Income & Growth Portfolio 0.75% 0.18% None 0.93%
AST American Century Strategic Balanced Portfolio 0.85% 0.23% None 1.08%
AST Balanced Asset Allocation Portfolio(11) 0.95% 0.20% None 1.15%
AST Capital Growth Asset Allocation Portfolio(11) 1.00% 0.20% None 1.20%
AST Cohen & Steers Realty Portfolio 1.00% 0.18% None 1.18%
AST Conservative Asset Allocation Portfolio(11) 0.94% 0.24% None 1.18%
AST DeAM Large-Cap Value Portfolio 0.85% 0.22% None 1.07%
AST DeAM Small-Cap Growth Portfolio 0.95% 0.20% None 1.15%
AST DeAM Small-Cap Value Portfolio 0.95% 0.24% None 1.19%
AST Federated Aggressive Growth Portfolio 0.95% 0.17% None 1.12%
AST First Trust Balanced Target Portfolio 0.85% 0.19% None 1.04%
AST First Trust Capital Appreciation Target
Portfolio 0.85% 0.19% None 1.04%
AST Global Allocation Portfolio 0.86% 0.23% None 1.09%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.16% None 1.06%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.18% None 1.18%
AST High Yield Portfolio
(formerly, AST Goldman Sachs High Yield
Portfolio)(12) 0.75% 0.19% None 0.94%
AST JPMorgan International Equity Portfolio 0.88% 0.19% None 1.07%
AST Large-Cap Value Portfolio
(formerly AST Hotchkis and Wiley Large-Cap Value
Portfolio)(13, 14, 15) 0.75% 0.16% None 0.91%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.17% None 0.97%
AST Marsico Capital Growth Portfolio 0.90% 0.13% None 1.03%
</Table>
19
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
AST MFS Global Equity Portfolio 1.00% 0.26% None 1.26%
AST MFS Growth Portfolio 0.90% 0.18% None 1.08%
AST Mid Cap Value Portfolio
(formerly, AST Gabelli All-Cap Value
Portfolio)(16) 0.95% 0.22% None 1.17%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.18% None 1.08%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.14% None 1.03%
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.15% None 0.80%
AST Preservation Asset Allocation Portfolio(11) 0.89% 0.38% None 1.27%
AST Small-Cap Value Portfolio(13, 17) 0.90% 0.17% None 1.07%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.23% None 1.08%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.21% None 1.01%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.18% None 1.08%
GARTMORE VARIABLE INSURANCE TRUST
----------------------------------------------------------
GVIT Developing Markets Fund (18, 19) 1.05% 0.37% 0.25% 1.67%
JANUS ASPEN SERIES
----------------------------------------------------------
Large Cap Growth Portfolio None Service Shares(19) 0.64% 0.02% 0.25% 0.91%
</Table>
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
20
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1A: Contract With Credit: Highest Daily Value Death Benefit; Guaranteed
Minimum Income Benefit; Earnings Appreciator Benefit, Income Appreciator
Benefit, and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit;
- - You choose the Highest Daily Value Death Benefit;
- - You choose the Guaranteed Minimum Income Benefit (for contracts sold on or
after January 20, 2004, or upon subsequent state approval);
- - You choose the Earnings Appreciator Benefit;
- - You choose the Income Appreciator Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
21
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
EXAMPLE 1b: Contract With Credit: Highest Daily Value Death Benefit, Guaranteed
Minimum Income Benefit, Earnings Appreciator Benefit, Income Appreciator
Benefit, and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 2a: Contract Without Credit: Highest Daily Value Death Benefit,
Guaranteed Minimum Income Benefit, Earnings Appreciator Benefit, Income
Appreciator Benefit, and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 2b: Contract Without Credit: Highest Daily Value Death Benefit,
Guaranteed Minimum Income Benefit, Earnings Appreciator Benefit, Income
Appreciator Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract With Credit: Base Death Benefit, and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit;
- - You do not choose any optional insurance benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 3b: Contract With Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 3a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
22
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
EXAMPLE 4a: Contract Without Credit: Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 3a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4b: Contract Without Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 4a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Examples 1a, 2a,
3a and 4a) are assessed in
connection with some annuity
options, but not others.
The values shown in the 10 year
column are the same for Example 4a
and 4b, the same for Example 3a and
3b, the same for Example 2a and 2b,
and the same for Example 1a and 1b.
This is because if 10 years have
elapsed since your last purchase
payment, we would no longer deduct
withdrawal charges when you make a
withdrawal. The indicated examples
reflect the maximum withdrawal
charges, but in certain states
reduced withdrawal charges may
apply for certain ages.
The examples use an average
contract maintenance charge, which
we calculated based on our estimate
of the total contract fees we
expect to collect in 2006. Your
actual fees will vary based on the
amount of your contract and your
specific allocation among the
investment options.
Premium taxes are not reflected in
the examples. We deduct a charge to
approximate premium taxes that may
be imposed on us in your state.
This charge is generally deducted
from the amount applied to an
annuity payout option.
A table of accumulation unit values
appears in Appendix A to this
prospectus.
23
PART I STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SUMMARY
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
<Table>
<Caption>
CONTRACT WITH CREDIT: HIGHEST DAILY VALUE DEATH BENEFIT; GUARANTEED MINIMUM
INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT; INCOME APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 1a: EXAMPLE 1b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,279 $2,332 $3,290 $5,254 $527 $1,580 $2,632 $5,254
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: HIGHEST DAILY VALUE DEATH BENEFIT; GUARANTEED
MINIMUM INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT; INCOME APPRECIATOR
BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 2a: EXAMPLE 2b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,127 $1,942 $2,757 $4,977 $497 $1,492 $2,487 $4,977
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT: BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 3a: EXAMPLE 3b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
-----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,121 $1,875 $2,557 $3,943 $369 $1,123 $1,899 $3,943
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 4a: EXAMPLE 4b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
-----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$975 $1,501 $2,049 $3,703 $345 $1,051 $1,779 $3,703
</Table>
24
PART II SECTIONS 1-11
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS
25
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26
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE 3
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
THE STRATEGIC PARTNERS ANNUITY ONE 3 VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU,
THE OWNER, AND US, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the third contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
There are two basic versions of Strategic Partners Annuity One 3 variable
annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide a lower interest rate for fixed interest rate options and the
Market Value Adjustment Option than the Contract Without Credit, and
- - may provide fewer available market value adjustment guarantee periods than
the Contract Without Credit.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide a higher interest rate for fixed interest rate options and the
Market Value Adjustment Option than the Contract With Credit, and
- - may provide more market value adjustment guarantee periods than the Contract
With Credit.
Unless we state otherwise, when we use the word contract, it applies to both
versions.
In replacing another annuity you may own, please consider all charges
associated with that annuity. Credits applicable to bonus products, such as the
Contract With Credit, should not be viewed as an offset of any surrender charge
that applies to another annuity contract you may currently own.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Annuity One 3 if you anticipate having to withdraw a
significant amount of your purchase payments within a few years of making those
purchase payments.
Strategic Partners Annuity One 3 is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options and a market value adjustment
option. If you select variable investment options, the amount of money you are
able to accumulate in your contract during the accumulation phase depends upon
the investment performance of the
27
1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE 3 VARIABLE ANNUITY? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
underlying mutual fund(s) associated with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Annuity One 3, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive, depending on applicable state law:
- - Your full purchase payment, less any applicable federal and state income tax;
or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment. We impose neither a withdrawal
charge nor any market value adjustment if you cancel your contract under this
provision.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value. To the extent dictated by state law, we will
include in your refund the amount of any fees and charges that we deducted.
28
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, FIXED INTEREST RATE OPTIONS, AND A MARKET VALUE
ADJUSTMENT OPTION.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/subadviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect, wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
subadvisers to manage specific portions of a portfolio, and the portion managed
by a subadviser may vary from 0% to 100% of the portfolio's assets. The
subadvisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker/dealer firms' registered
representatives and creating
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
marketing material discussing the contract and the available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those Portfolios. However, a contract owner
who had contract value allocated to a Prudential Series Fund Asset Allocation
Portfolio prior to December 5, 2005 may continue to allocate purchase payments
to that Portfolio after that date. In addition, after December 5, 2005, we
ceased offering the Prudential Series Fund SP Large Cap Value Portfolio to new
purchasers and to existing contract owners who had not previously invested in
that Portfolio. However, a contract owner who had contract value allocated to
the SP Large Cap Value Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date.
30
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP JENNISON PORTFOLIO: seeks long-term growth of capital. The Jennison Associates
GROWTH Portfolio invests primarily in equity securities of major, LLC
established corporations that the Sub-adviser believes offer
above-average growth prospects. The Portfolio may invest up
to 30% of its total assets in foreign securities. Stocks are
selected on a company-by-company basis using fundamental
analysis. Normally 65% of the Portfolio's total assets are
invested in common stocks and preferred stocks of companies
with capitalization in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of Jennison Associates
BLEND capital. The Portfolio invests at least 80% of its net LLC; Salomon Brothers
assets plus borrowings for investment purposes in common Asset Management Inc
stocks of major established corporations as well as smaller
companies that the Sub-advisers believe offer attractive
prospects of appreciation.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of LSV Asset Management;
EQUITY capital. The Portfolio invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign and U.S. companies. Each Management, LLC;
Sub-adviser for the Portfolio generally will use either a T. Rowe Price
"growth" approach or a "value" approach in selecting either Associates, Inc.;
foreign or U.S. common stocks. William Blair &
Company, LLC
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current Prudential Investment
income consistent with the stability of capital and the Management, Inc.
maintenance of liquidity. The Portfolio invests in
high-quality short-term money market instruments issued by
the U.S. Government or its agencies, as well as by
corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in
thirteen months or less, and which are denominated in U.S.
dollars.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment results Quantitative
BLEND that generally correspond to the performance of Management Associates
publicly-traded common stocks. With the price and yield LLC
performance of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) as the benchmark, the Portfolio
normally invests at least 80% of investable assets in S&P
500 stocks. The S&P 500 represents more than 70% of the
total market value of all publicly-traded common stocks and
is widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to
select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
31
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL VALUE PORTFOLIO: seeks long-term growth of Jennison Associates
VALUE capital through appreciation and income. The Portfolio LLC
invests primarily in common stocks that the Sub-adviser
believes are undervalued -- those stocks that are trading
below their underlying asset value, cash generating ability
and overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the market
as a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
Normally at least 65% of the Portfolio's total assets is
invested in the common stock and convertible securities of
companies that the Sub-adviser believes will provide
investment returns above those of the S&P 500 or the New
York Stock Exchange (NYSE) Composite Index. Most of the
investments will be securities of large capitalization
companies. The Portfolio may invest up to 25% of its total
assets in real estate investment trusts (REITs) and up to
30% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with Investments LLC
BALANCED the specified level of risk tolerance. The Portfolio may
invest in any other Portfolio of the Fund (other than
another SP Asset Allocation Portfolio), the AST Marsico
Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the
Underlying Portfolios). Under normal circumstances, the
Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying
Portfolios. (Effective December 5, 2005, this Portfolio was
closed to new purchasers and to existing contract owners who
had not previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND SP AIM CORE EQUITY PORTFOLIO: seeks long-term growth of AIM Capital
capital. The Portfolio normally invests at least 80% of Management, Inc.
investable assets in equity securities, including
convertible securities of established companies that have
long-term above-average growth in earnings and growth
companies that the Sub-adviser believes have the potential
for above-average growth in earnings. The Portfolio may
invest up to 20% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
ALLOCATION/ highest potential total return consistent with the specified Investments LLC
BALANCED level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). The Portfolio will invest in equity and
fixed-income Underlying Portfolios. (Effective December 5,
2005, this Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in
the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
32
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to obtain Prudential
the highest potential total return consistent with the Investments LLC
specified level of risk tolerance. The Portfolio may invest
in any other Portfolio of the Fund (other than another SP
Asset Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on fixed-income Underlying Portfolios
but will also invest in equity Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The Davis Selected
Portfolio invests primarily in common stocks of U.S. Advisers, L.P.
companies with market capitalizations of at least $5
billion. It may also invest in stocks of foreign companies
and U.S. companies with smaller capitalizations. The
Sub-adviser attempts to select common stocks of businesses
that possess characteristics that the Sub-adviser believe
foster the creation of long-term value, such as proven
management, a durable franchise and business model, and
sustainable competitive advantages. The Sub-adviser aims to
invest in such businesses when they are trading at a
discount to their intrinsic worth. There is a risk that
"value" stocks can perform differently from the market as a
whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
highest potential total return consistent with the specified Investments LLC
level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on equity Underlying Portfolios but
will also invest in fixed-income Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of Hotchkis and Wiley
capital. The Portfolio normally invests at least 80% of Capital Management,
investable assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are believed Investment Management
to be undervalued and have an above-average potential to Inc., Dreman Value
increase in price, given the company's sales, earnings, book Management LLC
value, cash flow and recent performance. The Portfolio seeks
to achieve its objective through investments primarily in
equity securities of large capitalization companies.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
33
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP LSV INTERNATIONAL VALUE PORTFOLIO: seeks capital growth. LSV Asset Management
The Portfolio pursues its objective by primarily investing
at least 80% of the value of its assets in the equity
securities of companies in developed non-U.S. countries that
are represented in the MSCI EAFE Index. The target of this
Portfolio is to outperform the unhedged US Dollar total
return (net of foreign dividend withholding taxes) of the
MSCI EAFE Index. The Sub-Adviser uses proprietary
quantitative models to manage the Portfolio in a bottom-up
security selection approach combined with overall portfolio
risk management.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of Calamos Advisors LLC
capital. The Portfolio normally invests at least 80% of
investable assets in common stocks and related securities,
such as preferred stocks, convertible securities and
depositary receipts for those securities. These securities
typically are of medium market capitalizations, which the
Sub-adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the
Portfolio as companies with market capitalizations equaling
or exceeding $250 million but not exceeding the top of the
Russell Mid Cap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or traded
in the over-the-counter markets. The Sub-adviser uses a
bottom-up and top-down analysis in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis, as well as a top-down approach to
diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging markets
securities).
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO HIGH YIELD PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a two- to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO TOTAL RETURN PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a three-to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks Jennison Associates
long-term capital appreciation. The Portfolio normally LLC
invests at least 80% of investable assets in equity
securities of small and medium sized U.S. companies that the
Sub-adviser believes have the potential for above-average
earnings growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
34
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH SP SMALL CAP GROWTH PORTFOLIO: seeks long-term capital Eagle Asset
growth. The Portfolio pursues its objective by primarily Management; Neuberger
investing in the common stocks of small-capitalization Berman Management,
companies, which is defined as a company with a market Inc.
capitalization, at the time of purchase, no larger than the
largest capitalized company included in the Russell 2000
Index during the most recent 11-month period (based on
month-end data) plus the most recent data during the current
month.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE SP SMALL-CAP VALUE PORTFOLIO(formerly SP Goldman Sachs Small Goldman Sachs Asset
Cap Value Portfolio): seeks long-term capital growth. The Management, L.P.;
Portfolio normally invests at least 80% its net assets plus Salomon Brothers
borrowings for investment purposes in the equity securities Asset Management Inc
of small capitalization companies. The Portfolio focuses on
equity securities that are believed to be undervalued in the
market place.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks AllianceBernstein
long-term growth of capital. The Portfolio normally invests L.P.; Jennison
at least 65% of total assets in equity-related securities of Associates LLC
U.S. companies that the Sub-advisers believe to have strong
capital appreciation potential. The Portfolio's strategy is
to combine the efforts of two Sub-advisers and to invest in
the favorite stock selection ideas of three portfolio
managers (two of whom invest as a team). Each Sub-adviser to
the Portfolio utilizes a growth style to select
approximately 20 securities. The portfolio managers build a
portfolio with stocks in which they have the highest
confidence and may invest more than 5% of the Portfolio's
assets in any one issuer. The Portfolio is nondiversified,
meaning it can invest a relatively high percentage of its
assets in a small number of issuers. Investing in a
nondiversified portfolio, particularly a portfolio investing
in approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of an on diversified portfolio.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (formerly SP T. Rowe Price
Alliance Bernstein Large-Cap Growth Portfolio): seeks Associates, Inc.
long-term capital growth. Under normal circumstances, the
Portfolio invests at least 80% of its net assets plus
borrowings for investment purposes in the equity securities
of large-cap companies. The Sub-adviser generally looks for
companies with an above-average rate of earnings and cash
flow growth and a lucrative niche in the economy that gives
them the ability to sustain earnings momentum even during
times of slow economic growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
35
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO: seeks William Blair &
long-term capital appreciation. The Portfolio invests Company, LLC
primarily in stocks of large and medium-sized companies
located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index. Under normal
market conditions, the portfolio invests at least 80% of its
net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six
different countries and will not concentrate investments in
any particular industry. The Portfolio seeks companies that
historically have had superior growth, profitability and
quality relative to local markets and relative to companies
within the same industry worldwide, and that are expected to
continue such performance.
- -----------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST ADVANCED STRATEGIES PORTFOLIO: seeks a high level of Marsico Capital
absolute return. The Portfolio invests primarily in a Management, LLC; T.
diversified portfolio of equity and fixed income securities Rowe Price
across different investment categories and investment Associates, Inc.; LSV
managers. The Portfolio pursues a combination of traditional Asset Management;
and non-traditional investment strategies. William Blair &
Company, L.L.C.;
Pacific Investment
Management Company
LLC (PIMCO)
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
92.5% to 100% of its net assets to underlying portfolios
investing primarily in equity securities, and 0% to 7.5% of
its net assets to underlying portfolios investing primarily
in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO: seeks long-term AllianceBernstein
capital growth by investing primarily in common stocks. The L.P.
Sub-adviser expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued. Among other things,
the Portfolio seeks to identify compelling buying
opportunities created when companies are undervalued on the
basis of investor reactions to near-term problems or
circumstances even though their long-term prospects remain
sound. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
36
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO: seeks AllianceBernstein
long-term growth of capital and income while attempting to L.P.
avoid excessive fluctuations in market value. The Portfolio
normally will invest in common stocks (and securities
convertible into common stocks). The Sub-adviser will take a
value-oriented approach, in that it will try to keep the
Portfolio's assets invested in securities that are selling
at reasonable valuations in relation to their fundamental
business prospects. The stocks that the Portfolio will
normally invest in are those of seasoned companies.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO (AST AllianceBernstein
AllianceBernstein Growth + Value Portfolio merged into this L.P.
Portfolio): seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P (R) 500") through
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest,
under normal circumstances, at least 80% of its net assets
in securities included in the S&P(R) 500.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO: seeks American Century
capital growth with current income as a secondary objective. Investment
The Portfolio invests primarily in common stocks that offer Management, Inc.
potential for capital growth, and may, consistent with its
investment objective, invest in stocks that offer potential
for current income. The Sub-adviser utilizes a quantitative
management technique with a goal of building an equity
portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and
while attempting to create a dividend yield that will be
greater than the S&P 500 Index.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO: seeks American Century
BALANCED capital growth and current income. The Sub-adviser intends Investment
to maintain approximately 60% of the Portfolio's assets in Management, Inc.
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed
income investments will fluctuate in value. The equity
securities will fluctuate depending on the performance of
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST BALANCED ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in equity securities, and 27.5% to 42.5%
of its net assets to underlying portfolios investing
primarily in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
37
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 72.5% to 87.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
12.5% to 27.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST COHEN & STEERS REALTY PORTFOLIO: seeks to maximize total Cohen & Steers
return through investment in real estate securities. The Capital Management,
Portfolio pursues its investment objective by investing, Inc.
under normal circumstances, at least 80% of its net assets
in securities of real estate issuers. Under normal
circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate
companies, i.e., a company that derives at least 50% of its
revenues from the ownership, construction, financing,
management or sale of real estate or that has at least 50%
of its assets in real estate. Real estate companies may
include real estate investment trusts or REITs.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 47.5% to 62.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
37.5% to 52.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST DEAM LARGE-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
capital by investing primarily in the value stocks of larger Management, Inc.
companies. The Portfolio pursues its objective, under normal
market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 1000(R) Value Index, but which attempts to
outperform the Russell 1000(R) Value Index through active
stock selection.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST DEAM SMALL-CAP GROWTH PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital from a portfolio of growth stocks of Management, Inc.
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Growth
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Growth Index, but which attempts to
outperform the Russell 2000(R) Growth Index.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
38
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST DEAM SMALL-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital. The Portfolio pursues its objective, Management, Inc.
under normal market conditions, by primarily investing at
least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Value Index, but which attempts to
outperform the Russell 2000(R) Value Index.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO: seeks capital Federated Equity
growth. The Portfolio pursues its investment objective by Management Company of
investing primarily in the stocks of small companies that Pennsylvania;
are traded on national security exchanges, NASDAQ stock Federated Global
exchange and the over-the-counter-market. Small companies Investment Management
will be defined as companies with market capitalizations Corp.
similar to companies in the Russell 2000 Growth Index. Up to
25% of the Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST BALANCED TARGET PORTFOLIO: seeks long-term First Trust Advisors
capital growth balanced by current income. The Portfolio L.P.
normally invests approximately 65% of its total assets in
equity securities and 35% in fixed income securities.
Depending on market conditions, the equity portion may range
between 60-70% and the fixed income portion between 30-40%.
The Portfolio allocates its assets across a number of
uniquely specialized investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO: seeks First Trust Advisors
long-term growth of capital. The Portfolio normally invests L.P.
approximately 80% of its total assets in equity securities
and 20% in fixed income securities. Depending on market
conditions, the equity portion may range between 75-85% and
the fixed income portion between 15-25%. The Portfolio
allocates its assets across a number of uniquely specialized
investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST GLOBAL ALLOCATION PORTFOLIO: seeks to obtain the highest Prudential
potential total return consistent with a specified level of Investments LLC
risk tolerance. The Portfolio seeks to achieve its
investment objective by investing in several other AST
Portfolios ("Underlying Portfolios"). The Portfolio intends
its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an
investor could otherwise achieve only by holding numerous
investments. It is expected that the investment objectives
of such AST Portfolios will be diversified.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
39
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO: seeks Goldman Sachs Asset
growth of capital in a manner consistent with the Management, L.P.
preservation of capital. Realization of income is not a
significant investment consideration and any income realized
on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity
securities of companies that the Sub-adviser believes have
the potential to achieve capital appreciation over the
long-term. The Portfolio seeks to achieve its investment
objective by investing, under normal circumstances, in
approximately 30-45 companies that are considered by the
Sub-adviser to be positioned for long-term growth.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO: seeks long-term Goldman Sachs Asset
capital growth. The Portfolio pursues its investment Management, L.P.
objective, by investing primarily in equity securities
selected for their growth potential, and normally invests at
least 80% of the value of its assets in medium
capitalization companies. For purposes of the Portfolio,
medium-sized companies are those whose market
capitalizations (measured at the time of investment) fall
within the range of companies in the Russell Mid Cap Growth
Index. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST HIGH YIELD PORTFOLIO (formerly AST Goldman Sachs High Goldman Sachs Asset
Yield Portfolio): seeks a high level of current income and Management, L.P.;
may also consider the potential for capital appreciation. Pacific Investment
The Portfolio invests, under normal circumstances, at least Management Company
80% of its net assets plus any borrowings for investment LLC (PIMCO)
purposes (measured at time of purchase) in high yield,
fixed-income securities that, at the time of purchase, are
non-investment grade securities. Such securities are
commonly referred to as "junk bonds."
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO: seeks long-term J.P.Morgan Investment
capital growth by investing in a diversified portfolio of Management Inc.
international equity securities. The Portfolio seeks to meet
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a
recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the
issuer is principally based, but may also be traded in other
countries including the United States.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
40
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAPVALUE AST LARGE-CAP VALUE PORTFOLIO (formerly AST Hotchkis and Dreman Value
Wiley Large-Cap Value Portfolio): seeks current income and Management LLC,
long-term growth of income, as well as capital appreciation. Hotchkis and Wiley
The Portfolio invests, under normal circumstances, at least Capital Management,
80% of its net assets in common stocks of large cap U.S. LLC; J.P. Morgan
companies. The Portfolio focuses on common stocks that have Investment
a high cash dividend or payout yield relative to the market Management, Inc.
or that possess relative value within sectors.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE PORTFOLIO: seeks high current Lord, Abbett & Co.
income and the opportunity for capital appreciation to LLC
produce a high total return. To pursue its objective, the
Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities
and normally invests primarily in high yield and investment
grade debt securities, securities convertible into common
stock and preferred stocks. The Portfolio may find good
value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have
more than half of its assets invested in those securities.
At least 20% of the Portfolio's assets must be invested in
any combination of investment grade debt securities, U.S.
Government securities and cash equivalents. The Portfolio
may also make significant investments in mortgage-backed
securities. Although the Portfolio expects to maintain a
weighted average maturity in the range of five to twelve
years, there are no restrictions on the overall Portfolio or
on individual securities. The Portfolio may invest up to 20%
of its net assets in equity securities.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MARSICO CAPITAL GROWTH PORTFOLIO: seeks capital growth. Marsico Capital
Income realization is not an investment objective and any Management, LLC
income realized on the Portfolio's investments, therefore,
will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies. In
selecting investments for the Portfolio, the Sub-adviser
uses an approach that combines "top down" economic analysis
with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that may
benefit from the trends the Sub-adviser has observed. The
Sub-adviser then looks for individual companies with
earnings growth potential that may not be recognized by the
market at large, utilizing a "bottom up" stock selection
process. The Portfolio will normally hold a core position of
between 35 and 50 common stocks. The Portfolio may hold a
limited number of additional common stocks at times when the
Portfolio manager is accumulating new positions, phasing out
existing or responding to exceptional market conditions.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST MFS GLOBAL EQUITY PORTFOLIO: seeks capital growth. Under Massachusetts
normal circumstances the Portfolio invests at least 80% of Financial Services
its assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
41
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MFS GROWTH PORTFOLIO: seeks long-term capital growth and Massachusetts
future income. Under normal market conditions, the Portfolio Financial Services
invests at least 80% of its total assets in common stocks Company
and related securities, such as preferred stocks,
convertible securities and depositary receipts, of companies
that the Sub-adviser believes offer better than average
prospects for long-term growth. The Sub-adviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE AST MID CAP VALUE PORTFOLIO (formerly AST Gabelli All-Cap EARNEST Partners LLC;
Value Portfolio): seeks to provide capital growth by WEDGE Capital
investing primarily in mid-capitalization stocks that appear Management, LLP
to be undervalued. The Portfolio has a non-fundamental
policy to invest, under normal circumstances, at least 80%
of the value of its net assets in mid-capitalization
companies.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO: (AST Alger Neuberger Berman
All-Cap Growth Portfolio merged into this Portfolio): seeks Management Inc.
capital growth. Under normal market conditions, the
Portfolio primarily invests at least 80% of its net assets
in the common stocks of mid-cap companies. The Sub-adviser
looks for fast-growing companies that are in new or rapidly
evolving industries.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO: seeks capital Neuberger Berman
growth. Under normal market conditions, the Portfolio Management Inc.
primarily invests at least 80% of its net assets in the
common stocks of mid-cap companies. For purposes of the
Portfolio, companies with equity market capitalizations that
fall within the range of the Russell Midcap(R) Index at the
time of investment are considered mid-cap companies. Some of
the Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. Under
the Portfolio's value-oriented investment approach, the
Sub-adviser looks for well-managed companies whose stock
prices are undervalued and that may rise in price before
other investors realize their worth.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST PIMCO LIMITED MATURITY BOND PORTFOLIO: seeks to maximize Pacific Investment
total return consistent with preservation of capital and Management Company
prudent investment management. The Portfolio will invest in LLC (PIMCO)
a diversified portfolio of fixed-income securities of
varying maturities. The average portfolio duration of the
Portfolio generally will vary within a one- to three-year
time frame based on the Sub-adviser's forecast for interest
rates.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST PRESERVATION ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 27.5% to 42.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
42
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST SMALL-CAP VALUE PORTFOLIO: seeks to provide long-term Lee Munder
capital growth by investing primarily in Investments, Ltd;
small-capitalization stocks that appear to be undervalued. J.P. Morgan
The Portfolio will have a non-fundamental policy to invest, Investment
under normal circumstances, at least 80% of the value of its Management, Inc.;
net assets in small capitalization stocks. The Portfolio Salomon Brothers
will focus on common stocks that appear to be undervalued. Asset Management Inc;
Dreman Value
Management LLC
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: seeks a high T. Rowe Price
BALANCED level of total return by investing primarily in a Associates, Inc.
diversified portfolio of fixed income and equity securities.
The Portfolio normally invests approximately 60% of its
total assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-adviser's
outlook for the markets. The Sub-adviser concentrates common
stock investments in larger, more established companies, but
the Portfolio may include small and medium-sized companies
with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND PORTFOLIO: seeks to provide T. Rowe Price
high current income and capital growth by investing in International, Inc.
high-quality foreign and U.S. dollar-denominated bonds. The
Portfolio will invest at least 80% of its total assets in
fixed income securities, including high quality bonds issued
or guaranteed by U.S. or foreign governments or their
agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds
and mortgage and asset-backed securities of U.S. and foreign
issuers. The Portfolio generally invests in countries where
the combination of fixed-income returns and currency
exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-adviser believes that the
currency risk can be minimized through hedging. The
Portfolio may also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk bonds ("junk
bonds"). In addition, the Portfolio may invest up to 30% of
its assets in mortgage-backed (including derivatives, such
as collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: seeks T. Rowe Price
long-term capital growth primarily through the common stocks Associates, Inc.
of companies that own or develop natural resources (such as
energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common
stocks of natural resource companies whose earnings and
tangible assets could benefit from accelerating inflation.
The Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
GARTMORE VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY GVIT DEVELOPING MARKETS FUND: seeks long-term capital Gartmore Global Asset
appreciation, under normal conditions by investing at least Management Trust;
80% of its total assets in stocks of companies of any size Gartmore Global
based in the world's developing economies. Under normal Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- -----------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: LARGE CAP GROWTH PORTFOLIO -- SERVICE Janus Capital
SHARES: seeks long- term growth of capital in a manner Management LLC
consistent with the preservation of capital. The Portfolio
invests at least 80% of its net assets in common stocks of
large-sized companies. Large-sized companies are those whose
market capitalizations fall within the range of companies in
the Russell 1000 Index at the time of purchase.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
44
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law. We may offer lower interest rates for Contracts With Credit than for
Contracts Without Credit.
Payments allocated to the fixed interest rate options become part of Pruco
Life's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this option
for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. You may not transfer
from other investment options to the DCA Fixed Rate Option. Transfers to the
one-year fixed interest rate option will remain in the general account.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$2,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transferred to
the selected variable investment options, or to the one-year fixed interest rate
option in either six or twelve monthly installments, and you may not change that
number of monthly installments after you have chosen the DCA Fixed Rate Option.
You may allocate to both the six-month and twelve-month options. (In the future,
we may make available other numbers of transfers and other transfer
schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the investment options into which the DCA Fixed Rate
Option assets are transferred. You may make a one time transfer of the remaining
value out of your DCA Fixed Rate Option, if you so choose. Transfers from the
DCA Fixed Rate Option do not count toward the maximum number of free transfers
allowed under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
Under the Market Value Adjustment Option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will be
no less than the minimum interest rate dictated by applicable state law with
respect to any guarantee period. We may offer fewer available guarantee periods
in Contracts With Credit than in Contracts Without Credit. This option is not
available for contracts issued in some states. Please see your contract. The
Market Value Adjustment Option is registered separately from the variable
investment options, and the amount of market value adjustment option securities
registered is stated in that registration statement.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE
30-DAY PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL
BE SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at least
$1,000 if you choose this option. We may offer lower interest rates for
Contracts With Credit than for Contracts Without Credit.
We refer to interest rates as annual rates, although we credit interest
within each guarantee period on a daily basis. The daily interest that we credit
is equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center until
the earliest to occur of any of the following events: (a) full surrender of the
contract, (b) commencement of annuity payments or settlement, (c) end of the
guarantee period, (d) transfer of the value in the guarantee period, (e) payment
of a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a) withdraw or transfer the value of the guarantee period,
(b) allocate the value to another available guarantee period or other investment
option (provided that the new guarantee period ends prior to the annuity
date). You will receive the interest rate applicable on the date we receive
your instruction, or
(c) apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
contract value in your maturing guarantee period, we will reinvest the amount in
the Prudential Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) listed immediately above, you
will receive the current interest rate applicable to the guarantee period having
the same duration as the guarantee period that just matured, which is offered on
the day immediately following the end of the matured guarantee period. However,
if at that time we do not offer a guarantee period with the same duration as
that which matured, you will then receive the current interest rate applicable
to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed by
us and the interest amount that your money will earn is guaranteed by us to be
at least the minimum interest rate dictated by applicable state law.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment or transfer contract value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected by changes
in interest rates, among other factors. The market value adjustment that we
assess against your contract value if you withdraw or transfer outside the
30-day period discussed above involves our attributing to you a portion of our
investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in a
reduction of the withdrawal proceeds that you receive). For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining contract value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above. The laws of certain states may prohibit us from imposing a
market value adjustment on the annuity date.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFIT IN YOUR GUARANTEE PERIOD DOES NOT DEPEND ON THE INVESTMENT
PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE HOLD WITH RESPECT TO YOUR
GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET VALUE ADJUSTMENT, WE DO
NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS AND OTHER INSTRUMENTS
THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. The minimum
transfer amount is the lesser of $250 or the amount in the investment option
from which the transfer is to be made. In addition, you can transfer your
contract value out of a market value adjustment guarantee period into another
market value adjustment guarantee period, into a variable investment option, or
into a one-year fixed interest rate option, although a market value adjustment
will apply to any transfer you make outside the 30-day period discussed above.
You may transfer contract value into the market value adjustment option at any
time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received in good order by us, or by certain entities that we have
specifically designated. Our business day generally closes at 4:00 p.m. Eastern
time. Our business day may close earlier, for example if regular trading on the
New York Stock Exchange closes early. Transfer requests received
47
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
after the close of the business day will take effect at the end of the next
business day.
With regard to the Market Value Adjustment Option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer from
the market value adjustment option, but you do not specify the guarantee period
from which funds are to be taken, then we will transfer funds from the guarantee
period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE
ONE YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. Currently we charge
$25 for each transfer after the twelfth in a contract year, and we have the
right to increase this charge up to $30. (Dollar Cost Averaging and Auto-
Rebalancing transfers do not count toward the 12 free transfers per year.)
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions we may take in the future, we have adopted the following specific
restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such amount
into a particular variable investment option, and within 30 calendar days
thereafter transfer (the "Transfer Out") all or a
48
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
portion of that amount into another variable investment option, then upon the
Transfer Out, the former variable investment option becomes restricted (the
"Restricted Option"). Specifically, we will not permit subsequent transfers
into the Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not (i) count transfers made in
connection with one of our systematic programs, such as asset allocation and
automated withdrawals and (ii) categorize as a transfer the first transfer
that you make after the contract date, if you make that transfer within 30
calendar days after the contract date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from your
contract at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment options or the one-year fixed interest rate option. You can have
these automatic transfers occur monthly, quarterly, semiannually or annually. By
investing amounts on a regular basis instead of investing the total amount at
one time, dollar cost averaging may decrease the effect of market fluctuation on
the investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against loss in declining markets.
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you have
designated. If you also participate in the DCA feature, then the variable
investment option from which you make the DCA transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code), and annuity payments. Scheduled transactions are processed and valued as
of the date they are scheduled, unless the scheduled day is not a business day.
In that case, the transaction will be processed and valued on the next business
day, unless (with respect to required minimum distributions, substantially equal
periodic payments under Section 72(t) of the Code, and annuity payments only),
the next business day falls in the subsequent calendar year, in which case the
transaction will be processed and valued on the prior business day.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the third contract
anniversary (or as required by state law if different). Annuity payments must
begin no later than the contract anniversary coinciding with or next following
the annuitant's 95th birthday (unless we agree to another date).
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners Annuity One 3 variable annuity contract offers an
optional Guaranteed Minimum Income Benefit, which we describe below. Your
annuity options vary depending upon whether you choose this benefit.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1 for a period
shorter than five years, Option 3, or certain other annuity options that we may
make available. We do not deduct a withdrawal charge if you choose Option 1 for
a period of five years or longer or Option 2. For information about withdrawal
charges, see Section 8, "What Are The Expenses Associated With The Strategic
Partners Annuity One 3 Contract?"
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY PAYMENT
OPTIONS DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE THE OPTIONAL
LIFETIME FIVE INCOME BENEFIT, THERE ARE ADDITIONAL ANNUITY PAYMENT OPTIONS THAT
ARE ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS PROSPECTUS FOR
ADDITIONAL DETAILS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life income annuity option is prohibited by applicable law, then we will pay
you a lump sum in lieu of this option.
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OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year. This option is not
available if you hold your contract in an IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part or all of the contract value that we are
holding at any time.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked. This feature may not be
available in your state. You may not elect both GMIB and the Lifetime Five
Income Benefit.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the annual
interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described below.
At this point, the GMIB protected value will be increased by any subsequent
invested purchase payments and reduced by the effect of withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 75 or younger in order for you to elect the Guaranteed
Minimum Income Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts), of the
average GMIB protected value described below. In some states this fee may be
lower.
- - Under the contract terms governing the GMIB, we can require GMIB participants
to invest only in designated underlying mutual funds or can require GMIB
participants to invest according to an asset allocation model.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING PERIOD
IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7TH CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET (AS
DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING WITH THE
DATE OF THE MOST RECENT RESET. IN LIGHT OF THIS WAITING PERIOD UPON RESETS,
IT IS NOT RECOMMENDED THAT YOU RESET YOUR GUARANTEED MINIMUM INCOME BENEFIT
IF THE REQUIRED BEGINNING DATE UNDER IRS MINIMUM DISTRIBUTION REQUIREMENTS
WOULD COMMENCE DURING THE 7 YEAR WAITING PERIOD. SEE "MINIMUM DISTRIBUTION
REQUIREMENTS AND PAYMENT OPTION" IN SECTION 10 FOR ADDITIONAL INFORMATION ON
IRS REQUIREMENTS.
Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the
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income phase with the Guaranteed Minimum Income Benefit by submitting the
necessary forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset, the
contract value at the time of the reset), increased daily at an effective annual
interest rate of 5% starting on the date each invested purchase payment is made,
until the cap is reached (GMIB roll-up cap). We will reduce this amount by the
effect of withdrawals. The GMIB roll-up cap is equal to two times each invested
purchase payment (for a reset, two times the sum of (1) the contract value at
the time of the reset, and (2) any invested purchase payments made subsequent to
the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
- - the contract anniversary coinciding with or next following the annuitant's
80th birthday,
- - the 7th contract anniversary, or
- - 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced proportionally by withdrawals.
EFFECT OF WITHDRAWALS
In any contract year when the GMIB protected value is increasing at the rate of
5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value calculated on the contract anniversary (or,
during the first contract year, on the contract date). Any withdrawals made
after the dollar-for-dollar limit has been reached will proportionally reduce
the GMIB protected value. We calculate the proportional reduction by dividing
the contract value after the withdrawal by the contract value immediately
following the withdrawal of any available dollar-for-dollar amount. The
resulting percentage is multiplied by the GMIB protected value after subtracting
the amount of the withdrawal that does not exceed 5%. In each contract year
during which the GMIB protected value has stopped increasing at the 5% rate,
withdrawals will reduce the GMIB protected value proportionally. The GMIB
roll-up cap is reduced by the sum of all reductions described above.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are January 1,
2006; 2.) an initial purchase payment of $250,000; 3.) an initial GMIB protected
value of $250,000; 4.) an initial 200% cap of $500,000; and 5.) an initial
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on February 1, 2006 (in the first contract year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
GMIB protected value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$500,000 to $490,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of
the first contract year is also reduced by the amount withdrawn (from $12,500
to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on March 1, 2006 (still within the first
contract year). Immediately before the withdrawal, the contract value is
$220,000 and the GMIB protected value is $241,941.95. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
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- - The GMIB protected value is first reduced by the Remaining Limit (from
$241,941.95 to $239,441.95).
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
- B is the contract value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,441.95 X (1 -
($7,500/$217,500)), or $231,185.33.
- The GMIB 200% cap is reduced by the sum of all reductions above
($490,000-$2,500-$8,256.62, or $479,243.38).
- - The Remaining Limit is set to zero (0) for the balance of the first contract
year.
EXAMPLE 3. DOLLAR-FOR-DOLLAR LIMIT IN SECOND CONTRACT YEAR
A $10,000 withdrawal is made on the first anniversary of the contract date,
January 1, 2007 (second contract year). Prior to the withdrawal, the GMIB
protected value is $240,837.69. The dollar-for-dollar limit is equal to 5% of
this amount, or $12,041.88. As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $240,837.69 to $230,837.69).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$479,243.38 to $469,243.38).
- - The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.88 to $2,041.88).
GMIB RESET FEATURE
You may elect to "reset" your GMIB protected value to equal your current
contract value twice over the life of the contract. You may only exercise this
reset option if the annuitant has not yet reached his or her 76th birthday. If
you reset, you must wait a new 7-year period from the most recent reset to
exercise the Guaranteed Minimum Income Benefit. Further, we will reset the GMIB
roll-up cap to equal two times the GMIB protected value as of such date.
Additionally, if you reset, we will determine the GMIB payout amount by using
the GMIB guaranteed annuity purchase rates (specified in your contract) based on
the number of years since the most recent reset. These purchase rates may be
less advantageous than the rates that would have applied absent a reset.
PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
(where applicable) of the annuitant (and, if there is one, the co-annuitant).
After we first deduct a charge for any applicable premium taxes that we are
required to pay, the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value -- that is, the value of the contract adjusted
for any market value adjustment minus any charge we impose for premium taxes
and withdrawal charges -- as of the date you exercise the GMIB payout option
applied to the current annuity purchase rates then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a period certain of ten years. In
calculating the amount of the payments under the GMIB, we apply certain assumed
interest rates, equal to 2% annually for a waiting period of 7-9 years, and 2.5%
annually for waiting periods of 10 years or longer for contracts sold on or
after January 20, 2004, or upon subsequent state approval (and 2.5% annually for
a waiting period of 7-9 years, 3% annually for a waiting period of 10-14 years,
and 3.5% annually for waiting periods of 15 years or longer for all other
contracts).
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GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the contract anniversary coinciding with or next
following the annuitant's attainment of age 95 (age 92 for contracts used as a
funding vehicle for IRAs).
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB, such as the annuity purchase rates, (which include
assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing non-GMIB annuity
payout options. Therefore, you may generate higher income payments if you were
to annuitize a lower contract value at the current annuity purchase rates, than
if you were to annuitize under the GMIB with a higher GMIB protected value than
your contract value but at the annuity purchase rates guaranteed under the GMIB.
TERMINATING THE GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is fully
surrendered, on the date the death benefit is payable to your beneficiary
(unless your surviving spouse elects to continue the contract), or on the date
that your contract value is transferred to begin making annuity payments. The
GMIB may also be terminated if you designate a new annuitant who would not be
eligible to elect the GMIB based on his or her age at the time of the change.
Upon termination of the GMIB, we will deduct the charge from your contract
value for the portion of the contract year since the prior contract anniversary
(or the contract date if in the first contract year).
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of
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the life of the annuitant (and possibly co-annuitant) (life annuities). There
are certain assumptions that are common to both fixed period annuities and life
annuities. In each type of annuity, we assume that the value you apply at the
outset toward your annuity payments earns interest throughout the payout period.
For annuity options within the GMIB, this interest rate ranges from 2% to 2.5%
for contracts sold on or after January 20, 2004, or upon subsequent state
approval (and 2.5% to 3.5% for all other contracts). For non-GMIB annuity
options, the guaranteed minimum rate is 3%. The GMIB guaranteed annuity purchase
rates in your contract depict the minimum amounts we will pay (per $1000 of
adjusted contract value). If our current annuity purchase rates on the annuity
date are more favorable to you than the guaranteed rates, we will make payments
based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted contract value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such a
reduced age, we base our calculations on a younger person, who generally would
live longer and therefore draw life annuity payments over a longer time period.
Given the longer pay-out period, the payments made to the younger person would
be less than those made to an older person. We make two such age adjustments:
1. First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by either
(a) four years, for life annuities under the GMIB sold in contracts on or
after January 20, 2004, or upon subsequent state approval or (b) two years,
with respect to guaranteed payments under life annuities not involving GMIB,
as well as GMIB payments under contracts not described in (a) immediately
above. For the reasons explained above in this section, the four year age
reduction causes a greater reduction in the amount of the annuity payments
than does the two-year age reduction.
2. Second, for life annuities under both versions of GMIB as well as guaranteed
payments under life annuities not involving GMIB, we make a further age
reduction according to the table in your contract entitled "Translation of
Adjusted Age." As indicated in the table, the further into the future the
first annuity payment is, the longer we expect the person receiving those
payments to live, and the more we reduce the annuitant's (or co-annuitant's)
age.
CURRENT ANNUITY PAYMENTS
Immediately above, we have referenced how we determine annuity payments based on
"guaranteed" annuity purchase rates. By "guaranteed" annuity purchase rates, we
mean the minimum annuity purchase rates that are set forth in your annuity
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contract and thus contractually guaranteed by us. "Current" annuity purchase
rates, in contrast, refer to the annuity purchase rates that we are applying to
contracts that are entering the annuity phase at a given point in time. These
current annuity purchase rates vary from period to period, depending on changes
in interest rates and other factors. We do not guarantee any particular level of
current annuity purchase rates. When calculating current annuity purchase rates,
we use the actual age of the annuitant (or co-annuitant), rather than any
reduced age.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner dies. However, if the contract is jointly owned, the owner must name
the joint owner and the joint owner must name the owner as the beneficiary. For
entity-owned contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the owner or joint owner dies during the accumulation phase, we will, upon
receiving the appropriate proof of death and any other needed documentation in
good order (proof of death), pay a death benefit to the beneficiary designated
by the deceased owner or joint owner. If there is a sole owner and there is only
one beneficiary who is the owner's spouse on the date of death, then the
surviving spouse may continue the contract under the Spousal Continuance
Benefit. If there are an owner and joint owner of the contract, and the owner's
spouse is both the joint owner and the beneficiary on the date of death, then,
at the death of the first to die, the death benefit will be paid to the
surviving owner or the surviving owner may continue the contract under the
Spousal Continuance Benefit.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order). If you have purchased the Contract With Credit, we will first deduct
any credit corresponding to a purchase payment made within one year of death.
We impose no market value adjustment on contract value held within the market
value adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, (i) if
you have chosen a Guaranteed Minimum Death Benefit (GMDB), the GMDB protected
value or (ii) if you have chosen the Highest Daily Value Death Benefit, a
death benefit equal to the highest daily value (computed as described below
in this section).
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole owner or the first to die of
the owner or joint owner during the accumulation phase. You cannot elect a GMDB
option if you choose the Highest Daily Value Death Benefit.
The GMDB protected value option can be equal to the:
- - GMDB roll-up,
- - GMDB step-up, or
- - Greater of the GMDB roll-up and the GMDB step-up.
The GMDB protected value is calculated daily.
GMDB ROLL-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB roll-up is equal to the invested purchase
payments, increased daily at an effective annual interest rate of 5% starting on
the date that each invested purchase payment is made. The GMDB roll-up value
will increase by subsequent invested purchase payments and reduce by the effect
of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the later of:
- - the contract anniversary coinciding with or next following the sole owner's
or older owner's 80th birthday, or
- - the 5th contract anniversary.
However, the GMDB protected value will still increase by subsequent invested
purchase payments and reduce by the effect of withdrawals.
Withdrawals will first reduce the GMDB protected value on a dollar-for-dollar
basis up to the first 5% of
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GMDB protected value calculated on the contract anniversary (on the contract
date in the first contract year), then proportionally by any amounts exceeding
the 5%.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB roll-up is equal to the invested purchase
payments, increased daily at an effective annual interest rate of 3% of all
invested purchase payments, starting on the date that each invested purchase
payment is made. We will increase the GMDB roll-up by subsequent invested
purchase payments and reduce it by the effect of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the 5th contract anniversary. However we will continue to reduce the GMDB
protected value by the effect of withdrawals.
Withdrawals will first reduce the GMDB protected value on a dollar-for-dollar
basis up to the first 3% of GMDB protected value calculated on the contract
anniversary (on the contract date in the first contract year), then
proportionally by any amounts exceeding the 3%.
GMDB STEP-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB step-up before the first contract anniversary is
the initial invested purchase payment increased by subsequent invested purchase
payments, and proportionally reduced by the effect of withdrawals. The GMDB
step-up on each contract anniversary will be the greater of the previous GMDB
step-up and the contract value as of such contract anniversary. Between contract
anniversaries, the GMDB step-up will increase by invested purchase payments and
reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value
on the later of:
- - the contract anniversary coinciding with or next following the sole or older
owner's 80th birthday, or
- - the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The new protected value is $60,000, or
75% of what it was before the withdrawal.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB step-up
to the greater of the then current GMDB step-up or the contract value as of that
contract anniversary. Thereafter, we will only increase the GMDB protected value
by subsequent invested purchase payments and proportionally reduce it by
withdrawals.
Special rules apply if the beneficiary is the spouse of the owner, and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met, then the
contract can continue, and the spouse will become the new owner of the
contract; or
- - The spouse can receive the death benefit. A surviving spouse who is eligible
for the Spousal Continuance Benefit must choose between that benefit and
receiving the death benefit during the first 60 days following our receipt of
proof of death.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
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Depending on applicable state law, some death benefit options may not be
available or may be subject to certain restrictions under your contract.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies, the Spousal Continuance Benefit may apply. If the contract has an
owner and a joint owner and they are not spouses at the time one dies, we will
pay the death benefit and the contract will end. Joint ownership may not be
allowed in your state.
HIGHEST DAILY VALUE DEATH BENEFIT
The Highest Daily Value Death Benefit (HDV) is a feature under which the death
benefit may be "stepped-up" on a daily basis to reflect increasing contract
value. HDV is currently being offered in those jurisdictions where we have
received regulatory approval. Certain terms and conditions may differ between
jurisdictions once approved. The HDV is not available if you elect the
Guaranteed Minimum Death Benefit. Currently, HDV can only be elected at the time
you purchase your contract. Please note that you may not terminate the HDV death
benefit once elected. Moreover, because this benefit may not be terminated once
elected, you must, as detailed below, keep your contract value allocated to
certain Prudential Series Fund asset allocation portfolios.
Under HDV, the amount of the benefit depends on whether the "target date" is
reached. The target date is reached upon the later of the contract anniversary
coinciding with or next following the elder owner's (or annuitant's, if entity
owned) 80th birthday or five years after the contract date. Prior to the target
date, the death benefit amount is increased on any business day if the contract
value on that day exceeds the most recently determined death benefit amount
under this option. These possible daily adjustments cease on and after the
target date, and instead adjustments are made only for purchase payments and
withdrawals.
IF THE CONTRACT HAS ONE CONTRACT OWNER, the contract owner must be age 79 or
less at the time the HDV is elected. If the contract has joint owners, the older
owner must be age 79 or less. If there are joint owners, death of the owner
refers to the first to die of the joint owners. If the contract is owned by an
entity, the annuitant must be age 79 or less, and death of the contract owner
refers to the death of the annuitant.
Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5, 2005
must allocate contract value to one or more of the following asset allocation
portfolios of American Skandia Trust: AST Capital Growth Asset Allocation
Portfolio, AST Balanced Asset Allocation Portfolio, AST Conservative Asset
Allocation Portfolio, AST Preservation Asset Allocation Portfolio or to the AST
Advanced Strategies Portfolio, AST First Trust Balanced Target Portfolio, or AST
First Trust Capital Appreciation Target Portfolio.
The HDV death benefit depends on whether death occurs before or after the
Death Benefit Target Date.
IF THE CONTRACT OWNER DIES BEFORE THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV as of the contract owner's date of death.
IF THE CONTRACT OWNER DIES ON OR AFTER THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV on the Death Benefit Target Date plus the sum of all purchase
payments less the sum of all proportional withdrawals since the Death Benefit
Target Date.
The amount determined by this calculation is increased by any purchase payments
received after the contract owner's date of death and decreased by any
proportional withdrawals since such date.
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CALCULATION OF THE HIGHEST DAILY VALUE DEATH BENEFIT
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV death benefit is calculated. Each
example assumes an initial purchase payment of $50,000. Each example assumes
that there is one contract owner who is age 70 on the contract date.
EXAMPLE WITH MARKET INCREASE AND DEATH BEFORE DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals have been made. On
the date we receive due proof of death, the contract value is $75,000; however,
the Highest Daily Value was $90,000. Assume as well that the contract owner has
died before the Death Benefit Target Date. The death benefit is equal to the
greater of HDV or the base death benefit. The death benefit would be the Highest
Daily Value ($90,000) because it is greater than the amount that would have been
payable under the base death benefit ($75,000).
EXAMPLE WITH WITHDRAWALS
Assume that the contract value has been increasing due to positive market
performance and the contract owner made a withdrawal of $15,000 in contract year
7 when the contract value was $75,000. On the date we receive due proof of
death, the contract value is $80,000; however, the Highest Daily Value ($90,000)
was attained during the fifth contract year. Assume as well that the contract
owner has died before the Death Benefit Target Date. The Death Benefit is equal
to the greater of the Highest Daily Value (proportionally reduced by the
subsequent withdrawal) or the base death benefit.
Highest Daily Value = $90,000 - [$90,000 X $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Base Death Benefit = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The death benefit therefore is $80,000.
EXAMPLE WITH DEATH AFTER DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals had been made prior
to the Death Benefit Target Date. Further assume that the contract owner dies
after the Death Benefit Target Date, when the contract value is $75,000. The
Highest Daily Value on the Death Benefit Target Date was $80,000; however,
following the Death Benefit Target Date, the contract owner made a purchase
payment of $15,000 and later had taken a withdrawal of $5,000 when the contract
value was $70,000. The death benefit is equal to the greater of the Highest
Daily Value on the Death Benefit Target Date plus purchase payments minus
proportional withdrawals after the Death Benefit Target Date or the base death
benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) X $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Base Death Benefit = max [$75,000, ($50,000 + $15,000) - [($50,000 + $15,000) X
$5,000/$70,000]]
= max [$75,000, $60,357]
= $75,000
The death benefit therefore is $88,214.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
CHOICE 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option within sixty days, the beneficiary will receive this
payout option.
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CHOICE 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first-to-die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the last to survive of the owner or
joint owner.
If the owner and joint owner are not spouses, any portion of the death
benefit not applied under Choice 3 within one year of the date of death of
the first to die must be distributed within five years of that date of death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 10, "What Are The Tax Considerations Associated With
The Strategic Partners Annuity One 3 Contract?"
EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit (EAB) is an optional, supplemental death
benefit that provides a benefit payment upon the death of the sole owner or
first-to-die of the owner or joint owner during the accumulation phase. Any
Earnings Appreciator Benefit payment we make will be in addition to any other
death benefit payment we make under the contract. This feature may not be
available in your state.
The Earnings Appreciator Benefit is designed to provide a beneficiary with
additional funds when we pay a death benefit in order to defray the impact taxes
may have on that payment. Because individual circumstances vary, you should
consult with a qualified tax advisor to determine whether it would be
appropriate for you to elect the Earnings Appreciator Benefit.
If you want the Earnings Appreciator Benefit, you generally must elect it at
the time you apply for the contract. If you elect the Earnings Appreciator
Benefit, you may not later revoke it. You may, if you wish, select both the
Earnings Appreciator Benefit and the Highest Daily Value Death Benefit.
Upon our receipt of proof of death in good order, we will determine an
Earnings Appreciator Benefit by multiplying the Earnings Appreciator Benefit
percentage below by the lesser of: (i) the then-existing amount of earnings
under the contract, or (ii) an amount equal to 3 times the sum of all purchase
payments previously made under the contract.
For purposes of computing earnings and purchase payments under the Earnings
Appreciator Benefit, we calculate earnings as the difference between the
contract value and the sum of all purchase payments. Withdrawals reduce earnings
first, then purchase payments, on a dollar-for-dollar basis.
EAB percentages are as follows:
- - 40% if the owner is age 70 or younger on the date the application is signed.
- - 25% if the owner is between ages 71 and 75 on the date the application is
signed.
- - 15% if the owner is between ages 76 and 79 on the date the application is
signed.
If the contract is owned jointly, the age of the older of the owner or joint
owner determines the EAB percentage.
If the surviving spouse is continuing the contract in accordance with the
Spousal Continuance Benefit (See "Spousal Continuance Benefit" below), the
following conditions apply:
- - In calculating the Earnings Appreciator Benefit, we will use the age of the
surviving spouse at the time
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that the Spousal Continuance Benefit is activated to determine the applicable
EAB percentage.
- - We will not allow the surviving spouse to continue the Earnings Appreciator
Benefit (or bear the charge associated with this benefit) if he or she is age
80 or older on the date that the Spousal Continuance Benefit is activated.
- - If the Earnings Appreciator Benefit is continued, we will calculate any
applicable Earnings Appreciator Benefit payable upon the surviving spouse's
death by treating the contract value (as adjusted under the terms of the
Spousal Continuance Benefit) as the first purchase payment.
TERMINATING THE EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract,
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit,
- - the date the contract terminates, or
- - the date you annuitize the contract.
Upon termination of the Earnings Appreciator Benefit, we cease imposing the
associated charge.
SPOUSAL CONTINUANCE BENEFIT
This benefit is available if, on the date we receive proof of the owner's death
in good order, (1) there is only one owner of the contract and there is only one
beneficiary who is the owner's spouse; or (2) there are an owner and joint owner
of the contract, and the joint owner is the owner's spouse and the owner's
beneficiary under the contract. In no event, however, can the annuitant be older
than the maximum age for annuitization on the date of the owner's death, nor can
the surviving spouse be older than 95 on the date of the owner's death. Assuming
the above conditions are present, the surviving spouse can elect the Spousal
Continuance Benefit, but must do so no later than 60 days after furnishing proof
of the owner's death in good order.
Upon activation of the Spousal Continuance Benefit, the contract value is
adjusted to equal the amount of the death benefit to which the surviving spouse
would have been entitled. This contract value will serve as the basis for
calculating any death benefit payable upon the death of the surviving spouse. We
will allocate any increase in the adjusted contract value among the variable,
fixed interest rate or market value adjustment options in the same proportions
that existed immediately prior to the spousal continuance adjustment. We will
waive the $1,000 minimum requirement for the market value adjustment option.
Under the Spousal Continuance Benefit, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the Spousal
Continuance Benefit. However, we will continue to impose withdrawal charges on
purchase payments made after activation of this benefit. In addition, contract
value allocated to the market value adjustment option will remain subject to a
potential market value adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Benefit, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the sum of all invested purchase payments (adjusted for withdrawals),
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB ROLL-UP, we
will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB roll-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB
STEP-UP, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB step-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GREATER OF
THE GMDB ROLL-UP AND GMDB STEP-UP, we will adjust the contract value to equal
the greatest of:
- - the contract value,
- - the GMDB roll-up, or
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- - the GMDB step-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE HIGHEST DAILY VALUE DEATH BENEFIT, we will adjust the
contract value to equal the greater of:
- - the contract value, or
- - the Highest Daily Value,
plus the amount of any applicable Earnings Appreciator Benefit.
After we have made the adjustment to contract value set out immediately
above, we will continue to compute the GMDB roll-up and the GMDB step-up, or HDV
death benefit (as applicable), under the surviving spousal owner's contract, and
will do so in accordance with the preceding discussion in this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death benefit
payable under the Guaranteed Minimum Death Benefit or Highest Daily Value Death
Benefit provisions of the contract. The contract may not be continued upon the
death of a spouse who had assumed ownership of the contract through the exercise
of the Spousal Continuance Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be continued
for the surviving spousal owner. All provisions of the Guaranteed Minimum Income
Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will remain the same as
on the date of the owner's death. If the GMIB reset feature was never exercised,
the surviving spousal owner can exercise the GMIB reset feature twice. If the
original owner had previously exercised the GMIB reset feature once, the
surviving spousal owner can exercise the GMIB reset once. However, the surviving
spouse (or new annuitant designated by the surviving spouse) must be under 76
years of age at the time of reset. If the original owner had previously
exercised the GMIB reset feature twice, the surviving spousal owner may not
exercise the GMIB reset at all. If the attained age of the surviving spouse at
activation of the Spousal Continuance Benefit, when added to the remainder of
the GMIB waiting period to be satisfied, would preclude the surviving spouse
from utilizing the Guaranteed Minimum Income Benefit, we will revoke the
Guaranteed Minimum Income Benefit under the contract at that time and we will no
longer charge for that benefit.
IF YOU ELECTED THE LIFETIME FIVE INCOME BENEFIT, on the owner's death, the
Lifetime Five Income Benefit will end. However, if the owner's surviving spouse
would be eligible to acquire the Lifetime Five Income Benefit as if he/she were
a new purchaser, then the surviving spouse may elect the Lifetime Five Income
Benefit under the Spousal Continuance Benefit. The surviving spouse (or new
annuitant designated by the surviving spouse) must be at least 45 years of age
at the time of election.
IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death (or
first-to-die, in the case of joint owners), the Income Appreciator Benefit will
end unless the contract is continued by the deceased owner's surviving spouse
under the Spousal Continuance Benefit. If the contract is continued by the
surviving spouse, we will continue to pay the balance of any Income Appreciator
Benefit payments until the earliest to occur of the following: (a) the date on
which 10 years' worth of IAB automatic withdrawal payments or IAB credits, as
applicable, have been paid, (b) the latest date on which annuity payments would
have had to have commenced had the owner not died (i.e., the contract
anniversary coinciding with or next following the annuitant's 95th birthday), or
(c) the contract anniversary coinciding with or next following the annuitants'
surviving spouse's 95th birthday.
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force for
7 contract years. If the attained age of the surviving spouse at activation of
the Spousal Continuance Benefit, when added to the remainder of the Income
Appreciator Benefit waiting period to be satisfied, would preclude the surviving
spouse from utilizing the Income Appreciator Benefit, we will revoke the Income
Appreciator Benefit under the contract at that time and we will no longer charge
for that benefit. If the Income Appreciator Benefit has been in force for 7
contract years or more, but the benefit has not been activated,
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the surviving spouse may activate the benefit at any time after the contract has
been continued. If the Income Appreciator Benefit is activated after the
contract is continued by the surviving spouse, the Income Appreciator Benefit
calculation will exclude any amount added to the contract at the time of spousal
continuance resulting from any death benefit value exceeding the contract value.
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LIFETIME FIVE INCOME BENEFIT
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an initial
principal value (called the "Protected Withdrawal Value"), regardless of the
impact of market performance on your contract value, subject to our rules
regarding the timing and amount of withdrawals. There are two options -- one is
designed to provide an annual withdrawal amount for life (the "Life Income
Benefit") and the other is designed to provide a greater annual withdrawal
amount (than the first option) as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the Withdrawal Benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the annuity has a contract value and Lifetime Five is in effect. Certain
benefits under Lifetime Five may remain in effect even if the contract value is
zero. The option may be appropriate if you intend to make periodic withdrawals
from your contract and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals -- the guarantees are not lost if you withdraw less than the maximum
allowable amount each year. Lifetime Five is only being offered in those
jurisdictions where we have received regulatory approval and will be offered
subsequently in other jurisdictions when we receive regulatory approval in those
jurisdictions. Certain terms and conditions may differ between jurisdictions
once approved.
Lifetime Five is subject to certain restrictions described below.
- - Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Lifetime Five Income Benefit.
- - The annuitant must be at least 45 years old when Lifetime Five is elected.
- - Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit or Income Appreciator Benefit.
- - Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5,
2005 must allocate contract value to one or more of the following asset
allocation portfolios of American Skandia Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, and AST Preservation Asset
Allocation Portfolio or to the AST Advanced Strategies Portfolio, AST First
Trust Balanced Target Portfolio, or AST First Trust Capital Appreciation
Target Portfolio.
PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the contract following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Lifetime Five growing at 5% per year from
the date of your election, plus any subsequent purchase payments growing at 5%
per year from the application of the purchase payment to your contract, until
the earlier of the date of your first withdrawal or the 10th anniversary of the
benefit effective date, (B) the contract value as of the date of the first
withdrawal from your contract, prior to the withdrawal, and (C) the highest
contract value on each contract anniversary prior to the first withdrawal or on
the first 10 contract anniversaries after the benefit effective date if earlier
than the date of your first withdrawal. With
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
respect to (A) and (C) above, each value is increased by the amount of any
subsequent purchase payments. In determining Protected Withdrawal Value, we
include, as part of purchase payments, the amount of any credits granted with
respect to such purchase payments for the Contract With Credit.
- - If you elect Lifetime Five at the time you purchase your contract, the
contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Lifetime Five Benefit, the
contract value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your contract value is greater than the Protected Withdrawal
Value. If you elected Lifetime Five prior to March 20, 2006 and that original
election remains in effect, then you are eligible to step-up the Protected
Withdrawal Value on or after the 5th anniversary of the first withdrawal under
Lifetime Five. Under contracts with Lifetime Five elected prior to March 20,
2006, the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary following the preceding step-up. If you elected Lifetime Five on or
after March 20, 2006, then you are eligible to step-up the Protected Withdrawal
Value on or after the 3rd anniversary of the first withdrawal under Lifetime
Five. Under contracts with Lifetime Five elected on or after March 20, 2006, the
Protected Withdrawal Value can be stepped up again on or after the 3rd
anniversary following the preceding step-up. In either scenario (i.e., elections
before or after March 20, 2006) if you elect to step-up the Protected Withdrawal
Value, and on the date you elect to step-up, the charges under Lifetime Five
have changed for new purchasers, you may be subject to the new charge going
forward.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary (5th
contract anniversary if the benefit was elected prior to March 20, 2006)
following the later of the first withdrawal under the benefit or the prior
step-up. At this time, your Protected Withdrawal Value will be stepped-up only
if 5% of the contract value exceeds the Annual Income Amount by 5% or more. If
5% of the contract value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive contract
anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd (5th if the benefit was elected prior to March
20, 2006) contract anniversary following the most recent step-up. If, on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current contract value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your contract value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount (as described below) are less than they would be if we
did not reflect the step-up in Protected Withdrawal Value, then we will increase
these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected Withdrawal
Value and on the greater of a "dollar-for-dollar" basis or a pro rata basis for
withdrawals in a contract year in
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excess of that amount until the Protected Withdrawal Value is reduced to zero.
At that point, the Annual Withdrawal Amount will be zero until such time (if
any) as the contract reflects a Protected Withdrawal Value (for example, due to
a step-up or additional purchase payments being made into the contract).
ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will not
reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of the
Excess Income to the contract value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of the
withdrawal, including any withdrawal charges that may apply. A withdrawal can be
considered Excess Income under the Life Income Benefit even though it does not
exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect
a step-up, your Annual Income Amount increases to equal 5% of your contract
value after the step-up if such amount is greater than your Annual Income
Amount. Your Annual Income Amount also increases if you make additional purchase
payments. The amount of the increase is equal to 5% of any additional purchase
payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the purchase payment is made. A
determination of whether you have exceeded your Annual Income Amount is made at
the time of each withdrawal; therefore, a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
Excess Withdrawal to the contract value immediately prior to such withdrawal
(see the examples of this calculation below). Reductions include the actual
amount of the withdrawal, including any withdrawal charges that may apply. When
you elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
contract value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional purchase payments. The amount of the increase is equal to 7% of any
additional purchase payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each contract year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income
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Benefit in any contract year, you cannot carry-over the unused portion of the
Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of $250,000;
3.) the contract value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the contract value is equal to $263,000;
and 5.) the contract value on February 1, 2010 is equal to $280,000. The values
set forth here are purely hypothetical, and do not reflect the charge for
Lifetime Five.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250
- - Annual Income Amount for future contract years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250 =
$93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current contract year = $0
- - Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future contract years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/contract value
before Excess Withdrawal
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X Annual Withdrawal Amount = $6,450/($263,000 - $18,550) X $18,550 = $489
- - Annual Withdrawal Amount for future contract years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250
= $623
- - Annual Income Amount for future contract years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater of
a dollar-for-dollar reduction or a proportional reduction.
- - Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal/contract value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
- - Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 3 years, the Protected Withdrawal Value on February 1,
2010 would be reduced to $225,250 [$265,000 - ($13,250 X 3)]. If a step-up is
elected on February 1,2010, then the following values would result:
- - Protected Withdrawal Value = contract value on February 1, 2010 = $280,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value is
5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000. If the step-up request on February 1, 2010 was due to
the election of the auto step-up feature, we would first check to see if an
auto step-up should occur by checking to see if 5% of the Contract Value
exceeds the Annual Income Amount by 5% or more. 5% of the Contract Value is
equal to 5% of $280,000, which is $14,000. 5% of the Annual Income Amount
($13,250) is $662.50, which added to the Annual Income Amount is $13,912.50.
Since 5% of the Contract Value is greater than $13,912.50, the step-up would
still occur in this scenario, and all of the values would be increased as
indicated above.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value. Current
Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore, the Annual
Withdrawal Amount is increased to $19,600.
BENEFITS UNDER LIFETIME FIVE
- - If your contract value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your contract value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent contract years we make payments that
equal either the Annual Income Amount or the Annual Withdrawal Amount. You
will not be able to change the option after your election and no further
purchase payments will be accepted under your contract. If
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you do not make an election, we will pay you annually under the Life Income
Benefit. To the extent that cumulative withdrawals in the current contract
year that reduced your contract value to zero are more than the Annual Income
Amount but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced your
contract value to zero, we will make an additional payment to equal any
remaining Annual Withdrawal Amount and make payments equal to the Annual
Withdrawal Amount in each subsequent year (until the Protected Withdrawal
Value is depleted). Once your contract value equals zero no further purchase
payments will be accepted under your contract.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected Withdrawal
Value, you can elect one of the following three options:
1. apply your contract value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with five
payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the contract value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the contract value or surrender value,
but any withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable withdrawal charges). If you surrender your
contract, you will receive the current contract value, not the Protected
Withdrawal Value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides a
guarantee that if your contract value declines due to market performance, you
will be able to receive your Protected Withdrawal Value or Annual Income
Amount in the form of periodic benefit payments.
ELECTION OF LIFETIME FIVE
Lifetime Five can be elected at the time you purchase your contract, or after
the contract date. Elections of Lifetime Five are subject to our eligibility
rules and
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restrictions. The contract owner's contract value as of the date of election
will be used as the basis to calculate the initial Protected Withdrawal Value,
the initial Annual Withdrawal Amount, and the initial Annual Income Amount.
TERMINATION OF LIFETIME FIVE
Lifetime Five terminates automatically when your Protected Withdrawal Value and
Annual Income Amount reach zero. You may terminate Lifetime Five at any time by
notifying us. If you terminate Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
- - upon your surrender of the contract,
- - upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five benefit if your spouse elects the spousal continuance option
and your spouse would then be eligible to elect the benefit as if he/she were
a new purchaser),
- - upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
- - upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes the
benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you will only be permitted to
re-elect the benefit or elect the Spousal Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and
prior to March 20, 2006, and you terminate Lifetime Five, there will be no
waiting period before you can re-elect the benefit or elect Spousal Lifetime
Five. However, once you choose to re-elect/elect, the waiting period described
above will apply to subsequent re-elections. If you elected Lifetime Five after
the time you purchased your contract, but prior to March 20, 2006, and you
terminate Lifetime Five, you must wait until the contract anniversary following
your cancellation before you can re-elect the benefit or elect Spousal Lifetime
Five. Once you choose to re-elect/elect, the waiting period described above will
apply to subsequent re-elections. We reserve the right to limit the
re-election/election frequency in the future. Before making any such change to
the re-election/election frequency, we will provide prior notice to contract
owners who have an effective Lifetime Five Income Benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
The Spousal Lifetime Five Income Benefit (Spousal Lifetime Five) described below
is only being offered in those jurisdictions where we have received regulatory
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
approval and will be offered subsequently in other jurisdictions when we receive
regulatory approval in those jurisdictions. Certain terms and conditions may
differ between jurisdictions once approved. Currently, if you elect Spousal
Lifetime Five and subsequently terminate the benefit, there will be a
restriction on your ability to re-elect Spousal Lifetime Five and Lifetime Five.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit. Spousal Lifetime Five must be elected based on two Designated Lives, as
described below. Each Designated Life must be at least 55 years old when the
benefit is elected. Spousal Lifetime Five is not available if you elect any
other optional living or death benefit. As long as your Spousal Lifetime Five
Income Benefit is in effect, you must allocate your contract value in accordance
with the then permitted and available option(s).
We offer a benefit that guarantees until the later death of two natural
persons that are each other's spouses at the time of election of Spousal
Lifetime Five and at the first death of one of them (the "Designated Lives",
each a "Designated Life") the ability to withdraw an annual amount (Spousal Life
Income Benefit) equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of market performance on
the contract value, subject to our rules regarding the timing and amount of
withdrawals. The Spousal Life Income Benefit may remain in effect even if the
contract value is zero. Spousal Lifetime Five may be appropriate if you intend
to make periodic withdrawals from your annuity, wish to ensure that market
performance will not affect your ability to receive annual payments and you wish
either spouse to be able to continue the Spousal Life Income Benefit after the
death of the first. You are not required to make withdrawals as part of the
benefit--the guarantees are not lost if you withdraw less than the maximum
allowable amount each year under the rules of the benefit.
INITIAL PROTECTED WITHDRAWAL VALUE
The initial Protected Withdrawal Value is used to determine the amount of the
initial annual payment under the Spousal Life Income Benefit. The initial
Protected Withdrawal Value is determined as of the date you make your first
withdrawal under the contract following your election of Spousal Lifetime Five.
The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Spousal Lifetime Five growing at 5% per
year from the date of your election, plus any subsequent purchase payments
growing at 5% per year from the application of the purchase payment to your
contract, until the earlier of the date of your first withdrawal or the 10th
anniversary of the benefit effective date, (B) the contract value as of the date
of the first withdrawal from your contract, prior to the withdrawal, and (C) the
highest contract value on each contract anniversary prior to the first
withdrawal or on the first 10 contract anniversaries after the benefit effective
date if earlier than the date of your first withdrawal. With respect to (A) and
(C) above, each value is increased by the amount of any subsequent purchase
payments. In determining Protected Withdrawal Value, we include, as part of
purchase payments, the amount of any credits granted with respect to such
purchase payments.
- - If you elect Spousal Lifetime Five at the time you purchase your contract,
the contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Spousal Lifetime Five
Benefit, the contract value on the date of your election of Spousal Lifetime
Five will be used to determine the initial Protected Withdrawal Value.
ANNUAL INCOME AMOUNT UNDER THE SPOUSAL LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Spousal Lifetime Five, if your cumulative withdrawals in
a contract year are less than or equal to the Annual Income Amount, they will
not reduce your Annual Income Amount in subsequent contract years, but any
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such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar
basis in that contract year. If your cumulative withdrawals are in excess of the
Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent
years will be reduced (except with regard to required minimum distributions) by
the result of the ratio of the Excess Income to the contract value immediately
prior to such withdrawal (see examples of this calculation below). Reductions
include the actual amount of the withdrawal, including any withdrawal charges
that may apply.
You may elect to step-up your Annual Income Amount if, due to positive market
performance, 5% of your contract value is greater than the Annual Income Amount.
You are eligible to step-up the Annual Income Amount on or after the 3rd
anniversary of the first withdrawal under Spousal Lifetime Five. The Annual
Income Amount can be stepped up again on or after the 3rd anniversary of the
preceding step-up. If you elect to step-up the Annual Income Amount, and on the
date you elect to step-up, the charges under Spousal Lifetime Five have changed
for new purchasers, you may be subject to the new charge at the time of such
step-up. When you elect a step-up, your Annual Income Amount increases to equal
5% of your contract value after the step-up. Your Annual Income Amount also
increases if you make additional purchase payments. The amount of the increase
is equal to 5% of any additional purchase payments. Any increase will be added
to your Annual Income Amount beginning on the day that the step-up is effective
or the purchase payment is made. A determination of whether you have exceeded
your Annual Income Amount is made at the time of each withdrawal; therefore a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary following
the later of the first withdrawal under the benefit or the prior step-up. At
this time, your Protected Withdrawal Value will be stepped-up only if 5% of the
contract value exceeds the Annual Income Amount by 5% or more. If 5% of the
contract value does not exceed the Annual Income Amount by 5% or more, then an
Auto Step-Up opportunity will occur on each successive contract anniversary
until a step-up occurs. Once a step-up occurs, the next Auto Step-Up opportunity
will occur on the 3rd contract anniversary following the most recent step-up.
If, on the date that we implement an Auto Step-Up to your Annual Income Amount,
the charge for Spousal Lifetime Five has changed for new purchasers, you may be
subject to the new charge at the time of such step-up.
Spousal Lifetime Five does not affect your ability to make withdrawals under
your contract or limit your ability to request withdrawals that exceed the
Annual Income Amount. Under Spousal Lifetime Five, if your cumulative
withdrawals in a contract year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent contract
years, but any such withdrawals will reduce the Annual Income Amount on a
dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount
under Spousal Lifetime Five Income Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent contract
years.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Annual Income Amount assume: 1.) the contract date and the
effective date of Spousal Lifetime Five are February 1, 2005; 2.) an initial
purchase payment of $250,000; 3.) the contract value on February 1, 2006 is
equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the
contract value is equal to $263,000; and 5.) the contract value on February 1,
2010 is equal to $280,000. The values set forth here are purely
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hypothetical, and do not reflect the charge for the Spousal Lifetime Income Five
Benefit.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit
(5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250 Annual Income Amount for future contract years remains at $13,250
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
If $15,000 was withdrawn (more than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
EXAMPLE 3. STEP-UP OF THE ANNUAL INCOME AMOUNT
If a step-up of the Annual Income Amount is requested on February 1, 2010, the
request will be accepted because 5% of the contract value, which is $14,000 (5%
of $280,000), is greater than the Annual Income Amount of $13,250. The new
Annual Income Amount will be equal to $14,000.
BENEFITS UNDER SPOUSAL LIFETIME FIVE
- - To the extent that your contract value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount and amounts are still payable under the Spousal Life Income Benefit,
we will make an additional payment for that contract year equal to the
remaining Annual Income Amount for the contract year, if any. Thus, in that
scenario, the remaining Annual Income Amount would be payable even though
your contract value was reduced to zero. In subsequent contract years we make
payments that equal the Annual Income Amount as described above. No further
purchase payments will be accepted under your contract. We will make payments
until the first of the Designated Lives to die, and will continue to make
payments until the death of the second Designated Life as long as the
Designated Lives were spouses at the time of the first death. To the extent
that cumulative withdrawals in the current contract year that reduced your
contract value to zero are more than the Annual Income Amount, the Spousal
Life Income Benefit terminates and no additional payments will be made.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
1. apply your contract value to any annuity option available; or
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
make payments until the first of the Designated Lives to die, and will
continue to make payments until the death of the second Designated Life as
long as the Designated Lives were spouses at the time of the first death.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with five payments certain using the same
basis that is used to calculate the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the same basis that is used to calculate
the single life fixed annuity rates guaranteed in your contract; and
2. the contract value.
- - If no withdrawal was ever taken, we will determine an initial Protected
Withdrawal Value and calculate an Annual Income Amount as if you made your
first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Spousal Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Spousal Lifetime Five is in effect will be treated,
for tax purposes, in the same way as any other withdrawals under the
contract. Spousal Lifetime Five does not directly affect the contract value
or surrender value, but any withdrawal will decrease the contract value by
the amount of the withdrawal (plus any applicable withdrawal charges). If you
surrender your contract, you will receive the current surrender value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Spousal Lifetime Five. Spousal Lifetime
Five provides a guarantee that if your contract value declines due to market
performance, you will be able to receive your Annual Income Amount in the
form of periodic benefit payments.
- - You must allocate your contract value in accordance with the then available
option(s) that we may permit in order to elect and maintain Spousal Lifetime
Five.
- - There may be circumstances where you will continue to be charged the full
amount for Spousal Lifetime Five even when the benefit is only providing a
guarantee of income based on one life with no survivorship.
- - In order for the surviving Designated Life to continue Spousal Lifetime Five
upon the death of an owner, the Designated Life must elect to assume
ownership of the contract under the spousal continuation benefit.
ELECTION OF AND DESIGNATIONS OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five can only be elected based on two Designated Lives.
Designated Lives must be natural persons who are each other's spouses at the
time of election of the benefit and at the death of the first of the Designated
Lives to die. Currently, the benefit may only be elected where the contract
owner, annuitant and beneficiary designations are as follows:
- - One contract owner, where the annuitant and the contract owner are the same
person and the beneficiary is the contract owner's spouse. The contract
owner/annuitant and the beneficiary each must be at least 55 years old at the
time of election; or
- - Co-contract owners, where the contract owners are each other's spouses. The
beneficiary designation must be the surviving spouse. The first named
contract owner must be the annuitant. Both contract owners must each be 55
years old at the time of election.
No ownership changes or annuitant changes will be permitted once this benefit is
elected. However, if the
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
contract is co-owned, the contract owner that is not the annuitant may be
removed without affecting the benefit.
Spousal Lifetime Five can be elected at the time that you purchase your
contract. We also offer existing contract owners the option to elect Spousal
Lifetime Five after the contract date of their contract, subject to our
eligibility rules and restrictions. Your contract value as of the date of
election will be used as a basis to calculate the initial Protected Withdrawal
Value and the Annual Income Amount.
Currently, if you terminate Spousal Lifetime Five, you will only be permitted
to re-elect the benefit or elect the Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit.
TERMINATION OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five terminates automatically when your Annual Income Amount
equals zero. You may terminate Spousal Lifetime Five at any time by notifying
us. If you terminate Spousal Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective and certain
restrictions on re-election of the benefit will apply as described above. We
reserve the right to further limit the frequency election in the future. Spousal
Lifetime Five terminates upon your surrender of the contract, upon the first
Designated Life to die if the contract is not continued, upon the second
Designated Life to die or upon your election to begin receiving annuity
payments.
The charge for Spousal Lifetime Five will no longer be deducted from your
contract value upon termination of the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your contract beginning
after age 70 1/2. Roth IRAs are not subject to these rules during the contract
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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6:
WHAT IS THE
INCOME APPRECIATOR BENEFIT?
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INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit (IAB) is an optional, supplemental income benefit
that provides an additional income amount during the accumulation period or upon
annuitization. The Income Appreciator Benefit is designed to provide you with
additional funds that can be used to help defray the impact taxes may have on
distributions from your contract. IAB may be suitable for you in other
circumstances as well, which you can discuss with your registered
representative. Because individual circumstances vary, you should consult with a
qualified tax advisor to determine whether it would be appropriate for you to
elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
- - The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
- - If you choose the Income Appreciator Benefit, we will impose an annual charge
equal to 0.25% of your contract value. See "What Are The Expenses Associated
With The Strategic Partners Annuity One 3 Contract?" in Section 8.
ACTIVATION OF THE INCOME APPRECIATOR BENEFIT
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN IN
FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must send
us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
- - IAB OPTION 1 - at annuitization as part of an annuity payment;
- - IAB OPTION 2 - during the accumulation phase through the IAB automatic
withdrawal payment program; or
- - IAB OPTION 3 - during the accumulation phase as an Income Appreciator Benefit
credit to your contract over a 10-year period.
Income Appreciator Benefit payments are treated as earnings and may be
subject to tax upon withdrawal. See Section 10, "What Are The Tax Considerations
Associated With The Strategic Partners Annuity One 3 Contract?"
IF YOU DO NOT ACTIVATE THE BENEFIT PRIOR TO THE MAXIMUM ANNUITIZATION AGE YOU
MAY LOSE ALL OR PART OF THE IAB.
CALCULATION OF THE INCOME APPRECIATOR BENEFIT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the annuity
date). We do this by multiplying the current earnings in the contract by the
applicable Income Appreciator Benefit percentage based on the number of years
the Income Appreciator Benefit has been in force. For purposes of calculating
the Income Appreciator Benefit:
- - earnings are calculated as the difference between the contract value and the
sum of all purchase payments;
- - earnings do not include (1) any amount added to the contract value as a
result of the Spousal Continuance Benefit, or (2) if we were to permit you to
elect the Income Appreciator Benefit after the contract date, any earnings
accrued under the contract prior to that election;
- - withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
- - the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has been
in force.
<Table>
<Caption>
NUMBER OF YEARS INCOME
INCOME APPRECIATOR APPRECIATOR
BENEFIT BENEFIT
HAS BEEN IN FORCE PERCENTAGE
------------------ -----------
0-6 0%
7-9 15%
10-14 20%
15+ 25%
</Table>
IAB OPTION 1 -- INCOME APPRECIATOR BENEFIT AT ANNUITIZATION
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
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WHAT IS THE INCOME APPRECIATOR BENEFIT? CONTINUED
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date and add it to the adjusted contract value for purposes of determining the
amount available for annuitization. You may apply this amount to any annuity or
settlement option over the lifetime of the annuitant, joint annuitants, or a
period certain of at least 15 years (but not to exceed life expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES,
WE WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
EFFECT OF INCOME APPRECIATOR BENEFIT ON GUARANTEED MINIMUM INCOME BENEFIT
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we use
to calculate the annuity payout amount will be the greater of:
1. the adjusted contract value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown in
the contract.
If you exercise the Guaranteed Minimum Income Benefit feature and activate
the Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
TERMINATING THE INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract;
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit;
- - the date the Income Appreciator Benefit amount is reduced to zero (generally
ten years after activation) under IAB Options 2 and 3;
- - the date of annuitization; or
- - the date the contract terminates.
Upon termination of the Income Appreciator Benefit, we cease imposing the
associated charge.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
You may choose IAB Option 1 at annuitization, but you may instead choose IAB
Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good order. Under IAB Options 2 and 3, you can
choose to have the Income Appreciator Benefit amounts paid or credited monthly,
quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY REMAINING
PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 -- INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay you
the Income Appreciator Benefit amount in equal installments over a 10-year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal amount from your contract value, in which case each
combined payment must be at least $100.
The maximum automated withdrawal payment amount that you may receive from
your contract value under this Income Appreciator Benefit program in any
contract year during the 10-year period may not exceed
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
10% of the contract value as of the date you activate the Income Appreciator
Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in contract value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal payment
amounts, but not to amounts attributable to the Income Appreciator Benefit.
After the ten-year payment period has ended, if the remaining contract value
is $2,000 or more, the contract will continue. If the remaining contract value
is less than $2,000 after the end of the 10-year payment period, we will pay you
the remaining contract value and the contract will terminate. If the contract
value falls below the minimum amount required to keep the contract in force due
solely to investment results before the end of the 10-year payment period, we
will continue to pay the Income Appreciator Benefit amount for the remainder of
the 10-year payment period.
DISCONTINUING THE INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT
PROGRAM UNDER IAB OPTION 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the contract value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the contract value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the variable
investment options, fixed interest rate options, or the market value adjustment
option in the same proportions as your most recent purchase payment allocation
percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for the
10-year payment period to the contract value in a lump sum before determining
the adjusted contract value. The adjusted contract value may be applied to any
annuity or settlement option that is paid over the lifetime of the annuitant,
joint annuitants, or a period certain of at least 15 years (but not to exceed
life expectancy).
IAB OPTION 3 -- INCOME APPRECIATOR BENEFIT CREDIT TO CONTRACT VALUE
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your contract value over a 10-year payment period. We
will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate options, or the market value
adjustment option in the same manner as your current allocation, unless you
direct us otherwise. We will waive the $1,000 minimum requirement for the market
value adjustment option. We will calculate the Income Appreciator Benefit amount
on the date we receive your written request in good order. Once we have
calculated the Income Appreciator Benefit, the Income Appreciator Benefit credit
will not be affected by changes in contract value due to the investment
performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your contract
value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the contract
value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment
period be applied to an annuity or settlement option that is paid over the
lifetime of the annuitants, joint annuitants, or a period certain of at least 15
years (but not to exceed life expectancy).
EXCESS WITHDRAWALS
During the 10 year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is withdrawn from your contract value in a contract year
that exceeds the sum of (1) 10% of the contract value as of the date the Income
Appreciator Benefit was activated plus (2) earnings since the Income Apprecia-
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WHAT IS THE INCOME APPRECIATOR BENEFIT? CONTINUED
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tor Benefit was activated that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply a
new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated
that have not been previously withdrawn do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year is
less than the excess withdrawal threshold, the difference between the amount
withdrawn and the threshold can be carried over to subsequent years on a
cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
EFFECT OF TOTAL WITHDRAWAL ON INCOME APPRECIATOR BENEFIT
We will not make Income Appreciator Benefit payments after the date you make a
total withdrawal of the contract surrender value.
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7:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
ANNUITY ONE 3 CONTRACT?
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PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. Unless we agree otherwise, and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $500 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers. (You may
not make additional purchase payments if you purchase a contract issued in
Massachusetts, or if you purchase a Contract With Credit issued in
Pennsylvania.)
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. Certain
age limits apply to certain features and benefits described herein. No
subsequent purchase payments may be made on or after the earliest of the 86th
birthday of:
- - the owner,
- - the joint owner,
- - the annuitant, or
- - the co-annuitant.
Currently, the maximum aggregate purchase payments you may make is $20
million. We limit the maximum total purchase payments in any contract year other
than the first to $2 million absent our prior approval. Depending on applicable
state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable or fixed interest rate options, or the market value
adjustment option based on the percentages you choose. The percentage of your
allocation to a particular investment option can range in whole percentages from
0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000 and,
allocations to the market value adjustment option must be no less than $1,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Our business day may close
earlier, for example if regular trading on the New York Stock Exchange closes
early. Subsequent purchase payments received in good order after the close of
the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable or fixed interest rate investment options or the
market value adjustment option in the same percentages as the purchase payment.
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HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY ONE 3 CONTRACT? CONTINUED
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The bonus credit that we pay with respect to any purchase payment depends on
(i) the age of the older of the owner or joint owner on the date on which the
purchase payment is made and (ii) the amount of the purchase payment.
Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000; 5% if the purchase payment is
equal to or greater than $250,000 but less than $1 million; or 6% if the
purchase payment is $1 million or greater; and
- - if the elder owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the Contract With Credit, if the owner returns the contract during the
free look period, we will recapture the bonus credits. If we pay a death benefit
under the contract, we have a contractual right to take back any credit we
applied within one year of the date of death.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option,
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes, and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to a variable investment option by the unit price of the accumulation
unit for that variable investment option. We calculate the unit price for each
investment option after the New York Stock Exchange closes each day and then
credit your contract. The value of the accumulation units can increase,
decrease, or remain the same from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments.
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WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT?
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THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day we make a deduction for the insurance and administrative charges. These
charges cover our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, Highest Daily Value Death Benefit option, or Lifetime Five Income
Benefit option, the insurance and administrative cost also includes a charge to
cover our assumption of the associated risk. The mortality risk portion of the
charge is for assuming the risk that the annuitant(s) will live longer than
expected based on our life expectancy tables. When this happens, we pay a
greater number of annuity payments. We also incur the risk that the death
benefit amount exceeds the contract value. The expense risk portion of the
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract. The administrative
expense portion of the charge compensates us for the expenses associated with
the administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other) option
that you choose.
The death benefit charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit,
- 1.65% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option, (i.e., 0.25% in addition to the
base death benefit charge),
- 1.75% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.35% in addition
to the base death benefit charge), or
- 1.90% on an annual basis if you choose the Highest Daily Value Death
Benefit (i.e., 0.50% in addition to the base death benefit charge).
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
Contract With Credit.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit. We impose an additional charge of 0.75% annually if you
choose the Spousal Lifetime Five Income Benefit. The 0.60% and 0.75% charges are
in addition to the charge we impose for the applicable death benefit, and are
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8:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT? CONTINUED
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deducted daily based on the contract value in the variable investment options.
Upon any reset of the amounts guaranteed under these benefits, we reserve the
right to adjust the charge to that being imposed at that time for new elections
of the benefits.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from these charges.
Any profits made from these charges may be used by us to pay for the costs of
distributing the contracts. If you choose the Contract With Credit, we will also
use any profits from this charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The amount and duration of
the withdrawal charge depends on whether you choose the Contract With Credit or
the Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment being
withdrawn was made. Specifically, we maintain an "age" for each purchase payment
you have made by keeping track of how many contract anniversaries have passed
since the purchase payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
<Table>
<Caption>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE CONTRACT WITH CONTRACT WITHOUT
THE DATE OF EACH CREDIT WITHDRAWAL CREDIT WITHDRAWAL
PURCHASE PAYMENT CHARGE CHARGE
- ------------------- ----------------- -----------------
0 8% 7%
1 8% 6%
2 8% 5%
3 8% 4%
4 7% 3%
5 6% 2%
6 5% 1%
7 0% 0%
</Table>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We make this "charge-free amount"
available to you subject to approval of this feature in your state. We determine
the charge-free amount available to you in a given contract year on the contract
anniversary that begins that year. In calculating the charge-free amount, we
divide purchase payments into two categories -- payments that are subject to a
withdrawal charge and those that are not. We determine the charge-free amount
based only on purchase payments that are subject to a withdrawal charge. The
charge-free amount in a given contract year is equal to 10% of the sum of all
the purchase payments subject to the withdrawal charge that you have made as of
the applicable contract anniversary. During the first contract year, the
charge-free amount is equal to 10% of the initial purchase payment.
When you make a withdrawal (including a withdrawal under the optional
Lifetime Five Income Benefit), we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If a withdrawal or transfer is taken from a market value adjustment guarantee
period prior to the expiration of the rate guarantee period, we will make a
market value adjustment to the withdrawal amount, including the withdrawal
charge. We will then apply a withdrawal charge to the adjusted amount.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
Withdrawal charges will never be greater than permitted by applicable law.
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WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges and any market value adjustment upon receipt of proof that the owner or
a joint owner is terminally ill, or has been confined to an eligible nursing
home or eligible hospital continuously for at least three months after the
contract date. We will also waive the contract maintenance charge if you
surrender your contract in accordance with the above noted conditions. This
waiver is not available if the owner has assigned ownership of the contract to
someone else.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 10, "What Are The Tax
Considerations Associated With The Strategic Partners Annuity One 3 Contract?"
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your contract
value is less than $75,000, we will deduct the lesser of $35 or 2% of your
contract value, for administrative expenses (this fee may differ in certain
states). While this is what we currently charge, we may increase this charge up
to a maximum of $60. Also, we may raise the level of the contract value at which
we waive this fee. The charge will be deducted proportionately from each of the
contract's investment options. This same charge will also be deducted when you
surrender your contract if your contract value is less than $75,000.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. FOR CONTRACTS SOLD ON OR AFTER JANUARY 20, 2004, OR UPON SUBSEQUENT
STATE APPROVAL, we will deduct a charge equal to 0.50% per year of the average
GMIB protected value for the period the charge applies. FOR ALL OTHER CONTRACTS,
this is an annual charge equal to 0.45% of the average GMIB protected value for
the period the charge applies. We deduct the charge from your contract value on
each of the following events:
- - each contract anniversary,
- - when you begin the income phase of the contract,
- - upon a full withdrawal, and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's contract
value due to market performance. If the GMIB protected value increases, the
dollar amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options, the fixed interest rate options,
and the market value adjustment option. In some states, we may deduct the charge
for the Guaranteed Minimum Income Benefit in a different manner. No market value
adjustment will apply to the portion of the charge deducted from the market
value adjustment option. If you surrender your contract, begin receiving annuity
payments under the GMIB or any other annuity payout option we make available
during a contract year, or the GMIB terminates, we will deduct the charge for
the portion of the contract year since the prior contract anniversary (or the
contract date if in the first contract year). Upon a full withdrawal or if the
contract value remaining after a partial withdrawal is not enough to cover the
applicable Guaranteed Minimum Income Benefit charge, we will deduct the charge
from the amount we pay you.
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8:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT? CONTINUED
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THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your contract value. The
Income Appreciator Benefit charge is calculated:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first-to-die of the owner or joint
owner prior to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first-to-die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option bears
to the total contract value. No market value adjustment will apply to the
portion of the charge deducted from the market value adjustment option. Upon a
full withdrawal, or if the contract value remaining after a partial withdrawal
is not enough to cover the then-applicable Income Appreciator Benefit charge,
the charge is deducted from the amount paid. The payment of the Income
Appreciator Benefit charge will be deemed to be made from earnings for purposes
of calculating other charges. THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL
OR PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE
TIME OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB charge
during the 10-year payment period contemplated by IAB Options 2 and 3. Moreover,
you should realize that amounts credited to your contract value under IAB Option
3 increase the contract value, and because the IAB fee is a percentage of your
contract value, the IAB fee may increase as a consequence of those additions.
EARNINGS APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Earnings Appreciator
Benefit. The charge for this benefit is based on an annual rate of 0.30% of your
contract value.
We calculate the charge on each of the following events:
- each contract anniversary,
- on the annuity date,
- upon death of the sole or first to die of the owner or joint owner prior
to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at time of calculation and is
pro-rated based on the portion of the contract year since the date that the
Earnings Appreciator Benefit charge was last calculated.
Although the Earnings Appreciator Benefit charge may be calculated more
often, it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon death of the sole owner or the first to die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- upon a partial withdrawal if the contract value remaining after the
partial withdrawal is not enough to cover the then applicable charge.
We withdraw this charge from each investment option (including each guarantee
period) in the same proportion that the amount allocated to the investment
option bears to the total contract value. Upon a full withdrawal or if the
contract value remaining after a partial withdrawal is not enough to cover the
then-applicable Earnings Appreciator Benefit charge, we will deduct the charge
from the amount we pay you. We will deem the payment of the Earnings Appreciator
Benefit charge as made from earnings for purposes of calculating other charges.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made. The
transfer fee is deducted before the market value adjustment, if any, is
calculated.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract. We reserve the right to
change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2005, the fees of these funds ranged from 0.38%
to 1.67% annually. For certain funds, expenses are reduced pursuant to expense
waivers and comparable arrangements. In general, these expense waivers and
comparable arrangements are not guaranteed, and may be terminated at any time.
For additional information about these fund fees, please consult the
prospectuses for the funds.
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9:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you indicate
that the withdrawal is to originate from the market value adjustment option, but
you do not specify which guarantee period is to be involved, then we will take
the withdrawal from the guarantee period that has the least time remaining until
its maturity date. If you indicate that you wish to make a withdrawal, but do
not specify the investment options to be involved, then we will take the
withdrawal from your contract value on a pro rata basis from each investment
option that you have. In that situation, we will aggregate the contract value in
each of the guarantee periods that you have within the market value adjustment
option for purposes of making that pro rata calculation. The portion of the
withdrawal associated with the market value adjustment option then will be taken
from the guarantee periods with the least amount of time remaining until the
maturity date, irrespective of the original length of the guarantee period. You
should be aware that a withdrawal may avoid a withdrawal charge based on the
charge-free amount that we allow, yet still be subject to a market value
adjustment.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options (other than a guarantee period within the market
value adjustment option). The minimum automated withdrawal amount you can make
is generally $100. An assignment of the contract terminates any automated
withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
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10:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT?
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The tax considerations associated with the Strategic Partners Annuity One 3
contract vary depending on whether the contract is (i) owned by an individual
and not associated with a tax-favored retirement plan (including contracts held
by a non-natural person, such as a trust, acting as an agent for a natural
person), or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA, which can hold other permissible assets other than the annuity. The terms
and administration of the trust or custodial account in accordance with the laws
and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for these benefits could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information).
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary.
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10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT CONTINUED
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Choosing any option other than a lump sum death benefit may defer taxes. Certain
minimum distribution requirements apply upon your death, as discussed further
below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under the contract pass by reason of death, and must be a natural person in
order to elect a periodic payment option based on life expectancy or a period
exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars, and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater), less any applicable federal and state
income tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older and by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to the prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law you may make to an IRA. For 2006, the limit is $4,000, increasing to $5,000
in 2008. After 2008, the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing these individuals an additional $1,000 contribution each
year. The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse)
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT CONTINUED
- --------------------------------------------------------------------------------
may generally "roll over" certain distributions from tax favored retirement
plans (either directly or within 60 days from the date of these distributions)
if he or she meets the requirements for distribution. Once you buy the contract,
you can make regular IRA contributions under the contract (to the extent
permitted by law). However, if you make such regular IRA contributions, you
should note that you will not be able to treat the contract as a "conduit IRA,"
which means that you will not retain possible favorable tax treatment if you
subsequently "roll over" the contract funds originally derived from a qualified
retirement plan into another Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements".
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
Roth IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
connection with a "rollover" or "conversion" of amounts of a traditional IRA,
conduit IRA, or another Roth IRA, or if you are age 50 or older and by making a
single contribution consisting of your Roth IRA contributions and catch-up
contributions attributable to the prior year and the current year during the
period from January 1 to April 15 of the current year. The Code permits persons
who meet certain income limitations (generally, adjusted gross income under
$100,000 who are not married filing a separate return), and who receive certain
qualifying distributions from such non-Roth IRAs, to directly rollover or make,
within 60 days, a "rollover" of all or any part of the amount of such
distribution to a Roth IRA which they establish. This conversion triggers
current taxation (but is not subject to a 10% early distribution penalty). Once
the contract has been purchased, regular Roth IRA contributions will be accepted
to the extent permitted by law.
In addition, as of January 1, 2006, an individual receiving an eligible
rollover distribution from a designated Roth account under an employer plan may
roll over the distribution to a Roth IRA. If you are considering rolling over
funds from your Roth account under an employer plan, please contact your
Financial Professional prior to purchase to confirm whether such rollovers are
being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE 3 CONTRACT CONTINUED
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payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 8, "What Are The Expenses Associated With
The Strategic Partners Annuity One 3 Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 11.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
11:
OTHER
INFORMATION
- --------------------------------------------------------------------------------
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company
which was organized on December 23, 1971 under the laws of the State of Arizona.
It is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company that has been
doing business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
Pruco Life publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about Pruco Life that is
annually audited by independent accountants. Pruco's Life annual report for the
year ended December 31, 2005, together with subsequent periodic reports that
Pruco Life files with the SEC, are incorporated by reference into this
prospectus. You can obtain copies, at no cost, of any and all of this
information, including the Pruco Life annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at the address or telephone number listed
on the cover. The SEC file number for Pruco Life is 811-07325. You may read and
copy any filings made by Pruco Life with the SEC at the SEC's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling (202) 551-8090. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940 as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
11:
OTHER INFORMATION CONTINUED
- --------------------------------------------------------------------------------
firm. Commissions are generally based on a percentage of purchase payments made,
up to a maximum of 8%. Alternative compensation schedules are available that
provide a lower initial commission plus ongoing annual compensation based on all
or a portion of contract value. We may also provide compensation to the
distributing firm for providing ongoing service to you in relation to the
contract. Commissions and other compensation paid in relation to the contract do
not result in any additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of benefits, return of
premiums or excessive premium charges and breaching fiduciary duties to
customers. In our annuities operations, we are subject to litigation involving
class action lawsuits and other litigation alleging, among other things, that we
made improper or inadequate disclosures in connection with the sale of annuity
products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. In some of our pending legal and
regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is such a pending
proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life
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PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
insurance policy against Pruco Life and Prudential. The complaint alleges that
the Prudential defendants acted in bad faith when they failed to pay a death
benefit on an alleged contract of insurance that was never delivered. In
February 2006, the jury awarded the plaintiffs $1.4 million in compensatory
damages and $35 million in punitive damages. Pruco Life plans to appeal the
verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. If you
do so, we will reset the death benefit to equal the contract value on the date
the assignment occurs. For details, see Section 4, "What Is The Death Benefit?"
We will not be bound by the assignment until we receive written notice. We will
not be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners Annuity One 3 contract, are included in the Statement
of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - State Specific Variations
- - Financial Statements
- - Separate Account Financial Information
- - Company Financial Information
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
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MARKET VALUE
ADJUSTMENT FORMULA
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT FORMULA
GENERAL FORMULA
The formula under which Pruco Life calculates the market value adjustment
applicable to a full or partial surrender, annuitization, or settlement under
the market value adjustment option is set forth below. The market value
adjustment is expressed as a multiplier factor. That is, the Contract Value
after the market value adjustment ("MVA"), but before any withdrawal charge, is
as follows: Contract Value (after MVA) = Contract Value (before MVA) X (1 +
MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(-------------) to the N/12 power] -1
1 + J + .0025
<Table>
where: I = the guaranteed credited interest rate
(annual effective) for the given
contract at the time of withdrawal or
annuitization or settlement.
J = the current credited interest rate
offered on new money at the time of
withdrawal or annuitization or
settlement for a guarantee period of
equal length to the number of whole
years remaining in the Contract's
current guarantee period plus one
year.
N = equals the remaining number of months
in the contract's current guarantee
period (rounded up) at the time of
withdrawal or annuitization or
settlement.
</Table>
PENNSYLVANIA FORMULA
We use the same MVA formula with respect to contracts issued in Pennsylvania as
the general formula, except that "J" in the formula above uses an interpolated
rate as the current credited interest rate. Specifically, "J" is the
interpolated current credited interest rate offered on new money at the time of
withdrawal, annuitization, or settlement. The interpolated value is calculated
using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of the
current guarantee period.
INDIANA FORMULA
We use the following MVA formula for contracts issued in Indiana:
1 + I
MVA = [(-----------) to the N/12 power] -1
1 + J
The variables I, J and N retain the same definitions as the general formula.
MARKET VALUE ADJUSTMENT EXAMPLE
(ALL STATES EXCEPT INDIANA AND PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05 + 0.0025)]to the (38/12)
power -1 = 0.02274
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.02274 = $253.03
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $253.03 = $11,380.14
- --------------------------------------------------------------------------------
102
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07 + 0.0025)] to the (38/12)
power -1 = -0.03644
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.03644) = -$405.47
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$405.47) = $10,721.64
MARKET VALUE ADJUSTMENT EXAMPLE
(PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 4%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.05] + [((365-61)/365) X 0.04] =
0.0417
</Table>
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the
(38/12) power -1 = 0.04871
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04871 = $542.00
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $542.00 = $11,669.11
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 7%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.08] + [((365 - 61)/365) X 0.07] =
0.0717
</Table>
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the
(38/12) power -1 = -0.04126
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04126) = -$459.10
- --------------------------------------------------------------------------------
103
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
MARKET VALUE ADJUSTMENT FORMULA CONTINUED
- --------------------------------------------------------------------------------
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$459.10) = $10,668.01
MARKET VALUE ADJUSTMENT EXAMPLE
(INDIANA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05)] to the (38/12) power -1 =
0.03047
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 x 0.03047 = $339.04
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $339.04 = $11,466.15
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07)] to the (38/12) power -1
= -0.02930
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.02930) = -$326.02
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$326.02) = $10,801.09
- --------------------------------------------------------------------------------
104
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
As we have indicated throughout this prospectus, the Strategic Partners Annuity
One 3 Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such contract features.
Here we depict the historical unit values corresponding to the contract features
bearing the highest and lowest combinations of asset-based charges. The
remaining unit values appear in the Statement of Additional Information, which
you may obtain free of charge, by calling (888) PRU-2888 or by writing to us at
the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176. As
discussed in the prospectus, if you select certain optional benefits (e.g.,
Lifetime Five), we limit the investment options to which you may allocate your
contract value. In certain of these accumulation unit value tables, we set forth
accumulation unit values that assume election of one or more of such optional
benefits and allocation of contract value to portfolios that currently are not
permitted as part of such optional benefits. Such unit values are set forth for
general reference purposes only, and are not intended to indicate that such
portfolios may be acquired along with those optional benefits.
- --------------------------------------------------------------------------------
105
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES: (CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01724 $ 1.24006 2,381,401
1/1/2004 to 12/31/2004 $ 1.24006 $ 1.34066 4,524,803
1/1/2005 to 12/31/2005 $ 1.34066 $ 1.51459 4,956,862
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01834 $ 1.25778 1,368,678
1/1/2004 to 12/31/2004 $ 1.25778 $ 1.36350 2,684,031
1/1/2005 to 12/31/2005 $ 1.36350 $ 1.49905 4,101,155
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00588 $ 1.28481 805,296
1/1/2004 to 12/31/2004 $ 1.28481 $ 1.38861 1,508,350
1/1/2005 to 12/31/2005 $ 1.38861 $ 1.58951 1,710,458
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 0.9997 $ 0.99449 2,049,651
1/1/2004 to 12/31/2004 $ 0.99449 $ 0.99063 2,305,599
1/1/2005 to 12/31/2005 $ 0.99063 $ 1.00520 2,461,350
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02199 $ 1.22414 3,356,056
1/1/2004 to 12/31/2004 $ 1.22414 $ 1.33335 6,275,540
1/1/2005 to 12/31/2005 $ 1.33335 $ 1.37464 7,333,743
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02526 $ 1.22392 900,360
1/1/2004 to 12/31/2004 $ 1.22392 $ 1.40386 2,404,499
1/1/2005 to 12/31/2005 $ 1.40386 $ 1.61508 3,335,527
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01313 $ 1.27916 1,545,924
1/1/2004 to 12/31/2004 $ 1.27916 $ 1.44765 4,414,881
1/1/2005 to 12/31/2005 $ 1.44765 $ 1.57741 5,640,314
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01134 $ 1.22149 436,202
1/1/2004 to 12/31/2004 $ 1.22149 $ 1.34749 936,271
1/1/2005 to 4/29/2005 $ 1.34749 $ 1.24414 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01232 $ 1.19626 301,134
1/1/2004 to 12/31/2004 $ 1.19626 $ 1.28343 837,364
1/1/2005 to 12/31/2005 $ 1.28343 $ 1.32432 965,159
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
106
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00979 $ 1.19393 12,267,993
1/1/2004 to 12/31/2004 $ 1.19393 $ 1.30793 26,018,065
1/1/2005 to 12/31/2005 $ 1.30793 $ 1.38790 33,510,409
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00745 $ 1.13654 7,810,706
1/1/2004 to 12/31/2004 $ 1.13654 $ 1.22048 20,504,877
1/1/2005 to 12/31/2005 $ 1.22048 $ 1.27471 24,154,580
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00887 $ 1.24835 3,564,458
1/1/2004 to 12/31/2004 $ 1.24835 $ 1.38531 6,407,256
1/1/2005 to 12/31/2005 $ 1.38531 $ 1.49631 6,823,589
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01135 $ 1.23975 7,383,151
1/1/2004 to 12/31/2004 $ 1.23975 $ 1.38211 19,325,934
1/1/2005 to 12/31/2005 $ 1.38211 $ 1.48911 23,285,380
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02725 $ 1.21457 1,098,747
1/1/2004 to 12/31/2004 $ 1.21457 $ 1.41041 1,973,944
1/1/2005 to 12/31/2005 $ 1.41041 $ 1.48345 2,568,911
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01281 $ 1.23393 1,148,393
1/1/2004 to 12/31/2004 $ 1.23393 $ 1.40924 2,233,253
1/1/2005 to 12/31/2005 $ 1.40924 $ 1.58122 2,606,065
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02112 $ 1.20717 455,643
1/1/2004 to 12/31/2004 $ 1.20717 $ 1.33789 972,645
1/1/2005 to 4/29/2005 $ 1.33789 $ 1.25025 0
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00463 $ 1.33928 846,352
1/1/2004 to 12/31/2004 $ 1.33928 $ 1.57888 2,103,385
1/1/2005 to 12/31/2005 $ 1.57888 $ 1.63898 3,625,123
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00530 $ 1.19841 3,514,084
1/1/2004 to 12/31/2004 $ 1.19841 $ 1.29196 7,294,050
1/1/2005 to 12/31/2005 $ 1.29196 $ 1.32558 8,189,606
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
107
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00076 $ 1.04684 9,081,987
1/1/2004 to 12/31/2004 $ 1.04684 $ 1.08689 15,192,943
1/1/2005 to 12/31/2005 $ 1.08689 $ 1.09767 17,074,503
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01864 $ 1.36653 1,350,535
1/1/2004 to 12/31/2004 $ 1.36653 $ 1.63587 2,782,102
1/1/2005 to 12/31/2005 $ 1.63587 $ 1.90014 3,759,244
SP SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01406 $ 1.30191 453,998
1/1/2004 to 12/31/2004 $ 1.30191 $ 1.27212 1,180,076
1/1/2005 to 12/31/2005 $ 1.27212 $ 1.28565 1,407,515
SP SMALL-CAP VALUE PORTFOLIO
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01511 $ 1.29026 2,793,324
1/1/2004 to 12/31/2004 $ 1.29026 $ 1.53570 6,372,012
1/1/2005 to 12/31/2005 $ 1.53570 $ 1.58443 7,198,239
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01518 $ 1.19388 620,221
1/1/2004 to 12/31/2004 $ 1.19388 $ 1.30209 976,074
1/1/2005 to 12/31/2005 $ 1.30209 $ 1.47863 1,062,759
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01908 $ 1.17938 1,236,101
1/1/2004 to 12/31/2004 $ 1.17938 $ 1.23406 2,216,249
1/1/2005 to 12/31/2005 $ 1.23406 $ 1.41770 2,320,476
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.03407 $ 1.34037 281,067
1/1/2004 to 12/31/2004 $ 1.34037 $ 1.32188 625,708
1/1/2005 to 4/29/2005 $ 1.32188 $ 1.18074 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01151 $ 1.35112 959,373
1/1/2004 to 12/31/2004 $ 1.35112 $ 1.55290 1,816,111
1/1/2005 to 12/31/2005 $ 1.55290 $ 1.78245 2,169,905
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $ 9.99933 3,576
</Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
108
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.09338 $11.73323 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07970 $10.33229 1,646
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05481 $10.28681 4,368
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.05009 $11.34495 0
AST ALLIANCE BERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04988 $10.42169 9,629
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06658 $10.35426 6,955
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04202 $10.33700 1,647
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.01933 41,437
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.00933 3,150
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.14710 $12.04155 7,726
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.02932 5,075
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.08492 $10.73678 4,470
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01133 $10.33264 3,220
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04570 $10.03757 10,009
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.98052 10,883
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01541 $10.64464 397
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
109
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03302 $10.78065 5,713
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.60000 15,282
AST HIGH YIELD PORTFOLIO
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.97681 $ 9.87825 13,582
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.91389 $10.67460 6,403
AST LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07726 $10.57804 19,588
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $ 9.96977 12,066
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.12625 $10.92526 23,473
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.96626 $10.49866 6,432
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03693 $10.78089 8,370
AST MID CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06503 $10.37369 5,745
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05576 $11.35869 20,075
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02196 $10.90682 36,991
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.07733 18,139
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.03931 16,239
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
110
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST SMALL CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04866 $10.66828 9,025
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02867 $10.37610 15,317
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.94939 $ 9.46839 12,121
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.00286 $11.76236 93,690
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.88103 $12.08600 18,558
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02245 $ 1.24622 208,132
1/1/2004 to 12/31/2004 $ 1.24622 $ 1.28061 415,826
1/1/2005 to 12/31/2005 $ 1.28061 $ 1.31370 497,033
* DATE THAT THE ANNUITY WAS FIRST OFFERED.
** DATE THAT FUND WAS FIRST OFFERED UNDER THIS ANNUITY.
</Table>
- --------------------------------------------------------------------------------
111
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06129 $11.73220 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04766 $11.02297 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98583 $11.25921 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99976 $10.04005 0
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05581 $10.30897 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03716 $11.18056 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03156 $10.90725 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.06851 $ 9.47818 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02484 $10.16588 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01681 $10.60008 2,803,554
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00686 $10.42969 699,364
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02477 $10.55480 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02869 $10.76609 3,674,148
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07548 $10.41036 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91187 $10.59302 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.05569 $ 9.59841 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND/OR HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
112
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02797 $10.62046 0
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98863 $10.06754 0
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.09857 0
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03548 $11.66658 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03010 $10.44213 0
SP SMALL CAP VALUE PORTFOLIO
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05698 $10.43562 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07330 $11.90839 0
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02984 $12.04891 0
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.04283 $ 9.58487 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.92605 $11.22029 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $ 9.99030 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.09241 $11.63321 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07873 $10.23479 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05384 $10.18979 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.04912 $11.24827 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04891 $10.32343 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND/OR HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
113
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06561 $10.25648 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04106 $10.23948 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.01025 329,867
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.00027 264,281
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.14613 $11.92816 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.02023 14,495
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.08395 $10.63555 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01036 $10.23522 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04473 $ 9.94281 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.87710 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01445 $10.54432 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03205 $10.67907 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.50002 0
AST HIGH YIELD PORTFOLIO
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.97584 $ 9.78498 0
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91292 $10.57386 0
AST LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07630 $10.47827 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND/OR HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
114
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $ 9.87561 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.12528 $10.82204 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.96529 $10.39968 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03596 $10.67928 0
AST MID CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06406 $10.27587 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05479 $11.25162 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02100 $10.80397 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $ 9.98223 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.03022 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04770 $10.56766 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02771 $10.27832 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.94843 $ 9.37907 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00189 $11.65151 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88006 $11.97195 0
JANUS ASPEN SERIES -- GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04383 $10.31860 0
</Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND/OR HDV WAS FIRST OFFERED UNDER
THIS ANNUITY.
- --------------------------------------------------------------------------------
115
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
APPENDIX B
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of
New Jersey). Not all of these annuities may be available to you due to state
approval or broker-dealer offerings. You can verify which of these annuities is
available to you by asking your registered representative, or by calling us at
(888) PRU-2888. For comprehensive information about each of these annuities,
please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each Strategic
Partners variable annuity. The availability of optional features, such as those
noted in the chart, may increase the cost of the contract. Therefore, you should
carefully consider which features you plan to use when selecting your annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners FlexElite 2 (i.e., the version of the contract sold on or after May
1, 2003) and the Strategic Partners Annuity One 3/Plus 3 contracts, Strategic
Partners Advisor offers few optional benefits.
- - Strategic Partners FlexElite 2 offers both an array of optional benefits as
well as the "liquidity" to surrender the annuity without any withdrawal
charge after three contract years have passed. FlexElite 2 also is unique in
offering an optional persistency bonus (which, if taken, extends the
withdrawal charge period).
- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of the contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- --------------------------------------------------------------------------------
116
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- - Strategic Partners Annuity One 3/Plus 3 comes in both a bonus version and a
non-bonus version, each of which offers several optional insurance features.
A bonus is added to your purchase payments under the bonus version, although
the withdrawal charges under the bonus version are higher than those under
the non-bonus version. Although the non-bonus version offers no bonus, it is
accompanied by fixed interest rate options and a market value adjustment
option that may provide higher interest rates than such options accompanying
the bonus version.
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of Strategic
Partners variable annuity products. You should consider the investment
objectives, risks, charges and expenses of an investment in any contract
carefully before investing. Each product prospectus as well as the underlying
portfolio prospectuses contains this and other information about the variable
annuities and underlying investment options. Your registered representative can
provide you with prospectuses for one or more of these variable annuities and
the underlying portfolios and can help you decide upon the product that would be
most advantageous for you given your individual needs. Please read the
prospectuses carefully before investing.
- --------------------------------------------------------------------------------
117
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
APPENDIX B -- SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000 $10,000
- --------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & 85 Qualified & 80 Qualified & 85 85 Qualified &
Non-Qualified Non-Qualified Non-Qualified Non-Qualified
- --------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 3 Years 7 Years (7%, 6%, 7 Years (7%, 6%, 5%,
Schedule (7%, 7%, 7%) 5%, 4%, 3%, 2%, 1%) 4%, 3%, 2%, 1%)
Contract date based Contract date based Payment date based
- --------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross 10% of gross 10% of gross purchase
Withdrawal(2) purchase payments purchase payments payments made as of
made as of last per contract year, last contract
contract cumulative up to 7 anniversary per
anniversary per years or 70% of contract year
contract year gross purchase
payments
- --------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.65% 1.52% 1.40%
Administration Charge
- --------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 The lesser of $50 $30. Waived if The lesser of $35 or
Fee (assessed or 2% of your or 2% of your contract value is 2% of your contract
annually) contract value. contract value. $50,000 or more value. Waived if
Waived if contract Waived if contract contract value is
value is $50,000 or value is $100,000 $75,000 or more
more or more
- --------------------------------------------------------------------------------------------------------------
Contract Credit No Yes No No
1% credit option at
end of 3rd and 6th
contract years.
Election results in
a new 3 year
withdrawal charge
- --------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes Yes Yes
1-Year 1-Year 1-Year
- --------------------------------------------------------------------------------------------------------------
Market Value No Yes Yes Yes
Adjustment Account 1-10 Years 7-Year 1-10 Years
(MVA)
- --------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No Yes No Yes
Averaging (DCA)
- --------------------------------------------------------------------------------------------------------------
Variable Investment 56 56 56 56/62
Options Available
- --------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A N/A 6-available in
Strategic Partners
Plus 3 only
- --------------------------------------------------------------------------------------------------------------
1 This column depicts features of the version of Strategic Partners FlexElite sold on or after May 1, 2003 or
upon subsequent state approval. In one state, Pruco Life continues to sell a prior version of the contract.
Under that version, the charge for the base death benefit is 1.60%, rather than 1.65%. The prior version
also differs in certain other respects (e.g., availability of optional benefits). The values illustrated
below are based on the 1.65% charge, and therefore are slightly lower than if the 1.60% charge were used.
2 Withdrawals of taxable amounts will be subject to income tax, and prior to age 59 1/2, may be subject to a
10% federal income tax penalty.
3 May offer lower interest rates for the fixed rate options than the interest rates offered in the contracts
without credit.
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
Minimum Investment $10,000
- ---------------------
Maximum Issue Age 85 Qualified &
Non-Qualified
- ---------------------
Withdrawal Charge 7 Years (8%, 8%, 8%,
Schedule 8%, 7%, 6%, 5%)
Payment date based
- ---------------------
Annual Charge-Free 10% of gross purchase
Withdrawal(2) payments made as of
last contract
anniversary per
contract year
- ---------------------
Insurance and 1.50%
Administration Charge
- ---------------------
Contract Maintenance The lesser of $35 or
Fee (assessed 2% of your contract
annually) value. Waived if
contract value is
$75,000 or more
- ---------------------
Contract Credit Yes
3%-all amounts ages
81-85
4%-under $250,000
5%-$250,000- $999,999
6%-$1,000,000+
- ---------------------
Fixed Rate Account Yes(3)
1-Year
- ---------------------
Market Value Yes
Adjustment Account 1-10 Years
(MVA)
- ---------------------
Enhanced Dollar Cost Yes
Averaging (DCA)
- ---------------------
Variable Investment 56/62
Options Available
- ---------------------
Evergreen Funds 6-available in
Strategic Partners
Plus 3 only
- ---------------------
1 This column depicts
upon subsequent sta
Under that version,
also differs in cer
below are based on
2 Withdrawals of taxa
10% federal income
3 May offer lower int
without credit.
</Table>
- --------------------------------------------------------------------------------
118
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: The greater of: Step/Roll The greater of:
purchase payment(s) purchase payment(s) Withdrawals will purchase payment(s)
minus proportionate minus proportionate proportionately minus proportionate
withdrawal(s) or withdrawal(s) or affect the Death withdrawal(s) or
contract value contract value Benefit contract value
- --------------------------------------------------------------------------------------------------------------
Optional Death Step/Roll Step-Up N/A Step-Up
Benefit (for an Roll-Up Roll-Up
additional Combo: Step/Roll Combo: Step/Roll
cost),(4,5) Highest Daily Value Highest Daily Value
(HDV) (HDV)
- --------------------------------------------------------------------------------------------------------------
Living Benefits (for Lifetime Five Lifetime Five N/A Lifetime Five
an additional Spousal Lifetime Spousal Lifetime Five
cost),(5,6) Five Guaranteed Minimum
Guaranteed Minimum Income Benefit (GMIB)
Income Benefit Income Appreciator
(GMIB) Income Benefit (IAB)
Appreciator Benefit
(IAB)
- --------------------------------------------------------------------------------------------------------------
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
- ------------------------------------------------------------------
Base Death Benefit: The greater of:
purchase payment(s)
minus proportionate
withdrawal(s) or
contract value
- ---------------------
Optional Death Step-Up
Benefit (for an Roll-Up
additional Combo: Step/Roll
cost),(4,5) Highest Daily Value
(HDV
- ---------------------
Living Benefits (for Lifetime Five
an additional Spousal Lifetime Five
cost),(5,6) Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator
Benefit (IAB)
- ---------------------
</Table>
4 For more information on these benefits, refer to section 4, "What Is The Death
Benefit?" in the Prospectus.
5 Not all Optional Benefits may be available in all states.
6 For more information on these benefits, refer to section 3, "What Kind of
Payments Will I Receive During The Income Phase?"; section 5, "What Is The
LifeTime Five(SM) Income Benefit?"; (discussing Lifetime Five and Spousal
Lifetime Five) and section 6, "What Is The Income Appreciator Benefit?" in the
Prospectus.
- --------------------------------------------------------------------------------
119
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made to/from the contract.
- - The hypothetical gross rates of return are reduced by the arithmetic average
of the fees and expenses of the underlying portfolios (as of December 31,
2005) and the charges that are deducted from the contract at the Separate
Account level as follows:
-- 0.99% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes
of the illustrations, we do not reflect any expense reimbursements or
expense waivers that might apply and are described in the prospectus fee
table.
-- The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under a contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
- --------------------------------------------------------------------------------
120
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
0% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/PLUS 3 ANNUITY ONE 3/PLUS 3
ADVISOR SELECT FLEXELITE 2 NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $97,659 $97,659 $97,544 $91,415 $97,419 $91,299 $97,659 $91,522 $101,465 $94,148
2 $95,366 $95,366 $95,141 $90,032 $94,850 $88,910 $95,366 $90,244 $ 98,986 $91,866
3 $93,128 $93,128 $92,798 $88,658 $92,347 $86,582 $93,128 $88,971 $ 96,567 $89,641
4 $90,941 $90,941 $90,512 $87,292 $89,908 $89,908 $90,941 $87,703 $ 94,207 $87,470
5 $88,807 $88,807 $88,283 $85,934 $87,533 $87,533 $88,807 $86,442 $ 91,905 $86,171
6 $86,722 $86,722 $86,109 $84,586 $85,219 $85,219 $86,722 $85,187 $ 89,659 $84,879
7 $84,686 $84,686 $83,988 $83,248 $82,965 $82,965 $84,686 $83,939 $ 87,468 $83,594
8 $82,698 $82,698 $81,919 $81,919 $80,770 $80,770 $82,698 $82,698 $ 85,331 $85,331
9 $80,757 $80,757 $79,902 $79,902 $78,631 $78,631 $80,757 $80,757 $ 83,245 $83,245
10 $78,861 $78,861 $77,934 $77,934 $76,547 $76,547 $78,861 $78,861 $ 81,211 $81,211
11 $77,010 $77,010 $76,014 $76,014 $74,518 $74,518 $77,010 $77,010 $ 79,226 $79,226
12 $75,202 $75,202 $74,142 $74,142 $72,541 $72,541 $75,202 $75,202 $ 77,290 $77,290
13 $73,436 $73,436 $72,282 $72,282 $70,615 $70,615 $73,436 $73,436 $ 75,402 $75,402
14 $71,712 $71,712 $70,468 $70,468 $68,739 $68,739 $71,678 $71,678 $ 73,559 $73,559
15 $70,029 $70,029 $68,698 $68,698 $66,912 $66,912 $69,961 $69,961 $ 71,727 $71,727
16 $68,385 $68,385 $66,972 $66,972 $65,131 $65,131 $68,285 $68,285 $ 69,940 $69,940
17 $66,780 $66,780 $65,288 $65,288 $63,397 $63,397 $66,648 $66,648 $ 68,197 $68,197
18 $65,212 $65,212 $63,646 $63,646 $61,708 $61,708 $65,049 $65,049 $ 66,496 $66,496
19 $63,681 $63,681 $62,044 $62,044 $60,062 $60,062 $63,488 $63,488 $ 64,837 $64,837
20 $62,186 $62,186 $60,482 $60,482 $58,460 $58,460 $61,963 $61,963 $ 63,219 $63,219
21 $60,726 $60,726 $58,958 $58,958 $56,898 $56,898 $60,474 $60,474 $ 61,640 $61,640
22 $59,301 $59,301 $57,472 $57,472 $55,377 $55,377 $59,021 $59,021 $ 60,099 $60,099
23 $57,909 $57,909 $56,022 $56,022 $53,895 $53,895 $57,601 $57,601 $ 58,596 $58,596
24 $56,549 $56,549 $54,608 $54,608 $52,452 $52,452 $56,215 $56,215 $ 57,130 $57,130
25 $55,222 $55,222 $53,229 $53,229 $51,046 $51,046 $54,861 $54,861 $ 55,700 $55,700
- ---------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005, the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners FlexElite 2 -2.59%; Strategic Partners Annuity One 3/Plus
3 Non-Bonus -2.35%; Strategic Partners Annuity One 3/Plus 3 Bonus -2.44%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
7. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
121
PART II STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE 3 PROSPECTUS SECTIONS 1-11
6% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/PLUS 3 ANNUITY ONE 3/PLUS 3
ADVISOR SELECT FLEXELITE 2 NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $103,502 $103,502 $103,380 $ 96,844 $103,248 $ 96,721 $103,502 $ 96,957 $107,536 $ 99,734
2 $107,136 $107,136 $106,884 $101,071 $106,611 $ 99,849 $107,136 $101,309 $111,203 $103,107
3 $110,899 $110,899 $110,506 $105,481 $110,083 $103,078 $110,899 $105,854 $114,994 $106,596
4 $114,793 $114,793 $114,252 $110,082 $113,669 $113,669 $114,793 $110,602 $118,915 $110,203
5 $118,824 $118,824 $118,124 $114,881 $117,371 $117,371 $118,824 $115,560 $122,970 $115,063
6 $122,997 $122,997 $122,127 $119,885 $121,194 $121,194 $122,997 $120,737 $127,163 $120,134
7 $127,316 $127,316 $126,267 $125,104 $125,141 $125,141 $127,316 $126,143 $131,499 $125,424
8 $131,787 $131,787 $130,546 $130,546 $129,217 $129,217 $131,787 $131,787 $135,982 $135,982
9 $136,415 $136,415 $134,971 $134,971 $133,426 $133,426 $136,415 $136,415 $140,619 $140,619
10 $141,205 $141,205 $139,545 $139,545 $137,771 $137,771 $141,205 $141,205 $145,413 $145,413
11 $146,164 $146,164 $144,275 $144,275 $142,259 $142,259 $146,164 $146,164 $150,371 $150,371
12 $151,297 $151,297 $149,165 $149,165 $146,892 $146,892 $151,297 $151,297 $155,499 $155,499
13 $156,610 $156,610 $154,220 $154,220 $151,676 $151,676 $156,610 $156,610 $160,800 $160,800
14 $162,109 $162,109 $159,447 $159,447 $156,616 $156,616 $162,109 $162,109 $166,283 $166,283
15 $167,802 $167,802 $164,851 $164,851 $161,717 $161,717 $167,802 $167,802 $171,953 $171,953
16 $173,694 $173,694 $170,439 $170,439 $166,985 $166,985 $173,694 $173,694 $177,816 $177,816
17 $179,794 $179,794 $176,215 $176,215 $172,423 $172,423 $179,794 $179,794 $183,879 $183,879
18 $186,108 $186,108 $182,188 $182,188 $178,039 $178,039 $186,108 $186,108 $190,148 $190,148
19 $192,643 $192,643 $188,363 $188,363 $183,838 $183,838 $192,643 $192,643 $196,632 $196,632
20 $199,408 $199,408 $194,747 $194,747 $189,826 $189,826 $199,408 $199,408 $203,336 $203,336
21 $206,411 $206,411 $201,347 $201,347 $196,009 $196,009 $206,411 $206,411 $210,269 $210,269
22 $213,659 $213,659 $208,172 $208,172 $202,393 $202,393 $213,659 $213,659 $217,439 $217,439
23 $221,162 $221,162 $215,227 $215,227 $208,985 $208,985 $221,162 $221,162 $224,853 $224,853
24 $228,928 $228,928 $222,522 $222,522 $215,791 $215,791 $228,928 $228,928 $232,519 $232,519
25 $236,967 $236,967 $230,064 $230,064 $222,820 $222,820 $236,967 $236,967 $240,447 $240,447
- ---------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005, the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.51%; Strategic Partners Select 3.39%; Strategic
Partners FlexElite 2 3.26%; Strategic Partners Annuity One 3/Plus 3 Non-Bonus
3.47%; Strategic Partners Annuity One 3/Plus 3 Bonus 3.41%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
7. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
122
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS ORD01142 (05/2006).
---------------------------------------------------------
(print your name)
---------------------------------------------------------
(address)
---------------------------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
ORD01142
STRATEGIC PARTNERS(SM)
PLUS 3
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH
YOUR REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS
DIFFERENT FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR
FINANCIAL SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. PLEASE NOTE
THAT SELLING BROKER-DEALER FIRMS THROUGH WHICH THE CONTRACT IS SOLD MAY DECLINE
TO MAKE AVAILABLE TO THEIR CUSTOMERS CERTAIN OF THE OPTIONAL FEATURES OFFERED
GENERALLY UNDER THE CONTRACT. ALTERNATIVELY, SUCH FIRMS MAY RESTRICT THE
AVAILABILITY OF THE OPTIONAL BENEFITS THAT THEY DO MAKE AVAILABLE TO THEIR
CUSTOMERS (E.G., BY IMPOSING A LOWER MAXIMUM ISSUE AGE FOR CERTAIN OPTIONAL
BENEFITS THAN WHAT IS PRESCRIBED GENERALLY UNDER THE CONTRACT). PLEASE SPEAK TO
YOUR REGISTERED REPRESENTATIVE FOR FURTHER DETAILS. THE DIFFERENT FEATURES AND
BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION, AND THE ABILITY TO
ACCESS YOUR ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES UNDER THE ANNUITY
CONTRACT AND THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE DIFFERENT
AMONG EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A REPLACEMENT FOR
EXISTING VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER, AMONG
OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN REPLACING YOUR
EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
- ------------------------------------------------------------
Strategic Partners Plus 3 offers a wide variety of investment choices, including
variable investment options that invest in underlying mutual funds. Currently,
portfolios of the following underlying mutual funds are being offered: The
Prudential Series Fund, American Skandia Trust, Evergreen Variable Annuity
Trust, Gartmore Variable Insurance Trust, and Janus Aspen Series. (see next page
for list of portfolios currently offered).
You may choose between two basic versions of Strategic Partners Plus 3. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Strategic Partners
Plus 3, some charges and expenses may be higher than if you choose the version
without the credit. Those higher charges could exceed the amount of the credit
under some circumstances, particularly if you withdraw purchase payments within
a few years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Plus 3
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference. The Risk Factors section relating to the market value
adjustment option appears in the Summary.
TO LEARN MORE ABOUT STRATEGIC PARTNERS PLUS 3
- ------------------------------------------------------------
To learn more about the Strategic Partners Plus 3 variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
offices, and can also be obtained from the SEC's Public Reference Section, 100 F
Street N.E., Washington, D.C. 20549. (See SEC file numbers 333-37728 and
333-103474) You may obtain information on the operation of the Public Reference
Room by calling the SEC at (202) 551-8090. The SEC maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners Plus 3 SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is set forth in
Section 11 of this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS PLUS 3 IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA P2360
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small-Cap Growth Portfolio
SP Small Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Balanced Fund
Evergreen VA Fundamental Large Cap Fund
Evergreen VA Growth Fund
Evergreen VA International Equity Fund
Evergreen VA Omega Fund
Evergreen VA Special Values Fund
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
CONTENTS
- --------------------------------------------------------------------------------
<Table>
PART I: STRATEGIC PARTNERS PLUS 3 PROSPECTUS
-------------------------------------------------
SUMMARY
-------
Glossary........................................... 6
Summary............................................ 11
Risk Factors....................................... 15
Summary Of Contract Expenses....................... 16
Expense Examples................................... 22
PART II: STRATEGIC PARTNERS PLUS 3 PROSPECTUS
------------------------------------------------------------
SECTIONS 1-11
------------------------------------------------------------
Section 1: What Is The Strategic Partners Plus 3
Variable Annuity?..................................... 28
Short Term Cancellation Right Or "Free Look"....... 29
Section 2: What Investment Options Can I Choose?........ 30
Variable Investment Options........................ 30
Fixed Interest Rate Options........................ 48
Market Value Adjustment Option..................... 49
Transfers Among Options............................ 50
Additional Transfer Restrictions................... 51
Dollar Cost Averaging.............................. 52
Asset Allocation Program........................... 53
Auto-Rebalancing................................... 53
Scheduled Transactions............................. 53
Voting Rights...................................... 54
Substitution....................................... 54
Section 3: What Kind Of Payments Will I Receive During
The Income Phase (Annuitization)?..................... 55
Payment Provisions................................. 55
Payment Provisions Without The Guaranteed Minimum
Income Benefit................................... 55
Option 1: Annuity Payments For A Fixed
Period....................................... 55
Option 2: Life Income Annuity Option........... 55
Option 3: Interest Payment Option.............. 56
Other Annuity Options.......................... 56
Tax Considerations................................. 56
Guaranteed Minimum Income Benefit.................. 56
GMIB Roll-Up................................... 57
GMIB Option 1 -- Single Life Payout Option..... 59
GMIB Option 2 -- Joint Life Payout Option...... 59
How We Determine Annuity Payments.................. 59
Section 4: What Is The Death Benefit?................... 62
Beneficiary........................................ 62
Calculation Of The Death Benefit................... 62
Guaranteed Minimum Death Benefit................... 62
GMDB Roll-Up................................... 62
GMDB Step-Up................................... 63
Special Rules If Joint Owners...................... 64
Highest Daily Value Death Benefit.................. 64
Calculation Of The Highest Daily Value Death
Benefit.......................................... 65
Payout Options..................................... 65
Earnings Appreciator Benefit....................... 66
Spousal Continuance Benefit........................ 67
Section 5: What Is The Lifetime Five(SM) Income
Benefit?.............................................. 70
Lifetime Five Income Benefit....................... 70
Spousal Lifetime Five Income Benefit............... 76
</Table>
3
CONTENTS CONTINUED
- --------------------------------------------------------------------------------
<Table>
Section 6: What Is The Income Appreciator Benefit?....................... 82
Income Appreciator Benefit.......................................... 82
Calculation Of The Income Appreciator Benefit....................... 82
Income Appreciator Benefit Options During The Accumulation Phase.... 83
Section 7: How Can I Purchase A Strategic Partners Plus 3 Contract?...... 86
Purchase Payments................................................... 86
Allocation Of Purchase Payments..................................... 86
Credits............................................................. 86
Calculating Contract Value.......................................... 87
Section 8: What Are The Expenses Associated With The Strategic Partners
Plus 3 Contract?....................................................... 88
Insurance And Administrative Charges................................ 88
Withdrawal Charge................................................... 89
Waiver Of Withdrawal Charges For Critical Care...................... 90
Contract Maintenance Charge......................................... 90
Guaranteed Minimum Income Benefit Charge............................ 90
Income Appreciator Benefit Charge................................... 91
Earnings Appreciator Benefit Charge................................. 91
Taxes Attributable To Premium....................................... 92
Transfer Fee........................................................ 92
Company Taxes....................................................... 92
Underlying Mutual Fund Fees......................................... 92
Section 9: How Can I Access My Money?.................................... 93
Withdrawals During The Accumulation Phase........................... 93
Automated Withdrawals............................................... 93
Suspension Of Payments Or Transfers................................. 93
Section 10: What Are The Tax Considerations Associated With The Strategic
Partners Plus 3 Contract?.............................................. 95
Contracts Owned By Individuals (Not Associated With Tax-Favored
Retirement Plans)................................................. 95
Contracts Held By Tax-Favored Plans................................. 98
Section 11: Other Information............................................ 102
Pruco Life Insurance Company........................................ 102
The Separate Account................................................ 102
Sale And Distribution Of The Contract............................... 102
Litigation.......................................................... 103
Assignment.......................................................... 104
Financial Statements................................................ 104
Statement Of Additional Information................................. 104
Householding........................................................ 104
Market Value Adjustment Formula..................................... 105
Appendix A............................................................... 108
Accumulation Unit Values............................................ 108
Appendix B............................................................... 120
Selecting The Variable Annuity That's Right For You................. 120
</Table>
4
PART I SUMMARY
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS PLUS 3 PROSPECTUS
5
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
GLOSSARY
- --------------------------------------------------------------------------------
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract adjusted
for any market value adjustment minus any charge we impose for premium taxes and
withdrawal charges.
ADJUSTED PURCHASE PAYMENT
Your invested purchase payment is adjusted for any subsequent withdrawals. The
adjusted purchase payment is used only for calculations of the Earnings
Appreciator Benefit.
ANNUAL INCOME AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as the annuitant lives. The annual income amount is
set initially as a percentage of the Protected Withdrawal Value, but will be
adjusted to reflect subsequent purchase payments, withdrawals, and any step-up.
Under the Spousal Lifetime Five Income Benefit, the annual income amount is paid
until the later death of two natural persons who are each other's spouses at the
time of election and at the first death of one of them.
ANNUAL WITHDRAWAL AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining. The
Annual Withdrawal Amount is set initially to equal 7% of the initial Protected
Withdrawal Value, but will be adjusted to reflect subsequent purchase payments,
withdrawals, and any step-up.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
6
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make and has higher withdrawal charges and insurance
and administrative costs than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges and insurance and administrative costs than the Contract With
Credit.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Bonus credits generally are
not recaptured once the free look period expires. Our reference in the preceding
sentence to "generally are not recaptured" refers to the fact that we have the
contractual right to deduct, from the death benefit we pay, the amount of any
credit corresponding to a purchase payment made within one year of death.
DAILY VALUE
For purposes of the Highest Daily Value Death Benefit, which we describe below,
the contract value as of the end of each business day. The Daily Value on the
contract date is equal to your purchase payment.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit, or Highest Daily Value Death Benefit, is
available for an additional charge. See Section 4, "What Is The Death Benefit?"
DEATH BENEFIT TARGET DATE
With respect to the Highest Daily Value Death Benefit, the later of the contract
anniversary on or after the 80th birthday of the current contract owner, the
older of either joint owner or (if owned by an entity) the annuitant, or five
years after the contract date.
DESIGNATED LIFE
For purposes of the Spousal Lifetime Five Income Benefit, a Designated Life
refers to each of two natural persons who are each other's spouses at the time
of election of the Spousal Lifetime Five Income Benefit and at the first death
of one of them.
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options or to the one-year fixed interest rate option.
EARNINGS APPRECIATOR BENEFIT (EAB)
An optional feature available for an additional charge that may provide a
supplemental death benefit based on earnings under the contract.
EXCESS INCOME/EXCESS WITHDRAWAL
Under the Spousal Lifetime Five Income Benefit and Lifetime Five Income Benefit,
Excess Income refers to cumulative withdrawals that exceed the Annual Income
Amount. Under the Lifetime Five Income Benefit, Excess Withdrawal refers to
cumulative withdrawals that exceed the Annual Withdrawal Amount.
FIXED INTEREST RATE OPTIONS
Investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options or to the one-year fixed rate
option.
7
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEE PERIOD
A period of time during which your invested purchase payment in the market value
adjustment option earns interest at the declared rate. We may offer one or more
guarantee periods.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value. The GMDB is a different death benefit than the Highest Daily
Value Death Benefit, which we describe below.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which may
equal the GMDB roll-up value, the GMDB step-up value, or the greater of the two.
The GMDB protected value will be subject to certain age restrictions and time
durations, however, it will still increase by subsequent invested purchase
payments and reduce proportionally by withdrawals.
GMDB ROLL-UP
We use the GMDB roll-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. The GMDB roll-up is equal to the invested
purchase payments compounded daily at an effective annual interest rate starting
on the date that each invested purchase payment is made, subject to a cap, and
reduced by the effect of withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant, number of contract anniversaries or
number of years since last GMIB reset. At such point, the GMIB protected value
will be increased by any subsequent invested purchase payments, and any
withdrawals will proportionally reduce the GMIB protected value. The GMIB
protected value is not available as a cash surrender benefit or a death benefit,
nor is it used to calculate the cash surrender value or death benefit.
GMIB RESET
You may elect to "step-up" or "reset" your GMIB protected value if your contract
value is greater than the current GMIB protected value. Upon exercise of the
reset provision, your GMIB protected value will be reset to equal your current
contract value. You are limited to two resets over the life of your contract,
provided that certain annuitant age requirements are met.
GMIB ROLL-UP
We will use the GMIB roll-up value to compute the GMIB protected value of the
Guaranteed Minimum Income Benefit. The GMIB roll-up is equal to the invested
purchase payments (after a reset, the contract value at the time of the reset)
compounded daily at an effective annual
8
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PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
interest rate starting on the date each invested purchase payment is made,
subject to a cap, and reduced proportionally by withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT
An optional death benefit available for an additional charge that can provide a
death benefit that exceeds the contract value on the date of death. The amount
of the death benefit is determined with reference to the Highest Daily Value, as
defined below.
HIGHEST DAILY VALUE
An amount equal to the highest of all previous "Daily Values" less proportional
withdrawals since such date and plus any purchase payments since such date.
INCOME APPRECIATOR BENEFIT (IAB)
An optional feature that may be available for an additional charge that provides
a supplemental living benefit based on earnings under the contract.
IAB AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
A series of payments consisting of a portion of your contract value and Income
Appreciator Benefit paid to you in equal installments over a 10 year period,
which you may choose, if you elect to receive the Income Appreciator Benefit
during the accumulation phase.
IAB CREDIT
An amount we add to your contract value that is credited in equal installments
over a 10 year period, which you may choose, if you elect to receive the Income
Appreciator Benefit during the accumulation phase.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on your contract value, subject to our rules regarding the timing
and amount of withdrawals. There are two options -- one is designed to provide
an annual withdrawal amount for life and the other is designed to provide a
greater annual withdrawal amount (than the first option) as long as there is
Protected Withdrawal Value. We also offer a variant of the Lifetime Five Income
Benefit to certain spousal owners -- see "Spousal Lifetime Five Income Benefit."
MARKET VALUE ADJUSTMENT
An adjustment to your contract value or withdrawal proceeds that is based on the
relationship between interest you are currently earning within the market value
adjustment option and prevailing interest rates. This adjustment may be positive
or negative.
MARKET VALUE ADJUSTMENT OPTION
This investment option may offer various guarantee periods and pays a fixed rate
of interest with respect to each guarantee period. We impose a market value
adjustment on withdrawals or transfers that you make from this option prior to
the end of its guarantee period.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
9
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
GLOSSARY CONTINUED
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PROPORTIONAL WITHDRAWALS
A method that involves calculating the percentage of your contract value that
each prior withdrawal represented when withdrawn. Proportional withdrawals
result in a reduction to the applicable benefit value by reducing such value in
the same proportion as the contract value was reduced by the withdrawal as of
the date the withdrawal occurred.
PROTECTED WITHDRAWAL VALUE
Under the Lifetime Five Income Benefit, we guarantee an amount that you can
withdraw each year until those annual withdrawals, when added together, reach an
aggregate limit. We call that aggregate limit the Protected Withdrawal Value.
Purchase payments and withdrawals you make will result in an adjustment to the
Protected Withdrawal Value. In addition, you may elect to step-up your Protected
Withdrawal Value under certain circumstances. Under the Spousal Lifetime Five
Income Benefit, Protected Withdrawal Value refers to a value that is used to
determine the Annual Income Amount. The initial Protected Withdrawal Value is
equal to the greatest of three specified amounts. (See "Initial Protected
Withdrawal Value" within the section describing the Spousal Lifetime Five Income
Benefit.)
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
(888) PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees the
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on the contract value, subject to our rules regarding the timing and
amount of withdrawals. Under the Spousal Lifetime Five Income Benefit, an annual
income amount is paid until the later death of two natural persons who are each
other's spouses at the time of election and at the first death of one of them.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Plus 3 variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 10, "What Are The Tax Considerations Associated With The Strategic
Partners Plus 3 Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
10
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS PLUS 3 VARIABLE ANNUITY?
The Strategic Partners Plus 3 variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company (Pruco Life,
we or us). The contract allows you to invest on a tax-deferred basis in variable
investment options, fixed interest rate options, and the market value adjustment
option. The contract is intended for retirement savings or other long-term
investment purposes and provides for a death benefit.
There are two basic versions of the Strategic Partners Plus 3 variable
annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide lower interest rates for fixed interest rate options and the
market value adjustment option than the Contract Without Credit, and
- - may provide fewer available market value adjustment guarantee periods than
the Contract Without Credit.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide higher interest rates for fixed interest rate options and the
market value adjustment option than the Contract With Credit, and
- - may provide more available market value adjustment guarantee periods than the
Contract With Credit.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option.
The fixed interest rate options offer a guaranteed interest rate. While your
money is allocated to one of these options, your principal amount will not
decrease and we guarantee that your money will earn at least a minimum interest
rate annually.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to be at least
the minimum interest rate dictated by applicable state law.
You may make up to 12 free transfers each contract year among the investment
options. Certain restrictions apply to transfers involving the fixed interest
rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
There are certain state variations to this contract that are referred to in
this prospectus. Please see your contract for further information on these and
other variations.
11
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
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We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Plus 3, you may
cancel your contract within 10 days after receiving it (or whatever period is
required under applicable law). This time period is referred to as the "Free
Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
You may also invest your money in fixed interest rate options or in a market
value adjustment option.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income payments
will be no less than a value that is based on a certain "GMIB protected value"
applied to the GMIB guaranteed annuity purchase rates. See Section 3, "What Kind
Of Payments Will I Receive During The Income Phase?"
The Lifetime Five Income Benefit, the Spousal Lifetime Five Income Benefit
(discussed in Section 5) and the Income Appreciator Benefit (discussed in
Section 6) each may provide an additional amount upon which your annuity
payments are based.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner or first-to-die of the owner or joint owner dies
before the income phase of the contract begins, the person(s) or entity that you
have chosen as your beneficiary will receive, at a minimum, the greater of (i)
the contract value, (ii) either the base death benefit or, for a higher
insurance and administrative cost, a potentially larger Guaranteed Minimum Death
Benefit (GMDB), or Highest Daily Value Death Benefit.
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal to
a "GMDB protected value" that depends upon which of the following Guaranteed
Minimum Death Benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we call
the "GMDB step-up value;"
- - the total amount you invest increased by a guaranteed rate of return, which
we call the "GMDB roll-up value;" or
- - the greater of the GMDB step-up value and GMDB roll-up value.
The Highest Daily Value Death Benefit provides a death benefit equal to the
greater of the base death benefit or the highest daily value less proportional
withdrawals.
On the date we receive proof of death in good order, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe,
in Section 4, are met.
For an additional fee, you may also choose, if it is available in your
contract, the Earnings Appreciator
12
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PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
supplemental death benefit, which provides a benefit payment upon the death of
the sole owner, or first to die of the owner or joint owner, during the
accumulation phase.
SECTION 5
WHAT IS THE LIFETIME FIVE(SM) INCOME BENEFIT?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your contract value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options -- one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the contract value allocated to the variable investment
options. This charge is in addition to the charge for the applicable death
benefit.
In addition to the Lifetime Five Income Benefit, we offer a benefit called
the Spousal Lifetime Five Income Benefit. The Spousal Lifetime Five Income
benefit is similar to the Lifetime Five Income Benefit, except that it is
offered only to those who are each other's spouses at the time the benefit is
elected, and the benefit offers only a Life Income Benefit (not the Withdrawal
Benefit). The charge for the Spousal Lifetime Five Income Benefit is a daily fee
equal on an annual basis to 0.75% of the contract value allocated to the
variable investment options. The charge is in addition to the charge for the
applicable death benefit.
SECTION 6
WHAT IS THE INCOME APPRECIATOR BENEFIT?
The Income Appreciator Benefit is an optional benefit, available for an
additional charge, that provides an additional income amount during the
accumulation period or upon annuitization. The Income Appreciator Benefit is
designed to provide you with additional funds that can be used to help defray
the impact taxes may have on distributions from your contract. You can activate
this benefit in one of three ways, as described in Section 6. Note, however,
that the annuitization options within this benefit are limited.
SECTION 7
HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS 3 CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $500
($100 if made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. In
addition, certain age limits apply to certain features and benefits described
herein.
SECTION 8
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3 CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge if
your contract value is less than $75,000. This charge is currently equal to
the lesser of $35 or 2% of your contract value. We do not impose the contract
maintenance charge if your contract value is $75,000 or more. We may impose
lesser charges in certain states.
13
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-11 CONTINUED
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- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit (or other) option that you choose.
The daily cost is equivalent to an annual charge as follows:
-- 1.40% if you choose the base death benefit,
-- 1.65% if you choose the roll-up or step-up Guaranteed Minimum Death
Benefit option (i.e., 0.25% in addition to the base death benefit
charge),
-- 1.75% if you choose the greater of the roll-up and step-up Guaranteed
Minimum Death Benefit option (i.e., 0.35% in addition to the base death
benefit charge),
-- 1.90% if you choose the Highest Daily Value Death Benefit (i.e., 0.50%
in addition to the base death benefit charge),
-- 0.60% if you choose the Lifetime Five Income Benefit. This charge is in
addition to the charge for the applicable death benefit, or
-- 0.75% if you choose the Spousal Lifetime Five Income Benefit. This
charge is in addition to the charge for the applicable death benefit.
- - We impose an additional insurance and administrative charge of 0.10% annually
for the Contract With Credit.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts), of the
average GMIB protected value. (In some states this fee may be lower.)
- - We will deduct an additional charge if you choose the Income Appreciator
Benefit. We deduct this charge from your contract value on the contract
anniversary and upon certain other events. The charge for this benefit is
based on an annual rate of 0.25% of your contract value.
- - We will deduct an additional charge if you choose the Earnings Appreciator
supplemental death benefit. We deduct this charge from your contract value on
the contract anniversary and upon certain other events. The charge for this
benefit is based on an annual rate of 0.30% of your contract value.
- - There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states,
we deduct a charge designed to approximate this tax, which can range from
0-3.5% of your contract value.
- - There are also expenses associated with the mutual funds. For 2005, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable arrangements.
In general, these expense waivers and comparable arrangements are not
guaranteed, and may be terminated at any time.
- - If you withdraw money (or you begin the income phase) less than seven
contract anniversaries after making a purchase payment, then you may have to
pay a withdrawal charge on all or part of the withdrawal. This charge ranges
from 1-7% for the Contract Without Credit and 5-8% for the Contract With
Credit. (In certain states reduced withdrawal charges may apply for certain
ages. Your contract contains the applicable charges.)
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 8, "What Are The
Expenses Associated With The Strategic Partners Plus 3 Contract?"
SECTION 9
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. For the Contract Without Credit, if
you withdraw money less than seven contract anniversaries after making a
purchase pay-
14
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PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
ment, we may impose a withdrawal charge ranging from 1-7%. For the Contract With
Credit, we may impose a withdrawal charge ranging from 5-8%. (In certain states
reduced withdrawal charges may apply for certain ages. Your contract contains
the applicable charges.)
Under the Market Value Adjustment Option, you will be subject to a market
value adjustment if you make a withdrawal or transfer from the option prior to
the end of a guarantee period.
We offer an optional benefit, called the Lifetime Five Income Benefit, under
which we guarantee that certain amounts will be available to you for withdrawal,
regardless of market-related declines in your contract value. You need not
participate in this benefit in order to withdraw some or all of your money. We
also offer a Spousal Lifetime Five Income Benefit. You also may access your
Income Appreciator Benefit through withdrawals.
SECTION 10
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS 3
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as a withdrawal
of earnings, which are taxed as ordinary income. If you are younger than age
59 1/2 when you take money out, you may be charged a 10% federal tax penalty on
the earnings in addition to ordinary taxation. A portion of the payments you
receive during the income phase is considered a partial return of your original
investment and therefore will not be taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contract (excluding Roth
IRAs) are taxable and subject to the 10% penalty if withdrawn prior to age
59 1/2.
SECTION 11
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the Market Value
Adjustment Option that we summarize below.
ISSUER RISK. The Market Value Adjustment Option, fixed interest rate options,
and the contract's other insurance features are available under a contract
issued by Pruco Life, and thus backed by the financial strength of that company.
If Pruco Life were to experience significant financial adversity, it is possible
that Pruco Life's ability to pay interest and principal under the Market Value
Adjustment Option and fixed interest rate options and to fulfill its insurance
guarantees could be impaired.
RISKS RELATED TO CHANGING INTEREST RATES. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life
holds to support the Market Value Adjustment Option. Nonetheless, the market
value adjustment formula reflects the effect that prevailing interest rates have
on those bonds and other instruments. If you need to withdraw your money prior
to the end of a guarantee period and during a period in which prevailing
interest rates have risen above their level when you made your purchase, you
will experience a "negative" market value adjustment. When we impose this market
value adjustment, it could result in the loss of both the interest you have
earned and a portion of your purchase payments. Thus, before you commit to a
particular guarantee period, you should consider carefully whether you have the
ability to remain invested throughout the guarantee period. In addition, we
cannot, of course, assure you that the market value adjustment option will
perform better than another investment that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose withdrawal charges on
amounts withdrawn from the market value adjustment option. If you anticipate
needing to withdraw your money prior to the end of a guarantee period, you
should be prepared to pay the withdrawal charge that we will impose.
15
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
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THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS PLUS 3. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see Section 8, "What Are The Expenses Associated With The
Strategic Partners Plus 3 Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
<Table>
<Caption>
WITHDRAWAL CHARGE(1)
- -------------------------------------------
NUMBER OF CONTRACT CONTRACT CONTRACT
ANNIVERSARIES SINCE WITH WITHOUT
PURCHASE PAYMENT CREDIT CREDIT
------------------- -------- --------
0 8% 7%
1 8% 6%
2 8% 5%
3 8% 4%
4 7% 3%
5 6% 2%
6 5% 1%
7 0% 0%
</Table>
<Table>
<Caption>
MAXIMUM TRANSFER FEE
- --------------------------------------------------------------
Each transfer after 12(2) $30.00
CHARGE FOR PREMIUM TAX IMPOSED ON US BY CERTAIN
STATES/JURISDICTIONS
- --------------------------------------------------------------
Up to 3.5% of contract value
</Table>
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" in Section 8. In certain states reduced withdrawal charges may apply
under the Contract with Credit. Your contract contains the applicable charges.
2: Currently, we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing or transfers
from the market value adjustment option at the end of a guarantee period, and do
not count them toward the limit of 12 free transfers per year.
16
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
The next table describes the fees and expenses you will pay periodically during
the time that you own the contract, not including underlying mutual fund fees
and expenses.
PERIODIC ACCOUNT EXPENSES
<Table>
MAXIMUM CONTRACT MAINTENANCE CHARGE AND CONTRACT CHARGE
UPON FULL WITHDRAWAL(3) $60.00
- ----------------------------------------------------------------------------------
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED
BENEFITS
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF ACCOUNT VALUE IN VARIABLE
INVESTMENT OPTIONS:
</Table>
<Table>
<Caption>
CONTRACT CONTRACT
WITH WITHOUT
CREDIT CREDIT
-------- --------
Base Death Benefit 1.50% 1.40%
Base Death Benefit with Lifetime Five Income
Benefit 2.10% 2.00%
Base Death Benefit with Spousal Lifetime Five
Income Benefit 2.25% 2.15%
Guaranteed Minimum Death Benefit Option--Roll-Up or
Step-Up 1.75% 1.65%
Guaranteed Minimum Death Benefit Option--Roll-Up or
Step-Up with Lifetime Five Income Benefit 2.35% 2.25%
Guaranteed Minimum Death Benefit Option--Greater of
Roll-Up or Step-Up 1.85% 1.75%
Guaranteed Minimum Death Benefit Option--Greater of
Roll-Up or Step-Up with Lifetime Five
Income Benefit 2.45% 2.35%
Highest Daily Value Death Benefit 2.00% 1.90%
Highest Daily Value Death Benefit with Lifetime Five
Income Benefit 2.60% 2.50%
ANNUAL GUARANTEED MINIMUM INCOME BENEFIT CHARGE AND CHARGE
UPON CERTAIN WITHDRAWALS(4) (FOR CONTRACTS SOLD ON OR
AFTER JANUARY 20, 2004, OR UPON SUBSEQUENT STATE APPROVAL)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF AVERAGE GMIB PROTECTED VALUE 0.50%
ANNUAL INCOME APPRECIATOR BENEFIT CHARGE AND CHARGE UPON
CERTAIN WITHDRAWALS(5)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.25%
ANNUAL EARNINGS APPRECIATOR BENEFIT CHARGE AND CHARGE UPON
CERTAIN TRANSACTIONS(6)
- ----------------------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.30%
</Table>
3: Currently, we waive this fee if your contract value is greater than or equal
to $75,000. If your contract value is less than $75,000, we currently charge the
lesser of $35 or 2% of your contract value. This is a single fee that we assess
(a) annually or (b) upon full withdrawal made on a date other than a contract
anniversary. As shown in the table, we can increase this fee in the future up to
a maximum of $60, but we have no current intention to do so. This charge may be
lower in certain states.
4: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.50% for contracts sold on or after January
20, 2004, or upon subsequent state approval (0.45% for all other contracts) of
the average GMIB protected value, which is calculated daily and generally is
equal to the GMIB roll-up value. In some states this charge is 0.30%, see your
contract for details. Subject to certain age or duration restrictions, the
roll-up value is the total of all invested purchase payments (after a reset, the
contract value at the time of the reset) compounded daily at an effective annual
rate of 5%, subject to a cap of 200% of all invested purchase payments.
Withdrawals reduce both the roll-up value and the 200% cap. The reduction is
equal to the amount of the withdrawal for the first 5% of the roll-up value,
calculated as of the latest contract anniversary (or contract date). The amount
of the withdrawal in excess of 5% of the roll-up value further reduces the
roll-up value and 200% cap proportionally to the additional reduction in
contract value after the first 5% withdrawal occurs. We assess this fee each
contract anniversary and when you begin the income phase of your contract. We
also assess this fee if you make a full withdrawal, but prorate the fee based on
the portion of the contract year that has elapsed since the full annual fee was
most recently deducted. If you make a partial withdrawal, we will assess the
prorated fee if the remaining contract value after the withdrawal would be less
than the amount of the prorated fee; otherwise we will not assess the fee at
that time.
5: We impose this charge only if you choose the Income Appreciator Benefit. The
charge for this benefit is based on an annual rate of 0.25% of your contract
value. The Income Appreciator Benefit charge is calculated: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full or
partial withdrawal, and upon a subsequent purchase payment. The fee is based on
the contract value at the time of the calculation, and is prorated based on the
portion of the contract year since the date that the charge was last deducted.
Although it may be calculated more often, it is deducted only: on each contract
anniversary, on the annuity date, upon the death of the sole owner or first to
die of the owner or joint owner prior to the annuity date, upon a full
withdrawal, and upon a partial withdrawal if the contract value remaining after
such partial withdrawal is not enough to cover the then-applicable charge. With
respect to full and partial withdrawals, we prorate the fee based on the portion
of the contract year that has elapsed since the full annual fee was most
recently deducted. We reserve the right to calculate and deduct the fee more
frequently than annually, such as quarterly.
6: We impose this charge only if you choose the Earnings Appreciator Benefit.
The charge for this benefit is based on an annual rate of 0.30% of your contract
value. Although the charge may be calculated more often, it is deducted only: on
each contract anniversary, on the annuity date, upon the death of the sole owner
or first to die of the owner or joint owner prior to the annuity date, upon a
full withdrawal, and upon a partial withdrawal if the contract value remaining
after such partial withdrawal is not enough to cover the then-applicable
earnings appreciator charge. We reserve the right to calculate and deduct the
fee more frequently than annually, such as quarterly.
17
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners Plus 3 contract, and may
vary from year to year.
<Table>
<Caption>
MINIMUM MAXIMUM
------- -------
Total Annual Underlying Mutual Fund Operating Expenses* 0.38% 1.67%
* See "Summary of Contract Expenses" -- Underlying Mutual Fund Portfolio Annual
Expenses for more detail on the expenses of the underlying mutual funds.
</Table>
18
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
THE PRUDENTIAL SERIES FUND (2)
- -------------------------------------------------------------------------------------------------------------------------------
Jennison Portfolio 0.60% 0.03% None 0.63%
Prudential Equity Portfolio(3) 0.45% 0.02% None 0.47%
Prudential Global Portfolio(4) 0.75% 0.07% None 0.82%
Prudential Money Market Portfolio 0.40% 0.05% None 0.45%
Prudential Stock Index Portfolio 0.35% 0.03% None 0.38%
Prudential Value Portfolio 0.40% 0.03% None 0.43%
SP Aggressive Growth Asset Allocation
Portfolio(5,6) 0.84% 0.11% None 0.95%
SP AIM Core Equity Portfolio 0.85% 0.15% None 1.00%
SP Balanced Asset Allocation Portfolio(5, 6) 0.76% 0.09% None 0.85%
SP Conservative Asset Allocation Portfolio(5,6) 0.72% 0.08% None 0.80%
SP Davis Value Portfolio 0.75% 0.07% None 0.82%
SP Growth Asset Allocation Portfolio(5, 6) 0.81% 0.10% None 0.91%
SP Large Cap Value Portfolio(5) 0.80% 0.03% None 0.83%
SP LSV International Value Portfolio 0.90% 0.16% None 1.06%
SP Mid Cap Growth Portfolio 0.80% 0.20% None 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.07% None 0.67%
SP PIMCO Total Return Portfolio 0.60% 0.02% None 0.62%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% None 0.80%
SP Small Cap Growth Portfolio 0.95% 0.10% None 1.05%
SP Small Cap Value Portfolio
(formerly SP Goldman Sachs Small Cap Value
Portfolio)(7) 0.90% 0.07% None 0.97%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.17% None 1.07%
SP T. Rowe Price Large-Cap Growth Portfolio
(formerly SP AllianceBernstein Large-Cap Growth
Portfolio)(8,9) 0.90% 0.16% None 1.06%
SP William Blair International Growth Portfolio 0.85% 0.13% None 0.98%
AMERICAN SKANDIA TRUST(2,10)
- -------------------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio 0.85% 0.18% None 1.03%
AST Aggressive Asset Allocation Portfolio(11) 1.04% 0.29% None 1.33%
AST AllianceBernstein Core Value Portfolio 0.75% 0.19% None 0.94%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.13% None 0.88%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.17% None 0.77%
AST American Century Income & Growth Portfolio 0.75% 0.18% None 0.93%
AST American Century Strategic Balanced Portfolio 0.85% 0.23% None 1.08%
AST Balanced Asset Allocation Portfolio(11) 0.95% 0.20% None 1.15%
AST Capital Growth Asset Allocation Portfolio(11) 1.00% 0.20% None 1.20%
AST Cohen & Steers Realty Portfolio 1.00% 0.18% None 1.18%
AST Conservative Asset Allocation Portfolio(11) 0.94% 0.24% None 1.18%
AST DeAM Large-Cap Value Portfolio 0.85% 0.22% None 1.07%
AST DeAM Small-Cap Growth Portfolio 0.95% 0.20% None 1.15%
AST DeAM Small-Cap Value Portfolio 0.95% 0.24% None 1.19%
AST Federated Aggressive Growth Portfolio 0.95% 0.17% None 1.12%
AST First Trust Balanced Target Portfolio 0.85% 0.19% None 1.04%
AST First Trust Capital Appreciation Target
Portfolio 0.85% 0.19% None 1.04%
AST Global Allocation Portfolio 0.86% 0.23% None 1.09%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.16% None 1.06%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.18% None 1.18%
AST High Yield Portfolio
(formerly, AST Goldman Sachs High Yield
Portfolio)(12) 0.75% 0.19% None 0.94%
AST JPMorgan International Equity Portfolio 0.88% 0.19% None 1.07%
AST Large-Cap Value Portfolio
(formerly AST Hotchkis and Wiley Large-Cap Value
Portfolio)(13, 14, 15) 0.75% 0.16% None 0.91%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.17% None 0.97%
AST Marsico Capital Growth Portfolio 0.90% 0.13% None 1.03%
</Table>
19
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
AST MFS Global Equity Portfolio 1.00% 0.26% None 1.26%
AST MFS Growth Portfolio 0.90% 0.18% None 1.08%
AST Mid Cap Value Portfolio
(formerly, AST Gabelli All-Cap Value
Portfolio)(16) 0.95% 0.22% None 1.17%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.18% None 1.08%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.14% None 1.03%
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.15% None 0.80%
AST Preservation Asset Allocation Portfolio(11) 0.89% 0.38% None 1.27%
AST Small-Cap Value Portfolio(13, 17) 0.90% 0.17% None 1.07%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.23% None 1.08%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.21% None 1.01%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.18% None 1.08%
EVERGREEN VARIABLE ANNUITY TRUST
- -------------------------------------------------------------------------------------------------------------------------------
Evergreen VA Balanced Fund 0.30% 0.20% None 0.50%
Evergreen VA Fundamental Large Cap Fund 0.58% 0.18% None 0.76%
Evergreen VA Growth Fund 0.70% 0.22% None 0.99%
Evergreen VA International Equity Fund 0.41% 0.30% None 0.71%
Evergreen VA Omega Fund 0.52% 0.19% None 0.71%
Evergreen VA Special ValuesFund 0.78% 0.19% None 0.97%
GARTMORE VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------------------------
GVIT Developing Markets Fund (18, 19) 1.05% 0.37% 0.25% 1.67%
JANUS ASPEN SERIES
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio None Service Shares(19) 0.64% 0.02% 0.25% 0.91%
</Table>
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
20
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
21
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1A: Contract With Credit: Highest Daily Value Death Benefit; Guaranteed
Minimum Income Benefit; Earnings Appreciator Benefit, Income Appreciator
Benefit, and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit;
- - You choose the Highest Daily Value Death Benefit;
- - You choose the Guaranteed Minimum Income Benefit (for contracts sold on or
after January 20, 2004, or upon subsequent state approval);
- - You choose the Earnings Appreciator Benefit;
- - You choose the Income Appreciator Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
22
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
EXAMPLE 1b: Contract With Credit: Highest Daily Value Death Benefit, Guaranteed
Minimum Income Benefit, Earnings Appreciator Benefit, Income Appreciator
Benefit, and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 2a: Contract Without Credit: Highest Daily Value Death Benefit,
Guaranteed Minimum Income Benefit, Earnings Appreciator Benefit, Income
Appreciator Benefit, and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 2b: Contract Without Credit: Highest Daily Value Death Benefit,
Guaranteed Minimum Income Benefit, Earnings Appreciator Benefit, Income
Appreciator Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract With Credit: Base Death Benefit, and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit;
- - You do not choose any optional insurance benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 3b: Contract With Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 3a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
23
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
EXAMPLE 4a: Contract Without Credit: Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 3a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 4b: Contract Without Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 4a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Examples 1a, 2a,
3a and 4a) are assessed in
connection with some annuity
options, but not others.
The values shown in the 10 year
column are the same for Example 4a
and 4b, the same for Example 3a and
3b, the same for Example 2a and 2b,
and the same for Example 1a and 1b.
This is because if 10 years have
elapsed since your last purchase
payment, we would no longer deduct
withdrawal charges when you make a
withdrawal. The indicated examples
reflect the maximum withdrawal
charges, but in certain states
reduced withdrawal charges may
apply for certain ages.
The examples use an average
contract maintenance charge, which
we calculated based on our estimate
of the total contract fees we
expect to collect in 2006. Your
actual fees will vary based on the
amount of your contract and your
specific allocation among the
investment options.
Premium taxes are not reflected in
the examples. We deduct a charge to
approximate premium taxes that may
be imposed on us in your state.
This charge is generally deducted
from the amount applied to an
annuity payout option.
A table of accumulation unit values
appears in Appendix A to this
prospectus.
24
- --------------------------------------------------------------------------------
PART I STRATEGIC PARTNERS PLUS 3 PROSPECTUS SUMMARY
<Table>
<Caption>
CONTRACT WITH CREDIT: HIGHEST DAILY VALUE DEATH BENEFIT; GUARANTEED MINIMUM
INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT; INCOME APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 1a: EXAMPLE 1b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,279 $2,332 $3,290 $5,254 $527 $1,580 $2,632 $5,254
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: HIGHEST DAILY VALUE DEATH BENEFIT; GUARANTEED
MINIMUM INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT; INCOME APPRECIATOR
BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 2a: EXAMPLE 2b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,127 $1,942 $2,757 $4,977 $497 $1,492 $2,487 $4,977
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT: BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 3a: EXAMPLE 3b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
-----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,121 $1,875 $2,557 $3,943 $369 $1,123 $1,899 $3,943
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: BASE DEATH BENEFIT
- ---------------------------------------------------------------------------
EXAMPLE 4a: EXAMPLE 4b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
-----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$975 $1,501 $2,049 $3,703 $345 $1,051 $1,779 $3,703
</Table>
25
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26
PART II SECTIONS 1-11
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS PLUS 3 PROSPECTUS
27
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
1:
WHAT IS THE STRATEGIC PARTNERS PLUS 3
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
THE STRATEGIC PARTNERS PLUS 3 VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the third contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
There are two basic versions of Strategic Partners Plus 3 variable annuity.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges and insurance and administrative costs than the
Contract Without Credit,
- - may provide a lower interest rate for fixed interest rate options and the
Market Value Adjustment Option than the Contract Without Credit, and
- - may provide fewer available market value adjustment guarantee periods than
the Contract Without Credit.
Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges and insurance and administrative costs than the
Contract With Credit,
- - may provide a higher interest rate for fixed interest rate options and the
Market Value Adjustment Option than the Contract With Credit, and
- - may provide more market value adjustment guarantee periods than the Contract
With Credit.
Unless we state otherwise, when we use the word contract, it applies to both
versions.
In replacing another annuity you may own, please consider all charges
associated with that annuity. Credits applicable to bonus products, such as the
Contract With Credit, should not be viewed as an offset of any surrender charge
that applies to another annuity contract you may currently own.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Plus 3 if you anticipate having to withdraw a significant
amount of your purchase payments within a few years of making those purchase
payments.
Strategic Partners Plus 3 is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options, guaranteed fixed interest rate options and a market value adjustment
option. If you select variable investment options, the amount of money you are
able to accumulate in your contract during the accumulation phase depends upon
the investment performance of the
28
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
underlying mutual fund(s) associated with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Plus 3, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable state law:
- - Your full purchase payment, less any applicable federal and state income tax;
or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment. We impose neither a withdrawal
charge nor any market value adjustment if you cancel your contract under this
provision.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value. To the extent dictated by state law, we will
include in your refund the amount of any fees and charges that we deducted.
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CAN I CHOOSE?
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, FIXED INTEREST RATE OPTIONS, AND A MARKET VALUE
ADJUSTMENT OPTION.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/subadviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect, wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
subadvisers to manage specific portions of a portfolio, and the portion managed
by a subadviser may vary from 0% to 100% of the portfolio's assets. The
subadvisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker/dealer firms' registered
representatives and creating
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
marketing material discussing the contract and the available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those Portfolios. However, a contract owner
who had contract value allocated to a Prudential Series Fund Asset Allocation
Portfolio prior to December 5, 2005 may continue to allocate purchase payments
to that Portfolio after that date. In addition, after December 5, 2005, we
ceased offering the Prudential Series Fund SP Large Cap Value Portfolio to new
purchasers and to existing contract owners who had not previously invested in
that Portfolio. However, a contract owner who had contract value allocated to
the SP Large Cap Value Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date.
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP JENNISON PORTFOLIO: seeks long-term growth of capital. The Jennison Associates
GROWTH Portfolio invests primarily in equity securities of major, LLC
established corporations that the Sub-adviser believes offer
above-average growth prospects. The Portfolio may invest up
to 30% of its total assets in foreign securities. Stocks are
selected on a company-by-company basis using fundamental
analysis. Normally 65% of the Portfolio's total assets are
invested in common stocks and preferred stocks of companies
with capitalization in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of Jennison Associates
BLEND capital. The Portfolio invests at least 80% of its net LLC; Salomon Brothers
assets plus borrowings for investment purposes in common Asset Management Inc
stocks of major established corporations as well as smaller
companies that the Sub-advisers believe offer attractive
prospects of appreciation.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of LSV Asset Management;
EQUITY capital. The Portfolio invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign and U.S. companies. Each Management, LLC;
Sub-adviser for the Portfolio generally will use either a T. Rowe Price
"growth" approach or a "value" approach in selecting either Associates, Inc.;
foreign or U.S. common stocks. William Blair &
Company, LLC
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current Prudential Investment
income consistent with the stability of capital and the Management, Inc.
maintenance of liquidity. The Portfolio invests in
high-quality short-term money market instruments issued by
the U.S. Government or its agencies, as well as by
corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in
thirteen months or less, and which are denominated in U.S.
dollars.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment results Quantitative
BLEND that generally correspond to the performance of Management Associates
publicly-traded common stocks. With the price and yield LLC
performance of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) as the benchmark, the Portfolio
normally invests at least 80% of investable assets in S&P
500 stocks. The S&P 500 represents more than 70% of the
total market value of all publicly-traded common stocks and
is widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to
select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
32
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL VALUE PORTFOLIO: seeks long-term growth of Jennison Associates
VALUE capital through appreciation and income. The Portfolio LLC
invests primarily in common stocks that the Sub-adviser
believes are undervalued -- those stocks that are trading
below their underlying asset value, cash generating ability
and overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the market
as a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
Normally at least 65% of the Portfolio's total assets is
invested in the common stock and convertible securities of
companies that the Sub-adviser believes will provide
investment returns above those of the S&P 500 or the New
York Stock Exchange (NYSE) Composite Index. Most of the
investments will be securities of large capitalization
companies. The Portfolio may invest up to 25% of its total
assets in real estate investment trusts (REITs) and up to
30% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with Investments LLC
BALANCED the specified level of risk tolerance. The Portfolio may
invest in any other Portfolio of the Fund (other than
another SP Asset Allocation Portfolio), the AST Marsico
Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the
Underlying Portfolios). Under normal circumstances, the
Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying
Portfolios. (Effective December 5, 2005, this Portfolio was
closed to new purchasers and to existing contract owners who
had not previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND SP AIM CORE EQUITY PORTFOLIO: seeks long-term growth of AIM Capital
capital. The Portfolio normally invests at least 80% of Management, Inc.
investable assets in equity securities, including
convertible securities of established companies that have
long-term above-average growth in earnings and growth
companies that the Sub-adviser believes have the potential
for above-average growth in earnings. The Portfolio may
invest up to 20% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
ALLOCATION/ highest potential total return consistent with the specified Investments LLC
BALANCED level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). The Portfolio will invest in equity and
fixed-income Underlying Portfolios. (Effective December 5,
2005, this Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in
the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to obtain Prudential
the highest potential total return consistent with the Investments LLC
specified level of risk tolerance. The Portfolio may invest
in any other Portfolio of the Fund (other than another SP
Asset Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on fixed-income Underlying Portfolios
but will also invest in equity Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The Davis Selected
Portfolio invests primarily in common stocks of U.S. Advisers, L.P.
companies with market capitalizations of at least $5
billion. It may also invest in stocks of foreign companies
and U.S. companies with smaller capitalizations. The
Sub-adviser attempts to select common stocks of businesses
that possess characteristics that the Sub-adviser believe
foster the creation of long-term value, such as proven
management, a durable franchise and business model, and
sustainable competitive advantages. The Sub-adviser aims to
invest in such businesses when they are trading at a
discount to their intrinsic worth. There is a risk that
"value" stocks can perform differently from the market as a
whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
highest potential total return consistent with the specified Investments LLC
level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on equity Underlying Portfolios but
will also invest in fixed-income Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of Hotchkis and Wiley
capital. The Portfolio normally invests at least 80% of Capital Management,
investable assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are believed Investment Management
to be undervalued and have an above-average potential to Inc., Dreman Value
increase in price, given the company's sales, earnings, book Management LLC
value, cash flow and recent performance. The Portfolio seeks
to achieve its objective through investments primarily in
equity securities of large capitalization companies.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
34
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP LSV INTERNATIONAL VALUE PORTFOLIO: seeks capital growth. LSV Asset Management
The Portfolio pursues its objective by primarily investing
at least 80% of the value of its assets in the equity
securities of companies in developed non-U.S. countries that
are represented in the MSCI EAFE Index. The target of this
Portfolio is to outperform the unhedged US Dollar total
return (net of foreign dividend withholding taxes) of the
MSCI EAFE Index. The Sub-Adviser uses proprietary
quantitative models to manage the Portfolio in a bottom-up
security selection approach combined with overall portfolio
risk management.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of Calamos Advisors LLC
capital. The Portfolio normally invests at least 80% of
investable assets in common stocks and related securities,
such as preferred stocks, convertible securities and
depositary receipts for those securities. These securities
typically are of medium market capitalizations, which the
Sub-adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the
Portfolio as companies with market capitalizations equaling
or exceeding $250 million but not exceeding the top of the
Russell Mid Cap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or traded
in the over-the-counter markets. The Sub-adviser uses a
bottom-up and top-down analysis in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis, as well as a top-down approach to
diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging markets
securities).
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO HIGH YIELD PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a two- to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO TOTAL RETURN PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a three-to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks Jennison Associates
long-term capital appreciation. The Portfolio normally LLC
invests at least 80% of investable assets in equity
securities of small and medium sized U.S. companies that the
Sub-adviser believes have the potential for above-average
earnings growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH SP SMALL CAP GROWTH PORTFOLIO: seeks long-term capital Eagle Asset
growth. The Portfolio pursues its objective by primarily Management; Neuberger
investing in the common stocks of small-capitalization Berman Management,
companies, which is defined as a company with a market Inc.
capitalization, at the time of purchase, no larger than the
largest capitalized company included in the Russell 2000
Index during the most recent 11-month period (based on
month-end data) plus the most recent data during the current
month.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE SP SMALL-CAP VALUE PORTFOLIO(formerly SP Goldman Sachs Small Goldman Sachs Asset
Cap Value Portfolio): seeks long-term capital growth. The Management, L.P.;
Portfolio normally invests at least 80% its net assets plus Salomon Brothers
borrowings for investment purposes in the equity securities Asset Management Inc
of small capitalization companies. The Portfolio focuses on
equity securities that are believed to be undervalued in the
market place.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks AllianceBernstein
long-term growth of capital. The Portfolio normally invests L.P.; Jennison
at least 65% of total assets in equity-related securities of Associates LLC
U.S. companies that the Sub-advisers believe to have strong
capital appreciation potential. The Portfolio's strategy is
to combine the efforts of two Sub-advisers and to invest in
the favorite stock selection ideas of three portfolio
managers (two of whom invest as a team). Each Sub-adviser to
the Portfolio utilizes a growth style to select
approximately 20 securities. The portfolio managers build a
portfolio with stocks in which they have the highest
confidence and may invest more than 5% of the Portfolio's
assets in any one issuer. The Portfolio is nondiversified,
meaning it can invest a relatively high percentage of its
assets in a small number of issuers. Investing in a
nondiversified portfolio, particularly a portfolio investing
in approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of an on diversified portfolio.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (formerly SP T. Rowe Price
Alliance Bernstein Large-Cap Growth Portfolio): seeks Associates, Inc.
long-term capital growth. Under normal circumstances, the
Portfolio invests at least 80% of its net assets plus
borrowings for investment purposes in the equity securities
of large-cap companies. The Sub-adviser generally looks for
companies with an above-average rate of earnings and cash
flow growth and a lucrative niche in the economy that gives
them the ability to sustain earnings momentum even during
times of slow economic growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
36
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO: seeks William Blair &
long-term capital appreciation. The Portfolio invests Company, LLC
primarily in stocks of large and medium-sized companies
located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index. Under normal
market conditions, the portfolio invests at least 80% of its
net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six
different countries and will not concentrate investments in
any particular industry. The Portfolio seeks companies that
historically have had superior growth, profitability and
quality relative to local markets and relative to companies
within the same industry worldwide, and that are expected to
continue such performance.
- -----------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST ADVANCED STRATEGIES PORTFOLIO: seeks a high level of Marsico Capital
absolute return. The Portfolio invests primarily in a Management, LLC; T.
diversified portfolio of equity and fixed income securities Rowe Price
across different investment categories and investment Associates, Inc.; LSV
managers. The Portfolio pursues a combination of traditional Asset Management;
and non-traditional investment strategies. William Blair &
Company, L.L.C.;
Pacific Investment
Management Company
LLC (PIMCO)
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
92.5% to 100% of its net assets to underlying portfolios
investing primarily in equity securities, and 0% to 7.5% of
its net assets to underlying portfolios investing primarily
in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO: seeks long-term AllianceBernstein
capital growth by investing primarily in common stocks. The L.P.
Sub-adviser expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued. Among other things,
the Portfolio seeks to identify compelling buying
opportunities created when companies are undervalued on the
basis of investor reactions to near-term problems or
circumstances even though their long-term prospects remain
sound. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
37
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO: seeks AllianceBernstein
long-term growth of capital and income while attempting to L.P.
avoid excessive fluctuations in market value. The Portfolio
normally will invest in common stocks (and securities
convertible into common stocks). The Sub-adviser will take a
value-oriented approach, in that it will try to keep the
Portfolio's assets invested in securities that are selling
at reasonable valuations in relation to their fundamental
business prospects. The stocks that the Portfolio will
normally invest in are those of seasoned companies.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO (AST AllianceBernstein
AllianceBernstein Growth + Value Portfolio merged into this L.P.
Portfolio): seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P (R) 500") through
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest,
under normal circumstances, at least 80% of its net assets
in securities included in the S&P(R) 500.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO: seeks American Century
capital growth with current income as a secondary objective. Investment
The Portfolio invests primarily in common stocks that offer Management, Inc.
potential for capital growth, and may, consistent with its
investment objective, invest in stocks that offer potential
for current income. The Sub-adviser utilizes a quantitative
management technique with a goal of building an equity
portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and
while attempting to create a dividend yield that will be
greater than the S&P 500 Index.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO: seeks American Century
BALANCED capital growth and current income. The Sub-adviser intends Investment
to maintain approximately 60% of the Portfolio's assets in Management, Inc.
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed
income investments will fluctuate in value. The equity
securities will fluctuate depending on the performance of
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST BALANCED ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in equity securities, and 27.5% to 42.5%
of its net assets to underlying portfolios investing
primarily in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
38
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 72.5% to 87.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
12.5% to 27.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST COHEN & STEERS REALTY PORTFOLIO: seeks to maximize total Cohen & Steers
return through investment in real estate securities. The Capital Management,
Portfolio pursues its investment objective by investing, Inc.
under normal circumstances, at least 80% of its net assets
in securities of real estate issuers. Under normal
circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate
companies, i.e., a company that derives at least 50% of its
revenues from the ownership, construction, financing,
management or sale of real estate or that has at least 50%
of its assets in real estate. Real estate companies may
include real estate investment trusts or REITs.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 47.5% to 62.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
37.5% to 52.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST DEAM LARGE-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
capital by investing primarily in the value stocks of larger Management, Inc.
companies. The Portfolio pursues its objective, under normal
market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 1000(R) Value Index, but which attempts to
outperform the Russell 1000(R) Value Index through active
stock selection.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST DEAM SMALL-CAP GROWTH PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital from a portfolio of growth stocks of Management, Inc.
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Growth
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Growth Index, but which attempts to
outperform the Russell 2000(R) Growth Index.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
39
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST DEAM SMALL-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital. The Portfolio pursues its objective, Management, Inc.
under normal market conditions, by primarily investing at
least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Value Index, but which attempts to
outperform the Russell 2000(R) Value Index.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO: seeks capital Federated Equity
growth. The Portfolio pursues its investment objective by Management Company of
investing primarily in the stocks of small companies that Pennsylvania;
are traded on national security exchanges, NASDAQ stock Federated Global
exchange and the over-the-counter-market. Small companies Investment Management
will be defined as companies with market capitalizations Corp.
similar to companies in the Russell 2000 Growth Index. Up to
25% of the Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST BALANCED TARGET PORTFOLIO: seeks long-term First Trust Advisors
capital growth balanced by current income. The Portfolio L.P.
normally invests approximately 65% of its total assets in
equity securities and 35% in fixed income securities.
Depending on market conditions, the equity portion may range
between 60-70% and the fixed income portion between 30-40%.
The Portfolio allocates its assets across a number of
uniquely specialized investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO: seeks First Trust Advisors
long-term growth of capital. The Portfolio normally invests L.P.
approximately 80% of its total assets in equity securities
and 20% in fixed income securities. Depending on market
conditions, the equity portion may range between 75-85% and
the fixed income portion between 15-25%. The Portfolio
allocates its assets across a number of uniquely specialized
investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST GLOBAL ALLOCATION PORTFOLIO: seeks to obtain the highest Prudential
potential total return consistent with a specified level of Investments LLC
risk tolerance. The Portfolio seeks to achieve its
investment objective by investing in several other AST
Portfolios ("Underlying Portfolios"). The Portfolio intends
its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an
investor could otherwise achieve only by holding numerous
investments. It is expected that the investment objectives
of such AST Portfolios will be diversified.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
40
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO: seeks Goldman Sachs Asset
growth of capital in a manner consistent with the Management, L.P.
preservation of capital. Realization of income is not a
significant investment consideration and any income realized
on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity
securities of companies that the Sub-adviser believes have
the potential to achieve capital appreciation over the
long-term. The Portfolio seeks to achieve its investment
objective by investing, under normal circumstances, in
approximately 30-45 companies that are considered by the
Sub-adviser to be positioned for long-term growth.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO: seeks long-term Goldman Sachs Asset
capital growth. The Portfolio pursues its investment Management, L.P.
objective, by investing primarily in equity securities
selected for their growth potential, and normally invests at
least 80% of the value of its assets in medium
capitalization companies. For purposes of the Portfolio,
medium-sized companies are those whose market
capitalizations (measured at the time of investment) fall
within the range of companies in the Russell Mid Cap Growth
Index. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST HIGH YIELD PORTFOLIO (formerly AST Goldman Sachs High Goldman Sachs Asset
Yield Portfolio): seeks a high level of current income and Management, L.P.;
may also consider the potential for capital appreciation. Pacific Investment
The Portfolio invests, under normal circumstances, at least Management Company
80% of its net assets plus any borrowings for investment LLC (PIMCO)
purposes (measured at time of purchase) in high yield,
fixed-income securities that, at the time of purchase, are
non-investment grade securities. Such securities are
commonly referred to as "junk bonds."
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO: seeks long-term J.P.Morgan Investment
capital growth by investing in a diversified portfolio of Management Inc.
international equity securities. The Portfolio seeks to meet
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a
recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the
issuer is principally based, but may also be traded in other
countries including the United States.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
41
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAPVALUE AST LARGE-CAP VALUE PORTFOLIO (formerly AST Hotchkis and Dreman Value
Wiley Large-Cap Value Portfolio): seeks current income and Management LLC,
long-term growth of income, as well as capital appreciation. Hotchkis and Wiley
The Portfolio invests, under normal circumstances, at least Capital Management,
80% of its net assets in common stocks of large cap U.S. LLC; J.P. Morgan
companies. The Portfolio focuses on common stocks that have Investment
a high cash dividend or payout yield relative to the market Management, Inc.
or that possess relative value within sectors.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE PORTFOLIO: seeks high current Lord, Abbett & Co.
income and the opportunity for capital appreciation to LLC
produce a high total return. To pursue its objective, the
Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities
and normally invests primarily in high yield and investment
grade debt securities, securities convertible into common
stock and preferred stocks. The Portfolio may find good
value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have
more than half of its assets invested in those securities.
At least 20% of the Portfolio's assets must be invested in
any combination of investment grade debt securities, U.S.
Government securities and cash equivalents. The Portfolio
may also make significant investments in mortgage-backed
securities. Although the Portfolio expects to maintain a
weighted average maturity in the range of five to twelve
years, there are no restrictions on the overall Portfolio or
on individual securities. The Portfolio may invest up to 20%
of its net assets in equity securities.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MARSICO CAPITAL GROWTH PORTFOLIO: seeks capital growth. Marsico Capital
Income realization is not an investment objective and any Management, LLC
income realized on the Portfolio's investments, therefore,
will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies. In
selecting investments for the Portfolio, the Sub-adviser
uses an approach that combines "top down" economic analysis
with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that may
benefit from the trends the Sub-adviser has observed. The
Sub-adviser then looks for individual companies with
earnings growth potential that may not be recognized by the
market at large, utilizing a "bottom up" stock selection
process. The Portfolio will normally hold a core position of
between 35 and 50 common stocks. The Portfolio may hold a
limited number of additional common stocks at times when the
Portfolio manager is accumulating new positions, phasing out
existing or responding to exceptional market conditions.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST MFS GLOBAL EQUITY PORTFOLIO: seeks capital growth. Under Massachusetts
normal circumstances the Portfolio invests at least 80% of Financial Services
its assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
42
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MFS GROWTH PORTFOLIO: seeks long-term capital growth and Massachusetts
future income. Under normal market conditions, the Portfolio Financial Services
invests at least 80% of its total assets in common stocks Company
and related securities, such as preferred stocks,
convertible securities and depositary receipts, of companies
that the Sub-adviser believes offer better than average
prospects for long-term growth. The Sub-adviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE AST MID CAP VALUE PORTFOLIO (formerly AST Gabelli All-Cap EARNEST Partners LLC;
Value Portfolio): seeks to provide capital growth by WEDGE Capital
investing primarily in mid-capitalization stocks that appear Management, LLP
to be undervalued. The Portfolio has a non-fundamental
policy to invest, under normal circumstances, at least 80%
ofthe value of its net assets inmid-capitalization
companies.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO: (AST Alger Neuberger Berman
All-Cap Growth Portfolio merged into this Portfolio): seeks Management Inc.
capital growth. Under normal market conditions, the
Portfolio primarily invests at least 80% of its net assets
in the common stocks of mid-cap companies. The Sub-adviser
looks for fast-growing companies that are in new or rapidly
evolving industries.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO: seeks capital Neuberger Berman
growth. Under normal market conditions, the Portfolio Management Inc.
primarily invests at least 80% of its net assets in the
common stocks of mid-cap companies. For purposes of the
Portfolio, companies with equity market capitalizations that
fall within the range of the Russell Midcap(R) Index at the
time of investment are considered mid-cap companies. Some of
the Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. Under
the Portfolio's value-oriented investment approach, the
Sub-adviser looks for well-managed companies whose stock
prices are undervalued and that may rise in price before
other investors realize their worth.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST PIMCO LIMITED MATURITY BOND PORTFOLIO: seeks to maximize Pacific Investment
total return consistent with preservation of capital and Management Company
prudent investment management. The Portfolio will invest in LLC (PIMCO)
a diversified portfolio of fixed-income securities of
varying maturities. The average portfolio duration of the
Portfolio generally will vary within a one- to three-year
time frame based on the Sub-adviser's forecast for interest
rates.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST PRESERVATION ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 27.5% to 42.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
43
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST SMALL-CAP VALUE PORTFOLIO: seeks to provide long-term Lee Munder
capital growth by investing primarily in Investments, Ltd;
small-capitalization stocks that appear to be undervalued. J.P. Morgan
The Portfolio will have a non-fundamental policy to invest, Investment
under normal circumstances, at least 80% of the value of its Management, Inc.;
net assets in small capitalization stocks. The Portfolio Salomon Brothers
will focus on common stocks that appear to be undervalued. Asset Management Inc;
Dreman Value
Management LLC
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: seeks a high T. Rowe Price
BALANCED level of total return by investing primarily in a Associates, Inc.
diversified portfolio of fixed income and equity securities.
The Portfolio normally invests approximately 60% of its
total assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-adviser's
outlook for the markets. The Sub-adviser concentrates common
stock investments in larger, more established companies, but
the Portfolio may include small and medium-sized companies
with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND PORTFOLIO: seeks to provide T. Rowe Price
high current income and capital growth by investing in International, Inc.
high-quality foreign and U.S. dollar-denominated bonds. The
Portfolio will invest at least 80% of its total assets in
fixed income securities, including high quality bonds issued
or guaranteed by U.S. or foreign governments or their
agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds
and mortgage and asset-backed securities of U.S. and foreign
issuers. The Portfolio generally invests in countries where
the combination of fixed-income returns and currency
exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-adviser believes that the
currency risk can be minimized through hedging. The
Portfolio may also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk bonds ("junk
bonds"). In addition, the Portfolio may invest up to 30% of
its assets in mortgage-backed (including derivatives, such
as collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
44
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: seeks T. Rowe Price
long-term capital growth primarily through the common stocks Associates, Inc.
of companies that own or develop natural resources (such as
energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common
stocks of natural resource companies whose earnings and
tangible assets could benefit from accelerating inflation.
The Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
EVERGREEN VARIABLE ANNUITY TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED EVERGREEN VA BALANCED FUND: seeks capital growth and current Evergreen Investment
income. The Portfolio invests in a combination of debt Management Company,
securities, common stocks, preferred stocks and securities LLC
convertible or exchangeable for common stocks of large U.S.
companies (i.e., companies whose market capitalizations fall
within the range tracked by the Russell 1000(R) Index, at
the time of purchase). Under normal circumstances, the
Portfolio will invest at least 25% of its assets in debt
securities and the remainder in equity securities. The
Portfolio's managers use a diversified equity style of
management, best defined as a blend between growth and value
stocks. The Portfolio normally invests primarily all of the
fixed income portion in U.S. dollar-denominated investment
grade debt securities, including debt securities issued or
guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. government, corporate bonds,
mortgage-backed securities, asset-backed securities, and
other income producing securities. The Portfolio is not
required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the
Portfolio has purchased it.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE EVERGREEN VA FUNDAMENTAL LARGE CAP FUND: seeks capital Evergreen Investment
growth with the potential for current income. The Portfolio Management Company,
invests primarily in common stocks of large U.S. companies LLC
(i.e., companies whose market capitalizations fall within
the market capitalization range of the companies tracked by
the Russell 1000(R) Index, measured at the time of
purchase). The Portfolio's stock selection is based on a
diversified style of equity management that allows the
Portfolio to invest in both value- and growth-oriented
equity securities. The Portfolio's managers seek companies
that are temporarily undervalued in the marketplace, sell at
a discount to their private market values and display
certain characteristics such as earning a high return on
investment and having some kind of competitive advantage in
their industry. "Growth" stocks are stocks of companies
which the Portfolio's managers believe have anticipated
earnings ranging from steady to accelerated growth. The
Portfolio intends to seek additional income primarily by
investing up to 20% of its assets in convertible bonds,
including below investment grade bonds, and convertible
preferred stocks of any quality. The Portfolio may invest up
to 20% of its assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
45
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH EVERGREEN VA GROWTH FUND: seeks long-term capital growth. Evergreen Investment
The Portfolio invests at least 75% of its assets in common Management Company,
stocks of small- and medium-sized companies (i.e., companies LLC
whose market capitalizations fall within the market
capitalization range of the companies tracked by the Russell
2000(R) Growth Index, measured at the time of purchase). The
remaining portion of the Portfolio's assets may be invested
in companies of any size. The Portfolio's managers employ a
growth-style of equity management and will purchase stocks
of companies that have demonstrated earnings, asset values
or growth potential which they believe are not yet reflected
in the stock's market price. The Portfolio's managers
consider earnings growth above the average earnings growth
of companies included in the Russell 2000(R) Growth Index as
a key factor in selecting investments.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY EVERGREEN VA INTERNATIONAL EQUITY FUND: seeks long-term Evergreen Investment
capital growth and secondarily, modest income. The Portfolio Management Company,
normally invests 80% of its assets in equity securities LLC
issued by established, quality, non-U.S. companies located
in countries with developed markets and may purchase across
all market capitalizations. The Portfolio normally invests
at least 65% of its assets in securities of companies in at
least three different countries (other than the U.S.). The
Portfolio may also invest in emerging markets. The
Portfolio's managers seek both growth and value
opportunities, and the Portfolio intends to seek modest
income from dividends paid by its equity holdings.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY EVERGREEN VA OMEGA FUND: seeks long-term capital growth. The Evergreen Investment
Portfolio invests primarily, and under normal conditions Management Company,
substantially all of its assets, in common stocks and LLC
securities convertible into common stocks of U.S. companies
across all market capitalizations. The Portfolio's managers
employ a growth style of equity management. "Growth" stocks
are stocks of companies that the Portfolio's managers
believe have anticipated earnings ranging from steady to
accelerated growth. The Portfolio may invest up to 25% of
its assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE EVERGREEN VA SPECIAL VALUES FUND: seeks capital growth in Evergreen Investment
the value of its shares. The Portfolio normally invests at Management Company,
least 80% of its assets in common stocks of small U.S. LLC
companies (i.e. companies whose market capitalizations fall
within the market capitalization range of the companies
tracked by the Russell 2000(R) Index, measured at the time
of purchase). The remaining 20% of the Portfolio's assets
may be represented by cash or invested in various cash
equivalents or common stocks of any market capitalization.
The Portfolio's managers seek to limit the investment risk
of small company investing by seeking stocks that trade
below what the managers consider their intrinsic value. The
Portfolio's managers look specifically for various growth
triggers, or catalysts, that will bring the stock's price
into line with its actual or potential value, such as new
products, new management, changes in regulation and/or
restructuring potential.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
46
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
GARTMORE VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY GVIT DEVELOPING MARKETS FUND: seeks long-term capital Gartmore Global Asset
appreciation, under normal conditions by investing at least Management Trust;
80% of its total assets in stocks of companies of any size Gartmore Global
based in the world's developing economies. Under normal Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- -----------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: LARGE CAP GROWTH PORTFOLIO -- SERVICE Janus Capital
SHARES: seeks long-term growth of capital in a manner Management LLC
consistent with the preservation of capital. The Portfolio
invests at least 80% of its net assets in common stocks of
large-sized companies. Large-sized companies are those whose
market capitalizations fall within the range of companies in
the Russell 1000 Index at the time of purchase.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
47
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
FIXED INTEREST RATE OPTIONS
We offer two fixed interest rate options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law. We may offer lower interest rates for Contracts With Credit than for
Contracts Without Credit.
Payments allocated to the fixed interest rate options become part of Pruco
Life's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one-year base guaranteed annual interest rate for the one-year fixed
interest rate option. Additionally, we may provide a higher interest rate on
each purchase payment allocated to this option for the first year after the
payment. This higher interest rate will not apply to amounts transferred from
other investment options within the contract or amounts remaining in this option
for more than one year.
DOLLAR COST AVERAGING FIXED RATE OPTION
You may allocate all or part of any purchase payment to the DCA Fixed Rate
Option. Under this option, you automatically transfer amounts over a stated
period (currently, six or twelve months) from the DCA Fixed Rate Option to the
variable investment options and/or to the one-year fixed interest rate option,
as you select. We will invest the assets you allocate to the DCA Fixed Rate
Option in our general account until they are transferred. You may not transfer
from other investment options to the DCA Fixed Rate Option. Transfers to the
one-year fixed interest rate option will remain in the general account.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$2,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transferred to
the selected variable investment options, or to the one-year fixed interest rate
option in either six or twelve monthly installments, and you may not change that
number of monthly installments after you have chosen the DCA Fixed Rate Option.
You may allocate to both the six-month and twelve-month options. (In the future,
we may make available other numbers of transfers and other transfer
schedules--for example, quarterly as well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the investment options into which the DCA Fixed Rate
Option assets are transferred. You may make a one time transfer of the remaining
value out of your DCA Fixed Rate Option, if you so choose. Transfers from the
DCA Fixed Rate Option do not count toward the maximum number of free transfers
allowed under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
MARKET VALUE ADJUSTMENT OPTION
Under the Market Value Adjustment Option, we may offer one or more of several
guarantee periods provided that the interest rate we are able to declare will be
no less than the minimum interest rate dictated by applicable state law with
respect to any guarantee period. We may offer fewer available guarantee periods
in Contracts With Credit than in Contracts Without Credit. This option is not
available for contracts issued in some states. Please see your contract. The
Market Value Adjustment Option is registered separately from the variable
investment options, and the amount of market value adjustment option securities
registered is stated in that registration statement.
IF AMOUNTS ARE WITHDRAWN FROM A GUARANTEE PERIOD, OTHER THAN DURING THE
30-DAY PERIOD IMMEDIATELY FOLLOWING THE END OF THE GUARANTEE PERIOD, THEY WILL
BE SUBJECT TO A MARKET VALUE ADJUSTMENT EVEN IF THEY ARE NOT SUBJECT TO A
WITHDRAWAL CHARGE.
You will earn interest on your invested purchase payment at the rate that we
have declared for the guarantee period you have chosen. You must invest at least
$1,000 if you choose this option. We may offer lower interest rates for
Contracts With Credit than for Contracts Without Credit.
We refer to interest rates as annual rates, although we credit interest
within each guarantee period on a daily basis. The daily interest that we credit
is equal to the pro rated portion of the interest that would be earned on an
annual basis. We credit interest from the business day on which your purchase
payment is received in good order at the Prudential Annuity Service Center until
the earliest to occur of any of the following events: (a) full surrender of the
contract, (b) commencement of annuity payments or settlement, (c) end of the
guarantee period, (d) transfer of the value in the guarantee period, (e) payment
of a death benefit, or (f) the date the amount is withdrawn.
During the 30-day period immediately following the end of a guarantee period,
we allow you to do any of the following, without the imposition of the market
value adjustment:
(a) withdraw or transfer the value of the guarantee period,
(b) allocate the value to another available guarantee period or other investment
option (provided that the new guarantee period ends prior to the annuity
date). You will receive the interest rate applicable on the date we receive
your instruction, or
(c) apply the value in the guarantee period to the annuity or settlement option
of your choice.
If we do not receive instructions from you concerning the disposition of the
contract value in your maturing guarantee period, we will reinvest the amount in
the Prudential Money Market Portfolio investment option.
During the 30-day period immediately following the end of the guarantee
period, or until you elect to do (a), (b) or (c) listed immediately above, you
will receive the current interest rate applicable to the guarantee period having
the same duration as the guarantee period that just matured, which is offered on
the day immediately following the end of the matured guarantee period. However,
if at that time we do not offer a guarantee period with the same duration as
that which matured, you will then receive the current interest rate applicable
to the shortest guarantee period then offered.
Under the market value adjustment option, while your money remains in the
contract for the full guarantee period, your principal amount is guaranteed by
us and the interest amount that your money will earn is guaranteed by us to be
at least the minimum interest rate dictated by applicable state law.
Payments allocated to the market value adjustment option are held as a
separate pool of assets. Any gains or losses experienced by these assets will
not directly affect the contracts. The strength of our guarantees under these
options is based on the overall financial strength of Pruco Life.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment or transfer contract value to a guarantee
period, we use that money to buy and sell securities and other instruments to
support our obligation to pay interest. Generally, we buy bonds for this
purpose. The duration of the bonds and other instruments that we buy with
respect to a particular guarantee period is influenced significantly by the
length of the guarantee period. For example, we typically would acquire
longer-duration bonds with respect to the 10 year guarantee period than we do
for the 3 year guarantee period. The value of these bonds is affected by changes
in interest rates, among other factors. The market value adjustment that we
assess against your contract value if you withdraw or transfer outside the
30-day period discussed above involves our attributing to you a portion of our
investment experience on these bonds and other instruments.
For example, if you make a full withdrawal when interest rates have risen
since the time of your investment, the bonds and other investments in the
guarantee period likely would have decreased in value, meaning that we would
impose a "negative" market value adjustment on you (i.e., one that results in a
reduction of the withdrawal proceeds that you receive). For a partial
withdrawal, we would deduct a negative market value adjustment from your
remaining contract value. Conversely, if interest rates have decreased, the
market value adjustment would be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above. The laws of certain states may prohibit us from imposing a
market value adjustment on the annuity date.
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFIT IN YOUR GUARANTEE PERIOD DOES NOT DEPEND ON THE INVESTMENT
PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE HOLD WITH RESPECT TO YOUR
GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET VALUE ADJUSTMENT, WE DO
NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS AND OTHER INSTRUMENTS
THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and the one-year fixed interest rate option. The minimum
transfer amount is the lesser of $250 or the amount in the investment option
from which the transfer is to be made. In addition, you can transfer your
contract value out of a market value adjustment guarantee period into another
market value adjustment guarantee period, into a variable investment option, or
into a one-year fixed interest rate option, although a market value adjustment
will apply to any transfer you make outside the 30-day period discussed above.
You may transfer contract value into the market value adjustment option at any
time, provided it is at least $1,000.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received in good order by us, or by certain entities that we have
specifically designated. Our business day generally closes at 4:00 p.m. Eastern
time. Our business day may close earlier, for example if regular trading on the
New York Stock Exchange closes early. Transfer requests received
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after the close of the business day will take effect at the end of the next
business day.
With regard to the Market Value Adjustment Option, you can specify the
guarantee period from which you wish to transfer. If you request a transfer from
the market value adjustment option, but you do not specify the guarantee period
from which funds are to be taken, then we will transfer funds from the guarantee
period that has the least time remaining until its maturity date.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE
ONE YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. Currently we charge
$25 for each transfer after the twelfth in a contract year, and we have the
right to increase this charge up to $30. (Dollar Cost Averaging and Auto-
Rebalancing transfers do not count toward the 12 free transfers per year.)
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In furtherance of our general
authority to restrict transfers as described above, and without limiting other
actions we may take in the future, we have adopted the following specific
restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such amount
into a particular variable investment option, and within 30 calendar days
thereafter transfer (the "Transfer Out") all or a
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
portion of that amount into another variable investment option, then upon the
Transfer Out, the former variable investment option becomes restricted (the
"Restricted Option"). Specifically, we will not permit subsequent transfers
into the Restricted Option for 90 calendar days after the Transfer Out if the
Restricted Option invests in a non-international fund, or 180 calendar days
after the Transfer Out if the Restricted Option invests in an international
fund. For purposes of this rule, we do not (i) count transfers made in
connection with one of our systematic programs, such as asset allocation and
automated withdrawals and (ii) categorize as a transfer the first transfer
that you make after the contract date, if you make that transfer within 30
calendar days after the contract date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from your
contract at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option into any other variable
investment options or the one-year fixed interest rate option. You can have
these automatic transfers occur monthly, quarterly, semiannually or annually. By
investing amounts on a regular basis instead of investing the total amount at
one time, dollar cost averaging may decrease the effect of market fluctuation on
the investment of your purchase payment. Of course, dollar cost averaging cannot
ensure a profit or protect against loss in declining markets.
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
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Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentage you
select. We will rebalance only the variable investment options that you have
designated. If you also participate in the DCA feature, then the variable
investment option from which you make the DCA transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code), and annuity payments. Scheduled transactions are processed and valued as
of the date they are scheduled, unless the scheduled day is not a business day.
In that case, the transaction will be processed and valued on the next business
day, unless (with respect to required minimum distributions, substantially equal
periodic payments under Section 72(t) of the Code, and annuity payments only),
the next business day falls in the subsequent calendar year, in which case the
transaction will be processed and valued on the prior business day.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the third contract
anniversary (or as required by state law if different). Annuity payments must
begin no later than the contract anniversary coinciding with or next following
the annuitant's 95th birthday (unless we agree to another date).
Upon annuitization, any value in a guarantee period of the market value
adjustment option may be subject to a market value adjustment.
The Strategic Partners Plus 3 variable annuity contract offers an optional
Guaranteed Minimum Income Benefit, which we describe below. Your annuity options
vary depending upon whether you choose this benefit.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1 for a period
shorter than five years, Option 3, or certain other annuity options that we may
make available. We do not deduct a withdrawal charge if you choose Option 1 for
a period of five years or longer or Option 2. For information about withdrawal
charges, see Section 8, "What Are The Expenses Associated With The Strategic
Partners Plus 3 Contract?"
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If an annuity option is not
selected by the annuity date, the Life Income Annuity Option (Option 2,
described below) will automatically be selected unless prohibited by applicable
law. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY PAYMENT
OPTIONS DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE THE OPTIONAL
LIFETIME FIVE INCOME BENEFIT, THERE ARE ADDITIONAL ANNUITY PAYMENT OPTIONS THAT
ARE ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS PROSPECTUS FOR
ADDITIONAL DETAILS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life income annuity option is prohibited by applicable law, then we will pay
you a lump sum in lieu of this option.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year. This option is not
available if you hold your contract in an IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part or all of the contract value that we are
holding at any time.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit cannot be revoked. This feature may not be
available in your state. You may not elect both GMIB and the Lifetime Five
Income Benefit.
The GMIB protected value is calculated daily and is equal to the GMIB roll-up
until the GMIB roll-up either reaches its cap or if we stop applying the annual
interest rate based on the age of the annuitant, number of contract
anniversaries, or number of years since the last GMIB reset, as described below.
At this point, the GMIB protected value will be increased by any subsequent
invested purchase payments and reduced by the effect of withdrawals.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 75 or younger in order for you to elect the Guaranteed
Minimum Income Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.50% for contracts sold on or after January 20, 2004, or
upon subsequent state approval (0.45% for all other contracts), of the
average GMIB protected value described below. In some states this fee may be
lower.
- - Under the contract terms governing the GMIB, we can require GMIB participants
to invest only in designated underlying mutual funds or can require GMIB
participants to invest according to an asset allocation model.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE WAITING PERIOD
IS THE PERIOD EXTENDING FROM THE CONTRACT DATE TO THE 7TH CONTRACT
ANNIVERSARY BUT, IF THE GUARANTEED MINIMUM INCOME BENEFIT HAS BEEN RESET (AS
DESCRIBED BELOW), THE WAITING PERIOD IS THE 7 YEAR PERIOD BEGINNING WITH THE
DATE OF THE MOST RECENT RESET. IN LIGHT OF THIS WAITING PERIOD UPON RESETS,
IT IS NOT RECOMMENDED THAT YOU RESET YOUR GUARANTEED MINIMUM INCOME BENEFIT
IF THE REQUIRED BEGINNING DATE UNDER IRS MINIMUM DISTRIBUTION REQUIREMENTS
WOULD COMMENCE DURING THE 7 YEAR WAITING PERIOD. SEE "MINIMUM DISTRIBUTION
REQUIREMENTS AND PAYMENT OPTION" IN SECTION 10 FOR ADDITIONAL INFORMATION ON
IRS REQUIREMENTS.
Once the waiting period has elapsed, you will have a 30-day period each year,
beginning on the contract anniversary (or in the case of a reset, the
anniversary of the most recent reset), during which you may begin the
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income phase with the Guaranteed Minimum Income Benefit by submitting the
necessary forms in good order to the Prudential Annuity Service Center.
GMIB ROLL-UP
The GMIB roll-up is equal to the invested purchase payments (after a reset, the
contract value at the time of the reset), increased daily at an effective annual
interest rate of 5% starting on the date each invested purchase payment is made,
until the cap is reached (GMIB roll-up cap). We will reduce this amount by the
effect of withdrawals. The GMIB roll-up cap is equal to two times each invested
purchase payment (for a reset, two times the sum of (1) the contract value at
the time of the reset, and (2) any invested purchase payments made subsequent to
the reset).
Even if the GMIB roll-up cap has not been reached, we will nevertheless stop
increasing the GMIB roll-up value by the effective annual interest rate on the
latest of:
- - the contract anniversary coinciding with or next following the annuitant's
80th birthday,
- - the 7th contract anniversary, or
- - 7 years from the most recent GMIB reset (as described below).
However, even if we stop increasing the GMIB roll-up value by the effective
annual interest rate, we will still increase the GMIB protected value by
subsequent invested purchase payments, reduced proportionally by withdrawals.
EFFECT OF WITHDRAWALS
In any contract year when the GMIB protected value is increasing at the rate of
5%, withdrawals will first reduce the GMIB protected value on a
dollar-for-dollar basis, by the same dollar amount of the withdrawal up to the
first 5% of GMIB protected value calculated on the contract anniversary (or,
during the first contract year, on the contract date). Any withdrawals made
after the dollar-for-dollar limit has been reached will proportionally reduce
the GMIB protected value. We calculate the proportional reduction by dividing
the contract value after the withdrawal by the contract value immediately
following the withdrawal of any available dollar-for-dollar amount. The
resulting percentage is multiplied by the GMIB protected value after subtracting
the amount of the withdrawal that does not exceed 5%. In each contract year
during which the GMIB protected value has stopped increasing at the 5% rate,
withdrawals will reduce the GMIB protected value proportionally. The GMIB
roll-up cap is reduced by the sum of all reductions described above.
The following examples of dollar-for-dollar and proportional reductions
assume: 1.) the contract date and the effective date of the GMIB are January 1,
2006; 2.) an initial purchase payment of $250,000; 3.) an initial GMIB protected
value of $250,000; 4.) an initial 200% cap of $500,000; and 5.) an initial
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on February 1, 2006 (in the first contract year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
GMIB protected value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$500,000 to $490,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of
the first contract year is also reduced by the amount withdrawn (from $12,500
to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on March 1, 2006 (still within the first
contract year). Immediately before the withdrawal, the contract value is
$220,000 and the GMIB protected value is $241,941.95. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
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- - The GMIB protected value is first reduced by the Remaining Limit (from
$241,941.95 to $239,441.95).
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
- B is the contract value less the Remaining Limit ($220,000 - $2,500, or
$217,500). The resulting GMIB protected value is: $239,441.95 X (1 -
($7,500/$217,500)), or $231,185.33.
- The GMIB 200% cap is reduced by the sum of all reductions above
($490,000-$2,500-$8,256.62, or $479,243.38).
- - The Remaining Limit is set to zero (0) for the balance of the first contract
year.
EXAMPLE 3. DOLLAR-FOR-DOLLAR LIMIT IN SECOND CONTRACT YEAR
A $10,000 withdrawal is made on the first anniversary of the contract date,
January 1, 2007 (second contract year). Prior to the withdrawal, the GMIB
protected value is $240,837.69. The dollar-for-dollar limit is equal to 5% of
this amount, or $12,041.88. As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The GMIB protected value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $240,837.69 to $230,837.69).
- - The GMIB 200% cap is reduced by the amount withdrawn (i.e., by $10,000, from
$479,243.38 to $469,243.38).
- - The Remaining Limit for the balance of the second contract year is also
reduced by the amount withdrawn (from $12,041.88 to $2,041.88).
GMIB RESET FEATURE
You may elect to "reset" your GMIB protected value to equal your current
contract value twice over the life of the contract. You may only exercise this
reset option if the annuitant has not yet reached his or her 76th birthday. If
you reset, you must wait a new 7-year period from the most recent reset to
exercise the Guaranteed Minimum Income Benefit. Further, we will reset the GMIB
roll-up cap to equal two times the GMIB protected value as of such date.
Additionally, if you reset, we will determine the GMIB payout amount by using
the GMIB guaranteed annuity purchase rates (specified in your contract) based on
the number of years since the most recent reset. These purchase rates may be
less advantageous than the rates that would have applied absent a reset.
PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
(where applicable) of the annuitant (and, if there is one, the co-annuitant).
After we first deduct a charge for any applicable premium taxes that we are
required to pay, the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value -- that is, the value of the contract adjusted
for any market value adjustment minus any charge we impose for premium taxes
and withdrawal charges -- as of the date you exercise the GMIB payout option
applied to the current annuity purchase rates then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a period certain of ten years. In
calculating the amount of the payments under the GMIB, we apply certain assumed
interest rates, equal to 2% annually for a waiting period of 7-9 years, and 2.5%
annually for waiting periods of 10 years or longer for contracts sold on or
after January 20, 2004, or upon subsequent state approval (and 2.5% annually for
a waiting period of 7-9 years, 3% annually for a waiting period of 10-14 years,
and 3.5% annually for waiting periods of 15 years or longer for all other
contracts).
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GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the contract anniversary coinciding with or next
following the annuitant's attainment of age 95 (age 92 for contracts used as a
funding vehicle for IRAs).
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB, such as the annuity purchase rates, (which include
assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing non-GMIB annuity
payout options. Therefore, you may generate higher income payments if you were
to annuitize a lower contract value at the current annuity purchase rates, than
if you were to annuitize under the GMIB with a higher GMIB protected value than
your contract value but at the annuity purchase rates guaranteed under the GMIB.
TERMINATING THE GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit cannot be terminated by the owner once
elected. The GMIB automatically terminates as of the date the contract is fully
surrendered, on the date the death benefit is payable to your beneficiary
(unless your surviving spouse elects to continue the contract), or on the date
that your contract value is transferred to begin making annuity payments. The
GMIB may also be terminated if you designate a new annuitant who would not be
eligible to elect the GMIB based on his or her age at the time of the change.
Upon termination of the GMIB, we will deduct the charge from your contract
value for the portion of the contract year since the prior contract anniversary
(or the contract date if in the first contract year).
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
the life of the annuitant (and possibly co-annuitant) (life annuities). There
are certain assumptions that are common to both fixed period annuities and life
annuities. In each type of annuity, we assume that the value you apply at the
outset toward your annuity payments earns interest throughout the payout period.
For annuity options within the GMIB, this interest rate ranges from 2% to 2.5%
for contracts sold on or after January 20, 2004, or upon subsequent state
approval (and 2.5% to 3.5% for all other contracts). For non-GMIB annuity
options, the guaranteed minimum rate is 3%. The GMIB guaranteed annuity purchase
rates in your contract depict the minimum amounts we will pay (per $1000 of
adjusted contract value). If our current annuity purchase rates on the annuity
date are more favorable to you than the guaranteed rates, we will make payments
based on those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the Income Appreciator
Benefit and non-GMIB annuity options. Generally speaking, in determining the
amount of each annuity payment under a fixed period annuity, we start with the
adjusted contract value, add interest assumed to be earned over the fixed
period, and divide the sum by the number of payments you have requested. The
life expectancy of the annuitant and co-annuitant are relevant to this
calculation only in that we will not allow you to select a fixed period that
exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such a
reduced age, we base our calculations on a younger person, who generally would
live longer and therefore draw life annuity payments over a longer time period.
Given the longer pay-out period, the payments made to the younger person would
be less than those made to an older person. We make two such age adjustments:
1. First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by either
(a) four years, for life annuities under the GMIB sold in contracts on or
after January 20, 2004, or upon subsequent state approval or (b) two years,
with respect to guaranteed payments under life annuities not involving GMIB,
as well as GMIB payments under contracts not described in (a) immediately
above. For the reasons explained above in this section, the four year age
reduction causes a greater reduction in the amount of the annuity payments
than does the two-year age reduction.
2. Second, for life annuities under both versions of GMIB as well as guaranteed
payments under life annuities not involving GMIB, we make a further age
reduction according to the table in your contract entitled "Translation of
Adjusted Age." As indicated in the table, the further into the future the
first annuity payment is, the longer we expect the person receiving those
payments to live, and the more we reduce the annuitant's (or co-annuitant's)
age.
CURRENT ANNUITY PAYMENTS
Immediately above, we have referenced how we determine annuity payments based on
"guaranteed" annuity purchase rates. By "guaranteed" annuity purchase rates, we
mean the minimum annuity purchase rates that are set forth in your annuity
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contract and thus contractually guaranteed by us. "Current" annuity purchase
rates, in contrast, refer to the annuity purchase rates that we are applying to
contracts that are entering the annuity phase at a given point in time. These
current annuity purchase rates vary from period to period, depending on changes
in interest rates and other factors. We do not guarantee any particular level of
current annuity purchase rates. When calculating current annuity purchase rates,
we use the actual age of the annuitant (or co-annuitant), rather than any
reduced age.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner dies. However, if the contract is jointly owned, the owner must name
the joint owner and the joint owner must name the owner as the beneficiary. For
entity-owned contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the owner or joint owner dies during the accumulation phase, we will, upon
receiving the appropriate proof of death and any other needed documentation in
good order (proof of death), pay a death benefit to the beneficiary designated
by the deceased owner or joint owner. If there is a sole owner and there is only
one beneficiary who is the owner's spouse on the date of death, then the
surviving spouse may continue the contract under the Spousal Continuance
Benefit. If there are an owner and joint owner of the contract, and the owner's
spouse is both the joint owner and the beneficiary on the date of death, then,
at the death of the first to die, the death benefit will be paid to the
surviving owner or the surviving owner may continue the contract under the
Spousal Continuance Benefit.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order). If you have purchased the Contract With Credit, we will first deduct
any credit corresponding to a purchase payment made within one year of death.
We impose no market value adjustment on contract value held within the market
value adjustment option when a death benefit is paid.
2) Either the base death benefit, which equals the total invested purchase
payments you have made proportionally reduced by any withdrawals, or, (i) if
you have chosen a Guaranteed Minimum Death Benefit (GMDB), the GMDB protected
value or (ii) if you have chosen the Highest Daily Value Death Benefit, a
death benefit equal to the highest daily value (computed as described below
in this section).
GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole owner or the first to die of
the owner or joint owner during the accumulation phase. You cannot elect a GMDB
option if you choose the Highest Daily Value Death Benefit.
The GMDB protected value option can be equal to the:
- - GMDB roll-up,
- - GMDB step-up, or
- - Greater of the GMDB roll-up and the GMDB step-up.
The GMDB protected value is calculated daily.
GMDB ROLL-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB roll-up is equal to the invested purchase
payments, increased daily at an effective annual interest rate of 5% starting on
the date that each invested purchase payment is made. The GMDB roll-up value
will increase by subsequent invested purchase payments and reduce by the effect
of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the later of:
- - the contract anniversary coinciding with or next following the sole owner's
or older owner's 80th birthday, or
- - the 5th contract anniversary.
However, the GMDB protected value will still increase by subsequent invested
purchase payments and reduce by the effect of withdrawals.
Withdrawals will first reduce the GMDB protected value on a dollar-for-dollar
basis up to the first 5% of
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GMDB protected value calculated on the contract anniversary (on the contract
date in the first contract year), then proportionally by any amounts exceeding
the 5%.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB roll-up is equal to the invested purchase
payments, increased daily at an effective annual interest rate of 3% of all
invested purchase payments, starting on the date that each invested purchase
payment is made. We will increase the GMDB roll-up by subsequent invested
purchase payments and reduce it by the effect of withdrawals.
We stop increasing the GMDB roll-up by the effective annual interest rate on
the 5th contract anniversary. However we will continue to reduce the GMDB
protected value by the effect of withdrawals.
Withdrawals will first reduce the GMDB protected value on a dollar-for-dollar
basis up to the first 3% of GMDB protected value calculated on the contract
anniversary (on the contract date in the first contract year), then
proportionally by any amounts exceeding the 3%.
GMDB STEP-UP
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS LESS THAN AGE 80
ON THE CONTRACT DATE, the GMDB step-up before the first contract anniversary is
the initial invested purchase payment increased by subsequent invested purchase
payments, and proportionally reduced by the effect of withdrawals. The GMDB
step-up on each contract anniversary will be the greater of the previous GMDB
step-up and the contract value as of such contract anniversary. Between contract
anniversaries, the GMDB step-up will increase by invested purchase payments and
reduce proportionally by withdrawals.
We stop increasing the GMDB step-up by any appreciation in the contract value
on the later of:
- - the contract anniversary coinciding with or next following the sole or older
owner's 80th birthday, or
- - the 5th contract anniversary.
However, we still increase the GMDB protected value by subsequent invested
purchase payments and proportionally reduce it by withdrawals.
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The new protected value is $60,000, or
75% of what it was before the withdrawal.
IF THE SOLE OWNER OR THE OLDER OF THE OWNER AND JOINT OWNER IS BETWEEN AGE 80
AND 85 ON THE CONTRACT DATE, the GMDB step-up before the third contract
anniversary is the sum of invested purchase payments, reduced by the effect of
withdrawals. On the third contract anniversary, we will adjust the GMDB step-up
to the greater of the then current GMDB step-up or the contract value as of that
contract anniversary. Thereafter, we will only increase the GMDB protected value
by subsequent invested purchase payments and proportionally reduce it by
withdrawals.
Special rules apply if the beneficiary is the spouse of the owner, and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met, then the
contract can continue, and the spouse will become the new owner of the
contract; or
- - The spouse can receive the death benefit. A surviving spouse who is eligible
for the Spousal Continuance Benefit must choose between that benefit and
receiving the death benefit during the first 60 days following our receipt of
proof of death.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
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Depending on applicable state law, some death benefit options may not be
available or may be subject to certain restrictions under your contract.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies, the Spousal Continuance Benefit may apply. If the contract has an
owner and a joint owner and they are not spouses at the time one dies, we will
pay the death benefit and the contract will end. Joint ownership may not be
allowed in your state.
HIGHEST DAILY VALUE DEATH BENEFIT
The Highest Daily Value Death Benefit (HDV) is a feature under which the death
benefit may be "stepped-up" on a daily basis to reflect increasing contract
value. HDV is currently being offered in those jurisdictions where we have
received regulatory approval. Certain terms and conditions may differ between
jurisdictions once approved. The HDV is not available if you elect the
Guaranteed Minimum Death Benefit. Currently, HDV can only be elected at the time
you purchase your contract. Please note that you may not terminate the HDV death
benefit once elected. Moreover, because this benefit may not be terminated once
elected, you must, as detailed below, keep your contract value allocated to
certain Prudential Series Fund asset allocation portfolios.
Under HDV, the amount of the benefit depends on whether the "target date" is
reached. The target date is reached upon the later of the contract anniversary
coinciding with or next following the elder owner's (or annuitant's, if entity
owned) 80th birthday or five years after the contract date. Prior to the target
date, the death benefit amount is increased on any business day if the contract
value on that day exceeds the most recently determined death benefit amount
under this option. These possible daily adjustments cease on and after the
target date, and instead adjustments are made only for purchase payments and
withdrawals.
IF THE CONTRACT HAS ONE CONTRACT OWNER, the contract owner must be age 79 or
less at the time the HDV is elected. If the contract has joint owners, the older
owner must be age 79 or less. If there are joint owners, death of the owner
refers to the first to die of the joint owners. If the contract is owned by an
entity, the annuitant must be age 79 or less, and death of the contract owner
refers to the death of the annuitant.
Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5, 2005
must allocate contract value to one or more of the following asset allocation
portfolios of American Skandia Trust: AST Capital Growth Asset Allocation
Portfolio, AST Balanced Asset Allocation Portfolio, AST Conservative Asset
Allocation Portfolio, AST Preservation Asset Allocation Portfolio or to the AST
Advanced Strategies Portfolio, AST First Trust Balanced Target Portfolio, or AST
First Trust Capital Appreciation Target Portfolio.
The HDV death benefit depends on whether death occurs before or after the
Death Benefit Target Date.
IF THE CONTRACT OWNER DIES BEFORE THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV as of the contract owner's date of death.
IF THE CONTRACT OWNER DIES ON OR AFTER THE DEATH BENEFIT TARGET DATE, THE DEATH
BENEFIT EQUALS THE GREATER OF:
- - the base death benefit; and
- - the HDV on the Death Benefit Target Date plus the sum of all purchase
payments less the sum of all proportional withdrawals since the Death Benefit
Target Date.
The amount determined by this calculation is increased by any purchase payments
received after the contract owner's date of death and decreased by any
proportional withdrawals since such date.
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CALCULATION OF THE HIGHEST DAILY VALUE DEATH BENEFIT
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV death benefit is calculated. Each
example assumes an initial purchase payment of $50,000. Each example assumes
that there is one contract owner who is age 70 on the contract date.
EXAMPLE WITH MARKET INCREASE AND DEATH BEFORE DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals have been made. On
the date we receive due proof of death, the contract value is $75,000; however,
the Highest Daily Value was $90,000. Assume as well that the contract owner has
died before the Death Benefit Target Date. The death benefit is equal to the
greater of HDV or the base death benefit. The death benefit would be the Highest
Daily Value ($90,000) because it is greater than the amount that would have been
payable under the base death benefit ($75,000).
EXAMPLE WITH WITHDRAWALS
Assume that the contract value has been increasing due to positive market
performance and the contract owner made a withdrawal of $15,000 in contract year
7 when the contract value was $75,000. On the date we receive due proof of
death, the contract value is $80,000; however, the Highest Daily Value ($90,000)
was attained during the fifth contract year. Assume as well that the contract
owner has died before the Death Benefit Target Date. The Death Benefit is equal
to the greater of the Highest Daily Value (proportionally reduced by the
subsequent withdrawal) or the base death benefit.
Highest Daily Value = $90,000 - [$90,000 X $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Base Death Benefit = max [$80,000, $50,000 - ($50,000 X $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The death benefit therefore is $80,000.
EXAMPLE WITH DEATH AFTER DEATH BENEFIT TARGET DATE
Assume that the contract owner's contract value has generally been increasing
due to positive market performance and that no withdrawals had been made prior
to the Death Benefit Target Date. Further assume that the contract owner dies
after the Death Benefit Target Date, when the contract value is $75,000. The
Highest Daily Value on the Death Benefit Target Date was $80,000; however,
following the Death Benefit Target Date, the contract owner made a purchase
payment of $15,000 and later had taken a withdrawal of $5,000 when the contract
value was $70,000. The death benefit is equal to the greater of the Highest
Daily Value on the Death Benefit Target Date plus purchase payments minus
proportional withdrawals after the Death Benefit Target Date or the base death
benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) X $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Base Death Benefit = max [$75,000, ($50,000 + $15,000) - [($50,000 + $15,000) X
$5,000/$70,000]]
= max [$75,000, $60,357]
= $75,000
The death benefit therefore is $88,214.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
CHOICE 1. Lump sum payment of the death benefit. If the beneficiary does not
choose a payout option
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
within sixty days, the beneficiary will receive this payout option.
CHOICE 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the first-to-die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the last to survive of the owner or
joint owner.
If the owner and joint owner are not spouses, any portion of the death
benefit not applied under Choice 3 within one year of the date of death of
the first to die must be distributed within five years of that date of death.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 10, "What Are The Tax Considerations Associated With
The Strategic Partners Plus 3 Contract?"
EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit (EAB) is an optional, supplemental death
benefit that provides a benefit payment upon the death of the sole owner or
first-to-die of the owner or joint owner during the accumulation phase. Any
Earnings Appreciator Benefit payment we make will be in addition to any other
death benefit payment we make under the contract. This feature may not be
available in your state.
The Earnings Appreciator Benefit is designed to provide a beneficiary with
additional funds when we pay a death benefit in order to defray the impact taxes
may have on that payment. Because individual circumstances vary, you should
consult with a qualified tax advisor to determine whether it would be
appropriate for you to elect the Earnings Appreciator Benefit.
If you want the Earnings Appreciator Benefit, you generally must elect it at
the time you apply for the contract. If you elect the Earnings Appreciator
Benefit, you may not later revoke it. You may, if you wish, select both the
Earnings Appreciator Benefit and the Highest Daily Value Death Benefit.
Upon our receipt of proof of death in good order, we will determine an
Earnings Appreciator Benefit by multiplying the Earnings Appreciator Benefit
percentage below by the lesser of: (i) the then-existing amount of earnings
under the contract, or (ii) an amount equal to 3 times the sum of all purchase
payments previously made under the contract.
For purposes of computing earnings and purchase payments under the Earnings
Appreciator Benefit, we calculate earnings as the difference between the
contract value and the sum of all purchase payments. Withdrawals reduce earnings
first, then purchase payments, on a dollar-for-dollar basis.
EAB percentages are as follows:
- - 40% if the owner is age 70 or younger on the date the application is signed.
- - 25% if the owner is between ages 71 and 75 on the date the application is
signed.
- - 15% if the owner is between ages 76 and 79 on the date the application is
signed.
If the contract is owned jointly, the age of the older of the owner or joint
owner determines the EAB percentage.
If the surviving spouse is continuing the contract in accordance with the
Spousal Continuance Benefit (See
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"Spousal Continuance Benefit" below), the following conditions apply:
- - In calculating the Earnings Appreciator Benefit, we will use the age of the
surviving spouse at the time that the Spousal Continuance Benefit is
activated to determine the applicable EAB percentage.
- - We will not allow the surviving spouse to continue the Earnings Appreciator
Benefit (or bear the charge associated with this benefit) if he or she is age
80 or older on the date that the Spousal Continuance Benefit is activated.
- - If the Earnings Appreciator Benefit is continued, we will calculate any
applicable Earnings Appreciator Benefit payable upon the surviving spouse's
death by treating the contract value (as adjusted under the terms of the
Spousal Continuance Benefit) as the first purchase payment.
TERMINATING THE EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract,
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit,
- - the date the contract terminates, or
- - the date you annuitize the contract.
Upon termination of the Earnings Appreciator Benefit, we cease imposing the
associated charge.
SPOUSAL CONTINUANCE BENEFIT
This benefit is available if, on the date we receive proof of the owner's death
in good order, (1) there is only one owner of the contract and there is only one
beneficiary who is the owner's spouse; or (2) there are an owner and joint owner
of the contract, and the joint owner is the owner's spouse and the owner's
beneficiary under the contract. In no event, however, can the annuitant be older
than the maximum age for annuitization on the date of the owner's death, nor can
the surviving spouse be older than 95 on the date of the owner's death. Assuming
the above conditions are present, the surviving spouse can elect the Spousal
Continuance Benefit, but must do so no later than 60 days after furnishing proof
of the owner's death in good order.
Upon activation of the Spousal Continuance Benefit, the contract value is
adjusted to equal the amount of the death benefit to which the surviving spouse
would have been entitled. This contract value will serve as the basis for
calculating any death benefit payable upon the death of the surviving spouse. We
will allocate any increase in the adjusted contract value among the variable,
fixed interest rate or market value adjustment options in the same proportions
that existed immediately prior to the spousal continuance adjustment. We will
waive the $1,000 minimum requirement for the market value adjustment option.
Under the Spousal Continuance Benefit, we waive any potential withdrawal
charges applicable to purchase payments made prior to activation of the Spousal
Continuance Benefit. However, we will continue to impose withdrawal charges on
purchase payments made after activation of this benefit. In addition, contract
value allocated to the market value adjustment option will remain subject to a
potential market value adjustment.
IF YOU ELECTED THE BASE DEATH BENEFIT, then upon activation of the Spousal
Continuance Benefit, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the sum of all invested purchase payments (adjusted for withdrawals),
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB ROLL-UP, we
will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB roll-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GMDB
STEP-UP, we will adjust the contract value to equal the greater of:
- - the contract value, or
- - the GMDB step-up,
plus the amount of any applicable Earnings Appreciator Benefit.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
IF YOU HAVE ELECTED THE GUARANTEED MINIMUM DEATH BENEFIT WITH THE GREATER OF
THE GMDB ROLL-UP AND GMDB STEP-UP, we will adjust the contract value to equal
the greatest of:
- - the contract value,
- - the GMDB roll-up, or
- - the GMDB step-up,
plus the amount of any applicable Earnings Appreciator Benefit.
IF YOU HAVE ELECTED THE HIGHEST DAILY VALUE DEATH BENEFIT, we will adjust the
contract value to equal the greater of:
- - the contract value, or
- - the Highest Daily Value,
plus the amount of any applicable Earnings Appreciator Benefit.
After we have made the adjustment to contract value set out immediately
above, we will continue to compute the GMDB roll-up and the GMDB step-up, or HDV
death benefit (as applicable), under the surviving spousal owner's contract, and
will do so in accordance with the preceding discussion in this section.
If the contract is being continued by the surviving spouse, the attained age
of the surviving spouse will be the basis used in determining the death benefit
payable under the Guaranteed Minimum Death Benefit or Highest Daily Value Death
Benefit provisions of the contract. The contract may not be continued upon the
death of a spouse who had assumed ownership of the contract through the exercise
of the Spousal Continuance Benefit.
IF YOU ELECTED THE GUARANTEED MINIMUM INCOME BENEFIT, it will be continued
for the surviving spousal owner. All provisions of the Guaranteed Minimum Income
Benefit (i.e., waiting period, GMIB roll-up cap, etc.) will remain the same as
on the date of the owner's death. If the GMIB reset feature was never exercised,
the surviving spousal owner can exercise the GMIB reset feature twice. If the
original owner had previously exercised the GMIB reset feature once, the
surviving spousal owner can exercise the GMIB reset once. However, the surviving
spouse (or new annuitant designated by the surviving spouse) must be under 76
years of age at the time of reset. If the original owner had previously
exercised the GMIB reset feature twice, the surviving spousal owner may not
exercise the GMIB reset at all. If the attained age of the surviving spouse at
activation of the Spousal Continuance Benefit, when added to the remainder of
the GMIB waiting period to be satisfied, would preclude the surviving spouse
from utilizing the Guaranteed Minimum Income Benefit, we will revoke the
Guaranteed Minimum Income Benefit under the contract at that time and we will no
longer charge for that benefit.
IF YOU ELECTED THE LIFETIME FIVE INCOME BENEFIT, on the owner's death, the
Lifetime Five Income Benefit will end. However, if the owner's surviving spouse
would be eligible to acquire the Lifetime Five Income Benefit as if he/she were
a new purchaser, then the surviving spouse may elect the Lifetime Five Income
Benefit under the Spousal Continuance Benefit. The surviving spouse (or new
annuitant designated by the surviving spouse) must be at least 45 years of age
at the time of election.
IF YOU ELECTED THE INCOME APPRECIATOR BENEFIT, on the owner's death (or
first-to-die, in the case of joint owners), the Income Appreciator Benefit will
end unless the contract is continued by the deceased owner's surviving spouse
under the Spousal Continuance Benefit. If the contract is continued by the
surviving spouse, we will continue to pay the balance of any Income Appreciator
Benefit payments until the earliest to occur of the following: (a) the date on
which 10 years' worth of IAB automatic withdrawal payments or IAB credits, as
applicable, have been paid, (b) the latest date on which annuity payments would
have had to have commenced had the owner not died (i.e., the contract
anniversary coinciding with or next following the annuitant's 95th birthday), or
(c) the contract anniversary coinciding with or next following the annuitants'
surviving spouse's 95th birthday.
If the Income Appreciator Benefit has not been in force for 7 contract years,
the surviving spouse may not activate the benefit until it has been in force for
7 contract years. If the attained age of the surviving spouse at activation of
the Spousal Continuance Benefit, when added to the remainder of the Income
Appreciator Benefit waiting period to be satisfied, would
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
preclude the surviving spouse from utilizing the Income Appreciator Benefit, we
will revoke the Income Appreciator Benefit under the contract at that time and
we will no longer charge for that benefit. If the Income Appreciator Benefit has
been in force for 7 contract years or more, but the benefit has not been
activated, the surviving spouse may activate the benefit at any time after the
contract has been continued. If the Income Appreciator Benefit is activated
after the contract is continued by the surviving spouse, the Income Appreciator
Benefit calculation will exclude any amount added to the contract at the time of
spousal continuance resulting from any death benefit value exceeding the
contract value.
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WHAT IS THE LIFETIME FIVE
INCOME BENEFIT?
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LIFETIME FIVE INCOME BENEFIT
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an initial
principal value (called the "Protected Withdrawal Value"), regardless of the
impact of market performance on your contract value, subject to our rules
regarding the timing and amount of withdrawals. There are two options -- one is
designed to provide an annual withdrawal amount for life (the "Life Income
Benefit") and the other is designed to provide a greater annual withdrawal
amount (than the first option) as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the Withdrawal Benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the annuity has a contract value and Lifetime Five is in effect. Certain
benefits under Lifetime Five may remain in effect even if the contract value is
zero. The option may be appropriate if you intend to make periodic withdrawals
from your contract and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals -- the guarantees are not lost if you withdraw less than the maximum
allowable amount each year. Lifetime Five is only being offered in those
jurisdictions where we have received regulatory approval and will be offered
subsequently in other jurisdictions when we receive regulatory approval in those
jurisdictions. Certain terms and conditions may differ between jurisdictions
once approved.
Lifetime Five is subject to certain restrictions described below.
- - Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Lifetime Five Income Benefit.
- - The annuitant must be at least 45 years old when Lifetime Five is elected.
- - Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit or Income Appreciator Benefit.
- - Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5,
2005 must allocate contract value to one or more of the following asset
allocation portfolios of American Skandia Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, and AST Preservation Asset
Allocation Portfolio or to the AST Advanced Strategies Portfolio, AST First
Trust Balanced Target Portfolio, or AST First Trust Capital Appreciation
Target Portfolio.
PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the contract following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Lifetime Five growing at 5% per year from
the date of your election, plus any subsequent purchase payments growing at 5%
per year from the application of the purchase payment to your contract, until
the earlier of the date of your first withdrawal or the 10th anniversary of the
benefit effective date, (B) the contract value as of the date of the first
withdrawal from your contract, prior to the withdrawal, and (C) the highest
contract value on each contract anniversary prior to the first withdrawal or on
the first 10 contract anniversaries after the benefit effective date if earlier
than the date of your first withdrawal. With
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
respect to (A) and (C) above, each value is increased by the amount of any
subsequent purchase payments. In determining Protected Withdrawal Value, we
include, as part of purchase payments, the amount of any credits granted with
respect to such purchase payments for the Contract With Credit.
- - If you elect Lifetime Five at the time you purchase your contract, the
contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Lifetime Five Benefit, the
contract value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your contract value is greater than the Protected Withdrawal
Value. If you elected Lifetime Five prior to March 20, 2006 and that original
election remains in effect, then you are eligible to step-up the Protected
Withdrawal Value on or after the 5th anniversary of the first withdrawal under
Lifetime Five. Under contracts with Lifetime Five elected prior to March 20,
2006, the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary following the preceding step-up. If you elected Lifetime Five on or
after March 20, 2006, then you are eligible to step-up the Protected Withdrawal
Value on or after the 3rd anniversary of the first withdrawal under Lifetime
Five. Under contracts with Lifetime Five elected on or after March 20, 2006, the
Protected Withdrawal Value can be stepped up again on or after the 3rd
anniversary following the preceding step-up. In either scenario (i.e., elections
before or after March 20, 2006) if you elect to step-up the Protected Withdrawal
Value, and on the date you elect to step-up, the charges under Lifetime Five
have changed for new purchasers, you may be subject to the new charge going
forward.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary (5th
contract anniversary if the benefit was elected prior to March 20, 2006)
following the later of the first withdrawal under the benefit or the prior
step-up. At this time, your Protected Withdrawal Value will be stepped-up only
if 5% of the contract value exceeds the Annual Income Amount by 5% or more. If
5% of the contract value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive contract
anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd (5th if the benefit was elected prior to March
20, 2006) contract anniversary following the most recent step-up. If, on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current contract value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your contract value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount (as described below) are less than they would be if we
did not reflect the step-up in Protected Withdrawal Value, then we will increase
these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected Withdrawal
Value and on the greater of a "dollar-for-dollar" basis or a pro rata basis for
withdrawals in a contract year in
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
excess of that amount until the Protected Withdrawal Value is reduced to zero.
At that point, the Annual Withdrawal Amount will be zero until such time (if
any) as the contract reflects a Protected Withdrawal Value (for example, due to
a step-up or additional purchase payments being made into the contract).
ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will not
reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of the
Excess Income to the contract value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of the
withdrawal, including any withdrawal charges that may apply. A withdrawal can be
considered Excess Income under the Life Income Benefit even though it does not
exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect
a step-up, your Annual Income Amount increases to equal 5% of your contract
value after the step-up if such amount is greater than your Annual Income
Amount. Your Annual Income Amount also increases if you make additional purchase
payments. The amount of the increase is equal to 5% of any additional purchase
payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the purchase payment is made. A
determination of whether you have exceeded your Annual Income Amount is made at
the time of each withdrawal; therefore, a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
Excess Withdrawal to the contract value immediately prior to such withdrawal
(see the examples of this calculation below). Reductions include the actual
amount of the withdrawal, including any withdrawal charges that may apply. When
you elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
contract value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional purchase payments. The amount of the increase is equal to 7% of any
additional purchase payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each contract year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
Benefit in any contract year, you cannot carry-over the unused portion of the
Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of $250,000;
3.) the contract value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the contract value is equal to $263,000;
and 5.) the contract value on February 1, 2010 is equal to $280,000. The values
set forth here are purely hypothetical, and do not reflect the charge for
Lifetime Five.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484.33
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250
- - Annual Income Amount for future contract years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current contract year = $0
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- - Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future contract years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/contract value
before Excess Withdrawal X Annual Withdrawal Amount = $6,450/($263,000 -
$18,550) X $18,550 = $489
- - Annual Withdrawal Amount for future contract years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250
= $623
- - Annual Income Amount for future contract years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater of
a dollar-for-dollar reduction or a proportional reduction.
- - Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal/contract value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
- - Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 3 years, the Protected Withdrawal Value on February 1,
2010 would be reduced to $225,250 [$265,000 - ($13,250 X 3)]. If a step-up is
elected on February 1, 2010, then the following values would result:
- - Protected Withdrawal Value = contract value on February 1, 2010 = $280,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value is
5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000. If the step-up request on February 1, 2010 was due to
the election of the auto step-up feature, we would first check to see if an
auto step-up should occur by checking to see if 5% of the Contract Value
exceeds the Annual Income Amount by 5% or more. 5% of the Contract Value is
equal to 5% of $280,000, which is $14,000. 5% of the Annual Income Amount
($13,250) is $662.50, which added to the Annual Income Amount is $13,912.50.
Since 5% of the Contract Value is greater than $13,912.50, the step-up would
still occur in this scenario, and all of the values would be increased as
indicated above.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value. Current
Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore, the Annual
Withdrawal Amount is increased to $19,600.
BENEFITS UNDER LIFETIME FIVE
- - If your contract value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your contract value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent
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contract years we make payments that equal either the Annual Income Amount or
the Annual Withdrawal Amount. You will not be able to change the option after
your election and no further purchase payments will be accepted under your
contract. If you do not make an election, we will pay you annually under the
Life Income Benefit. To the extent that cumulative withdrawals in the current
contract year that reduced your contract value to zero are more than the
Annual Income Amount but less than or equal to the Annual Withdrawal Amount
and amounts are still payable under the Withdrawal Benefit, you will receive
the payments under the Withdrawal Benefit. In the year of a withdrawal that
reduced your contract value to zero, we will make an additional payment to
equal any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your contract value equals zero no
further purchase payments will be accepted under your contract.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected Withdrawal
Value, you can elect one of the following three options:
1. apply your contract value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with five
payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the contract value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the contract value or surrender value,
but any withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable withdrawal charges). If you surrender your
contract, you will receive the current contract value, not the Protected
Withdrawal Value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides a
guarantee that if your contract value declines due to market performance, you
will be able to receive
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your Protected Withdrawal Value or Annual Income Amount in the form of
periodic benefit payments.
ELECTION OF LIFETIME FIVE
Lifetime Five can be elected at the time you purchase your contract, or after
the contract date. Elections of Lifetime Five are subject to our eligibility
rules and restrictions. The contract owner's contract value as of the date of
election will be used as the basis to calculate the initial Protected Withdrawal
Value, the initial Annual Withdrawal Amount, and the initial Annual Income
Amount.
TERMINATION OF LIFETIME FIVE
Lifetime Five terminates automatically when your Protected Withdrawal Value and
Annual Income Amount reach zero. You may terminate Lifetime Five at any time by
notifying us. If you terminate Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
- - upon your surrender of the contract,
- - upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five benefit if your spouse elects the spousal continuance option
and your spouse would then be eligible to elect the benefit as if he/she were
a new purchaser),
- - upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
- - upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes the
benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you will only be permitted to
re-elect the benefit or elect the Spousal Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and
prior to March 20, 2006, and you terminate Lifetime Five, there will be no
waiting period before you can re-elect the benefit or elect Spousal Lifetime
Five. However, once you choose to re-elect/elect, the waiting period described
above will apply to subsequent re-elections. If you elected Lifetime Five after
the time you purchased your contract, but prior to March 20, 2006, and you
terminate Lifetime Five, you must wait until the contract anniversary following
your cancellation before you can re-elect the benefit or elect Spousal Lifetime
Five. Once you choose to re-elect/elect, the waiting period described above will
apply to subsequent re-elections. We reserve the right to limit the
re-election/election frequency in the future. Before making any such change to
the re-election/election frequency, we will provide prior notice to contract
owners who have an effective Lifetime Five Income Benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments
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do not trigger any penalty or excise taxes due to tax considerations such as
minimum distribution requirements.
SPOUSAL LIFETIME FIVE INCOME BENEFIT
The Spousal Lifetime Five Income Benefit (Spousal Lifetime Five) described below
is only being offered in those jurisdictions where we have received regulatory
approval and will be offered subsequently in other jurisdictions when we receive
regulatory approval in those jurisdictions. Certain terms and conditions may
differ between jurisdictions once approved. Currently, if you elect Spousal
Lifetime Five and subsequently terminate the benefit, there will be a
restriction on your ability to re-elect Spousal Lifetime Five and Lifetime Five.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit. Spousal Lifetime Five must be elected based on two Designated Lives, as
described below. Each Designated Life must be at least 55 years old when the
benefit is elected. Spousal Lifetime Five is not available if you elect any
other optional living or death benefit. As long as your Spousal Lifetime Five
Income Benefit is in effect, you must allocate your contract value in accordance
with the then permitted and available option(s).
We offer a benefit that guarantees until the later death of two natural
persons that are each other's spouses at the time of election of Spousal
Lifetime Five and at the first death of one of them (the "Designated Lives",
each a "Designated Life") the ability to withdraw an annual amount (Spousal Life
Income Benefit) equal to a percentage of an initial principal value (the
"Protected Withdrawal Value") regardless of the impact of market performance on
the contract value, subject to our rules regarding the timing and amount of
withdrawals. The Spousal Life Income Benefit may remain in effect even if the
contract value is zero. Spousal Lifetime Five may be appropriate if you intend
to make periodic withdrawals from your annuity, wish to ensure that market
performance will not affect your ability to receive annual payments and you wish
either spouse to be able to continue the Spousal Life Income Benefit after the
death of the first. You are not required to make withdrawals as part of the
benefit--the guarantees are not lost if you withdraw less than the maximum
allowable amount each year under the rules of the benefit.
INITIAL PROTECTED WITHDRAWAL VALUE
The initial Protected Withdrawal Value is used to determine the amount of the
initial annual payment under the Spousal Life Income Benefit. The initial
Protected Withdrawal Value is determined as of the date you make your first
withdrawal under the contract following your election of Spousal Lifetime Five.
The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Spousal Lifetime Five growing at 5% per
year from the date of your election, plus any subsequent purchase payments
growing at 5% per year from the application of the purchase payment to your
contract, until the earlier of the date of your first withdrawal or the 10th
anniversary of the benefit effective date, (B) the contract value as of the date
of the first withdrawal from your contract, prior to the withdrawal, and (C) the
highest contract value on each contract anniversary prior to the first
withdrawal or on the first 10 contract anniversaries after the benefit effective
date if earlier than the date of your first withdrawal. With respect to (A) and
(C) above, each value is increased by the amount of any subsequent purchase
payments. In determining Protected Withdrawal Value, we include, as part of
purchase payments, the amount of any credits granted with respect to such
purchase payments.
- - If you elect Spousal Lifetime Five at the time you purchase your contract,
the contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Spousal Lifetime Five
Benefit, the contract value on the date of your election of Spousal Lifetime
Five will be used to determine the initial Protected Withdrawal Value.
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ANNUAL INCOME AMOUNT UNDER THE SPOUSAL LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Spousal Lifetime Five, if your cumulative withdrawals in
a contract year are less than or equal to the Annual Income Amount, they will
not reduce your Annual Income Amount in subsequent contract years, but any such
withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in
that contract year. If your cumulative withdrawals are in excess of the Annual
Income Amount ("Excess Income"), your Annual Income Amount in subsequent years
will be reduced (except with regard to required minimum distributions) by the
result of the ratio of the Excess Income to the contract value immediately prior
to such withdrawal (see examples of this calculation below). Reductions include
the actual amount of the withdrawal, including any withdrawal charges that may
apply.
You may elect to step-up your Annual Income Amount if, due to positive market
performance, 5% of your contract value is greater than the Annual Income Amount.
You are eligible to step-up the Annual Income Amount on or after the 3rd
anniversary of the first withdrawal under Spousal Lifetime Five. The Annual
Income Amount can be stepped up again on or after the 3rd anniversary of the
preceding step-up. If you elect to step-up the Annual Income Amount, and on the
date you elect to step-up, the charges under Spousal Lifetime Five have changed
for new purchasers, you may be subject to the new charge at the time of such
step-up. When you elect a step-up, your Annual Income Amount increases to equal
5% of your contract value after the step-up. Your Annual Income Amount also
increases if you make additional purchase payments. The amount of the increase
is equal to 5% of any additional purchase payments. Any increase will be added
to your Annual Income Amount beginning on the day that the step-up is effective
or the purchase payment is made. A determination of whether you have exceeded
your Annual Income Amount is made at the time of each withdrawal; therefore a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
An optional automatic step-up ("Auto Step-Up") feature is available for the
Spousal Lifetime Five benefit. This feature may be elected at the time the
benefit is elected or at any time while the benefit is in force. If you elect
this feature, the first Auto Step-Up opportunity will occur on the 3rd Contract
Anniversary following the later of the first withdrawal under the benefit or the
prior step-up. At this time, your Annual Income Amount will only be stepped-up
if 5% of the Contract Value exceeds the Annual Income Amount by 5% or more. If
5% of the Contract Value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive Contract
Anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd Contract Anniversary following the most recent
step-up. If, on the date that we implement an Auto Step-Up to your Annual Income
Amount, the charge for Spousal Lifetime Five has changed for new purchasers, you
may be subject to the new charge at the time of such step-up.
Spousal Lifetime Five does not affect your ability to make withdrawals under
your contract or limit your ability to request withdrawals that exceed the
Annual Income Amount. Under Spousal Lifetime Five, if your cumulative
withdrawals in a contract year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent contract
years, but any such withdrawals will reduce the Annual Income Amount on a
dollar-for-dollar basis in that contract year.
If, cumulatively, you withdraw an amount less than the Annual Income Amount
under Spousal Life Income Benefit in any contract year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent contract years.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Annual Income Amount assume: 1.) the contract date and the
effective date of Spousal Lifetime Five are February 1,
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2005; 2.) an initial purchase payment of $250,000; 3.) the contract value on
February 1, 2006 is equal to $265,000; 4.) the first withdrawal occurs on March
1, 2006 when the contract value is equal to $263,000; and 5.) the contract value
on February 1, 2010 is equal to $280,000. The values set forth here are purely
hypothetical, and do not reflect the charge for the Spousal Lifetime Income
Benefit.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit
(5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250 Annual Income Amount for future contract years remains at $13,250
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
If $15,000 was withdrawn (more than the Annual Income Amount) on March 1, 2006,
then the following values would result:
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/Contract Value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
EXAMPLE 3. STEP-UP OF THE ANNUAL INCOME AMOUNT
If a step-up of the Annual Income Amount is requested on February 1, 2010, the
request will be accepted because 5% of the contract value, which is $14,000 (5%
of $280,000), is greater than the Annual Income Amount of $13,250. The new
Annual Income Amount will be equal to $14,000. If the step-up request was due to
the election of the auto step-up feature, the step-up should still occur because
5% of Contract Value would exceed the Annual Income Amount by more than 5% (5%
of $13,250 = $662.50; $13,250 + 662.50 = $13,912.50; $14,000 > $13,912.50).
BENEFITS UNDER SPOUSAL LIFETIME FIVE
- - To the extent that your contract value was reduced to zero as a result of
cumulative withdrawals that are equal to or less than the Annual Income
Amount and amounts are still payable under the Spousal Life Income Benefit,
we will make an additional payment for that contract year equal to the
remaining Annual Income Amount for the contract year, if any. Thus, in that
scenario, the remaining Annual Income Amount would be payable even though
your contract value was reduced to zero. In subsequent contract years we make
payments that equal the Annual Income Amount as described above. No further
purchase payments will be accepted under your contract. We will make payments
until the first of the Designated Lives to die, and will continue to make
payments until the death of the second Designated Life as long as the
Designated Lives were spouses at the time of the first death. To the extent
that cumulative withdrawals in the current contract year that reduced your
contract value to zero are more than the Annual Income Amount, the Spousal
Life Income Benefit terminates and no additional payments will be made.
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- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years, you can elect one of the following
two options:
1. apply your contract value to any annuity option available; or
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We will make
payments until the first of the Designated Lives to die, and will continue
to make payments until the death of the second Designated Life as long as
the Designated Lives were spouses at the time of the first death.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a joint and survivor or single (as
applicable) life fixed annuity with five payments certain using the same
basis that is used to calculate the greater of the annuity rates then
currently available or the annuity rates guaranteed in your contract. The
amount that will be applied to provide such annuity payments will be the
greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the same basis that is used to calculate
the single life fixed annuity rates guaranteed in your contract; and
2. the contract value.
- - If no withdrawal was ever taken, we will determine an initial Protected
Withdrawal Value and calculate an Annual Income Amount as if you made your
first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Spousal Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Spousal Lifetime Five is in effect will be treated,
for tax purposes, in the same way as any other withdrawals under the
contract. Spousal Lifetime Five does not directly affect the contract value
or surrender value, but any withdrawal will decrease the contract value by
the amount of the withdrawal (plus any applicable withdrawal charges). If you
surrender your contract, you will receive the current surrender value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Spousal Lifetime Five. Spousal Lifetime
Five provides a guarantee that if your contract value declines due to market
performance, you will be able to receive your Annual Income Amount in the
form of periodic benefit payments.
- - You must allocate your contract value in accordance with the then available
option(s) that we may permit in order to elect and maintain Spousal Lifetime
Five.
- - There may be circumstances where you will continue to be charged the full
amount for Spousal Lifetime Five even when the benefit is only providing a
guarantee of income based on one life with no survivorship.
- - In order for the surviving Designated Life to continue Spousal Lifetime Five
upon the death of an owner, the Designated Life must elect to assume
ownership of the contract under the spousal continuation benefit.
ELECTION OF AND DESIGNATIONS OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five can only be elected based on two Designated Lives.
Designated Lives must be natural persons who are each other's spouses at the
time of election of the benefit and at the death of the first of the Designated
Lives to die. Currently, the benefit may only be elected where the contract
owner, annuitant and beneficiary designations are as follows:
- - One contract owner, where the annuitant and the contract owner are the same
person and the beneficiary is the contract owner's spouse. The contract
owner/annuitant and the beneficiary each
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must be at least 55 years old at the time of election; or
- - Co-contract owners, where the contract owners are each other's spouses. The
beneficiary designation must be the surviving spouse. The first named
contract owner must be the annuitant. Both contract owners must each be 55
years old at the time of election.
No ownership changes or annuitant changes will be permitted once this benefit is
elected. However, if the contract is co-owned, the contract owner that is not
the annuitant may be removed without affecting the benefit.
Spousal Lifetime Five can be elected at the time that you purchase your
contract. We also offer existing contract owners the option to elect Spousal
Lifetime Five after the contract date of their contract, subject to our
eligibility rules and restrictions. Your contract value as of the date of
election will be used as a basis to calculate the initial Protected Withdrawal
Value and the Annual Income Amount.
Currently, if you terminate Spousal Lifetime Five, you will only be permitted
to re-elect the benefit or elect the Lifetime Five Income Benefit on any
anniversary of the contract date that is at least 90 calendar days from the date
the benefit was last terminated.
We reserve the right to further limit the election frequency in the future.
Before making any such change to the election frequency, we will provide prior
notice to contract owners who have an effective Spousal Lifetime Five Income
Benefit.
TERMINATION OF SPOUSAL LIFETIME FIVE
Spousal Lifetime Five terminates automatically when your Annual Income Amount
equals zero. You may terminate Spousal Lifetime Five at any time by notifying
us. If you terminate Spousal Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective and certain
restrictions on re-election of the benefit will apply as described above. We
reserve the right to further limit the frequency election in the future. Spousal
Lifetime Five terminates upon your surrender of the contract, upon the first
Designated Life to die if the contract is not continued, upon the second
Designated Life to die or upon your election to begin receiving annuity
payments.
The charge for Spousal Lifetime Five will no longer be deducted from your
contract value upon termination of the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your contract beginning
after age 70 1/2. Roth IRAs are not subject to these rules during the contract
owner's lifetime. The amount required under the Code may exceed the Annual
Income Amount, which will cause us to increase the Annual Income Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. In addition, the amount and duration of payments
under the annuity payment and death benefit provisions may be adjusted so that
the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
6:
WHAT IS THE
INCOME APPRECIATOR BENEFIT?
- --------------------------------------------------------------------------------
INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit (IAB) is an optional, supplemental income benefit
that provides an additional income amount during the accumulation period or upon
annuitization. The Income Appreciator Benefit is designed to provide you with
additional funds that can be used to help defray the impact taxes may have on
distributions from your contract. IAB may be suitable for you in other
circumstances as well, which you can discuss with your registered
representative. Because individual circumstances vary, you should consult with a
qualified tax advisor to determine whether it would be appropriate for you to
elect the Income Appreciator Benefit.
If you want the Income Appreciator Benefit, you generally must elect it when
you make your initial purchase payment. Once you elect the Income Appreciator
Benefit, you may not later revoke it.
- - The annuitant must be 75 or younger in order for you to elect the Income
Appreciator Benefit.
- - If you choose the Income Appreciator Benefit, we will impose an annual charge
equal to 0.25% of your contract value. See "What Are The Expenses Associated
With The Strategic Partners Plus 3 Contract?" in Section 8.
ACTIVATION OF THE INCOME APPRECIATOR BENEFIT
YOU CAN ACTIVATE THE INCOME APPRECIATOR BENEFIT AT ANY TIME AFTER IT HAS BEEN IN
FORCE FOR SEVEN YEARS. To activate the Income Appreciator Benefit, you must send
us a written request in good order.
Once activated, you can receive the Income Appreciator Benefit:
- - IAB OPTION 1 - at annuitization as part of an annuity payment;
- - IAB OPTION 2 - during the accumulation phase through the IAB automatic
withdrawal payment program; or
- - IAB OPTION 3 - during the accumulation phase as an Income Appreciator Benefit
credit to your contract over a 10-year period.
Income Appreciator Benefit payments are treated as earnings and may be
subject to tax upon withdrawal. See Section 10, "What Are The Tax Considerations
Associated With The Strategic Partners Plus 3 Contract?"
IF YOU DO NOT ACTIVATE THE BENEFIT PRIOR TO THE MAXIMUM ANNUITIZATION AGE YOU
MAY LOSE ALL OR PART OF THE IAB.
CALCULATION OF THE INCOME APPRECIATOR BENEFIT
We will calculate the Income Appreciator Benefit amount as of the date we
receive your written request in good order (or, for IAB Option 1, on the annuity
date). We do this by multiplying the current earnings in the contract by the
applicable Income Appreciator Benefit percentage based on the number of years
the Income Appreciator Benefit has been in force. For purposes of calculating
the Income Appreciator Benefit:
- - earnings are calculated as the difference between the contract value and the
sum of all purchase payments;
- - earnings do not include (1) any amount added to the contract value as a
result of the Spousal Continuance Benefit, or (2) if we were to permit you to
elect the Income Appreciator Benefit after the contract date, any earnings
accrued under the contract prior to that election;
- - withdrawals reduce earnings first, then purchase payments, on a
dollar-for-dollar basis;
- - the table below shows the Income Appreciator Benefit percentages
corresponding to the number of years the Income Appreciator Benefit has been
in force.
<Table>
<Caption>
NUMBER OF YEARS INCOME
INCOME APPRECIATOR APPRECIATOR
BENEFIT BENEFIT
HAS BEEN IN FORCE PERCENTAGE
------------------ -----------
0-6 0%
7-9 15%
10-14 20%
15+ 25%
</Table>
IAB OPTION 1 -- INCOME APPRECIATOR BENEFIT AT ANNUITIZATION
Under this option, if you choose to activate the Income Appreciator Benefit at
annuitization, we will calculate the Income Appreciator Benefit amount on the
annuity
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
date and add it to the adjusted contract value for purposes of determining the
amount available for annuitization. You may apply this amount to any annuity or
settlement option over the lifetime of the annuitant, joint annuitants, or a
period certain of at least 15 years (but not to exceed life expectancy).
UPON ANNUITIZATION, YOU MAY LOSE ALL OR A PORTION OF THE INCOME APPRECIATOR
BENEFIT IF YOU CHOOSE AN ANNUITY SETTLEMENT OPTION OTHER THAN ANY LIFETIME
PAYOUT OPTION OR PERIOD CERTAIN OPTION FOR AT LEAST 15 YEARS. IN SUCH INSTANCES,
WE WOULD NOT REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
EFFECT OF INCOME APPRECIATOR BENEFIT ON GUARANTEED MINIMUM INCOME BENEFIT
If you exercise the Guaranteed Minimum Income Benefit feature and an Income
Appreciator Benefit amount remains payable under your contract, the value we use
to calculate the annuity payout amount will be the greater of:
1. the adjusted contract value plus the remaining Income Appreciator Benefit
amount, calculated at current IAB annuitization rates; or
2. the GMIB protected value plus the remaining Income Appreciator Benefit
amount, calculated using the GMIB guaranteed annuity purchase rates shown in
the contract.
If you exercise the Guaranteed Minimum Income Benefit feature and activate
the Income Appreciator Benefit at the same time, you must choose among the
Guaranteed Minimum Income Benefit annuity payout options available at the time.
TERMINATING THE INCOME APPRECIATOR BENEFIT
The Income Appreciator Benefit will terminate on the earliest of:
- - the date you make a total withdrawal from the contract;
- - the date a death benefit is payable if the contract is not continued by the
surviving spouse under the Spousal Continuance Benefit;
- - the date the Income Appreciator Benefit amount is reduced to zero (generally
ten years after activation) under IAB Options 2 and 3;
- - the date of annuitization; or
- - the date the contract terminates.
Upon termination of the Income Appreciator Benefit, we cease imposing the
associated charge.
INCOME APPRECIATOR BENEFIT OPTIONS DURING THE ACCUMULATION PHASE
You may choose IAB Option 1 at annuitization, but you may instead choose IAB
Options 2 or 3 during the accumulation phase of your contract. Income
Appreciator Benefit payments under IAB Options 2 and 3 will begin on the same
day of the month as the contract date, beginning with the next month following
our receipt of your request in good order. Under IAB Options 2 and 3, you can
choose to have the Income Appreciator Benefit amounts paid or credited monthly,
quarterly, semi-annually, or annually.
IAB OPTIONS 2 AND 3 INVOLVE A TEN-YEAR PAYMENT PERIOD. IF THE 10-YEAR PAYMENT
PERIOD WOULD END AFTER THE ANNUITY DATE AND YOU CHOOSE AN ANNUITY SETTLEMENT
OPTION OTHER THAN ANY LIFETIME PAYOUT OPTION OR PERIOD CERTAIN OPTION OF AT
LEAST 15 YEARS OR YOU MAKE A FULL WITHDRAWAL, YOU MAY LOSE ALL OR ANY REMAINING
PORTION OF THE INCOME APPRECIATOR BENEFIT. IN SUCH INSTANCES, WE WOULD NOT
REIMBURSE YOU FOR THE EXPENSES YOU HAD PAID US FOR THIS BENEFIT.
IAB OPTION 2 -- INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT PROGRAM
Under this option, you elect to receive the Income Appreciator Benefit during
the accumulation phase. When you activate the benefit, a 10-year Income
Appreciator Benefit automatic withdrawal payment program begins. We will pay you
the Income Appreciator Benefit amount in equal installments over a 10-year
payment period. You may combine this Income Appreciator Benefit amount with an
automated withdrawal amount from your contract value, in which case each
combined payment must be at least $100.
The maximum automated withdrawal payment amount that you may receive from
your contract value under this Income Appreciator Benefit program in any
contract year during the 10-year period may not exceed
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
6:
WHAT IS THE INCOME APPRECIATOR BENEFIT? CONTINUED
- --------------------------------------------------------------------------------
10% of the contract value as of the date you activate the Income Appreciator
Benefit.
Once we calculate the Income Appreciator Benefit, the amount will not be
affected by changes in contract value due to the investment performance of any
allocation option. Withdrawal charges may apply to automatic withdrawal payment
amounts, but not to amounts attributable to the Income Appreciator Benefit.
After the ten-year payment period has ended, if the remaining contract value
is $2,000 or more, the contract will continue. If the remaining contract value
is less than $2,000 after the end of the 10-year payment period, we will pay you
the remaining contract value and the contract will terminate. If the contract
value falls below the minimum amount required to keep the contract in force due
solely to investment results before the end of the 10-year payment period, we
will continue to pay the Income Appreciator Benefit amount for the remainder of
the 10-year payment period.
DISCONTINUING THE INCOME APPRECIATOR BENEFIT AUTOMATIC WITHDRAWAL PAYMENT
PROGRAM UNDER IAB OPTION 2
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 and activate IAB Option 3 at any time after payments have begun and
before the last payment is made. We will add the remaining Income Appreciator
Benefit amount to the contract value at the same frequency as your initial
election until the end of the 10-year payment period. We will treat any Income
Appreciator Benefit amount added to the contract value as additional earnings.
Unless you direct us otherwise, we will allocate these additions to the variable
investment options, fixed interest rate options, or the market value adjustment
option in the same proportions as your most recent purchase payment allocation
percentages.
You may discontinue the Income Appreciator Benefit payment program under IAB
Option 2 before the last payment is made and elect an annuity or settlement
option. We will add the balance of the Income Appreciator Benefit amount for the
10-year payment period to the contract value in a lump sum before determining
the adjusted contract value. The adjusted contract value may be applied to any
annuity or settlement option that is paid over the lifetime of the annuitant,
joint annuitants, or a period certain of at least 15 years (but not to exceed
life expectancy).
IAB OPTION 3 -- INCOME APPRECIATOR BENEFIT CREDIT TO CONTRACT VALUE
Under this option, you can activate the Income Appreciator Benefit and receive
the benefit as credits to your contract value over a 10-year payment period. We
will allocate these Income Appreciator Benefit credits to the variable
investment options, the fixed interest rate options, or the market value
adjustment option in the same manner as your current allocation, unless you
direct us otherwise. We will waive the $1,000 minimum requirement for the market
value adjustment option. We will calculate the Income Appreciator Benefit amount
on the date we receive your written request in good order. Once we have
calculated the Income Appreciator Benefit, the Income Appreciator Benefit credit
will not be affected by changes in contract value due to the investment
performance of any allocation option.
Before we add the last Income Appreciator Benefit credit to your contract
value, you may switch to IAB Option 2 and receive the remainder of the Income
Appreciator Benefit as payments to you (instead of credits to the contract
value) under the Income Appreciator Benefit program for the remainder of the
10-year payment period.
You can also request that any remaining payments in the 10-year payment
period be applied to an annuity or settlement option that is paid over the
lifetime of the annuitants, joint annuitants, or a period certain of at least 15
years (but not to exceed life expectancy).
EXCESS WITHDRAWALS
During the 10 year period under IAB options 2 or 3, an "excess withdrawal"
occurs when any amount is withdrawn from your contract value in a contract year
that exceeds the sum of (1) 10% of the contract value as of the date the Income
Appreciator Benefit was activated plus (2) earnings since the Income Apprecia-
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
tor Benefit was activated that have not been previously withdrawn.
We will deduct the excess withdrawal on a proportional basis from the
remaining Income Appreciator Benefit amount. We will then calculate and apply a
new reduced Income Appreciator Benefit amount.
Withdrawals you make in a contract year that do not exceed the sum of (1) 10%
of the contract value as of the date the Income Appreciator Benefit was
activated plus (2) earnings since the Income Appreciator Benefit was activated
that have not been previously withdrawn do not reduce the remaining Income
Appreciator Benefit amount. Additionally, if the amount withdrawn in any year is
less than the excess withdrawal threshold, the difference between the amount
withdrawn and the threshold can be carried over to subsequent years on a
cumulative basis and withdrawn without causing a reduction to the Income
Appreciator Benefit amount.
EFFECT OF TOTAL WITHDRAWAL ON INCOME APPRECIATOR BENEFIT
We will not make Income Appreciator Benefit payments after the date you make a
total withdrawal of the contract surrender value.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
7:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
PLUS 3 CONTRACT?
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you give us to purchase the
contract. Unless we agree otherwise, and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $500 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers. (You may
not make additional purchase payments if you purchase a contract issued in
Massachusetts, or if you purchase a Contract With Credit issued in
Pennsylvania.)
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger on the contract date. Certain
age limits apply to certain features and benefits described herein. No
subsequent purchase payments may be made on or after the earliest of the 86th
birthday of:
- - the owner,
- - the joint owner,
- - the annuitant, or
- - the co-annuitant.
Currently, the maximum aggregate purchase payments you may make is $20
million. We limit the maximum total purchase payments in any contract year other
than the first to $2 million absent our prior approval. Depending on applicable
state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable or fixed interest rate options, or the market value
adjustment option based on the percentages you choose. The percentage of your
allocation to a particular investment option can range in whole percentages from
0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise.
Allocations to the DCA Fixed Rate Option must be no less than $2,000 and,
allocations to the market value adjustment option must be no less than $1,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Our business day may close
earlier, for example if regular trading on the New York Stock Exchange closes
early. Subsequent purchase payments received in good order after the close of
the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable or fixed interest rate investment options or the
market value adjustment option in the same percentages as the purchase payment.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
The bonus credit that we pay with respect to any purchase payment depends on
(i) the age of the older of the owner or joint owner on the date on which the
purchase payment is made and (ii) the amount of the purchase payment.
Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000; 5% if the purchase payment is
equal to or greater than $250,000 but less than $1 million; or 6% if the
purchase payment is $1 million or greater; and
- - if the elder owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the Contract With Credit, if the owner returns the contract during the
free look period, we will recapture the bonus credits. If we pay a death benefit
under the contract, we have a contractual right to take back any credit we
applied within one year of the date of death.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option,
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes, and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to a variable investment option by the unit price of the accumulation
unit for that variable investment option. We calculate the unit price for each
investment option after the New York Stock Exchange closes each day and then
credit your contract. The value of the accumulation units can increase,
decrease, or remain the same from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
8:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT?
- --------------------------------------------------------------------------------
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day we make a deduction for the insurance and administrative charges. These
charges cover our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, Highest Daily Value Death Benefit option, or Lifetime Five Income
Benefit option, the insurance and administrative cost also includes a charge to
cover our assumption of the associated risk. The mortality risk portion of the
charge is for assuming the risk that the annuitant(s) will live longer than
expected based on our life expectancy tables. When this happens, we pay a
greater number of annuity payments. We also incur the risk that the death
benefit amount exceeds the contract value. The expense risk portion of the
charge is for assuming the risk that the current charges will be insufficient in
the future to cover the cost of administering the contract. The administrative
expense portion of the charge compensates us for the expenses associated with
the administration of the contract. This includes preparing and issuing the
contract; establishing and maintaining contract records; preparation of
confirmations and annual reports; personnel costs; legal and accounting fees;
filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other) option
that you choose.
The death benefit charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit,
- 1.65% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option, (i.e., 0.25% in addition to the
base death benefit charge),
- 1.75% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.35% in addition
to the base death benefit charge), or
- 1.90% on an annual basis if you choose the Highest Daily Value Death
Benefit (i.e., 0.50% in addition to the base death benefit charge).
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
Contract With Credit.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit. We impose an additional charge of 0.75% annually if you
choose the Spousal Lifetime Five Income Benefit. The 0.60% and 0.75% charges are
in addition to the charge we impose for the applicable death benefit, and are
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
deducted daily based on the contract value in the variable investment options.
Upon any reset of the amounts guaranteed under these benefits, we reserve the
right to adjust the charge to that being imposed at that time for new elections
of the benefits.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We do, however, expect to profit from these charges.
Any profits made from these charges may be used by us to pay for the costs of
distributing the contracts. If you choose the Contract With Credit, we will also
use any profits from this charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The amount and duration of
the withdrawal charge depends on whether you choose the Contract With Credit or
the Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment being
withdrawn was made. Specifically, we maintain an "age" for each purchase payment
you have made by keeping track of how many contract anniversaries have passed
since the purchase payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
<Table>
<Caption>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE CONTRACT WITH CONTRACT WITHOUT
THE DATE OF EACH CREDIT WITHDRAWAL CREDIT WITHDRAWAL
PURCHASE PAYMENT CHARGE CHARGE
- ------------------- ----------------- -----------------
0 8% 7%
1 8% 6%
2 8% 5%
3 8% 4%
4 7% 3%
5 6% 2%
6 5% 1%
7 0% 0%
</Table>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and provide you with the amount
requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We make this "charge-free amount"
available to you subject to approval of this feature in your state. We determine
the charge-free amount available to you in a given contract year on the contract
anniversary that begins that year. In calculating the charge-free amount, we
divide purchase payments into two categories -- payments that are subject to a
withdrawal charge and those that are not. We determine the charge-free amount
based only on purchase payments that are subject to a withdrawal charge. The
charge-free amount in a given contract year is equal to 10% of the sum of all
the purchase payments subject to the withdrawal charge that you have made as of
the applicable contract anniversary. During the first contract year, the
charge-free amount is equal to 10% of the initial purchase payment.
When you make a withdrawal (including a withdrawal under the optional
Lifetime Five Income Benefit), we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If a withdrawal or transfer is taken from a market value adjustment guarantee
period prior to the expiration of the rate guarantee period, we will make a
market value adjustment to the withdrawal amount, including the withdrawal
charge. We will then apply a withdrawal charge to the adjusted amount.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
Withdrawal charges will never be greater than permitted by applicable law.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
8:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT? CONTINUED
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WAIVER OF WITHDRAWAL CHARGE FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges and any market value adjustment upon receipt of proof that the owner or
a joint owner is terminally ill, or has been confined to an eligible nursing
home or eligible hospital continuously for at least three months after the
contract date. We will also waive the contract maintenance charge if you
surrender your contract in accordance with the above noted conditions. This
waiver is not available if the owner has assigned ownership of the contract to
someone else.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 10, "What Are The Tax
Considerations Associated With The Strategic Partners Plus 3 Contract?"
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your contract
value is less than $75,000, we will deduct the lesser of $35 or 2% of your
contract value, for administrative expenses (this fee may differ in certain
states). While this is what we currently charge, we may increase this charge up
to a maximum of $60. Also, we may raise the level of the contract value at which
we waive this fee. The charge will be deducted proportionately from each of the
contract's investment options. This same charge will also be deducted when you
surrender your contract if your contract value is less than $75,000.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. FOR CONTRACTS SOLD ON OR AFTER JANUARY 20, 2004, OR UPON SUBSEQUENT
STATE APPROVAL, we will deduct a charge equal to 0.50% per year of the average
GMIB protected value for the period the charge applies. FOR ALL OTHER CONTRACTS,
this is an annual charge equal to 0.45% of the average GMIB protected value for
the period the charge applies. We deduct the charge from your contract value on
each of the following events:
- - each contract anniversary,
- - when you begin the income phase of the contract,
- - upon a full withdrawal, and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's contract
value due to market performance. If the GMIB protected value increases, the
dollar amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options, the fixed interest rate options,
and the market value adjustment option. In some states, we may deduct the charge
for the Guaranteed Minimum Income Benefit in a different manner. No market value
adjustment will apply to the portion of the charge deducted from the market
value adjustment option. If you surrender your contract, begin receiving annuity
payments under the GMIB or any other annuity payout option we make available
during a contract year, or the GMIB terminates, we will deduct the charge for
the portion of the contract year since the prior contract anniversary (or the
contract date if in the first contract year). Upon a full withdrawal or if the
contract value remaining after a partial withdrawal is not enough to cover the
applicable Guaranteed Minimum Income Benefit charge, we will deduct the charge
from the amount we pay you.
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THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES
NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
INCOME APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Income Appreciator
Benefit. This is an annual charge equal to 0.25% of your contract value. The
Income Appreciator Benefit charge is calculated:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first-to-die of the owner or joint
owner prior to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at the time of the calculation, and is
prorated based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Although the Income Appreciator Benefit charge may be calculated more often,
it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon the death of the sole owner or first-to-die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
- upon a partial withdrawal if the contract value remaining after such
partial withdrawal is not enough to cover the then-applicable Income
Appreciator Benefit charge.
We reserve the right to calculate and deduct the fee more frequently than
annually, such as quarterly.
The Income Appreciator Benefit charge is deducted from each investment option
in the same proportion that the amount allocated to the investment option bears
to the total contract value. No market value adjustment will apply to the
portion of the charge deducted from the market value adjustment option. Upon a
full withdrawal, or if the contract value remaining after a partial withdrawal
is not enough to cover the then-applicable Income Appreciator Benefit charge,
the charge is deducted from the amount paid. The payment of the Income
Appreciator Benefit charge will be deemed to be made from earnings for purposes
of calculating other charges. THE FACT THAT WE MAY IMPOSE THE CHARGE UPON A FULL
OR PARTIAL WITHDRAWAL DOES NOT IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE
TIME OF YOUR CHOOSING.
We do not assess this charge upon election of IAB Option 1, the completion of
IAB Option 2 or 3, and upon annuitization. However, we do assess the IAB charge
during the 10-year payment period contemplated by IAB Options 2 and 3. Moreover,
you should realize that amounts credited to your contract value under IAB Option
3 increase the contract value, and because the IAB fee is a percentage of your
contract value, the IAB fee may increase as a consequence of those additions.
EARNINGS APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Earnings Appreciator
Benefit. The charge for this benefit is based on an annual rate of 0.30% of your
contract value.
We calculate the charge on each of the following events:
- each contract anniversary,
- on the annuity date,
- upon death of the sole or first to die of the owner or joint owner prior
to the annuity date,
- upon a full or partial withdrawal, and
- upon a subsequent purchase payment.
The fee is based on the contract value at time of calculation and is
pro-rated based on the portion of the contract year since the date that the
Earnings Appreciator Benefit charge was last calculated.
Although the Earnings Appreciator Benefit charge may be calculated more
often, it is deducted only:
- on each contract anniversary,
- on the annuity date,
- upon death of the sole owner or the first to die of the owner or joint
owner prior to the annuity date,
- upon a full withdrawal, and
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8:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT? CONTINUED
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- upon a partial withdrawal if the contract value remaining after the
partial withdrawal is not enough to cover the then applicable charge.
We withdraw this charge from each investment option (including each guarantee
period) in the same proportion that the amount allocated to the investment
option bears to the total contract value. Upon a full withdrawal or if the
contract value remaining after a partial withdrawal is not enough to cover the
then-applicable Earnings Appreciator Benefit charge, we will deduct the charge
from the amount we pay you. We will deem the payment of the Earnings Appreciator
Benefit charge as made from earnings for purposes of calculating other charges.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made. The
transfer fee is deducted before the market value adjustment, if any, is
calculated.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract. We reserve the right to
change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2005, the fees of these funds ranged from 0.38%
to 1.67% annually. For certain funds, expenses are reduced pursuant to expense
waivers and comparable arrangements. In general, these expense waivers and
comparable arrangements are not guaranteed, and may be terminated at any time.
For additional information about these fund fees, please consult the
prospectuses for the funds.
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9:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees. We will calculate the value of your
contract and charges, if any, as of the date we receive your request in good
order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
With respect to the market value adjustment option, you may specify the
guarantee period from which you would like to make a withdrawal. If you indicate
that the withdrawal is to originate from the market value adjustment option, but
you do not specify which guarantee period is to be involved, then we will take
the withdrawal from the guarantee period that has the least time remaining until
its maturity date. If you indicate that you wish to make a withdrawal, but do
not specify the investment options to be involved, then we will take the
withdrawal from your contract value on a pro rata basis from each investment
option that you have. In that situation, we will aggregate the contract value in
each of the guarantee periods that you have within the market value adjustment
option for purposes of making that pro rata calculation. The portion of the
withdrawal associated with the market value adjustment option then will be taken
from the guarantee periods with the least amount of time remaining until the
maturity date, irrespective of the original length of the guarantee period. You
should be aware that a withdrawal may avoid a withdrawal charge based on the
charge-free amount that we allow, yet still be subject to a market value
adjustment.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options (other than a guarantee period within the market
value adjustment option). The minimum automated withdrawal amount you can make
is generally $100. An assignment of the contract terminates any automated
withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 10.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
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9:
HOW CAN I ACCESS MY MONEY? CONTINUED
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- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
10:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT?
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The tax considerations associated with the Strategic Partners Plus 3 contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan (including contracts held by a
non-natural person, such as a trust, acting as an agent for a natural person),
or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA, which can hold other permissible assets other than the annuity. The terms
and administration of the trust or custodial account in accordance with the laws
and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for these benefits could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
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10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT CONTINUED
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TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information).
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
Choosing any option other than a lump sum death benefit may defer taxes. Certain
minimum distribution requirements apply upon your death, as discussed further
below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
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10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT CONTINUED
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If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under the contract pass by reason of death, and must be a natural person in
order to elect a periodic payment option based on life expectancy or a period
exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars, and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater), less any applicable federal and state
income tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older and by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to the prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law you may make to an IRA. For 2006, the limit is $4,000, increasing to $5,000
in 2008. After 2008, the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing these individuals an additional $1,000 contribution each
year. The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse)
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
may generally "roll over" certain distributions from tax favored retirement
plans (either directly or within 60 days from the date of these distributions)
if he or she meets the requirements for distribution. Once you buy the contract,
you can make regular IRA contributions under the contract (to the extent
permitted by law). However, if you make such regular IRA contributions, you
should note that you will not be able to treat the contract as a "conduit IRA,"
which means that you will not retain possible favorable tax treatment if you
subsequently "roll over" the contract funds originally derived from a qualified
retirement plan into another Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements".
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
Roth IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
10:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS 3 CONTRACT CONTINUED
- --------------------------------------------------------------------------------
connection with a "rollover" or "conversion" of amounts of a traditional IRA,
conduit IRA, or another Roth IRA, or if you are age 50 or older and by making a
single contribution consisting of your Roth IRA contributions and catch-up
contributions attributable to the prior year and the current year during the
period from January 1 to April 15 of the current year. The Code permits persons
who meet certain income limitations (generally, adjusted gross income under
$100,000 who are not married filing a separate return), and who receive certain
qualifying distributions from such non-Roth IRAs, to directly rollover or make,
within 60 days, a "rollover" of all or any part of the amount of such
distribution to a Roth IRA which they establish. This conversion triggers
current taxation (but is not subject to a 10% early distribution penalty). Once
the contract has been purchased, regular Roth IRA contributions will be accepted
to the extent permitted by law.
In addition, as of January 1, 2006, an individual receiving an eligible
rollover distribution from a designated Roth account under an employer plan may
roll over the distribution to a Roth IRA. If you are considering rolling over
funds from your Roth account under an employer plan, please contact your
Financial Professional prior to purchase to confirm whether such rollovers are
being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 8, "What Are The Expenses Associated With
The Strategic Partners Plus 3 Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 11.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
11:
OTHER
INFORMATION
- --------------------------------------------------------------------------------
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company
which was organized on December 23, 1971 under the laws of the State of Arizona.
It is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company that has been
doing business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
Pruco Life publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about Pruco Life that is
annually audited by independent accountants. Pruco's Life annual report for the
year ended December 31, 2005, together with subsequent periodic reports that
Pruco Life files with the SEC, are incorporated by reference into this
prospectus. You can obtain copies, at no cost, of any and all of this
information, including the Pruco Life annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at the address or telephone number listed
on the cover. The SEC file number for Pruco Life is 811-07325. You may read and
copy any filings made by Pruco Life with the SEC at the SEC's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling (202) 551-8090. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940 as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
firm. Commissions are generally based on a percentage of purchase payments made,
up to a maximum of 8%. Alternative compensation schedules are available that
provide a lower initial commission plus ongoing annual compensation based on all
or a portion of contract value. We may also provide compensation to the
distributing firm for providing ongoing service to you in relation to the
contract. Commissions and other compensation paid in relation to the contract do
not result in any additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
On July 1, 2003, Prudential Financial combined its retail securities
brokerage and clearing operations with those of Wachovia Corporation
("Wachovia") and formed Wachovia Securities Financial Holdings, LLC ("Wachovia
Securities"), a joint venture headquartered in Richmond, Virginia. PFI has a 38%
ownership interest in the joint venture, while Wachovia owns the remaining 62%.
Wachovia and Wachovia Securities are key distribution partners for certain
products of Prudential Financial affiliates, including mutual funds and
individual annuities that are distributed through their financial advisors, bank
channel and independent channel. In addition, Prudential Financial is a service
provider to the managed account platform and certain wrap-fee programs offered
by Wachovia Securities. The Strategic Partners Plus and Strategic Partners Plus
3 variable annuities are sold through Wachovia Securities.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
11:
OTHER INFORMATION CONTINUED
- --------------------------------------------------------------------------------
benefits, return of premiums or excessive premium charges and breaching
fiduciary duties to customers. In our annuities operations, we are subject to
litigation involving class action lawsuits and other litigation alleging, among
other things, that we made improper or inadequate disclosures in connection with
the sale of annuity products or charged excessive or impermissible fees on these
products, recommended unsuitable products to customers, mishandled customer
accounts or breached fiduciary duties to customers. In some of our pending legal
and regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is such a pending
proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life insurance policy against Pruco Life and Prudential. The
complaint alleges that the Prudential defendants acted in bad faith when they
failed to pay a death benefit on an alleged contract of insurance that was never
delivered. In February 2006, the jury awarded the plaintiffs $1.4 million in
compensatory damages and $35 million in punitive damages. Pruco Life plans to
appeal the verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. If you
do so, we will reset the death benefit to equal the contract value on the date
the assignment occurs. For details, see Section 4, "What Is The Death Benefit?"
We will not be bound by the assignment until we receive written notice. We will
not be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners Plus 3 contract, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - State Specific Variations
- - Financial Statements
- - Separate Account Financial Information
- - Company Financial Information
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
MARKET VALUE
ADJUSTMENT FORMULA
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT FORMULA
GENERAL FORMULA
The formula under which Pruco Life calculates the market value adjustment
applicable to a full or partial surrender, annuitization, or settlement under
the market value adjustment option is set forth below. The market value
adjustment is expressed as a multiplier factor. That is, the Contract Value
after the market value adjustment ("MVA"), but before any withdrawal charge, is
as follows: Contract Value (after MVA) = Contract Value (before MVA) X (1 +
MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(-------------) to the N/12 power] -1
1 + J + .0025
<Table>
where: I = the guaranteed credited interest rate
(annual effective) for the given
contract at the time of withdrawal or
annuitization or settlement.
J = the current credited interest rate
offered on new money at the time of
withdrawal or annuitization or
settlement for a guarantee period of
equal length to the number of whole
years remaining in the Contract's
current guarantee period plus one
year.
N = equals the remaining number of months
in the contract's current guarantee
period (rounded up) at the time of
withdrawal or annuitization or
settlement.
</Table>
PENNSYLVANIA FORMULA
We use the same MVA formula with respect to contracts issued in Pennsylvania as
the general formula, except that "J" in the formula above uses an interpolated
rate as the current credited interest rate. Specifically, "J" is the
interpolated current credited interest rate offered on new money at the time of
withdrawal, annuitization, or settlement. The interpolated value is calculated
using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of days remaining in year "n" of the
current guarantee period.
INDIANA FORMULA
We use the following MVA formula for contracts issued in Indiana:
1 + I
MVA = [(-----------) to the N/12 power] -1
1 + J
The variables I, J and N retain the same definitions as the general formula.
MARKET VALUE ADJUSTMENT EXAMPLE
(ALL STATES EXCEPT INDIANA AND PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05 + 0.0025)]to the (38/12)
power -1 = 0.02274
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.02274 = $253.03
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $253.03 = $11,380.14
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
MARKET VALUE ADJUSTMENT FORMULA CONTINUED
- --------------------------------------------------------------------------------
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07 + 0.0025)] to the (38/12)
power -1 = -0.03644
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.03644) = -$405.47
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$405.47) = $10,721.64
MARKET VALUE ADJUSTMENT EXAMPLE
(PENNSYLVANIA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 4%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.05] + [((365-61)/365) X 0.04] =
0.0417
</Table>
The MVA factor calculation would be: [(1.06)/(1.0417 + 0.0025)] to the
(38/12) power -1 = 0.04871
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X 0.04871 = $542.00
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $542.00 = $11,669.11
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 3 years (the number of whole years remaining) is 7%, and for a
guarantee period of 4 years (the number of whole years remaining plus 1) is
8%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = [(61/365) X 0.08] + [((365 - 61)/365) X 0.07] =
0.0717
</Table>
The MVA factor calculation would be: [(1.06)/(1.0717 + 0.0025)] to the
(38/12) power -1 = -0.04126
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.04126) = -$459.10
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$459.10) = $10,668.01
MARKET VALUE ADJUSTMENT EXAMPLE
(INDIANA)
The following will illustrate the application of the Market Value Adjustment.
For simplicity, surrender charges are ignored in this example.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 5%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 5% (0.05)
</Table>
The MVA factor calculation would be: [(1.06)/(1.05)] to the (38/12) power -1 =
0.03047
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 x 0.03047 = $339.04
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + $339.04 = $11,466.15
The MVA may not always be positive. Here is an example where it is negative.
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value will have accumulated to $11,127.11. The number of whole years
remaining in the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life for a guarantee
period of 4 years (the number of whole years remaining plus 1) is 7%.
The following computations would be made:
1) Determine the Market Value Adjustment factor.
<Table>
N = 38
I = 6% (0.06)
J = 7% (0.07)
</Table>
The MVA factor calculation would be: [(1.06)/(1.07)] to the (38/12) power -1
= -0.02930
2) Multiply the Contract Value by the factor calculated in Step 1.
$11,127.11 X (-0.02930) = -$326.02
3) Add together the Market Value Adjustment and the Contract Value to get the
total Contract Surrender Value.
$11,127.11 + (-$326.02) = $10,801.09
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PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
As we have indicated throughout this prospectus, the Strategic Partners Plus 3
Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such contract features.
Here we depict the historical unit values corresponding to the contract features
bearing the highest and lowest combinations of asset-based charges. The
remaining unit values appear in the Statement of Additional Information, which
you may obtain free of charge, by calling (888) PRU-2888 or by writing to us at
the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176. As
discussed in the prospectus, if you select certain optional benefits (e.g.,
Lifetime Five), we limit the investment options to which you may allocate your
contract value. In certain of these accumulation unit value tables, we set forth
accumulation unit values that assume election of one or more of such optional
benefits and allocation of contract value to portfolios that currently are not
permitted as part of such optional benefits. Such unit values are set forth for
general reference purposes only, and are not intended to indicate that such
portfolios may be acquired along with those optional benefits.
- --------------------------------------------------------------------------------
108
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES: (CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01724 $ 1.24006 14,202
1/1/2004 to 12/31/2004 $ 1.24006 $ 1.34066 270,828
1/1/2005 to 12/31/2005 $ 1.34066 $ 1.51459 269,558
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01834 $ 1.25778 34,149
1/1/2004 to 12/31/2004 $ 1.25778 $ 1.36350 46,073
1/1/2005 to 12/31/2005 $ 1.36350 $ 1.49905 45,945
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00588 $ 1.28481 0
1/1/2004 to 12/31/2004 $ 1.28481 $ 1.38861 0
1/1/2005 to 12/31/2005 $ 1.38861 $ 1.58951 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 0.9997 $ 0.99449 0
1/1/2004 to 12/31/2004 $ 0.99449 $ 0.99063 0
1/1/2005 to 12/31/2005 $ 0.99063 $ 1.00520 52,732
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02199 $ 1.22414 0
1/1/2004 to 12/31/2004 $ 1.22414 $ 1.33335 252,261
1/1/2005 to 12/31/2005 $ 1.33335 $ 1.37464 251,099
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02526 $ 1.22392 0
1/1/2004 to 12/31/2004 $ 1.22392 $ 1.40386 124,346
1/1/2005 to 12/31/2005 $ 1.40386 $ 1.61508 123,781
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01313 $ 1.27916 173,799
1/1/2004 to 12/31/2004 $ 1.27916 $ 1.44765 378,507
1/1/2005 to 12/31/2005 $ 1.44765 $ 1.57741 386,277
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01134 $ 1.22149 37,878
1/1/2004 to 12/31/2004 $ 1.22149 $ 1.34749 37,730
1/1/2005 to 4/29/2005 $ 1.34749 $ 1.24414 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01232 $ 1.19626 0
1/1/2004 to 12/31/2004 $ 1.19626 $ 1.28343 3,183
1/1/2005 to 12/31/2005 $ 1.28343 $ 1.32432 0
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
109
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00979 $ 1.19393 42,219
1/1/2004 to 12/31/2004 $ 1.19393 $ 1.30793 430,323
1/1/2005 to 12/31/2005 $ 1.30793 $ 1.38790 549,411
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00745 $ 1.13654 0
1/1/2004 to 12/31/2004 $ 1.13654 $ 1.22048 52,258
1/1/2005 to 12/31/2005 $ 1.22048 $ 1.27471 35,321
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00887 $ 1.24835 139,416
1/1/2004 to 12/31/2004 $ 1.24835 $ 1.38531 189,323
1/1/2005 to 12/31/2005 $ 1.38531 $ 1.49631 188,544
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01135 $ 1.23975 587,421
1/1/2004 to 12/31/2004 $ 1.23975 $ 1.38211 1,432,786
1/1/2005 to 12/31/2005 $ 1.38211 $ 1.48911 1,572,799
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02725 $ 1.21457 0
1/1/2004 to 12/31/2004 $ 1.21457 $ 1.41041 140,862
1/1/2005 to 12/31/2005 $ 1.41041 $ 1.48345 147,744
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01281 $ 1.23393 60,946
1/1/2004 to 12/31/2004 $ 1.23393 $ 1.40924 362,487
1/1/2005 to 12/31/2005 $ 1.40924 $ 1.58122 360,368
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02112 $ 1.20717 6,786
1/1/2004 to 12/31/2004 $ 1.20717 $ 1.33789 0
1/1/2005 to 4/29/2005 $ 1.33789 $ 1.25025 0
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00463 $ 1.33928 20,736
1/1/2004 to 12/31/2004 $ 1.33928 $ 1.57888 32,368
1/1/2005 to 12/31/2005 $ 1.57888 $ 1.63898 68,257
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00530 $ 1.19841 57,933
1/1/2004 to 12/31/2004 $ 1.19841 $ 1.29196 137,551
1/1/2005 to 12/31/2005 $ 1.29196 $ 1.32558 105,898
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
110
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00076 $ 1.04684 40,502
1/1/2004 to 12/31/2004 $ 1.04684 $ 1.08689 45,450
1/1/2005 to 12/31/2005 $ 1.08689 $ 1.09767 77,189
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01864 $ 1.36653 8,122
1/1/2004 to 12/31/2004 $ 1.36653 $ 1.63587 116,708
1/1/2005 to 12/31/2005 $ 1.63587 $ 1.90014 116,112
SP SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01406 $ 1.30191 0
1/1/2004 to 12/31/2004 $ 1.30191 $ 1.27212 0
1/1/2005 to 12/31/2005 $ 1.27212 $ 1.28565 0
SP SMALL-CAP VALUE PORTFOLIO
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01511 $ 1.29026 61,963
1/1/2004 to 12/31/2004 $ 1.29026 $ 1.53570 93,173
1/1/2005 to 12/31/2005 $ 1.53570 $ 1.58443 96,633
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01518 $ 1.19388 83,241
1/1/2004 to 12/31/2004 $ 1.19388 $ 1.30209 83,028
1/1/2005 to 12/31/2005 $ 1.30209 $ 1.47863 82,811
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01908 $ 1.17938 35,521
1/1/2004 to 12/31/2004 $ 1.17938 $ 1.23406 159,824
1/1/2005 to 12/31/2005 $ 1.23406 $ 1.41770 159,042
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.03407 $ 1.34037 0
1/1/2004 to 12/31/2004 $ 1.34037 $ 1.32188 0
1/1/2005 to 4/29/2005 $ 1.32188 $ 1.18074 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01151 $ 1.35112 12,286
1/1/2004 to 12/31/2004 $ 1.35112 $ 1.55290 16,814
1/1/2005 to 12/31/2005 $ 1.55290 $ 1.78245 16,711
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $ 9.99933 0
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
111
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.09338 $11.73323 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07970 $10.33229 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05481 $10.28681 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/02/2005 $10.05009 $11.34495 0
AST ALLIANCE BERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04988 $10.42169 0
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06658 $10.35426 1,075
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04202 $10.33700 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.01933 0
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.00933 0
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.14710 $12.04155 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.02932 0
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.08492 $10.73678 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01133 $10.33264 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04570 $10.03757 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.98052 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.01541 $10.64464 0
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
112
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03302 $10.78065 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.60000 532
AST HIGH YIELD PORTFOLIO
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.97681 $ 9.87825 0
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.91389 $10.67460 0
AST LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.07726 $10.57804 0
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $ 9.96977 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.12625 $10.92526 1,051
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.96626 $10.49866 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.03693 $10.78089 0
AST MID CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.06503 $10.37369 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.05576 $11.35869 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02196 $10.90682 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.99886 $10.07733 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005** to 12/31/2005 $ 9.99886 $10.03931 0
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
113
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST SMALL CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.04866 $10.66828 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.02867 $10.37610 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.94939 $ 9.46839 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $10.00286 $11.76236 0
EVERGREEN GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003** to 12/31/2003 $ 9.92203 $10.34285 0
1/1/2004 to 12/31/2004 $10.34285 $11.05580 0
1/1/2005 to 4/15/2005 $11.05580 $10.33082 0
EVERGREEN VA BALANCED FUND
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00931 $ 1.12625 0
1/1/2004 to 12/31/2004 $ 1.12625 $ 1.18087 0
1/1/2005 to 12/31/2005 $ 1.18087 $ 1.22619 0
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003** to 12/31/2003 $ 9.91859 $10.39784 0
1/1/2004 to 12/31/2004 $10.39784 $11.19868 47,339
1/1/2005 to 12/31/2005 $11.19868 $12.03990 47,125
EVERGREEN VA GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01232 $ 1.35076 1,339
1/1/2004 to 12/31/2004 $ 1.35076 $ 1.51675 7,387
1/1/2005 to 12/31/2005 $ 1.51675 $ 1.59343 4,538
EVERGREEN VA INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003** to 12/31/2003 $ 9.98995 $10.44289 1,603
1/1/2004 to 12/31/2004 $10.44289 $12.27702 1,655
1/1/2005 to 12/31/2005 $12.27702 $14.04482 1,646
EVERGREEN VA OMEGA FUND
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.00975 $ 1.33662 30,970
1/1/2004 to 12/31/2004 $ 1.33662 $ 1.41333 67,367
1/1/2005 to 12/31/2005 $ 1.41333 $ 1.44748 63,869
EVERGREEN VA SPECIAL VALUES FUND
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.01278 $ 1.25261 8,951
1/1/2004 to 12/31/2004 $ 1.25261 $ 1.48703 0
1/1/2005 to 12/31/2005 $ 1.48703 $ 1.62435 0
</Table>
<Table>
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
114
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/O CREDIT, BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005** to 12/31/2005 $ 9.88103 $12.08600 0
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
1/6/2003* to 12/31/2003 $ 1.02245 $ 1.24622 0
1/1/2004 to 12/31/2004 $ 1.24622 $ 1.28061 0
1/1/2005 to 12/31/2005 $ 1.28061 $ 1.31370 0
* DATE THAT THE ANNUITY WAS FIRST OFFERED.
** DATE THAT FUND WAS FIRST OFFERED UNDER THIS ANNUITY.
</Table>
- --------------------------------------------------------------------------------
115
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06129 $11.73220 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04766 $11.02297 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98583 $11.25921 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99976 $10.04005 0
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05581 $10.30897 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03716 $11.18056 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03156 $10.90725 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.06851 $ 9.47818 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02484 $10.16588 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01681 $10.60008 2,803,554
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00686 $10.42969 699,364
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02477 $10.55480 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02869 $10.76609 3,674,148
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07548 $10.41036 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91187 $10.59302 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.05569 $ 9.59841 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
116
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02797 $10.62046 0
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98863 $10.06754 0
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.09857 0
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03548 $11.66658 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03010 $10.44213 0
SP SMALL CAP VALUE PORTFOLIO
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05698 $10.43562 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07330 $11.90839 0
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02984 $12.04891 0
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.04283 $ 9.58487 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.92605 $11.22029 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $ 9.99030 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.09241 $11.63321 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07873 $10.23479 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05384 $10.18979 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.04912 $11.24827 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04891 $10.32343 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
117
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06561 $10.25648 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04106 $10.23948 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.01025 329,867
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.00027 264,281
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.14613 $11.92816 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.02023 14,495
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.08395 $10.63555 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01036 $10.23522 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04473 $ 9.94281 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.87710 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01445 $10.54432 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03205 $10.67907 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $10.50002 0
AST HIGH YIELD PORTFOLIO
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.97584 $ 9.78498 0
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91292 $10.57386 0
AST LARGE-CAP VALUE PORTFOLIO
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07630 $10.47827 0
</Table>
<Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND HDV WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
118
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
PART II
STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT WITH CREDIT, HDV, AND LIFETIME FIVE 2.60)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $ 9.87561 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.12528 $10.82204 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.96529 $10.39968 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03596 $10.67928 0
AST MID CAP VALUE PORTFOLIO
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06406 $10.27587 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05479 $11.25162 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02100 $10.80397 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99789 $ 9.98223 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99789 $10.03022 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04770 $10.56766 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02771 $10.27832 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.94843 $ 9.37907 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00189 $11.65151 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88006 $11.97195 0
JANUS ASPEN SERIES -- GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04383 $10.31860 0
</Table>
* DATE THAT THE FUND AND/OR LIFETIME FIVE AND HDV WAS FIRST OFFERED UNDER THIS
ANNUITY.
- --------------------------------------------------------------------------------
119
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
APPENDIX B
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of
New Jersey). Not all of these annuities may be available to you due to state
approval or broker-dealer offerings. You can verify which of these annuities is
available to you by asking your registered representative, or by calling us at
(888) PRU-2888. For comprehensive information about each of these annuities,
please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each Strategic
Partners variable annuity. The availability of optional features, such as those
noted in the chart, may increase the cost of the contract. Therefore, you should
carefully consider which features you plan to use when selecting your annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners FlexElite 2 (i.e., the version of the contract sold on or after May
1, 2003) and the Strategic Partners Annuity One 3/Plus 3 contracts, Strategic
Partners Advisor offers few optional benefits.
- - Strategic Partners FlexElite 2 offers both an array of optional benefits as
well as the "liquidity" to surrender the annuity without any withdrawal
charge after three contract years have passed. FlexElite 2 also is unique in
offering an optional persistency bonus (which, if taken, extends the
withdrawal charge period).
- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of the contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- --------------------------------------------------------------------------------
120
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- - Strategic Partners Annuity One 3/Plus 3 comes in both a bonus version and a
non-bonus version, each of which offers several optional insurance features.
A bonus is added to your purchase payments under the bonus version, although
the withdrawal charges under the bonus version are higher than those under
the non-bonus version. Although the non-bonus version offers no bonus, it is
accompanied by fixed interest rate options and a market value adjustment
option that may provide higher interest rates than such options accompanying
the bonus version.
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of Strategic
Partners variable annuity products. You should consider the investment
objectives, risks, charges and expenses of an investment in any contract
carefully before investing. Each product prospectus as well as the underlying
portfolio prospectuses contains this and other information about the variable
annuities and underlying investment options. Your registered representative can
provide you with prospectuses for one or more of these variable annuities and
the underlying portfolios and can help you decide upon the product that would be
most advantageous for you given your individual needs. Please read the
prospectuses carefully before investing.
- --------------------------------------------------------------------------------
121
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000 $10,000
- --------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & 85 Qualified & 80 Qualified & 85 85 Qualified &
Non-Qualified Non-Qualified Non-Qualified Non-Qualified
- --------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 3 Years 7 Years (7%, 6%, 7 Years (7%, 6%, 5%,
Schedule (7%, 7%, 7%) 5%, 4%, 3%, 2%, 1%) 4%, 3%, 2%, 1%)
Contract date based Contract date based Payment date based
- --------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross 10% of gross 10% of gross purchase
Withdrawal(2) purchase payments purchase payments payments made as of
made as of last per contract year, last contract
contract cumulative up to 7 anniversary per
anniversary per years or 70% of contract year
contract year gross purchase
payments
- --------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.65% 1.52% 1.40%
Administration Charge
- --------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 The lesser of $50 $30. Waived if The lesser of $35 or
Fee (assessed or 2% of your or 2% of your contract value is 2% of your contract
annually) contract value. contract value. $50,000 or more value. Waived if
Waived if contract Waived if contract contract value is
value is $50,000 or value is $100,000 $75,000 or more
more or more
- --------------------------------------------------------------------------------------------------------------
Contract Credit No Yes No No
1% credit option at
end of 3rd and 6th
contract years.
Election results in
a new 3 year
withdrawal charge
- --------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes Yes Yes
1-Year 1-Year 1-Year
- --------------------------------------------------------------------------------------------------------------
Market Value No Yes Yes Yes
Adjustment Account 1-10 Years 7-Year 1-10 Years
(MVA)
- --------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No Yes No Yes
Averaging (DCA)
- --------------------------------------------------------------------------------------------------------------
Variable Investment 56 56 56 56/62
Options Available
- --------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A N/A 6-available in
Strategic Partners
Plus 3 only
- --------------------------------------------------------------------------------------------------------------
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
Minimum Investment $10,000
- ---------------------
Maximum Issue Age 85 Qualified &
Non-Qualified
- ---------------------
Withdrawal Charge 7 Years (8%, 8%, 8%,
Schedule 8%, 7%, 6%, 5%)
Payment date based
- ---------------------
Annual Charge-Free 10% of gross purchase
Withdrawal(2) payments made as of
last contract
anniversary per
contract year
- ---------------------
Insurance and 1.50%
Administration Charge
- ---------------------
Contract Maintenance The lesser of $35 or
Fee (assessed 2% of your contract
annually) value. Waived if
contract value is
$75,000 or more
- ---------------------
Contract Credit Yes
3%-all amounts ages
81-85
4%-under $250,000
5%-$250,000- $999,999
6%-$1,000,000+
- ---------------------
Fixed Rate Account Yes(3)
1-Year
- ---------------------
Market Value Yes
Adjustment Account 1-10 Years
(MVA)
- ---------------------
Enhanced Dollar Cost Yes
Averaging (DCA)
- ---------------------
Variable Investment 56/62
Options Available
- ---------------------
Evergreen Funds 6-available in
Strategic Partners
Plus 3 only
- ---------------------
</Table>
1 This column depicts features of the version of Strategic Partners FlexElite
sold on or after May 1, 2003 or upon subsequent state approval. In one state,
Pruco Life continues to sell a prior version of the contract. Under that
version, the charge for the base death benefit is 1.60%, rather than 1.65%.
The prior version also differs in certain other respects (e.g., availability
of optional benefits). The values illustrated below are based on the 1.65%
charge, and therefore are slightly lower than if the 1.60% charge were used.
2 Withdrawals of taxable amounts will be subject to income tax, and prior to age
59 1/2, may be subject to a 10% federal income tax penalty.
3 May offer lower interest rates for the fixed rate options than the interest
rates offered in the contracts without credit.
- --------------------------------------------------------------------------------
122
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
<Table>
<Caption>
STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/ PLUS 3
ADVISOR FLEXELITE 2(1) SELECT NON BONUS
- --------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: The greater of: Step/Roll The greater of:
purchase payment(s) purchase payment(s) Withdrawals will purchase payment(s)
minus proportionate minus proportionate proportionately minus proportionate
withdrawal(s) or withdrawal(s) or affect the Death withdrawal(s) or
contract value contract value Benefit contract value
- --------------------------------------------------------------------------------------------------------------
Optional Death Step/Roll Step-Up N/A Step-Up
Benefit (for an Roll-Up Roll-Up
additional Combo: Step/Roll Combo: Step/Roll
cost),(4,5) Highest Daily Value Highest Daily Value
(HDV) Earnings (HDV)
Appreciator Benefit
(EAB)
- --------------------------------------------------------------------------------------------------------------
Living Benefits (for Lifetime Five Lifetime Five N/A Lifetime Five
an additional Spousal Lifetime Spousal Lifetime Five
cost),(5,6) Five Guaranteed Minimum
Guaranteed Minimum Income Benefit (GMIB)
Income Benefit Income Appreciator
(GMIB) Income Benefit (IAB)
Appreciator Benefit
(IAB)
- --------------------------------------------------------------------------------------------------------------
<Caption>
STRATEGIC PARTNERS
ANNUITY ONE 3/ PLUS 3
BONUS
- ------------------------------------------------------------------
Base Death Benefit: The greater of:
purchase payment(s)
minus proportionate
withdrawal(s) or
contract value
- ---------------------
Optional Death Step-Up
Benefit (for an Roll-Up
additional Combo: Step/Roll
cost),(4,5) Highest Daily Value
(HDV)
- ---------------------
Living Benefits (for Lifetime Five
an additional Spousal Lifetime Five
cost),(5,6) Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator
Benefit (IAB)
- ---------------------
</Table>
4 For more information on these benefits, refer to section 4, "What Is The Death
Benefit?" in the Prospectus.
5 Not all Optional Benefits may be available in all states.
6 For more information on these benefits, refer to section 3, "What Kind of
Payments Will I Receive During The Income Phase?"; section 5, "What Is The
LifeTime Five(SM) Income Benefit?"; (discussing Lifetime Five and Spousal
Lifetime Five) and section 6, "What Is The Income Appreciator Benefit?" in the
Prospectus.
- --------------------------------------------------------------------------------
123
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made to/from the contract.
- - The hypothetical gross rates of return are reduced by the arithmetic average
of the fees and expenses of the underlying portfolios (as of December 31,
2005) and the charges that are deducted from the contract at the Separate
Account level as follows:
-- 0.99% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes
of the illustrations, we do not reflect any expense reimbursements or
expense waivers that might apply and are described in the prospectus fee
table.
-- The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under a contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
- --------------------------------------------------------------------------------
124
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
0% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/PLUS 3 ANNUITY ONE 3/PLUS 3
ADVISOR SELECT FLEXELITE 2 NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $97,659 $97,659 $97,544 $91,415 $97,419 $91,299 $97,659 $91,522 $101,465 $94,148
2 $95,366 $95,366 $95,141 $90,032 $94,850 $88,910 $95,366 $90,244 $ 98,986 $91,866
3 $93,128 $93,128 $92,798 $88,658 $92,347 $86,582 $93,128 $88,971 $ 96,567 $89,641
4 $90,941 $90,941 $90,512 $87,292 $89,908 $89,908 $90,941 $87,703 $ 94,207 $87,470
5 $88,807 $88,807 $88,283 $85,934 $87,533 $87,533 $88,807 $86,442 $ 91,905 $86,171
6 $86,722 $86,722 $86,109 $84,586 $85,219 $85,219 $86,722 $85,187 $ 89,659 $84,879
7 $84,686 $84,686 $83,988 $83,248 $82,965 $82,965 $84,686 $83,939 $ 87,468 $83,594
8 $82,698 $82,698 $81,919 $81,919 $80,770 $80,770 $82,698 $82,698 $ 85,331 $85,331
9 $80,757 $80,757 $79,902 $79,902 $78,631 $78,631 $80,757 $80,757 $ 83,245 $83,245
10 $78,861 $78,861 $77,934 $77,934 $76,547 $76,547 $78,861 $78,861 $ 81,211 $81,211
11 $77,010 $77,010 $76,014 $76,014 $74,518 $74,518 $77,010 $77,010 $ 79,226 $79,226
12 $75,202 $75,202 $74,142 $74,142 $72,541 $72,541 $75,202 $75,202 $ 77,290 $77,290
13 $73,436 $73,436 $72,282 $72,282 $70,615 $70,615 $73,436 $73,436 $ 75,402 $75,402
14 $71,712 $71,712 $70,468 $70,468 $68,739 $68,739 $71,678 $71,678 $ 73,559 $73,559
15 $70,029 $70,029 $68,698 $68,698 $66,912 $66,912 $69,961 $69,961 $ 71,727 $71,727
16 $68,385 $68,385 $66,972 $66,972 $65,131 $66,131 $68,285 $68,285 $ 69,940 $69,940
17 $66,780 $66,780 $65,288 $65,288 $63,397 $63,397 $66,648 $66,648 $ 68,197 $68,197
18 $65,212 $65,212 $63,646 $63,646 $61,708 $61,708 $65,049 $65,049 $ 66,496 $66,496
19 $63,681 $63,681 $62,044 $62,044 $60,062 $60,062 $63,488 $63,488 $ 64,837 $64,837
20 $62,186 $62,186 $60,482 $60,482 $58,460 $58,460 $61,963 $61,963 $ 63,219 $63,219
21 $60,726 $60,726 $58,958 $58,958 $56,898 $56,898 $60,474 $60,474 $ 61,640 $61,640
22 $59,301 $59,301 $57,472 $57,472 $55,377 $55,377 $59,021 $59,021 $ 60,099 $60,099
23 $57,909 $57,909 $56,022 $56,022 $53,895 $53,895 $57,601 $57,601 $ 58,596 $58,596
24 $56,549 $56,549 $54,608 $54,608 $52,452 $52,452 $56,215 $56,215 $ 57,130 $57,130
25 $55,222 $55,222 $53,229 $53,229 $51,046 $51,046 $54,861 $54,861 $ 55,700 $55,700
- ---------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005, the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners FlexElite 2 -2.59%; Strategic Partners Annuity One 3/Plus
3 Non-Bonus -2.35%; Strategic Partners Annuity One 3/Plus 3 Bonus -2.44%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
7. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
125
PART II STRATEGIC PARTNERS PLUS 3 PROSPECTUS SECTIONS 1-11
- --------------------------------------------------------------------------------
6% GROSS RETURN
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE 3/PLUS 3 ANNUITY ONE 3/PLUS 3
ADVISOR SELECT FLEXELITE 2 NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $103,502 $103,502 $103,380 $ 96,844 $103,248 $ 96,721 $103,502 $ 96,957 $107,536 $ 99,734
2 $107,136 $107,136 $106,884 $101,071 $106,611 $ 99,849 $107,136 $101,309 $111,203 $103,107
3 $110,899 $110,899 $110,506 $105,481 $110,083 $103,078 $110,899 $105,854 $114,994 $106,596
4 $114,793 $114,793 $114,252 $110,082 $113,669 $113,669 $114,793 $110,602 $118,915 $110,203
5 $118,824 $118,824 $118,124 $114,881 $117,371 $117,371 $118,824 $115,560 $122,970 $115,063
6 $122,997 $122,997 $122,127 $119,885 $121,194 $121,194 $122,997 $120,737 $127,163 $120,134
7 $127,316 $127,316 $126,267 $125,104 $125,141 $125,141 $127,316 $126,143 $131,499 $125,424
8 $131,787 $131,787 $130,546 $130,546 $129,217 $129,217 $131,787 $131,787 $135,982 $135,982
9 $136,415 $136,415 $134,971 $134,971 $133,426 $133,426 $136,415 $136,415 $140,619 $140,619
10 $141,205 $141,205 $139,545 $139,545 $137,771 $137,771 $141,205 $141,205 $145,413 $145,413
11 $146,164 $146,164 $144,275 $144,275 $142,259 $142,259 $146,164 $146,164 $150,371 $150,371
12 $151,297 $151,297 $149,165 $149,165 $146,892 $146,892 $151,297 $151,297 $155,499 $155,499
13 $156,610 $156,610 $154,220 $154,220 $151,676 $151,676 $156,610 $156,610 $160,800 $160,800
14 $162,109 $162,109 $159,447 $159,447 $156,616 $156,616 $162,109 $162,109 $166,283 $166,283
15 $167,802 $167,802 $164,851 $164,851 $161,717 $161,717 $167,802 $167,802 $171,953 $171,953
16 $173,694 $173,694 $170,439 $170,439 $166,985 $166,985 $173,694 $173,694 $177,816 $177,816
17 $179,794 $179,794 $176,215 $176,215 $172,423 $172,423 $179,794 $179,794 $183,879 $183,879
18 $186,108 $186,108 $182,188 $182,188 $178,039 $178,039 $186,108 $186,108 $190,148 $190,148
19 $192,643 $192,643 $188,363 $188,363 $183,838 $183,838 $192,643 $192,643 $196,632 $196,632
20 $199,408 $199,408 $194,747 $194,747 $189,826 $189,826 $199,408 $199,408 $203,336 $203,336
21 $206,411 $206,411 $201,347 $201,347 $196,009 $196,009 $206,411 $206,411 $210,269 $210,269
22 $213,659 $213,659 $208,172 $208,172 $202,393 $202,393 $213,659 $213,659 $217,439 $217,439
23 $221,162 $221,162 $215,227 $215,227 $208,985 $208,985 $221,162 $221,162 $224,853 $224,853
24 $228,928 $228,928 $222,522 $222,522 $215,791 $215,791 $228,928 $228,928 $232,519 $232,519
25 $236,967 $236,967 $230,064 $230,064 $222,820 $222,820 $236,967 $236,967 $240,447 $240,447
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</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005, the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. Strategic Partners FlexElite 2 figures do not include the optional 1% credit
election. Had the credit been included, the Contract Values would be higher,
due to the additional credit. However, election of the credit extends the
surrender charge for an additional three years, thus lowering surrender value
in those years.
5. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.51%; Strategic Partners Select 3.39%; Strategic
Partners FlexElite 2 3.26%; Strategic Partners Annuity One 3/Plus 3 Non-Bonus
3.47%; Strategic Partners Annuity One 3/Plus 3 Bonus 3.41%.
6. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
7. Surrender Value assumes surrender 2 days prior to policy anniversary.
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126
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS ORD01142 (05/2006).
---------------------------------------------------------
(print your name)
---------------------------------------------------------
(address)
---------------------------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
P2360
STRATEGIC PARTNERS(SM)
ANNUITY ONE
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH YOUR
REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS DIFFERENT
FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR FINANCIAL
SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. PLEASE NOTE THAT
SELLING BROKER-DEALER FIRMS THROUGH WHICH THE CONTRACT IS SOLD MAY DECLINE TO
MAKE AVAILABLE TO THEIR CUSTOMERS CERTAIN OF THE OPTIONAL FEATURES OFFERED
GENERALLY UNDER THE CONTRACT. ALTERNATIVELY, SUCH FIRMS MAY RESTRICT THE
AVAILABILITY OF THE OPTIONAL BENEFITS THAT THEY DO MAKE AVAILABLE TO THEIR
CUSTOMERS (E.G., BY IMPOSING A LOWER MAXIMUM ISSUE AGE FOR CERTAIN OPTIONAL
BENEFITS THAN WHAT IS PRESCRIBED GENERALLY UNDER THE CONTRACT). PLEASE SPEAK TO
YOUR REGISTERED REPRESENTATIVE FOR FURTHER DETAILS. THE DIFFERENT FEATURES AND
BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION AND THE ABILITY TO
ACCESS YOUR ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES UNDER THE ANNUITY
CONTRACT AND THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE DIFFERENT
AMONG EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A REPLACEMENT FOR
EXISTING VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER, AMONG
OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN REPLACING YOUR
EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
- ------------------------------------------------------------
Strategic Partners Annuity One offers a wide variety of investment choices,
including variable investment options that invest in underlying mutual funds.
Currently, portfolios of the following underlying mutual funds are being
offered: The Prudential Series Fund, American Skandia Trust, Gartmore Variable
Insurance Trust, and Janus Aspen Series (see next page for list of portfolios
currently offered).
You may choose between two basic versions of Strategic Partners Annuity One.
One version, the Contract With Credit, provides for a bonus credit that we add
to each purchase payment you make. If you choose this version of Strategic
Partners Annuity One, some charges and expenses may be higher than if you choose
the version without the credit. Those higher charges could exceed the amount of
the credit under some circumstances, particularly if you withdraw purchase
payments within a few years of making those purchase payments. The Contract With
Credit comes in two forms -- one form under which bonus credits generally are
not recaptured once the free look period expires and which bears higher charges,
and the other form under which bonus credits vest over several years. We will
continue to offer the later version of the Contract With Credit in a State until
the State has approved the former version, after which approval we will offer
only the former version.
PLEASE READ THIS PROSPECTUS
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Annuity One
variable annuity contract, and keep it for future reference. The current
prospectuses for the underlying mutual funds contain important information about
the mutual funds. When you invest in a variable investment option that is funded
by a mutual fund, you should read the mutual fund prospectus and keep it for
future reference.
TO LEARN MORE ABOUT STRATEGIC PARTNERS
ANNUITY ONE
- ------------------------------------------------------------
To learn more about the Strategic Partners Annuity One variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
office, and can also be obtained from the SEC's Public Reference Section, 100 F
Street, N.E., Washington, D.C. 20549. (See SEC file number 333-37728.) You may
obtain information on the operation of the Public Reference Room by calling the
SEC at (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that
contains the Strategic Partners Annuity One SAI, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC. The Table of Contents of the SAI is set forth in Section 10 of
this prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS ANNUITY ONE IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA. ORD000045
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small-Cap Growth Portfolio
SP Small Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
- --------------------------------------------------------------------------------
2
CONTENTS
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<Table>
PART I: STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
-------------------------------------------------
SUMMARY
-------
Glossary........................................... 8
Summary............................................ 12
Summary Of Contract Expenses....................... 17
Expense Examples................................... 22
PART II: STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
------------------------------------------------------------
SECTIONS 1-10
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Section 1: What is the Strategic Partners Annuity One
Variable Annuity?..................................... 27
Short Term Cancellation Right Or "Free Look"....... 28
Section 2: What Investment Options Can I Choose?........ 29
Variable Investment Options........................ 29
Fixed Interest Rate Options........................ 45
Transfers Among Options............................ 46
Additional Transfer Restrictions................... 46
Dollar Cost Averaging.............................. 47
Asset Allocation Program........................... 48
Auto-Rebalancing................................... 48
Scheduled Transactions............................. 48
Voting Rights...................................... 49
Substitution....................................... 49
Section 3: What Kind Of Payments Will I Receive During
the Income Phase? (Annuitization)..................... 50
Payment Provisions................................. 50
Payment Provisions Without The Guaranteed Minimum
Income Benefit................................... 50
Option 1: Annuity Payments For A Fixed
Period....................................... 50
Option 2: Life Annuity with 120 Payments (10
Years) Certain .............................. 50
Option 3: Interest Payment Option.............. 51
Other Annuity Options.......................... 51
Tax Considerations................................. 51
Guaranteed Minimum Income Benefit.................. 51
GMIB Option 1 -- Single Life Payout Option..... 52
GMIB Option 2 -- Joint Life Payout Option...... 52
How We Determine Annuity Payments.................. 53
Section 4: What Is The Death Benefit?................... 55
Beneficiary........................................ 55
Calculation Of The Death Benefit................... 55
Guaranteed Minimum Death Benefit................... 55
GMDB Roll-Up................................... 55
GMDB Step-Up................................... 55
Special Rules If Joint Owners...................... 56
Payout Options..................................... 56
Earnings Appreciator Benefit....................... 57
Spousal Continuance Benefit........................ 58
Section 5: What Is The Lifetime Five(SM) Income
Benefit?.............................................. 60
Lifetime Five Income Benefit....................... 60
Section 6: How Can I Purchase A Strategic Partners
Annuity One Contract? ................................ 67
Purchase Payments.................................. 67
Allocation Of Purchase Payments.................... 67
Credits............................................ 67
</Table>
3
CONTENTS CONTINUED
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<Table>
Calculating Contract Value......................... 68
Section 7: What Are The Expenses Associated With The
Strategic Partners Annuity One Contract?.............. 69
Insurance And Administrative Charges............... 69
Withdrawal Charge.................................. 70
Waiver Of Withdrawal Charges For Critical Care..... 71
Minimum Distribution Requirements.................. 71
Contract Maintenance Charge........................ 71
Guaranteed Minimum Income Benefit Charge........... 71
Earnings Appreciator Benefit Charge................ 72
Taxes Attributable To Premium...................... 72
Transfer Fee....................................... 72
Company Taxes...................................... 73
Underlying Mutual Fund Fees........................ 73
Section 8: How Can I Access My Money?................... 74
Withdrawals During The Accumulation Phase.......... 74
Automated Withdrawals.............................. 74
Suspension Of Payments Or Transfers................ 74
Section 9: What Are The Tax Considerations Associated
With The Strategic Partners Annuity One Contract?..... 75
Contracts Owned by Individuals (Not Associated With
Tax-Favored Retirement Plans).................... 75
Contracts Held By Tax-Favored Plans................ 78
Section 10: Other Information........................... 82
Pruco Life Insurance Company....................... 82
The Separate Account............................... 82
Sale and Distribution Of The Contract.............. 82
Litigation......................................... 83
Assignment......................................... 83
Financial Statements............................... 84
Statement Of Additional Information................ 84
Householding....................................... 84
Appendix A.............................................. 85
Accumulation Unit Values........................... 86
Appendix B.............................................. 102
Calculation Of Earnings Appreciator Benefit........ 102
Appendix C.............................................. 104
Selecting the Variable Annuity That's Right for
You.............................................. 104
</Table>
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6
PART I SUMMARY
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
7
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
GLOSSARY
- --------------------------------------------------------------------------------
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus any
charge we impose for premium taxes and withdrawal charges.
ADJUSTED PURCHASE PAYMENT
Your invested purchase payment is adjusted for any subsequent withdrawals. The
adjusted purchase payment is used only for calculations of the Earnings
Appreciator Benefit.
ANNUAL INCOME AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as the annuitant lives. The Annual Income Amount is
set initially as a percentage of the Protected Withdrawal Value, but will be
adjusted to reflect subsequent purchase payments, withdrawals, and any step-up.
ANNUAL WITHDRAWAL AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining. The
Annual Withdrawal Amount is set initially to equal 7% of the initial Protected
Withdrawal Value, but will be adjusted to reflect subsequent purchase payments,
withdrawals, and any step-up.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
8
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make and has higher withdrawal charges and (with
respect to the later version of the contract) higher insurance and
administrative costs than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges than the Contract With Credit and (with respect to the later
version of the Contract With Credit) lower insurance and administrative costs.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Under one version of the
Contract With Credit, the credit is subject to a vesting schedule, which means
that if you withdraw all or part of a purchase payment within a certain period,
or you begin the income phase or we pay a death benefit during that period, we
may take back all or part of the credit. Under another version of the Contract
With Credit, bonus credits generally are not recaptured once the free look
period expires. Our reference in the preceding sentence to "generally are not
recaptured" refers to the fact that we have the contractual right to deduct,
from the death benefit we pay, the amount of any credit corresponding to a
purchase payment made within one year before death. We have the ability to
recapture such credits under both versions of the Contract With Credit. See
Section 6, "How Can I Purchase A Strategic Partners Annuity One Contract?"
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit is available for an additional charge. See
Section 4, "What Is the Death Benefit?"
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options.
EARNINGS APPRECIATOR BENEFIT (EAB)
An optional feature available for an additional charge that may provide a
supplemental death benefit based on earnings under the contract.
FIXED INTEREST RATE OPTIONS
Under the Contract Without Credit, these are investment options that offer a
fixed rate of interest for either a one-year period (fixed rate option) or a
selected period during which periodic transfers are made to selected variable
investment options.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which may
equal the GMDB roll-up value, the GMDB step-value, or the greater of the two.
The GMDB protected value will be subject to certain age restrictions and time
durations, however, it will still increase by
9
GLOSSARY CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
subsequent invested purchase payments and reduce proportionally by withdrawals.
GMDB ROLL-UP
We use the GMDB roll-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. The GMDB roll-up is equal to the invested
purchase payments compounded daily at an effective annual interest rate starting
on the date that each invested purchase payment is made, subject to a cap, and
reduced proportionally by withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant or number of contract anniversaries. At
such point, the GMIB protected value will be increased by any subsequent
invested purchase payments, and any withdrawals will proportionally reduce the
GMIB protected value. The GMIB protected value is not available as a cash
surrender benefit or a death benefit, nor is it used to calculate the cash
surrender value or death benefit.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on your contract value, subject to our rules regarding the timing
and amount of withdrawals. There are two options--one is designed to provide an
annual withdrawal amount for life and the other is designed to provide a greater
annual withdrawal amount (than the first option) as long as there is Protected
Withdrawal Value.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PROPORTIONAL WITHDRAWALS
A method that involves calculating the percentage of your contract value that
each prior withdrawal represented when withdrawn. Proportional withdrawals
result in a reduction to the applicable benefit value by reducing such value in
the same proportion as the contract value was reduced by the withdrawal as of
the date the withdrawal occurred.
10
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
PROTECTED WITHDRAWAL VALUE
Under the Lifetime Five Income Benefit, we guarantee an amount that you can
withdraw each year until those annual withdrawals, when added together, reach an
aggregate limit. We call that aggregate limit the Protected Withdrawal Value.
Purchase payments and withdrawals you make will result in an adjustment to the
Protected Withdrawal Value. In addition, you may elect to step-up your Protected
Withdrawal Value under certain circumstances.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
(888) PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Annuity One variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 9, "What Are The Tax Considerations Associated With The Strategic
Partners Annuity One Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
11
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-10
- --------------------------------------------------------------------------------
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY?
The Strategic Partners Annuity One variable annuity is a contract between you,
the owner, and us, the insurance company, Pruco Life Insurance Company (Pruco
Life, we or us). The contract allows you to invest on a tax-deferred basis in
variable investment options and if you choose the Contract Without Credit, fixed
interest rate options. The contract is intended for retirement savings or other
long-term investment purposes and provides for a death benefit.
There are two basic versions of the Strategic Partners Annuity One variable
annuity discussed in this prospectus.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges than the Contract Without Credit,
- - the version of the contract under which bonus credits generally are not
recaptured after the free look period has higher insurance and administrative
charges than the Contract Without Credit,
- - has no fixed interest rate investment options available,
- - comes in one version under which bonus credits generally are not recaptured
once the free look period expires, and another version under which bonus
credits vest over a period of several years. Once a State has approved the
former version, we will cease offering the later version, and
- - Under the Contract With Credit under which bonus credits generally are not
recaptured once the free look period expires, we have the contractual right
to deduct, from the death benefit we pay, the amount of any credit
corresponding to a purchase payment made within one year before death.
- - Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges than the Contract With Credit.
- - has lower insurance and administrative costs than the Contract With Credit
under which the bonus credits generally are not recaptured after the free
look period,
- - offers two fixed interest rate investment options: a one-year fixed rate
option and a dollar cost averaging fixed rate option.
Beginning in 2002, we started offering a version of both the Contract Without
Credit and the Contract With Credit that differ from the previously-issued
contracts with regard to maximum issue age, maximum annuitization age, Spousal
Continuance Benefit, credit amount, contract maintenance charge, and minimum
guaranteed interest rate. This subsequent version of the Strategic Partners
Annuity One contract is described in a different prospectus.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option.
The fixed interest rate options available under the Contract Without Credit
offer a guaranteed interest rate. While your money is allocated to one of these
options, your principal amount will not decrease and we guarantee that your
money will earn at least the annual minimum interest rate dictated by applicable
state law.
You may make up to 12 free transfers each contract year among the investment
options. For the Contract Without Credit, certain restrictions apply to
transfers involving the fixed interest rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
12
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
There are certain state variations to this contract that are referred to in
this prospectus. Please see your contract for further information on these and
other variations.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Annuity One, you may
cancel your contract within 10 days after receiving it (or whatever period is
required under applicable law). This time period is referred to as the "Free
Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
Under the Contract Without Credit, you may also invest your money in fixed
interest rate options.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income payments
will be no less than a value that is based on a certain "GMIB protected value"
applied to the GMIB guaranteed annuity purchase rates. See Section 3, "What Kind
Of Payments Will I Receive During The Income Phase?"
The Lifetime Five Income Benefit (discussed in Section 5) may provide an
additional amount upon which your annuity payments are based.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner, or last surviving of the owner and joint owner,
dies before the income phase of the contract begins, the person(s) or entity
that you have chosen as your beneficiary will receive, at a minimum, the greater
of (i) the contract value, (ii) either the base death benefit or, for a higher
insurance charge, a potentially larger Guaranteed Minimum Death Benefit (GMDB).
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal to
a "GMDB protected value" that depends upon which of the following Guaranteed
Minimum Death Benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we call
the "GMDB step-up value";
- - the total amount you invest increased by a guaranteed rate of return, which
we call the "GMDB roll-up value"; or
13
SUMMARY FOR SECTIONS 1-10 CONTINUED
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
- - the greater of the GMDB step-up value and GMDB roll-up value.
On the date we receive proof of death in good order, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe,
in Section 4, are met.
For an additional fee, you may also choose, if it is available under your
contract, the Earnings Appreciator supplemental death benefit which provides a
benefit payment upon the death of the sole owner, or last surviving of the owner
and joint owner, during the accumulation phase.
SECTION 5
WHAT IS THE LIFETIME FIVE(SM) INCOME BENEFIT?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your contract value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options--one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the contract value allocated to the variable investment
options. This charge is in addition to the charge for the applicable death
benefit.
SECTION 6
HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY ONE CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $1,000
($100 if made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger (or age 80 depending on the
version of the contract) on the contract date. In addition, certain age limits
apply to certain features and benefits described herein.
SECTION 7
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE
CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge.
For the original version of the contract, if your contract value is $50,000
or more, we do not deduct such a charge. If your contract value is less than
$50,000, we deduct a charge equal to the lesser of $30 or 2% of your contract
value. For the later version of the contract, we deduct a contract
maintenance charge of $35 if your contract value is less than $75,000 (or 2%
of your contract value, if that amount is less than $35).
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit (or other) option that you choose.
The daily cost is equivalent to an annual charge as follows:
-- 1.40% if you choose the base death benefit,
-- 1.60% if you choose the roll-up or step-up Guaranteed Minimum Death
Benefit option (i.e., 0.20% in addition to the base death benefit
charge), or
-- 1.70% if you choose the greater of the roll-up and step-up Guaranteed
Minimum Death
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
Benefit option (i.e., 0.30% in addition to the base death benefit
charge), or
-- 0.60% if you choose the Lifetime Five Income Benefit. This charge is in
addition to the charge for the applicable death benefit.
- - We will deduct an additional charge under the version of the Contract With
Credit under which bonus credits generally are not recaptured once the free
look period expires. The charge for this feature is equal to 0.10% annually.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.25% of the average GMIB protected value. In the future,
we may also offer other options, for which different charges may apply.
- - We will deduct an additional charge if you choose the Earnings Appreciator
supplemental death benefit. We deduct this charge from your contract value on
the contract anniversary and upon certain other events. The charge for this
benefit is based on an annual rate of 0.15% of your contract value if you
have also selected the Guaranteed Minimum Death Benefit option (0.20% if you
have not selected the Guaranteed Minimum Death Benefit Option).
- - There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states,
we deduct a charge designed to approximate this tax, which can range from
0-3.5% of your contract value.
- - There are also expenses associated with the mutual funds. For 2005, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable arrangements.
In general, these expense waivers and comparable arrangements are not
guaranteed, and may be terminated at any time.
- - If you withdraw money (or you begin the income phase) less than:
-- nine contract anniversaries after the purchase payment, if you purchase
the Contract With Credit under which bonus credits vest over a seven year
period, or
-- seven contract anniversaries after the purchase payment, if you purchase
the Contract Without Credit,
then you may have to pay a withdrawal charge on all or part of the
withdrawal. This charge ranges from 1-7%. For the version of the Contract
With Credit under which bonus credits generally are not recaptured once the
free look period expires, a withdrawal charge applies at any time prior to
the seventh contract anniversary after a purchase payment was made, which
ranges from 5-8%.
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 7, "What Are The
Expenses Associated With The Strategic Partners Annuity One Contract?"
SECTION 8
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. If you withdraw money less than nine
years (for the Contract With Credit under which bonus credits vest over a seven
year period) or seven years (for the Contract Without Credit) after making a
purchase payment, we may impose a withdrawal charge. For the Contract With
Credit under which bonus credits generally are not recaptured once the free look
period expires, a withdrawal charge applies during the first seven contract
years after a purchase payment was made, which ranges from 5-8%. In addition, if
you purchase a Contract With Credit, we may take back any credit that has not
vested that corresponds to the purchase payment(s) you withdraw.
We offer an optional benefit, called the Lifetime Five Income Benefit, under
which we guarantee that certain
15
SUMMARY FOR SECTIONS 1-10 CONTINUED
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
amounts will be available to you for withdrawal, regardless of market-related
declines in your contract value. You need not participate in this benefit in
order to withdraw some or all of your money.
SECTION 9
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY
ONE CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as first a
withdrawal of earnings, which are taxed as ordinary income. If you are younger
than age 59 1/2 when you take money out, you may be charged a 10% federal tax
penalty on the earnings in addition to ordinary taxation. A portion of the
payments you receive during the income phase is considered a partial return of
your original investment and therefore will not be taxable as income. Generally,
all amounts withdrawn from an Individual Retirement Annuity (IRA) contract
(excluding Roth IRAs) are taxable and subject to the 10% penalty if withdrawn
prior to age 59 1/2.
SECTION 10
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
16
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS ANNUITY ONE. THE FOLLOWING TABLES DESCRIBE THE FEES AND
EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT.
THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME
THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE
BETWEEN INVESTMENT OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see Section 7, "What Are The Expenses Associated With The
Strategic Partners Annuity One Contract?" The individual fund prospectuses
contain detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
<Table>
<Caption>
WITHDRAWAL CHARGE(1)
---------------------------------------------------------------------------------------------------------------------
CONTRACT WITH CREDIT (BONUS
NUMBER OF CONTRACT CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT
ANNIVERSARIES SINCE PURCHASE CREDITS VEST OVER SEVEN YEAR RECAPTURABLE AFTER EXPIRATION
PAYMENT PERIOD) OF FREE LOOK PERIOD) CONTRACT WITHOUT CREDIT
---------------------------- ---------------------------- ----------------------------- --------------------------
0 7% 8% 7%
1 7% 8% 6%
2 7% 8% 5%
3 6% 8% 4%
4 5% 7% 3%
5 4% 6% 2%
6 3% 5% 1%
7 2% 0% 0%
8 1% 0% 0%
9 0% 0% 0%
-------------------------- -------------------------- --------------------------
</Table>
<Table>
<Caption>
MAXIMUM TRANSFER FEE
- --------------------
Each transfer after 12(2) $30.00
</Table>
CHARGE FOR PREMIUM TAX IMPOSED ON US BY CERTAIN STATES/JURISDICTIONS
- --------------------------------------------------------------------------------
Up to 3.5% of contract value
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" in Section 7. In certain states reduced withdrawal charges may apply
under the Contract With Credit. Your contract contains the applicable charges.
2: Currently we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing and do not
count them toward the limit of 12 free transfers per year.
17
SUMMARY OF CONTRACT EXPENSES CONTINUED
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
The next table describes the fees and expenses you will pay periodically during
the time that you own the contract, not including underlying mutual fund fees
and expenses.
PERIODIC ACCOUNT EXPENSES
<Table>
MAXIMUM CONTRACT MAINTENANCE CHARGE AND CONTRACT CHARGE UPON FULL WITHDRAWAL(3)
- ----------------------------------------------------------------------------------------------------------------
$60.00
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED BENEFITS
- ----------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF ACCOUNT VALUE IN VARIABLE INVESTMENT OPTIONS:
</Table>
<Table>
<Caption>
CONTRACT WITH
CREDIT (BONUS
CREDITS GENERALLY
NOT RECAPTURABLE
AFTER EXPIRATION OF
FREE LOOK PERIOD)
------------------------------------------------------------------
Base Death Benefit 1.50%
Base Death Benefit with
Lifetime Five 2.10%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up 1.70%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up with Lifetime
Five Income Benefit 2.30%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up 1.80%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up
with Lifetime Five
Income Benefit 2.40%
<Caption>
CONTRACT
WITHOUT CREDIT
OR CONTRACT
WITH CREDIT
(VERSION UNDER
WHICH BONUS
CREDITS VEST
OVER SEVEN
YEAR PERIOD)
------------------------------------------------------------------
Base Death Benefit 1.40%
Base Death Benefit with
Lifetime Five 2.00%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up 1.60%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up with Lifetime
Five Income Benefit 2.20%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up 1.70%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up
with Lifetime Five
Income Benefit 2.30%
</Table>
<Table>
ANNUAL GUARANTEED MINIMUM INCOME BENEFIT CHARGE AND CHARGE UPON CERTAIN
WITHDRAWALS(4)
- ------------------------------------------------------------------
AS A PERCENTAGE OF AVERAGE GMIB PROTECTED VALUE 0.25%
ANNUAL EARNINGS APPRECIATOR CHARGE AND CHARGE UPON CERTAIN TRANSACTIONS(5)
- ------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.20% of contract value (0.15% if
Guaranteed Minimum Death Benefit
option is also selected)
</Table>
3: As shown in the table above, we have the right to assess a fee of up to $60
annually and at the time of full withdrawal. For the original version of the
contract, if your contract value is $50,000 or more, we do not deduct such a
charge. If your contract value is less than $50,000, we deduct a charge equal to
$30 or, if your contract value is less than $1,500, equal to 2% of your contract
value. Under the most recent version of the contract, we assess a fee of $35
against contracts valued less than $75,000 (or 2% of contract value, if less).
4: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.25% of the average GMIB protected value.
Subject to certain age restrictions, the roll-up value is the total of all
invested purchase payments compounded daily at an effective annual rate of 5%,
subject to a cap of 200% of all invested purchase payments. Both the roll-up
value and the cap are reduced proportionally by withdrawals. We assess this fee
each contract anniversary and when you begin the income phase of your contract.
We also assess this fee if you make a full withdrawal, but prorate the fee based
on the portion of the contract year that has elapsed since the full annual fee
was most recently deducted. If you make a partial withdrawal, we will assess the
prorated fee if the remaining contract value after the withdrawal would be less
than the amount of the prorated fee; otherwise we will not assess the fee at
that time.
5: We impose this charge only if you choose the Earnings Appreciator death
benefit. The charge for this benefit is based on an annual rate of 0.15% of your
contract value if you have also selected a Guaranteed Minimum Death Benefit
option (0.20% if you have not selected a Guaranteed Minimum Death Benefit
option). We deduct this charge annually. We also deduct this charge if you make
a full withdrawal or enter the income phase of your contract, or if a death
benefit is payable, but prorate the fee to reflect a partial rather than full
year. If you make a partial withdrawal, we will deduct the prorated fee if the
remaining contract value after the withdrawal would be less than the amount of
the prorated fee; otherwise we will not deduct the fee at that time. The fee is
also calculated when you make any purchase payment or withdrawal but we do not
deduct it until the next deduction date.
18
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners Annuity One contract, and
may vary from year to year.
<Table>
<Caption>
MINIMUM MAXIMUM
------- -------
Total Annual Underlying Mutual Fund Operating Expenses* 0.38% 1.67%
</Table>
* See "Summary of Contract Expenses" -- Underlying Mutual Fund Portfolio Annual
Expenses for more detail on the expenses of the underlying mutual funds.
19
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
THE PRUDENTIAL SERIES FUND(2)
- -------------------------------------------------------------------------------------------------------------------------------
Jennison Portfolio 0.60% 0.03% -- 0.63%
Prudential Equity Portfolio(3) 0.45% 0.02% -- 0.47%
Prudential Global Portfolio(4) 0.75% 0.07% -- 0.82%
Prudential Money Market Portfolio 0.40% 0.05% -- 0.45%
Prudential Stock Index Portfolio 0.35% 0.03% -- 0.38%
Prudential Value Portfolio 0.40% 0.03% -- 0.43%
SP Aggressive Growth Asset Allocation
Portfolio(5,6) 0.84% 0.11% -- 0.95%
SP AIM Core Equity Portfolio 0.85% 0.15% -- 1.00%
SP Balanced Asset Allocation Portfolio(5,6) 0.76% 0.09% -- 0.85%
SP Conservative Asset Allocation Portfolio(5,6) 0.72% 0.08% -- 0.80%
SP Davis Value Portfolio 0.75% 0.07% -- 0.82%
SP Growth Asset Allocation Portfolio(5,6) 0.81% 0.10% -- 0.91%
SP Large Cap Value Portfolio(5) 0.80% 0.03% -- 0.83%
SP LSV International Value Portfolio 0.90% 0.16% -- 1.06%
SP Mid Cap Growth Portfolio 0.80% 0.20% -- 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.07% -- 0.67%
SP PIMCO Total Return Portfolio 0.60% 0.02% -- 0.62%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% -- 0.80%
SP Small Cap Growth Portfolio 0.95% 0.10% -- 1.05%
SP Small Cap Value Portfolio (formerly SP Goldman
Sachs Small Cap Value Portfolio)(7) 0.90% 0.07% -- 0.97%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.17% -- 1.07%
SP T. Rowe Price Large-Cap Growth Portfolio
(formerly SP AllianceBernstein Large-Cap Growth
Portfolio)(8,9) 0.90% 0.16% -- 1.06%
SP William Blair International Growth Portfolio 0.85% 0.13% -- 0.98%
AMERICAN SKANDIA TRUST (2,10)
- -------------------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio 0.85% 0.18% 1.03%
AST Aggressive Asset Allocation Portfolio(11) 1.04% 0.29% -- 1.33%
AST AllianceBernstein Core Value Portfolio 0.75% 0.19% -- 0.94%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.13% -- 0.88%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.17% -- 0.77%
AST American Century Income & Growth Portfolio 0.75% 0.18% -- 0.93%
AST American Century Strategic Balanced Portfolio 0.85% 0.23% -- 1.08%
AST Balanced Asset Allocation Portfolio(11) 0.95% 0.20% -- 1.15%
AST Capital Growth Asset Allocation Portfolio(11) 1.00% 0.20% -- 1.20%
AST Cohen & Steers Realty Portfolio 1.00% 0.18% -- 1.18%
AST Conservative Asset Allocation Portfolio(11) 0.94% 0.24% -- 1.18%
AST DeAM Large-Cap Value Portfolio 0.85% 0.22% -- 1.07%
AST DeAM Small-Cap Growth Portfolio 0.95% 0.20% -- 1.15%
AST DeAM Small-Cap Value Portfolio 0.95% 0.24% -- 1.19%
AST Federated Aggressive Growth Portfolio 0.95% 0.17% -- 1.12%
AST First Trust Balanced Target Portfolio 0.85% 0.19% -- 1.04%
AST First Trust Capital Appreciation Target
Portfolio 0.85% 0.19% -- 1.04%
AST Global Allocation Portfolio 0.86% 0.23% -- 1.09%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.16% -- 1.06%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.18% -- 1.18%
AST High Yield Portfolio (formerly, AST Goldman
Sachs High Yield Portfolio)(12) 0.75% 0.19% -- 0.94%
AST JPMorgan International Equity Portfolio 0.88% 0.19% -- 1.07%
AST Large-Cap Value Portfolio (formerly AST
Hotchkis and Wiley Large-Cap Value
Portfolio)(13,14,15) 0.75% 0.16% -- 0.91%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.17% -- 0.97%
AST Marsico Capital Growth Portfolio 0.90% 0.13% -- 1.03%
AST MFS Global Equity Portfolio 1.00% 0.26% -- 1.26%
AST MFS Growth Portfolio 0.90% 0.18% -- 1.08%
</Table>
20
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PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
AST Mid Cap Value Portfolio (formerly, AST Gabelli
All-Cap Value Portfolio)(16) 0.95% 0.22% -- 1.17%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.18% -- 1.08%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.14% -- 1.03%
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.15% -- 0.80%
AST Preservation Asset Allocation Portfolio(11) 0.89% 0.38% -- 1.27%
AST Small-Cap Value Portfolio(13,17) 0.90% 0.17% -- 1.07%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.23% -- 1.08%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.21% -- 1.01%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.18% -- 1.08%
GARTMORE VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------------------------
GVIT Developing Markets Fund(18, 19) 1.05% 0.37% 0.25% 1.67%
JANUS ASPEN SERIES
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio -- Service Shares(19) 0.64% 0.02% 0.25% 0.91%
</Table>
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
21
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1a: Contract With Credit (bonus credits vest over seven year period):
Greater of Roll-up and Step-up Guaranteed Minimum Death Benefit Option; Lifetime
Five Income Benefit; Earnings Appreciator Benefit and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit (bonus credits vest over seven
year period);
- - You choose a Guaranteed Minimum Death Benefit that provides the greater of
the step-up and roll-up death benefit;
- - You choose the Lifetime Five Income Benefit;
- - You choose the Earnings Appreciator Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
22
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
EXAMPLE 1b: Contract With Credit (bonus credits vest over seven year period):
Greater of Roll-up and Step-up Guaranteed Minimum Death Benefit Option; Lifetime
Five Income Benefit; Earnings Appreciator Benefit and You Do Not Withdraw Your
Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 2a: Contract With Credit (bonus credits vest over seven year period):
Base Death Benefit, and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit (bonus credits vest over seven
year period);
- - You do not choose any optional insurance benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Contract With Credit (bonus credits vest over seven year period):
Base Death Benefit, and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings Appreciator
Benefit and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
23
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
EXAMPLE 3b: Contract With Credit (bonus credits are generally not recapturable
after expiration of the free look period): Greater of Roll-up and Step-up
Guaranteed Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings
Appreciator Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 4a: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 4b: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Base Death Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 5a: Contract Without Credit, Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit, Earnings Appreciator
Benefit and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 5b: Contract Without Credit, Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings Appreciator
Benefit; and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 6a: Contract Without Credit: Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 6b: Contract Without Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract Without Credit.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Examples 1a, 2a,
3a, 4a, 5a, and 6a) are assessed in
connection with some annuity
options, but not others.
The values shown in the 10 year
column are the same for Example 6a
and 6b, Example 5a and 5b, Example
4a and Example 4b, the same for
Example 3a and 3b, the same for
Example 2a and 2b, and the same for
Example 1a and 1b. This is because
if 10 years have elapsed since your
last purchase payment, we would no
longer deduct withdrawal charges
when you make a withdrawal or begin
the income phase of your contract.
The indicated examples reflect the
maximum withdrawal charges, but in
certain states reduced withdrawal
charges may apply for certain ages.
The examples use an average
contract maintenance charge, which
we calculated based on our estimate
of the total contract fees we
expect to collect in 2006. Your
actual fees will vary based on the
amount of your contract and your
specific allocation among the
investment options.
Premium taxes are not reflected in
the examples. We deduct a charge to
approximate premium taxes that may
be imposed on us in your state.
This charge is generally deducted
from the amount applied to an
annuity payout option.
A table of accumulation unit values
appears in Appendix A to this
prospectus.
24
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SUMMARY
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS VEST OVER SEVEN YEAR PERIOD): GREATER OF
ROLL-UP AND STEP-UP GUARANTEED MINIMUM DEATH BENEFIT OPTION; LIFETIME FIVE
INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 1a: EXAMPLE 1b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,491 $2,347 $3,030 $4,732 $461 $1,391 $2,332 $4,732
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS VEST OVER SEVEN YEAR PERIOD): BASE DEATH
BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 2a: EXAMPLE 2b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,383 $2,033 $2,523 $3,804 $353 $1,077 $1,825 $3,804
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT RECAPTURABLE AFTER
EXPIRATION OF FREE LOOK PERIOD): GREATER OF ROLL-UP AND STEP-UP GUARANTEED
MINIMUM DEATH BENEFIT OPTION; LIFETIME FIVE INCOME BENEFIT; EARNINGS
APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 3a: EXAMPLE 3b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,228 $2,187 $3,060 $4,856 $476 $1,435 $2,402 $4,856
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT RECAPTURABLE AFTER
EXPIRATION OF FREE LOOK PERIOD): BASE DEATH BENEFIT
- --------------------------------------------------------------------------
EXAMPLE 4a: EXAMPLE 4b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,121 $1,875 $2,557 $3,943 $369 $1,123 $1,899 $3,943
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: GREATER OF ROLL-UP AND STEP-UP GUARANTEED MINIMUM
DEATH BENEFIT; LIFETIME FIVE INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 5a: EXAMPLE 5b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,078 $1,802 $2,535 $4,590 $448 $1,352 $2,265 $4,590
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: BASE DEATH BENEFIT
- ------------------------------------------------------------------------
EXAMPLE 6a: EXAMPLE 6b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
--------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$975 $1,501 $2,049 $3,703 $345 $1,051 $1,779 $3,703
</Table>
25
PART II SECTIONS 1-10
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
26
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU,
THE OWNER, AND US, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the third contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
There are two basic versions of Strategic Partners Annuity One variable
annuity.
Contract With Credit:
- - provides for a bonus credit that we add to each purchase payment that you
make ,
- - comes in one version under which bonus credits generally are not recaptured
after the expiration of the free look period, and another version under which
bonus credits vest over a period of several years. Once a State has approved
the former version, we will cease offering the later version,
- - has higher withdrawal charges than the Contract Without Credit,
- - the version of the contract under which bonus credits generally are not
recaptured after the free look period has higher insurance and administrative
charges than the Contract Without Credit, and
- - has no fixed interest rate investment options available.
Contract Without Credit:
- - does not provide a credit,
- - has lower withdrawal charges than the Contract With Credit,
- - has lower insurance and administrative costs than the Contract With Credit
under which the bonus credits generally are not recaptured after the free
look period, and
- - offers two fixed interest rate investment options: a one-year fixed rate
option and a dollar cost averaging fixed rate option.
Beginning in 2002, we started offering a version of both the Contract Without
Credit and the Contract With Credit that differ from previously-issued contracts
with regard to maximum issue age, maximum annuitization age, Spousal Continuance
Benefit, credit amount, contract maintenance charge, and minimum guaranteed
interest rate.
Unless we state otherwise, when we use the word contract, it applies to both
versions discussed herein.
In replacing another annuity you may own, please consider all charges
associated with that annuity. Credits applicable to bonus products, such as the
Contract With Credit, should not be viewed as an offset of any surrender charge
that applies to another annuity contract you may currently own.
27
1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
You may prefer the Contract With Credit if:
- - You anticipate that you will not need to withdraw purchase payments any
earlier than at least seven contract anniversaries after making them,
- - You do not wish to allocate purchase payments to the fixed interest rate
options, and
- - You believe that the bonus credit is worth the higher withdrawal charges and
insurance and administrative costs.
If you wish to have the option of allocating part of your contract value to
the fixed interest rate options, you may prefer the Contract Without Credit.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Annuity One if you anticipate having to withdraw a
significant amount of your purchase payments within a few years of making those
purchase payments.
Strategic Partners Annuity One is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options and, if you choose the Contract Without Credit, guaranteed fixed
interest rate options as well. If you select variable investment options, the
amount of money you are able to accumulate in your contract during the
accumulation phase depends upon the investment performance of the underlying
mutual fund(s) associated with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR
"FREE LOOK"
If you change your mind about owning Strategic Partners Annuity One, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive, depending on applicable state law:
- - Your full purchase payment, less any applicable federal and state income tax
withholding; or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value. To the extent dictated by state law, we will
include in your refund the amount of any fees and charges that we deducted.
28
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
- --------------------------------------------------------------------------------
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, AND IF YOU CHOOSE THE CONTRACT WITHOUT CREDIT,
FIXED INTEREST RATE OPTIONS.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/subadviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
subadvisers to manage specific portions of a portfolio, and the portion managed
by a subadviser may vary from 0% to 100% of the portfolio's assets. The
subadvisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker/dealer firms' registered
representatives and creating marketing material discussing the contract and the
available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those Portfolios.
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
However, a contract owner who had contract value allocated to a Prudential
Series Fund Asset Allocation Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date. In addition, after
December 5, 2005, we ceased offering the Prudential Series Fund SP Large Cap
Value Portfolio to new purchasers and to existing contract owners who had not
previously invested in that Portfolio. However, a contract owner who had
contract value allocated to the SP Large Cap Value Portfolio prior to December
5, 2005 may continue to allocate purchase payments to that Portfolio after that
date.
30
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP JENNISON PORTFOLIO: seeks long-term growth of capital. The Jennison Associates
GROWTH Portfolio invests primarily in equity securities of major, LLC
established corporations that the Sub-adviser believes offer
above-average growth prospects. The Portfolio may invest up
to 30% of its total assets in foreign securities. Stocks are
selected on a company-by-company basis using fundamental
analysis. Normally 65% of the Portfolio's total assets are
invested in common stocks and preferred stocks of companies
with capitalization in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of Jennison Associates
BLEND capital. The Portfolio invests at least 80% of its net LLC; Salomon Brothers
assets plus borrowings for investment purposes in common Asset Management Inc
stocks of major established corporations as well as smaller
companies that the Sub-advisers believe offer attractive
prospects of appreciation.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of LSV Asset Management;
EQUITY capital. The Portfolio invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign and U.S. companies. Each Management, LLC;
Sub-adviser for the Portfolio generally will use either a T. Rowe Price
"growth" approach or a "value" approach in selecting either Associates, Inc.;
foreign or U.S. common stocks. William Blair &
Company, LLC
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current Prudential Investment
income consistent with the stability of capital and the Management, Inc.
maintenance of liquidity. The Portfolio invests in
high-quality short-term money market instruments issued by
the U.S. Government or its agencies, as well as by
corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in
thirteen months or less, and which are denominated in U.S.
dollars.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment results Quantitative
BLEND that generally correspond to the performance of Management Associates
publicly-traded common stocks. With the price and yield LLC
performance of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) as the benchmark, the Portfolio
normally invests at least 80% of investable assets in S&P
500 stocks. The S&P 500 represents more than 70% of the
total market value of all publicly-traded common stocks and
is widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to
select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
31
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL VALUE PORTFOLIO: seeks long-term growth of Jennison Associates
VALUE capital through appreciation and income. The Portfolio LLC
invests primarily in common stocks that the Sub-adviser
believes are undervalued -- those stocks that are trading
below their underlying asset value, cash generating ability
and overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the market
as a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
Normally at least 65% of the Portfolio's total assets is
invested in the common stock and convertible securities of
companies that the Sub-adviser believes will provide
investment returns above those of the S&P 500 or the New
York Stock Exchange (NYSE) Composite Index. Most of the
investments will be securities of large capitalization
companies. The Portfolio may invest up to 25% of its total
assets in real estate investment trusts (REITs) and up to
30% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with Investments LLC
BALANCED the specified level of risk tolerance. The Portfolio may
invest in any other Portfolio of the Fund (other than
another SP Asset Allocation Portfolio), the AST Marsico
Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the
Underlying Portfolios). Under normal circumstances, the
Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying
Portfolios. (Effective December 5, 2005, this Portfolio was
closed to new purchasers and to existing contract owners who
had not previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND SP AIM CORE EQUITY PORTFOLIO: seeks long-term growth of AIM Capital
capital. The Portfolio normally invests at least 80% of Management, Inc.
investable assets in equity securities, including
convertible securities of established companies that have
long-term above-average growth in earnings and growth
companies that the Sub-adviser believes have the potential
for above-average growth in earnings. The Portfolio may
invest up to 20% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
ALLOCATION/ highest potential total return consistent with the specified Investments LLC
BALANCED level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). The Portfolio will invest in equity and
fixed-income Underlying Portfolios. (Effective December 5,
2005, this Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in
the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
32
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to obtain Prudential
the highest potential total return consistent with the Investments LLC
specified level of risk tolerance. The Portfolio may invest
in any other Portfolio of the Fund (other than another SP
Asset Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on fixed-income Underlying Portfolios
but will also invest in equity Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The Davis Selected
Portfolio invests primarily in common stocks of U.S. Advisers, L.P.
companies with market capitalizations of at least $5
billion. It may also invest in stocks of foreign companies
and U.S. companies with smaller capitalizations. The
Sub-adviser attempts to select common stocks of businesses
that possess characteristics that the Sub-adviser believe
foster the creation of long-term value, such as proven
management, a durable franchise and business model, and
sustainable competitive advantages. The Sub-adviser aims to
invest in such businesses when they are trading at a
discount to their intrinsic worth. There is a risk that
"value" stocks can perform differently from the market as a
whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
highest potential total return consistent with the specified Investments LLC
level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on equity Underlying Portfolios but
will also invest in fixed-income Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of Hotchkis and Wiley
capital. The Portfolio normally invests at least 80% of Capital Management,
investable assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are believed Investment Management
to be undervalued and have an above-average potential to Inc., Dreman Value
increase in price, given the company's sales, earnings, book Management LLC
value, cash flow and recent performance. The Portfolio seeks
to achieve its objective through investments primarily in
equity securities of large capitalization companies.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
33
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP LSV INTERNATIONAL VALUE PORTFOLIO: seeks capital growth. LSV Asset Management
The Portfolio pursues its objective by primarily investing
at least 80% of the value of its assets in the equity
securities of companies in developed non-U.S. countries that
are represented in the MSCI EAFE Index. The target of this
Portfolio is to outperform the unhedged US Dollar total
return (net of foreign dividend withholding taxes) of the
MSCI EAFE Index. The Sub-Adviser uses proprietary
quantitative models to manage the Portfolio in a bottom-up
security selection approach combined with overall portfolio
risk management.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of Calamos Advisors LLC
capital. The Portfolio normally invests at least 80% of
investable assets in common stocks and related securities,
such as preferred stocks, convertible securities and
depositary receipts for those securities. These securities
typically are of medium market capitalizations, which the
Sub-adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the
Portfolio as companies with market capitalizations equaling
or exceeding $250 million but not exceeding the top of the
Russell Mid Cap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or traded
in the over-the-counter markets. The Sub-adviser uses a
bottom-up and top-down analysis in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis, as well as a top-down approach to
diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging markets
securities).
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO HIGH YIELD PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a two- to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO TOTAL RETURN PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a three-to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks Jennison Associates
long-term capital appreciation. The Portfolio normally LLC
invests at least 80% of investable assets in equity
securities of small and medium sized U.S. companies that the
Sub-adviser believes have the potential for above-average
earnings growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
34
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH SP SMALL CAP GROWTH PORTFOLIO: seeks long-term capital Eagle Asset
growth. The Portfolio pursues its objective by primarily Management; Neuberger
investing in the common stocks of small-capitalization Berman Management,
companies, which is defined as a company with a market Inc.
capitalization, at the time of purchase, no larger than the
largest capitalized company included in the Russell 2000
Index during the most recent 11-month period (based on
month-end data) plus the most recent data during the current
month.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE SP SMALL-CAP VALUE PORTFOLIO(formerly SP Goldman Sachs Small Goldman Sachs Asset
Cap Value Portfolio): seeks long-term capital growth. The Management, L.P.;
Portfolio normally invests at least 80% its net assets plus Salomon Brothers
borrowings for investment purposes in the equity securities Asset Management Inc
of small capitalization companies. The Portfolio focuses on
equity securities that are believed to be undervalued in the
market place.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks AllianceBernstein
long-term growth of capital. The Portfolio normally invests L.P.; Jennison
at least 65% of total assets in equity-related securities of Associates LLC
U.S. companies that the Sub-advisers believe to have strong
capital appreciation potential. The Portfolio's strategy is
to combine the efforts of two Sub-advisers and to invest in
the favorite stock selection ideas of three portfolio
managers (two of whom invest as a team). Each Sub-adviser to
the Portfolio utilizes a growth style to select
approximately 20 securities. The portfolio managers build a
portfolio with stocks in which they have the highest
confidence and may invest more than 5% of the Portfolio's
assets in any one issuer. The Portfolio is nondiversified,
meaning it can invest a relatively high percentage of its
assets in a small number of issuers. Investing in a
nondiversified portfolio, particularly a portfolio investing
in approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of an on diversified portfolio.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (formerly SP T. Rowe Price
Alliance Bernstein Large-Cap Growth Portfolio): seeks Associates, Inc.
long-term capital growth. Under normal circumstances, the
Portfolio invests at least 80% of its net assets plus
borrowings for investment purposes in the equity securities
of large-cap companies. The Sub-adviser generally looks for
companies with an above-average rate of earnings and cash
flow growth and a lucrative niche in the economy that gives
them the ability to sustain earnings momentum even during
times of slow economic growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
35
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO: seeks William Blair &
long-term capital appreciation. The Portfolio invests Company, LLC
primarily in stocks of large and medium-sized companies
located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index. Under normal
market conditions, the portfolio invests at least 80% of its
net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six
different countries and will not concentrate investments in
any particular industry. The Portfolio seeks companies that
historically have had superior growth, profitability and
quality relative to local markets and relative to companies
within the same industry worldwide, and that are expected to
continue such performance.
- -----------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST ADVANCED STRATEGIES PORTFOLIO: seeks a high level of Marsico Capital
absolute return. The Portfolio invests primarily in a Management, LLC; T.
diversified portfolio of equity and fixed income securities Rowe Price
across different investment categories and investment Associates, Inc.; LSV
managers. The Portfolio pursues a combination of traditional Asset Management;
and non-traditional investment strategies. William Blair &
Company, L.L.C.;
Pacific Investment
Management Company
LLC (PIMCO)
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
92.5% to 100% of its net assets to underlying portfolios
investing primarily in equity securities, and 0% to 7.5% of
its net assets to underlying portfolios investing primarily
in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO: seeks long-term AllianceBernstein
capital growth by investing primarily in common stocks. The L.P.
Sub-adviser expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued. Among other things,
the Portfolio seeks to identify compelling buying
opportunities created when companies are undervalued on the
basis of investor reactions to near-term problems or
circumstances even though their long-term prospects remain
sound. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
36
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO: seeks AllianceBernstein
long-term growth of capital and income while attempting to L.P.
avoid excessive fluctuations in market value. The Portfolio
normally will invest in common stocks (and securities
convertible into common stocks). The Sub-adviser will take a
value-oriented approach, in that it will try to keep the
Portfolio's assets invested in securities that are selling
at reasonable valuations in relation to their fundamental
business prospects. The stocks that the Portfolio will
normally invest in are those of seasoned companies.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO (AST AllianceBernstein
AllianceBernstein Growth + Value Portfolio merged into this L.P.
Portfolio): seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P (R) 500") through
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest,
under normal circumstances, at least 80% of its net assets
in securities included in the S&P(R) 500.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO: seeks American Century
capital growth with current income as a secondary objective. Investment
The Portfolio invests primarily in common stocks that offer Management, Inc.
potential for capital growth, and may, consistent with its
investment objective, invest in stocks that offer potential
for current income. The Sub-adviser utilizes a quantitative
management technique with a goal of building an equity
portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and
while attempting to create a dividend yield that will be
greater than the S&P 500 Index.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO: seeks American Century
BALANCED capital growth and current income. The Sub-adviser intends Investment
to maintain approximately 60% of the Portfolio's assets in Management, Inc.
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed
income investments will fluctuate in value. The equity
securities will fluctuate depending on the performance of
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST BALANCED ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in equity securities, and 27.5% to 42.5%
of its net assets to underlying portfolios investing
primarily in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
37
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 72.5% to 87.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
12.5% to 27.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST COHEN & STEERS REALTY PORTFOLIO: seeks to maximize total Cohen & Steers
return through investment in real estate securities. The Capital Management,
Portfolio pursues its investment objective by investing, Inc.
under normal circumstances, at least 80% of its net assets
in securities of real estate issuers. Under normal
circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate
companies, i.e., a company that derives at least 50% of its
revenues from the ownership, construction, financing,
management or sale of real estate or that has at least 50%
of its assets in real estate. Real estate companies may
include realestate investment trusts or REITs.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 47.5% to 62.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
37.5% to 52.5% of its net assets to underlying portfolios
investing primarily in debt securitiesand money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST DEAM LARGE-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
capital by investing primarily in the value stocks of larger Management, Inc.
companies. The Portfolio pursues its objective, under normal
market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 1000(R) Value Index, but which attempts to
outperform the Russell 1000(R) Value Index through active
stock selection.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST DEAM SMALL-CAP GROWTH PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital from a portfolio of growth stocks of Management, Inc.
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Growth
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Growth Index, but which attempts to
outperform the Russell 2000(R) Growth Index.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
38
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST DEAM SMALL-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital. The Portfolio pursues its objective, Management, Inc.
under normal market conditions, by primarily investing at
least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Value Index, but which attempts to
outperform the Russell 2000(R) Value Index.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO: seeks capital Federated Equity
growth. The Portfolio pursues its investment objective by Management Company of
investing primarily in the stocks of small companies that Pennsylvania;
are traded on national security exchanges, NASDAQ stock Federated Global
exchange and the over-the-counter-market. Small companies Investment Management
will be defined as companies with market capitalizations Corp.
similar to companies in the Russell 2000 Growth Index. Up to
25% of the Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST BALANCED TARGET PORTFOLIO: seeks long-term First Trust Advisors
capital growth balanced by current income. The Portfolio L.P.
normally invests approximately 65% of its total assets in
equity securities and 35% in fixed income securities.
Depending on market conditions, the equity portion may range
between 60-70% and the fixed income portion between 30-40%.
The Portfolio allocates its assets across a number of
uniquely specialized investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO: seeks First Trust Advisors
long-term growth of capital. The Portfolio normally invests L.P.
approximately 80% of its total assets in equity securities
and 20% in fixed income securities. Depending on market
conditions, the equity portion may range between 75-85% and
the fixed income portion between 15-25%. The Portfolio
allocates its assets across a number of uniquely specialized
investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST GLOBAL ALLOCATION PORTFOLIO: seeks to obtain the highest Prudential
potential total return consistent with a specified level of Investments LLC
risk tolerance. The Portfolio seeks to achieve its
investment objective by investing in several other AST
Portfolios ("Underlying Portfolios"). The Portfolio intends
its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an
investor could otherwise achieve only by holding numerous
investments. It is expected that the investment objectives
of such AST Portfolios will be diversified.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
39
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO: seeks Goldman Sachs Asset
growth of capital in a manner consistent with the Management, L.P.
preservation of capital. Realization of income is not a
significant investment consideration and any income realized
on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity
securities of companies that the Sub-adviser believes have
the potential to achieve capital appreciation over the
long-term. The Portfolio seeks to achieve its investment
objective by investing, under normal circumstances, in
approximately 30-45 companies that are considered by the
Sub-adviser to be positioned for long-term growth.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO: seeks long-term Goldman Sachs Asset
capital growth. The Portfolio pursues its investment Management, L.P.
objective, by investing primarily in equity securities
selected for their growth potential, and normally invests at
least 80% of the value of its assets in medium
capitalization companies. For purposes of the Portfolio,
medium-sized companies are those whose market
capitalizations (measured at the time of investment) fall
within the range of companies in the Russell Mid Cap Growth
Index. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST HIGH YIELD PORTFOLIO (formerly AST Goldman Sachs High Goldman Sachs Asset
Yield Portfolio): seeks a high level of current income and Management, L.P.;
may also consider the potential for capital appreciation. Pacific Investment
The Portfolio invests, under normal circumstances, at least Management Company
80% of its net assets plus any borrowings for investment LLC (PIMCO)
purposes (measured at time of purchase) in high yield,
fixed-income securities that, at the time of purchase, are
non-investment grade securities. Such securities are
commonly referred to as "junk bonds."
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO: seeks long-term J.P.Morgan Investment
capital growth by investing in a diversified portfolio of Management Inc.
international equity securities. The Portfolio seeks to meet
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a
recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the
issuer is principally based, but may also be traded in other
countries including the United States.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST LARGE-CAP VALUE PORTFOLIO (formerly AST Hotchkis and Dreman Value
Wiley Large-Cap Value Portfolio): seeks current income and Management LLC,
long-term growth of income, as well as capital appreciation. Hotchkis and Wiley
The Portfolio invests, under normal circumstances, at least Capital Management,
80% of its net assets in common stocks of large cap U.S. LLC; J.P. Morgan
companies. The Portfolio focuses on common stocks that have Investment
a high cash dividend or payout yield relative to the market Management, Inc.
or that possess relative value within sectors.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE PORTFOLIO: seeks high current Lord, Abbett & Co.
income and the opportunity for capital appreciation to LLC
produce a high total return. To pursue its objective, the
Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities
and normally invests primarily in high yield and investment
grade debt securities, securities convertible into common
stock and preferred stocks. The Portfolio may find good
value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have
more than half of its assets invested in those securities.
At least 20% of the Portfolio's assets must be invested in
any combination of investment grade debt securities, U.S.
Government securities and cash equivalents. The Portfolio
may also make significant investments in mortgage-backed
securities. Although the Portfolio expects to maintain a
weighted average maturity in the range of five to twelve
years, there are no restrictions on the overall Portfolio or
on individual securities. The Portfolio may invest up to 20%
of its net assets in equity securities.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MARSICO CAPITAL GROWTH PORTFOLIO: seeks capital growth. Marsico Capital
Income realization is not an investment objective and any Management, LLC
income realized on the Portfolio's investments, therefore,
will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies. In
selecting investments for the Portfolio, the Sub-adviser
uses an approach that combines "top down" economic analysis
with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that may
benefit from the trends the Sub-adviser has observed. The
Sub-adviser then looks for individual companies with
earnings growth potential that may not be recognized by the
market at large, utilizing a "bottom up" stock selection
process. The Portfolio will normally hold a core position of
between 35 and 50 common stocks. The Portfolio may hold a
limited number of additional common stocks at times when the
Portfolio manager is accumulating new positions, phasing out
existing or responding to exceptional market conditions.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST MFS GLOBAL EQUITY PORTFOLIO: seeks capital growth. Under Massachusetts
normal circumstances the Portfolio invests at least 80% of Financial Services
its assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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- --------------------------------------------------------------------------------
PART II
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<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MFS GROWTH PORTFOLIO: seeks long-term capital growth and Massachusetts
future income. Under normal market conditions, the Portfolio Financial Services
invests at least 80% of its total assets in common stocks Company
and related securities, such as preferred stocks,
convertible securities and depositary receipts, of companies
that the Sub-adviser believes offer better than average
prospects for long-term growth. The Sub-adviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE AST MID CAP VALUE PORTFOLIO (formerly AST Gabelli All-Cap EARNEST Partners LLC;
Value Portfolio): seeks to provide capital growth by WEDGE Capital
investing primarily in mid-capitalization stocks that appear Management, LLP
to be undervalued. The Portfolio has a non-fundamental
policy to invest, under normal circumstances, at least 80%
ofthe value of its net assets inmid-capitalization
companies.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO: (AST Alger Neuberger Berman
All-Cap Growth Portfolio merged into this Portfolio): seeks Management Inc.
capital growth. Under normal market conditions, the
Portfolio primarily invests at least 80% of its net assets
in the common stocks of mid-cap companies. The Sub-adviser
looks for fast-growing companies that are in new or rapidly
evolving industries.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO: seeks capital Neuberger Berman
growth. Under normal market conditions, the Portfolio Management Inc.
primarily invests at least 80% of its net assets in the
common stocks of mid-cap companies. For purposes of the
Portfolio, companies with equity market capitalizations that
fall within the range of the Russell Midcap(R) Index at the
time of investment are considered mid-cap companies. Some of
the Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. Under
the Portfolio's value-oriented investment approach, the
Sub-adviser looks for well-managed companies whose stock
prices are undervalued and that may rise in price before
other investors realize their worth.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST PIMCO LIMITED MATURITY BOND PORTFOLIO: seeks to maximize Pacific Investment
total return consistent with preservation of capital and Management Company
prudent investment management. The Portfolio will invest in LLC (PIMCO)
a diversified portfolio of fixed-income securities of
varying maturities. The average portfolio duration of the
Portfolio generally will vary within a one- to three-year
time frame based on the Sub-adviser's forecast for interest
rates.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST PRESERVATION ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 27.5% to 42.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST SMALL-CAP VALUE PORTFOLIO: seeks to provide long-term Lee Munder
capital growth by investing primarily in Investments, Ltd;
small-capitalization stocks that appear to be undervalued. J.P. Morgan
The Portfolio will have a non-fundamental policy to invest, Investment
under normal circumstances, at least 80% of the value of its Management, Inc.;
net assets in small capitalization stocks. The Portfolio Salomon Brothers
will focus on common stocks that appear to be undervalued. Asset Management Inc;
Dreman Value
Management LLC
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: seeks a high T. Rowe Price
BALANCED level of total return by investing primarily in a Associates, Inc.
diversified portfolio of fixed income and equity securities.
The Portfolio normally invests approximately 60% of its
total assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-adviser's
outlook for the markets. The Sub-adviser concentrates common
stock investments in larger, more established companies, but
the Portfolio may include small and medium-sized companies
with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND PORTFOLIO: seeks to provide T. Rowe Price
high current income and capital growth by investing in International, Inc.
high-quality foreign and U.S. dollar-denominated bonds. The
Portfolio will invest at least 80% of its total assets in
fixed income securities, including high quality bonds issued
or guaranteed by U.S. or foreign governments or their
agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds
and mortgage and asset-backed securities of U.S. and foreign
issuers. The Portfolio generally invests in countries where
the combination of fixed-income returns and currency
exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-adviser believes that the
currency risk can be minimized through hedging. The
Portfolio may also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk bonds ("junk
bonds"). In addition, the Portfolio may invest up to 30% of
its assets in mortgage-backed (including derivatives, such
as collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: seeks T. Rowe Price
long-term capital growth primarily through the common stocks Associates, Inc.
of companies that own or develop natural resources (such as
energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common
stocks of natural resource companies whose earnings and
tangible assets could benefit from accelerating inflation.
The Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
GARTMORE VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY GVIT DEVELOPING MARKETS FUND: seeks long-term capital Gartmore Global Asset
appreciation, under normal conditions by investing at least Management Trust;
80% of its total assets in stocks of companies of any size Gartmore Global
based in the world's developing economies. Under normal Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- -----------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: LARGE CAP GROWTH PORTFOLIO -- SERVICE Janus Capital
SHARES: seeks long- term growth of capital in a manner Management LLC
consistent with the preservation of capital. The Portfolio
invests at least 80% of its net assets in common stocks of
large-sized companies. Large-sized companies are those whose
market capitalizations fall within the range of companies in
the Russell 1000 Index at the time of purchase.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
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FIXED INTEREST RATE OPTIONS
If you choose the Contract Without Credit, we offer two fixed interest rate
options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law.
Payments allocated to the fixed interest rate options become part of Pruco
Life's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one year guaranteed annual interest rate for the one-year fixed
interest rate option. The one-year fixed interest rate option is not available
if you choose the Contract With Credit.
DOLLAR COST AVERAGING FIXED RATE OPTION
With the Contract Without Credit, you may allocate all or part of any purchase
payment to the DCA Fixed Rate Option. Under this option, you automatically
transfer amounts over a stated period (currently, six or twelve months) from the
DCA Fixed Rate Option to the variable investment options you select. We will
invest the assets you allocate to the DCA Fixed Rate Option in our general
account until they are transferred. You may not transfer from other investment
options to the DCA Fixed Rate Option.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$5,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transferred to
the selected variable investment options in either six or twelve monthly
installments, and you may not change that number of monthly installments after
you have chosen the DCA Fixed Rate Option. You may allocate to both the
six-month and twelve-month options. (In the future, we may make available other
numbers of transfers and other transfer schedules--for example, quarterly as
well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the variable investment options into which the DCA Fixed
Rate Option assets are transferred. Transfers from the DCA Fixed Rate Option do
not count toward the maximum number of free transfers allowed under the
contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
45
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and, if you have chosen the Contract Without Credit, the
fixed interest rate options as well. The minimum transfer amount is the lesser
of $250 or the amount in the investment option from which the transfer is to be
made.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received in good order by us, or by certain entities that we have
specifically designated. Our business day generally closes at 4:00 p.m. Eastern
time. Our business day may close earlier, for example if regular trading on the
New York Stock Exchange closes early. Transfer requests received after the close
of the business day will take effect at the end of the next business day.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE
ONE YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year among the investment options, without charge. Currently, we charge
$25 for each transfer after the twelfth in a contract year, and we have the
right to increase this charge up to $30. (Dollar Cost Averaging and Auto-
Rebalancing transfers do not count toward the 12 free transfers per year.)
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such amount
into a particular variable investment option, and within 30 calendar days
thereafter transfer (the "Transfer Out") all or a portion of that amount into
another variable investment option, then upon the Transfer Out, the former
variable investment option becomes restricted (the "Restricted Option").
Specifically, we will not permit subsequent transfers into the Restricted
Option for 90 calendar days after the Transfer Out if the Restricted Option
invests in a non-international fund, or 180 calendar days after the Transfer
Out if the Restricted Option invests in an international fund. For purposes
of this rule, we do not (i) count transfers made in connection with one of
our systematic programs, such as asset allocation and automated withdrawals
and (ii) categorize as a transfer the first transfer that you make after the
contract date, if you make that transfer within 30 calendar days after the
contract date. Even if an amount becomes restricted under the foregoing
rules, you are still free to redeem the amount from your contract at any
time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option and into any other
variable investment options. You can have these automatic transfers occur
monthly, quarterly, semiannually or annually. By investing amounts on a regular
basis instead of investing the total amount at one time, dollar cost averaging
may decrease the effect of market fluctuation on the investment of your purchase
payment. Of course, dollar cost averaging cannot ensure a profit or protect
against loss in declining markets.
47
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once you have allocated your money among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentages
you select. We will rebalance only the variable investment options that you have
designated. If you also participate in the DCA feature, then the variable
investment option from which you make the DCA transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code), and annuity payments. Scheduled transactions are processed and valued as
of the date they are scheduled, unless the scheduled day is not a business
48
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day. In that case, the transaction will be processed and valued on the next
business day, unless (with respect to required minimum distributions,
substantially equal periodic payments under Section 72(t) of the Code, and
annuity payments only), the next business day falls in the subsequent calendar
year, in which case the transaction will be processed and valued on the prior
business day.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
- --------------------------------------------------------------------------------
PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the third contract
anniversary (or as required by state law if different). Annuity payments must
begin no later than the contract anniversary coinciding with or next following
the annuitant's 95th birthday (unless we agree to another date). (Under the
original version of the contract, annuity payments must begin no later than the
contract anniversary coinciding with or next following the annuitant's 90th
birthday).
The Strategic Partners Annuity One variable annuity contract offers an
optional Guaranteed Minimum Income Benefit, which we describe below. Your
annuity options vary depending upon whether you choose this benefit.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1 for a period
shorter than five years, Option 3, or certain other annuity options that we may
make available. We do not deduct a withdrawal charge if you choose Option 1 for
a period of five years or longer or Option 2. For information about withdrawal
charges, see Section 7, "What Are The Expenses Associated With The Strategic
Partners Annuity One Contract?" In addition, if you have purchased the Contract
With Credit, we will take back any credits that have not vested when you begin
the income phase. See "Credits," in Section 5.
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that participation in the variable investment
options ends on the annuity date. If an annuity option is not selected by the
annuity date, the Life Income Annuity Option (Option 2, described below) will
automatically be selected for you unless prohibited by applicable law.
GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE CHANGED
AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY PAYMENT OPTIONS
DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE THE OPTIONAL LIFETIME
FIVE INCOME BENEFITS, THERE ARE ADDITIONAL ANNUITY PAYMENT OPTIONS THAT ARE
ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS PROSPECTUS FOR ADDITIONAL
DETAILS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life income annuity option is prohibited by applicable law, then we will pay
you a lump sum in lieu of this option.
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OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year. This option is not
available if you hold your contract in an IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part of or all of the contract value that we are
holding at any time.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options then offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit must be continued until at least the end of
the seventh contract year. If, after the seventh contract year, you decide to
stop participating in the GMIB, you may do so (if permitted by state law) but
you will not be able to reinstate it. This feature may not be available in your
state. You may not elect both GMIB and the Lifetime Five Income Benefit.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 70 or younger in order for you to elect the Guaranteed
Minimum Income Benefit, and you must also participate in the Guaranteed
Minimum Death Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.25% of the average GMIB protected value described below.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE LENGTH OF THAT
WAITING PERIOD DEPENDS UPON THE AGE OF THE ANNUITANT (OR, IF THERE IS A
CO-ANNUITANT AS WELL, THE AGE OF THE OLDER OF THE TWO) AS SHOWN IN THE
FOLLOWING CHART:
<Table>
<Caption>
CONTRACT ANNIVERSARY WHEN
AGE AT ISSUE GMIB BECOMES
OF CONTRACT AVAILABLE
- ------------ -------------------------
0-45 15
46 14
47 13
48 12
49 11
50 or more 10
</Table>
Once that waiting period has elapsed, you will have a 30-day period each
year, beginning on the contract anniversary, during which you may begin the
income phase with the Guaranteed Minimum Income Benefit by submitting the
necessary forms in good order to the Prudential Annuity Service Center.
EFFECT OF WITHDRAWALS
The protected value will equal the "roll-up value," which is the total of all
invested purchase payments compounded daily at an effective annual rate of 5%,
subject to a cap of 200% of all invested purchase payments. Both the roll-up and
the cap are reduced proportionally by withdrawals. When the roll-up" value no
longer increases, your protected value will continue to increase by any
subsequent invested purchase payments, and reduce by the effect of any
withdrawals.
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PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
(where applicable) of the annuitant (and, if there is one, the co-annuitant).
After we first deduct a charge for any applicable premium taxes that we are
required to pay, the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value--that is, the value of the contract minus any
charge we impose for premium taxes and withdrawal charges--as of the date you
exercise the GMIB payout option applied to the current annuity purchase rates
then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a "period certain." In calculating the
amount of the payments under the GMIB, we apply certain assumed interest rates,
equal to 3% annually for a waiting period of 10-14 years, and 3.5% annually for
waiting periods of 15 years or longer.
GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
The "period certain" for the Guaranteed Minimum Income Benefit depends upon
the annuitant's age on the date you exercise the GMIB payout option:
<Table>
<Caption>
AGE PERIOD CERTAIN
- ---------- --------------
80 or less 10 years
81 9 years
82 8 years
83 7 years
84 6 years
85 or more 5 years
</Table>
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the contract anniversary coinciding with or next
following the annuitant's attainment of age 90 (with respect to the original
version of the contract) and age 95 (with respect to the later version of the
contract).
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
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than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB, such as the annuity purchase rates, (which include
assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing non-GMIB annuity
payout options. Therefore, you may generate higher income payments if you were
to annuitize a lower contract value at the current annuity purchase rates, than
if you were to annuitize under the GMIB with a higher GMIB protected value than
your contract value but at the annuity purchase rates guaranteed under the GMIB.
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of the life of the annuitant (and possibly
co-annuitant) (life annuities). There are certain assumptions that are common to
both fixed period annuities and life annuities. In each type of annuity, we
assume that the value you apply at the outset toward your annuity payments earns
interest throughout the payout period. For annuity options within the GMIB, this
interest rate ranges from 3% to 3.5%. For non-GMIB annuity options, the
guaranteed minimum rate is 3%. The GMIB guaranteed annuity purchase rates in
your contract depict the minimum amounts we will pay (per $1000 of adjusted
contract value). If our current annuity purchase rates on the annuity date are
more favorable to you than the guaranteed rates, we will make payments based on
those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the non-GMIB annuity
options. Generally speaking, in determining the amount of each annuity payment
under a fixed period annuity, we start with the adjusted contract value, add
interest assumed to be earned over the fixed period, and divide the sum by the
number of payments you have requested. The life expectancy of the annuitant and
co-annuitant are relevant to this calculation only in that we will not allow you
to select a fixed period that exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such a
reduced age, we base our calculations on a younger person, who generally would
live longer and therefore draw life annuity payments over a longer time period.
Given the longer pay-out period, the payments made to the younger person would
be less than those made to an older person. We make two such age adjustments:
1. First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by two
years, with respect to guaranteed payments.
2. Second, for life annuities under GMIB as well as guaranteed payments under
life annuities not involving GMIB, we make a further age reduction according
to the table in your contract entitled "Translation of Adjusted Age." As
indicated in the table, the further into the future the first annuity payment
is, the longer we expect the person receiving those payments to live, and the
more we reduce the annuitant's (or co-annuitant's) age.
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CURRENT ANNUITY PAYMENTS
Immediately above, we have referenced how we determine annuity payments based on
"guaranteed" annuity purchase rates. By "guaranteed" annuity purchase rates, we
mean the minimum annuity purchase rates that are set forth in your annuity
contract and thus contractually guaranteed by us. "Current" annuity purchase
rates, in contrast, refer to the annuity purchase rates that we are applying to
contracts that are entering the annuity phase at a given point in time. These
current annuity purchase rates vary from period to period, depending on changes
in interest rates and other factors. We do not guarantee any particular level of
current annuity purchase rates. When calculating current annuity purchase rates,
we use the actual age of the annuitant (or co-annuitant), rather than any
reduced age.
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4:
WHAT IS THE
DEATH BENEFIT?
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THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner dies. However, if the contract is jointly owned, the owner must name
the joint owner and the joint owner must name the owner as the beneficiary. For
entity-owned contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the sole owner dies during the accumulation phase, we will, upon receiving
appropriate proof of death and any other needed documentation in good order
(proof of death), pay a death benefit to the beneficiary designated by the
owner. If the owner and joint owner are spouses, we will pay this death benefit
upon the death of the last surviving spouse who continues the contract as sole
owner.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order). If you have purchased the Contract With Credit, we will first deduct
any credit corresponding to a purchase payment made later than one year prior
to death.
2) Either the base death benefit, which equals the total purchase payments you
have made less any withdrawals, or, if you have chosen a Guaranteed Minimum
Death Benefit (GMDB), the GMDB protected value.
GUARANTEED MINIMUM DEATH BENEFIT
Under the newer version of the contracts, you may elect the base death benefit
if you are 85 or younger. Under both versions of the contracts described in this
prospectus, you may elect a Guaranteed Minimum Death Benefit if you are 75 or
younger.
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole or last surviving owner during
the accumulation phase.
The GMDB protected value option can be equal to the:
- GMDB roll-up
- GMDB step-up, or
- Greater of the GMDB roll-up and the
GMDB step-up.
The GMDB protected value is calculated daily.
GMDB ROLL-UP
The GMDB roll-up value is equal to the invested purchase payments, increased
daily at an effective annual rate of 5% starting on the date that each invested
purchase payment is made. Both the GMDB roll-up and the cap value will increase
by subsequent invested purchase payments and reduce proportionally by
withdrawals.
GMDB STEP-UP
The step-up value equals the highest value of the contract on any contract
anniversary date--that is, on each contract anniversary, the new step-up value
becomes the higher of the previous step-up value and the current contract value.
Between anniversary dates, the step-up value is only increased by additional
invested purchase payments and reduced proportionally by withdrawals.
If an owner who has purchased a Contract With Credit makes any purchase
payment later than one year prior to death, we will adjust the death benefit to
take back any non-vested credit corresponding to that purchase payment.
GREATER OF STEP-UP AND ROLL-UP GUARANTEED MINIMUM DEATH BENEFIT
Under this option, the protected value is equal to the greater of the step-up
value and the roll-up value.
If you have chosen a Guaranteed Minimum Death Benefit option and death occurs
on or after age 80, the beneficiary will receive the greater of: 1) the current
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contract value as of the date that proof of death is received, and 2) the
protected value of that death benefit as of age 80, reduced proportionally by
any withdrawals and increased by subsequent purchase payments. For this purpose,
an owner is deemed to reach age 80 on the contract anniversary on or following
the owner's actual 80th birthday (or if there is a joint owner, the contract
anniversary on or following the older owner's actual 80th birthday).
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The new protected value is $60,000, or
75% of what it was before the withdrawal.
Special rules apply if the beneficiary is the spouse of the owner, and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met, then the
contract can continue, and the spouse will become the new owner of the
contract; or
- - The spouse can receive the death benefit. If the spouse does wish to receive
the death benefit, he or she must make that choice within the first 60 days
following our receipt of proof of death. Otherwise, the contract will
continue with the spouse as owner.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
Depending on applicable state law, some death benefit options may not be
available or may be subject to certain restrictions under your contract.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies, the surviving spouse has the choice of the following:
- - The contract can continue, with the surviving spouse as the sole owner of the
contract; or
- - The surviving spouse can receive the adjusted contract value and the contract
will end. If the surviving spouse does wish to receive the adjusted contract
value, he or she must make that choice within the first 60 days following our
receipt of proof of death. Otherwise, the contract will continue with the
surviving spouse as the sole owner.
If the contract has an owner and a joint owner, and they are not spouses at
the time that one dies, the contract will not continue. Instead, the beneficiary
will receive the adjusted contract value.
Joint ownership may not be allowed in your state.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
Choice 1. Lump sum payment of the death benefit.
If the beneficiary does not choose a payout option within sixty days, the
beneficiary will receive this payout option.
Choice 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the second-to-die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
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During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner or joint owner.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 9, "What Are The Tax Considerations Associated With
The Strategic Partners Annuity One Contract?"
EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit is an optional, supplemental death benefit that
provides a benefit payable upon the death of the sole or last surviving owner
during the accumulation phase. Any Earnings Appreciator Benefit payment we make
will be in addition to any other death benefit payment we make under the
contract. This feature may not be available in your state. You must be 75 or
younger in order to elect the Earnings Appreciator Benefit.
An Earnings Appreciator Benefit is calculated for each purchase payment you
make. Your total Earnings Appreciator Benefit is the sum of the Earnings
Appreciator Benefits for all of your purchase payments.
If the owner (or older of owner and joint owner if there is a joint owner) is
younger than age 66 on the date the application is signed, the Earnings
Appreciator Benefit for each purchase payment is 45% of the lesser of:
- The adjusted purchase payment (which means the invested purchase payment
adjusted for partial withdrawals); or
- Earnings attributed to that adjusted purchase payment.
If the owner (or older of owner and joint owner if there is a joint owner) is
age 66 or older (and younger than age 76) on the date the application is signed,
the Earnings Appreciator Benefit for each purchase payment is 25% of the lesser
of:
- The adjusted purchase payment (which means the invested purchase payment
adjusted for partial withdrawals); or
- Earnings attributed to that adjusted purchase payment.
The following rules apply to the calculation of the benefit:
- Each "adjusted purchase payment" is the invested purchase payment reduced
pro-rata by any subsequent withdrawals. Reduction on a pro-rata basis
means that we calculate the percentage of your current contract value
being withdrawn and reduce each adjusted purchase payment made prior to
the withdrawal by that percentage. For example, if your contract value is
$40,000 and you withdraw $10,000, you have withdrawn 25% of your contract
value. If you have two adjusted purchase payments prior to the withdrawal
($10,000 and $20,000), each of those adjusted purchase payments would be
reduced by 25% (to $7,500 and $15,000). The amount of earnings allocated
to each adjusted purchase payment is also reduced by the same percentage.
These calculations, therefore, do not depend on the actual investment
option from which the withdrawal is made, and they are different
calculations than those that apply for other reasons under the contract,
such as for the withdrawal charge or for tax purposes.
- Earnings are periodically allocated to each adjusted purchase payment on a
pro-rata basis. We calculate the amount of earnings since the last
earnings allocation and we allocate those earnings proportionately among
the adjusted purchase payments (based on the amount of each adjusted
purchase payment plus the earnings previously allocated to that adjusted
purchase payment). For example, if you have two adjusted purchase
payments -- one with an adjusted purchase payment and allocated earn-
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ings of $30,000 and the other with an adjusted purchase payment and
allocated earnings of $20,000 (therefore 60% and 40% of the total
respectively) -- and your contract has earned $5,000 since the last
calculation, 60% of the earnings ($3,000) will be allocated to the first
adjusted purchase payment and 40% of the earnings ($2,000) will be
allocated to the second adjusted purchase payment. This calculation,
therefore, does not apply different rates of return to different purchase
payments based on the investment options in which the particular purchase
payment was invested. When allocating earnings at the time of a death
benefit payment, we will first deduct from earnings the amount of any
charges deducted and credit recaptured from your contract value at that
time.
- Under the Spousal Continuance Benefit, we will not allow the surviving
spouse to continue the Earnings Appreciator Benefit (or bear the charge
associated with that benefit) if that owner is age 76 or older when
Spousal Continuance is activated. If the surviving spouse does continue
the Earnings Appreciator Benefit, then we will calculate the benefit
payable upon the surviving spouse's death in the same manner as discussed
above, except that we will treat the contract value (as adjusted to
reflect the Spousal Continuance Benefit) as the first adjusted purchase
payment against which the Earnings Appreciator percentages are applied.
See Appendix B for examples of the benefit calculations.
TERMINATING THE EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit will terminate on the earliest of:
- the date you make a total withdrawal from the contract,
- the date a death benefit is payable if the contract is not continued by
the surviving spouse under the Spousal Continuance Benefit,
- the date the contract terminates, or
- the date you annuitize the contract.
Upon termination of the Earnings Appreciator Benefit, we cease imposing the
associated charge.
SPOUSAL CONTINUANCE BENEFIT
This is a benefit that, depending on the contract options chosen, can give the
owner's surviving spouse a stepped-up account value upon the owner's death. Any
person who buys a contract and meets our eligibility criteria for this benefit
receives the benefit without charge. The benefit must be selected within 60 days
of the owner's death, and may not be available under all contracts. The benefit
described in this section applies only to the later version of this contract.
Under the original version of this contract, no stepped-up contract value is
available to a surviving spouse who continues the contract.
We offer the Spousal Continuance Benefit only if each of the following
conditions is present on the date we receive proof of the owner's death: 1)
there is only one owner of the contract and that owner is the sole annuitant, 2)
there is only one beneficiary, 3) the beneficiary is the owner's spouse, 4) the
surviving spouse is not older than 95 on that date, and 5) the surviving spouse
becomes the new owner and annuitant. The contract may not be continued upon the
death of a spouse who had assumed ownership of the contract through the exercise
of the Spousal Continuance Benefit.
Under the Spousal Continuance Benefit, we impose no withdrawal charge at the
time of the owner's death, and we will not impose any withdrawal charges on the
surviving spouse with respect to the withdrawal of purchase payments made by the
owner prior to the activation of the benefit. However, we will continue to
impose withdrawal charges with respect to purchase payments made by the
surviving spouse as new owner.
IF YOU HAVE NOT SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE (I.E.,
YOU HAVE THE BASE DEATH BENEFIT), then upon the activation of the Spousal
Continuance Benefit, we will adjust the contract value, as of the date of our
receipt of proof of death, to equal
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the greater of the following: 1) the contract value as of the date of our
receipt of proof of death or 2) the sum of all invested purchase payments
(adjusted for withdrawals) made prior to the date on which we receive proof of
the owner's death. We will add the amount of any Earnings Appreciator Benefit
that you have selected to each of the amounts specified immediately above.
IF YOU HAVE SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE WITH THE
ROLL-UP OPTION, then upon the activation of the Spousal Continuance Benefit, we
will adjust the contract value, as of the date of our receipt of proof of death,
to equal the greater of the following: 1) the contract value as of the date of
our receipt of proof of death, or 2) the roll-up value. We will add the amount
of any Earnings Appreciator Benefit that you have selected to each of the
amounts specified immediately above. When the Spousal Continuance Benefit is
activated by a surviving spouse who is younger than 80, we will adjust the
roll-up value under the surviving spouse's contract to equal the contract value
(adjusted, as described immediately above). In addition, in that case we will
reset the surviving spouse's roll-up cap to equal 200% of the contract value
(adjusted, as described immediately above). We make no adjustment to the roll-up
value or the roll-up cap if the surviving spouse is 80 or older, except to
account for additional purchase payments and to reduce the roll-up value
proportionately by withdrawals. If the surviving spouse was younger than 80 at
the owner's death, then we will continue to increase the roll-up value annually
until the earlier of either (i) the surviving spouse's attainment of age 80 or
(ii) the attainment of the roll-up cap (i.e., the reset roll-up cap discussed
above). Once the roll-up value ceases to increase, we thereafter will adjust the
roll-up value only to account for subsequent purchase payments and to diminish
it proportionally by withdrawals.
IF YOU HAVE SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE WITH THE
STEP-UP GMDB OPTION, then upon the activation of the Spousal Continuance
Benefit, we will adjust the contract value, as of the date of our receipt of
proof of death, to equal the greater of the following: 1) the contract value as
of the date of our receipt of proof of death, or 2) the step-up value. We will
add the amount of any Earnings Appreciator Benefit that you have selected to
each of the amounts specified immediately above. When the Spousal Continuance
Benefit is activated by a surviving spouse younger than 80, we will adjust the
step-up value to equal the contract value (adjusted, as described immediately
above). We make no such adjustment if the surviving spouse is 80 or older. If
the surviving spouse was younger than 80 at the owner's death, then we will
continue to adjust the step-up value annually until the surviving spouse's
attainment of age 80. After the surviving spouse attains age 80, we will
continue to adjust the step-up value only to account for additional purchase
payments and to reduce the step-up value proportionally by withdrawals.
IF YOU HAVE SELECTED THE GREATER OF ROLL-UP AND STEP-UP AS YOUR GMDB OPTION,
then we will calculate those values upon activation of the Spousal Continuance
Benefit in accordance with the procedures set out in the immediately preceding
paragraphs and in your contract.
After activation of the Spousal Continuance Benefit, we will calculate the
Earnings Appreciator Benefit in the manner discussed under "Earnings Appreciator
Death Benefit". We do not allow the surviving spouse to retain the Guaranteed
Minimum Income Benefit under the Spousal Continuance Benefit (or bear the charge
associated with that benefit).
In the preceding discussion of the Spousal Continuance Benefit, we intend
references to attainment of age 80 to refer to the contract anniversary on or
following the actual 80th birthday of the surviving spouse.
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5:
WHAT IS THE LIFETIME FIVE
INCOME BENEFIT?
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LIFETIME FIVE INCOME BENEFIT
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an initial
principal value (called the "Protected Withdrawal Value"), regardless of the
impact of market performance on your contract value, subject to our rules
regarding the timing and amount of withdrawals. There are two options -- one is
designed to provide an annual withdrawal amount for life (the "Life Income
Benefit") and the other is designed to provide a greater annual withdrawal
amount (than the first option) as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the Withdrawal Benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the annuity has a contract value and Lifetime Five is in effect. Certain
benefits under Lifetime Five may remain in effect even if the contract value is
zero. The option may be appropriate if you intend to make periodic withdrawals
from your contract and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals -- the guarantees are not lost if you withdraw less than the maximum
allowable amount each year. Lifetime Five is only being offered in those
jurisdictions where we have received regulatory approval and will be offered
subsequently in other jurisdictions when we receive regulatory approval in those
jurisdictions. Certain terms and conditions may differ between jurisdictions
once approved.
Lifetime Five is subject to certain restrictions described below.
- - Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contact owners who have an effective Lifetime Five Income Benefit.
- - The annuitant must be at least 45 years old when Lifetime Five is elected.
- - Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit.
- - Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5,
2005 must allocate contract value to one or more of the following asset
allocation portfolios of American Skandia Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, and AST Preservation Asset
Allocation Portfolio or to the AST Advanced Strategies Portfolio, AST First
Trust Balanced Target Portfolio, or AST First Trust Capital Appreciation
Target Portfolio.
PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the contract following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Lifetime Five growing at 5% per year from
the date of your election, plus any subsequent purchase payments growing at 5%
per year from the application of the purchase payment to your contract, until
the earlier of the date of your first withdrawal or the 10th anniversary of the
benefit effective date, (B) the contract value as of the date of the first
withdrawal from your contract, prior to the withdrawal, and (C) the highest
contract value on each contract anniversary prior to the first withdrawal or on
the first 10 contract anniversaries after the benefit effective date if earlier
than the date of your first withdrawal.
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With respect to (A) and (C) above, each value is increased by the amount of any
subsequent purchase payments. In determining Protected Withdrawal Value, we
include, as part of purchase payments, the amount of any credits granted with
respect to such purchase payments for the Contract With Credit.
- - If you elect Lifetime Five at the time you purchase your contract, the
contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Lifetime Five Benefit, the
contract value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your contract value is greater than the Protected Withdrawal
Value. If you elected Lifetime Five prior to March 20, 2006 and that original
election remains in effect, then you are eligible to step-up the Protected
Withdrawal Value on or after the 5th anniversary of the first withdrawal under
Lifetime Five. Under contracts with Lifetime Five elected prior to March 20,
2006, the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary following the preceding step-up. If you elected Lifetime Five on or
after March 20, 2006, then you are eligible to step-up the Protected Withdrawal
Value on or after the 3rd anniversary of the first withdrawal under Lifetime
Five. Under contracts with Lifetime Five elected on or after March 20, 2006, the
Protected Withdrawal Value can be stepped up again on or after the 3rd
anniversary following the preceding step-up. In either scenario (i.e., elections
before or after March 20, 2006) if you elect to step-up the Protected Withdrawal
Value, and on the date you elect to step-up, the charges under Lifetime Five
have changed for new purchasers, you may be subject to the new charge going
forward.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary (5th
contract anniversary if the benefit was elected prior to March 20, 2006)
following the later of the first withdrawal under the benefit or the prior
step-up. At this time, your Protected Withdrawal Value will be stepped-up only
if 5% of the contract value exceeds the Annual Income Amount by 5% or more. If
5% of the contract value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive contract
anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd (5th if the benefit was elected prior to March
20, 2006) contract anniversary following the most recent step-up. If, on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current contract value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your contract value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount (as described below) are less than they would be if we
did not reflect the step-up in Protected Withdrawal Value, then we will increase
these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected Withdrawal
Value and on the greater of a "dollar-for-dollar" basis or a pro rata basis for
withdrawals in a contract year in
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excess of that amount until the Protected Withdrawal Value is reduced to zero.
At that point, the Annual Withdrawal Amount will be zero until such time (if
any) as the contract reflects a Protected Withdrawal Value (for example, due to
a step-up or additional purchase payments being made into the contract).
ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will not
reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of the
Excess Income to the contract value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of the
withdrawal, including any withdrawal charges that may apply. A withdrawal can be
considered Excess Income under the Life Income Benefit even though it does not
exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect
a step-up, your Annual Income Amount increases to equal 5% of your contract
value after the step-up if such amount is greater than your Annual Income
Amount. Your Annual Income Amount also increases if you make additional purchase
payments. The amount of the increase is equal to 5% of any additional purchase
payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the purchase payment is made. A
determination of whether you have exceeded your Annual Income Amount is made at
the time of each withdrawal; therefore, a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
Excess Withdrawal to the contract value immediately prior to such withdrawal
(see the examples of this calculation below). Reductions include the actual
amount of the withdrawal, including any withdrawal charges that may apply. When
you elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
contract value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional purchase payments. The amount of the increase is equal to 7% of any
additional purchase payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each contract year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income
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Benefit in any contract year, you cannot carry-over the unused portion of the
Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of $250,000;
3.) the contract value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the contract value is equal to $263,000;
and 5.) the contract value on February 1, 2010 is equal to $280,000.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250
- - Annual Income Amount for future contract years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current contract year = $0
- - Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future contract years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/contract value
before Excess Withdrawal
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x Annual Withdrawal Amount = $6,450/($263,000 - $18,550) X $18,550 = $489
- - Annual Withdrawal Amount for future contract years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250
= $623
- - Annual Income Amount for future contract years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater of
a dollar-for-dollar reduction or a proportional reduction.
- - Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal/contract value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
- - Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 3 years, the Protected Withdrawal Value on February 1,
2010 would be reduced to $225,250 [$265,000 - ($13,250 X 3)]. If a step-up is
elected on February 1, 2010, then the following values would result:
- - Protected Withdrawal Value = contract value on February 1, 2010 = $280,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value is
5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000.
If the step-up request on February 1, 2010 was due to the election of the
auto step-up feature, we would first check to see if an auto step-up should
occur by checking to see if 5% of the Account Value exceeds the Annual Income
Amount by 5% or more. 5% of the Account Value is equal to 5% of $280,000, which
is $14,000. 5% of the Annual Income Amount ($13,250) is $662.50, which added to
the Annual Income Amount is $13,912.50. Since 5% of the Account Value is greater
than $13,912.50, the step-up would still occur in this scenario, and all of the
values would be increased as indicated above.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value. Current
Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore, the Annual
Withdrawal Amount is increased to $19,600.
BENEFITS UNDER LIFETIME FIVE
- - If your contract value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your contract value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent contract years we make payments that
equal either the Annual Income Amount or the Annual Withdrawal Amount. You
will not be able to change the option after your election and no further
purchase payments will be accepted under your contract. If
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you do not make an election, we will pay you annually under the Life Income
Benefit. To the extent that cumulative withdrawals in the current contract
year that reduced your contract value to zero are more than the Annual Income
Amount but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced your
contract value to zero, we will make an additional payment to equal any
remaining Annual Withdrawal Amount and make payments equal to the Annual
Withdrawal Amount in each subsequent year (until the Protected Withdrawal
Value is depleted). Once your contract value equals zero no further purchase
payments will be accepted under your contract.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected Withdrawal
Value, you can elect one of the following three options:
1. apply your contract value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with five
payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the contract value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the contract value or surrender value,
but any withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable withdrawal charges). If you surrender your
contract, you will receive the current contract value, not the Protected
Withdrawal Value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides a
guarantee that if your contract value declines due to market performance, you
will be able to receive your Protected Withdrawal Value or Annual Income
Amount in the form of periodic benefit payments.
ELECTION OF LIFETIME FIVE
Lifetime Five can be elected only after the contract date. Elections of Lifetime
Five are subject to our eligibility rules and restrictions. The contract owner's
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contract value as of the date of election will be used as the basis to calculate
the initial Protected Withdrawal Value, the initial Annual Withdrawal Amount,
and the initial Annual Income Amount.
TERMINATION OF LIFETIME FIVE
Lifetime Five terminates automatically when your Protected Withdrawal Value and
Annual Income Amount reach zero. You may terminate Lifetime Five at any time by
notifying us. If you terminate Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
- - upon your surrender of the contract,
- - upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five benefit if your spouse elects the spousal continuance option
and your spouse would then be eligible to elect the benefit as if he/she were
a new purchaser),
- - upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
- - upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes the
benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you will only be permitted to
re-elect the benefit on any anniversary of the contract date that is at least 90
calendar days from the date the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and
prior to March 20, 2006, and you terminate Lifetime Five, there will be no
waiting period before you can re-elect the benefit. However, once you choose to
re-elect/elect, the waiting period described above will apply to subsequent
re-elections. If you elected Lifetime Five after the time you purchased your
contract, but prior to March 20, 2006, and you terminate Lifetime Five, you must
wait until the contract anniversary following your cancellation before you can
re-elect the benefit. Once you choose to re-elect/elect, the waiting period
described above will apply to subsequent re-elections. We reserve the right to
limit the re-election/election frequency in the future. Before making any such
change to the re-election/election frequency, we will provide prior notice to
contract owners who have an effective Lifetime Five Income Benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
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STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
6:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
ANNUITY ONE CONTRACT?
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PURCHASE PAYMENTS
The initial purchase payment is the amount of money you first pay us to purchase
the contract. Unless we agree otherwise, and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $1,000 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger (or age 80 depending on the
version of the contract) on the contract date. Certain age limits apply to
certain features and benefits described herein. No subsequent purchase payments
may be made on or after the earliest of the 86th birthday (or 81st birthday
depending on the version of the contract) of:
- - the owner,
- - the joint owner,
- - the annuitant, or
- - the co-annuitant.
Currently, the maximum aggregate purchase payments you may make is $20
million. We limit the maximum total purchase payments in any contract year,
other than the first to $2 million absent our prior approval. Depending on
applicable state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable investment options or, if you choose the Contract Without
Credit, the fixed interest rate options based on the percentages you choose. The
percentage of your allocation to a particular investment option can range in
whole percentages from 0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise. If
you purchase the Contract Without Credit, allocations to the DCA Fixed Rate
Option must be no less than $5,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Our business day may close
earlier, for example if regular trading on the New York Stock Exchange closes
early. Subsequent purchase payments received in good order after the close of
the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable investment options in the same percentages as the
purchase payment.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, the credit percentage is currently equal to 4% of each
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PART II
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purchase payment. With the approval of the SEC, we can change that credit
percentage, but we guarantee it will never be less than 3%. Under the version of
the Contract With Credit under which bonus credits generally are not
recapturable after expiration of the free look period, the bonus credit that we
pay with respect to any purchase payment depends on (i) the age of the older of
the owner or joint owner on the date on which the purchase payment is made and
(ii) the amount of the purchase payment. Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000 or 5% if the purchase payment is
greater than or equal to $250,000; and
- - if the elder owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, each credit is subject to its own vesting schedule,
which is shown below. If you make a withdrawal of all or part of a purchase
payment, or you begin the income phase of the contract, we will take back the
non-vested portion of the credit attributable to that purchase payment.
Withdrawals of purchase payments occur on a first-in first-out basis. This
credit that we take back is in addition to any withdrawal charges that may
apply.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, bonus credits vest according to the following
schedule:
<Table>
<Caption>
NUMBER OF CONTRACT ANNIVERSARIES
SINCE DATE OF EACH PURCHASE PAYMENT VESTED PERCENTAGE
- ----------------------------------- -----------------
0 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 100%
</Table>
Under each version of the Contract With Credit, if we pay a death benefit
under the contract, we have the right to take back any credit we applied one
year prior to the date of death or later.
Under each version of the Contract With Credit, we recapture bonus credits if
the owner returns his or her contract during the free look period.
Depending upon the state in which your contract was issued, your contract may
include a different vesting schedule.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to a variable investment option by the unit price of the accumulation
unit for that investment option. We calculate the unit price for each investment
option after the New York Stock Exchange closes each day and then credit your
contract. The value of the accumulation units can increase, decrease, or remain
the same from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments.
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7:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
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THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day, we make a deduction for the insurance and administrative charges.
These charges cover our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, or Lifetime Five Income Benefit option, the insurance and administrative
charge also includes a charge to cover our assumption of the associated risk.
The mortality risk portion of the charge is for assuming the risk that the
annuitant(s) will live longer than expected based on our life expectancy tables.
When this happens, we pay a greater number of annuity payments. We also incur
the risk that the death benefit amount exceeds the contract value. The expense
risk portion of the charge is for assuming the risk that the current charges
will be insufficient in the future to cover the cost of administering the
contract. The administrative expense portion of the charge compensates us for
the expenses associated with the administration of the contract. This includes
preparing and issuing the contract; establishing and maintaining contract
records; preparation of confirmations and annual reports; personnel costs; legal
and accounting fees; filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other) option
that you choose.
The death benefit charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit,
- 1.60% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option (i.e., 0.20% in addition to the
base death benefit charge), or
- 1.70% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.30% in addition
to the base death benefit charge).
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
version of the Contract With Credit under which bonus credits generally are not
recapturable after expiration of the free look period. We do not assess this
charge under the version of the Contract With Credit under which bonus credits
vest over a period of seven years.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit. The 0.60% charge is in addition to the charge we impose for
the applicable death benefit. Upon any reset of the amounts guaranteed under
this benefit, we reserve the right to adjust the charge to that being imposed at
that time for new elections of the benefit.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
do, however, expect to profit from these charges. Any profits made from these
charges may be used by us to pay for the costs of distributing the contracts. If
you choose the Contract With Credit, we will also use any profits from this
charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The withdrawal charge may
also apply if you begin the income phase during the withdrawal charge period,
depending upon the annuity option you choose. The amount and duration of the
withdrawal charge depends on whether you choose the Contract With Credit or the
Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment was made.
Specifically, we maintain an "age" for each purchase payment you have made by
keeping track of how many contract anniversaries have passed since the purchase
payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
<Table>
<Caption>
CONTRACT WITH
CREDIT WITHDRAWAL
NUMBER OF CONTRACT WITH CHARGE (VERSION
CONTRACT CREDIT WITHDRAWAL UNDER WHICH
ANNIVERSARIES CHARGE (VERSION BONUS CREDITS
SINCE THE DATE UNDER WHICH GENERALLY ARE NOT
OF EACH BONUS CREDITS VEST RECAPTURABLE CONTRACT WITHOUT
PURCHASE OVER SEVEN YEAR AFTER EXPIRATION OF CREDIT WITHDRAWAL
PAYMENT PERIOD) FREE LOOK PERIOD) CHARGE
- -------------- ------------------ ------------------- -----------------
0 7% 8% 7%
1 7% 8% 6%
2 7% 8% 5%
3 6% 8% 4%
4 5% 7% 3%
5 4% 6% 2%
6 3% 5% 1%
7 2% 0% 0%
8 1% 0% 0%
9 0% 0% 0%
</Table>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and take back any credit that
has not vested under the vesting schedule, if you have chosen the Contract With
Credit under which bonus credits vest over several years and provide you with
the amount requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We make this "charge-free amount"
available to you subject to approval of this feature in your state. We determine
the charge-free amount available to you in a given contract year on the contract
anniversary that begins that year. In calculating the charge-free amount, we
divide purchase payments into two categories -- payments that are subject to a
withdrawal charge and those that are not. We determine the charge-free amount
based only on purchase payments that are subject to a withdrawal charge. The
charge-free amount in a given contract year is equal to 10% of the sum of all
the purchase payments subject to the withdrawal charge that you have made as of
the applicable contract anniversary. During the first contract year, the
charge-free amount is equal to 10% of the initial purchase payment.
When you make a withdrawal (including a withdrawal under the optional
Lifetime Five Income Benefit), we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
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Withdrawal charges will never be greater than permitted by applicable law.
WAIVER OF WITHDRAWAL CHARGES FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges upon receipt of proof that the owner or a joint owner is terminally ill,
or has been confined to an eligible nursing home or eligible hospital
continuously for at least three months after the contract date. We will also
waive the contract maintenance charge if you surrender your contract in
accordance with the above noted conditions. This waiver is not available if the
owner has assigned ownership of the contract to someone else.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 9, "What Are The Tax
Considerations Associated With The Strategic Partners Annuity One Contract?"
CONTRACT MAINTENANCE CHARGE
Under the original version of the contract, we do not deduct a contract
maintenance charge for administrative expenses while your contract value is
$50,000 or more. If your contract value is less than $50,000 on a contract
anniversary during the accumulation phase or when you make a full withdrawal, we
will deduct $30 (or if your contract value is less than $1,500, then a lower
amount equal to 2% of your contract value) for administrative expenses. Under
the new version of the contract, we do not deduct a contract maintenance charge
for administrative expenses while your contract value is $75,000 or more. If
your contract value is less than $75,000 on a contract anniversary during the
accumulation phase or when you make a full withdrawal, we will deduct $35 (or a
lower amount equal to 2% of your contract value) for administrative expenses.
(This fee may differ in certain states.) We may increase this charge up to a
maximum of $60 per year. Also, we may raise the level of the contract value at
which we waive this fee. We will deduct this charge proportionately from each of
your contract's investment options.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. This is an annual charge equal to 0.25% of the average GMIB protected
value. We deduct the charge from your contract value on each of the following
events:
- - each contract anniversary;
- - when you begin the income phase of the contract;
- - when you decide no longer to participate in the guaranteed minimum income
benefit;
- - upon a full withdrawal; and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's contract
value due to market performance. If the GMIB protected value increases, the
dollar amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options, and for Contract Without Credit,
the fixed interest rate options. In some states, we may deduct the charge for
the Guaranteed Minimum Income Benefit in a different manner. If you surrender
your contract, begin receiving annuity payments under the GMIB or any other
annuity
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PARTNERS ANNUITY ONE CONTRACT? CONTINUED
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
payout option we make available during a contract year, or the GMIB terminates,
we will deduct the charge for the portion of the contract year since the prior
contract anniversary (or the contract date if in the first contract year). Upon
a full withdrawal or if the contract value remaining after a partial withdrawal
is not enough to cover the applicable Guaranteed Minimum Income Benefit charge,
we will deduct the charge from the amount we pay you.
THE FACT THAT WE IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES NOT
IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
EARNINGS APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Earnings Appreciator
Benefit. The charge for this benefit is based on an annual rate of 0.15% of your
contract value if you have also selected a Guaranteed Minimum Death Benefit
option (0.20% if you have not selected a Guaranteed Minimum Death Benefit
option).
We calculate the charge on each of the following events:
- each contract anniversary;
- when you begin the income phase of the contract;
- upon death of the sole or last surviving owner prior to the income phase;
- upon a withdrawal; and
- upon a subsequent purchase payment.
The fee is based on the contract value at time of calculation and is
pro-rated based on the portion of the contract year since the date the Earnings
Appreciator Benefit charge was last calculated.
The charge is not deducted every time it is calculated. Instead, the charge
is deducted, along with any previously calculated but not deducted charge, on
each of the following events:
- each contract anniversary;
- when you begin the income phase of the contract;
- upon death of the sole or last surviving owner prior to the income phase;
- upon a full withdrawal; and
- upon a partial withdrawal if the contract value remaining after the
partial withdrawal is not enough to cover the then applicable charge.
We withdraw this charge from each investment option in the same proportion
that the amount allocated to the investment option bears to the total contract
value. Upon a full withdrawal or if the contract value remaining after a partial
withdrawal is not enough to cover the then-applicable Earnings Appreciator
Benefit charge, we will deduct the charge from the amount we pay you. We will
deem the payment of the Earnings Appreciator Benefit charge as made from
earnings for purposes of calculating other charges.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so.
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We will deduct the transfer fee pro-rata from the investment options from which
the transfer is made.
COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract. We reserve the right to
change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2005, the fees of these funds ranged on an annual
basis from 0.38% to 1.67% annually. For certain funds, expenses are reduced
pursuant to expense waivers and comparable arrangements. In general, these
expense waivers and comparable arrangements are not guaranteed, and may be
terminated at any time.
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8:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees and, if you have purchased the Contract
With Credit, after we have taken back any credits that have not yet vested. We
will calculate the value of your contract and charges, if any, as of the date we
receive your request in good order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 9.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options. The minimum automated withdrawal amount you can
make is generally $100. An assignment of the contract terminates any automated
withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 9.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
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9:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
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The tax considerations associated with the Strategic Partners Annuity One
contract vary depending on whether the contract is (i) owned by an individual
and not associated with a tax-favored retirement plan (including contracts held
by a non-natural person, such as a trust, acting as an agent for a natural
person), or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA, which can hold other permissible assets other than the annuity. The terms
and administration of the trust or custodial account in accordance with the laws
and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for these benefits could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments
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and will not be taxed. The remaining portion will be taxed as ordinary income.
Generally, the nontaxable portion is determined by multiplying the annuity
payment you receive by a fraction, the numerator of which is your purchase
payments (less any amounts previously received tax-free) and the denominator of
which is the total expected payments under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information).
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example, we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
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- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under
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the contract pass by reason of death, and must be a natural person in order to
elect a periodic payment option based on life expectancy or a period exceeding
five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes In The Contract We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars, and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater) less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older and by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to a prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law you may make to an IRA. For 2006, the limit is $4,000, increasing to $5,000
in 2008. After 2008, the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing those individuals an additional $1,000 contribution each
year. The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will
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not retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan into another
Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements".
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of another traditional IRA, conduit IRA, or Roth IRA, or
if you are age 50 or older and by making a single contribution consisting of
your Roth IRA contributions and catch-up contributions attributable to a prior
year and the current year during the period from January 1 to April 15 of the
current year. The Code permits persons who meet certain income limitations
(generally, adjusted gross income under $100,000 who are not married filing a
separate return), and who receive certain qualifying distributions from such
non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of all
or any part of the amount of such distribution to a Roth IRA which they
establish. This
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conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law. In addition, as
of January 1, 2006, an individual receiving an eligible rollover distribution
from a designated Roth account under an employer plan may roll over the
distribution to a Roth IRA. If you are considering rolling over funds from your
Roth account under an employer plan, please contact your Financial Professional
prior to purchase to confirm whether such rollovers are being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
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- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 7, "What Are The Expenses Associated With
The Strategic Partners Annuity One Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 10.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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10:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company
which was organized on December 23, 1971 under the laws of the State of Arizona.
It is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company that has been
doing business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940 as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
8%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the contract. Commissions and
other compensation paid in relation to the contract do not result in any
additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of
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sales personnel and/or marketing and/or administrative services and/or other
services they provide to us or our affiliates. These services may include, but
are not limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of benefits, return of
premiums or excessive premium charges and breaching fiduciary duties to
customers. In our annuities operations, we are subject to litigation involving
class action lawsuits and other litigation alleging, among other things, that we
made improper or inadequate disclosures in connection with the sale of annuity
products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. In some of our pending legal and
regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is such a pending
proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life insurance policy against Pruco Life and Prudential. The
complaint alleges that the Prudential defendants acted in bad faith when they
failed to pay a death benefit on an alleged contract of insurance that was never
delivered. In February 2006, the jury awarded the plaintiffs $1.4 million in
compensatory damages and $35 million in punitive damages. Pruco Life plans to
appeal the verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. If you
do so, we will reset the death benefit to equal the contract value on the date
the assignment occurs. For details, see Section 4, "What Is
- --------------------------------------------------------------------------------
83
10:
OTHER INFORMATION CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
The Death Benefit?" We will not be bound by the assignment until we receive
written notice. We will not be liable for any payment or other action we take in
accordance with the contract if that action occurs before we receive notice of
the assignment. An assignment, like any other change in ownership, may trigger a
taxable event. If you assign the contract, that assignment will result in the
termination of any automated withdrawal program that had been in effect. If the
new owner wants to re-institute an automated withdrawal program, then he/she
needs to submit the forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners Annuity One contract, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - State Specific Variations
- - Financial Statements
- - Separate Account Financial Information
- - Company Financial Information
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
- --------------------------------------------------------------------------------
84
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
As we have indicated throughout this prospectus, the Strategic Partners Annuity
One Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such contract features.
Here, we depict the historical unit values corresponding to the contract
features bearing the highest and lowest combination of asset-based charges. The
remaining unit values appear in the Statement of Additional Information, which
you may obtain free of charge by calling (888) PRU-2888 or by writing to us at
the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176. As
discussed in the prospectus, if you select certain optional benefits (e.g.,
Lifetime Five), we limit the investment options to which you may allocate your
contract value. In certain of these accumulation unit value tables, we set forth
accumulation unit values that assume election of one or more of such optional
benefits and allocation of contract value to portfolios that currently are not
permitted as part of such optional benefits. Such unit values are set forth for
general reference purposes only, and are not intended to indicate that such
portfolios may be acquired along with those optional benefits.
- --------------------------------------------------------------------------------
85
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 1.00269 $ 0.81573 2,804,198
1/1/2001 to 12/31/2001 $ 0.81573 $ 0.65768 13,472,779
1/1/2002 to 12/31/2002 $ 0.65768 $ 0.44784 17,750,091
1/1/2003 to 12/31/2003 $ 0.44784 $ 0.57527 17,493,004
1/1/2004 to 12/31/2004 $ 0.57527 $ 0.62205 15,595,654
1/1/2005 to 12/31/2005 $ 0.62205 $ 0.70282 13,509,022
2/4/2002** to 12/31/2002 $ 0.97701 $ 0.70649 2,074,773
1/1/2003 to 12/31/2003 $ 0.70649 $ 0.90749 3,307,801
1/1/2004 to 12/31/2004 $ 0.90749 $ 0.98122 3,450,251
1/1/2005 to 12/31/2005 $ 0.98122 $ 1.10855 3,130,048
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002*** to 12/31/2002 $ 1.00967 $ 0.80531 70,722
1/1/2003 to 12/31/2003 $ 0.80531 $ 1.04571 592,315
1/1/2004 to 12/31/2004 $ 1.04571 $ 1.13373 1,097,246
1/1/2005 to 12/31/2005 $ 1.13373 $ 1.24642 2,421,326
2/4/2002** to 12/31/2002 $ 0.97750 $ 0.78176 610,157
1/1/2003 to 12/31/2003 $ 0.78176 $ 1.01497 1,368,738
1/1/2004 to 12/31/2004 $ 1.01497 $ 1.10038 1,544,892
1/1/2005 to 12/31/2005 $ 1.10038 $ 1.20970 1,875,682
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99803 $ 0.87656 371,999
1/1/2001 to 12/31/2001 $ 0.87656 $ 0.71233 2,021,873
1/1/2002 to 12/31/2002 $ 0.71233 $ 0.52578 2,853,658
1/1/2003 to 12/31/2003 $ 0.52578 $ 0.69505 3,098,273
1/1/2004 to 12/31/2004 $ 0.69505 $ 0.75112 3,171,231
1/1/2005 to 12/31/2005 $ 0.75112 $ 0.85974 2,766,443
2/4/2002** to 12/31/2002 $ 0.98632 $ 0.76666 491,420
1/1/2003 to 12/31/2003 $ 0.76666 $ 1.01366 748,667
1/1/2004 to 12/31/2004 $ 1.01366 $ 1.09542 774,604
1/1/2005 to 12/31/2005 $ 1.09542 $ 1.25393 733,732
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
86
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 1.00040 $ 1.01353 3,827,370
1/1/2001 to 12/31/2001 $ 1.01353 $ 1.04061 28,517,423
1/1/2002 to 12/31/2002 $ 1.04061 $ 1.04179 30,407,337
1/1/2003 to 12/31/2003 $ 1.04179 $ 1.03613 23,119,477
1/1/2004 to 12/31/2004 $ 1.03613 $ 1.03213 16,405,422
1/1/2005 to 12/31/2005 $ 1.03213 $ 1.04743 15,171,362
2/4/2002** to 12/31/2002 $ 1.00003 $ 1.00082 1,223,365
1/1/2003 to 12/31/2003 $ 1.00082 $ 0.99527 4,777,403
1/1/2004 to 12/31/2004 $ 0.99527 $ 0.99141 4,662,685
1/1/2005 to 12/31/2005 $ 0.99141 $ 1.00599 2,015,180
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99966 $ 0.91141 1,122,383
1/1/2001 to 12/31/2001 $ 0.91141 $ 0.79064 7,243,090
1/1/2002 to 12/31/2002 $ 0.79064 $ 0.60663 11,922,873
1/1/2003 to 12/31/2003 $ 0.60663 $ 0.76671 13,031,875
1/1/2004 to 12/31/2004 $ 0.76671 $ 0.83508 12,497,799
1/1/2005 to 12/31/2005 $ 0.83508 $ 0.86092 10,756,264
2/4/2002** to 12/31/2002 $ 0.97534 $ 0.78517 2,259,907
1/1/2003 to 12/31/2003 $ 0.78517 $ 0.99254 4,369,924
1/1/2004 to 12/31/2004 $ 0.99254 $ 1.08106 5,673,071
1/1/2005 to 12/31/2005 $ 1.08106 $ 1.11454 4,964,469
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002*** to 12/31/2002 $ 1.00859 $ 0.79744 131,956
1/1/2003 to 12/31/2003 $ 0.79744 $ 1.00719 656,248
1/1/2004 to 12/31/2004 $ 1.00719 $ 1.15535 1,400,351
1/1/2005 to 12/31/2005 $ 1.15535 $ 1.32936 1,589,111
2/4/2002** to 12/31/2002 $ 0.97746 $ 0.79350 924,945
1/1/2003 to 12/31/2003 $ 0.79350 $ 1.00220 1,453,519
1/1/2004 to 12/31/2004 $ 1.00220 $ 1.14963 1,739,846
1/1/2005 to 12/31/2005 $ 1.14963 $ 1.32269 2,019,582
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
87
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.92990 612,611
1/1/2001 to 12/31/2001 $ 0.92990 $ 0.75207 2,321,220
1/1/2002 to 12/31/2002 $ 0.75207 $ 0.57727 3,164,636
1/1/2003 to 12/31/2003 $ 0.57727 $ 0.75587 3,480,170
1/1/2004 to 12/31/2004 $ 0.75587 $ 0.85542 3,671,537
1/1/2005 to 12/31/2005 $ 0.85542 $ 0.93214 3,864,680
2/4/2002** to 12/31/2002 $ 0.98198 $ 0.80240 458,213
1/1/2003 to 12/31/2003 $ 0.80240 $ 1.05061 778,049
1/1/2004 to 12/31/2004 $ 1.05061 $ 1.18898 870,360
1/1/2005 to 12/31/2005 $ 1.18898 $ 1.29548 923,830
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.85666 599,327
1/1/2001 to 12/31/2001 $ 0.85666 $ 0.63765 1,875,278
1/1/2002 to 12/31/2002 $ 0.63765 $ 0.49707 2,447,386
1/1/2003 to 12/31/2003 $ 0.49707 $ 0.62015 2,280,952
1/1/2004 to 12/31/2004 $ 0.62015 $ 0.68418 2,257,823
1/1/2005 to 4/29/2005 $ 0.68418 $ 0.63168 0
2/4/2002** to 12/31/2002 $ 0.97611 $ 0.80273 210,394
1/1/2003 to 12/31/2003 $ 0.80273 $ 1.00158 408,387
1/1/2004 to 12/31/2004 $ 1.00158 $ 1.10499 460,455
1/1/2005 to 4/29/2005 $ 1.10499 $ 1.02030 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.83933 907,104
1/1/2001 to 12/31/2001 $ 0.83933 $ 0.64005 4,254,778
1/1/2002 to 12/31/2002 $ 0.64005 $ 0.53519 4,851,632
1/1/2003 to 12/31/2003 $ 0.53519 $ 0.65281 4,279,800
1/1/2004 to 12/31/2004 $ 0.65281 $ 0.70030 3,982,664
1/1/2005 to 12/31/2005 $ 0.70030 $ 0.72258 3,526,371
2/4/2002** to 12/31/2002 $ 0.98416 $ 0.85696 309,138
1/1/2003 to 12/31/2003 $ 0.85696 $ 1.04529 438,902
1/1/2004 to 12/31/2004 $ 1.04529 $ 1.12146 505,329
1/1/2005 to 12/31/2005 $ 1.12146 $ 1.15727 515,268
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
88
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.98004 1,201,198
1/1/2001 to 12/31/2001 $ 0.98004 $ 0.91008 13,774,348
1/1/2002 to 12/31/2002 $ 0.91008 $ 0.79270 22,825,268
1/1/2003 to 12/31/2003 $ 0.79270 $ 0.96061 24,925,329
1/1/2004 to 12/31/2004 $ 0.96061 $ 1.05233 25,534,859
1/1/2005 to 12/31/2005 $ 1.05233 $ 1.11679 25,133,546
2/4/2002** to 12/31/2002 $ 0.98743 $ 0.89088 4,569,334
1/1/2003 to 12/31/2003 $ 0.89088 $ 1.07966 9,899,885
1/1/2004 to 12/31/2004 $ 1.07966 $ 1.18290 11,850,512
1/1/2005 to 12/31/2005 $ 1.18290 $ 1.25533 11,632,530
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.00456 831,559
1/1/2001 to 12/31/2001 $ 1.00456 $ 0.98804 12,182,545
1/1/2002 to 12/31/2002 $ 0.98804 $ 0.91698 19,460,197
1/1/2003 to 12/31/2003 $ 0.91698 $ 1.05346 18,946,400
1/1/2004 to 12/31/2004 $ 1.05346 $ 1.13137 19,002,701
1/1/2005 to 12/31/2005 $ 1.13137 $ 1.18166 16,744,844
2/4/2002** to 12/31/2002 $ 0.99058 $ 0.93899 3,739,863
1/1/2003 to 12/31/2003 $ 0.93899 $ 1.07868 6,890,674
1/1/2004 to 12/31/2004 $ 1.07868 $ 1.15831 8,749,042
1/1/2005 to 12/31/2005 $ 1.15831 $ 1.20985 8,573,075
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.01293 3,263,900
1/1/2001 to 12/31/2001 $ 1.01293 $ 0.89451 17,121,317
1/1/2002 to 12/31/2002 $ 0.89451 $ 0.74364 21,195,077
1/1/2003 to 12/31/2003 $ 0.74364 $ 0.94911 20,257,141
1/1/2004 to 12/31/2004 $ 0.94911 $ 1.05322 18,920,898
1/1/2005 to 12/31/2005 $ 1.05322 $ 1.13769 17,141,072
2/4/2002** to 12/31/2002 $ 0.97724 $ 0.86688 2,962,070
1/1/2003 to 12/31/2003 $ 0.86688 $ 1.10632 4,046,538
1/1/2004 to 12/31/2004 $ 1.10632 $ 1.22772 4,008,092
1/1/2005 to 12/31/2005 $ 1.22772 $ 1.32606 3,550,726
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
89
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.95179 1,422,198
1/1/2001 to 12/31/2001 $ 0.95179 $ 0.82679 10,013,607
1/1/2002 to 12/31/2002 $ 0.82679 $ 0.67465 15,695,966
1/1/2003 to 12/31/2003 $ 0.67465 $ 0.85346 15,882,317
1/1/2004 to 12/31/2004 $ 0.85346 $ 0.95157 15,498,538
1/1/2005 to 12/31/2005 $ 0.95157 $ 1.02509 14,933,648
2/4/2002** to 12/31/2002 $ 0.98366 $ 0.84346 3,092,708
1/1/2003 to 12/31/2003 $ 0.84346 $ 1.06700 5,126,970
1/1/2004 to 12/31/2004 $ 1.06700 $ 1.18965 5,476,579
1/1/2005 to 12/31/2005 $ 1.18965 $ 1.28163 6,096,985
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.04410 557,079
1/1/2001 to 12/31/2001 $ 1.04410 $ 0.94081 4,822,405
1/1/2002 to 12/31/2002 $ 0.94081 $ 0.77601 7,324,154
1/1/2003 to 12/31/2003 $ 0.77601 $ 0.96995 6,818,953
1/1/2004 to 12/31/2004 $ 0.96995 $ 1.12629 6,620,325
1/1/2005 to 12/31/2005 $ 1.12629 $ 1.18463 6,153,274
2/4/2002** to 12/31/2002 $ 0.97731 $ 0.83825 1,061,212
1/1/2003 to 12/31/2003 $ 0.83825 $ 1.04790 1,417,334
1/1/2004 to 12/31/2004 $ 1.04790 $ 1.21689 1,374,111
1/1/2005 to 12/31/2005 $ 1.21689 $ 1.27983 1,369,364
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.94430 727,420
1/1/2001 to 12/31/2001 $ 0.94430 $ 0.72585 4,573,063
1/1/2002 to 12/31/2002 $ 0.72585 $ 0.59296 6,199,295
1/1/2003 to 12/31/2003 $ 0.59296 $ 0.74486 5,899,804
1/1/2004 to 12/31/2004 $ 0.74486 $ 0.85068 5,716,172
1/1/2005 to 12/31/2005 $ 0.85068 $ 0.95452 5,374,033
2/4/2002** to 12/31/2002 $ 0.99846 $ 0.85393 823,568
1/1/2003 to 12/31/2003 $ 0.85393 $ 1.07261 1,230,724
1/1/2004 to 12/31/2004 $ 1.07261 $ 1.22497 1,258,600
1/1/2005 to 12/31/2005 $ 1.22497 $ 1.37436 1,011,416
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
90
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.91251 810,786
1/1/2001 to 12/31/2001 $ 0.91251 $ 0.69040 2,722,542
1/1/2002 to 12/31/2002 $ 0.69040 $ 0.48564 3,368,105
1/1/2003 to 12/31/2003 $ 0.48564 $ 0.60731 3,287,546
1/1/2004 to 12/31/2004 $ 0.60731 $ 0.67315 2,962,682
1/1/2005 to 4/29/2005 $ 0.67315 $ 0.62908 0
2/4/2002** to 12/31/2002 $ 0.96821 $ 0.74461 243,813
1/1/2003 to 12/31/2003 $ 0.74461 $ 0.93117 445,019
1/1/2004 to 12/31/2004 $ 0.93117 $ 1.03208 434,466
1/1/2005 to 4/29/2005 $ 1.03208 $ 0.96445 0
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.97366 1,181,291
1/1/2001 to 12/31/2001 $ 0.97366 $ 0.75936 4,194,730
1/1/2002 to 12/31/2002 $ 0.75936 $ 0.40193 5,093,082
1/1/2003 to 12/31/2003 $ 0.40193 $ 0.55548 5,645,379
1/1/2004 to 12/31/2004 $ 0.55548 $ 0.65495 5,609,864
1/1/2005 to 12/31/2005 $ 0.65495 $ 0.67992 6,805,650
2/4/2002** to 12/31/2002 $ 0.95936 $ 0.58443 756,328
1/1/2003 to 12/31/2003 $ 0.58443 $ 0.80750 1,178,996
1/1/2004 to 12/31/2004 $ 0.80750 $ 0.95200 1,360,156
1/1/2005 to 12/31/2005 $ 0.95200 $ 0.98826 1,698,859
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.01546 722,150
1/1/2001 to 12/31/2001 $ 1.01546 $ 1.04100 7,856,471
1/1/2002 to 12/31/2002 $ 1.04100 $ 1.02813 9,066,653
1/1/2003 to 12/31/2003 $ 1.02813 $ 1.24124 9,447,820
1/1/2004 to 12/31/2004 $ 1.24124 $ 1.33818 9,045,748
1/1/2005 to 12/31/2005 $ 1.33818 $ 1.37312 7,807,777
2/4/2002** to 12/31/2002 $ 0.99887 $ 0.98184 1,529,066
1/1/2003 to 12/31/2003 $ 0.98184 $ 1.18535 3,798,121
1/1/2004 to 12/31/2004 $ 1.18535 $ 1.27784 4,126,423
1/1/2005 to 12/31/2005 $ 1.27784 $ 1.31099 3,576,187
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
91
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.04774 1,448,492
1/1/2001 to 12/31/2001 $ 1.04774 $ 1.12247 18,070,959
1/1/2002 to 12/31/2002 $ 1.12247 $ 1.21092 23,310,960
1/1/2003 to 12/31/2003 $ 1.21092 $ 1.26394 27,581,422
1/1/2004 to 12/31/2004 $ 1.26394 $ 1.31224 23,832,755
1/1/2005 to 12/31/2005 $ 1.31224 $ 1.32513 20,690,952
2/4/2002** to 12/31/2002 $ 1.00358 $ 1.06613 6,564,425
1/1/2003 to 12/31/2003 $ 1.06613 $ 1.11297 10,369,192
1/1/2004 to 12/31/2004 $ 1.11297 $ 1.15556 10,417,848
1/1/2005 to 12/31/2005 $ 1.15556 $ 1.16696 9,283,073
SP PRUDENTIAL US EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.83561 1,515,243
1/1/2001 to 12/31/2001 $ 0.83561 $ 0.67759 6,095,282
1/1/2002 to 12/31/2002 $ 0.67759 $ 0.45382 8,181,551
1/1/2003 to 12/31/2003 $ 0.45382 $ 0.63603 8,150,706
1/1/2004 to 12/31/2004 $ 0.63603 $ 0.76134 8,016,562
1/1/2005 to 12/31/2005 $ 0.76134 $ 0.88437 8,516,490
2/4/2002** to 12/31/2002 $ 0.96873 $ 0.71988 794,585
1/1/2003 to 12/31/2003 $ 0.71988 $ 1.00882 1,489,842
1/1/2004 to 12/31/2004 $ 1.00882 $ 1.20761 1,510,321
1/1/2005 to 12/31/2005 $ 1.20761 $ 1.40267 1,644,239
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.83474 441,462
1/1/2001 to 12/31/2001 $ 0.83474 $ 0.68188 2,522,640
1/1/2002 to 12/31/2002 $ 0.68188 $ 0.46899 2,932,746
1/1/2003 to 12/31/2003 $ 0.46899 $ 0.62301 2,995,098
1/1/2004 to 12/31/2004 $ 0.62301 $ 0.60866 2,860,158
1/1/2005 to 12/31/2005 $ 0.60866 $ 0.61518 2,493,758
2/4/2002** to 12/31/2002 $ 0.97561 $ 0.72521 544,296
1/1/2003 to 12/31/2003 $ 0.72521 $ 0.96342 862,743
1/1/2004 to 12/31/2004 $ 0.96342 $ 0.94136 881,042
1/1/2005 to 12/31/2005 $ 0.94136 $ 0.95138 836,686
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
92
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
9/22/2000* to 12/31/2000 $ 0.99989 $ 1.10899 1,013,389
1/1/2001 to 12/31/2001 $ 1.10899 $ 1.12776 5,986,116
1/1/2002 to 12/31/2002 $ 1.12776 $ 0.95217 8,420,757
1/1/2003 to 12/31/2003 $ 0.95217 $ 1.24988 8,325,494
1/1/2004 to 12/31/2004 $ 1.24988 $ 1.48755 8,294,965
1/1/2005 to 12/31/2005 $ 1.48755 $ 1.53474 7,346,572
2/4/2002** to 12/31/2002 $ 0.98396 $ 0.84988 2,200,257
1/1/2003 to 12/31/2003 $ 0.84988 $ 1.11558 3,165,113
1/1/2004 to 12/31/2004 $ 1.11558 $ 1.32788 3,593,566
1/1/2005 to 12/31/2005 $ 1.32788 $ 1.36999 3,265,910
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.79227 693,204
1/1/2001 to 12/31/2001 $ 0.79227 $ 0.66171 3,503,249
1/1/2002 to 12/31/2002 $ 0.66171 $ 0.48778 4,108,519
1/1/2003 to 12/31/2003 $ 0.48778 $ 0.60541 3,953,002
1/1/2004 to 12/31/2004 $ 0.60541 $ 0.66033 3,679,812
1/1/2005 to 12/31/2005 $ 0.66033 $ 0.74991 3,228,830
2/4/2002** to 12/31/2002 $ 0.97345 $ 0.77240 272,093
1/1/2003 to 12/31/2003 $ 0.77240 $ 0.95860 426,339
1/1/2004 to 12/31/2004 $ 0.95860 $ 1.04544 452,645
1/1/2005 to 12/31/2005 $ 1.04544 $ 1.18721 422,319
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.85233 1,254,905
1/1/2001 to 12/31/2001 $ 0.85233 $ 0.71906 5,750,267
1/1/2002 to 12/31/2002 $ 0.71906 $ 0.48794 6,976,552
1/1/2003 to 12/31/2003 $ 0.48794 $ 0.59595 6,981,606
1/1/2004 to 12/31/2004 $ 0.59595 $ 0.62365 6,751,783
1/1/2005 to 12/31/2005 $ 0.62365 $ 0.71651 6,027,621
2/4/2002** to 12/31/2002 $ 0.96941 $ 0.72083 743,529
1/1/2003 to 12/31/2003 $ 0.72083 $ 0.88040 1,245,148
1/1/2004 to 12/31/2004 $ 0.88040 $ 0.92132 1,147,725
1/1/2005 to 12/31/2005 $ 0.92132 $ 1.05848 1,081,009
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
93
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.75990 1,305,959
1/1/2001 to 12/31/2001 $ 0.75990 $ 0.56163 2,243,267
1/1/2002 to 12/31/2002 $ 0.56163 $ 0.32494 2,590,099
1/1/2003 to 12/31/2003 $ 0.32494 $ 0.45628 3,243,536
1/1/2004 to 12/31/2004 $ 0.45628 $ 0.45003 2,868,543
1/1/2005 to 4/29/2005 $ 0.45003 $ 0.40195 0
2/4/2002** to 12/31/2002 $ 0.97074 $ 0.60245 40,621
1/1/2003 to 12/31/2003 $ 0.60245 $ 0.84598 338,831
1/1/2004 to 12/31/2004 $ 0.84598 $ 0.83430 351,344
1/1/2005 to 4/29/2005 $ 0.83430 $ 0.74523 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 0.99989 $ 0.84672 943,082
1/1/2001 to 12/31/2001 $ 0.84672 $ 0.53757 4,590,254
1/1/2002 to 12/31/2002 $ 0.53757 $ 0.41046 5,579,681
1/1/2003 to 12/31/2003 $ 0.41046 $ 0.56496 5,249,603
1/1/2004 to 12/31/2004 $ 0.56496 $ 0.64928 4,721,996
1/1/2005 to 12/31/2005 $ 0.64928 $ 0.74528 4,600,115
2/4/2002** to 12/31/2002 $ 0.99603 $ 0.80285 424,766
1/1/2003 to 12/31/2003 $ 0.80285 $ 1.10501 763,000
1/1/2004 to 12/31/2004 $ 1.10501 $ 1.27001 848,132
1/1/2005 to 12/31/2005 $ 1.27001 $ 1.45769 839,210
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $ 9.99933 468
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/02/2005 $10.09338 $11.73323 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07970 $10.33229 695
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05481 $10.28681 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/02/2005 $10.05009 $11.34495 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04988 $10.42169 3,138
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06658 $10.35426 3,733
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
94
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04202 $10.33700 480
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99886 $10.01933 35,254
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99886 $10.00933 16,953
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.14710 $12.04155 11,885
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99886 $10.02932 4,895
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.08492 $10.73678 5,473
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01133 $10.33264 399
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04570 $10.03757 3,983
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99886 $10.98052 8,235
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01541 $10.64464 193
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03302 $10.78065 471
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99886 $10.60000 1,893
AST HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
3/14/2005* to 12/31/2005 $ 9.97681 $ 9.87825 5,242
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91389 $10.67460 15,216
AST LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
3/14/2005* to 12/31/2005 $10.07726 $10.57804 31,485
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99886 $ 9.96977 9,454
</Table>
<Table>
* DATE THAT FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
95
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.12625 $10.92526 18,742
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.96626 $10.49866 3,218
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03693 $10.78089 13,545
AST MID CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
3/14/2005* to 12/31/2005 $10.06503 $10.37369 1,319
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05576 $11.35869 10,238
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02196 $10.90682 24,263
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99886 $10.07733 7,572
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99886 $10.03931 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04866 $10.66828 5,525
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02867 $10.37610 8,025
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.94939 $ 9.46839 6,633
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00286 $11.76236 62,664
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88103 $12.08600 12,954
</Table>
<Table>
* DATE THAT FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
96
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO--SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
9/22/2000* to 12/31/2000 $ 1.00400 $ 0.83038 1,473,096
1/1/2001 to 12/31/2001 $ 0.83038 $ 0.61510 4,870,436
1/1/2002 to 12/31/2002 $ 0.61510 $ 0.44459 5,096,340
1/1/2003 to 12/31/2003 $ 0.44459 $ 0.57657 4,772,334
1/1/2004 to 12/31/2004 $ 0.57657 $ 0.59255 4,419,591
1/1/2005 to 12/31/2005 $ 0.59255 $ 0.60787 3,753,378
2/4/2002** to 12/31/2002 $ 0.97419 $ 0.74968 287,219
1/1/2003 to 12/31/2003 $ 0.74968 $ 0.97207 505,453
1/1/2004 to 12/31/2004 $ 0.97207 $ 0.99891 579,355
1/1/2005 to 12/31/2005 $ 0.99891 $ 1.02463 407,436
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
</Table>
- --------------------------------------------------------------------------------
97
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(CONTRACT W/CREDIT GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06145 $11.75073 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04782 $11.04034 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98600 $11.27691 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99992 $10.05598 0
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05597 $10.32516 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03732 $11.19819 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03172 $10.92445 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.06867 $ 9.48068 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02500 $10.18186 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01697 $10.61664 65,028
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00702 $10.44620 44,618
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02493 $10.57131 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02885 $10.78307 77,676
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07564 $10.42666 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91203 $10.60969 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.05585 $ 9.60094 0
</Table>
<Table>
* Date that fund and/or benefit was first added to annuity.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
98
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/CREDIT GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02813 $10.63711 0
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98879 $10.08338 0
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.11445 0
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03564 $11.68501 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03026 $10.45862 0
SP SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
3/14/2005* to 12/31/2005 $10.05714 $10.45206 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07347 $11.92709 0
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
3/14/2005* to 12/31/2005 $10.03000 $12.06788 0
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.04299 $ 9.58740 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.92621 $11.23793 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $ 9.99180 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.09257 $11.64968 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07889 $10.25092 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05400 $10.20591 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/02/2005 $10.04928 $11.26425 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04907 $10.33975 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT FIRST ADDED TO ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
99
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/CREDIT GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06577 $10.27260 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04122 $10.25565 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.01176 0
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.00178 0
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.14629 $11.94685 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.02175 0
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.08411 $10.65216 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01052 $10.25131 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04489 $ 9.95852 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.89421 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01461 $10.56091 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03221 $10.69595 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.51651 0
AST HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
3/14/2005* to 12/31/2005 $ 9.97600 $ 9.80046 0
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91308 $10.59056 0
AST LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
3/14/2005* to 12/31/2005 $10.07646 $10.49471 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT FIRST ADDED TO ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
100
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PART II
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(CONTRACT W/CREDIT GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $ 9.89115 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.12544 $10.83913 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.96545 $10.41606 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03612 $10.69610 0
AST MID CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
3/14/2005* to 12/31/2005 $10.06422 $10.29196 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05495 $11.26937 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02116 $10.82098 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $ 9.99792 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.03174 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04786 $10.58426 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02787 $10.29451 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.94859 $ 9.39375 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00205 $11.66986 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88022 $11.99077 0
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO--SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04399 $10.33470 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT FIRST ADDED TO ANNUITY.
</Table>
- --------------------------------------------------------------------------------
101
PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
APPENDIX B
CALCULATION OF EARNINGS APPRECIATOR BENEFIT
EXAMPLE 1:
Assume that a purchase payment of $70,000 is made on the contract date. Assume
that no withdrawals or subsequent purchase payments are made and that the
contract value used in the death benefit calculation is $120,000. Also assume
that the owner (or joint owner, if older) is younger than age 66 on the date the
application is signed.
<Table>
45% of lesser of:
Adjusted Purchase Payment $70,000
Allocated Earnings $50,000 contract value minus purchase payment)
Benefit (45% of $50,000) $22,500
</Table>
EXAMPLE 2:
Assume that a 60 year old purchases a contract on 1/1/2001 with a $50,000
purchase payment.
The owner's initial purchase payment (purchase payment #1) grows to $90,000 on
1/1/2005, giving the contract $40,000 IN EARNINGS, all allocated to the initial
purchase payment. On this date, the owner makes an additional purchase payment
of $60,000. The $60,000 purchase payment increases the contract value to
$150,000 ($90,000 + $60,000). At this time, there are no earnings allocated to
the additional purchase payment (purchase payment #2). However, future earnings
will now be allocated to the two purchase payments in the following proportions:
(purchase payment#1 + earnings) / total contract value = ($50,000 +
$40,000*) / $150,000 = 60%
(purchase payment#2 + earnings) / total contract value = ($60,000 +
$0) / $150,000 = 40%
On 1/1/2009 the owner makes a withdrawal of $38,000. The contract value has
grown an additional $40,000 from $150,000 on 1/1/2005 to $190,000 on 1/1/2009
prior to the withdrawal. The $40,000 IN NEW EARNINGS will be allocated among the
two purchase payments prior to the withdrawal using the percentages determined
above.
$40,000 IN NEW EARNINGS
Earnings Allocated to Adjusted Purchase Payment #1 (60% of $40,000) =
$24,000
Earnings Allocated to Adjusted Purchase Payment # 2 (40% of $40,000) =
$16,000
The earnings allocated to each purchase payment now are as follows:
<Table>
<Caption>
BEFORE
NEW
EARNINGS $40,000 NEW EARNINGS TOTAL
-------- + -------------------- = --------
Purchase Payment #1 $ 50,000 $ 0 $ 50,000
Earnings Allocated to #1 $ 40,000 $24,000 $ 64,000
Purchase Payment #2 $ 60,000 $ 0 $ 60,000
Earnings Allocated to #2 $ 0 $16,000 $ 16,000
-------- ------- --------
$150,000 + $40,000 = $190,000
</Table>
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102
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PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
The withdrawal of $38,000 reduces the contract value by 20% ($38,000/$190,000).
The withdrawal will reduce both purchase payments and the earnings allocated to
each of them by 20% as shown below.
<Table>
<Caption>
BEFORE
WITHDRAWAL REDUCED BY 20%
---------- --------------
Adjusted Purchase Payment #1 $ 50,000 $ 40,000
Earnings Allocated to #1 $ 64,000 $ 51,200
Adjusted Purchase Payment #2 $ 60,000 $ 48,000
Earnings Allocated to #2 $ 16,000 $ 12,800
-------- --------
$190,000 $152,000
</Table>
'The contract value grows $20,000 from $152,000 on 1/1/2009 to $172,000 on
1/1/2011. THE $20,000 IN NEW EARNINGS will be allocated among the two purchase
payments using the percentages determined above.
$20,000 IN NEW EARNINGS
Earnings Allocated to Adjusted Purchase Payment #1 (60% of $20,000) =
$12,000
Earnings Allocated to Adjusted Purchase Payment #2 (40% of $20,000) =
$8,000
The earnings allocated to each purchase payment now are as follows:
<Table>
<Caption>
BEFORE
NEW
EARNINGS $20,000 NEW EARNINGS TOTAL
-------- + -------------------- = --------
Adjusted Purchase Payment #1 $ 40,000 $ 0 $ 40,000
Earnings Allocated to #1 $ 51,200 $12,000 $ 63,200
Adjusted Purchase Payment #2 $ 48,000 $ 0 $ 48,000
Earnings Allocated to #2 $ 12,800 $ 8,000 $ 20,800
-------- ------- --------
$152,000 + $20,000 = $172,000
</Table>
Now let's calculate the total Earnings Appreciator Benefit as of 1/1/2011:
<Table>
Benefit on Purchase Payment #1 Benefit on Purchase Payment #2
45% of lesser of: 45% of lesser of:
Adjusted Purchase Payment $40,000 Adjusted Purchase Payment $48,000
Allocated Earnings $63,200 Allocated Earnings $20,800
45% OF $40,000 $18,000 45% OF $20,800 $9,360
</Table>
TOTAL EARNINGS APPRECIATOR BENEFIT: $18,000 + $9,360 = $27,360
- --------------------------------------------------------------------------------
103
PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
APPENDIX C
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company. Not all of these annuities may be available to you
due to state approval or broker-dealer offerings. You can verify which of these
annuities is available to you by asking your registered representative, or by
calling us at (888) PRU-2888. For comprehensive information about each of these
annuities, please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each available
Strategic Partners variable annuity. The availability of optional features, such
as those noted in the chart, may increase the cost of the contract. Therefore,
you should carefully consider which features you plan to use when selecting your
annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners Annuity One/Plus and the Strategic Partners Annuity One/Plus
Enhanced contracts ("Enhanced Contracts" refers to the version of the
contract offered beginning in February of 2002), Strategic Partners Advisor
offers few optional benefits.
- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- - Strategic Partners Annuity One/Plus Enhanced comes in both a bonus version
and a non-bonus version, each of which offers several optional insurance
features. A bonus is added to your purchase payments under the bonus version,
although the withdrawal charges under the bonus version are higher than those
under the non-bonus version. Although the non-bonus version offers no bonus,
it is accompanied by fixed interest rate options that are not available in
the bonus version.
- --------------------------------------------------------------------------------
104
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PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of the
available Strategic Partners variable annuity products. You should consider the
investment objectives, risks, charges and expenses of an investment in any
contract carefully before investing. Each product prospectus as well as the
underlying portfolio prospectuses contains this and other information about the
variable annuities and underlying investment options. Your registered
representative can provide you with prospectuses for one or more of these
variable annuities and the underlying portfolios and can help you decide upon
the product that would be most advantageous for you given your individual needs.
Please read the prospectuses carefully before investing.
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/ ANNUITY ONE/
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS PLUS ENHANCED PLUS ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
- ----------------------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000 $10,000 $10,000
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & Non- 80 Qualified & 85 80 Qualified & Non- 85 Qualified & Non- 85 Qualified & Non-
Qualified Non-Qualified Qualified Qualified Qualified
- ----------------------------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 7 Years (7%, 6%, 9 Years (7%, 7%, 7 Years (7%, 6%, 7 Years (8%, 8%,
Schedule 5%, 4%, 3%, 2%, 1%) 7%, 6%, 5%, 4%, 3%, 5%, 4%, 3%, 2%, 1%) 8%, 8%, 7%, 6%, 5%)
Contract date based 2%, 1%) Payment Payment date based Payment date based
date based
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross 10% of gross 10% of gross 10% of gross
Withdrawal(1) purchase payments purchase payments purchase payments purchase payments
per contract year, made as of last made as of last made as of last
cumulative up to 7 contract contract contract
years or 70% of anniversary per anniversary per anniversary per
gross purchase contract year contract year contract year
payments
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.52% 1.40% 1.40% 1.50%
Administration Charge
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 $30. Waived if The lesser of $30 The lesser of $35 The lesser of $35
Fee (assessed or 2% of your contract value is or 2% of your or 2% of your or 2% of your
annually) contract value. $50,000 or more contract value. contract value. contract value.
Waived if contract Waived if contract Waived if contract Waived if contract
value is $50,000 or value is $50,000 or value is $75,000 or value is $75,000 or
more more more more
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Credit No No Yes No Yes
4% vested over 7 3%-all amounts ages
years 81-85
4%-under $250,000
5%-$250,000+
- ----------------------------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes No Yes No
1-Year 1-Year
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value No Yes No No No
Adjustment Account 7-Year
(MVA)
- ----------------------------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No No No Yes No
Averaging (DCA)
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Investment 56 56 56/62 56/62 56/62
Options Available
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
1 Withdrawals of taxable amounts will be subject to income tax, and prior to age
59 1/2, may be subject to a 10% federal income tax penalty.
- --------------------------------------------------------------------------------
105
PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/ ANNUITY ONE/
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS PLUS ENHANCED PLUS ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
- ----------------------------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A 6 - available in 6 - available in 6 - available in
Strategic Partners Strategic Partners Strategic Partners
Plus only Plus Enhanced only Plus Enhanced only
- ----------------------------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: Step/Roll The greater of: The greater of: The greater of:
purchase payment(s) Withdrawals will purchase payment(s) purchase payment(s) purchase payment(s)
minus proportionate proportionately minus proportionate minus proportionate minus proportionate
withdrawal(s) or affect the Death withdrawal(s) or withdrawal(s) or withdrawal(s) or
contract value Benefit contract value contract value contract value
- ----------------------------------------------------------------------------------------------------------------------------------
Optional Death Step/Roll N/A Step-Up Step-Up Step-Up
Benefit (for an Roll-Up Roll-Up Roll-Up
additional Combo: Step/Roll Combo: Step/Roll Combo: Step/Roll
cost)(2,3)
- ----------------------------------------------------------------------------------------------------------------------------------
Living Benefits (for Lifetime Five N/A Lifetime Five Lifetime Five Lifetime Five
an additional Guaranteed Minimum Guaranteed Minimum Guaranteed Minimum
cost)(3, 4) Income Benefit Income Benefit Income Benefit
(GMIB) (GMIB) (GMIB)
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
2 For more information on these benefits, refer to Section 4, "What Is The Death
Benefit?" in the Prospectus.
3 Not all Optional Benefits may be available in all states.
4 For more information on these benefits, refer to Section 3, "What Kind Of
Payments Will I Receive During The Income Phase?"; and Section 5, "What Is the
LifeTime Five(SM) Income Benefit?" in the Prospectus.
- --------------------------------------------------------------------------------
106
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PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made to/from the contract.
- - The hypothetical gross rates of return are reduced by the arithmetic average
of the fees and expenses of the underlying portfolios (as of December 31,
2005) and the charges that are deducted from the contract at the Separate
Account level as follows:
-- 0.99% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes
of the illustrations, we do not reflect any expense reimbursements or
expense waivers that might apply and are described in the prospectus fee
table.
-- The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the Withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under a contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
- --------------------------------------------------------------------------------
107
PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
0% GROSS RETURN
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ANNUITY ONE/PLUS ANNUITY ONE/PLUS
STRATEGIC PARTNERS ONE/PLUS ENHANCED ENHANCED
ADVISOR STRATEGIC PARTNERS SELECT BONUS NON BONUS BONUS
-------------------- -------------------------- -------------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------------------
1 $97,659 $97,659 $97,544 $91,415 $101,565 $ 95,265 $97,659 $91,522 $101,465 $ 94,148
2 $95,366 $95,366 $95,141 $90,032 $ 99,181 $ 92,881 $95,366 $90,244 $ 98,986 $ 91,866
3 $93,128 $93,128 $92,798 $88,658 $ 96,853 $ 90,553 $93,128 $88,971 $ 96,567 $ 89,641
4 $90,941 $90,941 $90,512 $87,292 $ 94,579 $ 89,504 $90,941 $87,703 $ 94,207 $ 87,470
5 $88,807 $88,807 $88,283 $85,934 $ 92,359 $ 88,241 $88,807 $86,442 $ 91,905 $ 86,171
6 $86,722 $86,722 $86,109 $84,586 $ 90,191 $ 86,983 $86,722 $85,187 $ 89,659 $ 84,879
7 $84,686 $84,686 $83,988 $83,248 $ 88,073 $ 85,731 $84,686 $83,939 $ 87,468 $ 83,594
8 $82,698 $82,698 $81,919 $81,919 $ 86,006 $ 84,486 $82,698 $82,698 $ 85,331 $ 85,331
9 $80,757 $80,757 $79,902 $79,902 $ 83,987 $ 83,247 $80,757 $80,757 $ 83,245 $ 83,245
10 $78,861 $78,861 $77,934 $77,934 $ 82,015 $ 82,015 $78,861 $78,861 $ 81,211 $ 81,211
11 $77,010 $77,010 $76,014 $76,014 $ 80,090 $ 80,090 $77,010 $77,010 $ 79,226 $ 79,226
12 $75,202 $75,202 $74,142 $74,142 $ 78,210 $ 78,210 $75,202 $75,202 $ 77,290 $ 77,290
13 $73,436 $73,436 $72,282 $72,282 $ 76,374 $ 76,374 $73,436 $73,436 $ 75,402 $ 75,402
14 $71,712 $71,712 $70,468 $70,468 $ 74,581 $ 74,581 $71,678 $71,678 $ 73,559 $ 73,559
15 $70,029 $70,029 $68,698 $68,698 $ 72,830 $ 72,830 $69,961 $69,961 $ 71,727 $ 71,727
16 $68,385 $68,385 $66,972 $66,972 $ 71,121 $ 71,121 $68,285 $68,285 $ 69,940 $ 69,940
17 $66,780 $66,780 $65,288 $65,288 $ 69,451 $ 69,451 $66,648 $66,648 $ 68,197 $ 68,197
18 $65,212 $65,212 $63,646 $63,646 $ 67,821 $ 67,821 $65,049 $65,049 $ 66,496 $ 66,496
19 $63,681 $63,681 $62,044 $62,044 $ 66,228 $ 66,228 $63,488 $63,488 $ 64,837 $ 64,837
20 $62,186 $62,186 $60,482 $60,482 $ 64,674 $ 64,674 $61,963 $61,963 $ 63,219 $ 63,219
21 $60,726 $60,726 $58,958 $58,958 $ 63,156 $ 63,156 $60,474 $60,474 $ 61,640 $ 61,640
22 $59,301 $59,301 $57,472 $57,472 $ 61,673 $ 61,673 $59,021 $59,021 $ 60,099 $ 60,099
23 $57,909 $57,909 $56,022 $56,022 $ 60,225 $ 60,225 $57,601 $57,601 $ 58,596 $ 58,596
24 $56,549 $56,549 $54,608 $54,608 $ 58,811 $ 58,811 $56,215 $56,215 $ 57,130 $ 57,130
25 $55,222 $55,222 $53,229 $53,229 $ 57,431 $ 57,431 $54,861 $54,861 $ 55,700 $ 55,700
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005 the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners Annuity One/Plus Bonus -2.35%; Strategic Partners Annuity
One/Plus Enhanced Non-Bonus -2.35%; Strategic Partners Annuity One/Plus
Enhanced Bonus -2.44%.
5. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
6. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
108
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS SECTIONS 1-10
6% GROSS RETURN
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/PLUS ANNUITY ONE/PLUS
STRATEGIC PARTNERS ANNUITY ONE/PLUS ENHANCED ENHANCED
ADVISOR STRATEGIC PARTNERS SELECT BONUS NON BONUS BONUS
-------------------- -------------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
1 $103,502 $103,502 $103,380 $ 96,844 $107,642 $101,342 $103,502 $ 96,957 $107,536 $ 99,734
2 $107,136 $107,136 $106,864 $101,071 $111,422 $105,122 $107,136 $101,309 $111,203 $103,107
3 $110,899 $110,899 $110,506 $105,481 $115,335 $109,035 $110,899 $105,854 $114,994 $106,596
4 $114,793 $114,793 $114,252 $110,082 $119,385 $112,822 $114,793 $110,602 $118,915 $110,203
5 $118,824 $118,824 $118,124 $114,881 $123,577 $117,899 $118,824 $115,560 $122,970 $115,063
6 $122,997 $122,997 $122,127 $119,885 $127,917 $123,201 $122,997 $120,737 $127,163 $120,134
7 $127,316 $127,316 $126,267 $125,104 $132,409 $128,737 $127,316 $126,143 $131,499 $125,424
8 $131,787 $131,787 $130,546 $130,546 $137,058 $134,518 $131,787 $131,787 $135,982 $135,982
9 $136,415 $136,415 $134,971 $134,971 $141,871 $140,553 $136,415 $136,415 $140,619 $140,619
10 $141,205 $141,205 $139,545 $139,545 $146,853 $146,853 $141,205 $141,205 $145,413 $145,413
11 $146,164 $146,164 $144,275 $144,275 $152,010 $152,010 $146,164 $146,164 $150,371 $150,371
12 $151,297 $151,297 $149,165 $149,165 $157,348 $157,348 $151,297 $151,297 $155,499 $155,499
13 $156,610 $156,610 $154,220 $154,220 $162,874 $162,874 $156,610 $156,610 $160,800 $160,800
14 $162,109 $162,109 $159,447 $159,447 $168,594 $168,594 $162,109 $162,109 $166,283 $166,283
15 $167,802 $167,802 $164,851 $164,851 $174,514 $174,514 $167,802 $167,802 $171,953 $171,953
16 $173,694 $173,694 $170,439 $170,439 $180,642 $180,642 $173,694 $173,694 $177,816 $177,816
17 $179,794 $179,794 $176,215 $176,215 $186,986 $186,986 $179,794 $179,794 $183,879 $183,879
18 $186,108 $186,108 $182,188 $182,188 $193,552 $193,552 $186,108 $186,108 $190,148 $190,148
19 $192,643 $192,643 $188,363 $188,363 $200,349 $200,349 $192,643 $192,643 $196,632 $196,632
20 $199,408 $199,408 $194,747 $194,747 $207,384 $207,384 $199,408 $199,408 $203,336 $203,336
21 $206,411 $206,411 $201,347 $201,347 $214,667 $214,667 $206,411 $206,411 $210,269 $210,269
22 $213,659 $213,659 $208,172 $208,172 $222,205 $222,205 $213,659 $213,659 $217,439 $217,439
23 $221,162 $221,162 $215,227 $215,227 $230,008 $230,008 $221,162 $221,162 $224,853 $224,853
24 $228,928 $228,928 $222,522 $222,522 $238,085 $238,085 $228,928 $228,928 $232,519 $232,519
25 $236,967 $236,967 $230,064 $230,064 $246,446 $246,446 $236,967 $236,967 $240,447 $240,447
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005 the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.47%; Strategic Partners Select 3.35%; Strategic
Partners Annuity One/Plus Bonus 3.47%; Strategic Partners Annuity One/Plus
Enhanced Non-Bonus 3.47%; Strategic Partners Annuity One/Plus Enhanced Bonus
3.37%.
5. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
6. Surrender Value assumes surrender 2 days prior to policy anniversary.
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS ORD000045
(05/2006).
---------------------------------------------------------
(print your name)
---------------------------------------------------------
(address)
---------------------------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
ORD000045
STRATEGIC PARTNERS(SM)
PLUS
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 1, 2006
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE) AND THE PRUCO LIFE FLEXIBLE PREMIUM
ANNUITY ACCOUNT. PRUCO LIFE OFFERS SEVERAL DIFFERENT ANNUITIES WHICH YOUR
REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS DIFFERENT
FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR FINANCIAL
SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. PLEASE NOTE THAT
SELLING BROKER-DEALER FIRMS THROUGH WHICH THE CONTRACT IS SOLD MAY DECLINE TO
MAKE AVAILABLE TO THEIR CUSTOMERS CERTAIN OF THE OPTIONAL FEATURES OFFERED
GENERALLY UNDER THE CONTRACT. ALTERNATIVELY, SUCH FIRMS MAY RESTRICT THE
AVAILABILITY OF THE OPTIONAL BENEFITS THAT THEY DO MAKE AVAILABLE TO THEIR
CUSTOMERS (E.G., BY IMPOSING A LOWER MAXIMUM ISSUE AGE FOR CERTAIN OPTIONAL
BENEFITS THAN WHAT IS PRESCRIBED GENERALLY UNDER THE CONTRACT). PLEASE SPEAK TO
YOUR REGISTERED REPRESENTATIVE FOR FURTHER DETAILS. THE DIFFERENT FEATURES AND
BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION AND THE ABILITY TO
ACCESS YOUR ANNUITY'S CONTRACT VALUE. THE FEES AND CHARGES UNDER THE ANNUITY
CONTRACT AND THE COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE DIFFERENT
AMONG EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A REPLACEMENT FOR
EXISTING VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER, AMONG
OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN REPLACING YOUR
EXISTING COVERAGE. PRUCO LIFE IS A WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
- ------------------------------------------------------------
Strategic Partners Plus offers a wide variety of investment choices, including
variable investment options that invest in underlying mutual funds. Currently,
portfolios of the following underlying mutual funds are being offered: The
Prudential Series Fund, American Skandia Trust, Evergreen Variable Annuity
Trust, Gartmore Variable Insurance Trust, and Janus Aspen Series (see next page
for list of portfolios currently offered).
You may choose between two basic versions of Strategic Partners Plus. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Strategic Partners
Plus, some charges and expenses may be higher than if you choose the version
without the credit. Those higher charges could exceed the amount of the credit
under some circumstances, particularly if you withdraw purchase payments within
a few years of making those purchase payments. The Contract With Credit comes in
two forms -- one form under which bonus credits generally are not recaptured
once the free look period expires and which bears higher charges, and the other
form under which bonus credits vest over several years. We will continue to
offer the later version of the Contract With Credit in a State until the State
has approved the former version, after which approval we will offer only the
former version.
PLEASE READ THIS PROSPECTUS
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Plus variable
annuity contract, and keep it for future reference. The current prospectuses for
the underlying mutual funds contain important information about the mutual
funds. When you invest in a variable investment option that is funded by a
mutual fund, you should read the mutual fund prospectus and keep it for future
reference.
TO LEARN MORE ABOUT STRATEGIC PARTNERS
PLUS
- ------------------------------------------------------------
To learn more about the Strategic Partners Plus variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2006. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
office, and can also be obtained from the SEC's Public Reference Section, 100 F
Street, N.E., Washington, D.C. 20549. (See SEC file number 333-37728.) You may
obtain information on the operation of the Public Reference Room by calling the
SEC at (202) 551-8090. The SEC maintains a Web site (http://www.sec.gov) that
contains the Strategic Partners Plus SAI, material incorporated by reference,
and other information regarding registrants that file electronically with the
SEC. The Table of Contents of the SAI is set forth in Section 10 of this
prospectus.
For a free copy of the SAI, call us at (888) PRU-2888, or write to us at
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS PLUS IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA. P2082
THE PRUDENTIAL SERIES FUND
Jennison Portfolio
Prudential Equity Portfolio
Prudential Global Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP LSV International Value Portfolio
SP Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small-Cap Growth Portfolio
SP Small Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
SP T. Rowe Price Large-Cap Growth Portfolio
SP William Blair International Growth Portfolio
AMERICAN SKANDIA TRUST
AST Advanced Strategies Portfolio
AST Aggressive Asset Allocation Portfolio
AST AllianceBernstein Core Value Portfolio
AST AllianceBernstein Growth & Income Portfolio
AST AllianceBernstein Managed Index 500 Portfolio
AST American Century Income & Growth Portfolio
AST American Century Strategic Balanced Portfolio
AST Balanced Asset Allocation Portfolio
AST Capital Growth Asset Allocation Portfolio
AST Cohen & Steers Realty Portfolio
AST Conservative Asset Allocation Portfolio
AST DeAM Large-Cap Value Portfolio
AST DeAM Small-Cap Growth Portfolio
AST DeAM Small-Cap Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target Portfolio
AST Global Allocation Portfolio
AST Goldman Sachs Concentrated Growth Portfolio
AST Goldman Sachs Mid-Cap Growth Portfolio
AST High Yield Portfolio
AST JPMorgan International Equity Portfolio
AST Large-Cap Value Portfolio
AST Lord Abbett Bond-Debenture Portfolio
AST Marsico Capital Growth Portfolio
AST MFS Global Equity Portfolio
AST MFS Growth Portfolio
AST Mid-Cap Value Portfolio
AST Neuberger Berman Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST PIMCO Limited Maturity Bond Portfolio
AST Preservation Asset Allocation Portfolio
AST Small-Cap Value Portfolio
AST T. Rowe Price Asset Allocation Portfolio
AST T. Rowe Price Global Bond Portfolio
AST T. Rowe Price Natural Resources Portfolio
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Balanced Fund
Evergreen VA Fundamental Large Cap Fund
Evergreen VA Growth Fund
Evergreen VA International Equity Fund
Evergreen VA Omega Fund
Evergreen VA Special Values Fund
GARTMORE VARIABLE INSURANCE TRUST
GVIT Developing Markets Fund
JANUS ASPEN SERIES
Large Cap Growth Portfolio -- Service Shares
- --------------------------------------------------------------------------------
2
CONTENTS
- --------------------------------------------------------------------------------
<Table>
PART I: STRATEGIC PARTNERS PLUS PROSPECTUS
------------------------------------------------------------
SUMMARY
-------
Glossary........................................... 8
Summary............................................ 12
Summary Of Contract Expenses....................... 17
Expense Examples................................... 22
PART II: STRATEGIC PARTNERS PLUS PROSPECTUS
------------------------------------------------------------
SECTIONS 1-10
------------------------------------------------------------
Section 1: What is the Strategic Partners Plus Variable
Annuity?.............................................. 27
Short Term Cancellation Right Or "Free Look"....... 28
Section 2: What Investment Options Can I Choose?........ 29
Variable Investment Options........................ 29
Fixed Interest Rate Options........................ 47
Transfers Among Options............................ 48
Additional Transfer Restrictions................... 48
Dollar Cost Averaging.............................. 49
Asset Allocation Program........................... 50
Auto-Rebalancing................................... 50
Scheduled Transactions............................. 50
Voting Rights...................................... 51
Substitution....................................... 51
Section 3: What Kind Of Payments Will I Receive During
the Income Phase? (Annuitization)..................... 52
Payment Provisions................................. 52
Payment Provisions Without The Guaranteed Minimum
Income Benefit................................... 52
Option 1: Annuity Payments For A Fixed
Period....................................... 52
Option 2: Life Annuity with 120 Payments (10
Years) Certain .............................. 52
Option 3: Interest Payment Option.............. 53
Other Annuity Options.......................... 53
Tax Considerations................................. 53
Guaranteed Minimum Income Benefit.................. 53
GMIB Option 1 -- Single Life Payout Option..... 54
GMIB Option 2 -- Joint Life Payout Option...... 54
How We Determine Annuity Payments.................. 55
Section 4: What Is The Death Benefit?................... 57
Beneficiary........................................ 57
Calculation Of The Death Benefit................... 57
Guaranteed Minimum Death Benefit................... 57
GMDB Roll-Up................................... 57
GMDB Step-Up................................... 57
Special Rules If Joint Owners...................... 58
Payout Options..................................... 58
Earnings Appreciator Benefit....................... 59
Spousal Continuance Benefit........................ 60
Section 5: What Is The Lifetime Five(SM) Income
Benefit?.............................................. 62
Lifetime Five Income Benefit....................... 62
Section 6: How Can I Purchase A Strategic Partners Plus
Contract?............................................. 69
Purchase Payments.................................. 69
Allocation Of Purchase Payments.................... 69
Credits............................................ 69
</Table>
3
CONTENTS CONTINUED
- --------------------------------------------------------------------------------
<Table>
Calculating Contract Value......................... 70
Section 7: What Are The Expenses Associated With The
Strategic Partners Plus Contract?..................... 71
Insurance And Administrative Charges............... 71
Withdrawal Charge.................................. 72
Waiver Of Withdrawal Charges For Critical Care..... 73
Minimum Distribution Requirements.................. 73
Contract Maintenance Charge........................ 73
Guaranteed Minimum Income Benefit Charge........... 73
Earnings Appreciator Benefit Charge................ 74
Taxes Attributable To Premium...................... 74
Transfer Fee....................................... 74
Company Taxes...................................... 75
Underlying Mutual Fund Fees........................ 75
Section 8: How Can I Access My Money?................... 76
Withdrawals During The Accumulation Phase.......... 76
Automated Withdrawals.............................. 76
Suspension Of Payments Or Transfers................ 76
Section 9: What Are The Tax Considerations Associated
With The Strategic Partners Plus Contract?............ 77
Contracts Owned by Individuals (Not Associated With
Tax-Favored Retirement Plans).................... 77
Contracts Held By Tax-Favored Plans................ 80
Section 10: Other Information........................... 84
Pruco Life Insurance Company....................... 84
The Separate Account............................... 84
Sale and Distribution Of The Contract.............. 84
Litigation......................................... 85
Assignment......................................... 86
Financial Statements............................... 86
Statement Of Additional Information................ 86
Householding....................................... 86
Appendix A.............................................. 87
Accumulation Unit Values........................... 88
Appendix B.............................................. 106
Calculation Of Earnings Appreciator Benefit........ 106
Appendix C.............................................. 108
Selecting the Variable Annuity That's Right for
You.............................................. 108
</Table>
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5
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6
PART I SUMMARY
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS PLUS PROSPECTUS
7
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
GLOSSARY
- --------------------------------------------------------------------------------
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus any
charge we impose for premium taxes and withdrawal charges.
ADJUSTED PURCHASE PAYMENT
Your invested purchase payment is adjusted for any subsequent withdrawals. The
adjusted purchase payment is used only for calculations of the Earnings
Appreciator Benefit.
ANNUAL INCOME AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as the annuitant lives. The Annual Income Amount is
set initially as a percentage of the Protected Withdrawal Value, but will be
adjusted to reflect subsequent purchase payments, withdrawals, and any step-up.
ANNUAL WITHDRAWAL AMOUNT
Under the terms of the Lifetime Five Income Benefit, an amount that you can
withdraw each year as long as there is Protected Withdrawal Value remaining. The
Annual Withdrawal Amount is set initially to equal 7% of the initial Protected
Withdrawal Value, but will be adjusted to reflect subsequent purchase payments,
withdrawals, and any step-up.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the contract's requirements for
changing the annuity date are met. No co-annuitant may be designated if the
owner is a non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
8
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of your
investment in each investment option you have chosen. Your contract value will
go up or down based on the performance of the investment options you choose.
CONTRACT WITH CREDIT
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make and has higher withdrawal charges and (with
respect to the later version of the contract) higher insurance and
administrative costs than the Contract Without Credit.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit and has lower
withdrawal charges than the Contract With Credit and (with respect to the later
version of the Contract With Credit) lower insurance and administrative costs.
CREDIT
If you choose the Contract With Credit, this is the bonus amount that we
allocate to your account each time you make a purchase payment. The amount of
the credit is a percentage of the purchase payment. Under one version of the
Contract With Credit, the credit is subject to a vesting schedule, which means
that if you withdraw all or part of a purchase payment within a certain period,
or you begin the income phase or we pay a death benefit during that period, we
may take back all or part of the credit. Under another version of the Contract
With Credit, bonus credits generally are not recaptured once the free look
period expires. Our reference in the preceding sentence to "generally are not
recaptured" refers to the fact that we have the contractual right to deduct,
from the death benefit we pay, the amount of any credit corresponding to a
purchase payment made within one year before death. We have the ability to
recapture such credits under both versions of the Contract With Credit. See
Section 6, "How Can I Purchase A Strategic Partners Plus Contract?"
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive, at a
minimum, the total invested purchase payments, reduced proportionally by
withdrawals, or a potentially greater amount related to market appreciation. The
Guaranteed Minimum Death Benefit is available for an additional charge. See
Section 4, "What Is the Death Benefit?"
DOLLAR COST AVERAGING FIXED RATE OPTION (DCA FIXED RATE OPTION)
An investment option that offers a fixed rate of interest for a selected period
during which periodic transfers are automatically made to selected variable
investment options.
EARNINGS APPRECIATOR BENEFIT (EAB)
An optional feature available for an additional charge that may provide a
supplemental death benefit based on earnings under the contract.
FIXED INTEREST RATE OPTIONS
Under the Contract Without Credit, these are investment options that offer a
fixed rate of interest for either a one-year period (fixed rate option) or a
selected period during which periodic transfers are made to selected variable
investment options.
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB)
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
GMDB PROTECTED VALUE
The amount guaranteed under the Guaranteed Minimum Death Benefit, which may
equal the GMDB roll-up value, the GMDB step-value, or the greater of the two.
The GMDB protected value will be subject to certain age restrictions and time
durations, however, it will still increase by
9
GLOSSARY CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
subsequent invested purchase payments and reduce proportionally by withdrawals.
GMDB ROLL-UP
We use the GMDB roll-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. The GMDB roll-up is equal to the invested
purchase payments compounded daily at an effective annual interest rate starting
on the date that each invested purchase payment is made, subject to a cap, and
reduced proportionally by withdrawals.
GMDB STEP-UP
We use the GMDB step-up value to compute the GMDB protected value of the
Guaranteed Minimum Death Benefit. Generally speaking, the GMDB step-up
establishes a "high water mark" of protected value that we would pay upon death,
even if the contract value has declined. For example, if the GMDB step-up were
set at $100,000 on a contract anniversary, and the contract value subsequently
declined to $80,000 on the date of death, the GMDB step-up value would
nonetheless remain $100,000 (assuming no additional purchase payments or
withdrawals).
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
An optional feature available for an additional charge that guarantees that the
income payments you receive during the income phase will be no less than a
certain GMIB protected value applied to the GMIB guaranteed annuity purchase
rates.
GMIB PROTECTED VALUE
We use the GMIB protected value to calculate annuity payments should you
annuitize under the Guaranteed Minimum Income Benefit.
The value is calculated daily and is equal to the GMIB roll-up, until the
GMIB roll-up either reaches its cap or if we stop applying the annual interest
rate based on the age of the annuitant or number of contract anniversaries. At
such point, the GMIB protected value will be increased by any subsequent
invested purchase payments, and any withdrawals will proportionally reduce the
GMIB protected value. The GMIB protected value is not available as a cash
surrender benefit or a death benefit, nor is it used to calculate the cash
surrender value or death benefit.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INCOME PHASE
The period during which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. A joint owner must be a natural person.
LIFETIME FIVE INCOME BENEFIT
An optional feature available for an additional charge that guarantees your
ability to withdraw amounts equal to a percentage of an initial principal value
(called the "Protected Withdrawal Value"), regardless of the impact of market
performance on your contract value, subject to our rules regarding the timing
and amount of withdrawals. There are two options--one is designed to provide an
annual withdrawal amount for life and the other is designed to provide a greater
annual withdrawal amount (than the first option) as long as there is Protected
Withdrawal Value.
NET PURCHASE PAYMENTS
Your total purchase payments less any withdrawals you have made.
PROPORTIONAL WITHDRAWALS
A method that involves calculating the percentage of your contract value that
each prior withdrawal represented when withdrawn. Proportional withdrawals
result in a reduction to the applicable benefit value by reducing such value in
the same proportion as the contract value was reduced by the withdrawal as of
the date the withdrawal occurred.
10
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
PROTECTED WITHDRAWAL VALUE
Under the Lifetime Five Income Benefit, we guarantee an amount that you can
withdraw each year until those annual withdrawals, when added together, reach an
aggregate limit. We call that aggregate limit the Protected Withdrawal Value.
Purchase payments and withdrawals you make will result in an adjustment to the
Protected Withdrawal Value. In addition, you may elect to step-up your Protected
Withdrawal Value under certain circumstances.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
(888) PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Plus variable annuity. We have filed the Statement of Additional
Information with the Securities and Exchange Commission and it is legally a part
of this prospectus. To learn how to obtain a copy of the Statement of Additional
Information, see the front cover of this prospectus.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 9, "What Are The Tax Considerations Associated With The Strategic
Partners Plus Contract?"
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the
underlying mutual fund that are held as an investment for that option. We hold
these shares in the separate account. The division of the separate account of
Pruco Life that invests in a particular mutual fund is referred to in your
contract as a subaccount.
11
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
SUMMARY FOR SECTIONS 1-10
- --------------------------------------------------------------------------------
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS PLUS VARIABLE ANNUITY?
The Strategic Partners Plus variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company (Pruco Life,
we or us). The contract allows you to invest on a tax-deferred basis in variable
investment options and if you choose the Contract Without Credit, fixed interest
rate options. The contract is intended for retirement savings or other long-term
investment purposes and provides for a death benefit.
There are two basic versions of the Strategic Partners Plus variable annuity
discussed in this prospectus.
Contract With Credit.
- - provides for a bonus credit that we add to each purchase payment that you
make,
- - has higher withdrawal charges than the Contract Without Credit,
- - the version of the contract under which bonus credits generally are not
recaptured after the free look period has higher insurance and administrative
charges than the Contract Without Credit,
- - has no fixed interest rate investment options available,
- - comes in one version under which bonus credits generally are not recaptured
once the free look period expires, and another version under which bonus
credits vest over a period of several years. Once a State has approved the
former version, we will cease offering the later version, and
- - Under the Contract With Credit under which bonus credits generally are not
recaptured once the free look period expires, we have the contractual right
to deduct, from the death benefit we pay, the amount of any credit
corresponding to a purchase payment made within one year before death.
- - Contract Without Credit.
- - does not provide a credit,
- - has lower withdrawal charges than the Contract With Credit.
- - has lower insurance and administrative costs than the Contract With Credit
under which the bonus credits generally are not recaptured after the free
look period,
- - offers two fixed interest rate investment options: a one-year fixed rate
option and a dollar cost averaging fixed rate option.
Beginning in 2002, we started offering a version of both the Contract Without
Credit and the Contract With Credit that differ from the previously-issued
contracts with regard to maximum issue age, maximum annuitization age, Spousal
Continuance Benefit, credit amount, contract maintenance charge, and minimum
guaranteed interest rate. This subsequent version of the Strategic Partners Plus
contract is described in a different prospectus.
The variable investment options available under the contract offer the
opportunity for a favorable return. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value,
including an investment in the Prudential Money Market Portfolio variable
investment option.
The fixed interest rate options available under the Contract Without Credit
offer a guaranteed interest rate. While your money is allocated to one of these
options, your principal amount will not decrease and we guarantee that your
money will earn at least the annual minimum interest rate dictated by applicable
state law.
You may make up to 12 free transfers each contract year among the investment
options. For the Contract Without Credit, certain restrictions apply to
transfers involving the fixed interest rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase.
- - During the accumulation phase, any earnings grow on a tax-deferred basis and
are generally only taxed as income when you make a withdrawal.
12
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
- - The income phase starts when you begin receiving regular payments from your
contract.
The amount of money you are able to accumulate in your contract during the
accumulation phase will help determine the amount you will receive during the
income phase. Other factors will affect the amount of your payments, such as
age, gender, and the payout option you select.
The contract offers a choice of income and death benefit options, which may
also be available to you.
There are certain state variations to this contract that are referred to in
this prospectus. Please see your contract for further information on these and
other variations.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
If you change your mind about owning Strategic Partners Plus, you may cancel
your contract within 10 days after receiving it (or whatever period is required
under applicable law). This time period is referred to as the "Free Look"
period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in several variable investment options. The variable
investment options are classified according to their investment style, and a
brief description of each portfolio's investment objective and key policies is
set forth in Section 2, to assist you in determining which portfolios may be of
interest to you.
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the
performance of the underlying mutual fund portfolios used by the variable
investment options that you choose. Past performance is not a guarantee of
future results.
Under the Contract Without Credit, you may also invest your money in fixed
interest rate options.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
For an additional fee, you may also choose, if it is available under your
contract, the Guaranteed Minimum Income Benefit (GMIB). The Guaranteed Minimum
Income Benefit provides that once the income period begins, your income payments
will be no less than a value that is based on a certain "GMIB protected value"
applied to the GMIB guaranteed annuity purchase rates. See Section 3, "What Kind
Of Payments Will I Receive During The Income Phase?"
The Lifetime Five Income Benefit (discussed in Section 5) may provide an
additional amount upon which your annuity payments are based.
SECTION 4
WHAT IS THE DEATH BENEFIT?
In general, if the sole owner, or last surviving of the owner and joint owner,
dies before the income phase of the contract begins, the person(s) or entity
that you have chosen as your beneficiary will receive, at a minimum, the greater
of (i) the contract value, (ii) either the base death benefit or, for a higher
insurance charge, a potentially larger Guaranteed Minimum Death Benefit (GMDB).
The base death benefit equals the total invested purchase payments reduced
proportionally by withdrawals. The Guaranteed Minimum Death Benefit is equal to
a "GMDB protected value" that depends upon which of the following Guaranteed
Minimum Death Benefit options you choose:
- - the highest value of the contract on any contract anniversary, which we call
the "GMDB step-up value";
- - the total amount you invest increased by a guaranteed rate of return, which
we call the "GMDB roll-up value"; or
13
SUMMARY FOR SECTIONS 1-10 CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
- - the greater of the GMDB step-up value and GMDB roll-up value.
On the date we receive proof of death in good order, in lieu of paying a
death benefit, we will allow the surviving spouse to continue the contract by
exercising the Spousal Continuance Benefit, if the conditions that we describe,
in Section 4, are met.
For an additional fee, you may also choose, if it is available under your
contract, the Earnings Appreciator supplemental death benefit which provides a
benefit payment upon the death of the sole owner, or last surviving of the owner
and joint owner, during the accumulation phase.
SECTION 5
WHAT IS THE LIFETIME FIVE(SM) INCOME BENEFIT?
The Lifetime Five Income Benefit is an optional feature that guarantees your
ability to withdraw an amount equal to a percentage of an initial principal
value (called the "Protected Withdrawal Value"), regardless of the impact of
market performance on your contract value, subject to our rules regarding the
timing and amounts of withdrawals. There are two options--one is designed to
provide an annual withdrawal amount for life (the "Life Income Benefit"), and
the other is designed to provide a greater annual withdrawal amount (than the
first option), as long as there is Protected Withdrawal Value (adjusted, as
described in Section 5) (the "Withdrawal Benefit"). The annuitant must be at
least 45 years old when the Lifetime Five Income Benefit is elected.
The charge for the Lifetime Five Income Benefit is a daily fee equal on an
annual basis to 0.60% of the contract value allocated to the variable investment
options. This charge is in addition to the charge for the applicable death
benefit.
SECTION 6
HOW CAN I PURCHASE A STRATEGIC PARTNERS PLUS CONTRACT?
You can purchase this contract, unless we agree otherwise and subject to our
rules, with a minimum initial purchase payment of $10,000. You must get our
prior approval for any initial and additional purchase payment of $1,000,000 or
more, unless we are prohibited under applicable state law from insisting on such
prior approval. Generally, you can make additional purchase payments of $1,000
($100 if made through electronic funds transfer) or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms. The Contract With Credit provides for the allocation of a
credit with each purchase payment.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger (or age 80 depending on the
version of the contract) on the contract date. In addition, certain age limits
apply to certain features and benefits described herein.
SECTION 7
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS CONTRACT?
The contract has insurance features and investment features, both of which have
related costs and charges.
- - Each year (or upon full surrender) we deduct a contract maintenance charge.
For the original version of the contract, if your contract value is $50,000
or more, we do not deduct such a charge. If your contract value is less than
$50,000, we deduct a charge equal to the lesser of $30 or 2% of your contract
value. For the later version of the contract, we deduct a contract
maintenance charge of $35 if your contract value is less than $75,000 (or 2%
of your contract value, if that amount is less than $35).
- - For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable investment
options, depending on the death benefit (or other) option that you choose.
The daily cost is equivalent to an annual charge as follows:
-- 1.40% if you choose the base death benefit,
-- 1.60% if you choose the roll-up or step-up Guaranteed Minimum Death
Benefit option (i.e., 0.20% in addition to the base death benefit
charge), or
-- 1.70% if you choose the greater of the roll-up and step-up Guaranteed
Minimum Death
14
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
Benefit option (i.e., 0.30% in addition to the base death benefit
charge), or
-- 0.60% if you choose the Lifetime Five Income Benefit. This charge is in
addition to the charge for the applicable death benefit.
- - We will deduct an additional charge under the version of the Contract With
Credit under which bonus credits generally are not recaptured once the free
look period expires. The charge for this feature is equal to 0.10% annually.
- - We will deduct an additional charge if you choose the Guaranteed Minimum
Income Benefit. We deduct this annual charge from your contract value on the
contract anniversary and upon certain other events. The charge for this
benefit is equal to 0.25% of the average GMIB protected value. In the future,
we may also offer other options, for which different charges may apply.
- - We will deduct an additional charge if you choose the Earnings Appreciator
supplemental death benefit. We deduct this charge from your contract value on
the contract anniversary and upon certain other events. The charge for this
benefit is based on an annual rate of 0.15% of your contract value if you
have also selected the Guaranteed Minimum Death Benefit option (0.20% if you
have not selected the Guaranteed Minimum Death Benefit Option).
- - There are a few states/jurisdictions that assess a premium tax on us when you
begin receiving regular income payments from your annuity. In those states,
we deduct a charge designed to approximate this tax, which can range from
0-3.5% of your contract value.
- - There are also expenses associated with the mutual funds. For 2005, the fees
of these funds ranged from 0.38% to 1.67% annually. For certain funds,
expenses are reduced pursuant to expense waivers and comparable arrangements.
In general, these expense waivers and comparable arrangements are not
guaranteed, and may be terminated at any time.
- - If you withdraw money (or you begin the income phase) less than:
-- nine contract anniversaries after the purchase payment, if you purchase
the Contract With Credit under which bonus credits vest over a seven year
period, or
-- seven contract anniversaries after the purchase payment, if you purchase
the Contract Without Credit,
then you may have to pay a withdrawal charge on all or part of the
withdrawal. This charge ranges from 1-7%. For the version of the Contract
With Credit under which bonus credits generally are not recaptured once the
free look period expires, a withdrawal charge applies at any time prior to
the seventh contract anniversary after a purchase payment was made, which
ranges from 5-8%.
For more information, including details about other possible charges under
the contract, see "Summary Of Contract Expenses" and Section 7, "What Are The
Expenses Associated With The Strategic Partners Plus Contract?"
SECTION 8
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. If you withdraw money less than nine
years (for the Contract With Credit under which bonus credits vest over a seven
year period) or seven years (for the Contract Without Credit) after making a
purchase payment, we may impose a withdrawal charge. For the Contract With
Credit under which bonus credits generally are not recaptured once the free look
period expires, a withdrawal charge applies during the first seven contract
years after a purchase payment was made, which ranges from 5-8%. In addition, if
you purchase a Contract With Credit, we may take back any credit that has not
vested that corresponds to the purchase payment(s) you withdraw.
We offer an optional benefit, called the Lifetime Five Income Benefit, under
which we guarantee that certain
15
SUMMARY FOR SECTIONS 1-10 CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
amounts will be available to you for withdrawal, regardless of market-related
declines in your contract value. You need not participate in this benefit in
order to withdraw some or all of your money.
SECTION 9
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS PLUS
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws treat the withdrawal as first a
withdrawal of earnings, which are taxed as ordinary income. If you are younger
than age 59 1/2 when you take money out, you may be charged a 10% federal tax
penalty on the earnings in addition to ordinary taxation. A portion of the
payments you receive during the income phase is considered a partial return of
your original investment and therefore will not be taxable as income. Generally,
all amounts withdrawn from an Individual Retirement Annuity (IRA) contract
(excluding Roth IRAs) are taxable and subject to the 10% penalty if withdrawn
prior to age 59 1/2.
SECTION 10
OTHER INFORMATION
This contract is issued by Pruco Life Insurance Company (Pruco Life), a
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives of affiliated and unaffiliated broker/dealers.
16
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS PLUS. THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES
THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT. THE FIRST
TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY
THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE BETWEEN INVESTMENT
OPTIONS.
For more detailed information, including additional information about current
and maximum charges, see Section 7, "What Are The Expenses Associated With The
Strategic Partners Plus Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
CONTRACT OWNER TRANSACTION EXPENSES
<Table>
<Caption>
WITHDRAWAL CHARGE(1)
---------------------------------------------------------------------------------------------------------------------
CONTRACT WITH CREDIT (BONUS
NUMBER OF CONTRACT CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT
ANNIVERSARIES SINCE PURCHASE CREDITS VEST OVER SEVEN YEAR RECAPTURABLE AFTER EXPIRATION
PAYMENT PERIOD) OF FREE LOOK PERIOD) CONTRACT WITHOUT CREDIT
---------------------------- ---------------------------- ----------------------------- --------------------------
0 7% 8% 7%
1 7% 8% 6%
2 7% 8% 5%
3 6% 8% 4%
4 5% 7% 3%
5 4% 6% 2%
6 3% 5% 1%
7 2% 0% 0%
8 1% 0% 0%
9 0% 0% 0%
-------------------------- -------------------------- --------------------------
</Table>
<Table>
<Caption>
MAXIMUM TRANSFER FEE
- --------------------
Each transfer after 12(2) $30.00
</Table>
CHARGE FOR PREMIUM TAX IMPOSED ON US BY CERTAIN STATES/JURISDICTIONS
- --------------------------------------------------------------------------------
Up to 3.5% of contract value
1: Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We will waive the withdrawal charge
if we pay a death benefit or under certain other circumstances. See "Withdrawal
Charge" in Section 7. In certain states reduced withdrawal charges may apply
under the Contract With Credit. Your contract contains the applicable charges.
2: Currently we charge $25 for each transfer after the twelfth in a contract
year. As shown in the table, we can increase that charge up to a maximum of $30,
but have no current intention to do so. We will not charge you for transfers
made in connection with Dollar Cost Averaging and Auto-Rebalancing and do not
count them toward the limit of 12 free transfers per year.
17
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
The next table describes the fees and expenses you will pay periodically during
the time that you own the contract, not including underlying mutual fund fees
and expenses.
PERIODIC ACCOUNT EXPENSES
<Table>
MAXIMUM CONTRACT MAINTENANCE CHARGE AND CONTRACT CHARGE UPON FULL WITHDRAWAL(3)
- ----------------------------------------------------------------------------------------------------------------
$60.00
INSURANCE AND ADMINISTRATIVE EXPENSES WITH THE INDICATED BENEFITS
- ----------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF ACCOUNT VALUE IN VARIABLE INVESTMENT OPTIONS:
</Table>
<Table>
<Caption>
CONTRACT WITH
CREDIT (BONUS
CREDITS GENERALLY
NOT RECAPTURABLE
AFTER EXPIRATION OF
FREE LOOK PERIOD)
------------------------------------------------------------------
Base Death Benefit 1.50%
Base Death Benefit with
Lifetime Five 2.10%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up 1.70%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up with Lifetime
Five Income Benefit 2.30%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up 1.80%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up
with Lifetime Five
Income Benefit 2.40%
<Caption>
CONTRACT
WITHOUT CREDIT
OR CONTRACT
WITH CREDIT
(VERSION UNDER
WHICH BONUS
CREDITS VEST
OVER SEVEN
YEAR PERIOD)
------------------------------------------------------------------
Base Death Benefit 1.40%
Base Death Benefit with
Lifetime Five 2.00%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up 1.60%
Guaranteed Minimum Death
Benefit Option--Roll-up
or Step-Up with Lifetime
Five Income Benefit 2.20%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up 1.70%
Guaranteed Minimum Death
Benefit Option--Greater
of Roll-up or Step-up
with Lifetime Five
Income Benefit 2.30%
</Table>
<Table>
ANNUAL GUARANTEED MINIMUM INCOME BENEFIT CHARGE AND CHARGE UPON CERTAIN
WITHDRAWALS(4)
- ------------------------------------------------------------------
AS A PERCENTAGE OF AVERAGE GMIB PROTECTED VALUE 0.25%
ANNUAL EARNINGS APPRECIATOR CHARGE AND CHARGE UPON CERTAIN TRANSACTIONS(5)
- ------------------------------------------------------------------
AS A PERCENTAGE OF CONTRACT VALUE 0.20% of contract value (0.15% if
Guaranteed Minimum Death Benefit
option is also selected)
</Table>
3: As shown in the table above, we have the right to assess a fee of up to $60
annually and at the time of full withdrawal. For the original version of the
contract, if your contract value is $50,000 or more, we do not deduct such a
charge. If your contract value is less than $50,000, we deduct a charge equal to
$30 or, if your contract value is less than $1,500, equal to 2% of your contract
value. Under the most recent version of the contract, we assess a fee of $35
against contracts valued less than $75,000 (or 2% of contract value, if less).
4: We impose this charge only if you choose the Guaranteed Minimum Income
Benefit. This charge is equal to 0.25% of the average GMIB protected value.
Subject to certain age restrictions, the roll-up value is the total of all
invested purchase payments compounded daily at an effective annual rate of 5%,
subject to a cap of 200% of all invested purchase payments. Both the roll-up
value and the cap are reduced proportionally by withdrawals. We assess this fee
each contract anniversary and when you begin the income phase of your contract.
We also assess this fee if you make a full withdrawal, but prorate the fee based
on the portion of the contract year that has elapsed since the full annual fee
was most recently deducted. If you make a partial withdrawal, we will assess the
prorated fee if the remaining contract value after the withdrawal would be less
than the amount of the prorated fee; otherwise we will not assess the fee at
that time.
5: We impose this charge only if you choose the Earnings Appreciator death
benefit. The charge for this benefit is based on an annual rate of 0.15% of your
contract value if you have also selected a Guaranteed Minimum Death Benefit
option (0.20% if you have not selected a Guaranteed Minimum Death Benefit
option). We deduct this charge annually. We also deduct this charge if you make
a full withdrawal or enter the income phase of your contract, or if a death
benefit is payable, but prorate the fee to reflect a partial rather than full
year. If you make a partial withdrawal, we will deduct the prorated fee if the
remaining contract value after the withdrawal would be less than the amount of
the prorated fee; otherwise we will not deduct the fee at that time. The fee is
also calculated when you make any purchase payment or withdrawal but we do not
deduct it until the next deduction date.
18
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PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
TOTAL ANNUAL MUTUAL FUND OPERATING EXPENSES
The next item shows the minimum and maximum total operating expenses (expenses
that are deducted from underlying mutual fund assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) charged by the
underlying mutual funds that you may pay periodically during the time that you
own the contract. More detail concerning each underlying mutual fund's fees and
expenses is contained below and in the prospectus for each underlying mutual
fund. The minimum and maximum total operating expenses depicted below are based
on historical fund expenses for the year ended December 31, 2005. Fund expenses
are not fixed or guaranteed by the Strategic Partners Plus contract, and may
vary from year to year.
<Table>
<Caption>
MINIMUM MAXIMUM
------- -------
Total Annual Underlying Mutual Fund Operating Expenses* 0.38% 1.67%
</Table>
* See "Summary of Contract Expenses" -- Underlying Mutual Fund Portfolio Annual
Expenses for more detail on the expenses of the underlying mutual funds.
19
SUMMARY OF CONTRACT EXPENSES CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
THE PRUDENTIAL SERIES FUND(2)
- -------------------------------------------------------------------------------------------------------------------------------
Jennison Portfolio 0.60% 0.03% -- 0.63%
Prudential Equity Portfolio(3) 0.45% 0.02% -- 0.47%
Prudential Global Portfolio(4) 0.75% 0.07% -- 0.82%
Prudential Money Market Portfolio 0.40% 0.05% -- 0.45%
Prudential Stock Index Portfolio 0.35% 0.03% -- 0.38%
Prudential Value Portfolio 0.40% 0.03% -- 0.43%
SP Aggressive Growth Asset Allocation
Portfolio(5,6) 0.84% 0.11% -- 0.95%
SP AIM Core Equity Portfolio 0.85% 0.15% -- 1.00%
SP Balanced Asset Allocation Portfolio(5,6) 0.76% 0.09% -- 0.85%
SP Conservative Asset Allocation Portfolio(5,6) 0.72% 0.08% -- 0.80%
SP Davis Value Portfolio 0.75% 0.07% -- 0.82%
SP Growth Asset Allocation Portfolio(5,6) 0.81% 0.10% -- 0.91%
SP Large Cap Value Portfolio(5) 0.80% 0.03% -- 0.83%
SP LSV International Value Portfolio 0.90% 0.16% -- 1.06%
SP Mid Cap Growth Portfolio 0.80% 0.20% -- 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.07% -- 0.67%
SP PIMCO Total Return Portfolio 0.60% 0.02% -- 0.62%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.20% -- 0.80%
SP Small Cap Growth Portfolio 0.95% 0.10% -- 1.05%
SP Small Cap Value Portfolio (formerly SP Goldman
Sachs Small Cap Value Portfolio)(7) 0.90% 0.07% -- 0.97%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.17% -- 1.07%
SP T. Rowe Price Large-Cap Growth Portfolio
(formerly SP AllianceBernstein Large-Cap Growth
Portfolio)(8,9) 0.90% 0.16% -- 1.06%
SP William Blair International Growth Portfolio 0.85% 0.13% -- 0.98%
AMERICAN SKANDIA TRUST (2,10)
- -------------------------------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio 0.85% 0.18% -- 1.03%
AST Aggressive Asset Allocation Portfolio(11) 1.04% 0.29% -- 1.33%
AST AllianceBernstein Core Value Portfolio 0.75% 0.19% -- 0.94%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.13% -- 0.88%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.17% -- 0.77%
AST American Century Income & Growth Portfolio 0.75% 0.18% -- 0.93%
AST American Century Strategic Balanced Portfolio 0.85% 0.23% -- 1.08%
AST Balanced Asset Allocation Portfolio(11) 0.95% 0.20% -- 1.15%
AST Capital Growth Asset Allocation Portfolio(11) 1.00% 0.20% -- 1.20%
AST Cohen & Steers Realty Portfolio 1.00% 0.18% -- 1.18%
AST Conservative Asset Allocation Portfolio(11) 0.94% 0.24% -- 1.18%
AST DeAM Large-Cap Value Portfolio 0.85% 0.22% -- 1.07%
AST DeAM Small-Cap Growth Portfolio 0.95% 0.20% -- 1.15%
AST DeAM Small-Cap Value Portfolio 0.95% 0.24% -- 1.19%
AST Federated Aggressive Growth Portfolio 0.95% 0.17% -- 1.12%
AST First Trust Balanced Target Portfolio 0.85% 0.19% -- 1.04%
AST First Trust Capital Appreciation Target
Portfolio 0.85% 0.19% -- 1.04%
AST Global Allocation Portfolio 0.86% 0.23% -- 1.09%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.16% -- 1.06%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.18% -- 1.18%
AST High Yield Portfolio (formerly, AST Goldman
Sachs High Yield Portfolio)(12) 0.75% 0.19% -- 0.94%
AST JPMorgan International Equity Portfolio 0.88% 0.19% -- 1.07%
AST Large-Cap Value Portfolio (formerly AST
Hotchkis and Wiley Large-Cap Value
Portfolio)(13,14,15) 0.75% 0.16% -- 0.91%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.17% -- 0.97%
AST Marsico Capital Growth Portfolio 0.90% 0.13% -- 1.03%
AST MFS Global Equity Portfolio 1.00% 0.26% -- 1.26%
AST MFS Growth Portfolio 0.90% 0.18% -- 1.08%
AST Mid Cap Value Portfolio (formerly, AST Gabelli
All-Cap Value Portfolio)(16) 0.95% 0.22% -- 1.17%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.18% -- 1.08%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.14% -- 1.03%
</Table>
20
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
<Table>
<Caption>
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
FEES EXPENSES(1) 12B-1 FEES EXPENSES
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.15% -- 0.80%
AST Preservation Asset Allocation Portfolio(11) 0.89% 0.38% -- 1.27%
AST Small-Cap Value Portfolio(13,17) 0.90% 0.17% -- 1.07%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.23% -- 1.08%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.21% -- 1.01%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.18% -- 1.08%
EVERGREEN VARIABLE ANNUITY TRUST
- -------------------------------------------------------------------------------------------------------------------------------
Evergreen VA Balanced Fund 0.30% 0.20% -- 0.50%
Evergreen VA Fundamental Large Cap Fund 0.58% 0.18% -- 0.76%
Evergreen VA Growth Fund 0.70% 0.22% -- 0.99%
Evergreen VA International Equity Fund 0.41% 0.30% -- 0.71%
Evergreen VA Omega Fund 0.52% 0.19% -- 0.71%
Evergreen VA Special Values Fund 0.78% 0.19% -- 0.97%
GARTMORE VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------------------------
GVIT Developing Markets Fund(18, 19) 1.05% 0.37% 0.25% 1.67%
JANUS ASPEN SERIES
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio -- Service Shares(19) 0.64% 0.02% 0.25% 0.91%
</Table>
1. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Series Fund and/or Trust providing such services.
Amounts paid by a Portfolio under those arrangements are included under "Other
Expenses."
2. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2005 were less than the amounts shown in
the table above, due to fee waivers, reimbursement of expenses, and expense
offset arrangements ("Arrangements"). These Arrangements are voluntary and may
be terminated at any time. In addition, the Arrangements may be modified
periodically. For more information regarding the Arrangements, please see the
prospectus and statement of additional information for the Portfolios.
3. Effective December 5, 2005, GE Asset Management was removed as sub-adviser to
a portion of the Portfolio. Salomon Brothers Asset Management, Inc. (an existing
co-sub-adviser to the Portfolio) assumed responsibility for the assets
previously managed by GE Asset Management.
4. Effective December 5, 2005, LSV Asset Management, Marsico Capital Management,
LLC, T. Rowe Price Associates, Inc., and William Blair & Company, LLC became the
sub-advisers of the Portfolio. Prior to December 5, 2005, Jennison Associates
LLC served as sub-adviser to the Portfolio.
5. Effective December 5, 2005, the Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in the Portfolio.
6. Each asset allocation portfolio invests in a combination of underlying
portfolios of The Prudential Series Fund. The total expenses for each asset
allocation portfolio are calculated as a blend of the fees of the underlying
portfolios, plus a 0.05% advisory fee payable to the investment adviser,
Prudential Investments LLC. The 0.05% advisory fee is included in the amount of
each investment advisory fee set forth in the table above.
7. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets, then named "SP Goldman Sachs Small
Cap Value Portfolio."
8. Effective December 5, 2005, T. Rowe Price Associates replaced Alliance
Capital Management, L.P. as sub-adviser of the Portfolio, then named "SP
AllianceBernstein Large-Cap Growth Portfolio."
9. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
10. Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's investment managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004.
11. Effective December 5, 2005, this Portfolio was added as a new asset
allocation portfolio.
12. Effective March 20, 2006, Pacific Investment Management Company LLC began
managing a portion of the Portfolio's assets, then named "AST Goldman Sachs High
Yield Portfolio."
13. Effective December 5, 2005, Salomon Brothers Asset Management Inc. began
managing a portion of the Portfolio's assets.
14. Effective December 5, 2005, J.P. Morgan Investment Management, Inc. began
managing a portion of the Portfolio's assets, then named "AST Hotchkis and Wiley
Large-Cap Value Portfolio."
15. Effective March 20, 2006, Dreman Value Management LLC began managing a
portion of the Portfolio's assets.
16. Effective December 5, 2005, EARNEST Partners, LLC and Wedge Capital
Management, LLP replaced GAMCO Investors, Inc. as sub-advisers to the Portfolio,
then named "AST Gabelli All-Cap Value Portfolio."
17. Effective March 20, 2006, Integrity Asset Management was removed as a
sub-adviser to a portion of the Portfolio's assets. Dreman Value Management LLC
was added as a sub-adviser and assumed responsibility for the assets previously
managed by Integrity Asset Management.
18. Effective January 1, 2006, the management fee was lowered to the base fee
described above. Beginning January 1, 2007, the management fee may be adjusted,
on a quarterly basis, upward or downward depending on the Fund's performance
relative to its benchmark, the MSCI Emerging Market Free Index. As a result,
beginning January 1, 2007, if the management fee were calculated taking into
account all base fee breakpoints and performance fee adjustments, the management
fee could range from 0.85% at its lowest to 1.15% at its highest.
19. Because the 12b-1 fee is charged as an ongoing fee, over time the fee will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
21
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1a: Contract With Credit (bonus credits vest over seven year period):
Greater of Roll-up and Step-up Guaranteed Minimum Death Benefit Option; Lifetime
Five Income Benefit; Earnings Appreciator Benefit and You Withdraw All Your
Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit (bonus credits vest over seven
year period);
- - You choose a Guaranteed Minimum Death Benefit that provides the greater of
the step-up and roll-up death benefit;
- - You choose the Lifetime Five Income Benefit;
- - You choose the Earnings Appreciator Benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
22
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
EXAMPLE 1b: Contract With Credit (bonus credits vest over seven year period):
Greater of Roll-up and Step-up Guaranteed Minimum Death Benefit Option; Lifetime
Five Income Benefit; Earnings Appreciator Benefit and You Do Not Withdraw Your
Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 2a: Contract With Credit (bonus credits vest over seven year period):
Base Death Benefit, and You Withdraw All Your Assets
This example assumes that:
- - You invest $10,000 in the Contract With Credit (bonus credits vest over seven
year period);
- - You do not choose any optional insurance benefit;
- - You allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - The investment has a 5% return each year;
- - The mutual fund's total operating expenses remain the same each year; and
- - You withdraw all your assets at the end of the indicated period.
EXAMPLE 2b: Contract With Credit (bonus credits vest over seven year period):
Base Death Benefit, and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
EXAMPLE 3a: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings Appreciator
Benefit and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
23
EXPENSE EXAMPLES CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
EXAMPLE 3b: Contract With Credit (bonus credits are generally not recapturable
after expiration of the free look period): Greater of Roll-up and Step-up
Guaranteed Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings
Appreciator Benefit and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 4a: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 4b: Contract With Credit (bonus credits are generally not recapturable
after expiration of free look period): Base Death Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the version of the Contract With Credit under which
bonus credits are generally not recapturable after expiration of the free look
period.
EXAMPLE 5a: Contract Without Credit, Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit, Earnings Appreciator
Benefit and You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 5b: Contract Without Credit, Greater of Roll-up and Step-up Guaranteed
Minimum Death Benefit Option; Lifetime Five Income Benefit; Earnings Appreciator
Benefit; and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 6a: Contract Without Credit: Base Death Benefit, and You Withdraw All
Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract Without Credit.
EXAMPLE 6b: Contract Without Credit: Base Death Benefit, and You Do Not Withdraw
Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract Without Credit.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Examples 1a, 2a,
3a, 4a, 5a, and 6a) are assessed in
connection with some annuity
options, but not others.
The values shown in the 10 year
column are the same for Example 6a
and 6b, Example 5a and 5b, Example
4a and Example 4b, the same for
Example 3a and 3b, the same for
Example 2a and 2b, and the same for
Example 1a and 1b. This is because
if 10 years have elapsed since your
last purchase payment, we would no
longer deduct withdrawal charges
when you make a withdrawal or begin
the income phase of your contract.
The indicated examples reflect the
maximum withdrawal charges, but in
certain states reduced withdrawal
charges may apply for certain ages.
The examples use an average
contract maintenance charge, which
we calculated based on our estimate
of the total contract fees we
expect to collect in 2006. Your
actual fees will vary based on the
amount of your contract and your
specific allocation among the
investment options.
Premium taxes are not reflected in
the examples. We deduct a charge to
approximate premium taxes that may
be imposed on us in your state.
This charge is generally deducted
from the amount applied to an
annuity payout option.
A table of accumulation unit values
appears in Appendix A to this
prospectus.
24
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS PLUS PROSPECTUS SUMMARY
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS VEST OVER SEVEN YEAR PERIOD): GREATER OF
ROLL-UP AND STEP-UP GUARANTEED MINIMUM DEATH BENEFIT OPTION; LIFETIME FIVE
INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 1a: EXAMPLE 1b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,491 $2,347 $3,030 $4,732 $461 $1,391 $2,332 $4,732
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS VEST OVER SEVEN YEAR PERIOD): BASE DEATH
BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 2a: EXAMPLE 2b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,383 $2,033 $2,523 $3,804 $353 $1,077 $1,825 $3,804
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT RECAPTURABLE AFTER
EXPIRATION OF FREE LOOK PERIOD): GREATER OF ROLL-UP AND STEP-UP GUARANTEED
MINIMUM DEATH BENEFIT OPTION; LIFETIME FIVE INCOME BENEFIT; EARNINGS
APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 3a: EXAMPLE 3b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,228 $2,187 $3,060 $4,856 $476 $1,435 $2,402 $4,856
</Table>
<Table>
<Caption>
CONTRACT WITH CREDIT (BONUS CREDITS GENERALLY NOT RECAPTURABLE AFTER
EXPIRATION OF FREE LOOK PERIOD): BASE DEATH BENEFIT
- --------------------------------------------------------------------------
EXAMPLE 4a: EXAMPLE 4b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,121 $1,875 $2,557 $3,943 $369 $1,123 $1,899 $3,943
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: GREATER OF ROLL-UP AND STEP-UP GUARANTEED MINIMUM
DEATH BENEFIT; LIFETIME FIVE INCOME BENEFIT; EARNINGS APPRECIATOR BENEFIT
- --------------------------------------------------------------------------------
EXAMPLE 5a: EXAMPLE 5b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,078 $1,802 $2,535 $4,590 $448 $1,352 $2,265 $4,590
</Table>
<Table>
<Caption>
CONTRACT WITHOUT CREDIT: BASE DEATH BENEFIT
- ------------------------------------------------------------------------
EXAMPLE 6a: EXAMPLE 6b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
--------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$975 $1,501 $2,049 $3,703 $345 $1,051 $1,779 $3,703
</Table>
25
PART II SECTIONS 1-10
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS PLUS PROSPECTUS
26
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
1:
WHAT IS THE STRATEGIC PARTNERS PLUS
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
THE STRATEGIC PARTNERS PLUS VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the third contract
anniversary. Your annuity is in the accumulation phase until you decide to begin
receiving annuity payments. The date you begin receiving annuity payments is the
annuity date. On the annuity date, your contract switches to the income phase.
This annuity contract benefits from tax deferral when it is sold outside a
tax-favored plan (generally called a non-qualified annuity). Tax deferral means
that you are not taxed on earnings or appreciation on the assets in your
contract until you withdraw money from your contract.
If you purchase the annuity contract in a tax-favored plan such as an IRA,
that plan generally provides tax deferral even without investing in an annuity
contract. In other words, you need not purchase this contract to gain the
preferential tax treatment provided by your retirement plan. Therefore, before
purchasing an annuity in a tax-favored plan, you should consider whether its
features and benefits beyond tax deferral, including the death benefit and
income benefits, meet your needs and goals. You should consider the relative
features, benefits and costs of this annuity compared with any other investment
that you may use in connection with your retirement plan or arrangement.
There are two basic versions of Strategic Partners Plus variable annuity.
Contract With Credit:
- - provides for a bonus credit that we add to each purchase payment that you
make ,
- - comes in one version under which bonus credits generally are not recaptured
after the expiration of the free look period, and another version under which
bonus credits vest over a period of several years. Once a State has approved
the former version, we will cease offering the later version,
- - has higher withdrawal charges than the Contract Without Credit,
- - the version of the contract under which bonus credits generally are not
recaptured after the free look period has higher insurance and administrative
charges than the Contract Without Credit, and
- - has no fixed interest rate investment options available.
Contract Without Credit:
- - does not provide a credit,
- - has lower withdrawal charges than the Contract With Credit,
- - has lower insurance and administrative costs than the Contract With Credit
under which the bonus credits generally are not recaptured after the free
look period, and
- - offers two fixed interest rate investment options: a one-year fixed rate
option and a dollar cost averaging fixed rate option.
Beginning in 2002, we started offering a version of both the Contract Without
Credit and the Contract With Credit that differ from previously-issued contracts
with regard to maximum issue age, maximum annuitization age, Spousal Continuance
Benefit, credit amount, contract maintenance charge, and minimum guaranteed
interest rate.
Unless we state otherwise, when we use the word contract, it applies to both
versions discussed herein.
In replacing another annuity you may own, please consider all charges
associated with that annuity. Credits applicable to bonus products, such as the
Contract With Credit, should not be viewed as an offset of any surrender charge
that applies to another annuity contract you may currently own.
27
1:
WHAT IS THE STRATEGIC PARTNERS PLUS VARIABLE ANNUITY? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
You may prefer the Contract With Credit if:
- - You anticipate that you will not need to withdraw purchase payments any
earlier than at least seven contract anniversaries after making them,
- - You do not wish to allocate purchase payments to the fixed interest rate
options, and
- - You believe that the bonus credit is worth the higher withdrawal charges and
insurance and administrative costs.
If you wish to have the option of allocating part of your contract value to
the fixed interest rate options, you may prefer the Contract Without Credit.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment, depending upon the performance of
the investment options you choose, you may be worse off than if you had chosen
the Contract Without Credit. We do not recommend purchase of either version of
Strategic Partners Plus if you anticipate having to withdraw a significant
amount of your purchase payments within a few years of making those purchase
payments.
Strategic Partners Plus is a variable annuity contract. During the
accumulation phase, you can allocate your assets among the variable investment
options and, if you choose the Contract Without Credit, guaranteed fixed
interest rate options as well. If you select variable investment options, the
amount of money you are able to accumulate in your contract during the
accumulation phase depends upon the investment performance of the underlying
mutual fund(s) associated with that variable investment option.
Because the underlying mutual funds' portfolios fluctuate in value depending
upon market conditions, your contract value can either increase or decrease.
This is important, since the amount of the annuity payments you receive during
the income phase depends upon the value of your contract at the time you begin
receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person whose life is used to determine how much and
how long (if applicable) the annuity payments will continue once the annuity
phase begins. On or after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity you designate to receive any death
benefit. You may change the beneficiary any time prior to the annuity date by
making a written request to us.
SHORT TERM CANCELLATION RIGHT OR
"FREE LOOK"
If you change your mind about owning Strategic Partners Plus, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable state law:
- - Your full purchase payment, less any applicable federal and state income tax
withholding; or
- - The amount your contract is worth as of the day we receive your request, less
any applicable federal and state income tax withholding. This amount may be
more or less than your original payment.
If you have purchased the Contract With Credit, we will deduct any credit we
had added to your contract value. To the extent dictated by state law, we will
include in your refund the amount of any fees and charges that we deducted.
28
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
- --------------------------------------------------------------------------------
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY OF
THE VARIABLE INVESTMENT OPTIONS, AND IF YOU CHOOSE THE CONTRACT WITHOUT CREDIT,
FIXED INTEREST RATE OPTIONS.
The variable investment options invest in underlying mutual funds managed by
leading investment advisers. These underlying mutual funds may sell their shares
to both variable annuity and variable life separate accounts of different
insurance companies, which could create the kinds of risks that are described in
more detail in the current prospectus for the underlying mutual fund. The
current prospectuses for the underlying mutual funds also contain other
important information about the mutual funds. When you invest in a variable
investment option that is funded by a mutual fund, you should read the mutual
fund prospectus and keep it for future reference.
VARIABLE INVESTMENT OPTIONS
The following chart classifies each of the portfolios based on our assessment of
their investment style (as of the date of this prospectus). The chart also
provides a description of each portfolio's investment objective and a short,
summary description of their key policies to assist you in determining which
portfolios may be of interest to you. There is no guarantee that any portfolio
will meet its investment objective. The name of the adviser/subadviser for each
portfolio appears next to the description.
The Jennison Portfolio, Prudential Equity Portfolio, Prudential Global
Portfolio, Prudential Money Market Portfolio, Prudential Stock Index Portfolio,
Prudential Value Portfolio, and each "SP" Portfolio of the Prudential Series
Fund, are managed by an indirect wholly-owned subsidiary of Prudential
Financial, Inc. called Prudential Investments LLC (PI) under a
"manager-of-managers" approach.
Under the manager-of-managers approach, PI has the ability to assign
subadvisers to manage specific portions of a portfolio, and the portion managed
by a subadviser may vary from 0% to 100% of the portfolio's assets. The
subadvisers that manage some or all of a Prudential Series Fund portfolio are
listed on the following chart.
The portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a manager-of-
managers approach. American Skandia Investment Services, Incorporated is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc.
A fund or portfolio may have a similar name or an investment objective and
investment policies resembling those of a mutual fund managed by the same
investment adviser that is sold directly to the public. Despite such
similarities, there can be no assurance that the investment performance of any
such fund or portfolio will resemble that of the publicly available mutual fund.
Pruco Life has entered into agreements with certain underlying portfolios
and/or the investment adviser or distributor of such portfolios. Pruco Life may
provide administrative and support services to such portfolios pursuant to the
terms of these agreements and under which it receives a fee of up to 0.55%
annually (as of May 1, 2006) of the average assets allocated to the portfolio
under the contract. These agreements, including the fees paid and services
provided, can vary for each underlying mutual fund whose portfolios are offered
as sub-accounts.
In addition, the investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the contract.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker/dealer firms' registered
representatives and creating marketing material discussing the contract and the
available options.
As detailed in the Prudential Series Fund prospectus, although the Prudential
Money Market Portfolio is designed to be a stable investment option, it is
possible to lose money in that portfolio. For example, when prevailing
short-term interest rates are very low, the yield on the Prudential Money Market
Portfolio may be so low that, when separate account and contract charges are
deducted, you experience a negative return.
Upon the introduction of the American Skandia Trust Asset Allocation
Portfolios on December 5, 2005, we ceased offering the Prudential Series Fund
Asset Allocation Portfolios to new purchasers and to existing contract owners
who had not previously invested in those Portfolios.
29
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
However, a contract owner who had contract value allocated to a Prudential
Series Fund Asset Allocation Portfolio prior to December 5, 2005 may continue to
allocate purchase payments to that Portfolio after that date. In addition, after
December 5, 2005, we ceased offering the Prudential Series Fund SP Large Cap
Value Portfolio to new purchasers and to existing contract owners who had not
previously invested in that Portfolio. However, a contract owner who had
contract value allocated to the SP Large Cap Value Portfolio prior to December
5, 2005 may continue to allocate purchase payments to that Portfolio after that
date.
30
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP JENNISON PORTFOLIO: seeks long-term growth of capital. The Jennison Associates
GROWTH Portfolio invests primarily in equity securities of major, LLC
established corporations that the Sub-adviser believes offer
above-average growth prospects. The Portfolio may invest up
to 30% of its total assets in foreign securities. Stocks are
selected on a company-by-company basis using fundamental
analysis. Normally 65% of the Portfolio's total assets are
invested in common stocks and preferred stocks of companies
with capitalization in excess of $1 billion.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL EQUITY PORTFOLIO: seeks long-term growth of Jennison Associates
BLEND capital. The Portfolio invests at least 80% of its net LLC; Salomon Brothers
assets plus borrowings for investment purposes in common Asset Management Inc
stocks of major established corporations as well as smaller
companies that the Sub-advisers believe offer attractive
prospects of appreciation.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PRUDENTIAL GLOBAL PORTFOLIO: seeks long-term growth of LSV Asset Management;
EQUITY capital. The Portfolio invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign and U.S. companies. Each Management, LLC;
Sub-adviser for the Portfolio generally will use either a T. Rowe Price
"growth" approach or a "value" approach in selecting either Associates, Inc.;
foreign or U.S. common stocks. William Blair &
Company, LLC
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME PRUDENTIAL MONEY MARKET PORTFOLIO: seeks maximum current Prudential Investment
income consistent with the stability of capital and the Management, Inc.
maintenance of liquidity. The Portfolio invests in
high-quality short-term money market instruments issued by
the U.S. Government or its agencies, as well as by
corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in
thirteen months or less, and which are denominated in U.S.
dollars.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL STOCK INDEX PORTFOLIO: seeks investment results Quantitative
BLEND that generally correspond to the performance of Management Associates
publicly-traded common stocks. With the price and yield LLC
performance of the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) as the benchmark, the Portfolio
normally invests at least 80% of investable assets in S&P
500 stocks. The S&P 500 represents more than 70% of the
total market value of all publicly-traded common stocks and
is widely viewed as representative of publicly-traded common
stocks as a whole. The Portfolio is not "managed" in the
traditional sense of using market and economic analyses to
select stocks. Rather, the portfolio manager purchases
stocks in proportion to their weighting in the S&P 500.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
31
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP PRUDENTIAL VALUE PORTFOLIO: seeks long-term growth of Jennison Associates
VALUE capital through appreciation and income. The Portfolio LLC
invests primarily in common stocks that the Sub-adviser
believes are undervalued -- those stocks that are trading
below their underlying asset value, cash generating ability
and overall earnings and earnings growth. There is a risk
that "value" stocks can perform differently from the market
as a whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
Normally at least 65% of the Portfolio's total assets is
invested in the common stock and convertible securities of
companies that the Sub-adviser believes will provide
investment returns above those of the S&P 500 or the New
York Stock Exchange (NYSE) Composite Index. Most of the
investments will be securities of large capitalization
companies. The Portfolio may invest up to 25% of its total
assets in real estate investment trusts (REITs) and up to
30% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO: seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with Investments LLC
BALANCED the specified level of risk tolerance. The Portfolio may
invest in any other Portfolio of the Fund (other than
another SP Asset Allocation Portfolio), the AST Marsico
Capital Growth Portfolio of American Skandia Trust (AST),
and the AST LSV International Value Portfolio of AST (the
Underlying Portfolios). Under normal circumstances, the
Portfolio generally will focus on equity Underlying
Portfolios but will also invest in fixed-income Underlying
Portfolios. (Effective December 5, 2005, this Portfolio was
closed to new purchasers and to existing contract owners who
had not previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND SP AIM CORE EQUITY PORTFOLIO: seeks long-term growth of AIM Capital
capital. The Portfolio normally invests at least 80% of Management, Inc.
investable assets in equity securities, including
convertible securities of established companies that have
long-term above-average growth in earnings and growth
companies that the Sub-adviser believes have the potential
for above-average growth in earnings. The Portfolio may
invest up to 20% of its total assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
ASSET SP BALANCED ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
ALLOCATION/ highest potential total return consistent with the specified Investments LLC
BALANCED level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). The Portfolio will invest in equity and
fixed-income Underlying Portfolios. (Effective December 5,
2005, this Portfolio was closed to new purchasers and to
existing contract owners who had not previously invested in
the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
32
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks to obtain Prudential
the highest potential total return consistent with the Investments LLC
specified level of risk tolerance. The Portfolio may invest
in any other Portfolio of the Fund (other than another SP
Asset Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on fixed-income Underlying Portfolios
but will also invest in equity Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP DAVIS VALUE PORTFOLIO: seeks growth of capital. The Davis Selected
Portfolio invests primarily in common stocks of U.S. Advisers, L.P.
companies with market capitalizations of at least $5
billion. It may also invest in stocks of foreign companies
and U.S. companies with smaller capitalizations. The
Sub-adviser attempts to select common stocks of businesses
that possess characteristics that the Sub-adviser believe
foster the creation of long-term value, such as proven
management, a durable franchise and business model, and
sustainable competitive advantages. The Sub-adviser aims to
invest in such businesses when they are trading at a
discount to their intrinsic worth. There is a risk that
"value" stocks can perform differently from the market as a
whole and other types of stocks and can continue to be
undervalued by the markets for long periods of time.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED SP GROWTH ASSET ALLOCATION PORTFOLIO: seeks to obtain the Prudential
highest potential total return consistent with the specified Investments LLC
level of risk tolerance. The Portfolio may invest in any
other Portfolio of the Fund (other than another SP Asset
Allocation Portfolio), the AST Marsico Capital Growth
Portfolio of American Skandia Trust (AST), and the AST LSV
International Value Portfolio of AST (the Underlying
Portfolios). Under normal circumstances, the Portfolio
generally will focus on equity Underlying Portfolios but
will also invest in fixed-income Underlying Portfolios.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE SP LARGE CAP VALUE PORTFOLIO: seeks long-term growth of Hotchkis and Wiley
capital. The Portfolio normally invests at least 80% of Capital Management,
investable assets in common stocks and securities LLC; J.P. Morgan
convertible into common stock of companies that are believed Investment Management
to be undervalued and have an above-average potential to Inc., Dreman Value
increase in price, given the company's sales, earnings, book Management LLC
value, cash flow and recent performance. The Portfolio seeks
to achieve its objective through investments primarily in
equity securities of large capitalization companies.
(Effective December 5, 2005, this Portfolio was closed to
new purchasers and to existing contract owners who had not
previously invested in the Portfolio.)
- -----------------------------------------------------------------------------------------------------------------------
</Table>
33
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP LSV INTERNATIONAL VALUE PORTFOLIO: seeks capital growth. LSV Asset Management
The Portfolio pursues its objective by primarily investing
at least 80% of the value of its assets in the equity
securities of companies in developed non-U.S. countries that
are represented in the MSCI EAFE Index. The target of this
Portfolio is to outperform the unhedged US Dollar total
return (net of foreign dividend withholding taxes) of the
MSCI EAFE Index. The Sub-Adviser uses proprietary
quantitative models to manage the Portfolio in a bottom-up
security selection approach combined with overall portfolio
risk management.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP MID CAP GROWTH PORTFOLIO: seeks long-term growth of Calamos Advisors LLC
capital. The Portfolio normally invests at least 80% of
investable assets in common stocks and related securities,
such as preferred stocks, convertible securities and
depositary receipts for those securities. These securities
typically are of medium market capitalizations, which the
Sub-adviser believes have above-average growth potential.
Medium market capitalization companies are defined by the
Portfolio as companies with market capitalizations equaling
or exceeding $250 million but not exceeding the top of the
Russell Mid Cap(TM) Growth Index range at the time of the
Portfolio's investment. The Portfolio's investments may
include securities listed on a securities exchange or traded
in the over-the-counter markets. The Sub-adviser uses a
bottom-up and top-down analysis in managing the Portfolio.
This means that securities are selected based upon
fundamental analysis, as well as a top-down approach to
diversification by industry and company, and by paying
attention to macro-level investment themes. The Portfolio
may invest in foreign securities (including emerging markets
securities).
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO HIGH YIELD PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a two- to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME SP PIMCO TOTAL RETURN PORTFOLIO: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management Company
investment management. The Portfolio will invest in a LLC (PIMCO)
diversified portfolio of fixed-income securities of varying
maturities. The average portfolio duration of the Portfolio
generally will vary within a three-to six-year time frame
based on the Sub-adviser's forecast for interest rates.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO: seeks Jennison Associates
long-term capital appreciation. The Portfolio normally LLC
invests at least 80% of investable assets in equity
securities of small and medium sized U.S. companies that the
Sub-adviser believes have the potential for above-average
earnings growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
34
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH SP SMALL CAP GROWTH PORTFOLIO: seeks long-term capital Eagle Asset
growth. The Portfolio pursues its objective by primarily Management; Neuberger
investing in the common stocks of small-capitalization Berman Management,
companies, which is defined as a company with a market Inc.
capitalization, at the time of purchase, no larger than the
largest capitalized company included in the Russell 2000
Index during the most recent 11-month period (based on
month-end data) plus the most recent data during the current
month.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE SP SMALL-CAP VALUE PORTFOLIO(formerly SP Goldman Sachs Small Goldman Sachs Asset
Cap Value Portfolio): seeks long-term capital growth. The Management, L.P.;
Portfolio normally invests at least 80% its net assets plus Salomon Brothers
borrowings for investment purposes in the equity securities Asset Management Inc
of small capitalization companies. The Portfolio focuses on
equity securities that are believed to be undervalued in the
market place.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO: seeks AllianceBernstein
long-term growth of capital. The Portfolio normally invests L.P.; Jennison
at least 65% of total assets in equity-related securities of Associates LLC
U.S. companies that the Sub-advisers believe to have strong
capital appreciation potential. The Portfolio's strategy is
to combine the efforts of two Sub-advisers and to invest in
the favorite stock selection ideas of three portfolio
managers (two of whom invest as a team). Each Sub-adviser to
the Portfolio utilizes a growth style to select
approximately 20 securities. The portfolio managers build a
portfolio with stocks in which they have the highest
confidence and may invest more than 5% of the Portfolio's
assets in any one issuer. The Portfolio is nondiversified,
meaning it can invest a relatively high percentage of its
assets in a small number of issuers. Investing in a
nondiversified portfolio, particularly a portfolio investing
in approximately 40 equity-related securities, involves
greater risk than investing in a diversified portfolio
because a loss resulting from the decline in the value of
one security may represent a greater portion of the total
assets of an on diversified portfolio.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (formerly SP T. Rowe Price
Alliance Bernstein Large-Cap Growth Portfolio): seeks Associates, Inc.
long-term capital growth. Under normal circumstances, the
Portfolio invests at least 80% of its net assets plus
borrowings for investment purposes in the equity securities
of large-cap companies. The Sub-adviser generally looks for
companies with an above-average rate of earnings and cash
flow growth and a lucrative niche in the economy that gives
them the ability to sustain earnings momentum even during
times of slow economic growth.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
35
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO: seeks William Blair &
long-term capital appreciation. The Portfolio invests Company, LLC
primarily in stocks of large and medium-sized companies
located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index. Under normal
market conditions, the portfolio invests at least 80% of its
net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six
different countries and will not concentrate investments in
any particular industry. The Portfolio seeks companies that
historically have had superior growth, profitability and
quality relative to local markets and relative to companies
within the same industry worldwide, and that are expected to
continue such performance.
- -----------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST ADVANCED STRATEGIES PORTFOLIO: seeks a high level of Marsico Capital
absolute return. The Portfolio invests primarily in a Management, LLC; T.
diversified portfolio of equity and fixed income securities Rowe Price
across different investment categories and investment Associates, Inc.; LSV
managers. The Portfolio pursues a combination of traditional Asset Management;
and non-traditional investment strategies. William Blair &
Company, L.L.C.;
Pacific Investment
Management Company
LLC (PIMCO)
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
92.5% to 100% of its net assets to underlying portfolios
investing primarily in equity securities, and 0% to 7.5% of
its net assets to underlying portfolios investing primarily
in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO: seeks long-term AllianceBernstein
capital growth by investing primarily in common stocks. The L.P.
Sub-adviser expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued. Among other things,
the Portfolio seeks to identify compelling buying
opportunities created when companies are undervalued on the
basis of investor reactions to near-term problems or
circumstances even though their long-term prospects remain
sound. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
36
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO: seeks AllianceBernstein
long-term growth of capital and income while attempting to L.P.
avoid excessive fluctuations in market value. The Portfolio
normally will invest in common stocks (and securities
convertible into common stocks). The Sub-adviser will take a
value-oriented approach, in that it will try to keep the
Portfolio's assets invested in securities that are selling
at reasonable valuations in relation to their fundamental
business prospects. The stocks that the Portfolio will
normally invest in are those of seasoned companies.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP BLEND AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO (AST AllianceBernstein
AllianceBernstein Growth + Value Portfolio merged into this L.P.
Portfolio): seeks to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P (R) 500") through
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest,
under normal circumstances, at least 80% of its net assets
in securities included in the S&P(R) 500.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO: seeks American Century
capital growth with current income as a secondary objective. Investment
The Portfolio invests primarily in common stocks that offer Management, Inc.
potential for capital growth, and may, consistent with its
investment objective, invest in stocks that offer potential
for current income. The Sub-adviser utilizes a quantitative
management technique with a goal of building an equity
portfolio that provides better returns than the S&P 500
Index without taking on significant additional risk and
while attempting to create a dividend yield that will be
greater than the S&P 500 Index.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO: seeks American Century
BALANCED capital growth and current income. The Sub-adviser intends Investment
to maintain approximately 60% of the Portfolio's assets in Management, Inc.
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed
income investments will fluctuate in value. The equity
securities will fluctuate depending on the performance of
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST BALANCED ASSET ALLOCATION PORTFOLIO: seeks the highest American Skandia
potential total return consistent with its specified level Investment Services,
of risk tolerance. The Portfolio will invest its assets in Inc.; Prudential
several other American Skandia Trust Portfolios. Under Investments LLC
normal market conditions, the Portfolio will devote between
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in equity securities, and 27.5% to 42.5%
of its net assets to underlying portfolios investing
primarily in debt securities and money market instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
37
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 72.5% to 87.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
12.5% to 27.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST COHEN & STEERS REALTY PORTFOLIO: seeks to maximize total Cohen & Steers
return through investment in real estate securities. The Capital Management,
Portfolio pursues its investment objective by investing, Inc.
under normal circumstances, at least 80% of its net assets
in securities of real estate issuers. Under normal
circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate
companies, i.e., a company that derives at least 50% of its
revenues from the ownership, construction, financing,
management or sale of real estate or that has at least 50%
of its assets in real estate. Real estate companies may
include real estate investment trusts or REITs.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 47.5% to 62.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
37.5% to 52.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST DEAM LARGE-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
capital by investing primarily in the value stocks of larger Management, Inc.
companies. The Portfolio pursues its objective, under normal
market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 1000(R) Value Index, but which attempts to
outperform the Russell 1000(R) Value Index through active
stock selection.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST DEAM SMALL-CAP GROWTH PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital from a portfolio of growth stocks of Management, Inc.
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Growth
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Growth Index, but which attempts to
outperform the Russell 2000(R) Growth Index.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
38
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST DEAM SMALL-CAP VALUE PORTFOLIO: seeks maximum growth of Deutsche Asset
investors' capital. The Portfolio pursues its objective, Management, Inc.
under normal market conditions, by primarily investing at
least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value
Index. The Sub-adviser employs an investment strategy
designed to maintain a portfolio of equity securities which
approximates the market risk of those stocks included in the
Russell 2000(R) Value Index, but which attempts to
outperform the Russell 2000(R) Value Index.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO: seeks capital Federated Equity
growth. The Portfolio pursues its investment objective by Management Company of
investing primarily in the stocks of small companies that Pennsylvania;
are traded on national security exchanges, NASDAQ stock Federated Global
exchange and the over-the-counter-market. Small companies Investment Management
will be defined as companies with market capitalizations Corp.
similar to companies in the Russell 2000 Growth Index. Up to
25% of the Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST BALANCED TARGET PORTFOLIO: seeks long-term First Trust Advisors
capital growth balanced by current income. The Portfolio L.P.
normally invests approximately 65% of its total assets in
equity securities and 35% in fixed income securities.
Depending on market conditions, the equity portion may range
between 60-70% and the fixed income portion between 30-40%.
The Portfolio allocates its assets across a number of
uniquely specialized investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST FIRST TRUST CAPITAL APPRECIATION TARGET PORTFOLIO: seeks First Trust Advisors
long-term growth of capital. The Portfolio normally invests L.P.
approximately 80% of its total assets in equity securities
and 20% in fixed income securities. Depending on market
conditions, the equity portion may range between 75-85% and
the fixed income portion between 15-25%. The Portfolio
allocates its assets across a number of uniquely specialized
investment strategies.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST GLOBAL ALLOCATION PORTFOLIO: seeks to obtain the highest Prudential
potential total return consistent with a specified level of Investments LLC
risk tolerance. The Portfolio seeks to achieve its
investment objective by investing in several other AST
Portfolios ("Underlying Portfolios"). The Portfolio intends
its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an
investor could otherwise achieve only by holding numerous
investments. It is expected that the investment objectives
of such AST Portfolios will be diversified.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
39
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO: seeks Goldman Sachs Asset
growth of capital in a manner consistent with the Management, L.P.
preservation of capital. Realization of income is not a
significant investment consideration and any income realized
on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity
securities of companies that the Sub-adviser believes have
the potential to achieve capital appreciation over the
long-term. The Portfolio seeks to achieve its investment
objective by investing, under normal circumstances, in
approximately 30-45 companies that are considered by the
Sub-adviser to be positioned for long-term growth.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP GROWTH AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO: seeks long-term Goldman Sachs Asset
capital growth. The Portfolio pursues its investment Management, L.P.
objective, by investing primarily in equity securities
selected for their growth potential, and normally invests at
least 80% of the value of its assets in medium
capitalization companies. For purposes of the Portfolio,
medium-sized companies are those whose market
capitalizations (measured at the time of investment) fall
within the range of companies in the Russell Mid Cap Growth
Index. The Sub-adviser seeks to identify individual
companies with earnings growth potential that may not be
recognized by the market at large.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST HIGH YIELD PORTFOLIO (formerly AST Goldman Sachs High Goldman Sachs Asset
Yield Portfolio): seeks a high level of current income and Management, L.P.;
may also consider the potential for capital appreciation. Pacific Investment
The Portfolio invests, under normal circumstances, at least Management Company
80% of its net assets plus any borrowings for investment LLC (PIMCO)
purposes (measured at time of purchase) in high yield,
fixed-income securities that, at the time of purchase, are
non-investment grade securities. Such securities are
commonly referred to as "junk bonds."
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO: seeks long-term J.P.Morgan Investment
capital growth by investing in a diversified portfolio of Management Inc.
international equity securities. The Portfolio seeks to meet
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world. The equity securities will ordinarily be traded on a
recognized foreign securities exchange or traded in a
foreign over-the-counter market in the country where the
issuer is principally based, but may also be traded in other
countries including the United States.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
40
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE AST LARGE-CAP VALUE PORTFOLIO (formerly AST Hotchkis and Dreman Value
Wiley Large-Cap Value Portfolio): seeks current income and Management LLC,
long-term growth of income, as well as capital appreciation. Hotchkis and Wiley
The Portfolio invests, under normal circumstances, at least Capital Management,
80% of its net assets in common stocks of large cap U.S. LLC; J.P. Morgan
companies. The Portfolio focuses on common stocks that have Investment
a high cash dividend or payout yield relative to the market Management, Inc.
or that possess relative value within sectors.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE PORTFOLIO: seeks high current Lord, Abbett & Co.
income and the opportunity for capital appreciation to LLC
produce a high total return. To pursue its objective, the
Portfolio will invest, under normal circumstances, at least
80% of the value of its assets in fixed income securities
and normally invests primarily in high yield and investment
grade debt securities, securities convertible into common
stock and preferred stocks. The Portfolio may find good
value in high yield securities, sometimes called
"lower-rated bonds" or "junk bonds," and frequently may have
more than half of its assets invested in those securities.
At least 20% of the Portfolio's assets must be invested in
any combination of investment grade debt securities, U.S.
Government securities and cash equivalents. The Portfolio
may also make significant investments in mortgage-backed
securities. Although the Portfolio expects to maintain a
weighted average maturity in the range of five to twelve
years, there are no restrictions on the overall Portfolio or
on individual securities. The Portfolio may invest up to 20%
of its net assets in equity securities.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MARSICO CAPITAL GROWTH PORTFOLIO: seeks capital growth. Marsico Capital
Income realization is not an investment objective and any Management, LLC
income realized on the Portfolio's investments, therefore,
will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies. In
selecting investments for the Portfolio, the Sub-adviser
uses an approach that combines "top down" economic analysis
with "bottom up" stock selection. The "top down" approach
identifies sectors, industries and companies that may
benefit from the trends the Sub-adviser has observed. The
Sub-adviser then looks for individual companies with
earnings growth potential that may not be recognized by the
market at large, utilizing a "bottom up" stock selection
process. The Portfolio will normally hold a core position of
between 35 and 50 common stocks. The Portfolio may hold a
limited number of additional common stocks at times when the
Portfolio manager is accumulating new positions, phasing out
existing or responding to exceptional market conditions.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST MFS GLOBAL EQUITY PORTFOLIO: seeks capital growth. Under Massachusetts
normal circumstances the Portfolio invests at least 80% of Financial Services
its assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
41
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH AST MFS GROWTH PORTFOLIO: seeks long-term capital growth and Massachusetts
future income. Under normal market conditions, the Portfolio Financial Services
invests at least 80% of its total assets in common stocks Company
and related securities, such as preferred stocks,
convertible securities and depositary receipts, of companies
that the Sub-adviser believes offer better than average
prospects for long-term growth. The Sub-adviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE AST MID CAP VALUE PORTFOLIO (formerly AST Gabelli All-Cap EARNEST Partners LLC;
Value Portfolio): seeks to provide capital growth by WEDGE Capital
investing primarily in mid-capitalization stocks that appear Management, LLP
to be undervalued. The Portfolio has a non-fundamental
policy to invest, under normal circumstances, at least 80%
of the value of its net assets in mid-capitalization
companies.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP GROWTH AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO: (AST Alger Neuberger Berman
All-Cap Growth Portfolio merged into this Portfolio): seeks Management Inc.
capital growth. Under normal market conditions, the
Portfolio primarily invests at least 80% of its net assets
in the common stocks of mid-cap companies. The Sub-adviser
looks for fast-growing companies that are in new or rapidly
evolving industries.
- -----------------------------------------------------------------------------------------------------------------------
MID-CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO: seeks capital Neuberger Berman
growth. Under normal market conditions, the Portfolio Management Inc.
primarily invests at least 80% of its net assets in the
common stocks of mid-cap companies. For purposes of the
Portfolio, companies with equity market capitalizations that
fall within the range of the Russell Midcap(R) Index at the
time of investment are considered mid-cap companies. Some of
the Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. Under
the Portfolio's value-oriented investment approach, the
Sub-adviser looks for well-managed companies whose stock
prices are undervalued and that may rise in price before
other investors realize their worth.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST PIMCO LIMITED MATURITY BOND PORTFOLIO: seeks to maximize Pacific Investment
total return consistent with preservation of capital and Management Company
prudent investment management. The Portfolio will invest in LLC (PIMCO)
a diversified portfolio of fixed-income securities of
varying maturities. The average portfolio duration of the
Portfolio generally will vary within a one- to three-year
time frame based on the Sub-adviser's forecast for interest
rates.
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED AST PRESERVATION ASSET ALLOCATION PORTFOLIO: seeks the American Skandia
highest potential total return consistent with its specified Investment Services,
level of risk tolerance. The Portfolio will invest its Inc.; Prudential
assets in several other American Skandia Trust Portfolios. Investments LLC
Under normal market conditions, the Portfolio will devote
between 27.5% to 42.5% of its net assets to underlying
portfolios investing primarily in equity securities, and
57.5% to 72.5% of its net assets to underlying portfolios
investing primarily in debt securities and money market
instruments.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
42
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE AST SMALL-CAP VALUE PORTFOLIO: seeks to provide long-term Lee Munder
capital growth by investing primarily in Investments, Ltd;
small-capitalization stocks that appear to be undervalued. J.P. Morgan
The Portfolio will have a non-fundamental policy to invest, Investment
under normal circumstances, at least 80% of the value of its Management, Inc.;
net assets in small capitalization stocks. The Portfolio Salomon Brothers
will focus on common stocks that appear to be undervalued. Asset Management Inc;
Dreman Value
Management LLC
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO: seeks a high T. Rowe Price
BALANCED level of total return by investing primarily in a Associates, Inc.
diversified portfolio of fixed income and equity securities.
The Portfolio normally invests approximately 60% of its
total assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-adviser's
outlook for the markets. The Sub-adviser concentrates common
stock investments in larger, more established companies, but
the Portfolio may include small and medium-sized companies
with good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- -----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND PORTFOLIO: seeks to provide T. Rowe Price
high current income and capital growth by investing in International, Inc.
high-quality foreign and U.S. dollar-denominated bonds. The
Portfolio will invest at least 80% of its total assets in
fixed income securities, including high quality bonds issued
or guaranteed by U.S. or foreign governments or their
agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds
and mortgage and asset-backed securities of U.S. and foreign
issuers. The Portfolio generally invests in countries where
the combination of fixed-income returns and currency
exchange rates appears attractive, or, if the currency trend
is unfavorable, where the Sub-adviser believes that the
currency risk can be minimized through hedging. The
Portfolio may also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk bonds ("junk
bonds"). In addition, the Portfolio may invest up to 30% of
its assets in mortgage-backed (including derivatives, such
as collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
43
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO: seeks T. Rowe Price
long-term capital growth primarily through the common stocks Associates, Inc.
of companies that own or develop natural resources (such as
energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common
stocks of natural resource companies whose earnings and
tangible assets could benefit from accelerating inflation.
The Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
EVERGREEN VARIABLE ANNUITY TRUST
- -----------------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION/ BALANCED EVERGREEN VA BALANCED FUND: seeks capital growth and current Evergreen Investment
income. The Portfolio invests in a combination of debt Management Company,
securities, common stocks, preferred stocks and securities LLC
convertible or exchangeable for common stocks of large U.S.
companies (i.e., companies whose market capitalizations fall
within the range tracked by the Russell 1000(R) INDEX, AT
THE TIME OF PURCHASE). UNDER NORMAL CIRCUMSTANCES, THE
PORTFOLIO WILL INVEST AT LEAST 25% OF ITS ASSETS IN DEBT
SECURITIES AND THE REMAINDER IN EQUITY SECURITIES. THE
PORTFOLIO'S MANAGERS USE A DIVERSIFIED EQUITY STYLE OF
MANAGEMENT, BEST DEFINED AS A BLEND BETWEEN GROWTH AND VALUE
STOCKS. THE PORTFOLIO NORMALLY INVESTS PRIMARILY ALL OF THE
FIXED INCOME PORTION IN U.S. DOLLAR-DENOMINATED INVESTMENT
GRADE DEBT SECURITIES, INCLUDING DEBT SECURITIES ISSUED OR
GUARANTEED BY THE U.S. TREASURY OR BY AN AGENCY OR
INSTRUMENTALITY OF THE U.S. GOVERNMENT, CORPORATE BONDS,
MORTGAGE-BACKED SECURITIES, ASSET-BACKED SECURITIES, AND
OTHER INCOME PRODUCING SECURITIES. THE PORTFOLIO IS NOT
REQUIRED TO SELL OR OTHERWISE DISPOSE OF ANY SECURITY THAT
LOSES ITS RATING OR HAS ITS RATING REDUCED AFTER THE
PORTFOLIO HAS PURCHASED IT.
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE EVERGREEN VA FUNDAMENTAL LARGE CAP FUND: seeks capital Evergreen Investment
growth with the potential for current income. The Portfolio Management Company,
invests primarily in common stocks of large U.S. companies LLC
(i.e., companies whose market capitalizations fall within
the market capitalization range of the companies tracked by
the Russell 1000(R) INDEX, MEASURED AT THE TIME OF
PURCHASE). THE PORTFOLIO'S STOCK SELECTION IS BASED ON A
DIVERSIFIED STYLE OF EQUITY MANAGEMENT THAT ALLOWS THE
PORTFOLIO TO INVEST IN BOTH VALUE- AND GROWTH-ORIENTED
EQUITY SECURITIES. THE PORTFOLIO'S MANAGERS SEEK COMPANIES
THAT ARE TEMPORARILY UNDERVALUED IN THE MARKETPLACE, SELL AT
A DISCOUNT TO THEIR PRIVATE MARKET VALUES AND DISPLAY
CERTAIN CHARACTERISTICS SUCH AS EARNING A HIGH RETURN ON
INVESTMENT AND HAVING SOME KIND OF COMPETITIVE ADVANTAGE IN
THEIR INDUSTRY. "GROWTH" STOCKS ARE STOCKS OF COMPANIES
WHICH THE PORTFOLIO'S MANAGERS BELIEVE HAVE ANTICIPATED
EARNINGS RANGING FROM STEADY TO ACCELERATED GROWTH. THE
PORTFOLIO INTENDS TO SEEK ADDITIONAL INCOME PRIMARILY BY
INVESTING UP TO 20% OF ITS ASSETS IN CONVERTIBLE BONDS,
INCLUDING BELOW INVESTMENT GRADE BONDS, AND CONVERTIBLE
PREFERRED STOCKS OF ANY QUALITY. THE PORTFOLIO MAY INVEST UP
TO 20% OF ITS ASSETS IN FOREIGN SECURITIES.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
44
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH EVERGREEN VA GROWTH FUND: seeks long-term capital growth. Evergreen Investment
The Portfolio invests at least 75% of its assets in common Management Company,
stocks of small- and medium-sized companies (i.e., companies LLC
whose market capitalizations fall within the market
capitalization range of the companies tracked by the Russell
2000(R) GROWTH INDEX, MEASURED AT THE TIME OF PURCHASE). THE
REMAINING PORTION OF THE PORTFOLIO'S ASSETS MAY BE INVESTED
IN COMPANIES OF ANY SIZE. THE PORTFOLIO'S MANAGERS EMPLOY A
GROWTH-STYLE OF EQUITY MANAGEMENT AND WILL PURCHASE STOCKS
OF COMPANIES THAT HAVE DEMONSTRATED EARNINGS, ASSET VALUES
OR GROWTH POTENTIAL WHICH THEY BELIEVE ARE NOT YET REFLECTED
IN THE STOCK'S MARKET PRICE. THE PORTFOLIO'S MANAGERS
CONSIDER EARNINGS GROWTH ABOVE THE AVERAGE EARNINGS GROWTH
OF COMPANIES INCLUDED IN THE RUSSELL 2000(R) GROWTH INDEX AS
A KEY FACTOR IN SELECTING INVESTMENTS.
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY EVERGREEN VA INTERNATIONAL EQUITY FUND: seeks long-term Evergreen Investment
capital growth and secondarily, modest income. The Portfolio Management Company,
normally invests 80% of its assets in equity securities LLC
issued by established, quality, non-U.S. companies located
in countries with developed markets and may purchase across
all market capitalizations. The Portfolio normally invests
at least 65% of its assets in securities of companies in at
least three different countries (other than the U.S.). The
Portfolio may also invest in emerging markets. The
Portfolio's managers seek both growth and value
opportunities, and the Portfolio intends to seek modest
income from dividends paid by its equity holdings.
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY EVERGREEN VA OMEGA FUND: seeks long-term capital growth. The Evergreen Investment
Portfolio invests primarily, and under normal conditions Management Company,
substantially all of its assets, in common stocks and LLC
securities convertible into common stocks of U.S. companies
across all market capitalizations. The Portfolio's managers
employ a growth style of equity management. "Growth" stocks
are stocks of companies that the Portfolio's managers
believe have anticipated earnings ranging from steady to
accelerated growth. The Portfolio may invest up to 25% of
its assets in foreign securities.
- -----------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE EVERGREEN VA SPECIAL VALUES FUND: seeks capital growth in Evergreen Investment
the value of its shares. The Portfolio normally invests at Management Company,
least 80% of its assets in common stocks of small U.S. LLC
companies (i.e. companies whose market capitalizations fall
within the market capitalization range of the companies
tracked by the Russell 2000(R) INDEX, MEASURED AT THE TIME
OF PURCHASE). THE REMAINING 20% OF THE PORTFOLIO'S ASSETS
MAY BE REPRESENTED BY CASH OR INVESTED IN VARIOUS CASH
EQUIVALENTS OR COMMON STOCKS OF ANY MARKET CAPITALIZATION.
THE PORTFOLIO'S MANAGERS SEEK TO LIMIT THE INVESTMENT RISK
OF SMALL COMPANY INVESTING BY SEEKING STOCKS THAT TRADE
BELOW WHAT THE MANAGERS CONSIDER THEIR INTRINSIC VALUE. THE
PORTFOLIO'S MANAGERS LOOK SPECIFICALLY FOR VARIOUS GROWTH
TRIGGERS, OR CATALYSTS, THAT WILL BRING THE STOCK'S PRICE
INTO LINE WITH ITS ACTUAL OR POTENTIAL VALUE, SUCH AS NEW
PRODUCTS, NEW MANAGEMENT, CHANGES IN REGULATION AND/OR
RESTRUCTURING POTENTIAL.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
45
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
PORTFOLIO
STYLE/ ADVISER/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISER
- -----------------------------------------------------------------------------------------------------------------------
GARTMORE VARIABLE INSURANCE TRUST
- -----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY GVIT DEVELOPING MARKETS FUND: seeks long-term capital Gartmore Global Asset
appreciation, under normal conditions by investing at least Management Trust;
80% of its total assets in stocks of companies of any size Gartmore Global
based in the world's developing economies. Under normal Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- -----------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH JANUS ASPEN SERIES: LARGE CAP GROWTH PORTFOLIO -- SERVICE Janus Capital
SHARES: seeks long- term growth of capital in a manner Management LLC
consistent with the preservation of capital. The Portfolio
invests at least 80% of its net assets in common stocks of
large-sized companies. Large-sized companies are those whose
market capitalizations fall within the range of companies in
the Russell 1000 Index at the time of purchase.
- -----------------------------------------------------------------------------------------------------------------------
</Table>
46
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
FIXED INTEREST RATE OPTIONS
If you choose the Contract Without Credit, we offer two fixed interest rate
options:
- - a one-year fixed interest rate option, and
- - a dollar cost averaging fixed rate option (DCA Fixed Rate Option).
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, they
will not be less than the minimum interest rate dictated by applicable state
law.
Payments allocated to the fixed interest rate options become part of Pruco
Life's general assets.
ONE-YEAR FIXED INTEREST RATE OPTION
We set a one year guaranteed annual interest rate for the one-year fixed
interest rate option. The one-year fixed interest rate option is not available
if you choose the Contract With Credit.
DOLLAR COST AVERAGING FIXED RATE OPTION
With the Contract Without Credit, you may allocate all or part of any purchase
payment to the DCA Fixed Rate Option. Under this option, you automatically
transfer amounts over a stated period (currently, six or twelve months) from the
DCA Fixed Rate Option to the variable investment options you select. We will
invest the assets you allocate to the DCA Fixed Rate Option in our general
account until they are transferred. You may not transfer from other investment
options to the DCA Fixed Rate Option.
If you choose to allocate all or part of a purchase payment to the DCA Fixed
Rate Option, the minimum amount of the purchase payment you may allocate is
$5,000. The first periodic transfer will occur on the date you allocate your
purchase payment to the DCA Fixed Rate Option. Subsequent transfers will occur
on the monthly anniversary of the first transfer. Currently, you may choose to
have the purchase payment allocated to the DCA Fixed Rate Option transferred to
the selected variable investment options in either six or twelve monthly
installments, and you may not change that number of monthly installments after
you have chosen the DCA Fixed Rate Option. You may allocate to both the
six-month and twelve-month options. (In the future, we may make available other
numbers of transfers and other transfer schedules--for example, quarterly as
well as monthly.)
If you choose a six-payment transfer schedule, each transfer generally will
equal 1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either case,
the final transfer amount generally will also include the credited interest. You
may change at any time the variable investment options into which the DCA Fixed
Rate Option assets are transferred. Transfers from the DCA Fixed Rate Option do
not count toward the maximum number of free transfers allowed under the
contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total amount
at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
47
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WHAT INVESTMENT OPTIONS CAN I CHOOSE? CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
TRANSFERS AMONG OPTIONS
Subject to certain restrictions, you can transfer money among the variable
investment options and, if you have chosen the Contract Without Credit, the
fixed interest rate options as well. The minimum transfer amount is the lesser
of $250 or the amount in the investment option from which the transfer is to be
made.
In general, you may make your transfer request by telephone, electronically,
or otherwise in paper form to the Prudential Annuity Service Center. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following unauthorized
telephone or electronic instructions that we reasonably believed to be genuine.
Your transfer request will take effect at the end of the business day on which
it was received in good order by us, or by certain entities that we have
specifically designated. Our business day generally closes at 4:00 p.m. Eastern
time. Our business day may close earlier, for example if regular trading on the
New York Stock Exchange closes early. Transfer requests received after the close
of the business day will take effect at the end of the next business day.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST RATE OPTION, OTHER THAN THE
DCA FIXED RATE OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE
ONE YEAR INTEREST RATE PERIOD. TRANSFERS FROM THE DCA FIXED RATE OPTION ARE MADE
ON A PERIODIC BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers each
contract year among the investment options, without charge. Currently, we charge
$25 for each transfer after the twelfth in a contract year, and we have the
right to increase this charge up to $30. (Dollar Cost Averaging and Auto-
Rebalancing transfers do not count toward the 12 free transfers per year.)
For purposes of the 12 free transfers per year that we allow, we will treat
multiple transfers that are submitted on the same business day as a single
transfer.
ADDITIONAL TRANSFER RESTRICTIONS
We limit your ability to transfer among your contract's variable investment
options as permitted by applicable law. We impose a yearly restriction on
transfers. Specifically, once you have made 20 transfers among the subaccounts
during a contract year, we will accept any additional transfer request during
that year only if the request is submitted to us in writing with an original
signature and otherwise is in good order. For purposes of this transfer
restriction, we (i) do not view a facsimile transmission as a "writing", (ii)
will treat multiple transfer requests submitted on the same business day as a
single transfer, and (iii) do not count any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among variable investment options in response to
short-term fluctuations in markets, sometimes called "market timing," can make
it very difficult for a portfolio manager to manage an underlying mutual fund's
investments. Frequent transfers may cause the fund to hold more cash than
otherwise necessary, disrupt management strategies, increase transaction costs,
or affect performance. For those reasons, the contract was not designed for
persons who make programmed, large, or frequent transfers.
In light of the risks posed to contract owners and other fund investors by
frequent transfers, we reserve the right to limit the number of transfers in any
contract year for all existing or new contract owners, and to take the other
actions discussed below. We also reserve the right to limit the number of
transfers in any contract year or to refuse any transfer request for an owner or
certain owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on accumulation unit values or the share prices of the
underlying mutual funds; or (b) we are informed by a fund (e.g., by the fund's
portfolio manager) that the purchase or redemption of fund shares must be
restricted because the fund believes the transfer activity to which such
purchase and redemption relates would have a detrimental effect on the share
prices of the affected fund. Without limiting the above, the most likely
scenario where either of the above could occur would be if the aggregate amount
of a trade or trades represented a relatively large proportion of the total
assets of a particular underlying mutual fund. In
48
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PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each variable investment option (other than the Prudential
Money Market Portfolio), we track amounts exceeding a certain dollar
threshold that were transferred into the option. If you transfer such amount
into a particular variable investment option, and within 30 calendar days
thereafter transfer (the "Transfer Out") all or a portion of that amount into
another variable investment option, then upon the Transfer Out, the former
variable investment option becomes restricted (the "Restricted Option").
Specifically, we will not permit subsequent transfers into the Restricted
Option for 90 calendar days after the Transfer Out if the Restricted Option
invests in a non-international fund, or 180 calendar days after the Transfer
Out if the Restricted Option invests in an international fund. For purposes
of this rule, we do not (i) count transfers made in connection with one of
our systematic programs, such as asset allocation and automated withdrawals
and (ii) categorize as a transfer the first transfer that you make after the
contract date, if you make that transfer within 30 calendar days after the
contract date. Even if an amount becomes restricted under the foregoing
rules, you are still free to redeem the amount from your contract at any
time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving a variable investment
option on the business day subsequent to the business day on which the
exchange request was received. Before implementing such a practice, we would
issue a separate written notice to contract owners that explains the practice
in detail. In addition, if we do implement a delayed exchange policy, we will
apply the policy on a uniform basis to all contracts in the relevant class.
- - We may impose specific restrictions on financial transactions (including
transfer requests) for certain portfolios based on the portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or
future restriction that is imposed by any portfolio available under this
contract.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you promptly of the circumstances concerning the denial.
- - We will not implement these rules in jurisdictions that have not approved
contract language authorizing us to do so, or may implement different rules
in certain jurisdictions if required by such jurisdictions. Contract owners
in jurisdictions with such limited transfer restrictions, and contract owners
who own variable life insurance or variable annuity contracts (regardless of
jurisdiction) that do not impose the above-referenced transfer restrictions,
might make more numerous and frequent transfers than contract owners who are
subject to such limitations. Because contract owners who are not subject to
the same transfer restrictions may have the same underlying mutual fund
portfolios available to them, unfavorable consequences associated with such
frequent trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues) may affect
all contract owners. Apart from jurisdiction-specific and contract
differences in transfer restrictions, we will apply these rules uniformly,
and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option and into any other
variable investment options. You can have these automatic transfers occur
monthly, quarterly, semiannually or annually. By investing amounts on a regular
basis instead of investing the total amount at one time, dollar cost averaging
may decrease the effect of market fluctuation on the investment of your purchase
payment. Of course, dollar cost averaging cannot ensure a profit or protect
against loss in declining markets.
49
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- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
Transfers will be made automatically on the schedule you choose until the
entire amount you chose to have transferred has been transferred or until you
tell us to discontinue the transfers. You can allocate subsequent purchase
payments to be transferred under this option at any time.
Your transfers will occur on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any dollar cost averaging transfers you make do not count toward the 12 free
transfers you are allowed each contract year. The dollar cost averaging feature
is available only during the contract accumulation phase and is offered without
charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having asset allocation models when deciding how to
allocate your purchase payments among the investment options. If you choose to
participate in the Asset Allocation Program, your representative will give you a
questionnaire to complete that will help determine a program that is appropriate
for you. Your asset allocation will be prepared based on your answers to the
questionnaire. You will not be charged for this service, and you are not
obligated to participate or to invest according to program recommendations.
Asset allocation is a sophisticated method of diversification which allocates
assets among classes in order to manage investment risk and enhance returns over
the long term. However, asset allocation does not guarantee a profit or protect
against a loss. You are not obligated to participate or to invest according to
the program recommendations. We do not intend to provide any personalized
investment advice in connection with these programs and you should not rely on
these programs as providing individualized investment recommendations to you.
The asset allocation programs do not guarantee better investment results. We
reserve the right to terminate or change the asset allocation programs at any
time. You should consult your representative before electing any asset
allocation program.
AUTO-REBALANCING
Once you have allocated your money among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation percentage or to a subsequent allocation percentages
you select. We will rebalance only the variable investment options that you have
designated. If you also participate in the DCA feature, then the variable
investment option from which you make the DCA transfers will not be rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur on the last calendar day
of the period you have chosen, provided that the New York Stock Exchange is open
on that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of auto-rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
SCHEDULED TRANSACTIONS
Scheduled transactions include transfers under dollar cost averaging, the asset
allocation program, auto-rebalancing, systematic withdrawals, systematic
investments, required minimum distributions, substantially equal periodic
payments under Section 72(t) of the Internal Revenue Code of 1986, as amended
(Code), and annuity payments. Scheduled transactions are processed and valued as
of the date they are scheduled, unless the scheduled day is not a business
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day. In that case, the transaction will be processed and valued on the next
business day, unless (with respect to required minimum distributions,
substantially equal periodic payments under Section 72(t) of the Code, and
annuity payments only), the next business day falls in the subsequent calendar
year, in which case the transaction will be processed and valued on the prior
business day.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds used by the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote is
required, we will mail you a proxy which is a form that you need to complete and
return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own in our own right, in the same
proportion as shares for which we receive instructions from contract owners.
This voting procedure is sometimes referred to as "mirror voting" because, as
indicated in the immediately preceding sentence, we mirror the votes that are
actually cast, rather than decide on our own how to vote. In addition, because
all the shares of a given mutual fund held within our separate account are
legally owned by us, we intend to vote all of such shares when that underlying
fund seeks a vote of its shareholders. As such, all such shares will be counted
towards whether there is a quorum at the underlying fund's shareholder meeting
and towards the ultimate outcome of the vote. We may change the way your voting
instructions are calculated if it is required or permitted by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the underlying mutual funds used by the
variable investment options. We may also cease to allow investments in existing
funds. We would not do this without the approval of the Securities and Exchange
Commission (SEC) and any necessary state insurance departments. You will be
given specific notice in advance of any substitution we intend to make.
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WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
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PAYMENT PROVISIONS
We can begin making annuity payments any time on or after the third contract
anniversary (or as required by state law if different). Annuity payments must
begin no later than the contract anniversary coinciding with or next following
the annuitant's 95th birthday (unless we agree to another date). (Under the
original version of the contract, annuity payments must begin no later than the
contract anniversary coinciding with or next following the annuitant's 90th
birthday).
The Strategic Partners Plus variable annuity contract offers an optional
Guaranteed Minimum Income Benefit, which we describe below. Your annuity options
vary depending upon whether you choose this benefit.
Depending upon the annuity option you choose, you may incur a withdrawal
charge when the income phase begins. Currently, if permitted by state law, we
deduct any applicable withdrawal charge if you choose Option 1 for a period
shorter than five years, Option 3, or certain other annuity options that we may
make available. We do not deduct a withdrawal charge if you choose Option 1 for
a period of five years or longer or Option 2. For information about withdrawal
charges, see Section 7, "What Are The Expenses Associated With The Strategic
Partners Plus Contract?" In addition, if you have purchased the Contract With
Credit, we will take back any credits that have not vested when you begin the
income phase. See "Credits," in Section 5.
PAYMENT PROVISIONS WITHOUT THE GUARANTEED MINIMUM INCOME BENEFIT
We make the income plans described below available at any time before the
annuity date. These plans are called "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that participation in the variable investment
options ends on the annuity date. If an annuity option is not selected by the
annuity date, the Life Income Annuity Option (Option 2, described below) will
automatically be selected for you unless prohibited by applicable law.
GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT BE CHANGED
AND YOU CANNOT MAKE WITHDRAWALS. IN ADDITION TO THE ANNUITY PAYMENT OPTIONS
DISCUSSED IN THIS SECTION, PLEASE NOTE THAT IF YOU CHOOSE THE OPTIONAL LIFETIME
FIVE INCOME BENEFITS, THERE ARE ADDITIONAL ANNUITY PAYMENT OPTIONS THAT ARE
ASSOCIATED WITH THAT BENEFIT. SEE SECTION 5 OF THIS PROSPECTUS FOR ADDITIONAL
DETAILS.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but not to exceed life expectancy). The annuity payments may be made
monthly, quarterly, semiannually, or annually, as you choose, for the fixed
period. If the annuitant dies during the income phase, payments will continue to
the beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump sum payment. The amount of the lump sum
payment is determined by calculating the present value of the unpaid future
payments. This is done by using the interest rate used to compute the actual
payments. The interest rate will be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
If an annuity option is not selected by the annuity date, this is the option
we will automatically select for you, unless prohibited by applicable law. If
the life income annuity option is prohibited by applicable law, then we will pay
you a lump sum in lieu of this option.
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OPTION 3
INTEREST PAYMENT OPTION
Under this option, we will credit interest on the adjusted contract value until
you request payment of all or part of the adjusted contract value. We can make
interest payments on a monthly, quarterly, semiannual, or annual basis or allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year. This option is not
available if you hold your contract in an IRA.
Under this option, all gain in the annuity will be taxable as of the annuity
date, however, you can withdraw part of or all of the contract value that we are
holding at any time.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options then offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
GUARANTEED MINIMUM INCOME BENEFIT
The Guaranteed Minimum Income Benefit (GMIB), is an optional feature that
guarantees that once the income period begins, your income payments will be no
less than the GMIB protected value applied to the GMIB guaranteed annuity
purchase rates. If you want the Guaranteed Minimum Income Benefit, you must
elect it when you make your initial purchase payment. Once elected, the
Guaranteed Minimum Income Benefit must be continued until at least the end of
the seventh contract year. If, after the seventh contract year, you decide to
stop participating in the GMIB, you may do so (if permitted by state law) but
you will not be able to reinstate it. This feature may not be available in your
state. You may not elect both GMIB and the Lifetime Five Income Benefit.
The Guaranteed Minimum Income Benefit is subject to certain restrictions
described below.
- - The annuitant must be 70 or younger in order for you to elect the Guaranteed
Minimum Income Benefit, and you must also participate in the Guaranteed
Minimum Death Benefit.
- - If you choose the Guaranteed Minimum Income Benefit, we will impose an annual
charge equal to 0.25% of the average GMIB protected value described below.
- - TO TAKE ADVANTAGE OF THE GUARANTEED MINIMUM INCOME BENEFIT, YOU MUST WAIT A
CERTAIN AMOUNT OF TIME BEFORE YOU BEGIN THE INCOME PHASE. THE LENGTH OF THAT
WAITING PERIOD DEPENDS UPON THE AGE OF THE ANNUITANT (OR, IF THERE IS A
CO-ANNUITANT AS WELL, THE AGE OF THE OLDER OF THE TWO) AS SHOWN IN THE
FOLLOWING CHART:
<Table>
<Caption>
CONTRACT ANNIVERSARY WHEN
AGE AT ISSUE GMIB BECOMES
OF CONTRACT AVAILABLE
- ------------ -------------------------
0-45 15
46 14
47 13
48 12
49 11
50 or more 10
</Table>
Once that waiting period has elapsed, you will have a 30-day period each
year, beginning on the contract anniversary, during which you may begin the
income phase with the Guaranteed Minimum Income Benefit by submitting the
necessary forms in good order to the Prudential Annuity Service Center.
EFFECT OF WITHDRAWALS
The protected value will equal the "roll-up value," which is the total of all
invested purchase payments compounded daily at an effective annual rate of 5%,
subject to a cap of 200% of all invested purchase payments. Both the roll-up and
the cap are reduced proportionally by withdrawals. When the roll-up" value no
longer increases, your protected value will continue to increase by any
subsequent invested purchase payments, and reduce by the effect of any
withdrawals.
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PAYOUT AMOUNT
The Guaranteed Minimum Income Benefit payout amount is based on the age and sex
(where applicable) of the annuitant (and, if there is one, the co-annuitant).
After we first deduct a charge for any applicable premium taxes that we are
required to pay, the payout amount will equal the greater of:
1) the GMIB protected value as of the date you exercise the GMIB payout option,
applied to the GMIB guaranteed annuity purchase rates (which are generally
less favorable than the annuity purchase rates for annuity payments not
involving GMIB) and based on the annuity payout option as described below, or
2) the adjusted contract value--that is, the value of the contract minus any
charge we impose for premium taxes and withdrawal charges--as of the date you
exercise the GMIB payout option applied to the current annuity purchase rates
then in use.
GMIB ANNUITY PAYOUT OPTIONS
We currently offer two Guaranteed Minimum Income Benefit annuity payout options.
Each option involves payment for at least a "period certain." In calculating the
amount of the payments under the GMIB, we apply certain assumed interest rates,
equal to 3% annually for a waiting period of 10-14 years, and 3.5% annually for
waiting periods of 15 years or longer.
GMIB OPTION 1
SINGLE LIFE PAYOUT OPTION
We will make monthly payments for as long as the annuitant lives, with payments
for a period certain. We will stop making payments after the later of the death
of the annuitant or the end of the period certain.
GMIB OPTION 2
JOINT LIFE PAYOUT OPTION
In the case of an annuitant and co-annuitant, we will make monthly payments for
the joint lifetime of the annuitant and co-annuitant, with payments for a period
certain. If the co-annuitant dies first, we will continue to make payments until
the later of the death of the annuitant and the end of the period certain. If
the annuitant dies first, we will continue to make payments until the later of
the death of the co-annuitant and the end of the period certain, but if the
period certain ends first, we will reduce the amount of each payment to 50% of
the original amount.
You have no right to withdraw amounts early under either GMIB payout option.
We may make other payout frequencies available, such as quarterly, semi-annually
or annually.
The "period certain" for the Guaranteed Minimum Income Benefit depends upon
the annuitant's age on the date you exercise the GMIB payout option:
<Table>
<Caption>
AGE PERIOD CERTAIN
- ---------- --------------
80 or less 10 years
81 9 years
82 8 years
83 7 years
84 6 years
85 or more 5 years
</Table>
Because we do not impose a new waiting period for each subsequent purchase
payment, if you choose the Guaranteed Minimum Income Benefit, we reserve the
right to limit subsequent purchase payments if we discover that by the timing of
your purchase payments, your GMIB protected value is increasing in ways we did
not intend. In determining whether to limit purchase payments, we will look at
purchase payments which are disproportionately larger than your initial purchase
payment and other actions that may artificially increase the GMIB protected
value. Certain state laws may prevent us from limiting your subsequent purchase
payments. You must exercise one of the GMIB payout options described above no
later than 30 days after the contract anniversary coinciding with or next
following the annuitant's attainment of age 90 (with respect to the original
version of the contract) and age 95 (with respect to the later version of the
contract).
You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event that your contract value declines
significantly due to negative investment performance. If your contract value is
not significantly affected by negative investment performance, it is unlikely
that the purchase of GMIB will result in your receiving larger annuity payments
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than if you had not purchased GMIB. This is because the assumptions that we use
in computing the GMIB, such as the annuity purchase rates, (which include
assumptions as to age-setbacks and assumed interest rates), are more
conservative than the assumptions that we use in computing non-GMIB annuity
payout options. Therefore, you may generate higher income payments if you were
to annuitize a lower contract value at the current annuity purchase rates, than
if you were to annuitize under the GMIB with a higher GMIB protected value than
your contract value but at the annuity purchase rates guaranteed under the GMIB.
HOW WE DETERMINE ANNUITY PAYMENTS
Generally speaking, the annuity phase of the contract involves our distributing
to you in increments the value that you have accumulated. We make these
incremental payments either over a specified time period (e.g., 15 years) (fixed
period annuities) or for the duration of the life of the annuitant (and possibly
co-annuitant) (life annuities). There are certain assumptions that are common to
both fixed period annuities and life annuities. In each type of annuity, we
assume that the value you apply at the outset toward your annuity payments earns
interest throughout the payout period. For annuity options within the GMIB, this
interest rate ranges from 3% to 3.5%. For non-GMIB annuity options, the
guaranteed minimum rate is 3%. The GMIB guaranteed annuity purchase rates in
your contract depict the minimum amounts we will pay (per $1000 of adjusted
contract value). If our current annuity purchase rates on the annuity date are
more favorable to you than the guaranteed rates, we will make payments based on
those more favorable rates.
Other assumptions that we use for life annuities and fixed period annuities
differ, as detailed in the following overview:
FIXED PERIOD ANNUITIES
Currently, we offer fixed period annuities only under the non-GMIB annuity
options. Generally speaking, in determining the amount of each annuity payment
under a fixed period annuity, we start with the adjusted contract value, add
interest assumed to be earned over the fixed period, and divide the sum by the
number of payments you have requested. The life expectancy of the annuitant and
co-annuitant are relevant to this calculation only in that we will not allow you
to select a fixed period that exceeds life expectancy.
LIFE ANNUITIES
There are more variables that affect our calculation of life annuity payments.
Most importantly, we make several assumptions about the annuitant's or co-
annuitant's life expectancy, including the following:
- - The Annuity 2000 Mortality Table is the starting point for our life
expectancy assumptions. This table anticipates longevity of an insured
population based on historical experience and reflecting anticipated
experience for the year 2000.
GUARANTEED AND GMIB ANNUITY PAYMENTS
Because life expectancy has lengthened over the past few decades, and likely
will increase in the future, our life annuity calculations anticipate these
developments. We do this largely by making a hypothetical reduction in the age
of the annuitant (or co-annuitant), in lieu of using the annuitant's (or
co-annuitant's) actual age, in calculating the payment amounts. By using such a
reduced age, we base our calculations on a younger person, who generally would
live longer and therefore draw life annuity payments over a longer time period.
Given the longer pay-out period, the payments made to the younger person would
be less than those made to an older person. We make two such age adjustments:
1. First, for all annuities, we start with the age of the annuitant (or
co-annuitant) on his/her most recent birthday and reduce that age by two
years, with respect to guaranteed payments.
2. Second, for life annuities under GMIB as well as guaranteed payments under
life annuities not involving GMIB, we make a further age reduction according
to the table in your contract entitled "Translation of Adjusted Age." As
indicated in the table, the further into the future the first annuity payment
is, the longer we expect the person receiving those payments to live, and the
more we reduce the annuitant's (or co-annuitant's) age.
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CURRENT ANNUITY PAYMENTS
Immediately above, we have referenced how we determine annuity payments based on
"guaranteed" annuity purchase rates. By "guaranteed" annuity purchase rates, we
mean the minimum annuity purchase rates that are set forth in your annuity
contract and thus contractually guaranteed by us. "Current" annuity purchase
rates, in contrast, refer to the annuity purchase rates that we are applying to
contracts that are entering the annuity phase at a given point in time. These
current annuity purchase rates vary from period to period, depending on changes
in interest rates and other factors. We do not guarantee any particular level of
current annuity purchase rates. When calculating current annuity purchase rates,
we use the actual age of the annuitant (or co-annuitant), rather than any
reduced age.
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4:
WHAT IS THE
DEATH BENEFIT?
- --------------------------------------------------------------------------------
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner dies. However, if the contract is jointly owned, the owner must name
the joint owner and the joint owner must name the owner as the beneficiary. For
entity-owned contracts, we pay a death benefit upon the death of the annuitant.
CALCULATION OF THE DEATH BENEFIT
If the sole owner dies during the accumulation phase, we will, upon receiving
appropriate proof of death and any other needed documentation in good order
(proof of death), pay a death benefit to the beneficiary designated by the
owner. If the owner and joint owner are spouses, we will pay this death benefit
upon the death of the last surviving spouse who continues the contract as sole
owner.
Upon receiving appropriate proof of death, the beneficiary will receive the
greater of the following:
1) The current contract value (as of the time we receive proof of death in good
order). If you have purchased the Contract With Credit, we will first deduct
any credit corresponding to a purchase payment made later than one year prior
to death.
2) Either the base death benefit, which equals the total purchase payments you
have made less any withdrawals, or, if you have chosen a Guaranteed Minimum
Death Benefit (GMDB), the GMDB protected value.
GUARANTEED MINIMUM DEATH BENEFIT
Under the newer version of the contracts, you may elect the base death benefit
if you are 85 or younger. Under both versions of the contracts described in this
prospectus, you may elect a Guaranteed Minimum Death Benefit if you are 75 or
younger.
The Guaranteed Minimum Death Benefit provides for the option to receive an
enhanced death benefit upon the death of the sole or last surviving owner during
the accumulation phase.
The GMDB protected value option can be equal to the:
- GMDB roll-up
- GMDB step-up, or
- Greater of the GMDB roll-up and the
GMDB step-up.
The GMDB protected value is calculated daily.
GMDB ROLL-UP
The GMDB roll-up value is equal to the invested purchase payments, increased
daily at an effective annual rate of 5% starting on the date that each invested
purchase payment is made. Both the GMDB roll-up and the cap value will increase
by subsequent invested purchase payments and reduce proportionally by
withdrawals.
GMDB STEP-UP
The step-up value equals the highest value of the contract on any contract
anniversary date--that is, on each contract anniversary, the new step-up value
becomes the higher of the previous step-up value and the current contract value.
Between anniversary dates, the step-up value is only increased by additional
invested purchase payments and reduced proportionally by withdrawals.
If an owner who has purchased a Contract With Credit makes any purchase
payment later than one year prior to death, we will adjust the death benefit to
take back any non-vested credit corresponding to that purchase payment.
GREATER OF STEP-UP AND ROLL-UP GUARANTEED MINIMUM DEATH BENEFIT
Under this option, the protected value is equal to the greater of the step-up
value and the roll-up value.
If you have chosen a Guaranteed Minimum Death Benefit option and death occurs
on or after age 80, the beneficiary will receive the greater of: 1) the current
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PART II
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contract value as of the date that proof of death is received, and 2) the
protected value of that death benefit as of age 80, reduced proportionally by
any withdrawals and increased by subsequent purchase payments. For this purpose,
an owner is deemed to reach age 80 on the contract anniversary on or following
the owner's actual 80th birthday (or if there is a joint owner, the contract
anniversary on or following the older owner's actual 80th birthday).
Here is an example of a proportional reduction:
The current contract value is $100,000 and the protected value is $80,000.
The owner makes a withdrawal that reduces the contract value by 25% (including
the effect of any withdrawal charges). The new protected value is $60,000, or
75% of what it was before the withdrawal.
Special rules apply if the beneficiary is the spouse of the owner, and the
contract does not have a joint owner. In that case, upon the death of the owner,
the spouse will have the choice of the following:
- - If the sole beneficiary under the contract is the owner's spouse, and the
other requirements of the Spousal Continuance Benefit are met, then the
contract can continue, and the spouse will become the new owner of the
contract; or
- - The spouse can receive the death benefit. If the spouse does wish to receive
the death benefit, he or she must make that choice within the first 60 days
following our receipt of proof of death. Otherwise, the contract will
continue with the spouse as owner.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the contract
value on the date the change of ownership occurs, and for purposes of computing
the future death benefit, we will treat that contract value as a purchase
payment occurring on that date.
Depending on applicable state law, some death benefit options may not be
available or may be subject to certain restrictions under your contract.
SPECIAL RULES IF JOINT OWNERS
If the contract has an owner and a joint owner and they are spouses at the time
that one dies, the surviving spouse has the choice of the following:
- - The contract can continue, with the surviving spouse as the sole owner of the
contract; or
- - The surviving spouse can receive the adjusted contract value and the contract
will end. If the surviving spouse does wish to receive the adjusted contract
value, he or she must make that choice within the first 60 days following our
receipt of proof of death. Otherwise, the contract will continue with the
surviving spouse as the sole owner.
If the contract has an owner and a joint owner, and they are not spouses at
the time that one dies, the contract will not continue. Instead, the beneficiary
will receive the adjusted contract value.
Joint ownership may not be allowed in your state.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
Choice 1. Lump sum payment of the death benefit.
If the beneficiary does not choose a payout option within sixty days, the
beneficiary will receive this payout option.
Choice 2. The payment of the entire death benefit within a period of 5 years
from the date of death of the second-to-die of the owner or joint owner.
The entire death benefit will include any increases or losses resulting
from the performance of the variable or fixed interest rate options during
this period. During this period the beneficiary may: reallocate the contract
value among the variable or fixed interest rate options; name a beneficiary
to receive any remaining death benefit in the event of the beneficiary's
death; and make withdrawals from the contract value, in which case, any such
withdrawals will not be subject to any withdrawal charges. However, the
beneficiary may not make any purchase payments to the contract.
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During this 5 year period, we will continue to deduct from the death
benefit proceeds the charges and costs that were associated with the features
and benefits of the contract. Some of these features and benefits may not be
available to the beneficiary, such as the Guaranteed Minimum Income Benefit.
Choice 3. Payment of the death benefit under an annuity or annuity settlement
option over the lifetime of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary with distribution beginning
within one year of the date of death of the owner or joint owner.
The tax consequences to the beneficiary vary among the three death benefit
payout options. See Section 9, "What Are The Tax Considerations Associated With
The Strategic Partners Plus Contract?"
EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit is an optional, supplemental death benefit that
provides a benefit payable upon the death of the sole or last surviving owner
during the accumulation phase. Any Earnings Appreciator Benefit payment we make
will be in addition to any other death benefit payment we make under the
contract. This feature may not be available in your state. You must be 75 or
younger in order to elect the Earnings Appreciator Benefit.
An Earnings Appreciator Benefit is calculated for each purchase payment you
make. Your total Earnings Appreciator Benefit is the sum of the Earnings
Appreciator Benefits for all of your purchase payments.
If the owner (or older of owner and joint owner if there is a joint owner) is
younger than age 66 on the date the application is signed, the Earnings
Appreciator Benefit for each purchase payment is 45% of the lesser of:
- The adjusted purchase payment (which means the invested purchase payment
adjusted for partial withdrawals); or
- Earnings attributed to that adjusted purchase payment.
If the owner (or older of owner and joint owner if there is a joint owner) is
age 66 or older (and younger than age 76) on the date the application is signed,
the Earnings Appreciator Benefit for each purchase payment is 25% of the lesser
of:
- The adjusted purchase payment (which means the invested purchase payment
adjusted for partial withdrawals); or
- Earnings attributed to that adjusted purchase payment.
The following rules apply to the calculation of the benefit:
- Each "adjusted purchase payment" is the invested purchase payment reduced
pro-rata by any subsequent withdrawals. Reduction on a pro-rata basis
means that we calculate the percentage of your current contract value
being withdrawn and reduce each adjusted purchase payment made prior to
the withdrawal by that percentage. For example, if your contract value is
$40,000 and you withdraw $10,000, you have withdrawn 25% of your contract
value. If you have two adjusted purchase payments prior to the withdrawal
($10,000 and $20,000), each of those adjusted purchase payments would be
reduced by 25% (to $7,500 and $15,000). The amount of earnings allocated
to each adjusted purchase payment is also reduced by the same percentage.
These calculations, therefore, do not depend on the actual investment
option from which the withdrawal is made, and they are different
calculations than those that apply for other reasons under the contract,
such as for the withdrawal charge or for tax purposes.
- Earnings are periodically allocated to each adjusted purchase payment on a
pro-rata basis. We calculate the amount of earnings since the last
earnings allocation and we allocate those earnings proportionately among
the adjusted purchase payments (based on the amount of each adjusted
purchase payment plus the earnings previously allocated to that adjusted
purchase payment). For example, if you have two adjusted purchase
payments -- one with an adjusted purchase payment and allocated earnings
of $30,000 and the other with an adjusted
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purchase payment and allocated earnings of $20,000 (therefore 60% and 40%
of the total respectively) -- and your contract has earned $5,000 since
the last calculation, 60% of the earnings ($3,000) will be allocated to
the first adjusted purchase payment and 40% of the earnings ($2,000) will
be allocated to the second adjusted purchase payment. This calculation,
therefore, does not apply different rates of return to different purchase
payments based on the investment options in which the particular purchase
payment was invested. When allocating earnings at the time of a death
benefit payment, we will first deduct from earnings the amount of any
charges deducted and credit recaptured from your contract value at that
time.
- Under the Spousal Continuance Benefit, we will not allow the surviving
spouse to continue the Earnings Appreciator Benefit (or bear the charge
associated with that benefit) if that owner is age 76 or older when
Spousal Continuance is activated. If the surviving spouse does continue
the Earnings Appreciator Benefit, then we will calculate the benefit
payable upon the surviving spouse's death in the same manner as discussed
above, except that we will treat the contract value (as adjusted to
reflect the Spousal Continuance Benefit) as the first adjusted purchase
payment against which the Earnings Appreciator percentages are applied.
See Appendix B for examples of the benefit calculations.
TERMINATING THE EARNINGS APPRECIATOR BENEFIT
The Earnings Appreciator Benefit will terminate on the earliest of:
- the date you make a total withdrawal from the contract,
- the date a death benefit is payable if the contract is not continued by
the surviving spouse under the Spousal Continuance Benefit,
- the date the contract terminates, or
- the date you annuitize the contract.
Upon termination of the Earnings Appreciator Benefit, we cease imposing the
associated charge.
SPOUSAL CONTINUANCE BENEFIT
This is a benefit that, depending on the contract options chosen, can give the
owner's surviving spouse a stepped-up account value upon the owner's death. Any
person who buys a contract and meets our eligibility criteria for this benefit
receives the benefit without charge. The benefit must be selected within 60 days
of the owner's death, and may not be available under all contracts. The benefit
described in this section applies only to the later version of this contract.
Under the original version of this contract, no stepped-up contract value is
available to a surviving spouse who continues the contract.
We offer the Spousal Continuance Benefit only if each of the following
conditions is present on the date we receive proof of the owner's death: 1)
there is only one owner of the contract and that owner is the sole annuitant, 2)
there is only one beneficiary, 3) the beneficiary is the owner's spouse, 4) the
surviving spouse is not older than 95 on that date, and 5) the surviving spouse
becomes the new owner and annuitant. The contract may not be continued upon the
death of a spouse who had assumed ownership of the contract through the exercise
of the Spousal Continuance Benefit.
Under the Spousal Continuance Benefit, we impose no withdrawal charge at the
time of the owner's death, and we will not impose any withdrawal charges on the
surviving spouse with respect to the withdrawal of purchase payments made by the
owner prior to the activation of the benefit. However, we will continue to
impose withdrawal charges with respect to purchase payments made by the
surviving spouse as new owner.
IF YOU HAVE NOT SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE (I.E.,
YOU HAVE THE BASE DEATH BENEFIT), then upon the activation of the Spousal
Continuance Benefit, we will adjust the contract value, as of the date of our
receipt of proof of death, to equal
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the greater of the following: 1) the contract value as of the date of our
receipt of proof of death or 2) the sum of all invested purchase payments
(adjusted for withdrawals) made prior to the date on which we receive proof of
the owner's death. We will add the amount of any Earnings Appreciator Benefit
that you have selected to each of the amounts specified immediately above.
IF YOU HAVE SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE WITH THE
ROLL-UP OPTION, then upon the activation of the Spousal Continuance Benefit, we
will adjust the contract value, as of the date of our receipt of proof of death,
to equal the greater of the following: 1) the contract value as of the date of
our receipt of proof of death, or 2) the roll-up value. We will add the amount
of any Earnings Appreciator Benefit that you have selected to each of the
amounts specified immediately above. When the Spousal Continuance Benefit is
activated by a surviving spouse who is younger than 80, we will adjust the
roll-up value under the surviving spouse's contract to equal the contract value
(adjusted, as described immediately above). In addition, in that case we will
reset the surviving spouse's roll-up cap to equal 200% of the contract value
(adjusted, as described immediately above). We make no adjustment to the roll-up
value or the roll-up cap if the surviving spouse is 80 or older, except to
account for additional purchase payments and to reduce the roll-up value
proportionately by withdrawals. If the surviving spouse was younger than 80 at
the owner's death, then we will continue to increase the roll-up value annually
until the earlier of either (i) the surviving spouse's attainment of age 80 or
(ii) the attainment of the roll-up cap (i.e., the reset roll-up cap discussed
above). Once the roll-up value ceases to increase, we thereafter will adjust the
roll-up value only to account for subsequent purchase payments and to diminish
it proportionally by withdrawals.
IF YOU HAVE SELECTED THE GUARANTEED MINIMUM DEATH BENEFIT FEATURE WITH THE
STEP-UP GMDB OPTION, then upon the activation of the Spousal Continuance
Benefit, we will adjust the contract value, as of the date of our receipt of
proof of death, to equal the greater of the following: 1) the contract value as
of the date of our receipt of proof of death, or 2) the step-up value. We will
add the amount of any Earnings Appreciator Benefit that you have selected to
each of the amounts specified immediately above. When the Spousal Continuance
Benefit is activated by a surviving spouse younger than 80, we will adjust the
step-up value to equal the contract value (adjusted, as described immediately
above). We make no such adjustment if the surviving spouse is 80 or older. If
the surviving spouse was younger than 80 at the owner's death, then we will
continue to adjust the step-up value annually until the surviving spouse's
attainment of age 80. After the surviving spouse attains age 80, we will
continue to adjust the step-up value only to account for additional purchase
payments and to reduce the step-up value proportionally by withdrawals.
IF YOU HAVE SELECTED THE GREATER OF ROLL-UP AND STEP-UP AS YOUR GMDB OPTION,
then we will calculate those values upon activation of the Spousal Continuance
Benefit in accordance with the procedures set out in the immediately preceding
paragraphs and in your contract.
After activation of the Spousal Continuance Benefit, we will calculate the
Earnings Appreciator Benefit in the manner discussed under "Earnings Appreciator
Death Benefit". We do not allow the surviving spouse to retain the Guaranteed
Minimum Income Benefit under the Spousal Continuance Benefit (or bear the charge
associated with that benefit).
In the preceding discussion of the Spousal Continuance Benefit, we intend
references to attainment of age 80 to refer to the contract anniversary on or
following the actual 80th birthday of the surviving spouse.
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LIFETIME FIVE INCOME BENEFIT
The Lifetime Five Income Benefit (Lifetime Five) is an optional feature that
guarantees your ability to withdraw amounts equal to a percentage of an initial
principal value (called the "Protected Withdrawal Value"), regardless of the
impact of market performance on your contract value, subject to our rules
regarding the timing and amount of withdrawals. There are two options -- one is
designed to provide an annual withdrawal amount for life (the "Life Income
Benefit") and the other is designed to provide a greater annual withdrawal
amount (than the first option) as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the Withdrawal Benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the annuity has a contract value and Lifetime Five is in effect. Certain
benefits under Lifetime Five may remain in effect even if the contract value is
zero. The option may be appropriate if you intend to make periodic withdrawals
from your contract and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals -- the guarantees are not lost if you withdraw less than the maximum
allowable amount each year. Lifetime Five is only being offered in those
jurisdictions where we have received regulatory approval and will be offered
subsequently in other jurisdictions when we receive regulatory approval in those
jurisdictions. Certain terms and conditions may differ between jurisdictions
once approved.
Lifetime Five is subject to certain restrictions described below.
- - Currently, Lifetime Five can only be elected once each contract year, and
only where the annuitant and the contract owner are the same person or, if
the contract owner is an entity, where there is only one annuitant. We
reserve the right to limit the election frequency in the future. Before
making any such change to the election frequency, we will provide prior
notice to contact owners who have an effective Lifetime Five Income Benefit.
- - The annuitant must be at least 45 years old when Lifetime Five is elected.
- - Lifetime Five is not available if you elect the Guaranteed Minimum Income
Benefit.
- - Owners electing this benefit prior to December 5, 2005, were required to
allocate contract value to one or more of the following asset allocation
portfolios of the Prudential Series Fund: SP Balanced Asset Allocation
Portfolio, SP Conservative Asset Allocation Portfolio, and SP Growth Asset
Allocation Portfolio. Owners electing this benefit on or after December 5,
2005 must allocate contract value to one or more of the following asset
allocation portfolios of American Skandia Trust: AST Capital Growth Asset
Allocation Portfolio, AST Balanced Asset Allocation Portfolio, AST
Conservative Asset Allocation Portfolio, and AST Preservation Asset
Allocation Portfolio or to the AST Advanced Strategies Portfolio, AST First
Trust Balanced Target Portfolio, or AST First Trust Capital Appreciation
Target Portfolio.
PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the contract following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
contract value on the date you elect Lifetime Five growing at 5% per year from
the date of your election, plus any subsequent purchase payments growing at 5%
per year from the application of the purchase payment to your contract, until
the earlier of the date of your first withdrawal or the 10th anniversary of the
benefit effective date, (B) the contract value as of the date of the first
withdrawal from your contract, prior to the withdrawal, and (C) the highest
contract value on each contract anniversary prior to the first withdrawal or on
the first 10 contract anniversaries after the benefit effective date if earlier
than the date of your first withdrawal.
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With respect to (A) and (C) above, each value is increased by the amount of any
subsequent purchase payments. In determining Protected Withdrawal Value, we
include, as part of purchase payments, the amount of any credits granted with
respect to such purchase payments for the Contract With Credit.
- - If you elect Lifetime Five at the time you purchase your contract, the
contract value will be your initial purchase payment.
- - For existing contract owners who are electing the Lifetime Five Benefit, the
contract value on the date of the contract owner's election of Lifetime Five
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional purchase payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each additional
purchase payment.
You may elect to step-up your Protected Withdrawal Value if, due to positive
market performance, your contract value is greater than the Protected Withdrawal
Value. If you elected Lifetime Five prior to March 20, 2006 and that original
election remains in effect, then you are eligible to step-up the Protected
Withdrawal Value on or after the 5th anniversary of the first withdrawal under
Lifetime Five. Under contracts with Lifetime Five elected prior to March 20,
2006, the Protected Withdrawal Value can be stepped up again on or after the 5th
anniversary following the preceding step-up. If you elected Lifetime Five on or
after March 20, 2006, then you are eligible to step-up the Protected Withdrawal
Value on or after the 3rd anniversary of the first withdrawal under Lifetime
Five. Under contracts with Lifetime Five elected on or after March 20, 2006, the
Protected Withdrawal Value can be stepped up again on or after the 3rd
anniversary following the preceding step-up. In either scenario (i.e., elections
before or after March 20, 2006) if you elect to step-up the Protected Withdrawal
Value, and on the date you elect to step-up, the charges under Lifetime Five
have changed for new purchasers, you may be subject to the new charge going
forward.
An optional automatic step-up ("Auto Step-Up") feature is available for this
benefit. This feature may be elected at the time the benefit is elected or at
any time while the benefit is in force. If you elect this feature, the first
Auto Step-Up opportunity will occur on the 3rd contract anniversary (5th
contract anniversary if the benefit was elected prior to March 20, 2006)
following the later of the first withdrawal under the benefit or the prior
step-up. At this time, your Protected Withdrawal Value will be stepped-up only
if 5% of the contract value exceeds the Annual Income Amount by 5% or more. If
5% of the contract value does not exceed the Annual Income Amount by 5% or more,
then an Auto Step-Up opportunity will occur on each successive contract
anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up
opportunity will occur on the 3rd (5th if the benefit was elected prior to March
20, 2006) contract anniversary following the most recent step-up. If, on the
date that we implement an Auto Step-Up to your Protected Withdrawal Value, the
charge for Lifetime Five has changed for new purchasers, you may be subject to
the new charge at the time of such step-up.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current contract value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your contract value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount (as described below) are less than they would be if we
did not reflect the step-up in Protected Withdrawal Value, then we will increase
these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
"dollar-for-dollar" basis up to 7% per contract year of the Protected Withdrawal
Value and on the greater of a "dollar-for-dollar" basis or a pro rata basis for
withdrawals in a contract year in
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excess of that amount until the Protected Withdrawal Value is reduced to zero.
At that point, the Annual Withdrawal Amount will be zero until such time (if
any) as the contract reflects a Protected Withdrawal Value (for example, due to
a step-up or additional purchase payments being made into the contract).
ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals in a
contract year are less than or equal to the Annual Income Amount, they will not
reduce your Annual Income Amount in subsequent contract years. If your
cumulative withdrawals are in excess of the Annual Income Amount (Excess
Income), your Annual Income Amount in subsequent years will be reduced (except
with regard to required minimum distributions) by the result of the ratio of the
Excess Income to the contract value immediately prior to such withdrawal (see
examples of this calculation below). Reductions include the actual amount of the
withdrawal, including any withdrawal charges that may apply. A withdrawal can be
considered Excess Income under the Life Income Benefit even though it does not
exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect
a step-up, your Annual Income Amount increases to equal 5% of your contract
value after the step-up if such amount is greater than your Annual Income
Amount. Your Annual Income Amount also increases if you make additional purchase
payments. The amount of the increase is equal to 5% of any additional purchase
payments. Any increase will be added to your Annual Income Amount beginning on
the day that the step-up is effective or the purchase payment is made. A
determination of whether you have exceeded your Annual Income Amount is made at
the time of each withdrawal; therefore, a subsequent increase in the Annual
Income Amount will not offset the effect of a withdrawal that exceeded the
Annual Income Amount at the time the withdrawal was made.
ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under Lifetime Five, if your cumulative withdrawals each
contract year are less than or equal to the Annual Withdrawal Amount, your
Protected Withdrawal Value will be reduced on a "dollar-for-dollar" basis. If
your cumulative withdrawals are in excess of the Annual Withdrawal Amount
(Excess Withdrawal), your Annual Withdrawal Amount will be reduced (except with
regard to required minimum distributions) by the result of the ratio of the
Excess Withdrawal to the contract value immediately prior to such withdrawal
(see the examples of this calculation below). Reductions include the actual
amount of the withdrawal, including any withdrawal charges that may apply. When
you elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
contract value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional purchase payments. The amount of the increase is equal to 7% of any
additional purchase payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
Lifetime Five does not affect your ability to make withdrawals under your
contract or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each contract year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any contract year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
contract years.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income
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Benefit in any contract year, you cannot carry-over the unused portion of the
Annual Income Amount to subsequent contract years.
However, because the Protected Withdrawal Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused Annual
Withdrawal Amount or Annual Income Amount may extend the period of time until
the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and
the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the contract date and the effective date of
Lifetime Five are February 1, 2005; 2.) an initial purchase payment of $250,000;
3.) the contract value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the contract value is equal to $263,000;
and 5.) the contract value on February 1, 2010 is equal to $280,000.
The initial Protected Withdrawal Value is calculated as the greatest of (a),
(b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005 until
March 1, 2006 (393 days) = $250,000 X 1.05(393/365) = $263,484.33
(b) Contract value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Contract value on February 1, 2006 (the first contract anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$10,000 = $8,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $13,250 - $10,000
= $3,250
- - Annual Income Amount for future contract years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
a) If $15,000 was withdrawn (more than the Annual Income Amount but less than
the Annual Withdrawal Amount) on March 1, 2006, then the following values
would result:
- - Remaining Annual Withdrawal Amount for current contract year = $18,550 -
$15,000 = $3,550
- - Annual Withdrawal Amount for future contract years remains at $18,550
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250
= $93
- - Annual Income Amount for future contract years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
b) If $25,000 was withdrawn (more than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current contract year = $0
- - Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future contract years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/contract value
before Excess Withdrawal
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x Annual Withdrawal Amount = $6,450/($263,000 - $18,550) X $18,550 = $489
- - Annual Withdrawal Amount for future contract years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current contract year = $0
- - Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future contract years.
- - Reduction to Annual Income Amount = Excess Income/contract value before
Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250
= $623
- - Annual Income Amount for future contract years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater of
a dollar-for-dollar reduction or a proportional reduction.
- - Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal/contract value before Excess
Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X
$246,450 = $6,503
- - Protected Withdrawal Value = $246,450 - max [$6,450, $6,503] = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 3 years, the Protected Withdrawal Value on February 1,
2010 would be reduced to $225,250 [$265,000 - ($13,250 X 3)]. If a step-up is
elected on February 1, 2010, then the following values would result:
- - Protected Withdrawal Value = contract value on February 1, 2010 = $280,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value is
5% of $280,000, which is $14,000. Therefore, the Annual Income Amount is
increased to $14,000.
If the step-up request on February 1, 2010 was due to the election of the
auto step-up feature, we would first check to see if an auto step-up should
occur by checking to see if 5% of the Contract Value exceeds the Annual Income
Amount by 5% or more. 5% of the Contract Value is equal to 5% of $280,000, which
is $14,000. 5% of the Annual Income Amount ($13,250) is $662.50, which added to
the Annual Income Amount is $13,912.50. Since 5% of the Contract Value is
greater than $13,912.50, the step-up would still occur in this scenario, and all
of the values would be increased as indicated above.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value. Current
Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $280,000, which is $19,600. Therefore, the Annual
Withdrawal Amount is increased to $19,600.
BENEFITS UNDER LIFETIME FIVE
- - If your contract value is equal to zero, and the cumulative withdrawals in
the current contract year are greater than the Annual Withdrawal Amount,
Lifetime Five will terminate. To the extent that your contract value was
reduced to zero as a result of cumulative withdrawals that are equal to or
less than the Annual Income Amount and amounts are still payable under both
the Life Income Benefit and the Withdrawal Benefit, you will be given the
choice of receiving the payments under the Life Income Benefit or under the
Withdrawal Benefit. Once you make this election we will make an additional
payment for that contract year equal to either the remaining Annual Income
Amount or Annual Withdrawal Amount for the contract year, if any, depending
on the option you choose. In subsequent contract years we make payments that
equal either the Annual Income Amount or the Annual Withdrawal Amount. You
will not be able to change the option after your election and no further
purchase payments will be accepted under your contract. If
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you do not make an election, we will pay you annually under the Life Income
Benefit. To the extent that cumulative withdrawals in the current contract
year that reduced your contract value to zero are more than the Annual Income
Amount but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced your
contract value to zero, we will make an additional payment to equal any
remaining Annual Withdrawal Amount and make payments equal to the Annual
Withdrawal Amount in each subsequent year (until the Protected Withdrawal
Value is depleted). Once your contract value equals zero no further purchase
payments will be accepted under your contract.
- - If annuity payments are to begin under the terms of your contract or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent contract years or any remaining Protected Withdrawal
Value, you can elect one of the following three options:
1. apply your contract value to any annuity option available;
2. request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the annuitant's death; or
3. request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each year
such annuity payments will equal the Annual Withdrawal Amount or the
remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at the Prudential
Annuity Service Center.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with five
payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your contract. The amount that
will be applied to provide such annuity payments will be the greater of:
1. the present value of future Annual Income Amount payments. Such present
value will be calculated using the greater of the single life fixed
annuity rates then currently available or the single life fixed annuity
rates guaranteed in your contract; and
2. the contract value.
If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as
if you made your first withdrawal on the date the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under Lifetime Five are subject to all of the terms and
conditions of the contract, including any withdrawal charges.
- - Withdrawals made while Lifetime Five is in effect will be treated, for tax
purposes, in the same way as any other withdrawals under the contract.
Lifetime Five does not directly affect the contract value or surrender value,
but any withdrawal will decrease the contract value by the amount of the
withdrawal (plus any applicable withdrawal charges). If you surrender your
contract, you will receive the current contract value, not the Protected
Withdrawal Value.
- - You can make withdrawals from your contract while your contract value is
greater than zero without purchasing Lifetime Five. Lifetime Five provides a
guarantee that if your contract value declines due to market performance, you
will be able to receive your Protected Withdrawal Value or Annual Income
Amount in the form of periodic benefit payments.
ELECTION OF LIFETIME FIVE
Lifetime Five can be elected only after the contract date. Elections of Lifetime
Five are subject to our eligibility rules and restrictions. The contract owner's
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contract value as of the date of election will be used as the basis to calculate
the initial Protected Withdrawal Value, the initial Annual Withdrawal Amount,
and the initial Annual Income Amount.
TERMINATION OF LIFETIME FIVE
Lifetime Five terminates automatically when your Protected Withdrawal Value and
Annual Income Amount reach zero. You may terminate Lifetime Five at any time by
notifying us. If you terminate Lifetime Five, any guarantee provided by the
benefit will terminate as of the date the termination is effective.
Lifetime Five terminates:
- - upon your surrender of the contract,
- - upon the death of the annuitant (but your surviving spouse may elect a new
Lifetime Five benefit if your spouse elects the spousal continuance option
and your spouse would then be eligible to elect the benefit as if he/she were
a new purchaser),
- - upon a change in ownership of the contract that changes the tax
identification number of the contract owner, or
- - upon your election to begin receiving annuity payments.
We cease imposing the charge for Lifetime Five upon the earliest to occur of
(i) your election to terminate the benefit, (ii) our receipt of appropriate
proof of the death of the owner (or annuitant, for entity owned contracts),
(iii) the annuity date, (iv) automatic termination of the benefit due to an
impermissible change of owner or annuitant, or (v) a withdrawal that causes the
benefit to terminate.
While you may terminate Lifetime Five at any time, we may not terminate the
benefit other than in the circumstances listed above. However, we may stop
offering Lifetime Five for new elections or re-elections at any time in the
future.
Currently, if you terminate Lifetime Five, you will only be permitted to
re-elect the benefit on any anniversary of the contract date that is at least 90
calendar days from the date the benefit was last terminated.
If you elected Lifetime Five at the time you purchased your contract and
prior to March 20, 2006, and you terminate Lifetime Five, there will be no
waiting period before you can re-elect the benefit. However, once you choose to
re-elect/elect, the waiting period described above will apply to subsequent
re-elections. If you elected Lifetime Five after the time you purchased your
contract, but prior to March 20, 2006, and you terminate Lifetime Five, you must
wait until the contract anniversary following your cancellation before you can
re-elect the benefit. Once you choose to re-elect/elect, the waiting period
described above will apply to subsequent re-elections. We reserve the right to
limit the re-election/election frequency in the future. Before making any such
change to the re-election/election frequency, we will provide prior notice to
contract owners who have an effective Lifetime Five Income Benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an annuity contract as an investment vehicle for "qualified"
investments, including an IRA, the minimum distribution rules under the Code
require that you begin receiving periodic amounts from your annuity contract
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
contract year that required minimum distributions due from your contract are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
contract payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
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PART II
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6:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
PLUS CONTRACT?
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PURCHASE PAYMENTS
The initial purchase payment is the amount of money you first pay us to purchase
the contract. Unless we agree otherwise, and subject to our rules, the minimum
initial purchase payment is $10,000. You must get our prior approval for any
initial and additional purchase payment of $1,000,000 or more, unless we are
prohibited under applicable state law from insisting on such prior approval.
With some restrictions, you can make additional purchase payments by means other
than electronic fund transfer of no less than $1,000 at any time during the
accumulation phase. However, we impose a minimum of $100 with respect to
additional purchase payments made through electronic fund transfers.
You may purchase this contract only if the oldest of the owner, joint owner,
annuitant, or co-annuitant is age 85 or younger (or age 80 depending on the
version of the contract) on the contract date. Certain age limits apply to
certain features and benefits described herein. No subsequent purchase payments
may be made on or after the earliest of the 86th birthday (or 81st birthday
depending on the version of the contract) of:
- - the owner,
- - the joint owner,
- - the annuitant, or
- - the co-annuitant.
Currently, the maximum aggregate purchase payments you may make is $20
million. We limit the maximum total purchase payments in any contract year,
other than the first to $2 million absent our prior approval. Depending on
applicable state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable investment options or, if you choose the Contract Without
Credit, the fixed interest rate options based on the percentages you choose. The
percentage of your allocation to a particular investment option can range in
whole percentages from 0% to 100%.
When you make an additional purchase payment, it will be allocated in the
same way as your most recent purchase payment, unless you tell us otherwise. If
you purchase the Contract Without Credit, allocations to the DCA Fixed Rate
Option must be no less than $5,000.
You may change your allocation of future invested purchase payments at any
time. Contact the Prudential Annuity Service Center for details.
We generally will credit the initial purchase payment to your contract within
two business days from the day on which we receive your payment in good order at
the Prudential Annuity Service Center. If, however, your first payment is made
without enough information for us to set up your contract, we may need to
contact you to obtain the required information. If we are not able to obtain
this information within five business days, we will within that five business
day period either return your purchase payment or obtain your consent to
continue holding it until we receive the necessary information. We will
generally credit each subsequent purchase payment as of the business day we
receive it in good order at the Prudential Annuity Service Center. Our business
day generally closes at 4:00 p.m. Eastern time. Our business day may close
earlier, for example if regular trading on the New York Stock Exchange closes
early. Subsequent purchase payments received in good order after the close of
the business day will be credited on the following business day.
At our discretion, we may give initial and subsequent purchase payments (as
well as withdrawals and transfers) received in good order by certain
broker/dealers prior to the close of a business day the same treatment as they
would have received had they been received at the same time at the Prudential
Annuity Service Center. For more detail, talk to your registered representative.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit amount is
allocated to the variable investment options in the same percentages as the
purchase payment.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, the credit percentage is currently equal to 4% of each
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PART II
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purchase payment. With the approval of the SEC, we can change that credit
percentage, but we guarantee it will never be less than 3%. Under the version of
the Contract With Credit under which bonus credits generally are not
recapturable after expiration of the free look period, the bonus credit that we
pay with respect to any purchase payment depends on (i) the age of the older of
the owner or joint owner on the date on which the purchase payment is made and
(ii) the amount of the purchase payment. Specifically,
- - if the elder owner is 80 or younger on the date that the purchase payment is
made, then we will add a bonus credit to the purchase payment equal to 4% if
the purchase payment is less than $250,000 or 5% if the purchase payment is
greater than or equal to $250,000; and
- - if the elder owner is aged 81-85 on the date that the purchase payment is
made, then we will add a bonus credit equal to 3% of the amount of the
purchase payment.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, each credit is subject to its own vesting schedule,
which is shown below. If you make a withdrawal of all or part of a purchase
payment, or you begin the income phase of the contract, we will take back the
non-vested portion of the credit attributable to that purchase payment.
Withdrawals of purchase payments occur on a first-in first-out basis. This
credit that we take back is in addition to any withdrawal charges that may
apply.
Under the version of the Contract With Credit under which bonus credits vest
over a seven year period, bonus credits vest according to the following
schedule:
<Table>
<Caption>
NUMBER OF CONTRACT ANNIVERSARIES
SINCE DATE OF EACH PURCHASE PAYMENT VESTED PERCENTAGE
- ----------------------------------- -----------------
0 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 100%
</Table>
Under each version of the Contract With Credit, if we pay a death benefit
under the contract, we have the right to take back any credit we applied one
year prior to the date of death or later.
Under each version of the Contract With Credit, we recapture bonus credits if
the owner returns his or her contract during the free look period.
Depending upon the state in which your contract was issued, your contract may
include a different vesting schedule.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment options you choose. To
determine the value of your contract allocated to the variable investment
options, we use a unit of measure called an accumulation unit. An accumulation
unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment to a variable investment option, we credit
your contract with accumulation units of the subaccount or subaccounts for the
investment options you choose. We determine the number of accumulation units
credited to your contract by dividing the amount of the purchase payment, plus
(if you have purchased the Contract With Credit) any applicable credit,
allocated to a variable investment option by the unit price of the accumulation
unit for that investment option. We calculate the unit price for each investment
option after the New York Stock Exchange closes each day and then credit your
contract. The value of the accumulation units can increase, decrease, or remain
the same from day to day.
We cannot guarantee that your contract value will increase or that it will
not fall below the amount of your total purchase payments.
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7:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS CONTRACT?
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THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise, we will incur a loss. The
rates of certain of our charges have been set with reference to estimates of the
amount of specific types of expenses or risks that we will incur. In most cases,
this prospectus identifies such expenses or risks in the name of the charge;
however, the fact that any charge bears the name of, or is designed primarily to
defray a particular expense or risk does not mean that the amount we collect
from that charge will never be more than the amount of such expense or risk. Nor
does it mean that we may not also be compensated for such expense or risk out of
any other charges we are permitted to deduct by the terms of the contract.
INSURANCE AND ADMINISTRATIVE CHARGES
Each day, we make a deduction for the insurance and administrative charges.
These charges cover our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a Guaranteed Minimum Death Benefit
option, or Lifetime Five Income Benefit option, the insurance and administrative
charge also includes a charge to cover our assumption of the associated risk.
The mortality risk portion of the charge is for assuming the risk that the
annuitant(s) will live longer than expected based on our life expectancy tables.
When this happens, we pay a greater number of annuity payments. We also incur
the risk that the death benefit amount exceeds the contract value. The expense
risk portion of the charge is for assuming the risk that the current charges
will be insufficient in the future to cover the cost of administering the
contract. The administrative expense portion of the charge compensates us for
the expenses associated with the administration of the contract. This includes
preparing and issuing the contract; establishing and maintaining contract
records; preparation of confirmations and annual reports; personnel costs; legal
and accounting fees; filing fees; and systems costs.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. These
charges are not assessed against amounts allocated to the fixed interest rate
options. The amount of the charge depends on the death benefit (or other) option
that you choose.
The death benefit charge is equal to:
- 1.40% on an annual basis if you choose the base death benefit,
- 1.60% on an annual basis if you choose either the roll-up or step-up
Guaranteed Minimum Death Benefit option (i.e., 0.20% in addition to the
base death benefit charge), or
- 1.70% on an annual basis if you choose the greater of the roll-up and
step-up Guaranteed Minimum Death Benefit option (i.e., 0.30% in addition
to the base death benefit charge).
We impose an additional insurance and administrative charge of 0.10% annually
(of account value attributable to the variable investment options) for the
version of the Contract With Credit under which bonus credits generally are not
recapturable after expiration of the free look period. We do not assess this
charge under the version of the Contract With Credit under which bonus credits
vest over a period of seven years.
We impose an additional charge of 0.60% annually if you choose the Lifetime
Five Income Benefit. The 0.60% charge is in addition to the charge we impose for
the applicable death benefit. Upon any reset of the amounts guaranteed under
this benefit, we reserve the right to adjust the charge to that being imposed at
that time for new elections of the benefit.
If the charges under the contract are not sufficient to cover our expenses,
then we will bear the loss. We
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do, however, expect to profit from these charges. Any profits made from these
charges may be used by us to pay for the costs of distributing the contracts. If
you choose the Contract With Credit, we will also use any profits from this
charge to recoup our costs of providing the credit.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The withdrawal charge may
also apply if you begin the income phase during the withdrawal charge period,
depending upon the annuity option you choose. The amount and duration of the
withdrawal charge depends on whether you choose the Contract With Credit or the
Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment was made.
Specifically, we maintain an "age" for each purchase payment you have made by
keeping track of how many contract anniversaries have passed since the purchase
payment was made.
The withdrawal charge is the percentage, shown below, of the amount
withdrawn.
<Table>
<Caption>
CONTRACT WITH
CREDIT WITHDRAWAL
NUMBER OF CONTRACT WITH CHARGE (VERSION
CONTRACT CREDIT WITHDRAWAL UNDER WHICH
ANNIVERSARIES CHARGE (VERSION BONUS CREDITS
SINCE THE DATE UNDER WHICH GENERALLY ARE NOT
OF EACH BONUS CREDITS VEST RECAPTURABLE CONTRACT WITHOUT
PURCHASE OVER SEVEN YEAR AFTER EXPIRATION OF CREDIT WITHDRAWAL
PAYMENT PERIOD) FREE LOOK PERIOD) CHARGE
- -------------- ------------------ ------------------- -----------------
0 7% 8% 7%
1 7% 8% 6%
2 7% 8% 5%
3 6% 8% 4%
4 5% 7% 3%
5 4% 6% 2%
6 3% 5% 1%
7 2% 0% 0%
8 1% 0% 0%
9 0% 0% 0%
</Table>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the next following contract anniversary will
apply.
If you request a withdrawal, we will deduct an amount from the contract value
that is sufficient to pay the withdrawal charge, and take back any credit that
has not vested under the vesting schedule, if you have chosen the Contract With
Credit under which bonus credits vest over several years and provide you with
the amount requested.
If you request a full withdrawal, we will provide you with the full amount of
the contract value after making deductions for charges.
Each contract year, you may withdraw a specified amount of your contract
value without incurring a withdrawal charge. We make this "charge-free amount"
available to you subject to approval of this feature in your state. We determine
the charge-free amount available to you in a given contract year on the contract
anniversary that begins that year. In calculating the charge-free amount, we
divide purchase payments into two categories -- payments that are subject to a
withdrawal charge and those that are not. We determine the charge-free amount
based only on purchase payments that are subject to a withdrawal charge. The
charge-free amount in a given contract year is equal to 10% of the sum of all
the purchase payments subject to the withdrawal charge that you have made as of
the applicable contract anniversary. During the first contract year, the
charge-free amount is equal to 10% of the initial purchase payment.
When you make a withdrawal (including a withdrawal under the optional
Lifetime Five Income Benefit), we will deduct the amount of the withdrawal first
from the available charge-free amount. Any excess amount will then be deducted
from purchase payments in excess of the charge-free amount and subject to
applicable withdrawal charges. Once you have withdrawn all purchase payments,
additional withdrawals will come from any earnings. We do not impose withdrawal
charges on earnings.
If you choose the Contract With Credit and make a withdrawal that is subject
to a withdrawal charge, we may use part of that withdrawal charge to recoup our
costs of providing the credit.
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Withdrawal charges will never be greater than permitted by applicable law.
WAIVER OF WITHDRAWAL CHARGES FOR CRITICAL CARE
Except as restricted by applicable state law, we will waive all withdrawal
charges upon receipt of proof that the owner or a joint owner is terminally ill,
or has been confined to an eligible nursing home or eligible hospital
continuously for at least three months after the contract date. We will also
waive the contract maintenance charge if you surrender your contract in
accordance with the above noted conditions. This waiver is not available if the
owner has assigned ownership of the contract to someone else.
MINIMUM DISTRIBUTION REQUIREMENTS
If a withdrawal is taken from a tax qualified contract under the minimum
distribution option in order to satisfy an Internal Revenue Service mandatory
distribution requirement only with respect to that contract's account balance,
we will waive withdrawal charges. See Section 9, "What Are The Tax
Considerations Associated With The Strategic Partners Plus Contract?"
CONTRACT MAINTENANCE CHARGE
Under the original version of the contract, we do not deduct a contract
maintenance charge for administrative expenses while your contract value is
$50,000 or more. If your contract value is less than $50,000 on a contract
anniversary during the accumulation phase or when you make a full withdrawal, we
will deduct $30 (or if your contract value is less than $1,500, then a lower
amount equal to 2% of your contract value) for administrative expenses. Under
the new version of the contract, we do not deduct a contract maintenance charge
for administrative expenses while your contract value is $75,000 or more. If
your contract value is less than $75,000 on a contract anniversary during the
accumulation phase or when you make a full withdrawal, we will deduct $35 (or a
lower amount equal to 2% of your contract value) for administrative expenses.
(This fee may differ in certain states.) We may increase this charge up to a
maximum of $60 per year. Also, we may raise the level of the contract value at
which we waive this fee. We will deduct this charge proportionately from each of
your contract's investment options.
GUARANTEED MINIMUM INCOME BENEFIT CHARGE
We will impose an additional charge if you choose the Guaranteed Minimum Income
Benefit. This is an annual charge equal to 0.25% of the average GMIB protected
value. We deduct the charge from your contract value on each of the following
events:
- - each contract anniversary;
- - when you begin the income phase of the contract;
- - when you decide no longer to participate in the guaranteed minimum income
benefit;
- - upon a full withdrawal; and
- - upon a partial withdrawal if the remaining contract value would not be enough
to cover the then applicable Guaranteed Minimum Income Benefit charge.
If we impose this fee other than on a contract anniversary, then we will
pro-rate it based on the portion of the contract year that has elapsed since the
full annual fee was most recently deducted.
Because the charge is calculated based on the average GMIB protected value,
it does not increase or decrease based on changes to the annuity's contract
value due to market performance. If the GMIB protected value increases, the
dollar amount of the annual charge will increase, while a decrease in the GMIB
protected value will decrease the dollar amount of the charge.
The charge is deducted annually in arrears each contract year on the contract
anniversary. We deduct the amount of the charge pro-rata from the contract value
allocated to the variable investment options, and for Contract Without Credit,
the fixed interest rate options. In some states, we may deduct the charge for
the Guaranteed Minimum Income Benefit in a different manner. If you surrender
your contract, begin receiving annuity payments under the GMIB or any other
annuity payout option we make available during a contract year, or the GMIB
terminates, we will deduct the charge
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PART II
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for the portion of the contract year since the prior contract anniversary (or
the contract date if in the first contract year). Upon a full withdrawal or if
the contract value remaining after a partial withdrawal is not enough to cover
the applicable Guaranteed Minimum Income Benefit charge, we will deduct the
charge from the amount we pay you.
THE FACT THAT WE IMPOSE THE CHARGE UPON A FULL OR PARTIAL WITHDRAWAL DOES NOT
IMPAIR YOUR RIGHT TO MAKE A WITHDRAWAL AT THE TIME OF YOUR CHOOSING.
We will not impose the Guaranteed Minimum Income Benefit charge after the
income phase begins.
EARNINGS APPRECIATOR BENEFIT CHARGE
We will impose an additional charge if you choose the Earnings Appreciator
Benefit. The charge for this benefit is based on an annual rate of 0.15% of your
contract value if you have also selected a Guaranteed Minimum Death Benefit
option (0.20% if you have not selected a Guaranteed Minimum Death Benefit
option).
We calculate the charge on each of the following events:
- each contract anniversary;
- when you begin the income phase of the contract;
- upon death of the sole or last surviving owner prior to the income phase;
- upon a withdrawal; and
- upon a subsequent purchase payment.
The fee is based on the contract value at time of calculation and is
pro-rated based on the portion of the contract year since the date the Earnings
Appreciator Benefit charge was last calculated.
The charge is not deducted every time it is calculated. Instead, the charge
is deducted, along with any previously calculated but not deducted charge, on
each of the following events:
- each contract anniversary;
- when you begin the income phase of the contract;
- upon death of the sole or last surviving owner prior to the income phase;
- upon a full withdrawal; and
- upon a partial withdrawal if the contract value remaining after the
partial withdrawal is not enough to cover the then applicable charge.
We withdraw this charge from each investment option in the same proportion
that the amount allocated to the investment option bears to the total contract
value. Upon a full withdrawal or if the contract value remaining after a partial
withdrawal is not enough to cover the then-applicable Earnings Appreciator
Benefit charge, we will deduct the charge from the amount we pay you. We will
deem the payment of the Earnings Appreciator Benefit charge as made from
earnings for purposes of calculating other charges.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes. It
is our current practice not to deduct a charge for state premium taxes until
annuity payments begin. In the states that impose a premium tax on us, the
current rates range up to 3.5%. It is also our current practice not to deduct a
charge for the federal tax associated with deferred acquisition costs paid by us
that are based on premium received. However, we reserve the right to charge the
contract owner in the future for any such tax associated with deferred
acquisition costs and any federal, state or local income, excise, business or
any other type of tax measured by the amount of premium received by us.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $25 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current plans to do so. We will deduct the transfer fee
pro-rata from the investment options from which the transfer is made.
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COMPANY TAXES
We pay company income taxes on the taxable corporate earnings created by this
separate account product. While we may consider company income taxes when
pricing our products, we do not currently include such income taxes in the tax
charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividend received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract. We reserve the right to
change these tax practices.
UNDERLYING MUTUAL FUND FEES
When you allocate a purchase payment or a transfer to the variable investment
options, we in turn invest in shares of a corresponding underlying mutual fund.
Those funds charge fees that are in addition to the contract-related fees
described in this section. For 2005, the fees of these funds ranged on an annual
basis from 0.38% to 1.67% annually. For certain funds, expenses are reduced
pursuant to expense waivers and comparable arrangements. In general, these
expense waivers and comparable arrangements are not guaranteed, and may be
terminated at any time.
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8:
HOW CAN I
ACCESS MY MONEY?
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YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- - CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract
minus any applicable charges and fees and, if you have purchased the Contract
With Credit, after we have taken back any credits that have not yet vested. We
will calculate the value of your contract and charges, if any, as of the date we
receive your request in good order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal and related withdrawal
charges will be taken proportionately from all of the investment options you
have selected. The minimum contract value that must remain in order to keep the
contract in force after a withdrawal is $2,000. If you request a withdrawal
amount that would reduce the contract value below this minimum, we will withdraw
the maximum amount available that, with the withdrawal charge, would not reduce
the contract value below such minimum.
With respect to the variable investment options, we will generally pay the
withdrawal amount, less any required tax withholding, within seven days after we
receive a withdrawal request in good order. We will deduct applicable charges,
if any, from the assets in your contract.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS ALSO MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 9.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options. The minimum automated withdrawal amount you can
make is generally $100. An assignment of the contract terminates any automated
withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND CERTAIN RESTRICTIONS MAY
APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 9.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales and
redemptions of shares of the underlying mutual funds are not feasible or we
cannot reasonably value the accumulation units; or
- - The SEC, by order, permits suspension or postponement of payments for the
protection of owners.
We expect to pay the amount of any withdrawal or process any transfer made
from the fixed interest rate options promptly upon request.
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9:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS PLUS CONTRACT?
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The tax considerations associated with the Strategic Partners Plus contract vary
depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan (including contracts held by a
non-natural person, such as a trust, acting as an agent for a natural person),
or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA, which can hold other permissible assets other than the annuity. The terms
and administration of the trust or custodial account in accordance with the laws
and regulations for IRAs, as applicable, are the responsibility of the
applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that some
or all of the charges for the optional benefits under the contract such as the
Guaranteed Minimum Death Benefit, should be treated for federal income tax
purposes as a partial withdrawal from the contract. If this were the case, the
charge for these benefits could be deemed a withdrawal and treated as taxable to
the extent there are earnings in the contract. Additionally, for owners under
age 59 1/2, the taxable income attributable to the charge for the benefit could
be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments
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and will not be taxed. The remaining portion will be taxed as ordinary income.
Generally, the nontaxable portion is determined by multiplying the annuity
payment you receive by a fraction, the numerator of which is your purchase
payments (less any amounts previously received tax-free) and the denominator of
which is the total expected payments under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See "Federal Tax Status" in the Statement of Additional Information).
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS
has reserved the right to treat transactions it considers abusive as ineligible
for this favorable partial 1035 exchange treatment. We do not know what
transactions may be considered abusive. For example, we do not know how the IRS
may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
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- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with three exemptions unless
you designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, the Treasury Department may promulgate guidelines under which a variable
annuity will not be treated as an annuity for tax purposes if persons with
ownership rights have excessive control over the investments underlying such
variable annuity. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this prospectus. We will take any action, including modifications to your
contract or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional Information for further
information on these diversification and investor control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under
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the contract pass by reason of death, and must be a natural person in order to
elect a periodic payment option based on life expectancy or a period exceeding
five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
that portion of the contract may be continued with your spouse as the owner.
Changes In The Contract We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a) and 408(b) of the Code and Roth Individual Retirement Accounts
(Roth IRAs) under Section 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement," attached to this
prospectus, contains information about eligibility, contribution limits, tax
particulars, and other IRA information. In addition to this information (some of
which is summarized below), the IRS requires that you have a "free look" after
making an initial contribution to the contract. During this time, you can cancel
the contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or, if provided by applicable state law, the amount
your contract is worth, if greater) less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA, or if you
are age 50 or older and by making a single contribution consisting of your IRA
contributions and catch-up contributions attributable to a prior year and the
current year during the period from January 1 to April 15 of the current year.
You must make a minimum initial payment of $10,000 to purchase a contract. This
minimum is greater than the maximum amount of any annual contribution allowed by
law you may make to an IRA. For 2006, the limit is $4,000, increasing to $5,000
in 2008. After 2008, the contribution amount will be indexed for inflation. The
tax law also provides for a catch-up provision for individuals who are age 50
and above, allowing those individuals an additional $1,000 contribution each
year. The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will
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not retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan into another
Section 401(a) plan.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which required minimum distributions must begin cannot be later
than April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements".
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age
59 1/2; (b) after the owner's death; (c) due to the owner's disability; or
(d) for a qualified first time homebuyer distribution within the meaning of
Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the
year that is at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a traditional IRA to
a Roth IRA. Distributions from a Roth IRA that are not qualified
distributions will be treated as made first from contributions and then from
earnings, and earnings will be taxed generally in the same manner as
distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
The "IRA Disclosure Statement" attached to this prospectus contains some
additional information on Roth IRAs.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase the contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of another traditional IRA, conduit IRA, or Roth IRA, or
if you are age 50 or older and by making a single contribution consisting of
your Roth IRA contributions and catch-up contributions attributable to a prior
year and the current year during the period from January 1 to April 15 of the
current year. The Code permits persons who meet certain income limitations
(generally, adjusted gross income under $100,000 who are not married filing a
separate return), and who receive certain qualifying distributions from such
non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of all
or any part of the amount of such distribution to a Roth IRA which they
establish. This
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conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law. In addition, as
of January 1, 2006, an individual receiving an eligible rollover distribution
from a designated Roth account under an employer plan may roll over the
distribution to a Roth IRA. If you are considering rolling over funds from your
Roth account under an employer plan, please contact your Financial Professional
prior to purchase to confirm whether such rollovers are being accepted.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. Roth IRAs are not subject to these rules
during the owner's lifetime. The amount of the payment must at least equal the
minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% tax penalty on the amount of any minimum distribution not made in a
timely manner.
Effective in 2006, in accordance with recent changes in laws and regulations,
required minimum distributions will be calculated based on the sum of the
contract value and the actuarial value of any additional death benefits and
benefits from optional riders that you have purchased under the contract. As a
result, the required minimum distributions may be larger than if the calculation
were based on the contract value only, which may in turn result in an earlier
(but not before the required beginning date) distribution of amounts under the
contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the minimum distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs. Similar rules apply if you inherit more than one Roth IRA from the same
owner.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA or Roth IRA before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
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- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 7, "What Are The Expenses Associated With
The Strategic Partners Plus Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 10.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement," attached to this prospectus.
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10:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company (Pruco Life) is a stock life insurance company
which was organized on December 23, 1971 under the laws of the State of Arizona.
It is licensed to sell life insurance and annuities in the District of Columbia,
Guam and in all states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company
of America (Prudential), a New Jersey stock life insurance company that has been
doing business since October 13, 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (Prudential Financial), a New Jersey
insurance holding company. As Pruco Life's ultimate parent, Prudential Financial
exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential,
nor any other related company has any legal responsibility to pay amounts that
Pruco Life may owe under the contract.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (separate account), to hold the assets that are associated with
the variable annuity contracts. The separate account was established under
Arizona law on June 16, 1995, and is registered with the SEC under the
Investment Company Act of 1940 as a unit investment trust, which is a type of
investment company. The assets of the separate account are held in the name of
Pruco Life and legally belong to us. These assets are kept separate from all of
our other assets and may not be charged with liabilities arising out of any
other business we may conduct. More detailed information about Pruco Life,
including its audited consolidated financial statements, is provided in the
Statement of Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
8%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the contract. Commissions and
other compensation paid in relation to the contract do not result in any
additional charge to you or to the separate account.
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life and/or the contract on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or PIMS may enter into compensation arrangements with
certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of
- --------------------------------------------------------------------------------
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sales personnel and/or marketing and/or administrative services and/or other
services they provide to us or our affiliates. These services may include, but
are not limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval to PIMS. A list of firms that PIMS paid
pursuant to such arrangements is provided in the Statement of Additional
Information which is available upon request.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
On July 1, 2003, Prudential Financial combined its retail securities
brokerage and clearing operations with those of Wachovia Corporation
("Wachovia") and formed Wachovia Securities Financial Holdings, LLC ("Wachovia
Securities"), a joint venture headquartered in Richmond, Virginia. PFI has a 38%
ownership interest in the joint venture, while Wachovia owns the remaining 62%.
Wachovia and Wachovia Securities are key distribution partners for certain
products of Prudential Financial affiliates, including mutual funds and
individual annuities that are distributed through their financial advisors, bank
channel and independent channel. In addition, Prudential Financial is a service
provider to the managed account platform and certain wrap-fee programs offered
by Wachovia Securities. The Strategic Partners Plus and Strategic Partners Plus
3 variable annuities are sold through Wachovia Securities.
LITIGATION
Pruco Life is subject to legal and regulatory actions in the ordinary course of
our businesses, including class action lawsuits. Our pending legal and
regulatory actions include proceedings specific to us and proceedings generally
applicable to business practices in the industries in which we operate. In our
insurance operations, we are subject to class action lawsuits and individual
lawsuits involving a variety of issues, including sales practices, underwriting
practices, claims payment and procedures, additional premium charges for
premiums paid on a periodic basis, denial or delay of benefits, return of
premiums or excessive premium charges and breaching fiduciary duties to
customers. In our annuities operations, we are subject to litigation involving
class action lawsuits and other litigation alleging, among other things, that we
made improper or inadequate disclosures in connection with the sale of annuity
products or charged excessive or impermissible fees on these products,
recommended unsuitable products to customers, mishandled customer accounts or
breached fiduciary duties to customers. In some of our pending legal and
regulatory actions, parties are seeking large and/or indeterminate amounts,
including punitive or exemplary damages. The following is such a pending
proceeding:
Stewart v. Prudential, et al. is a lawsuit brought in the Circuit Court of
the First Judicial District of Hinds County, Mississippi by the beneficiaries of
an alleged life insurance policy against Pruco Life and Prudential. The
complaint alleges that the Prudential defendants acted in bad faith when they
failed to pay a death benefit on an alleged contract of insurance that was never
delivered. In February 2006, the jury awarded the plaintiffs $1.4 million in
compensatory damages and
- --------------------------------------------------------------------------------
85
10:
OTHER INFORMATION CONTINUED
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
$35 million in punitive damages. Pruco Life plans to appeal the verdict.
Pruco Life's litigation and regulatory matters are subject to many
uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of
Pruco Life in a particular quarterly or annual period could be materially
affected by an ultimate unfavorable resolution of litigation and regulatory
matters. Management believes, however, that the ultimate outcome of all pending
litigation and regulatory matters should not have a material adverse effect on
Pruco Life's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. If you
do so, we will reset the death benefit to equal the contract value on the date
the assignment occurs. For details, see Section 4, "What Is The Death Benefit?"
We will not be bound by the assignment until we receive written notice. We will
not be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life, the co-issuer
of the Strategic Partners Plus contract, are included in the Statement of
Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Principal Underwriter
- - Payments Made to Promote Sale of Our Products
- - Allocation of Initial Purchase Payment
- - Determination of Accumulation Unit Values
- - Federal Tax Status
- - State Specific Variations
- - Financial Statements
- - Separate Account Financial Information
- - Company Financial Information
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each contract
owner that resides in the household. If you are a member of such a household,
you should be aware that you can revoke your consent to householding at any
time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling (877) 778-5008.
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PART II
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APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
As we have indicated throughout this prospectus, the Strategic Partners Plus
Variable Annuity is a contract that allows you to select or decline any of
several features that carries with it a specific asset-based charge. We maintain
a unique unit value corresponding to each combination of such contract features.
Here, we depict the historical unit values corresponding to the contract
features bearing the highest and lowest combination of asset-based charges. The
remaining unit values appear in the Statement of Additional Information, which
you may obtain free of charge by calling (888) PRU-2888 or by writing to us at
the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, PA 19176. As
discussed in the prospectus, if you select certain optional benefits (e.g.,
Lifetime Five), we limit the investment options to which you may allocate your
contract value. In certain of these accumulation unit value tables, we set forth
accumulation unit values that assume election of one or more of such optional
benefits and allocation of contract value to portfolios that currently are not
permitted as part of such optional benefits. Such unit values are set forth for
general reference purposes only, and are not intended to indicate that such
portfolios may be acquired along with those optional benefits.
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PART II
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ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99430 $ 0.86988 33,208
1/1/2002 to 12/31/2002 $ 0.86988 $ 0.59236 41,596
1/1/2003 to 12/31/2003 $ 0.59236 $ 0.76091 41,580
1/1/2004 to 12/31/2004 $ 0.76091 $ 0.82279 3,931
1/1/2005 to 12/31/2005 $ 0.82279 $ 0.92957 3,916
2/4/2002** to 12/31/2002 $ 0.97701 $ 0.70649 0
1/1/2003 to 12/31/2003 $ 0.70649 $ 0.90749 0
1/1/2004 to 12/31/2004 $ 0.90749 $ 0.98122 0
1/1/2005 to 12/31/2005 $ 0.98122 $ 1.10855 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002*** to 12/31/2002 $ 1.00967 $ 0.80531 0
1/1/2003 to 12/31/2003 $ 0.80531 $ 1.04571 0
1/1/2004 to 12/31/2004 $ 1.04571 $ 1.13373 0
1/1/2005 to 12/31/2005 $ 1.13373 $ 1.24642 0
2/4/2002** to 12/31/2002 $ 0.97750 $ 0.78176 0
1/1/2003 to 12/31/2003 $ 0.78176 $ 1.01497 0
1/1/2004 to 12/31/2004 $ 1.01497 $ 1.10038 0
1/1/2005 to 12/31/2005 $ 1.10038 $ 1.20970 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99996 $ 0.83992 0
1/1/2002 to 12/31/2002 $ 0.83992 $ 0.62009 0
1/1/2003 to 12/31/2003 $ 0.62009 $ 0.81994 0
1/1/2004 to 12/31/2004 $ 0.81994 $ 0.88620 0
1/1/2005 to 12/31/2005 $ 0.88620 $ 1.01441 0
2/4/2002** to 12/31/2002 $ 0.98632 $ 0.76666 0
1/1/2003 to 12/31/2003 $ 0.76666 $ 1.01366 0
1/1/2004 to 12/31/2004 $ 1.01366 $ 1.09542 0
1/1/2005 to 12/31/2005 $ 1.09542 $ 1.25393 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
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88
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<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 1.00009 $ 1.01253 0
1/1/2002 to 12/31/2002 $ 1.01253 $ 1.01372 0
1/1/2003 to 12/31/2003 $ 1.01372 $ 1.00812 0
1/1/2004 to 12/31/2004 $ 1.00812 $ 1.00423 0
1/1/2005 to 12/31/2005 $ 1.00423 $ 1.01903 0
2/4/2002** to 12/31/2002 $ 1.00003 $ 1.00082 188,201
1/1/2003 to 12/31/2003 $ 1.00082 $ 0.99527 244,578
1/1/2004 to 12/31/2004 $ 0.99527 $ 0.99141 218,407
1/1/2005 to 12/31/2005 $ 0.99141 $ 1.00599 172,616
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99726 $ 0.90493 0
1/1/2002 to 12/31/2002 $ 0.90493 $ 0.69437 0
1/1/2003 to 12/31/2003 $ 0.69437 $ 0.87784 0
1/1/2004 to 12/31/2004 $ 0.87784 $ 0.95615 0
1/1/2005 to 12/31/2005 $ 0.95615 $ 0.98584 0
2/4/2002** to 12/31/2002 $ 0.97534 $ 0.78517 0
1/1/2003 to 12/31/2003 $ 0.78517 $ 0.99254 0
1/1/2004 to 12/31/2004 $ 0.99254 $ 1.08106 0
1/1/2005 to 12/31/2005 $ 1.08106 $ 1.11454 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/1/2002*** to 12/31/2002 $ 1.00860 $ 0.79744 0
1/1/2003 to 12/31/2003 $ 0.79744 $ 1.00719 0
1/1/2004 to 12/31/2004 $ 1.00719 $ 1.15535 0
1/1/2005 to 12/31/2005 $ 1.15535 $ 1.32936 0
2/4/2002** to 12/31/2002 $ 0.97746 $ 0.79350 0
1/1/2003 to 12/31/2003 $ 0.79350 $ 1.00220 64,859
1/1/2004 to 12/31/2004 $ 1.00220 $ 1.14963 56,890
1/1/2005 to 12/31/2005 $ 1.14963 $ 1.32269 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND FIRST BECAME AVAILABLE WITHIN THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
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89
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PART II
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<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99881 $ 0.87109 0
1/1/2002 to 12/31/2002 $ 0.87109 $ 0.66866 0
1/1/2003 to 12/31/2003 $ 0.66866 $ 0.87565 0
1/1/2004 to 12/31/2004 $ 0.87565 $ 0.99098 0
1/1/2005 to 12/31/2005 $ 0.99098 $ 1.07976 0
2/4/2002** to 12/31/2002 $ 0.98198 $ 0.80240 0
1/1/2003 to 12/31/2003 $ 0.80240 $ 1.05061 0
1/1/2004 to 12/31/2004 $ 1.05061 $ 1.18898 0
1/1/2005 to 12/31/2005 $ 1.18898 $ 1.29548 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99724 $ 0.87500 0
1/1/2002 to 12/31/2002 $ 0.87500 $ 0.68204 0
1/1/2003 to 12/31/2003 $ 0.68204 $ 0.85087 0
1/1/2004 to 12/31/2004 $ 0.85087 $ 0.93878 0
1/1/2005 to 4/29/2005 $ 0.93878 $ 0.86680 0
2/4/2002** to 12/31/2002 $ 0.97611 $ 0.80273 0
1/1/2003 to 12/31/2003 $ 0.80273 $ 1.00158 0
1/1/2004 to 12/31/2004 $ 1.00158 $ 1.10499 0
1/1/2005 to 4/29/2005 $ 1.10499 $ 1.02030 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99084 $ 0.84109 0
1/1/2002 to 12/31/2002 $ 0.84109 $ 0.70328 0
1/1/2003 to 12/31/2003 $ 0.70328 $ 0.85787 0
1/1/2004 to 12/31/2004 $ 0.85787 $ 0.92049 0
1/1/2005 to 12/31/2005 $ 0.92049 $ 0.94985 0
2/4/2002** to 12/31/2002 $ 0.98416 $ 0.85696 0
1/1/2003 to 12/31/2003 $ 0.85696 $ 1.04529 0
1/1/2004 to 12/31/2004 $ 1.04529 $ 1.12146 0
1/1/2005 to 12/31/2005 $ 1.12146 $ 1.15727 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
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PART II
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<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99509 $ 0.88230 27,876
1/1/2002 to 12/31/2002 $ 0.88230 $ 0.59865 31,466
1/1/2003 to 12/31/2003 $ 0.59865 $ 0.73114 31,147
1/1/2004 to 12/31/2004 $ 0.73114 $ 0.76497 3,041
1/1/2005 to 12/31/2005 $ 0.76497 $ 0.87890 2,886
2/4/2002** to 12/31/2002 $ 0.96941 $ 0.72083 0
1/1/2003 to 12/31/2003 $ 0.72083 $ 0.88040 0
1/1/2004 to 12/31/2004 $ 0.88040 $ 0.92132 0
1/1/2005 to 12/31/2005 $ 0.92132 $ 1.05848 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99892 $ 0.94964 0
1/1/2002 to 12/31/2002 $ 0.94964 $ 0.82711 5,464
1/1/2003 to 12/31/2003 $ 0.82711 $ 1.00219 0
1/1/2004 to 12/31/2004 $ 1.00219 $ 1.09792 8,463
1/1/2005 to 12/31/2005 $ 1.09792 $ 1.16514 8,435
2/4/2002** to 12/31/2002 $ 0.98743 $ 0.89088 0
1/1/2003 to 12/31/2003 $ 0.89088 $ 1.07966 0
1/1/2004 to 12/31/2004 $ 1.07966 $ 1.18290 0
1/1/2005 to 12/31/2005 $ 1.18290 $ 1.25533 0
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99796 $ 0.98458 0
1/1/2002 to 12/31/2002 $ 0.98458 $ 0.91397 0
1/1/2003 to 12/31/2003 $ 0.91397 $ 1.04994 0
1/1/2004 to 12/31/2004 $ 1.04994 $ 1.12757 0
1/1/2005 to 12/31/2005 $ 1.12757 $ 1.17779 0
2/4/2002** to 12/31/2002 $ 0.99058 $ 0.93899 74,336
1/1/2003 to 12/31/2003 $ 0.93899 $ 1.07868 31,721
1/1/2004 to 12/31/2004 $ 1.07868 $ 1.15831 26,233
1/1/2005 to 12/31/2005 $ 1.15831 $ 1.20985 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
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<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99791 $ 0.92029 39,934
1/1/2002 to 12/31/2002 $ 0.92029 $ 0.76511 46,013
1/1/2003 to 12/31/2003 $ 0.76511 $ 0.97653 93,809
1/1/2004 to 12/31/2004 $ 0.97653 $ 1.08373 95,409
1/1/2005 to 12/31/2005 $ 1.08373 $ 1.17051 78,850
2/4/2002** to 12/31/2002 $ 0.97224 $ 0.86688 0
1/1/2003 to 12/31/2003 $ 0.86688 $ 1.10632 0
1/1/2004 to 12/31/2004 $ 1.10632 $ 1.22772 0
1/1/2005 to 12/31/2005 $ 1.22772 $ 1.32606 0
SP SMALL-CAP VALUE PORTFOLIO FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 1.00085 $ 1.00289 25,060
1/1/2002 to 12/31/2002 $ 1.00289 $ 0.84681 29,602
1/1/2003 to 12/31/2003 $ 0.84681 $ 1.11158 29,583
1/1/2004 to 12/31/2004 $ 1.11158 $ 1.32305 39,945
1/1/2005 to 12/31/2005 $ 1.32305 $ 1.36506 39,926
2/4/2002** to 12/31/2002 $ 0.98396 $ 0.84988 0
1/1/2003 to 12/31/2003 $ 0.84988 $ 1.11558 30,298
1/1/2004 to 12/31/2004 $ 1.11558 $ 1.32788 26,005
1/1/2005 to 12/31/2005 $ 1.32788 $ 1.36999 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99886 $ 0.90967 8,484
1/1/2002 to 12/31/2003 $ 0.90967 $ 0.74223 17,415
1/1/2003 to 12/31/2003 $ 0.74223 $ 0.93901 17,380
1/1/2004 to 12/31/2004 $ 0.93901 $ 1.04685 17,351
1/1/2005 to 12/31/2005 $ 1.04685 $ 1.12778 17,323
2/4/2002** to 12/31/2002 $ 0.98366 $ 0.84346 0
1/1/2003 to 12/31/2003 $ 0.84346 $ 1.06700 0
1/1/2004 to 12/31/2004 $ 1.06700 $ 1.18965 0
1/1/2005 to 12/31/2005 $ 1.18965 $ 1.28163 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
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<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99702 $ 0.92388 0
1/1/2002 to 12/31/2002 $ 0.92388 $ 0.76199 0
1/1/2003 to 12/31/2003 $ 0.76199 $ 0.95257 0
1/1/2004 to 12/31/2004 $ 0.95257 $ 1.10611 0
1/1/2005 to 12/31/2005 $ 1.10611 $ 1.16342 0
2/4/2002** to 12/31/2002 $ 0.97731 $ 0.83825 0
1/1/2003 to 12/31/2003 $ 0.83825 $ 1.04790 0
1/1/2004 to 12/31/2004 $ 1.04790 $ 1.21689 0
1/1/2005 to 12/31/2005 $ 1.21689 $ 1.27983 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 1.00228 $ 0.84741 0
1/1/2002 to 12/31/2002 $ 0.84741 $ 0.69226 0
1/1/2003 to 12/31/2003 $ 0.69226 $ 0.86952 0
1/1/2004 to 12/31/2004 $ 0.86952 $ 0.99305 0
1/1/2005 to 12/31/2005 $ 0.99305 $ 1.11424 0
2/4/2002** to 12/31/2002 $ 0.99846 $ 0.85393 0
1/1/2003 to 12/31/2003 $ 0.85393 $ 1.07261 31,250
1/1/2004 to 12/31/2004 $ 1.07261 $ 1.22497 27,343
1/1/2005 to 12/31/2005 $ 1.22497 $ 1.37436 2
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99530 $ 0.81060 0
1/1/2002 to 12/31/2002 $ 0.81060 $ 0.57009 0
1/1/2003 to 12/31/2003 $ 0.57009 $ 0.71281 0
1/1/2004 to 12/31/2004 $ 0.71281 $ 0.79003 0
1/1/2005 to 4/29/2005 $ 0.79003 $ 0.73827 0
2/4/2002** to 12/31/2002 $ 0.96821 $ 0.74461 0
1/1/2003 to 12/31/2003 $ 0.74461 $ 0.93117 0
1/1/2004 to 12/31/2004 $ 0.93117 $ 1.03208 0
1/1/2005 to 4/29/2005 $ 1.03208 $ 0.96445 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
93
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99348 $ 0.81540 7,562
1/1/2002 to 12/31/2002 $ 0.81540 $ 0.43161 6,516
1/1/2003 to 12/31/2003 $ 0.43161 $ 0.59621 6,140
1/1/2004 to 12/31/2004 $ 0.59621 $ 0.70289 5,679
1/1/2005 to 12/31/2005 $ 0.70289 $ 0.72963 5,495
2/4/2002** to 12/31/2002 $ 0.95936 $ 0.58443 0
1/1/2003 to 12/31/2003 $ 0.58443 $ 0.80750 42,093
1/1/2004 to 12/31/2004 $ 0.80750 $ 0.95200 35,169
1/1/2005 to 12/31/2005 $ 0.95200 $ 0.98826 1
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99996 $ 1.01397 1,054
1/1/2002 to 12/31/2002 $ 1.01397 $ 1.00143 1,615
1/1/2003 to 12/31/2003 $ 1.00143 $ 1.20911 1,608
1/1/2004 to 12/31/2004 $ 1.20911 $ 1.30346 1,602
1/1/2005 to 12/31/2005 $ 1.30346 $ 1.33732 1,596
2/4/2002** to 12/31/2002 $ 0.99887 $ 0.98184 0
1/1/2003 to 12/31/2003 $ 0.98184 $ 1.18535 11,996
1/1/2004 to 12/31/2004 $ 1.18535 $ 1.27784 12,715
1/1/2005 to 12/31/2005 $ 1.27784 $ 1.31099 1
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99996 $ 1.04110 24,059
1/1/2002 to 12/31/2002 $ 1.04110 $ 1.12328 29,690
1/1/2003 to 12/31/2003 $ 1.12328 $ 1.17265 29,689
1/1/2004 to 12/31/2004 $ 1.17265 $ 1.21745 33,428
1/1/2005 to 12/31/2005 $ 1.21745 $ 1.22923 33,432
2/4/2002** to 12/31/2002 $ 1.00358 $ 1.06613 0
1/1/2003 to 12/31/2003 $ 1.06613 $ 1.11297 23,687
1/1/2004 to 12/31/2004 $ 1.11297 $ 1.15556 27,079
1/1/2005 to 12/31/2005 $ 1.15556 $ 1.16696 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
94
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99484 $ 0.87416 15,458
1/1/2002 to 12/31/2002 $ 0.87416 $ 0.58550 19,001
1/1/2003 to 12/31/2003 $ 0.58550 $ 0.82046 19,002
1/1/2004 to 12/31/2004 $ 0.82046 $ 0.98221 50,025
1/1/2005 to 12/31/2005 $ 0.98221 $ 1.14091 50,022
2/4/2002** to 12/31/2002 $ 0.96873 $ 0.71988 0
1/1/2003 to 12/31/2003 $ 0.71988 $ 1.00882 0
1/1/2004 to 12/31/2004 $ 1.00882 $ 1.20761 0
1/1/2005 to 12/31/2005 $ 1.20761 $ 1.40267 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99727 $ 0.92677 3,587
1/1/2002 to 12/31/2002 $ 0.92677 $ 0.63744 1,942
1/1/2003 to 12/31/2003 $ 0.63744 $ 0.84694 1,934
1/1/2004 to 12/31/2004 $ 0.84694 $ 0.82752 1,927
1/1/2005 to 12/31/2005 $ 0.82752 $ 0.83643 1,920
2/4/2002** to 12/31/2002 $ 0.97561 $ 0.72521 0
1/1/2003 to 12/31/2003 $ 0.72521 $ 0.96342 0
1/1/2004 to 12/31/2004 $ 0.96342 $ 0.94136 0
1/1/2005 to 12/31/2005 $ 0.94136 $ 0.95138 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99482 $ 0.85719 0
1/1/2002 to 12/31/2002 $ 0.85719 $ 0.63181 0
1/1/2003 to 12/31/2003 $ 0.63181 $ 0.78409 0
1/1/2004 to 12/31/2004 $ 0.78409 $ 0.85515 0
1/1/2005 to 12/31/2005 $ 0.85515 $ 0.97121 0
2/4/2002** to 12/31/2002 $ 0.97345 $ 0.77240 0
1/1/2003 to 12/31/2003 $ 0.77240 $ 0.95860 0
1/1/2004 to 12/31/2004 $ 0.95860 $ 1.04544 0
1/1/2005 to 12/31/2005 $ 1.04544 $ 1.18721 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
95
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.98559 $ 0.81297 0
1/1/2002 to 12/31/2002 $ 0.81297 $ 0.47030 0
1/1/2003 to 12/31/2003 $ 0.47030 $ 0.66039 0
1/1/2004 to 12/31/2004 $ 0.66039 $ 0.65130 0
1/1/2005 to 4/29/2005 $ 0.65130 $ 0.58180 0
2/4/2002** to 12/31/2002 $ 0.97074 $ 0.60245 0
1/1/2003 to 12/31/2003 $ 0.60245 $ 0.84598 0
1/1/2004 to 12/31/2004 $ 0.84598 $ 0.83430 0
1/1/2005 to 4/29/2005 $ 0.83430 $ 0.74523 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 1.00272 $ 0.74788 1,091
1/1/2002 to 12/31/2002 $ 0.74788 $ 0.57108 0
1/1/2003 to 12/31/2003 $ 0.57108 $ 0.78612 0
1/1/2004 to 12/31/2004 $ 0.78612 $ 0.90356 0
1/1/2005 to 12/31/2005 $ 0.90356 $ 1.03720 0
2/4/2002** to 12/31/2002 $ 0.99603 $ 0.80285 0
1/1/2003 to 12/31/2003 $ 0.80285 $ 1.10501 0
1/1/2004 to 12/31/2004 $ 1.10501 $ 1.27001 0
1/1/2005 to 12/31/2005 $ 1.27001 $ 1.45769 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $ 9.99933 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/2/2005 $10.09338 $11.73323 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07970 $10.33229 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05481 $10.28681 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/2/2005 $10.05009 $11.34495 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04988 $10.42169 0
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06658 $10.35426 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
96
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04202 $10.33700 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $10.01933 0
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $10.00933 0
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.14710 $12.04155 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $10.02932 0
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.08492 $10.73678 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.01133 $10.33264 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04570 $10.03757 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99886 $10.98052 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.01541 $10.64464 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03302 $10.78065 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99886 $10.60000 0
AST HIGH YIELD PORTFOLIO FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.97681 $ 9.87825 0
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.91389 $10.67460 0
AST LARGE-CAP VALUE PORTFOLIO FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.07726 $10.57804 0
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99886 $ 9.96977 0
</Table>
<Table>
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
97
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.12625 $10.92526 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.96626 $10.49866 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.03693 $10.78089 0
AST MID-CAP VALUE PORTFOLIO FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.06503 $10.37369 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.05576 $11.35869 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02196 $10.90682 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.99886 $10.07733 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005*** to 12/31/2005 $ 9.99886 $10.03931 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.04866 $10.66828 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.02867 $10.37610 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $ 9.94939 $ 9.46839 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005*** to 12/31/2005 $10.00286 $11.76236 0
EVERGREEN GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003*** to 12/31/2003 $ 9.92203 $10.39285 0
1/1/2004 to 12/31/2004 $10.34285 $11.05580 0
1/1/2005 to 4/15/2005 $11.05580 $10.33082 0
</Table>
<Table>
*** DATE THAT THE FUND WAS FIRST ADDED TO THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
98
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
EVERGREEN VA BALANCED FUND
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99781 $ 0.95089 19,363
1/1/2002 to 12/31/2002 $ 0.95089 $ 0.84711 6,679
1/1/2003 to 12/31/2003 $ 0.84711 $ 0.96717 6,106
1/1/2004 to 12/31/2004 $ 0.96717 $ 1.01405 5,402
1/1/2005 to 12/31/2005 $ 1.01405 $ 1.05290 5,128
2/4/2002** to 12/31/2002 $ 0.98745 $ 0.90443 0
1/1/2003 to 12/31/2003 $ 0.90443 $ 1.03262 0
1/1/2004 to 12/31/2004 $ 1.03262 $ 1.08262 0
1/1/2005 to 12/31/2005 $ 1.08262 $ 1.12421 0
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003*** to 12/31/2003 $ 9.91859 $10.39784 6,477
1/1/2004 to 12/31/2004 $10.39784 $11.19868 5,741
1/1/2005 to 12/31/2005 $11.19868 $12.03990 0
EVERGREEN VA GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99162 $ 0.98597 0
1/1/2002 to 12/31/2002 $ 0.98597 $ 0.71064 0
1/1/2003 to 12/31/2003 $ 0.71064 $ 0.97401 0
1/1/2004 to 12/31/2004 $ 0.97401 $ 1.09375 0
1/1/2005 to 12/31/2005 $ 1.09375 $ 1.14903 0
2/4/2002** to 12/31/2002 $ 0.97334 $ 0.73715 0
1/1/2003 to 12/31/2003 $ 0.73715 $ 1.01048 0
1/1/2004 to 12/31/2004 $ 1.01048 $ 1.13472 0
1/1/2005 to 12/31/2005 $ 1.13472 $ 1.19214 0
EVERGREEN VA INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2003*** to 12/31/2003 $ 9.98995 $10.44289 0
1/1/2004 to 12/31/2004 $10.44289 $12.27702 0
1/1/2005 to 12/31/2005 $12.27702 $14.04482 0
EVERGREEN VA OMEGA FUND
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99424 $ 0.91152 3,859
1/1/2002 to 12/31/2002 $ 0.91152 $ 0.67078 3,618
1/1/2003 to 12/31/2003 $ 0.67078 $ 0.92642 3,307
1/1/2004 to 12/31/2004 $ 0.92642 $ 0.97960 2,927
1/1/2005 to 12/31/2005 $ 0.97960 $ 1.00323 2,778
2/4/2002** to 12/31/2002 $ 0.97492 $ 0.75981 0
1/1/2003 to 12/31/2003 $ 0.75981 $ 1.04955 0
1/1/2004 to 12/31/2004 $ 1.04955 $ 1.10971 0
1/1/2005 to 12/31/2005 $ 1.10971 $ 1.13658 0
</Table>
<Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
*** DATE THAT FUND WAS FIRST OFFERED UNDER THIS ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
99
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES (CONTINUED):
(BASE DEATH BENEFIT 1.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
EVERGREEN VA SPECIAL VALUES FUND
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99754 $ 1.09268 3,551
1/1/2002 to 12/31/2002 $ 1.09268 $ 0.94182 3,331
1/1/2003 to 12/31/2003 $ 0.94182 $ 1.20289 3,046
1/1/2004 to 12/31/2004 $ 1.20289 $ 1.42791 2,692
1/1/2005 to 12/31/2005 $ 1.42791 $ 1.55985 2,555
2/4/2002** to 12/31/2002 $ 0.98336 $ 0.85553 0
1/1/2003 to 12/31/2003 $ 0.85553 $ 1.09280 0
1/1/2004 to 12/31/2004 $ 1.09280 $ 1.29737 0
1/1/2005 to 12/31/2005 $ 1.29737 $ 1.41728 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88103 $12.08600 0
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
5/7/2001* to 12/31/2001 $ 0.99357 $ 0.78373 0
1/1/2002 to 12/31/2002 $ 0.78373 $ 0.56640 0
1/1/2003 to 12/31/2003 $ 0.56640 $ 0.73449 0
1/1/2004 to 12/31/2004 $ 0.73449 $ 0.75480 0
1/1/2005 to 12/31/2005 $ 0.75480 $ 0.77428 0
2/4/2002** to 12/31/2002 $ 0.97419 $ 0.74968 0
1/1/2003 to 12/31/2003 $ 0.74968 $ 0.97207 0
1/1/2004 to 12/31/2004 $ 0.97207 $ 0.99891 0
1/1/2005 to 12/31/2005 $ 0.99891 $ 1.02463 0
</Table>
* DATE THAT THE ORIGINAL VERSION OF THIS ANNUITY WAS FIRST OFFERED.
** DATE THAT THE LATER VERSION OF THIS ANNUITY WAS FIRST OFFERED.
- --------------------------------------------------------------------------------
100
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES:
(CONTRACT WITH CREDIT, GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
JENNISON PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06145 $11.75073 0
PRUDENTIAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04782 $11.04034 0
PRUDENTIAL GLOBAL PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98600 $11.27691 0
PRUDENTIAL MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99992 $10.05598 0
PRUDENTIAL STOCK INDEX PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05597 $10.32516 0
PRUDENTIAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03732 $11.19819 0
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03172 $10.92445 0
SP AIM AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.06867 $ 9.48068 0
SP AIM CORE EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02500 $10.18186 0
SP BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01697 $10.61664 65,028
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00702 $10.44620 44,618
SP DAVIS VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02493 $10.57131 0
SP GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02885 $10.78307 77,676
SP LARGE CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07564 $10.42666 0
SP LSV INTERNATIONAL VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91203 $10.60969 0
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.05585 $ 9.60094 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT WAS FIRST ADDED TO ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
101
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES: (CONTINUED):
(CONTRACT WITH CREDIT, GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
SP MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02813 $10.63711 0
SP PIMCO HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.98879 $10.08338 0
SP PIMCO TOTAL RETURN PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.11445 0
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03564 $11.68501 0
SP SMALL CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03026 $10.45862 0
SP SMALL-CAP VALUE PORTFOLIO (FORMERLY, SP GOLDMAN SACHS SMALL CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05714 $10.45206 0
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07347 $11.92709 0
SP T. ROWE PRICE LARGE-CAP GROWTH PORTFOLIO (FORMERLY, SP ALLIANCEBERNSTEIN LARGE-CAP GROWTH PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03000 $12.06788 0
SP TECHNOLOGY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 4/29/2005 $10.04299 $ 9.58740 0
SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.92621 $11.23793 0
AST AGGRESSIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $ 9.99180 0
AST ALGER ALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/2/2005 $10.09257 $11.64968 0
AST ALLIANCEBERNSTEIN CORE VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07889 $10.25092 0
AST ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05400 $10.20591 0
AST ALLIANCEBERNSTEIN GROWTH + VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/2/2005 $10.04928 $11.26425 0
AST ALLIANCEBERNSTEIN MANAGED INDEX 500 PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04907 $10.33975 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT WAS FIRST ADDED TO ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
102
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES: (CONTINUED):
(CONTRACT WITH CREDIT, GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST AMERICAN CENTURY INCOME & GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06577 $10.27260 0
AST AMERICAN CENTURY STRATEGIC BALANCED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04122 $10.25565 0
AST BALANCED ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.01176 0
AST CAPITAL GROWTH ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.00178 0
AST COHEN & STEERS REALTY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.14629 $11.94685 0
AST CONSERVATIVE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.02175 0
AST DEAM LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.08411 $10.65216 0
AST DEAM SMALL-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01052 $10.25131 0
AST DEAM SMALL-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04489 $ 9.95852 0
AST FEDERATED AGGRESSIVE GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.89421 0
AST GLOBAL ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.01461 $10.56091 0
AST GOLDMAN SACHS CONCENTRATED GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03221 $10.69595 0
AST GOLDMAN SACHS MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $10.51651 0
AST HIGH YIELD PORTFOLIO FORMERLY, AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.97600 $ 9.80046 0
AST JPMORGAN INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.91308 $10.59056 0
AST LARGE-CAP VALUE PORTFOLIO FORMERLY, AST HOTCHKIS AND WILEY LARGE-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.07646 $10.49471 0
</Table>
<Table>
* DATE THAT FUND AND/OR BENEFIT WAS FIRST ADDED TO ANNUITY.
THIS CHART CONTINUES ON THE NEXT PAGE
</Table>
- --------------------------------------------------------------------------------
103
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
ACCUMULATION UNIT VALUES: (CONTINUED):
(CONTRACT WITH CREDIT, GREATER OF ROLL-UP AND STEP-UP GMDB, LIFETIME FIVE, 2.40)
- ------------------------------------------------------------------------------------------------------------------------------
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE NUMBER OF ACCUMULATION UNITS
AT BEGINNING OF PERIOD AT END OF PERIOD OUTSTANDING AT END OF PERIOD
AST LORD ABBETT BOND-DEBENTURE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $ 9.89115 0
AST MARSICO CAPITAL GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.12544 $10.83913 0
AST MFS GLOBAL EQUITY PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.96545 $10.41606 0
AST MFS GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.03612 $10.69610 0
AST MID CAP VALUE PORTFOLIO (FORMERLY, AST GABELLI ALL-CAP VALUE PORTFOLIO)
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.06422 $10.29196 0
AST NEUBERGER BERMAN MID-CAP GROWTH PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.05495 $11.26937 0
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02116 $10.82098 0
AST PIMCO LIMITED MATURITY BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.99805 $ 9.99792 0
AST PRESERVATION ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
12/5/2005* to 12/31/2005 $ 9.99805 $10.03174 0
AST SMALL CAP VALUE PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04786 $10.58426 0
AST T. ROWE PRICE ASSET ALLOCATION PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.02787 $10.29451 0
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.94859 $ 9.39375 0
AST T. ROWE PRICE NATURAL RESOURCES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.00205 $11.66986 0
GARTMORE GVIT DEVELOPING MARKETS FUND
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $ 9.88022 $11.99077 0
JANUS ASPEN LARGE CAP GROWTH PORTFOLIO -- SERVICE SHARES
- ------------------------------------------------------------------------------------------------------------------------------
3/14/2005* to 12/31/2005 $10.04399 $10.33470 0
</Table>
* DATE THAT FUND AND/OR BENEFIT WAS FIRST ADDED TO ANNUITY.
- --------------------------------------------------------------------------------
104
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
APPENDIX B
CALCULATION OF EARNINGS APPRECIATOR BENEFIT
EXAMPLE 1:
Assume that a purchase payment of $70,000 is made on the contract date. Assume
that no withdrawals or subsequent purchase payments are made and that the
contract value used in the death benefit calculation is $120,000. Also assume
that the owner (or joint owner, if older) is younger than age 66 on the date the
application is signed.
<Table>
45% of lesser of:
Adjusted Purchase Payment $70,000
Allocated Earnings $50,000 contract value minus purchase payment)
Benefit (45% of $50,000) $22,500
</Table>
EXAMPLE 2:
Assume that a 60 year old purchases a contract on 1/1/2001 with a $50,000
purchase payment.
The owner's initial purchase payment (purchase payment #1) grows to $90,000 on
1/1/2005, giving the contract $40,000 IN EARNINGS, all allocated to the initial
purchase payment. On this date, the owner makes an additional purchase payment
of $60,000. The $60,000 purchase payment increases the contract value to
$150,000 ($90,000 + $60,000). At this time, there are no earnings allocated to
the additional purchase payment (purchase payment #2). However, future earnings
will now be allocated to the two purchase payments in the following proportions:
(purchase payment#1 + earnings) / total contract value = ($50,000 +
$40,000*) / $150,000 = 60%
(purchase payment#2 + earnings) / total contract value = ($60,000 +
$0) / $150,000 = 40%
On 1/1/2009 the owner makes a withdrawal of $38,000. The contract value has
grown an additional $40,000 from $150,000 on 1/1/2005 to $190,000 on 1/1/2009
prior to the withdrawal. The $40,000 IN NEW EARNINGS will be allocated among the
two purchase payments prior to the withdrawal using the percentages determined
above.
$40,000 IN NEW EARNINGS
Earnings Allocated to Adjusted Purchase Payment #1 (60% of $40,000) =
$24,000
Earnings Allocated to Adjusted Purchase Payment # 2 (40% of $40,000) =
$16,000
The earnings allocated to each purchase payment now are as follows:
<Table>
<Caption>
BEFORE
NEW
EARNINGS $40,000 NEW EARNINGS TOTAL
-------- + -------------------- = --------
Purchase Payment #1 $ 50,000 $ 0 $ 50,000
Earnings Allocated to #1 $ 40,000 $24,000 $ 64,000
Purchase Payment #2 $ 60,000 $ 0 $ 60,000
Earnings Allocated to #2 $ 0 $16,000 $ 16,000
-------- ------- --------
$150,000 + $40,000 = $190,000
</Table>
- --------------------------------------------------------------------------------
105
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
The withdrawal of $38,000 reduces the contract value by 20% ($38,000/$190,000).
The withdrawal will reduce both purchase payments and the earnings allocated to
each of them by 20% as shown below.
<Table>
<Caption>
BEFORE
WITHDRAWAL REDUCED BY 20%
---------- --------------
Adjusted Purchase Payment #1 $ 50,000 $ 40,000
Earnings Allocated to #1 $ 64,000 $ 51,200
Adjusted Purchase Payment #2 $ 60,000 $ 48,000
Earnings Allocated to #2 $ 16,000 $ 12,800
-------- --------
$190,000 $152,000
</Table>
'The contract value grows $20,000 from $152,000 on 1/1/2009 to $172,000 on
1/1/2011. THE $20,000 IN NEW EARNINGS will be allocated among the two purchase
payments using the percentages determined above.
$20,000 IN NEW EARNINGS
Earnings Allocated to Adjusted Purchase Payment #1 (60% of $20,000) =
$12,000
Earnings Allocated to Adjusted Purchase Payment #2 (40% of $20,000) =
$8,000
The earnings allocated to each purchase payment now are as follows:
<Table>
<Caption>
BEFORE
NEW
EARNINGS $20,000 NEW EARNINGS TOTAL
-------- + -------------------- = --------
Adjusted Purchase Payment #1 $ 40,000 $ 0 $ 40,000
Earnings Allocated to #1 $ 51,200 $12,000 $ 63,200
Adjusted Purchase Payment #2 $ 48,000 $ 0 $ 48,000
Earnings Allocated to #2 $ 12,800 $ 8,000 $ 20,800
-------- ------- --------
$152,000 + $20,000 = $172,000
</Table>
Now let's calculate the total Earnings Appreciator Benefit as of 1/1/2011:
<Table>
Benefit on Purchase Payment #1 Benefit on Purchase Payment #2
45% of lesser of: 45% of lesser of:
Adjusted Purchase Payment $40,000 Adjusted Purchase Payment $48,000
Allocated Earnings $63,200 Allocated Earnings $20,800
45% OF $40,000 $18,000 45% OF $20,800 $9,360
</Table>
TOTAL EARNINGS APPRECIATOR BENEFIT: $18,000 + $9,360 = $27,360
- --------------------------------------------------------------------------------
106
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
APPENDIX C
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
Within the Strategic Partners(SM) family of annuities, we offer several
different deferred variable annuity products. These annuities are issued by
Pruco Life Insurance Company. Not all of these annuities may be available to you
due to state approval or broker-dealer offerings. You can verify which of these
annuities is available to you by asking your registered representative, or by
calling us at (888) PRU-2888. For comprehensive information about each of these
annuities, please consult the prospectus for the annuity.
Each annuity has different features and benefits that may be appropriate for
you, based on your individual financial situation and how you intend to use the
annuity.
The different features and benefits may include variations on your ability to
access funds in your annuity without the imposition of a withdrawal charge as
well as different ongoing fees and charges you pay while your contract remains
in force. Additionally, differences may exist in various optional benefits such
as guaranteed living benefits or death benefit protection.
Among the factors you should consider when choosing which annuity product may
be most appropriate for your individual needs are the following:
- - Your age;
- - The amount of your investment and any planned future deposits into the
annuity;
- - How long you intend to hold the annuity (also referred to as investment time
horizon);
- - Your desire to make withdrawals from the annuity;
- - Your investment return objectives;
- - The effect of optional benefits that may be elected; and
- - Your desire to minimize costs and/or maximize return associated with the
annuity.
The following chart sets forth the prominent features of each available
Strategic Partners variable annuity. The availability of optional features, such
as those noted in the chart, may increase the cost of the contract. Therefore,
you should carefully consider which features you plan to use when selecting your
annuity.
In addition to the chart, we set out below certain hypothetical illustrations
that reflect the contract value and surrender value of each variable annuity
over a variety of holding periods. These charts are meant to reflect how your
annuities can grow or decrease depending on market conditions and the comparable
value of each of the annuities (which reflects the charges associated with the
annuities) under the assumptions noted. In comparing the values within the
illustrations, a number of distinctions are evident. To fully appreciate these
distinctions, we encourage you to speak to your registered representative and to
read the prospectuses. However, we do point out the following noteworthy items:
- - Strategic Partners Advisor, because it has no sales charge, offers the
highest surrender value during the first few years. However, unlike Strategic
Partners Plus/Plus and the Strategic Partners Plus/Plus Enhanced contracts
("Enhanced Contracts" refers to the version of the contract offered beginning
in February of 2002), Strategic Partners Advisor offers few optional
benefits.
- - Strategic Partners Select, as part of its standard insurance and
administrative expense, offers a guaranteed minimum death benefit equal to
the greater of contract value, a step-up value, or a roll-up value. In
contrast, you incur an additional charge if you opt for an enhanced death
benefit under the other annuities.
- - Strategic Partners Plus/Plus Enhanced comes in both a bonus version and a
non-bonus version, each of which offers several optional insurance features.
A bonus is added to your purchase payments under the bonus version, although
the withdrawal charges under the bonus version are higher than those under
the non-bonus version. Although the non-bonus version offers no bonus, it is
accompanied by fixed interest rate options that are not available in the
bonus version.
- --------------------------------------------------------------------------------
107
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS ANNUITY PRODUCT COMPARISON. Below is a summary of the
available Strategic Partners variable annuity products. You should consider the
investment objectives, risks, charges and expenses of an investment in any
contract carefully before investing. Each product prospectus as well as the
underlying portfolio prospectuses contains this and other information about the
variable annuities and underlying investment options. Your registered
representative can provide you with prospectuses for one or more of these
variable annuities and the underlying portfolios and can help you decide upon
the product that would be most advantageous for you given your individual needs.
Please read the prospectuses carefully before investing.
- --------------------------------------------------------------------------------
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/ ANNUITY ONE/
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS PLUS ENHANCED PLUS ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
- ----------------------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000 $10,000 $10,000
- ----------------------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & Non- 80 Qualified & 85 80 Qualified & Non- 85 Qualified & Non- 85 Qualified & Non-
Qualified Non-Qualified Qualified Qualified Qualified
- ----------------------------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 7 Years (7%, 6%, 9 Years (7%, 7%, 7 Years (7%, 6%, 7 Years (8%, 8%,
Schedule 5%, 4%, 3%, 2%, 1%) 7%, 6%, 5%, 4%, 3%, 5%, 4%, 3%, 2%, 1%) 8%, 8%, 7%, 6%, 5%)
Contract date based 2%, 1%) Payment Payment date based Payment date based
date based
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross 10% of gross 10% of gross 10% of gross
Withdrawal(1) purchase payments purchase payments purchase payments purchase payments
per contract year, made as of last made as of last made as of last
cumulative up to 7 contract contract contract
years or 70% of anniversary per anniversary per anniversary per
gross purchase contract year contract year contract year
payments
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.52% 1.40% 1.40% 1.50%
Administration Charge
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 $30. Waived if The lesser of $30 The lesser of $35 The lesser of $35
Fee (assessed or 2% of your contract value is or 2% of your or 2% of your or 2% of your
annually) contract value. $50,000 or more contract value. contract value. contract value.
Waived if contract Waived if contract Waived if contract Waived if contract
value is $50,000 or value is $50,000 or value is $75,000 or value is $75,000 or
more more more more
- ----------------------------------------------------------------------------------------------------------------------------------
Contract Credit No No Yes No Yes
4% vested over 7 3%-all amounts ages
years 81-85
4%-under $250,000
5%-$250,000+
- ----------------------------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes No Yes No
1-Year 1-Year
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value No Yes No No No
Adjustment Account 7-Year
(MVA)
- ----------------------------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No No No Yes No
Averaging (DCA)
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Investment 56 56 56/62 56/62 56/62
Options Available
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
1 Withdrawals of taxable amounts will be subject to income tax, and prior to age
59 1/2, may be subject to a 10% federal income tax penalty.
- --------------------------------------------------------------------------------
108
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/ ANNUITY ONE/
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS PLUS ENHANCED PLUS ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
- ----------------------------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A 6 - available in 6 - available in 6 - available in
Strategic Partners Strategic Partners Strategic Partners
Plus only Plus Enhanced only Plus Enhanced only
- ----------------------------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: Step/Roll The greater of: The greater of: The greater of:
purchase payment(s) Withdrawals will purchase payment(s) purchase payment(s) purchase payment(s)
minus proportionate proportionately minus proportionate minus proportionate minus proportionate
withdrawal(s) or affect the Death withdrawal(s) or withdrawal(s) or withdrawal(s) or
contract value Benefit contract value contract value contract value
- ----------------------------------------------------------------------------------------------------------------------------------
Optional Death Step/Roll N/A Step-Up Step-Up Step-Up
Benefit (for an Roll-Up Roll-Up Roll-Up
additional Combo: Step/Roll Combo: Step/Roll Combo: Step/Roll
cost)(2,3)
- ----------------------------------------------------------------------------------------------------------------------------------
Living Benefits (for Lifetime Five N/A Lifetime Five Lifetime Five Lifetime Five
an additional Guaranteed Minimum Guaranteed Minimum Guaranteed Minimum
cost)(3, 4) Income Benefit Income Benefit Income Benefit
(GMIB) (GMIB) (GMIB)
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
2 For more information on these benefits, refer to Section 4, "What Is The Death
Benefit?" in the Prospectus.
3 Not all Optional Benefits may be available in all states.
4 For more information on these benefits, refer to Section 3, "What Kind Of
Payments Will I Receive During The Income Phase?"; and Section 5, "What Is the
LifeTime Five(SM) Income Benefit?" in the Prospectus.
- --------------------------------------------------------------------------------
109
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATION
The following examples outline the value of each annuity as well as the amount
that would be available to an investor as a result of full surrender at the end
of each of the contract years specified. The values shown below are based on the
following assumptions:
- - An initial investment of $100,000 is made into each contract earning a gross
rate of return of 0% and 6% respectively.
- - No subsequent deposits or withdrawals are made to/from the contract.
- - The hypothetical gross rates of return are reduced by the arithmetic average
of the fees and expenses of the underlying portfolios (as of December 31,
2005) and the charges that are deducted from the contract at the Separate
Account level as follows:
-- 0.99% average of all fund expenses are computed by adding Portfolio
management fees, 12b-1 fees and other expenses of all of the underlying
portfolios and then dividing by the number of portfolios. For purposes
of the illustrations, we do not reflect any expense reimbursements or
expense waivers that might apply and are described in the prospectus fee
table.
-- The Separate Account level charges include the Insurance Charge and
Administration Charge (as applicable).
The Contract Value assumes no surrender while the Surrender Value assumes a
100% surrender two days prior to the contract anniversary, therefore reflecting
the Withdrawal charge applicable to that contract year. Note that a withdrawal
on the contract anniversary, or the day before the contract anniversary, would
be subject to the withdrawal charge applicable to the next contract year, which
usually is lower. The values that you actually experience under a contract will
be different from what is depicted here if any of the assumptions we make here
differ from your circumstances, however the relative values for each product
reflected below will remain the same. (We will provide you with a personalized
illustration upon request).
- --------------------------------------------------------------------------------
110
- --------------------------------------------------------------------------------
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
0% GROSS RETURN
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/PLUS ANNUITY ONE/PLUS
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS ENHANCED ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER ANNUITY SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $97,659 $97,659 $97,544 $91,415 $101,565 $95,265 $97,659 $91,522 $101,465 $94,148
2 $95,366 $95,366 $95,141 $90,032 $ 99,181 $92,881 $95,366 $90,244 $ 98,986 $91,866
3 $93,128 $93,128 $92,798 $88,658 $ 96,853 $90,553 $93,128 $88,971 $ 96,567 $89,641
4 $90,941 $90,941 $90,512 $87,292 $ 94,579 $89,504 $90,941 $87,703 $ 94,207 $87,470
5 $88,807 $88,807 $88,283 $85,934 $ 92,359 $88,241 $88,807 $86,442 $ 91,905 $86,171
6 $86,722 $86,722 $86,109 $84,586 $ 90,191 $86,983 $86,722 $85,187 $ 89,659 $84,879
7 $84,686 $84,686 $83,988 $83,248 $ 88,073 $85,731 $84,686 $83,939 $ 87,468 $83,594
8 $82,698 $82,698 $81,919 $81,919 $ 86,006 $84,486 $82,698 $82,698 $ 85,331 $85,331
9 $80,757 $80,757 $79,902 $79,902 $ 83,987 $83,247 $80,757 $80,757 $ 83,245 $83,245
10 $78,861 $78,861 $77,934 $77,934 $ 82,015 $82,015 $78,861 $78,861 $ 81,211 $81,211
11 $77,010 $77,010 $76,014 $76,014 $ 80,090 $80,090 $77,010 $77,010 $ 79,226 $79,226
12 $75,202 $75,202 $74,142 $74,142 $ 78,210 $78,210 $75,202 $75,202 $ 77,290 $77,290
13 $73,436 $73,436 $72,282 $72,282 $ 76,374 $76,374 $73,436 $73,436 $ 75,402 $75,402
14 $71,712 $71,712 $70,468 $70,468 $ 74,581 $74,581 $71,678 $71,678 $ 73,559 $73,559
15 $70,029 $70,029 $68,698 $68,698 $ 72,830 $72,830 $69,961 $69,961 $ 71,727 $71,727
16 $68,385 $68,385 $66,972 $66,972 $ 71,121 $71,121 $68,285 $68,285 $ 69,940 $69,940
17 $66,780 $66,780 $65,288 $65,288 $ 69,451 $69,451 $66,648 $66,648 $ 68,197 $68,197
18 $65,212 $65,212 $63,646 $63,646 $ 67,821 $67,821 $65,049 $65,049 $ 66,496 $66,496
19 $63,681 $63,681 $62,044 $62,044 $ 66,228 $66,228 $63,488 $63,488 $ 64,837 $64,837
20 $62,186 $62,186 $60,482 $60,482 $ 64,674 $64,674 $61,963 $61,963 $ 63,219 $63,219
21 $60,726 $60,726 $58,958 $58,958 $ 63,156 $63,156 $60,474 $60,474 $ 61,640 $61,640
22 $59,301 $59,301 $57,472 $57,472 $ 61,673 $61,673 $59,021 $59,021 $ 60,099 $60,099
23 $57,909 $57,909 $56,022 $56,022 $ 60,225 $60,225 $57,601 $57,601 $ 58,596 $58,596
24 $56,549 $56,549 $54,608 $54,608 $ 58,811 $58,811 $56,215 $56,215 $ 57,130 $57,130
25 $55,222 $55,222 $53,229 $53,229 $ 57,431 $57,431 $54,861 $54,861 $ 55,700 $55,700
- ---------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005 the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor -2.35%; Strategic Partners Select -2.46%;
Strategic Partners Annuity One/Plus Bonus -2.35%; Strategic Partners Annuity
One/Plus Enhanced Non-Bonus -2.35%; Strategic Partners Annuity One/Plus
Enhanced Bonus -2.44%.
5. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
6. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
111
PART II STRATEGIC PARTNERS PLUS PROSPECTUS SECTIONS 1-10
- --------------------------------------------------------------------------------
6% GROSS RETURN
<Table>
<Caption>
STRATEGIC PARTNERS STRATEGIC PARTNERS
STRATEGIC PARTNERS ANNUITY ONE/PLUS ANNUITY ONE/PLUS
STRATEGIC PARTNERS STRATEGIC PARTNERS ANNUITY ONE/PLUS ENHANCED ENHANCED
ADVISOR SELECT BONUS NON BONUS BONUS
-------------------- -------------------- -------------------- -------------------- --------------------
CONTRACT SURRENDER CONTRACT SURRENDER ANNUITY SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
- ---------------------------------------------------------------------------------------------------------------------
1 $103,502 $103,502 $103,380 $ 96,844 $107,642 $101,342 $103,502 $ 96,957 $107,536 $ 99,734
2 $107,136 $107,136 $106,884 $101,071 $111,422 $105,122 $107,136 $101,309 $111,203 $103,107
3 $110,899 $110,899 $110,506 $105,481 $115,335 $109,035 $110,899 $105,854 $114,994 $106,596
4 $114,793 $114,793 $114,252 $110,082 $119,385 $112,822 $114,793 $110,602 $118,915 $110,203
5 $118,824 $118,824 $118,124 $114,881 $123,577 $117,899 $118,824 $115,560 $122,970 $115,063
6 $122,997 $122,997 $122,127 $119,885 $127,917 $123,201 $122,997 $120,737 $127,163 $120,134
7 $127,316 $127,316 $126,267 $125,104 $132,409 $128,737 $127,316 $126,143 $131,499 $125,424
8 $131,787 $131,787 $130,546 $130,546 $137,058 $134,518 $131,787 $131,787 $135,982 $135,982
9 $136,415 $136,415 $134,971 $134,971 $141,871 $140,553 $136,415 $136,415 $140,619 $140,619
10 $141,205 $141,205 $139,545 $139,545 $146,853 $146,853 $141,205 $141,205 $145,413 $145,413
11 $146,164 $146,164 $144,275 $144,275 $152,010 $152,010 $146,164 $146,164 $150,371 $150,371
12 $151,297 $151,297 $149,165 $149,165 $157,348 $157,348 $151,297 $151,297 $155,499 $155,499
13 $156,610 $156,610 $154,220 $154,220 $162,874 $162,874 $156,610 $156,610 $160,800 $160,800
14 $162,109 $162,109 $159,447 $159,447 $168,594 $168,594 $162,109 $162,109 $166,283 $166,283
15 $167,802 $167,802 $164,851 $164,851 $174,514 $174,514 $167,802 $167,802 $171,953 $171,953
16 $173,694 $173,694 $170,439 $170,439 $180,642 $180,642 $173,694 $173,694 $177,816 $177,816
17 $179,794 $179,794 $176,215 $176,215 $186,986 $186,986 $179,794 $179,794 $183,879 $183,879
18 $186,108 $186,108 $182,188 $182,188 $193,552 $193,552 $186,108 $186,108 $190,148 $190,148
19 $192,643 $192,643 $188,363 $188,363 $200,349 $200,349 $192,643 $192,643 $196,632 $196,632
20 $199,408 $199,408 $194,747 $194,747 $207,384 $207,384 $199,408 $199,408 $203,336 $203,336
21 $206,411 $206,411 $201,347 $201,347 $214,667 $214,667 $206,411 $206,411 $210,269 $210,269
22 $213,659 $213,659 $208,172 $208,172 $222,205 $222,205 $213,659 $213,659 $217,439 $217,439
23 $221,162 $221,162 $215,227 $215,227 $230,008 $230,008 $221,162 $221,162 $224,853 $224,853
24 $228,928 $228,928 $222,522 $222,522 $238,085 $238,085 $228,928 $228,928 $232,519 $232,519
25 $236,967 $236,967 $230,064 $230,064 $246,446 $246,446 $236,967 $236,967 $240,447 $240,447
- ---------------------------------------------------------------------------------------------------------------------
</Table>
Assumptions:
1. $100,000 initial investment.
2. As of December 31, 2005 the average fund expenses = 0.99%.
3. No optional death benefit(s) and/or optional living benefit(s) were elected.
4. These reductions result in hypothetical net rates of return as follows:
Strategic Partners Advisor 3.47%; Strategic Partners Select 3.35%; Strategic
Partners Annuity One/Plus Bonus 3.47%; Strategic Partners Annuity One/Plus
Enhanced Non-Bonus 3.47%; Strategic Partners Annuity One/Plus Enhanced Bonus
3.37%.
5. The illustration above illustrates 100% invested into the variable
sub-accounts. Investments into the fixed rate accounts, as noted above, may
receive a higher rate of interest in one product over another causing
Contract Values to differ in relation to one another.
6. Surrender Value assumes surrender 2 days prior to policy anniversary.
- --------------------------------------------------------------------------------
112
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE PRUCO LIFE ANNUITY DESCRIBED IN PROSPECTUS P2082 (05/2006).
---------------------------------------------------------
(print your name)
---------------------------------------------------------
(address)
---------------------------------------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
P2082
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registation Fees
Pruco Life registered $200 million of interests in the market value adjusted
annuity contracts described in this registration statement. Pruco Life has paid
$16,180 to the SEC for the registration fees required under the Securities Act
of 1933.
Federal Taxes
Pruco Life estimates the federal tax effect associated with the deferred
acquisition costs attributable to receipt of $30 million of purchase payments
over a two year period to be approximately $118,400.
State Taxes
Pruco Life estimates that approximately $6,400 in premium taxes will be owed
upon receipt of purchase payments under the contracts, and that additional
premium taxes in the approximate amount of $64,000 would be owed if the full $32
million of purchase payments were applied to annuity options. The taxes set
forth here are an estimate, based on the amount of purchase payments we expect
to receive during the next two years.
Printing Costs
Pruco Life estimates that the costs of printing prospectuses for the amount of
securities registered herein will be approximately $200,000.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life.
Accounting Costs
PricewaterhouseCoopersLLP, the independent registered public accounting firm
that audits Pruco Life's financials, charges approximately $10,000 in connection
with each filing of this registration statement with the Commission.
Premium Paid to Indemnify Officers
Officers and Directors of Pruco Life are indemnified under a policy that also
covers officers and directors of other entities controlled by Prudential
Financial, Inc. A portion of the cost of that policy is attributed to Pruco
Life.
II-1
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in conjunction with certain of its affiliates, maintains
insurance on behalf of any person who is or was a trustee, director, officer,
employee, or agent of the Registrant, or who is or was serving at the request of
the Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
Arizona, the state of organization of Pruco Life Insurance Company ("Pruco"),
permits entities organized under its jurisdiction to indemnify directors and
officers with certain limitations. The relevant provisions of Arizona law
permitting indemnification can be found in Section 10-850 et. seq. of the
Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII, which
relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS
(A) EXHIBITS
(1) Form of a Distribution Agreement between Prudential Investment Management
Services, Inc., "PIMS" (Principal Underwriter) and Pruco Life Insurance
Company (Depositor). (Note 2)
(3) (i) Articles of Incorporation of Pruco Life Insurance Company, as amended
through October 19, 1993 (Note 6)
(ii) By-Laws of Pruco Life Insurance Company, as amended through May 6,
1997 (Note 7)
(4) (a) Strategic Partners Variable Annuity Contract VBON-2000 (Note 3)
(b) Strategic Partners Variable Annuity Contract VDCA-2000 (Note 3)
(c) Strategic Partners MVA Endorsement ORD 112805 (Note 5)
(d) Strategic Partners Application ORD 99730 (Note 5)
II-2
(e) Strategic Partners FlexElite Variable Annuity Contract VFLX-2003 (Note
4)
(f) Strategic Partners FlexElite Application (Note 8)
(g) Strategic Partners SPAO and FlexElite GMIB Endorsement ORD 112963
(Note 9)
(h) Strategic Partners SPAO Application (Note 10)
(i) Strategic Partners FlexElite Application (Note 10)
(j) Strategic Partners SPAO and FlexElite GMIB Endorsement Supplement ORD
112963 (Note 10)
(k) Periodic Value Death Benefit Endorsement (HDV) (Note 11)
(l) Schedule Supplement Periodic Value Death Benefit (HDV) (Note 11)
(m) Guaranteed Minimum Payments Benefit Endorsement (Lifetime 5) (Note 11)
(n) Schedule Supplement Guaranteed Minimum Payments Benefit (Lifetime 5)
(Note 11)
(o) Strategic Partners SPAO and FlexElite Joint and Survivor Guaranteed
Minimum Payments Benefit Schedule (Spousal Lifetime Five) (Note 12)
(5) Opinion of Counsel as to the legality of the securities being registered.
(Note 1)
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm (Note 1)
(24) Powers of Attorney:
(a) James J. Avery, Jr., C. Edward Chaplin, John Chieffo, Helen M. Galt,
Bernard J. Jacob, Ronald P. Joelson, and David R. Odenath, Jr. (Note
13)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post Effective Amendment No. 4 on Form
S-1, Registration No. 33-61143, filed April 15, 1999, on behalf the Pruco
Life Insurance Company.
(Note 3) Incorporated by reference to the initial registration on Form N-4,
Registration No. 333-37728, filed May 24, 2000 on behalf of the Pruco Life
Flexible Premium Variable Annuity Account.
II-3
(Note 4) Incorporated by reference to Post-Effective Amendment No. 1 to Form
N-4, Registration No. 333-75702, filed February 14, 2003 on behalf of Pruco
Life Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to initial Form S-3 Registration Statement
No. 333-103474 filed February 27, 2003 on behalf of Pruco Life Insurance
Company.
(Note 6) Incorporated by reference to the initial registration on Form S-6,
Registration No. 333-07451, filed July 2, 1999 on behalf of the Pruco Life
Variable Appreciable Account.
(Note 7) Incorporated by reference to Form 10-Q as filed August 15, 1997 on
behalf of Pruco Life Insurance Company.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 2 to Form
N-4, Registration No. 333-75702, filed April 23, 2003 on behalf of Pruco
Life Flexible Premium Variable Annuity Account.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 11 to Form
N-4, Registration No. 333-37728, filed November 14, 2003 on behalf of Pruco
Life Flexible Premium Variable Annuity Account.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 3 to Form
S-3, Registration No. 333-103474, filed April 12, 2004 on behalf of Pruco
Life Insurance Company.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 5 to Form
N-4, Registration No. 333-75702, filed January 20, 2005 on behalf of Pruco
Life Flexible Premium Variable Annuity Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 6 to Form
S-3, Registration No. 333-103474, filed February 7, 2006 on behalf of Pruco
Life Insurance Company.
(Note 13) Incorporated by reference to Post-Effective Amendment No. 13 to Form
S-3, Registration No. 33-61143, filed April 19, 2006 on behalf of Pruco
Life Insurance Company.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-4
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newark, State of New Jersey, on this 21st day of
April, 2006.
PRUCO LIFE INSURANCE COMPANY
(Registrant)
By: /s/ BERNARD J. JACOB
------------------------------------
BERNARD J. JACOB
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE AND TITLE
/s/* April 21, 2006
- -------------------------------------
JAMES J. AVERY JR
VICE CHAIRMAN AND DIRECTOR
/s/* *By: /s/ CLIFFORD E. KIRSCH
- ------------------------------------- -----------------------------------
BERNARD J. JACOB CLIFFORD E. KIRSCH
PRESIDENT AND DIRECTOR (ATTORNEY-IN-FACT)
/s/*
- -------------------------------------
JOHN CHIEFFO
VICE PRESIDENT, CHIEF ACCOUNTING
OFFICER AND PRINCIPAL FINANCIAL
OFFICER
/s/*
- -------------------------------------
C. EDWARD CHAPLIN
SENIOR VICE PRESIDENT AND DIRECTOR
/s/*
- -------------------------------------
HELEN M. GALT
DIRECTOR
/s/*
- -------------------------------------
RONALD P. JOELSON.
DIRECTOR
/s/*
- -------------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
II-6
EXHIBIT INDEX
(5) Opinion of Counsel
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm