AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 2009
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
(Exact Name of Registrant)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2426091
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-5740
(Address and telephone number of principal executive offices)
THOMAS C. CASTANO
SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4780
(Name, address and telephone number of agent for service)
Copies to:
CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
751 BROAD STREET
NEWARK, NJ 07102-2992
(973) 802-6997
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. [_]
Indicate by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company.
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [X] Smaller reporting company [_]
Calculation of Registration fee
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Proposed Proposed
Title of each class of Amount maximum maximum
securities to be to be offering price aggregate Amount of
registered registered* per unit* offering price registration fee**
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Market-value adjustment
annuity contracts (or
modified guaranteed
annuity contracts) $40,000,000 $1,572.00
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* Securities are not issued in predetermined units
** In this filling, Pruco Life Insurance Company of New Jersey is registering
$40,000,000 of Securities and paying a fee of $1,572.00 therefor.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission may determine.
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STRATEGIC PARTNERS/SM/ SELECT VARIABLE ANNUITY
Prospectus: May 1, 2007
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This prospectus describes an individual variable annuity contract offered by
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) and the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account. Pruco Life
of New Jersey 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. The different features and
benefits include variations in death benefit protection and the ability to
access your annuity's Contact 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 of New Jersey is an
indirect wholly-owned subsidiary of The Prudential Insurance Company of
America.
THE FUNDS
Strategic Partners Select 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, Advanced Series Trust (formerly named
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
Please read this prospectus before purchasing a Strategic Partners Select
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 SELECT
To learn more about the Strategic Partners Select variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated May 1,
2007. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life of New Jersey 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. 20549-0102. (See SEC file
numbers 333-62238 and 333-62246.) 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 Select 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 9 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.
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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 SELECT 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 ORD01009NY
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INVESTMENT OPTIONS
The Prudential Series Fund
Jennison Portfolio
Equity Portfolio
Global Portfolio
Money Market Portfolio
Stock Index Portfolio
Value Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Growth Asset Allocation Portfolio
SP AIM Core Equity Portfolio
SP Davis Value Portfolio
SP International Growth Portfolio
SP 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
Advanced Series 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 Allocation 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 Value Portfolio
AST Federated Aggressive Growth Portfolio
AST First Trust Balanced Target Portfolio
AST First Trust Capital Appreciation Target 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 Neuberger Berman Small-Cap Growth 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
AST UBS Dynamic Alpha Portfolio
Gartmore Variable Insurance Trust
GVIT Developing Markets Fund
Janus Aspen Series
Large Cap Growth Portfolio -- Service Shares
CONTENTS
PART I: STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY...................................... 5
GLOSSARY................................................................................. 6
SUMMARY.................................................................................. 9
RISK FACTORS............................................................................. 10
SUMMARY OF CONTRACT EXPENSES............................................................. 12
EXPENSE EXAMPLES......................................................................... 15
PART II: STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9................................ 16
SECTION 1: WHAT IS THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY?....................... 17
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"........................................... 17
SECTION 2: WHAT INVESTMENT OPTIONS CAN I CHOOSE?......................................... 17
VARIABLE INVESTMENT OPTIONS............................................................ 18
INTEREST-RATE OPTIONS.................................................................. 29
TRANSFERS AMONG OPTIONS................................................................ 29
ADDITIONAL TRANSFER RESTRICTIONS....................................................... 30
DOLLAR COST AVERAGING FEATURE.......................................................... 31
ASSET ALLOCATION PROGRAM............................................................... 31
AUTO-REBALANCING....................................................................... 32
SCHEDULED TRANSACTIONS................................................................. 32
VOTING RIGHTS.......................................................................... 32
SUBSTITUTION........................................................................... 32
SECTION 3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION). 32
PAYMENT PROVISIONS..................................................................... 33
OPTION 1: ANNUITY PAYMENTS FOR A FIXED PERIOD........................................ 33
OPTION 2: LIFE INCOME ANNUITY WITH 120 PAYMENTS (10 YEARS) CERTAIN................... 33
OPTION 3: INTEREST PAYMENT OPTION.................................................... 33
OTHER ANNUITY OPTIONS................................................................ 33
TAX CONSIDERATIONS..................................................................... 33
HOW WE DETERMINE ANNUITY PAYMENTS...................................................... 33
SECTION 4: WHAT IS THE DEATH BENEFIT?.................................................... 34
BENEFICIARY............................................................................ 34
CALCULATION OF THE DEATH BENEFIT....................................................... 34
DEATH OF OWNER OR JOINT OWNER.......................................................... 35
BENEFICIARY CONTINUATION OPTION........................................................ 36
SECTION 5: HOW CAN I PURCHASE A STRATEGIC PARTNERS SELECT CONTRACT?...................... 37
PURCHASE PAYMENTS...................................................................... 37
ALLOCATION OF PURCHASE PAYMENTS........................................................ 37
CALCULATING CONTRACT VALUE............................................................. 38
SECTION 6: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
CONTRACT?.............................................................................. 38
INSURANCE AND ADMINISTRATIVE CHARGES................................................... 38
ANNUAL CONTRACT FEE.................................................................... 39
WITHDRAWAL CHARGE...................................................................... 39
TAXES ATTRIBUTABLE TO PREMIUM.......................................................... 40
TRANSFER FEE........................................................................... 40
BENEFICIARY CONTINUATION OPTION CHARGES................................................ 40
COMPANY TAXES.......................................................................... 40
UNDERLYING MUTUAL FUND FEES............................................................ 40
3
SECTION 7: HOW CAN I ACCESS MY MONEY?.................................................... 40
YOU CAN MAKE WITHDRAWALS ONLY DURING THE ACCUMULATION PHASE............................ 40
AUTOMATED WITHDRAWALS.................................................................. 41
SUSPENSION OF PAYMENTS OR TRANSFERS.................................................... 41
SECTION 8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
CONTRACT?.............................................................................. 41
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT PLANS)...... 41
CONTRACTS HELD BY TAX FAVORED PLANS.................................................... 44
SECTION 9: OTHER INFORMATION............................................................. 48
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY............................................. 48
THE SEPARATE ACCOUNT................................................................... 48
SALE AND DISTRIBUTION OF THE CONTRACT.................................................. 48
LITIGATION............................................................................. 49
ASSIGNMENT............................................................................. 49
FINANCIAL STATEMENTS................................................................... 50
STATEMENT OF ADDITIONAL INFORMATION.................................................... 50
HOUSEHOLDING........................................................................... 50
MARKET VALUE ADJUSTMENT FORMULA........................................................ 50
APPENDIX A - ACCUMULATION UNIT VALUES..................................................... A-1
APPENDIX B - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU.......................... B-1
4
PART I SUMMARY
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STRATEGIC PARTNERS SELECT PROSPECTUS
5
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
by any market value adjustment and minus any charge we impose for premium
taxes and withdrawal charge.
Annuitant
The person whose life determines how long the contract lasts and the amount of
income payments that we will make. Except as indicated below, 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.
Generally, if an annuity is owned by an entity and the entity has named a
co-annuitant, the co-annuitant will become the annuitant upon the death of the
annuitant, and no death benefit is payable. If a Custodial Account elects to
receive the Death Benefit, the Contract Value as of the date of due proof of
death of the annuitant will reflect the amount that would have been payable
had a death benefit been paid. Unless we agree otherwise, the contract is only
eligible to have a co-annuitant designation if the entity which owns the
contract is (1) a plan described in Internal Revenue Code
Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an entity
described in Code Section 72(u)(1) (or any successor Code section thereto); or
(3) custodial account established pursuant to the provisions in Code
Section 408(a) (or any successor Code section thereto) ("Custodial Account").
Where the contract is held by a Custodial Account, the co-annuitant will not
automatically become the annuitant upon the death of the annuitant. Upon the
death of the annuitant, the Custodial Account will have the choice, subject to
our rules, to either elect to receive the death benefit or elect to continue
the contract.
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 when the
sole or last surviving annuitant dies.
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.
Cash Value
This is the total value of your contract adjusted by any market value
adjustment, minus any withdrawal charge(s) or administrative charge.
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.
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.
6
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.
Death Benefit
If a death benefit is payable, the beneficiary you designate will receive, at
a minimum, the current Contact Value as of the date that proof of death is
received, or a potentially greater amount related to market appreciation. See
Section 4, "What Is The Death Benefit?"
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)
A feature available for an additional charge, which guarantees that the death
benefit that the beneficiary receives will be no less than a certain GMDB
protected value.
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.
Interest Cell
The segment of the interest-rate option that is established whenever you
allocate or transfer money into an interest-rate option.
Interest-Rate Option
An investment option that offers a fixed-rate of interest for a one-year
period (fixed-rate option) or a seven-year period (market value adjustment
option).
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.
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 offers a specified guarantee period and pays a fixed
rate of interest. We impose a market value adjustment on withdrawals that you
make from this option prior to the end of a guarantee period.
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 of New Jersey Flexible Premium
Variable Annuity Account. The separate account is set apart from all of the
general assets of Pruco Life of New Jersey.
Statement Of Additional Information
A document containing certain additional information about the Strategic
Partners Select 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.
7
GLOSSARY continued
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 8, "What Are The Tax Considerations Associated
With The Strategic Partners Select 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 of New Jersey that invests in a particular mutual fund is referred
to in your contract as a subaccount.
8
SUMMARY OF SECTIONS 1-9
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 Select Variable Annuity?
This variable annuity contract, offered by Pruco Life of New Jersey, is a
contract between you, as the owner, and us, the insurance company, Pruco Life
Insurance Company of New Jersey (Pruco Life of New Jersey, we or us). The
contract allows you to invest on a tax-deferred basis in one or more variable
investment options. There are also two interest-rate options, the fixed-rate
option 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 and guaranteed income options.
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 the Prudential Money Market Portfolio variable investment option.
The interest-rate options offer an interest rate that is guaranteed. While
your money is in the fixed-rate option or if your money remains in the market
value adjustment option for a full seven-year period, your principal amount is
guaranteed and the minimum interest amount that your money will earn is
dictated by state law. Payments allocated to the fixed-rate option become part
of Pruco Life of New Jersey's general assets. Payments allocated to the market
value adjustment option are held as a separate pool of assets, but the income,
gains or losses resulting from these assets are not credited or charged
against the contracts. As a result, the strength of our guarantees under these
interest-rate options are based on the overall financial strength of Pruco
Life Insurance Company of New Jersey.
You can invest your money in any or all of the variable investment options and
the interest-rate options. You are allowed 12 transfers each contract year
among the investment options, without a charge. There are certain restrictions
on transfers involving the 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.
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 Select, you may cancel
your contract within 10 days after receiving it (or whatever period is
required by 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
investment 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 a fixed interest rate option or 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.
SECTION 4
What Is The Death Benefit?
If the sole or last surviving annuitant dies during the accumulation phase,
the designated person(s) or the beneficiary will receive, at a minimum, the
current value of the contract.
9
SUMMARY OF SECTIONS 1-9 continued
SECTION 5
How Can I Purchase A Strategic Partners Select Annuity Contract?
You can purchase this contract, unless we agree otherwise and subject to our
rules, under most circumstances, 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 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 annuitant and co-annuitant are age
85 or younger (69 for qualified contracts unless a minimum distribution option
is elected, in which case the annuitant and co-annuitant may be age 80 or
younger) on the contract date. Certain age limits apply to certain features
and benefits described herein.
SECTION 6
What Are The Expenses Associated With The Strategic Partners Select Contract?
The contract has insurance features and investment features, and there are
costs related to each.
Each year we deduct a $30 contract maintenance charge if your Contract Value
is less than $50,000. For insurance and administrative costs, we also deduct
an annual charge of 1.52% of the average daily value of all assets allocated
to the variable investment options. This charge is not assessed against
amounts allocated to the interest-rate investment options.
There are also expenses associated with the mutual funds. For 2006, the fees
of these funds ranged from 0.37% to 1.19% 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.
During the accumulation phase, if you withdraw money less than seven years
after the contract date, you may have to pay a withdrawal charge on all or
part of the withdrawal. This charge ranges from 1-7%.
For more information, including details about other possible charges under the
contract, see "Summary Of Contract Expenses" and Section 6, "What Are The
Expenses Associated With The Strategic Partners Select Contract?"
SECTION 7
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. Each year, you may withdraw up to
10% of your total purchase payments without charge. Withdrawals greater than
10% of your purchase payments will be subject to a withdrawal charge. We may
impose a withdrawal charge ranging from 1-7%, which decreases 1% each year.
Thereafter, there is no charge for a withdrawal. A market value adjustment may
also apply.
SECTION 8
What Are The Tax Considerations Associated With The Strategic Partners Select
Contract?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, earnings are withdrawn first and 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 9
Other Information
This contract is issued by Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey), an indirect 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 option,
and the contract's other insurance features are available under a contract
issued by Pruco Life of New Jersey, and thus are backed by the financial
strength of that company. If Pruco Life of New Jersey were to experience
significant financial adversity, it is possible that Pruco Life of New
Jersey's ability to pay
10
interest and principal under the market value adjustment option and fixed
interest rate option 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
of New Jersey 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.
11
SUMMARY OF CONTRACT EXPENSES
The purpose of this summary is to help you to understand the costs you will
pay for Strategic Partners Select. 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 6, "What Are The Expenses Associated With The
Strategic Partners Select Contract?" The individual fund prospectuses contain
detailed expense information about the underlying mutual funds.
-------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
-------------------------------------------------------------------------------
WITHDRAWAL CHARGE /1/
-------------------------------------------------------------------------------
During contract year 1 7%
-------------------------------------------------------------------------------
During contract year 2 6%
-------------------------------------------------------------------------------
During contract year 3 5%
-------------------------------------------------------------------------------
During contract year 4 4%
-------------------------------------------------------------------------------
During contract year 5 3%
-------------------------------------------------------------------------------
During contract year 6 2%
-------------------------------------------------------------------------------
During contract year 7 1%
-------------------------------------------------------------------------------
Maximum Transfer Fee /2/
-------------------------------------------------------------------------------
Each transfer after 12 $25.00
-------------------------------------------------------------------------------
Each transfer after 20 (Beneficiary $10.00
Continuation Option only)
-------------------------------------------------------------------------------
The next table describes the fees and expenses that you will pay periodically
during the time that you own the contract, not including the underlying mutual
funds' fees and expenses.
-------------------------------------------------------------------------------
PERIODIC ACCOUNT EXPENSES
-------------------------------------------------------------------------------
Maximum Annual Contract Fee /3/ $30.00
-------------------------------------------------------------------------------
INSURANCE AND ADMINISTRATIVE EXPENSES
(as a percentage of average contract value in variable investment options)
-------------------------------------------------------------------------------
Mortality and Expense Risk 1.37%
-------------------------------------------------------------------------------
Administrative Fee 0.15%
-------------------------------------------------------------------------------
Total 1.52%
-------------------------------------------------------------------------------
Settlement Service Charge 1.00%
(if the Contract Owner's beneficiary
elects the Beneficiary Continuation
Option) /4/
-------------------------------------------------------------------------------
1 As of the beginning of the contract year, you may withdraw up to 10% of the
total purchase payments plus any charge-free amount carried over from the
previous contract year without charge. There is no withdrawal charge on any
amount used to provide income under the Life Annuity with 120 payments (10
years) certain option or annuity payments for a fixed period of five years
or more. (see Section 3). Withdrawal charges are waived when a death
benefit is paid due to the death of an annuitant.
2 You will not be charged for transfers made in connection with dollar cost
averaging and auto-rebalancing.
3 This fee is not charged if the value of your contract is $50,000 or more.
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. For
beneficiaries who elect the Beneficiary Continuation Option, the annual
contract fee is equal to the lesser of $30 or 2% of Contract Value if the
Contract Value is less than $25,000 at the time the fee is assessed. The
fee will not apply if it is assessed 30 days prior to a surrender request.
4 The other Insurance and Administrative Expense charges do not apply if you
are a beneficiary under the Beneficiary Continuation Option. Instead, the
Settlement Service Charge set forth here applies, if your beneficiary
elects the Beneficiary Continuation Option. The 1.00% charge is an annual
charge that is assessed daily against the assets in the variable investment
options.
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, 2006.
Fund expenses are not fixed or guaranteed by the Strategic Partners Select
contract, and may vary from year to year.
- --------------------------------------------------------------------------------------------------------------------
MINIMUM MAXIMUM
- --------------------------------------------------------------------------------------------------------------------
Total Annual Underlying Mutual Fund 0.37% 1.19%
Operating Expenses*
- --------------------------------------------------------------------------------------------------------------------
* See, "Underlying Mutual Fund Portfolio Annual Expenses" for more detail on
the expenses of the underlying mutual funds.
12
- ----------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
- ----------------------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2006
UNDERLYING PORTFOLIOS -----------------------------------------------------------------
Management Fee Other 12b-1 Fee Acquired Total Annual
Expenses /3/ Portfolio Fees Portfolio
& Expenses /1/ Operating
Expenses /2/
- - -----------------------------------------------------------------
Prudential Series Fund
Equity Portfolio 0.45% 0.02% 0.00% 0.00% 0.47%
Global Portfolio 0.75% 0.09% 0.00% 0.00% 0.84%
Jennison Portfolio 0.60% 0.03% 0.00% 0.00% 0.63%
Money Market Portfolio 0.40% 0.03% 0.00% 0.00% 0.43%
Stock Index Portfolio /4/ 0.35% 0.02% 0.00% 0.00% 0.37%
Value Portfolio 0.40% 0.03% 0.00% 0.00% 0.43%
SP Aggressive Growth Asset Allocation Portfolio 0.05% 0.07% 0.00% 0.86% 0.98%
SP Balanced Asset Allocation Portfolio 0.05% 0.01% 0.00% 0.77% 0.83%
SP Conservative Asset Allocation Portfolio 0.05% 0.02% 0.00% 0.72% 0.79%
SP Growth Asset Allocation Portfolio 0.05% 0.01% 0.00% 0.81% 0.87%
SP AIM Core Equity Portfolio 0.85% 0.44% 0.00% 0.00% 1.29%
SP Davis Value Portfolio 0.75% 0.06% 0.00% 0.00% 0.81%
SP International Growth Portfolio /5/ 0.85% 0.12% 0.00% 0.00% 0.97%
SP International Value Portfolio /6/ 0.90% 0.09% 0.00% 0.00% 0.99%
SP Mid Cap Growth Portfolio 0.80% 0.11% 0.00% 0.00% 0.91%
SP PIMCO High Yield Portfolio 0.60% 0.10% 0.00% 0.00% 0.70%
SP PIMCO Total Return Portfolio 0.60% 0.06% 0.00% 0.00% 0.66%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.07% 0.00% 0.00% 0.67%
SP Small Cap Growth Portfolio 0.95% 0.19% 0.00% 0.00% 1.14%
SP Small Cap Value Portfolio 0.90% 0.06% 0.00% 0.00% 0.96%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.26% 0.00% 0.00% 1.16%
SP T. Rowe Price Large Cap Growth Portfolio 0.90% 0.29% 0.00% 0.00% 1.19%
Advanced Series Trust /7,8/
AST JPMorgan International Equity Portfolio 0.87% 0.16% 0.00% 0.00% 1.03%
AST MFS Global Equity Portfolio 1.00% 0.25% 0.00% 0.00% 1.25%
AST Small-Cap Value Portfolio 0.90% 0.18% 0.00% 0.00% 1.08%
AST Neuberger Berman Small-Cap Growth Portfolio /9/ 0.95% 0.16% 0.00% 0.00% 1.11%
AST Federated Aggressive Growth Portfolio 0.95% 0.14% 0.00% 0.00% 1.09%
AST DeAM Small-Cap Value Portfolio 0.95% 0.23% 0.00% 0.00% 1.18%
AST Goldman Sachs Mid-Cap Growth Portfolio 1.00% 0.15% 0.00% 0.00% 1.15%
AST Neuberger Berman Mid-Cap Growth Portfolio 0.90% 0.14% 0.00% 0.00% 1.04%
AST Neuberger Berman Mid-Cap Value Portfolio 0.89% 0.11% 0.00% 0.00% 1.00%
AST Mid-Cap Value Portfolio 0.95% 0.21% 0.00% 0.00% 1.16%
AST MFS Growth Portfolio 0.90% 0.13% 0.00% 0.00% 1.03%
AST Marsico Capital Growth Portfolio 0.90% 0.11% 0.00% 0.00% 1.01%
AST Goldman Sachs Concentrated Growth Portfolio 0.90% 0.13% 0.00% 0.00% 1.03%
AST DeAM Large-Cap Value Portfolio 0.85% 0.15% 0.00% 0.00% 1.00%
AST Large-Cap Value Portfolio 0.75% 0.11% 0.00% 0.00% 0.86%
AST AllianceBernstein Core Value Portfolio 0.75% 0.14% 0.00% 0.00% 0.89%
AST AllianceBernstein Managed Index 500 Portfolio 0.60% 0.14% 0.00% 0.00% 0.74%
AST American Century Income & Growth Portfolio 0.75% 0.15% 0.00% 0.00% 0.90%
AST AllianceBernstein Growth & Income Portfolio 0.75% 0.11% 0.00% 0.00% 0.86%
AST Cohen & Steers Realty Portfolio 1.00% 0.13% 0.00% 0.00% 1.13%
AST T. Rowe Price Natural Resources Portfolio 0.90% 0.13% 0.00% 0.00% 1.03%
AST American Century Strategic Allocation Portfolio /10/ 0.85% 0.21% 0.00% 0.00% 1.06%
AST Advanced Strategies Portfolio 0.85% 0.24% 0.00% 0.00% 1.09%
AST T. Rowe Price Asset Allocation Portfolio 0.85% 0.14% 0.00% 0.00% 0.99%
AST UBS Dynamic Alpha Portfolio /11/ 1.00% 0.21% 0.00% 0.00% 1.21%
AST First Trust Balanced Target Portfolio 0.85% 0.21% 0.00% 0.00% 1.06%
AST First Trust Capital Appreciation Target Portfolio 0.85% 0.19% 0.00% 0.00% 1.04%
AST Aggressive Asset Allocation Portfolio 0.15% 0.05% 0.00% 0.99% 1.19%
AST Capital Growth Asset Allocation Portfolio 0.15% 0.02% 0.00% 0.95% 1.12%
AST Balanced Asset Allocation Portfolio 0.15% 0.02% 0.00% 0.90% 1.07%
AST Conservative Asset Allocation Portfolio 0.15% 0.04% 0.00% 0.89% 1.08%
AST Preservation Asset Allocation Portfolio 0.15% 0.08% 0.00% 0.82% 1.05%
AST T. Rowe Price Global Bond Portfolio 0.80% 0.16% 0.00% 0.00% 0.96%
AST High Yield Portfolio /12/ 0.75% 0.15% 0.00% 0.00% 0.90%
AST Lord Abbett Bond-Debenture Portfolio 0.80% 0.14% 0.00% 0.00% 0.94%
AST PIMCO Limited Maturity Bond Portfolio 0.65% 0.12% 0.00% 0.00% 0.77%
13
SUMMARY OF CONTRACT EXPENSES continued
- --------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(as a percentage of the average net assets of the underlying Portfolios)
- --------------------------------------------------------------------------------------------------------------
For the year ended December 31, 2006
UNDERLYING PORTFOLIOS -----------------------------------------------------------------
Management Fee Other 12b-1 Fee Acquired Total Annual
Expenses /3/ Portfolio Fees Portfolio
& Expenses /1/ Operating
Expenses /2/
- - -----------------------------------------------------------------
Gartmore Variable Insurance Trust
GVIT Developing Markets /13/ 1.05% 0.35% 0.25% 0.00% 1.65%
Janus Aspen Series
Large Cap Growth Portfolio--Service Shares 0.64% 0.05% 0.25% 0.00% 0.94%
1. Each Asset Allocation Portfolio invests in shares of other Portfolios of
the Fund and the Advanced Series Trust (the Acquired Portfolios). In
addition, each Portfolio may invest otherwise uninvested cash in the Dryden
Core Investment Fund (Money Market and/or Short-Term Bond Series).
Investors in an Asset Allocation Portfolio or other Portfolio indirectly
bear the fees and expenses of the Acquired Portfolios and/or Dryden Core
Investment Fund. The expenses shown in the column "Acquired Portfolio Fees
and Expenses" represent a weighted average of the expense ratios of the
Acquired Portfolios and/or Dryden Core Investment Fund, in which the Asset
Allocation Portfolios or other Portfolios invested during the year ended
December 31, 2006. The Asset Allocation Portfolios do not pay any
transaction fees when they purchase and redeem shares of the Acquired
Portfolios.
Where "Acquired Portfolio Fees and Expenses" are less than 0.01%, such
expenses are included in the column titled "Other Expenses." This may cause
the Total Annual Portfolio Operating Expenses to differ from those set
forth in the Financial Highlights tables of the respective Portfolios.
Effective March 1, 2007, each of the Asset Allocation Portfolios became
responsible for the payment of its own "Other Expenses," including, without
limitation, custodian fees, legal fees, trustee fees and audit fees, in
accordance with the terms of the management agreement. Prior to that time,
Prudential Investments LLC or an affiliate paid the "other expenses" of the
Asset Allocation Portfolios. The table reflects and annualized estimate of
the "Other Expenses" of the Asset Allocation Portfolios for the year ended
December 31, 2006 had the current arrangement been in place during that
year.
2. Prudential Investments LLC has voluntarily agreed to waive a portion of its
management fee and/or limit total expenses (expressed as an annual
percentage of average daily net assets) for certain Portfolios of the Fund.
These arrangements, which are set forth as follows, may be discontinued or
otherwise modified at any time. Equity Portfolio: 0.75%; Jennison
Portfolio: 0.75%; Money Market Portfolio: 0.75%; Stock Index Portfolio:
0.75%; Value Portfolio: 0.75%; SP AIM Core Equity Portfolio: 1.00%; SP
International Value Portfolio: 1.00%; SP International Growth Portfolio:
1.24%; SP Mid Cap Growth Portfolio: 1.00%; SP PIMCO High Yield Portfolio:
0.82%; SP PIMCO Total Return Portfolio: 0.76%; SP Small Cap Growth
Portfolio: 1.15%; SP Small Cap Value Portfolio: 1.05%; SP T. Rowe Price
Large Cap Growth Portfolio: 1.06%.
3. As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of each Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For
more information see the prospectus for each underlying portfolio and
Variable Investment Options in this section.
4. The Portfolio's contractual management fee rate is as follows: 0.35% for
average net assets up to $4 billion, and 0.30% for average net assets in
excess of $4 billion.
5. Effective November 13, 2006, Marsico Capital Management, LLC was added as a
Sub-advisor to the Portfolio. Prior to November 13, 2006, William Blair &
Company, LLC served as the sole Sub-advisor of the Portfolio, then named
the "SP William Blair International Growth Portfolio."
6. Effective November 13, 2006, Thornburg Investment Management, Inc. was
added as a Sub-advisor to the Portfolio. Prior to November 13, 2006,
Thornburg Investment Management, Inc. served as the sole Sub-advisor of the
Portfolio, then named the "SP LSV International Value Portfolio."
7. The AST Aggressive Asset Allocation, the AST Balanced Asset Allocation, the
AST Capital Growth Asset Allocation, the AST Conservative Asset Allocation
and the AST Preservation Asset Allocation Portfolios (the "Dynamic Asset
Allocation Portfolios") each invest in other investment companies (the
Acquired Portfolios). For example, each Dynamic Asset Allocation Portfolio
invests in shares of other Portfolios of the Advanced Series Trust, and
some Portfolios invest in other funds, including the Dryden Core Investment
Fund. Investors in a Portfolio indirectly bear the fees and expenses of the
Acquired Portfolios. The expenses shown in the column "Acquired Portfolio
Fees and Expenses" represent a weighted average of the expense ratios of
the Acquired Portfolios in which each Dynamic Asset Allocation Portfolio
invested during the year ended December 31, 2006. The Dynamic Asset
Allocation Portfolios do not pay any transaction fees when they purchase or
redeem shares of the Acquired Portfolios. Where "Acquired Portfolio Fees
and Expenses" are less than 0.01%, such expenses are included in the column
titled "Other Expenses." This may cause the Total Annual Portfolio
Operating Expenses to differ from those set forth in the Financial
Highlights tables in the prospectus for the Portfolios.
8. The total actual operating expenses for certain of the Portfolios listed
above for the year ended December 31, 2006 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.
9. Effective May 1, 2007, Neuberger Berman Management, Inc. became Sub-advisor
to the Portfolio. Prior to May 1, 2007, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named the "AST DeAM Small-Cap
Growth Portfolio."
10.Prior to May 1, 2007 the Portfolio was named the "AST American Century
Strategic Balanced Portfolio."
14
11.Prior to May 1, 2007 the Portfolio was named the "AST Global Allocation
Portfolio." Expenses shown are the annualized estimated operating expense
for AST UBS Dynamic Alpha Portfolio effective May 1, 2007. Operating
expenses for the AST Global Allocation Portfolio based upon the year ended
December 31, 2006 would be as follows: Shareholder Fees (fees paid directly
from your investment) - None; Management Fees - .10%; Distribution (12b-1)
Fees - None; Other Expenses - .09%; Acquired Portfolio Fees & Expenses -
.88%; Total Annual Portfolio Operating Expenses - 1.07%.
12.Effective June 16, 2006, Goldman Sachs Asset Management L.P. no longer
serves as a Co-Sub-advisor to the Portfolio.
13.Effective January 1, 2006, the management fee was lowered by 0.10% 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 Markets
Free Index. As a result, beginning January 1, 2007, if the management fee
were calculated taking into account the current base fee (as stated in the
table above) and the maximum performance fee adjustment of 0.10% (+/-), the
management fee could range from 0.95% at its lowest to 1.15% at its highest.
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 1: If You Withdraw Your Assets
Example 1 assumes that:
.. You invest $10,000 in Strategic Partners Select;
.. You allocate all of your assets to the variable investment option having
the maximum total operating expenses;
.. You withdraw all your assets at the end of the time period indicated;
.. Your investment has a 5% return each year;
.. The mutual fund's total operating expenses remain the same each year; and
.. For each Separate Account charge, we deduct the current charge rather than
the maximum charge.
Example 2: If You Do Not Withdraw Your Assets
Example 2 assumes that:
.. You invest $10,000 in Strategic Partners Select;
.. You allocate all of your assets to the variable investment option having
the maximum total operating expenses;
.. You do not withdraw any of your assets at the end of the time period
indicated;
.. Your investment has a 5% return each year;
.. The mutual fund's total operating expenses remain the same each year; and
.. For each Separate Account charge, we deduct the current charge rather than
the maximum charge.
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 Example 1) are assessed
in connection with some annuity options, but not others.
The values shown in the 10 year column are the same for Example 1 and 2. This
is because after 10 years, we would no longer deduct withdrawal charges when
you make a withdrawal or when you begin the income phase of your contract.
If your Contract Value is less than $50,000, on your contract anniversary (or
upon a surrender), we deduct a $30 fee. The examples use an average annual
contract fee, which we calculated based on our estimate of the total contract
fees we expect to collect in 2007. Your actual fees will vary based on the
amount of your contract and your specific allocation(s).
The table of accumulation unit values appears in the appendix to this
prospectus.
Example 1: If you withdraw your Assets
---------------------------------------
1 yr 3 yrs 5 yrs 10 yrs
---------------------------------------
$980 $1,515 $2,073 $3,747
---------------------------------------
Example 2: If you do not withdraw your Assets
----------------------------------------------
1 yr 3 yrs 5 yrs 10 yrs
----------------------------------------------
$350 $1,065 $1,803 $3,747
----------------------------------------------
15
PART II SECTIONS 1 - 9
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS SELECT PROSPECTUS
16
1: WHAT IS THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY?
The Strategic Partners Select variable annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company of New
Jersey (Pruco Life of New Jersey, We or Us).
Under our contract or agreement, in exchange for your payment to us, we
promise to pay you a guaranteed income stream that can begin any time after
the first 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 Select is a variable annuity contract. This means that
during the accumulation phase, you can allocate your assets among the variable
investment options as well as guaranteed interest-rate options. If you select
a variable investment option, 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 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 mentioned above, Strategic Partners Select also offers interest-rate
options: a fixed-rate option and a market value adjustment option. The
fixed-rate option offers an interest rate that is guaranteed by us for one
year and will not be less than the minimum interest rate dictated by state
law. The market value adjustment option guarantees a stated interest rate,
generally higher than the fixed-rate option. However, in order to get the full
benefit of the stated interest rate, assets in the option must be held for a
seven-year period.
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(s) is the person upon whose death during the accumulation
phase, the death benefit is payable. The annuitant is the person who receives
the annuity payments when the income phase begins. The annuitant is also the
person whose life is used to determine the amount of these payments and how
long (if applicable) the 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 Select, 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 a refund equal to your Contact Value (plus the
amount of any fees or other charges) as of the date you surrendered your
contract.
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 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
17
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
current prospectuses for the underlying mutual funds also 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 mutual fund options that you
select are your choice. We do not recommend or endorse any particular
underlying mutual fund.
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. What appears in the chart below is
merely a summary--please consult the portfolio's prospectus for a
comprehensive discussion of the portfolio's investment policies. 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.
Under the agreement through which Prudential Financial, Inc. acquired American
Skandia Life Assurance Corporation and certain of its affiliates in May 2003,
Prudential Financial may not use the "American Skandia" name in any context
after May 1, 2008. Therefore, Prudential Financial has begun a "rebranding"
project that involves renaming certain American Skandia legal entities. As
pertinent to this annuity: 1) American Skandia Investment Services, Inc. has
been renamed AST Investment Services, Inc.; and 2) American Skandia Trust has
been renamed Advanced Series Trust. These name changes will not impact the
manner in which customers do business with Prudential. The portfolios of the
Advanced Series Trust are co-managed by PI and AST Investment Services, Inc.
also under a manager-of-managers approach. AST Investment Services, Inc. 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 of New Jersey has entered into agreements with certain underlying
portfolios and/or the investment adviser or distributor of such portfolios.
Pruco Life of New Jersey 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, 2007) 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, an investment adviser, sub-adviser or distributor of the
underlying portfolios may also compensate us by providing reimbursement,
defraying the costs of, 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: sponsoring or co-sponsoring various promotional, educational or marketing
meetings and seminars attended by distributors, wholesalers, and/or broker
dealer firms' registered representatives, and creating marketing material
discussing the contract, available options, and underlying portfolios. The
amounts paid depend on the nature of the meetings, the number of meetings
attended by the adviser, sub-adviser, or distributor, the number of
participants and attendees at the meetings, the costs expected to be incurred,
and the level of the adviser's, sub-adviser's or distributor's participation.
These payments or reimbursements may not be offered by all advisers,
sub-advisers, or distributors, and the amounts of such payments may vary
between and among each adviser, sub-adviser, and distributor depending on
their respective participation. During 2006, with regard to amounts that were
paid under these kinds of arrangements, the amounts ranged from approximately
$53 to approximately $190,514. These amounts may have been paid to one or more
Prudential-affiliated insurers issuing individual variable annuities.
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.
18
Upon the introduction of the Advanced Series 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 Contact 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 Contact 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.
19
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
-------------------------------------------------------------------
LARGE Jennison Portfolio: seeks long-term Jennison
CAP growth of capital. The Portfolio Associates LLC
GROWTH invests primarily in equity
securities of major, established
corporations that the subadviser
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 Equity Portfolio: seeks long-term Jennison
CAP growth of capital. The Portfolio Associates LLC;
BLEND invests at least 80% of its net ClearBridge
assets plus borrowings for investment Advisors, LLC
purposes in common stocks of major
established corporations as well as
smaller companies that the Sub
advisers believe offer attractive
prospects of appreciation. In the
Jennison portion, over a full market
cycle, the subadviser seeks to
outperform the S&P 500 Index by
investing in a portfolio with
earnings growth greater than the
index at valuations comparable to
that of the index.
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INTER Global Portfolio: seeks long-term LSV Asset
NATIONAL growth of capital. The Portfolio Management/
EQUITY invests primarily in common stocks Marsico Capital
(and their equivalents) of foreign Management, LLC/
and U.S. companies. Each Sub-adviser T. Rowe Price
for the Portfolio generally will use Associates, Inc./
either a "growth" approach or a William Blair &
"value" approach in selecting either Company, LLC
foreign or U.S. common stocks.
-------------------------------------------------------------------
FIXED Money Market Portfolio: seeks maximum Prudential
INCOME current income consistent with the Investment
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 Value Portfolio: seeks long-term Jennison
CAP growth of capital through Associates LLC
VALUE appreciation and income. The
Portfolio invests primarily in common
stocks that the subadviser 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 subadviser believes will
provide investment returns above
those of the Russell 1000(R) Value
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.
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ASSET SP Aggressive Growth Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), and the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (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.
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ASSET SP Balanced Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), and the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (AST) (the
Underlying Portfolios). The Portfolio
will invest in equity and
fixed-income Underlying Portfolios.
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20
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------
ASSET SP Conservative Asset Allocation Prudential
ALLOCA- Portfolio: seeks to obtain the Investments LLC
TION/ highest potential total return
BALANCED consistent with the specified level
of risk tolerance. The Portfolio may
invest in any other Portfolio of the
Fund (other than another SP Asset
Allocation Portfolio), and the AST
Marsico Capital Growth Portfolio of
Advanced Series Trust (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.
--------------------------------------------------------------------
ASSET SP Growth Asset Allocation Portfolio: Prudential
ALLOCA- seeks to obtain the highest potential Investments LLC
TION/ total return consistent with the
BALANCED specified level of risk tolerance.
The Portfolio may invest in any other
Portfolio of the Fund (other than
another SP Asset Allocation
Portfolio), and the AST Marsico
Capital Growth Portfolio of Advanced
Series Trust (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.
--------------------------------------------------------------------
LARGE SP AIM Core Equity Portfolio: seeks A I M Capital
CAP long-term growth of capital. The Management, Inc.
BLEND Portfolio normally invests at least
80% of 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 subadviser
believes have the potential for
above-average growth in earnings.
--------------------------------------------------------------------
LARGE SP Davis Value Portfolio: seeks Davis Selected
CAP growth of capital. The Portfolio Advisers, L.P.
VALUE invests primarily in common stocks of
U.S. companies with market
capitalizations within the market
capitalization range of the Russell
1000 Value Index. It may also invest
in stocks of foreign companies and
U.S. companies with smaller
capitalizations. The subadviser
attempts to select common stocks of
businesses that possess
characteristics that the subadviser
believe foster the creation of
long-term value, such as proven
management, a durable franchise and
business model, and sustainable
competitive advantages. The
subadviser 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.
--------------------------------------------------------------------
INTER SP International Value Portfolio LSV Asset
NATIONAL (formerly SP LSV International Value Management,
EQUITY Portfolio): seeks capital growth. The Thornburg
Portfolio normally invests at least Investment
65% of the Portfolio's investable Management, Inc.
assets (net assets plus borrowings
made for investment purposes) in the
equity securities of companies in
developed countries outside the
United States that are represented in
the MSCI EAFE Index.
--------------------------------------------------------------------
MID CAP SP Mid Cap Growth Portfolio: seeks Calamos Advisors
GROWTH long-term growth of capital. The LLC
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
subadviser believes have
above-average growth potential. The
Portfolio generally defines medium
market capitalization companies as
those companies with market
capitalizations within the market
capitalization range of the Russell
Mid Cap Growth Index. The Portfolio's
investments may include securities
listed on a securities exchange or
traded in the over-the-counter
markets. The subadviser 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 SP PIMCO High Yield Portfolio: seeks Pacific Investment
INCOME to maximize total return consistent Management
with preservation of capital and Company LLC
prudent investment management. The (PIMCO)
Portfolio will invest in a
diversified portfolio of fixed-income
investment instruments 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-advisor's
forecast for interest rates.
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21
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------
FIXED SP PIMCO Total Return Portfolio: Pacific Investment
INCOME seeks to maximize total return Management
consistent with preservation of Company LLC
capital and prudent investment (PIMCO)
management. The Portfolio will invest
in a diversified portfolio of
fixed-income investment instruments
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-advisor's forecast for interest
rates.
-------------------------------------------------------------------
MID CAP SP Prudential U.S. Emerging Growth Jennison
GROWTH Portfolio: seeks long-term capital Associates LLC
appreciation. The Portfolio normally
invests at least 80% of investable
assets in equity securities of small
and medium sized U.S. companies that
the subadviser believes have the
potential for above-average earnings
growth. The subadviser seeks to
invest in companies that it believes
are poised to benefit from an
acceleration of growth or an
inflection point in a company's
growth rate that is not currently
reflected in the stock price. The
team uses a research-intensive
approach based on internally
generated fundamental research.
-------------------------------------------------------------------
SMALL SP Small Cap Growth Portfolio: seeks Eagle Asset
CAP long-term capital growth. The Management/
GROWTH Portfolio pursues its objective by Neuberger Berman
primarily investing in the common Management, Inc.
stocks of small-capitalization
companies, which is defined as a
company with a market capitalization,
at the time of purchase, no larger
than the largest capitalized company
included in the Russell 2000 Index
during the most recent 11-month
period (based on month-end data) plus
the most recent data during the
current month.
-------------------------------------------------------------------
SMALL SP Small-Cap Value Portfolio: seeks Goldman Sachs
CAP long-term capital growth. The Asset
VALUE Portfolio normally invests at least Management, L.P.;
80% its net assets plus borrowings ClearBridge
for investment purposes in the equity Advisors, LLC
securities of small capitalization
companies. The Portfolio focuses on
equity securities that are believed
to be undervalued in the marketplace.
-------------------------------------------------------------------
LARGE SP Strategic Partners Focused Growth AllianceBernstein
CAP Portfolio: seeks long-term growth of L.P.; Jennison
GROWTH capital. The Portfolio normally Associates LLC
invests at least 65% of total assets
in equity-related securities of U.S.
companies that the subadvisers
believe to have strong capital
appreciation potential. The
Portfolio's strategy is to combine
the efforts of two subadvisers and to
invest in the favorite stock
selection ideas of three portfolio
managers (two of whom invest as a
team). Each investment Sub-adviser to
the Portfolio utilizes a growth
style: Jennison selects approximately
20 securities and AllianceBernstein
selects approximately 30 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 50 equity-related
securities, involves greater risk
than investing in a diversified
portfolio because a loss resulting
from the decline in the value of one
security may represent a greater
portion of the total assets of a
nondiversified portfolio.
-------------------------------------------------------------------
LARGE Stock Index Portfolio: seeks Quantitative
CAP investment results that generally Management
BLEND correspond to the performance of Associates LLC
publicly-traded common stocks. With
the price and yield 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.
-------------------------------------------------------------------
LARGE SP T. Rowe Price Large-Cap Growth T. Rowe Price
CAP Portfolio: seeks long-term capital Associates, Inc.
GROWTH 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.
-------------------------------------------------------------------
22
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------
INTER- SP International Growth Portfolio Marsico Capital
NATIONAL (formerly, SP William Blair Management, LLC;
EQUITY International Growth Portfolio): William Blair &
seeks long-term capital appreciation. Company, LLC.
The Portfolio invests primarily in
equity-related securities of foreign
issuers. The Portfolio invests
primarily in the common stock of
large and medium-sized foreign
companies, although it may also
invest in companies of all sizes.
Under normal circumstances, the
Portfolio invests at least 65% of its
total assets in common stock of
foreign companies operating or based
in at least five different countries,
which may include countries with
emerging markets. The Portfolio looks
primarily for stocks of companies
whose earnings are growing at a
faster rate than other companies or
which offer attractive growth
potential.
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ADVANCED SERIES TRUST
-------------------------------------------------------------------
ASSET AST Advanced Strategies Portfolio: LSV Asset
ALLOCA seeks a high level of absolute Management;
TION/ return. The Portfolio invests Marsico Capital
BALANCED primarily in a diversified portfolio Management,
of equity and fixed income securities LLC; Pacific
across different investment Investment
categories and investment managers. Management
The Portfolio pursues a combination Company LLC
of traditional and non-traditional (PIMCO);
investment strategies. T. Rowe Price
Associates, Inc.;
William Blair &
Company, L.L.C.
-------------------------------------------------------------------
ASSET AST Aggressive Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc./
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC
tolerance. The Portfolio will invest
its assets in several other Advanced
Series Trust Portfolios. Under 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 AST AllianceBernstein Core Value AllianceBernstein
CAP Portfolio: seeks long-term capital L.P.
VALUE growth by investing primarily in
common stocks. The Sub-advisor
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-advisor seeks to identify
individual companies with earnings
growth potential that may not be
recognized by the market at large.
-------------------------------------------------------------------
LARGE AST AllianceBernstein Growth & Income AllianceBernstein
CAP Portfolio: seeks long-term growth of L.P.
VALUE capital and income while attempting
to avoid excessive fluctuations in
market value. The Portfolio normally
will invest in common stocks (and
securities convertible into common
stocks). The Sub-advisor 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 AST AllianceBernstein Managed Index AllianceBernstein
CAP 500 Portfolio: seeks to outperform L.P.
BLEND the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 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.
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23
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
-------------------------------------------------------------------
LARGE AST American Century Income & Growth American Century
CAP Portfolio: seeks capital growth with Investment
VALUE current income as a secondary Management, Inc.
objective. The Portfolio invests
primarily in common stocks that offer
potential for capital growth, and
may, consistent with its investment
objective, invest in stocks that
offer potential for current income.
The Sub-advisor 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 AST American Century Strategic American Century
ALLOCA Allocation Portfolio (formerly known Investment
TION/ as AST American Century Strategic Management, Inc.
BALANCED Balanced Portfolio): seeks capital
growth and current income. The
Sub-advisor intends to maintain
approximately 60% of the Portfolio's
assets in 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 AST Balanced Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc./
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC
tolerance. The Portfolio will invest
its assets in several other Advanced
Series Trust Portfolios. Under 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.
-------------------------------------------------------------------
ASSET AST Capital Growth Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc./
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC
tolerance. The Portfolio will invest
its assets in several other Advanced
Series Trust Portfolios. 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: Cohen & Steers
seeks to maximize total return Capital
through investment in real estate Management, Inc.
securities. The Portfolio pursues its
investment objective by investing,
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 AST Conservative Asset Allocation AST Investment
ALLOCA Portfolio: seeks the highest Services, Inc./
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC
tolerance. The Portfolio will invest
its assets in several other Advanced
Series Trust Portfolios. 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 AST DeAM Large-Cap Value Portfolio: Deutsche
CAP seeks maximum growth of capital by Investment
VALUE investing primarily in the value Management
stocks of larger companies. The Americas, Inc.
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-advisor 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.
-------------------------------------------------------------------
24
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STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
------------------------------------------------------------------
SMALL AST Neuberger Berman Small-Cap Growth Neuberger Berman
CAP Portfolio (formerly known as AST DeAM Management Inc.
GROWTH Small-Cap Growth Portfolio): seeks
maximum growth of investors' capital
from a portfolio of growth stocks of
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 Growth(R) Index.
------------------------------------------------------------------
SMALL AST DeAM Small-Cap Value Portfolio: Deutsche
CAP seeks maximum growth of investors' Investment
VALUE capital by investing primarily in the Management
value stocks of smaller companies. Americas, Inc.
The Portfolio pursues its objective,
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-advisor 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 AST Federated Aggressive Growth Federated Equity
CAP Portfolio: seeks capital growth. The Management
GROWTH Portfolio pursues its investment Company of
objective by investing primarily in Pennsylvania/
the stocks of small companies that Federated Global
are traded on national security Investment
exchanges, NASDAQ stock exchange and Management
the over-the-counter-market. Small Corp.; Federated
companies will be defined as MDTA LLC
companies with market capitalizations
similar to companies in the Russell
2000 Growth Index.
------------------------------------------------------------------
ASSET AST First Trust Balanced Target First Trust
ALLOCA- Portfolio: seeks long-term capital Advisors L.P.
TION/ growth balanced by current income.
BALANCED The Portfolio seeks to achieve its
objective by investing approximately
65% in common stocks and 35% in fixed
income securities. The Portfolio
allocates the equity portion of the
portfolio across five uniquely
specialized strategies - the Dow/SM/
Target Dividend, the Value Line(R)
Target 25, the Global Dividend Target
15, the NYSE(R) International Target
25, and the Target Small Cap. Each
strategy employs a quantitative
approach by screening common stocks
for certain attributes and/or using a
multi-factor scoring system to select
the common stocks. The fixed income
allocation is determined by the Dow
Jones Income strategy which utilizes
certain screens to select bonds from
the Dow Jones Corporate Bond Index or
like-bonds not in the index.
------------------------------------------------------------------
ASSET AST First Trust Capital Appreciation First Trust
ALLOCA- Target Portfolio: seeks long-term Advisors L.P.
TION/ growth of capital. The Portfolio
BALANCED seeks to achieve its objective by
investing approximately 80% in common
stocks and 20% in fixed income
securities. The portfolio allocates
the equity portion of the portfolio
across five uniquely specialized
strategies - the Value Line(R) Target
25, the Global Dividend Target 15,
the Target Small Cap, the Nasdaq(R)
Target 15, and the NYSE(R)
International Target 25. Each
strategy employs a quantitative
approach by screening common stocks
for certain attributes and/or using a
multi-factor scoring system to select
the common stocks. The fixed income
allocation is determined by the Dow
Jones Income strategy utilizes
certain screens to select bonds from
the Dow Jones Corporate Bond Index or
like-bonds not in the index.
------------------------------------------------------------------
ASSET AST UBS Dynamic Alpha Portfolio UBS Global Asset
ALLOCA- (formerly known as AST Global Management
TION/ Allocation Portfolio): seeks to (Americas) Inc.
BALANCED maximize total return, consisting of
capital appreciation and current
income. The Portfolio invests in
securities and financial instruments
to gain exposure to global equity,
global fixed income and cash
equivalent markets, including global
currencies. The Portfolio may invest
in equity and fixed income securities
of issuers located within and outside
the United States or in open-end
investment companies advised by UBS
Global Asset Management (Americas)
Inc., the Portfolio's Sub-Advisor, to
gain exposure to certain global
equity and global fixed income
markets.
------------------------------------------------------------------
25
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
--------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------
LARGE AST Goldman Sachs Concentrated Growth Goldman Sachs
CAP Portfolio: seeks growth of capital in Asset
GROWTH 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-advisor 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-advisor to
be positioned for long-term growth.
--------------------------------------------------------------------
MID CAP AST Goldman Sachs Mid-Cap Growth Goldman Sachs
GROWTH Portfolio: seeks long-term capital Asset
growth. The Portfolio pursues its Management, L.P.
investment 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-advisor seeks to identify
individual companies with earnings
growth potential that may not be
recognized by the market at large.
--------------------------------------------------------------------
FIXED AST High Yield Portfolio: seeks a Pacific Investment
INCOME high level of current income and may Management
also consider the potential for Company LLC
capital appreciation. The Portfolio (PIMCO)
invests, under normal circumstances,
at least 80% of its net assets plus
any borrowings for investment
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".
--------------------------------------------------------------------
INTER- AST JPMorgan International Equity J.P. Morgan
NATIONAL Portfolio: seeks long-term capital Investment
EQUITY growth by investing in a diversified Management Inc.
portfolio of 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.
--------------------------------------------------------------------
LARGE AST Large-Cap Value Portfolio: seeks Dreman Value
CAP current income and long-term growth Management LLC,
VALUE of income, as well as capital Hotchkis and
appreciation. The Portfolio invests, Wiley Capital
under normal circumstances, at least Management LLC;
80% of its net assets in common J.P. Morgan
stocks of large cap U.S. companies. Investment
The Portfolio focuses on common Management, Inc.
stocks that have a high cash dividend
or payout yield relative to the
market or that possess relative value
within sectors.
--------------------------------------------------------------------
FIXED AST Lord Abbett Bond-Debenture Lord, Abbett &
INCOME Portfolio: seeks high current income Co. LLC
and the opportunity for capital
appreciation to 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.
--------------------------------------------------------------------
26
--------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------------
LARGE AST Marsico Capital Growth Portfolio: Marsico Capital
CAP seeks capital growth. Income Management, LLC
GROWTH realization is not an investment
objective 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 common stocks
of larger, more established
companies. In selecting investments
for the Portfolio, the Sub-advisor
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-advisor has observed. The
Sub-advisor 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.
--------------------------------------------------------------------
INTER- AST MFS Global Equity Portfolio: Massachusetts
NATIONAL seeks capital growth. Under normal Financial Services
EQUITY circumstances the Portfolio invests Company
at least 80% of its assets in equity
securities of U.S. and foreign
issuers (including issuers in
developing countries). While the
portfolio may invest its assets in
companies of any size, the Portfolio
generally focuses on companies with
large capitalizations.
--------------------------------------------------------------------
LARGE AST MFS Growth Portfolio: seeks Massachusetts
CAP long-term capital growth and future Financial Services
GROWTH income. Under normal market Company
conditions, the Portfolio invests at
least 80% of its total assets in
common stocks and related securities,
such as preferred stocks, convertible
securities and depositary receipts,
of companies. The Sub-advisor focuses
on investing the Portfolio's assets
in the stock of companies it believes
to have above average earnings growth
potential compared to other companies
(growth companies). The Portfolio may
invest up to 35% of its net assets in
foreign securities.
--------------------------------------------------------------------
MID CAP AST Mid Cap Value Portfolio: seeks to EARNEST
VALUE provide capital growth by investing Partners LLC/
primarily in mid-capitalization WEDGE Capital
stocks that appear to be undervalued. Management, LLP
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 AST Neuberger Berman Mid-Cap Growth Neuberger Berman
GROWTH Portfolio: seeks capital growth. Management Inc.
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 AST Neuberger Berman Mid-Cap Value Neuberger Berman
VALUE Portfolio: seeks capital growth. Management Inc.
Under normal market conditions, the
Portfolio 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-advisor
looks for well-managed companies
whose stock prices are undervalued
and that may rise in price before
other investors realize their worth.
--------------------------------------------------------------------
FIXED AST PIMCO Limited Maturity Bond Pacific Investment
INCOME Portfolio: seeks to maximize total Management
return consistent with preservation Company LLC
of capital and prudent investment (PIMCO)
management. The Portfolio will invest
in a diversified portfolio of
fixed-income investment instruments
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-advisor's forecast for interest
rates.
--------------------------------------------------------------------
ASSET AST Preservation Asset Allocation AST Investment
ALLOCA- Portfolio: seeks the highest Services, Inc./
TION/ potential total return consistent Prudential
BALANCED with its specified level of risk Investments LLC
tolerance. The Portfolio will invest
its assets in several other Advanced
Series Trust Portfolios. 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.
--------------------------------------------------------------------
27
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
----------------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
----------------------------------------------------------------------
SMALL AST Small-Cap Value Portfolio: seeks ClearBridge
CAP to provide long-term capital growth Advisors, LLC;
VALUE by investing primarily in Dreman Value
small-capitalization stocks that Management LLC;
appear to be undervalued. The J.P. Morgan
Portfolio will have a non-fundamental Investment
policy to invest, under normal Management, Inc.;
circumstances, at least 80% of the Lee Munder
value of its net assets in small Investments, Ltd
capitalization stocks. The Portfolio
will focus on common stocks that
appear to be undervalued.
----------------------------------------------------------------------
ASSET AST T. Rowe Price Asset Allocation T. Rowe Price
ALLOCA- Portfolio: seeks a high level of Associates, Inc.
TION/ total return by investing primarily
BALANCED in a 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-advisor's
outlook for the markets. The
Sub-advisor 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, emerging market securities,
foreign high quality debt securities
and cash reserves.
----------------------------------------------------------------------
FIXED AST T. Rowe Price Global Bond T. Rowe Price
INCOME Portfolio: seeks to provide high International, Inc.
current income and capital growth by
investing in 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-advisor
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-related
(including derivatives, such as
collateralized mortgage obligations
and stripped mortgage securities) and
asset-backed securities.
----------------------------------------------------------------------
SPECIALTY AST T. Rowe Price Natural Resources T. Rowe Price
Portfolio: seeks long-term capital Associates, Inc.
growth primarily through the common
stocks 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.
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
----------------------------------------------------------------------
INTER- GVIT Developing Markets: seeks NWD Management
NATIONAL long-term capital appreciation, under & Research Trust/
EQUITY normal conditions by investing at Gartmore Global
least 80% of its total assets in Partners
stocks of companies of any size based
in the world's developing economies.
Under normal 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.
----------------------------------------------------------------------
28
--------------------------------------------------------------
STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO
TYPE ADVISOR/
SUB-ADVISOR
--------------------------------------------------------------
JANUS ASPEN SERIES
--------------------------------------------------------------
LARGE Janus Aspen Series: Large Cap Growth Janus Capital
CAP Portfolio - Service Shares: seeks Management LLC
GROWTH long-term growth of capital in a
manner consistent with the
preservation of capital. The
Portfolio invests at least 80% of its
net assets plus the amount of any
borrowings for investment purposes 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.
--------------------------------------------------------------
INTEREST-RATE OPTIONS
We offer two interest-rate options: a one-year fixed-rate option, and a market
value adjustment option. We set a one year guaranteed annual interest rate for
the one-year fixed-rate option. For the market value adjustment option, we set
a seven-year guaranteed interest rate. 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.
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. An interest cell
with a new interest rate period is established every time you allocate or
transfer money into a interest-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, the minimum rate set will not be less than the minimum interest rate
dictated by state law. The interest rates we pay on the fixed interest rate
options may be influenced by the asset-based charges assessed against the
Separate Account.
At the maturity of an interest cell for a fixed-rate or market value
adjustment option, you may elect to transfer the amount in the cell to any
other investment option available on that date. If you do not make a transfer
election during the 30-day period following the interest cell's maturity date,
then we will transfer the amount in the cell to a new interest cell with the
same time to maturity as the old cell.
Payments that you apply to the interest-rate option become part of Pruco Life
of New Jersey's general assets. Payments that you apply to the market value
adjustment option are held as a separate pool of assets, but the income, gains
or losses resulting from these assets are not credited or charged against the
contracts. As a result, the strength of the interest-rate option guarantees is
based on the overall financial strength of Pruco Life of New Jersey. If Pruco
Life of New Jersey suffered a material financial set back, the ability of
Pruco Life of New Jersey to meet its financial obligations could be affected.
Market Value Adjustment
If you transfer or withdraw assets from the market value adjustment option
before an interest rate period is over, the assets will be subject to a market
value adjustment. The market value adjustment may increase or decrease the
amount being withdrawn or transferred and may be substantial. The adjustment,
whether up or down, will never be greater than 40%. The amount of the market
value adjustment is based on the difference between the:
1) Guaranteed interest rate for the amount you are withdrawing or
transferring; and
2) Current interest rates that are in effect on the date of the withdrawal or
transfer.
The amount of time left in the interest rate period is also a factor. You will
find a detailed description of how the market value adjustment is calculated
in Section 9, under "Market Value Adjustment Formula."
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 Contact Value you apply to an
annuity or settlement option, unless you annuitize within the 30-day period
discussed above.
TRANSFERS AMONG OPTIONS
Subject to certain restrictions you can transfer money among the variable
investment options and the interest-rate options. Your transfer request may be
made 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
29
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
following telephone or electronic instructions that we reasonably believe 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 GENERALLY CAN MAKE TRANSFERS OUT OF THE ONE-YEAR FIXED-RATE OPTION ONLY
DURING THE 30-DAY PERIOD FOLLOWING THE END OF AN INTEREST RATE PERIOD. ANY
AMOUNT TRANSFERRED FROM A MARKET VALUE ADJUSTMENT OPTION IS SUBJECT TO A
MARKET VALUE ADJUSTMENT, UNLESS THE TRANSFER IS MADE DURING THE 30-DAY PERIOD
FOLLOWING THE MATURITY OF THE INTEREST CELL.
During the contract accumulation phase, you can make up to 12 transfers each
contract year, among the investment options, without charge. If you make more
than 12 transfers in one contract year, you will be charged $25 for each
additional transfer. 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 an interest cell count
against the 12 free transfers. (As noted in the fee table, we have different
transfer rules under the Beneficiary Continuation Option).
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 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
30
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.
.. The Portfolios may have adopted their own policies and procedures with
respect to excessive trading of their respective shares, and we reserve the
right to enforce these policies and procedures. The prospectuses for the
Portfolios describe any such policies and procedures, which may be more or
less restrictive than the policies and procedures we have adopted. Under
SEC rules, we are required to: (1) enter into a written agreement with each
Portfolio or its principal underwriter that obligates us to provide to the
Portfolio promptly upon request certain information about the trading
activity of individual contract owners, and (2) execute instructions from
the Portfolio to restrict or prohibit further purchases or transfers by
specific contract owners who violate the excessive trading policies
established by the Portfolio. In addition, you should be aware that some
Portfolios may receive "omnibus" purchase and redemption orders from other
insurance companies or intermediaries such as retirement plans. The omnibus
orders reflect the aggregation and netting of multiple orders from
individual owners of variable insurance contracts and/or individual
retirement plan participants. The omnibus nature of these orders may limit
the Portfolios in their ability to apply their excessive trading policies
and procedures. In addition, the other insurance companies and/or
retirement plans may have different policies and procedures or may not have
any such policies and procedures because of contractual limitations. For
these reasons, we cannot guarantee that the Portfolios (and thus the
contract owners) will not be harmed by transfer activity relating to other
insurance companies and/or retirement plans that may invest in the
Portfolios.
.. A Portfolio also may assess a short term trading fee in connection with a
transfer out of the variable investment option investing in that Portfolio
that occurs within a certain number of days following the date of
allocation to the variable investment option. Each Portfolio determines the
amount of the short term trading fee and when the fee is imposed. The fee
is retained by or paid to the Portfolio and is not retained by us. The fee
will be deducted from your Contract Value, to the extent allowed by law. At
present, no Portfolio has adopted a short-term trading fee.
.. 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 FEATURE
The dollar cost averaging (DCA) feature allows you to systematically transfer
either a fixed dollar amount or a percentage out of any variable investment
option or the one-year fixed-rate option and into any other variable
investment option(s). You can transfer money to more than one variable
investment option. The investment option used for the transfers is designated
as the DCA account. You can have these automatic transfers made from the DCA
account monthly, quarterly, semiannually or annually. By investing amounts on
a regular basis, instead of investing the total amount at one particular time,
you may be less susceptible to the impact of market fluctuations. Of course,
there is no guarantee that dollar cost averaging will 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 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. This 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.
31
2: WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
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 percentages or to subsequent
allocation percentages you select. We will rebalance only the variable
investment options that you have designated. The interest-rate options and 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) and 72(q) 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) and 72(q) 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 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.
3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION)
PAYMENT PROVISIONS
We can begin making annuity payments any time after the first contract
anniversary. Annuity payments must begin no later than the later of the
contract anniversary next following the annuitant's 90th birthday or the tenth
contract anniversary. Upon annuitization, any value in an interest cell of the
market value adjustment option may be subject to a market value adjustment.
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We make the income plans described below available at any time before the
annuity date. These plans are called "annuity 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 Interest Payment Option (Option 3, described below) will
automatically be selected. However, if your contract is held as an IRA and an
annuity option is not selected by the annuity date or prior to the maximum
annuity age, a lump sum payment of the Contact Value will be made to you.
GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CAN NOT BE
CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
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 6, "What Are The Expenses Associated With
Strategic Partners Select Contract?"
Please note that annuitization essentially involves converting your Contract
Value to an annuity payment stream, the length of which depends on the terms
of the applicable annuity option. Thus, once annuity payments begin, your
death benefit is determined solely under the terms of the applicable annuity
payment option.
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.
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 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
required minimum distribution rules under the tax law when selecting your
annuity option.
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
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3: WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION) continued
toward your annuity payments earns interest throughout the payout period. The
guaranteed minimum rate is 3%. 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
Generally speaking, in determining the amount of each annuity payment under a
fixed period annuity, we start with the adjusted Contact 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.
4: WHAT IS THE DEATH BENEFIT?
THE DEATH BENEFIT FEATURE PROTECTS THE CONTRACT VALUE FOR THE BENEFICIARY.
PLEASE NOTE, THAT NO DEATH BENEFIT IS PAYABLE UPON THE DEATH OF THE OWNER OR
JOINT OWNER. A DEATH BENEFIT IS ONLY PAYABLE UPON THE DEATH OF THE ANNUITANT
OR CO-ANNUITANT (AS APPLICABLE).
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit upon the death of the annuitant or co-annuitant. 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, you can change the
beneficiary at any time before the annuitant or last surviving annuitant dies.
For entity-owned contracts, we pay a death benefit upon the death of the
annuitant.
CALCULATION OF THE DEATH BENEFIT
If the annuitant (or the last surviving annuitant, if there are co-annuitants)
dies during the accumulation phase, we will, upon receiving appropriate proof
of death and any other needed documentation in good order ("due proof of
death"), pay a death benefit to the beneficiary designated by the contract
owner. We require due proof of death to be submitted promptly.
If the annuitant (older co-annuitant) is under age 80 on the contract date and
prior to his or her 80/th/ birthday, the annuitant (last surviving annuitant)
dies, the beneficiary will receive the greater of the following (as of the
time we receive due proof of death):
.. Current Contact Value (as of the time we receive appropriate proof of
death). We impose no negative market value adjustment on Contact Value held
within the market value adjustment option when a death benefit is paid.
.. Guaranteed Minimum Death Benefit (GMDB) - This is the step-up value which
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 Contact Value.
Between anniversary dates, the step-up value is only increased by
additional invested purchase payments and reduced proportionally by
withdrawals.
On or after the annuitant's (or older co-annuitant's) 80/th/ birthday, if the
annuitant (last surviving annuitant) dies, the beneficiary will receive the
greater of: 1) the current Contact Value as of the date that due proof of
death is received, and 2) the Guaranteed Minimum Death Benefit as of age 80,
increased by additional invested purchase payments, and reduced proportionally
by withdrawals. For this purpose, an annuitant is deemed to reach age 80 on
the contract anniversary on or following the annuitant's actual 80/th/
birthday.
If the annuitant (older co-annuitant) is age 80 or older on the contract date,
upon the annuitant's (last surviving annuitant's) death, the beneficiary will
receive, as of the date that due proof of death is received, the greater of:
1) current Contact Value as of the date due proof of death is received; or 2)
the total invested purchase payments reduced proportionally by withdrawals.
Here is an example of a proportional reduction:
The current Contact Value is $100,000 and step-up value is $80,000. The owner
makes a withdrawal that reduces the Contact Value by 50% (including the effect
of any withdrawal charges). The new step-up value is $40,000, or 50% of what
it was before the withdrawal.
34
This death benefit is payable only in the event of the death of the sole or
last surviving annuitant and will not be paid upon the death of an owner who
is not the annuitant.
DEATH OF OWNER OR JOINT OWNER
If the owner and the annuitant are not the same person and the owner dies
during the accumulation phase, the subsequent owner generally receives the
cash value subject to tax requirements concerning distributions.
If the contract has an owner and joint owner who are spouses at the time of
the owner's or joint owner's death during the accumulation phase, the contract
will continue and the surviving spouse will become the sole owner of the
contract, entitled to any rights and privileges granted by us under the
contract. However, the surviving spouse may, within 60 days of providing due
proof of death take the cash value under one of the payout options listed
below.
If the contract has an owner and joint owner who are not spouses at the time
of the owner's or joint owner's death during the accumulation phase, the
surviving owner will be required to take the cash value under one of the
payout options listed below.
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.
With respect to a death benefit paid before March 19, 2007, the death benefit
payout options were:
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.
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 8, "What Are The Tax Considerations Associated
With The Strategic Partners Select Contract?"
With respect to a death benefit paid on or after March 19, 2007, unless the
surviving spouse opts to continue the contract (or spousal continuance is
required under the terms of your contract), a beneficiary may, within 60 days
of providing proof of death, take the death benefit as follows:
Alternative Death Benefit Payment Options - Contracts owned by Individuals
(not associated with Tax-Favored Plans)
Except in the case of spousal continuance, 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.
In the event of your death before the annuity start date, the death benefit
must be distributed:
. within five (5) years after the date of death; or
. as a series of annuity payments not extending beyond the life expectancy
of the life expectancy of the beneficiary or over the life of the
beneficiary. Payments under this option must begin within one year of the
date of death of the beneficiary:
35
4: WHAT IS THE DEATH BENEFIT? continued
Unless you have made an election prior to death benefit proceeds becoming due,
a beneficiary can elect to receive the death benefit proceeds under the
Beneficiary Continuation Option as described below in the section entitled
"Beneficiary Continuation Option," or as a series of fixed annuity payments.
See the section entitled "What Kind of Payments Will I Receive During the
Income Phase?"
Alternative Death Benefit Payment Options - Contracts Held by Tax-Favored Plans
The Code provides for alternative death benefit payment options when a
contract is used as an IRA, 403(b) or other "qualified investment" that
requires minimum distributions. Upon your death under an IRA, 403(b) or other
"qualified investment", the designated beneficiary may generally elect to
continue the contract and receive Required Minimum Distributions under the
contract, instead of receiving the death benefit in a single payment. The
available payment options will depend on whether the you die before the date
Required Minimum Distributions under the Code were to begin, whether you have
named a designated beneficiary and whether the beneficiary is your surviving
spouse.
.. If you die after a designated beneficiary has been named, the death benefit
must be distributed by December 31/st/ of the year including the five year
anniversary of the date of death, or as periodic payments not extending
beyond the life or life expectancy of the designated beneficiary (provided
such payments begin by December 31/st/ of the year following the year of
death). However, if your surviving spouse is the beneficiary, the death
benefit can be paid out over the life or life expectancy of your spouse
with such payments beginning no later than December 31/st/ of the year
following the year of death or December 31/st/ of the year in which you
would have reached age 70 1/2, which ever is later. Additionally, 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.
.. If you die before a designated beneficiary is named and before the date
required minimum distributions must begin under the Code, the death benefit
must be paid out by December 31/st/ of the year including the five year
anniversary of the date of death. For contracts where multiple
beneficiaries have been named and at least one of the beneficiaries does
not qualify as a designated beneficiary and the account has not been
divided into separate accounts by December 31/st/ of the year following the
year of death, such contract is deemed to have no designated beneficiary.
.. If you die before a designated beneficiary is named and after the date
Required Minimum Distributions must begin under the Code, the death benefit
must be paid out at least as rapidly as under the method then in effect.
For contracts where multiple beneficiaries have been named and at least one
of the beneficiaries does not qualify as a designated beneficiary and the
account has not been divided into separate accounts by December 31/st/ of
the year following the year of death, such contract is deemed to have no
designated beneficiary.
A beneficiary has the flexibility to take out more each year than mandated
under the required minimum distribution rules.
Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment"
continue to be tax deferred. Amounts withdrawn each year, including amounts
that are required to be withdrawn under the Minimum Distribution rules, are
subject to tax. You may wish to consult a professional tax advisor for tax
advice as to your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date Required Minimum Distributions must begin under
the Code.
The tax consequences to the beneficiary may vary among the different death
benefit payment options. See the Tax Considerations section of this
prospectus, and consult your tax advisor.
BENEFICIARY CONTINUATION OPTION
Instead of receiving the death benefit in a single payment, or under an
annuity option, a beneficiary may take the death benefit under an alternative
death benefit payment option, as provided by the Code and described above.
This "Beneficiary Continuation Option" is described below and is available for
an IRA, Roth IRA, SEP IRA, or 403(b), or a non-qualified contract.
Under the Beneficiary Continuation Option:
.. The Owner's contract will be continued in the Owner's name, for the benefit
of the beneficiary.
.. The beneficiary will incur a Settlement Service Charge which is an annual
charge assessed on a daily basis against the average assets allocated to
the Sub-accounts. The charge is 1.00% per year.
.. The beneficiary will incur an annual maintenance fee equal to the lesser of
$30 or 2% of Contract Value if the Contract Value is less than $25,000 at
the time the fee is assessed. The fee will not apply if it is assessed 30
days prior to a surrender request.
36
.. The initial Contract Value will be equal to any death benefit (including
any optional death benefit) that would have been payable to the beneficiary
if the beneficiary had taken a lump sum distribution.
.. The available Sub-accounts will be among those available to the Owner at
the time of death, however certain Sub-Accounts may not be available.
.. The beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner. Transfers in
excess of 20 per year will incur a $10 transfer fee.
.. No fixed interest rate options will be offered.
.. No additional Purchase Payments can be applied to the contract.
.. The basic death benefit and any optional benefits elected by the Owner will
no longer apply to the beneficiary.
.. The beneficiary can request a withdrawal of all or a portion of the
Contract Value at any time without any applicable withdrawal charge, unless
the beneficiary is required to take pre-determined withdrawal amounts.
.. Upon the death of the beneficiary, if the successor does not take a lump
sum, the successor may take any remaining benefit over the life expectancy
of the beneficiary.
Currently only Investment Options corresponding to Portfolios of the Advanced
Series Trust, and The Prudential Money Market Portfolio, are available under
the Beneficiary Continuation Option.
In addition to the materials referenced above, the Beneficiary will be
provided with a prospectus and a settlement agreement describing the
Beneficiary Continuation Option. We may pay compensation to the broker-dealer
of record on the Annuity based on amounts held in the Beneficiary Continuation
Option. Please contact us for additional information on the availability,
restrictions and limitations that will apply to a beneficiary under the
Beneficiary Continuation Option.
For more information see Section 8, "What Are The Tax Considerations
Associated With The Strategic Partners Select Contract?"
5: HOW CAN I PURCHASE A STRATEGIC PARTNERS SELECT 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.
For qualified contracts, you may purchase the contract only if the annuitant
is 69 or younger on the contract date (age 80 or younger if a minimum
distribution option has been selected). For non-qualified contracts, you may
purchase this contract only if the annuitant, or co-annuitant is 85 or younger
on the contract date.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your 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.
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.
With respect to both your initial Purchase Payment and any subsequent Purchase
Payment that is pending investment in our Separate Account, we may hold the
amount temporarily in our general account and may earn interest on such
amount. You will not be credited with interest during that period.
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5: HOW CAN I PURCHASE A STRATEGIC PARTNERS SELECT CONTRACT? continued
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.
Applicable laws designed to counter terrorists and prevent money laundering
might, in certain circumstances, require us to block a contract owner's
ability to make certain transactions, and thereby refuse to accept purchase
payments or requests for transfers, partial withdrawals, total withdrawals,
death benefits, or income payments until instructions are received from the
appropriate regulator. We also may be required to provide additional
information about you and your contract to government regulators.
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. A
variable 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. The number of accumulation units credited to
your contract is determined by dividing the amount of the purchase payment
allocated to an 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 Contact Value will increase or that it will not
fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 3% a year on that portion of the Contact
Value allocated to the fixed-rate option and to the market value adjustment
option if held for the full seven-year period.
6: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
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 insurance and administrative charges. The
insurance charges have two parts:
1) Mortality and expense risk charge
2) Administrative expense charge
1) Mortality and Expense Risk Charge
The mortality risk 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 Contact Value. The expense risk
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 mortality and expense risk charge is equal, on an annual basis, to 1.37%
of the daily value of the contract invested in the variable investment
options. This charge is not assessed against amounts allocated to the
interest-rate options.
38
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 this charge.
The mortality and expense risk charge cannot be increased. Any profits made
from this charge may be used by us to pay for the costs of distributing the
contracts.
2) Administrative Expense Charge
This charge is for the expenses associated with the administration of the
contract. The administration of the contract includes preparing and issuing
the contract, establishing and maintaining contract records, issuing
confirmations and annual reports, personnel costs, legal and accounting fees,
filing fees, and systems costs.
This charge is equal, on an annual basis, to 0.15% of the daily value of the
contract invested in the variable investment options. This charge is not
assessed against amounts allocated to the interest-rate options.
ANNUAL CONTRACT FEE
During the accumulation phase, if your Contact Value is less than $50,000, we
will deduct $30 per contract year. This annual contract fee is used for
administrative expenses and cannot be increased. The $30 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
Contact Value is less than $50,000.
WITHDRAWAL CHARGE
During the accumulation phase you can make withdrawals from your contract.
When you make a withdrawal, money will be taken first from your purchase
payments for purposes of determining withdrawal charges. When your purchase
payments have been used up, then we will take the money from your earnings.
You will not have to pay any withdrawal charge when you withdraw your earnings.
The withdrawal charge is for the payment of the expenses involved in selling
and distributing the contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature and other
promotional activities. If the contract is sold under circumstances that
reduce the sales expenses, we may reduce or eliminate the withdrawal charge.
For example, a large group of individuals purchasing contracts or an
individual who already has a relationship with us may receive such a
reduction. We will not permit a reduction or elimination of charges where it
would be unfairly discriminatory.
You can withdraw up to 10% of your total purchase payments each contract year
without paying a withdrawal charge. This amount is referred to as the
"charge-free amount." If any of the charge-free amount is not used during a
contract year, it will be carried over to the next contract year. During the
first seven contract years, if your withdrawal of purchase payments is more
than the charge-free amount, a withdrawal charge will be applied
proportionately to all of the variable investment options as well as the
interest-rate options. This charge is based on your contract date.
The withdrawal charge is the percentage, shown below, of the amount withdrawn.
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PERCENTAGE OF APPLICABLE WITHDRAWAL CHARGES
-------------------------------------------------------------------------------
During contract year 1 7%
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During contract year 2 6%
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During contract year 3 5%
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During contract year 4 4%
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During contract year 5 3%
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During contract year 6 2%
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During contract year 7 1%
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After that 0%
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Note: There is no withdrawal charge on any amount used to provide income under
the Life Annuity with 120 Payments (10 years) Certain Option or the annuity
payments for a fixed period option with a period of five years or more. There
will be a reduction in the withdrawal charge for contracts issued to
annuitants whose age is 84 and older.
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.
39
6: WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
CONTRACT? continued
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. New York does not currently charge premium taxes on annuities. It is
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 year (excluding Dollar Cost Averaging and Auto-Rebalancing), we
will deduct a transfer fee of $25 for each additional transfer. 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. There is a different transfer fee under the Beneficiary
Continuation Option.
BENEFICIARY CONTINUATION OPTION CHARGES
If your beneficiary takes the death benefit under a beneficiary continuation
option, we deduct a Settlement Service Charge. The charge is assessed daily
against the average assets allocated to the variable investment options, and
is equal to an annual charge of 1.00%. In addition, the beneficiary will incur
an annual maintenance fee equal to the lesser of $30 or 2% of Contract Value
if the Contract Value is less than $25,000 at the time the fee is assessed.
The fee will not apply if it is assessed 30 days prior to a surrender request.
Finally, transfers in excess of 20 per year will incur a $10 transfer fee.
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 2006, the fees of these funds ranged from
0.37% to 1.19% 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.
7: HOW CAN I ACCESS MY MONEY?
You can access your money by:
.. Making a withdrawal (either partial or complete); or
.. Choosing to receive annuity payments during the income phase.
YOU CAN MAKE WITHDRAWALS ONLY 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 will be made
proportionately from all of the affected investment options and interest-rate
options you have selected. You will need our consent to make a partial
withdrawal if the requested withdrawal is less than $250.
40
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 properly completed withdrawal request. We will deduct applicable
charges, and apply a market value adjustment, 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 8 OF THIS
PROSPECTUS.
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. Market value adjustments may
apply. Withdrawal charges may be deducted if the withdrawals in any contract
year are more than the charge-free amount. The minimum automated withdrawal
amount you can make generally is $100. An assignment of the contract
terminates any automated withdrawal program that you had in effect.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, MARKET VALUE ADJUSTMENTS AND
CERTAIN RESTRICTIONS MAY APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE
EXPLANATION, SEE SECTION 8.
SUSPENSION OF PAYMENTS OR TRANSFERS
The SEC may require us to suspend or postpone payments made in connection with
withdrawals or transfers from the variable investment options 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 interest-rate options promptly upon request.
8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
SELECT CONTRACT?
The tax considerations associated with the Strategic Partners Select 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.
41
8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
SELECT CONTRACT? continued
Charges for investment advisory fees that are taken from the contract are
treated as a partial withdrawal from the contract and will be reported as such
to the contract owner.
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, 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.
Once all gain has been withdrawn, payments will be treated as a nontaxable
return of purchase payments until all purchase payments have been returned.
After all purchase payments are returned, all subsequent amounts will be taxed
as ordinary income. You will generally be taxed on any withdrawals from the
contract while you are alive even if the withdrawal is paid to someone else.
Withdrawals under a systematic payment are taxed under these rules.
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 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).
42
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 required minimum distribution provisions
under the tax law 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).
Considerations for Co-Annuitants
There may be adverse tax consequences if a Co-Annuitant succeeds an Annuitant
when an Annuity is owned by a trust that is neither tax exempt nor qualifies
for preferred treatment under certain sections of the Code. In general, the
Code is designed to prevent indefinite deferral of tax. Continuing the benefit
of tax deferral by naming one or more Co-Annuitants when an Annuity is owned
by a non-qualified trust might be deemed an attempt to extend the tax deferral
for an indefinite period. Therefore, adverse tax treatment may depend on the
terms of the trust, who is named as Co-Annuitant, as well as the particular
facts and circumstances. You should consult your tax advisor before naming a
Co-Annuitant if you expect to use an Annuity in such a fashion.
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.
Entity Owners
Where a contract is held by a non-natural person (e.g. a corporation), other
than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract over its cost basis will be subject to tax annually.
43
8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
SELECT CONTRACT? continued
Where a contract is issued to a trust, and such trust is characterized as a
grantor trust under the Internal Revenue Code, such contract shall not be
considered to be held by a non-natural person and will be subject to the tax
reporting and withholding requirements for contracts not held by tax favored
plans.
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 under the Internal Revenue Code.
Each portfolio is required to diversify its investments each quarter so that
no more than 55% of the value of its assets is represented by any one
investment, no more than 70% is represented by any two investments, no more
than 80% is represented by any three investments, and no more than 90% is
represented by any four investments. Generally, securities of a single issuer
are treated as one investment and obligations of each U.S. Government agency
and instrumentality (such as the Government National Mortgage Association) are
treated as issued by separate issuers. In addition, any security issued,
guaranteed or insured (to the extent so guaranteed or insured) by the United
States or an instrumentality of the U.S. will be treated as a security issued
by the U.S. Government or its instrumentality, where applicable. We believe
the portfolios underlying the variable investment options of the Contract meet
these diversification requirements.
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 reserve the right
to take any action, including modifications to your contract or the investment
options, required to comply with such guidelines if promulgated. Any such
changes will apply uniformly to affected owners and will be made with such
notice to affected owners as is feasible under the circumstances.
REQUIRED DISTRIBUTIONS UPON YOUR DEATH FOR CONTRACTS OWNED BY INDIVIDUALS (NOT
ASSOCIATED WITH TAX-FAVORED PLANS). 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 start 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 start date, the entire interest in the contract
must be distributed within five years after the date of death, or as periodic
payments over a period not extending beyond the life or life expectancy of
such designated beneficiary (provided such payments begin within one year of
your death). 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.
Additionally, 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:
.. 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.
44
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 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 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 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 of
New Jersey;
.. 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 1/st/ of the calendar year after the calendar year you turn age
70 1/2; and
.. Death and annuity payments must meet "required minimum distribution
provisions under the tax law".
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
45
8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
SELECT CONTRACT? continued
.. 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 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. Beginning January 2008, an individual receiving an eligible
rollover distribution from a qualified plan can directly roll over
contributions to a Roth IRA, subject to the same income limits. 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.
Required Minimum Distributions and Payment Options
If you hold the contract under an IRA (or other tax-favored plan), IRS
required minimum distribution provisions 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
Contact 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 Contact 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 required
minimum distribution provisions 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.
Required Distributions Upon Your Death for Qualified Contracts Held by Tax
Favored Plans
Upon your death under an IRA, 403(b) or other "qualified investment", the
designated beneficiary may generally elect to continue the contract and
receive required minimum distributions under the contract instead of receiving
the death benefit in a single payment. The available payment options will
depend on whether you die before the date required minimum distributions under
the Code were required to begin, whether you have named a designated
beneficiary and whether that beneficiary is your surviving spouse.
. If you die after a designated beneficiary has been named, the death
benefit must be distributed by December 31/st/ of the year including the
five year anniversary of the date of death, or as periodic payments not
extending beyond the life or life expectancy of the designated
beneficiary (as long as payments begin by December 31/st/ of the year
following the year of death). However, if your surviving spouse is the
beneficiary, the death benefit can be paid out over the life or life
46
expectancy of your spouse with such payments beginning no later than
December 31/st/ of the year following the year of death or
December 31/st/ of the year in which you would have reached age 70 1/2,
which ever is later. Additionally, 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.
. If you die before a designated beneficiary is named and before the date
required minimum distributions must begin under the Code, the death
benefit must be paid out by December 31/st /of the year including the
five year anniversary of the date of death. For contracts where multiple
beneficiaries have been named and at least one of the beneficiaries does
not qualify as a designated beneficiary and the account has not been
divided into separate accounts by December 31/st/ of the year following
the year of death, such contract is deemed to have no designated
beneficiary.
. If you die before a designated beneficiary is named and after the date
required minimum distributions must begin under the Code, the death
benefit must be paid out at least as rapidly as under the method then in
effect. For contracts where multiple beneficiaries have been named and at
least one of the beneficiaries does not qualify as a designated
beneficiary and the account has not been divided into separate accounts
by December 31/st/ of the year following the year of death, such contract
is deemed to have no designated beneficiary.
A beneficiary has the flexibility to take out more each year than mandated
under the required minimum distribution rules.
Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment"
continue to be tax deferred. Amounts withdrawn each year, including amounts
that are required to be withdrawn under the minimum distribution rules, are
subject to tax. You may wish to consult a professional tax advisor for tax
advice as to your particular situation.
For a Roth IRA, if death occurs before the entire interest is distributed, the
death benefit must be distributed under the same rules applied to IRAs where
death occurs before the date required minimum distributions must begin under
the Code.
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:
.. 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 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 6, "What Are The Expenses Associated
With The Strategic Partners Select Contract?"
47
8: WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
SELECT CONTRACT? continued
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 9.
Other relevant information required by the exemptions is contained in the
contract and accompanying documentation.
Please consult with your tax advisor if you have any questions about ERISA and
these disclosure requirements.
Additional Information
For additional information about federal tax law requirements applicable to
tax favored plans, see the "IRA Disclosure Statement," attached to this
prospectus.
9: OTHER INFORMATION
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a
stock life insurance company, organized on September 17, 1982 under the laws
of the State of New Jersey. It is licensed to sell life insurance and
annuities in New Jersey and New York.
Pruco Life of New Jersey is an indirect, wholly-owned subsidiary of The
Prudential Insurance Company of America (Prudential), a New Jersey stock life
insurance company 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 of New
Jersey's ultimate parent, Prudential Financial exercises significant influence
over the operations and capital structure of Pruco Life of New Jersey and
Prudential. However, neither Prudential Financial, Prudential, nor any other
related company has any legal responsibility to pay amounts that Pruco Life of
New Jersey may owe under the contract.
Pruco Life of New Jersey publishes annual and quarterly reports that are filed
with the SEC. These reports contain financial information about Pruco Life of
New Jersey that is annually audited by independent accountants. Pruco Life of
New Jersey's annual report for the year ended December 31, 2005, together with
subsequent periodic reports that Pruco Life of New Jersey 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 of New
Jersey 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 of New Jersey is 811-07975. You may read and copy
any filings made by Pruco Life of New Jersey with the SEC at the SEC's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549-0102. 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 www.sec.gov.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey 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 New Jersey law on May 20, 1996, 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 of New Jersey 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 of New Jersey, including its audited
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
48
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 Contact 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 of New Jersey 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. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total purchase payments
made. Your registered representative can provide you with more information
about the compensation arrangements that apply upon the sale of the contract.
LITIGATION
Pruco Life of New Jersey is subject to legal and regulatory actions in the
ordinary course of its businesses, which may include class action lawsuits.
Pending legal and regulatory actions include proceedings relating to aspects
of the businesses and operations that are specific to Pruco Life of New Jersey
and that are typical of the businesses in which Pruco Life of New Jersey
operates. Class action and individual lawsuits may involve a variety of issues
and/or allegations, which include sales practices, underwriting practices,
claims payment and procedures, premium charges, policy servicing and breach of
fiduciary duties to customers. Pruco Life of New Jersey may also be subject to
litigation arising out of its general business activities, such as its
investments and third party contracts. In certain of these matters, the
plaintiffs may seek large and/or indeterminate amounts, including punitive or
exemplary damages.
Pruco Life of New Jersey'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 flows of
Pruco Life of New Jersey in a particular quarterly or annual period could be
materially affected by an ultimate unfavorable resolution of litigation and
regulatory matters, depending, in part, upon the results of operations or cash
flows for such period. Management believes, however, that the ultimate outcome
of all pending litigation and regulatory matters, after consideration of
applicable reserves and rights to indemnification, should not have a material
adverse effect on Pruco Life of New Jersey's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. 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.
49
9: OTHER INFORMATION continued
FINANCIAL STATEMENTS
The financial statements of the separate account and Pruco Life of New Jersey,
the co-issuer of the Strategic Partners Select 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
.. 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.
MARKET VALUE ADJUSTMENT FORMULA
The Adjustment Involves Three Amounts
The Market Value Adjustment, which is applied to withdrawals and transfers
made at any time other than the 30-day period following the end of an interest
rate period, involves three amounts:
1) The number of whole months remaining in the existing interest rate period.
2) The guaranteed interest rate.
3) The interpolated value of the interest rates that Pruco Life of New Jersey
declares for the number of whole years remaining and the duration 1 year
longer than the number of whole years remaining in the existing interest
rate period.
Stated as a Formula, the Market Value is Equal to:
(M/12) X (R-C)
not to exceed +0.40 or be less than -0.40; where,
M = the number of whole months (not to be less than one) remaining in the interest-rate period.
R = the Contract's guaranteed interest-rate expressed as a decimal. Thus 6.2% is converted to
0.062.
C = the interpolated value of the interest rates, expressed as a decimal, that Pruco Life of New
Jersey declares for the number of whole years remaining and the duration 1 year longer
than the number of whole years remaining as of the date the request for a withdrawal or
transfer is received or m/365 x (n+1) year rate + (365 - m)/365 x n year rate, where "n"
equals years and "m" equals days remaining in year "n" of the existing interest rate period.
The Market Value Adjustment is then equal to the Market Value Factor
multiplied by the amount subject to a Market Value Adjustment.
Step by Step
The steps below explain how a market value adjustment is calculated.
STEP 1: Divide the number of whole months left in the existing interest rate
period (not to be less than one) by 12.
50
STEP 2: Interpolate the interest rates Pruco Life declares on the date the
request for withdrawal or transfer is received for the duration of years equal
to the whole number of years determined in Step 1, plus the whole number of
years plus 1 additional year.
STEP 3: Subtract this interpolated interest rate from the guaranteed interest
rate. The result could be negative.
STEP 4: Multiply the results of Step 1 and Step 2. Again, the result could be
negative. If the result is less than -0.4, use the value -0.4. If the result
is in between -0.4 and 0.4, use the actual value. If the result is more than
0.4, use the value 0.4.
STEP 5: Multiply the result of Step 3 (which is the Market Value Factor) by
the value of the amount subject to a Market Value Adjustment. The result is
the Market Value Adjustment.
STEP 6: The result of Step 4 is added to the interest cell. If the Market
Value Adjustment is positive, the interest cell will go up in value. If the
Market Value Adjustment is negative, the interest cell will go down in value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
The following example will illustrate the application of a market value
adjustment and the determination of the withdrawal charge:
Suppose a contractowner made two invested purchase payments, the first in the
amount of $10,000 on December 1, 2000, all of which was allocated to the
Equity Subaccount, and the second in the amount of $5,000 on October 1, 2002,
all of which was allocated to the MVA option with a guaranteed interest rate
of 8% (0.08) for 7 years. A request for withdrawal of $8,500 is made on
February 1, 2005 (the contract owner does not provide any withdrawal
instructions). On that date the amount in the Equity Subaccount is equal to
$12,000 and the amount in the interest cell with a maturity date of
September 30, 2009 is $5,985.23, so that the contract fund on that date is
equal to $17,985.23.
On February 1, 2005, the interest rates declared by Pruco Life of New Jersey
for the duration's 4 and 5 years (4 whole years remaining until September 30,
2009, plus 1 year) are 10.8% and 11.4%, respectively.
The following computations would be made:
1) Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2) Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
DATE PAYMENT FREE
---- ------- ----
12/1/00 $10,000 $1,000
12/1/01 $2,000
10/1/02 $ 5,000 $2,500
12/1/02 $4,000
12/1/03 $5,500
12/1/04 $7,000
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the fourth
Contract year) for a total of $7,000.
3) Since the withdrawal request is in the fifth Contract year, a 3% withdrawal
charge rate applies to any portion of the withdrawal which is not charge-free.
$8,500.00 requested withdrawal amount
-$7,000.00 charge-free
------------------------------------- -------------------------------------
additional amount needed to complete
$1,500.00 withdrawal
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount requested.
Therefore, in order to produce the amount needed to complete the withdrawal
request ($1,500), we must "gross-up" that amount, before applying the
withdrawal charge rate. This is done by dividing by 1 minus the withdrawal
charge rate.
$1,500.00/(1 - .03) = $1,500.00/0.97 = $1,546.39 grossed-up amount
51
9: OTHER INFORMATION continued
Please note that a 3% withdrawal charge on this grossed-up amount reduces it
to $1,500, the balance needed to complete the request.
$1,546.39 grossed-up amount
X .03 withdrawal charge rate
------------------------------------- -------------------------------------
$46.39 withdrawal charge
4) The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interpolated value for the interest
rates that would be offered for interest cells with durations of whole years
remaining and whole year plus 1 remaining in the existing interest rate
period), which is -0.03, multiplied by 4.58333 (55 months remaining until
September 30, 2004, divided by 12) or -0.13750. Thus, there will be a negative
Market Value Adjustment of approximately 14% of the amount in the interest
cell that is subject to the adjustment.
-0.13750 X $5,985.23 =
-822.97 negative MVA
$5,985.23 unadjusted value
------------------------------------- -------------------------------------
$5,162.26 adjusted value
$12,000.00 equity value
------------------------------------- -------------------------------------
$17,162.26 adjusted contract fund
5) The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over all
accounts making up the Contract Fund following the Market Value Adjustments,
if any, associated with the MVA option.
Equity
($12,000/$17,162.26) X $8,546.39 = $5,975.71
- --------------------------------------------- -------------------------------------
7-Yr MVA ($5,162.26/$17,162.26) X $8,546.39 = $2,570.68
-------------------------------------
$8,546.39
6) The adjusted value of the interest cell, $5,162.26, reduced by the
withdrawal of $2,570.68 leaves $2,591.58. This amount must be "unadjusted" by
dividing it by 0.86250 (1 plus the Market Value Adjustment of -0.13750) to
determine the amount remaining in the interest cell to which the guaranteed
interest-rate of 8% will continue to be credited until September 30, 2009 or a
subsequent withdrawal. That amount is $3,004.73.
52
APPENDIX A - ACCUMULATION UNIT VALUES
Following are the historical unit values for each of the portfolios offered as
investment options.
(BASIC DEATH BENEFIT 1.52)
- -------------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------
Jennison Portfolio
1/7/2002* to 12/31/2002 $0.87868 $0.59107 351,723
1/1/2003 to 12/31/2003 $0.59107 $0.75840 507,186
1/1/2004 to 12/31/2004 $0.75840 $0.81908 509,175
1/1/2005 to 12/31/2005 $0.81908 $0.92424 461,212
1/1/2006 to 12/31/2006 $0.92424 $0.92675 483,747
- -------------------------------------------------------------------------------------------------------
Prudential Equity Portfolio
2/4/2002* to 12/31/2002 $0.97749 $0.78083 120,821
1/1/2003 to 12/31/2003 $0.78083 $1.01258 146,803
1/1/2004 to 12/31/2004 $1.01258 $1.09644 165,489
1/1/2005 to 12/31/2005 $1.09644 $1.20402 233,761
1/1/2006 to 12/31/2006 $1.20402 $1.33503 227,403
- -------------------------------------------------------------------------------------------------------
Prudential Global Portfolio
1/7/2002* to 12/31/2002 $0.85113 $0.61886 211,852
1/1/2003 to 12/31/2003 $0.61886 $0.81734 237,646
1/1/2004 to 12/31/2004 $0.81734 $0.88230 266,255
1/1/2005 to 12/31/2005 $0.88230 $1.00873 277,142
1/1/2006 to 12/31/2006 $1.00873 $1.18888 250,219
- -------------------------------------------------------------------------------------------------------
Prudential Money Market Portfolio
1/7/2002* to 12/31/2002 $1.01184 $1.01170 292,999
1/1/2003 to 12/31/2003 $1.01170 $1.00488 110,158
1/1/2004 to 12/31/2004 $1.00488 $1.00006 100,818
1/1/2005 to 12/31/2005 $1.00006 $1.01374 89,120
1/1/2006 to 12/31/2006 $1.01374 $1.04628 141,426
- -------------------------------------------------------------------------------------------------------
Prudential Stock Index Portfolio
1/7/2002* to 12/31/2002 $0.91739 $0.69297 370,035
1/1/2003 to 12/31/2003 $0.69297 $0.87500 549,623
1/1/2004 to 12/31/2004 $0.87500 $0.95207 550,100
1/1/2005 to 12/31/2005 $0.95207 $0.98036 514,189
1/1/2006 to 12/31/2006 $0.98036 $1.11593 486,401
- -------------------------------------------------------------------------------------------------------
Prudential Value Portfolio
2/4/2002* to 12/31/2002 $0.97745 $0.79269 231,534
1/1/2003 to 12/31/2003 $0.79269 $0.99996 253,028
1/1/2004 to 12/31/2004 $0.99996 $1.14569 315,951
1/1/2005 to 12/31/2005 $1.14569 $1.31672 317,482
1/1/2006 to 12/31/2006 $1.31672 $1.55569 308,002
- -------------------------------------------------------------------------------------------------------
SP Aggressive Growth Asset Allocation Portfolio
1/7/2002* to 12/31/2002 $0.87588 $0.66733 29,311
1/1/2003 to 12/31/2003 $0.66733 $0.87279 29,310
1/1/2004 to 12/31/2004 $0.87279 $0.98656 99,771
1/1/2005 to 12/31/2005 $0.98656 $1.07382 155,697
1/1/2006 to 12/31/2006 $1.07382 $1.20877 106,780
- -------------------------------------------------------------------------------------------------------
SP AIM Aggressive Growth Portfolio
1/7/2002* to 12/31/2002 $0.87951 $0.68075 39,997
1/1/2003 to 12/31/2003 $0.68075 $0.84830 112,867
1/1/2004 to 12/31/2004 $0.84830 $0.93474 105,634
1/1/2005 to 4/29/2005 $0.93474 $0.86275 0
A-1
- ---------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- ---------------------------------------------------------------------------------------------------
SP AIM Core Equity Portfolio
1/7/2002* to 12/31/2002 $0.85687 $0.70189 42,481
1/1/2003 to 12/31/2003 $0.70189 $0.85528 87,786
1/1/2004 to 12/31/2004 $0.85528 $0.91648 69,724
1/1/2005 to 12/31/2005 $0.91648 $0.94460 68,126
1/1/2006 to 12/31/2006 $0.94460 $1.07992 64,384
- ---------------------------------------------------------------------------------------------------
SP T. Rowe Price Large-Cap Growth Portfolio
1/7/2002* to 12/31/2002 $0.88501 $0.59753 105,508
1/1/2003 to 12/31/2003 $0.59753 $0.72895 193,138
1/1/2004 to 12/31/2004 $0.72895 $0.76178 226,780
1/1/2005 to 12/31/2005 $0.76178 $0.87412 205,706
1/1/2006 to 12/31/2006 $0.87412 $0.91205 208,115
- ---------------------------------------------------------------------------------------------------
SP Balanced Asset Allocation Portfolio
1/7/2002* to 12/31/2002 $0.95377 $0.82546 190,870
1/1/2003 to 12/31/2003 $0.82546 $0.99909 1,261,977
1/1/2004 to 12/31/2004 $0.99909 $1.09336 2,402,176
1/1/2005 to 12/31/2005 $1.09336 $1.15893 2,567,991
1/1/2006 to 12/31/2006 $1.15893 $1.26364 2,180,762
- ---------------------------------------------------------------------------------------------------
SP Conservative Asset Allocation Portfolio
1/7/2002* to 12/31/2002 $0.98860 $0.91217 560,196
1/1/2003 to 12/31/2003 $0.91217 $1.04674 805,336
1/1/2004 to 12/31/2004 $1.04674 $1.12280 1,039,120
1/1/2005 to 12/31/2005 $1.12280 $1.17125 1,205,047
1/1/2006 to 12/31/2006 $1.17125 $1.25366 1,020,552
- ---------------------------------------------------------------------------------------------------
SP Davis Value Portfolio
1/7/2002* to 12/31/2002 $0.92223 $0.76351 355,707
1/1/2003 to 12/31/2003 $0.76351 $0.93719 558,220
1/1/2004 to 12/31/2004 $0.97319 $1.07865 785,002
1/1/2005 to 12/31/2005 $1.07865 $1.16363 776,002
1/1/2006 to 12/31/2006 $1.16363 $1.31853 716,442
- ---------------------------------------------------------------------------------------------------
SP Small-Cap Value Portfolio
1/7/2002* to 12/31/2002 $1.00968 $0.84509 282,405
1/1/2003 to 12/31/2003 $0.84509 $1.10812 331,507
1/1/2004 to 12/31/2004 $1.10812 $1.31729 390,195
1/1/2005 to 12/31/2005 $1.31729 $1.35751 395,154
1/1/2006 to 12/31/2006 $1.35751 $1.53244 386,631
- ---------------------------------------------------------------------------------------------------
SP Growth Asset Allocation Portfolio
1/7/2002* to 12/31/2002 $0.91535 $0.74090 341,199
1/1/2003 to 12/31/2003 $0.74090 $0.93617 464,355
1/1/2004 to 12/31/2004 $0.93617 $1.04247 920,389
1/1/2005 to 12/31/2005 $1.04247 $1.12183 1,051,556
1/1/2006 to 12/31/2006 $1.12183 $1.24749 1,114,757
- ---------------------------------------------------------------------------------------------------
SP Large Cap Value Portfolio
1/7/2002* to 12/31/2002 $0.93269 $0.76054 186,634
1/1/2003 to 12/31/2003 $0.76054 $0.94961 242,010
1/1/2004 to 12/31/2004 $0.94961 $1.10143 259,187
1/1/2005 to 12/31/2005 $1.10143 $1.15700 235,213
1/1/2006 to 12/31/2006 $1.15700 $1.35030 224,813
A-2
- -----------------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -----------------------------------------------------------------------------------------------------------
SP International Value Portfolio
(formerly, SP LSV International Value Portfolio)
1/7/2002* to 12/31/2002 $0.84991 $0.69085 79,223
1/1/2003 to 12/31/2003 $0.69085 $0.86667 140,560
1/1/2004 to 12/31/2004 $0.86667 $0.98855 140,852
1/1/2005 to 12/31/2005 $0.98855 $1.10787 139,711
1/1/2006 to 12/31/2006 $1.10787 $1.40888 138,932
- -----------------------------------------------------------------------------------------------------------
SP MFS Capital Opportunities Portfolio
1/7/2002* to 12/31/2002 $0.82477 $0.56912 28,083
1/1/2003 to 12/31/2003 $0.56912 $0.71086 67,272
1/1/2004 to 12/31/2004 $0.71086 $0.78700 74,375
1/1/2005 to 4/29/2005 $0.78700 $0.73515 0
- -----------------------------------------------------------------------------------------------------------
SP Mid Cap Growth Portfolio
1/7/2002* to 12/31/2002 $0.81135 $0.43076 87,322
1/1/2003 to 12/31/2003 $0.43076 $0.59441 148,454
1/1/2004 to 12/31/2004 $0.59441 $0.69992 171,204
1/1/2005 to 12/31/2005 $0.69992 $0.72567 245,454
1/1/2006 to 12/31/2006 $0.72567 $0.70088 232,618
- -----------------------------------------------------------------------------------------------------------
SP PIMCO High Yield Portfolio
1/7/2002* to 12/31/2002 $1.02021 $0.99971 312,153
1/1/2003 to 12/31/2003 $0.99971 $1.20555 479,168
1/1/2004 to 12/31/2004 $1.20555 $1.29831 610,078
1/1/2005 to 12/31/2005 $1.29831 $1.33076 642,170
1/1/2006 to 12/31/2006 $1.33076 $1.43529 590,629
- -----------------------------------------------------------------------------------------------------------
SP PIMCO Total Return Portfolio
1/7/2002* to 12/31/2002 $1.04393 $1.12110 1,106,672
1/1/2003 to 12/31/2003 $1.12110 $1.16879 1,317,769
1/1/2004 to 12/31/2004 $1.16879 $1.21208 1,576,210
1/1/2005 to 12/31/2005 $1.21208 $1.22256 1,676,776
1/1/2006 to 12/31/2006 $1.22256 $1.24864 1,524,621
- -----------------------------------------------------------------------------------------------------------
SP Prudential U.S. Emerging Growth Portfolio
1/7/2002* to 12/31/2002 $0.87575 $0.58438 131,556
1/1/2003 to 12/31/2003 $0.58438 $0.81789 170,581
1/1/2004 to 12/31/2004 $0.81789 $0.97791 205,166
1/1/2005 to 12/31/2005 $0.97791 $1.13458 230,916
1/1/2006 to 12/31/2006 $1.13458 $1.22470 242,050
- -----------------------------------------------------------------------------------------------------------
SP Small-Cap Growth Portfolio
1/7/2002* to 12/31/2002 $0.93648 $0.63614 79,868
1/1/2003 to 12/31/2003 $0.63614 $0.84421 87,678
1/1/2004 to 12/31/2004 $0.84421 $0.82386 126,232
1/1/2005 to 12/31/2005 $0.82386 $0.83175 149,576
1/1/2006 to 12/31/2006 $0.83175 $0.92074 144,714
- -----------------------------------------------------------------------------------------------------------
SP Strategic Partners Focused Growth Portfolio
1/7/2002* to 12/31/2002 $0.86130 $0.63048 34,616
1/1/2003 to 12/31/2003 $0.63048 $0.78159 32,861
1/1/2004 to 12/31/2004 $0.78159 $0.85155 46,122
1/1/2005 to 12/31/2005 $0.85155 $0.96594 48,124
1/1/2006 to 12/31/2006 $0.96594 $0.94518 50,552
- -----------------------------------------------------------------------------------------------------------
SP Technology Portfolio
1/7/2002* to 12/31/2002 $0.85333 $0.46943 11,136
1/1/2003 to 12/31/2003 $0.46943 $0.65839 10,776
1/1/2004 to 12/31/2004 $0.65839 $0.64848 2,405
1/1/2005 to 4/29/2005 $0.64848 $0.57902 0
A-3
- -----------------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -----------------------------------------------------------------------------------------------------------
SP International Growth Portfolio
(formerly, SP William Blair International Growth
Portfolio)
1/7/2002* to 12/31/2002 $0.75949 $0.57004 125,554
1/1/2003 to 12/31/2003 $0.57004 $0.78386 122,744
1/1/2004 to 12/31/2004 $0.78386 $0.89987 114,966
1/1/2005 to 12/31/2005 $0.89987 $1.03159 146,041
1/1/2006 to 12/31/2006 $1.03159 $1.23000 152,938
- -----------------------------------------------------------------------------------------------------------
AST Advanced Strategies Portfolio
3/20/2006* to 12/31/2006 $9.99876 $10.67264 499
- -----------------------------------------------------------------------------------------------------------
AST Aggressive Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99876 $9.99839 0
1/1/2006 to 12/31/2006 $9.99839 $11.39397 11,797
- -----------------------------------------------------------------------------------------------------------
AST Alger All-Cap Growth Portfolio
3/14/2005* to 12/02/2005 $10.09328 $11.72320 0
- -----------------------------------------------------------------------------------------------------------
AST AllianceBernstein Core Value Portfolio
3/14/2005* to 12/31/2005 $10.07960 $10.32239 0
1/1/2006 to 12/31/2006 $10.32239 $12.33889 0
- -----------------------------------------------------------------------------------------------------------
AST AllianceBernstein Growth & Income Portfolio
3/14/2005* to 12/31/2005 $10.05471 $10.27703 0
1/1/2006 to 12/31/2006 $10.27703 $11.87195 0
- -----------------------------------------------------------------------------------------------------------
AST AllianceBernstein Growth + Value Portfolio
3/14/2005* to 12/02/2005 $10.04999 $11.33524 0
- -----------------------------------------------------------------------------------------------------------
AST AllianceBernstein Managed Index 500 Portfolio
3/14/2005* to 12/31/2005 $10.04978 $10.41185 0
1/1/2006 to 12/31/2006 $10.41185 $11.54864 0
- -----------------------------------------------------------------------------------------------------------
AST American Century Income & Growth Portfolio
3/14/2005* to 12/31/2005 $10.06648 $10.34429 0
1/1/2006 to 12/31/2006 $10.34429 $11.90759 0
- -----------------------------------------------------------------------------------------------------------
AST American Century Strategic Allocation Portfolio
(formerly, AST American Century Strategic Balanced
Portfolio)
3/14/2005* to 12/31/2005 $10.04193 $10.32717 0
1/1/2006 to 12/31/2006 $10.32717 $11.15653 0
- -----------------------------------------------------------------------------------------------------------
AST Balanced Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99876 $10.01837 0
1/1/2006 to 12/31/2006 $10.01837 $11.02977 11,112
- -----------------------------------------------------------------------------------------------------------
AST Capital Growth Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99876 $10.00838 0
1/1/2006 to 12/31/2006 $10.00838 $11.20697 3,104
- -----------------------------------------------------------------------------------------------------------
AST Cohen & Steers Realty Portfolio
3/14/2005* to 12/31/2005 $10.14700 $12.03005 0
1/1/2006 to 12/31/2006 $12.03005 $16.20379 924
- -----------------------------------------------------------------------------------------------------------
AST Conservative Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99876 $10.02837 0
1/1/2006 to 12/31/2006 $10.02837 $10.92155 978
- -----------------------------------------------------------------------------------------------------------
AST DeAM Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.08482 $10.72639 729
1/1/2006 to 12/31/2006 $10.72639 $12.86194 729
- -----------------------------------------------------------------------------------------------------------
AST Neuberger Berman Small-Cap Growth Portfolio
(formerly, AST DeAM Small-Cap Growth Portfolio)
3/14/2005* to 12/31/2005 $10.01123 $10.32274 671
1/1/2006 to 12/31/2006 $10.32274 $10.95733 671
- -----------------------------------------------------------------------------------------------------------
AST DeAM Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04560 $10.02801 0
1/1/2006 to 12/31/2006 $10.02801 $11.84933 0
A-4
- -------------------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -------------------------------------------------------------------------------------------------------------
AST Federated Aggressive Growth Portfolio
3/14/2005* to 12/31/2005 $9.99876 $10.97021 2,047
1/1/2006 to 12/31/2006 $10.97021 $12.20163 2,130
- -------------------------------------------------------------------------------------------------------------
AST First Trust Capital Appreciation Target Portfolio
3/20/2006* to 12/31/2006 $9.99876 $10.49471 1,574
- -------------------------------------------------------------------------------------------------------------
AST First Trust Balanced Target Portfolio
3/20/2006* to 12/31/2006 $9.99876 $10.59360 505
- -------------------------------------------------------------------------------------------------------------
AST UBS Dynamic Alpha Portfolio
(formerly, AST Global Allocation Portfolio)
3/14/2005* to 12/31/2005 $10.01532 $10.63449 0
1/1/2006 to 12/31/2006 $10.63449 $11.64264 0
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Concentrated Growth Portfolio
3/14/2005* to 12/31/2005 $10.03292 $10.77054 0
1/1/2006 to 12/31/2006 $10.77054 $11.66959 0
- -------------------------------------------------------------------------------------------------------------
AST High Yield Portfolio
3/14/2005* to 12/31/2005 $9.97671 $9.86884 0
1/1/2006 to 12/31/2006 $9.86884 $10.72766 0
- -------------------------------------------------------------------------------------------------------------
AST Goldman Sachs Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $9.99876 $10.58989 1,418
1/1/2006 to 12/31/2006 $10.58989 $11.08650 2,007
- -------------------------------------------------------------------------------------------------------------
AST JP Morgan International Equity Portfolio
3/14/2005* to 12/31/2005 $9.91379 $10.66436 0
1/1/2006 to 12/31/2006 $10.66436 $12.89969 424
- -------------------------------------------------------------------------------------------------------------
AST Large-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.07717 $10.56795 2,644
1/1/2006 to 12/31/2006 $10.56795 $12.33176 3,171
- -------------------------------------------------------------------------------------------------------------
AST Lord Abbett Bond Debenture Portfolio
3/14/2005* to 12/31/2005 $9.99876 $9.96022 1,067
1/1/2006 to 12/31/2006 $9.96022 $10.77302 967
- -------------------------------------------------------------------------------------------------------------
AST Marsico Capital Growth Portfolio
3/14/2005* to 12/31/2005 $10.12615 $10.91463 3,439
1/1/2006 to 12/31/2006 $10.91463 $11.52967 3,439
- -------------------------------------------------------------------------------------------------------------
AST MFS Global Equity Portfolio
3/14/2005* to 12/31/2005 $9.96616 $10.48868 432
1/1/2006 to 12/31/2006 $10.48868 $12.84291 432
- -------------------------------------------------------------------------------------------------------------
AST MFS Growth Portfolio
3/14/2005* to 12/31/2005 $10.03683 $10.77072 0
1/1/2006 to 12/31/2006 $10.77072 $11.63510 359
- -------------------------------------------------------------------------------------------------------------
AST Mid Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.06493 $10.36375 0
1/1/2006 to 12/31/2006 $10.36375 $11.66305 86
- -------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Growth Portfolio
3/14/2005* to 12/31/2005 $10.05566 $11.34792 131
1/1/2006 to 12/31/2006 $11.34792 $12.74973 135
- -------------------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.02187 $10.89648 2,062
1/1/2006 to 12/31/2006 $10.89648 $11.88780 2,487
- -------------------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond Portfolio
3/14/2005* to 12/31/2005 $9.99876 $10.06754 0
1/1/2006 to 12/31/2006 $10.06754 $10.29612 0
- -------------------------------------------------------------------------------------------------------------
AST Preservation Asset Allocation Portfolio
12/5/2005* to 12/31/2005 $9.99876 $10.03837 0
1/1/2006 to 12/31/2006 $10.03837 $10.67559 0
- -------------------------------------------------------------------------------------------------------------
AST Small-Cap Value Portfolio
3/14/2005* to 12/31/2005 $10.04857 $10.65807 0
1/1/2006 to 12/31/2006 $10.65807 $12.60337 113
A-5
- -----------------------------------------------------------------------------------------------------
Number of
Accumulation Accumulation Accumulation
Unit Value at Unit Value at Units Outstanding at
Beginning of Period End of Period End of Period
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Asset Allocation Portfolio
3/14/2005* to 12/31/2005 $10.02858 $10.36634 0
1/1/2006 to 12/31/2006 $10.36634 $11.48721 0
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Global Bond Portfolio
3/14/2005* to 12/31/2005 $9.94930 $9.45939 0
1/1/2006 to 12/31/2006 $9.45939 $9.90259 0
- -----------------------------------------------------------------------------------------------------
AST T. Rowe Price Natural Resources Portfolio
3/14/2005* to 12/31/2005 $10.00276 $11.75113 8,725
1/1/2006 to 12/31/2006 $11.75113 $13.41190 10,618
- -----------------------------------------------------------------------------------------------------
Gartmore GVIT Developing Markets Fund
3/14/2005* to 12/31/2005 $9.88093 $12.07433 0
1/1/2006 to 12/31/2006 $12.07433 $16.00639 1,210
- -----------------------------------------------------------------------------------------------------
Janus Aspen Large Cap Growth Portfolio -
Service Shares
1/7/2002* to 12/31/2002 $0.79756 $0.56521 44,823
1/1/2003 to 12/31/2003 $0.56521 $0.73210 77,593
1/1/2004 to 12/31/2004 $0.73210 $0.75143 89,715
1/1/2005 to 12/31/2005 $0.75143 $0.76990 55,540
1/1/2006 to 12/31/2006 $0.76990 $0.84286 50,174
* As applicable, date that portfolio was first offered in the product and/or
this charge combination first appeared.
A-6
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 Contact 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 the
Strategic Partners Annuity One 3/Plus 3 contract, 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 Contact Value, or a step-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.
B-1
- --------------------------------------------------------------------------------------------------------------------
Strategic
Partners
Strategic Strategic Annuity
Partners Partners One 3/Plus 3
Advisor Select Non Bonus
- --------------------------------------------------------------------------------------------------------------------
Minimum Investment $10,000 $10,000 $10,000
- --------------------------------------------------------------------------------------------------------------------
Maximum Issue Age 85 Qualified & 80 Qualified & 85 85 Qualified &
Non-Qualified Non-Qualified Non-Qualified
- --------------------------------------------------------------------------------------------------------------------
Withdrawal Charge None 7 Years (7%, 6%, 5%, 4%, 7 Years (7%, 6%, 5%, 4%,
Schedule 3%, 2%, 1%) 3%, 2%, 1%) Payment date
Contract date based based
- --------------------------------------------------------------------------------------------------------------------
Annual Charge-Free Full liquidity 10% of gross purchase 10% of gross purchase
Withdrawal /1/ payments per contract year, payments made as of last
cumulative up to 7 years or contract anniversary per
70% of gross purchase contract year
payments
- --------------------------------------------------------------------------------------------------------------------
Insurance and 1.40% 1.52% 1.40%
Administration Charge
- --------------------------------------------------------------------------------------------------------------------
Contract Maintenance The lesser of $30 or 2% of $30. Waived if contract The lesser of $30 or 2% of
Fee (assessed annually) your contract value. value is $50,000 or more your contract value.
Waived if contract value is Waived if contract value is
$50,000 or more $75,000 or more
- --------------------------------------------------------------------------------------------------------------------
Contract Credit No No No
- --------------------------------------------------------------------------------------------------------------------
Fixed Rate Account No Yes Yes
1-Year 1-Year
- --------------------------------------------------------------------------------------------------------------------
Market Value Adjustment No Yes Yes
Account (MVA) 7-Year 1-10 Years
- --------------------------------------------------------------------------------------------------------------------
Enhanced Dollar Cost No No Yes
Averaging (DCA)
- --------------------------------------------------------------------------------------------------------------------
Variable Investment as indicated in prospectus as indicated in prospectus as indicated in prospectus
Options Available
- --------------------------------------------------------------------------------------------------------------------
Evergreen Funds N/A N/A 6-available in Strategic
Partners Plus 3 only
- --------------------------------------------------------------------------------------------------------------------
Base Death Benefit: The greater of: Step-Up Withdrawals will The greater of: purchase
purchase payment(s) proportionately affect the payment(s) minus
minus proportionate Death Benefit proportionate withdrawal(s)
withdrawal(s) or contract or contract value
value
- --------------------------------------------------------------------------------------------------------------------
Optional Death Benefit (for Step-Up N/A Step-Up
an additional cost) /3/
- --------------------------------------------------------------------------------------------------------------------
Living Benefits (for an Lifetime Five N/A Lifetime Five
additional cost) /4/ Spousal Lifetime Five
Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator Benefit
(IAB)
- ---------------------------------------------------------
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%, 8%,
Schedule 7%, 6%, 5%) Payment date
based
- ---------------------------------------------------------
Annual Charge-Free 10% of gross purchase
Withdrawal /1/ payments made as of last
contract anniversary per
contract year
- ---------------------------------------------------------
Insurance and 1.50%
Administration Charge
- ---------------------------------------------------------
Contract Maintenance The lesser of $30 or 2% of
Fee (assessed annually) your contract 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 /2/
1-Year
- ---------------------------------------------------------
Market Value Adjustment No
Account (MVA)
- ---------------------------------------------------------
Enhanced Dollar Cost Yes
Averaging (DCA)
- ---------------------------------------------------------
Variable Investment as indicated in prospectus
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 Benefit (for Step-Up
an additional cost) /3/
- ---------------------------------------------------------
Living Benefits (for an Lifetime Five
additional cost) /4/ Spousal Lifetime Five
Guaranteed Minimum
Income Benefit (GMIB)
Income Appreciator Benefit
(IAB)
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.
2 May offer lower interest rates for the fixed rate options than the interest
rates offered in the contracts without credit.
3 For more information on these benefits, refer to section 4, "What Is The
Death Benefit?" in the Prospectus.
4 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?"; and section 6, "What Is The Income
Appreciator Benefit?" in the Prospectus.
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.
B-2
.. The hypothetical gross rates of return (as of December 31, 2006) are
reduced by the arithmetic average of the fees and expenses of the
underlying portfolios (as of December 31, 2006) and the charges that are
deducted from the contract at the Separate Account level as follows:
. 0.97% average of all fund expenses (as of December 31, 2006) 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. Please note that because the SP
Aggressive Growth Asset Allocation Portfolio, the SP Balanced Asset
Allocation Portfolio, the SP Conservation Asset Allocation Portfolio, and
the SP Growth Asset Allocation Portfolio generally were closed to
investors in 2005, the fees for such portfolios are not reflected in the
above-mentioned average.
. 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 an 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).
0% GROSS RETURN
SP ADVISOR SP SELECT SPAO 3 NON BONUS SPAO 3 BONUS
------------------ ------------------ ------------------ ------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
-------- --------- -------- --------- -------- --------- -------- ---------
1 $97,678 $97,678 $97,563 $91,433 $97,678 $91,540 $101,485 $94,166
2 $95,404 $95,404 $95,179 $90,068 $95,404 $90,279 $ 99,025 $91,902
3 $93,183 $93,183 $92,853 $88,710 $93,183 $89,023 $ 96,624 $89,694
4 $91,013 $91,013 $90,584 $87,361 $91,013 $87,773 $ 94,282 $87,539
5 $88,894 $88,894 $88,371 $86,019 $88,894 $86,527 $ 91,996 $86,256
6 $86,825 $86,825 $86,211 $84,687 $86,825 $85,288 $ 89,766 $84,979
7 $84,803 $84,803 $84,104 $83,363 $84,803 $84,055 $ 87,589 $83,710
8 $82,829 $82,829 $82,049 $82,049 $82,829 $82,829 $ 85,466 $85,466
9 $80,901 $80,901 $80,044 $80,044 $80,901 $80,901 $ 83,394 $83,394
10 $79,017 $79,017 $78,088 $78,088 $79,017 $79,017 $ 81,372 $81,372
11 $77,178 $77,178 $76,180 $76,180 $77,178 $77,178 $ 79,399 $79,399
12 $75,381 $75,381 $74,319 $74,319 $75,381 $75,381 $ 77,474 $77,474
13 $73,626 $73,626 $72,468 $72,468 $73,626 $73,626 $ 75,596 $75,596
14 $71,912 $71,912 $70,663 $70,663 $71,877 $71,877 $ 73,763 $73,763
15 $70,237 $70,237 $68,902 $68,902 $70,170 $70,170 $ 71,941 $71,941
16 $68,602 $68,602 $67,185 $67,185 $68,502 $68,502 $ 70,162 $70,162
17 $67,005 $67,005 $65,509 $65,509 $66,873 $66,873 $ 68,427 $68,427
18 $65,445 $65,445 $63,874 $63,874 $65,282 $65,282 $ 66,734 $66,734
19 $63,921 $63,921 $62,279 $62,279 $63,728 $63,728 $ 65,082 $65,082
20 $62,433 $62,433 $60,723 $60,723 $62,210 $62,210 $ 63,470 $63,470
21 $60,980 $60,980 $59,205 $59,205 $60,727 $60,727 $ 61,897 $61,897
22 $59,560 $59,560 $57,724 $57,724 $59,279 $59,279 $ 60,362 $60,362
23 $58,173 $58,173 $56,279 $56,279 $57,865 $57,865 $ 58,865 $58,865
24 $56,819 $56,819 $54,870 $54,870 $56,484 $56,484 $ 57,404 $57,404
25 $55,496 $55,496 $53,495 $53,495 $55,134 $55,134 $ 55,978 $55,978
- -------------------------------------------------------------------------------
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.97%.
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 -2.33%; Strategic Partners Select -2.44%;
Strategic Partners Annuity One 3/Plus 3 Non-Bonus -2.33%; Strategic
Partners Annuity One 3/Plus 3 Bonus -2.42%.
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.
B-3
6% GROSS RETURN
SP ADVISOR SP SELECT SPAO 3 NON BONUS SPAO 3 BONUS
------------------ ------------------ ------------------ ------------------
CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER CONTRACT SURRENDER
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
-------- --------- -------- --------- -------- --------- -------- ---------
1 $103,522 $103,522 $103,400 $ 96,863 $103,522 $ 96,976 $107,557 $ 99,754
2 $107,179 $107,179 $106,926 $101,111 $107,179 $101,349 $111,247 $103,148
3 $110,965 $110,965 $110,572 $105,544 $110,965 $105,917 $115,063 $106,659
4 $114,884 $114,884 $114,342 $110,169 $114,884 $110,689 $119,009 $110,290
5 $118,942 $118,942 $118,241 $114,994 $118,942 $115,674 $123,092 $115,176
6 $123,143 $123,143 $122,273 $120,027 $123,143 $120,880 $127,314 $120,276
7 $127,493 $127,493 $126,442 $125,278 $127,493 $126,318 $131,681 $125,597
8 $131,996 $131,996 $130,753 $130,753 $131,996 $131,996 $136,198 $136,198
9 $136,658 $136,658 $135,212 $135,212 $136,658 $136,658 $140,870 $140,870
10 $141,485 $141,485 $139,822 $139,822 $141,485 $141,485 $145,702 $145,702
11 $146,483 $146,483 $144,590 $144,590 $146,483 $146,483 $150,699 $150,699
12 $151,657 $151,657 $149,520 $149,520 $151,657 $151,657 $155,868 $155,868
13 $157,013 $157,013 $154,618 $154,618 $157,013 $157,013 $161,215 $161,215
14 $162,559 $162,559 $159,890 $159,890 $162,559 $162,559 $166,745 $166,745
15 $168,301 $168,301 $165,342 $165,342 $168,301 $168,301 $172,464 $172,464
16 $174,246 $174,246 $170,980 $170,980 $174,246 $174,246 $178,380 $178,380
17 $180,400 $180,400 $176,810 $176,810 $180,400 $180,400 $184,499 $184,499
18 $186,772 $186,772 $182,838 $182,838 $186,772 $186,772 $190,827 $190,827
19 $193,369 $193,369 $189,073 $189,073 $193,369 $193,369 $197,373 $197,373
20 $200,199 $200,199 $195,520 $195,520 $200,199 $200,199 $204,143 $204,143
21 $207,271 $207,271 $202,186 $202,186 $207,271 $207,271 $211,146 $211,146
22 $214,592 $214,592 $209,080 $209,080 $214,592 $214,592 $218,388 $218,388
23 $222,172 $222,172 $216,210 $216,210 $222,172 $222,172 $225,879 $225,879
24 $230,019 $230,019 $223,582 $223,582 $230,019 $230,019 $233,627 $233,627
25 $238,144 $238,144 $231,205 $231,205 $238,144 $238,144 $241,641 $241,641
- -------------------------------------------------------------------------------
Assumptions:
1. $100,000 initial investment.
2. Fund Expenses = 0.97%.
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 3.53%; Strategic Partners Select 3.41%;
Strategic Partners Annuity One 3/Plus 3 Non-Bonus 3.53%; Strategic Partners
Annuity One 3/Plus Bonus 3.43%.
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.
B-4
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS
FURTHER DETAILS ABOUT THE PRUCO LIFE OF NEW JERSEY ANNUITY
DESCRIBED IN PROSPECTUS ORD01009NY (05/2007).
------------------------
(print your name)
------------------------
(address)
------------------------
(city/state/zip code)
MAILING ADDRESS:
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960
Philadelphia, PA 19176
[LOGO]
The Prudential Insurance Company of America
751 Broad Street
Newark, NJ 07102-3777
ORD01009NY
PRSRT STD
U.S. POSTAGE
PAID
LANCASTER, PA
PERMIT NO. 1793
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
Supplement, dated February 11, 2009
To
Prospectus, dated May 1, 2001
This supplement should be read and retained with your current prospectus. If you
would like another copy of that prospectus, please call us at 800-752-6342.
Pruco Life Insurance Company of New Jersey ("PLNJ") incorporates by reference
into the prospectus its latest annual report on Form 10-K filed pursuant to
Section 13(a) or Section 15(d) of the Exchange Act since the end of the fiscal
year covered by its latest annual report. In addition, all documents
subsequently filed by PLNJ pursuant to Sections 13(a), 13 (c), 14 or 15(d) of
the Exchange Act also are incorporated into the prospectus by reference. PLNJ
will provide to each person, including any beneficial owner, to whom a
prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference into the prospectus but not delivered with the
prospectus. Such information will be provided upon written or oral request at no
cost to the requester by writing to Prudential Annuities Life Assurance
Corporation, One Corporate Drive, Shelton, CT 06484 or by calling 800-752-6342.
PLNJ files periodic reports as required under the Securities Exchange Act of
1934. The public may read and copy any materials that PLNJ files with the SEC at
the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy, and information statements, and other information
regarding issuers that file electronically with the SEC (see
http://www.sec.gov). Our internet address is http://www.prudentialannuities.com.
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees
In this registration statement, Pruco Life Insurance Company of New Jersey is
registering $40 million of securities and paying a filing fee of $1,572.00
therefor.
Federal Taxes
Pruco Life Insurance Company of New Jersey estimated the federal tax effect
associated with the deferred acquisition costs attributable to receipt of $1
million of purchase payments over a two year period to be approximately $74,000.
State Taxes
Pruco Life Insurance Company of New Jersey estimated that approximately $-0- in
premium taxes would be owed upon receipt of purchase payments under the
contracts.
Printing Costs
Prospectus printing costs for the amount of securities registered herein would
be $0 because the variable annuity with which this market value adjustment
option is associated is no longer offered or sold.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life Insurance Company of New Jersey.
Accounting Costs
PricewaterhouseCoopers LLP, the independent registered public accounting firm
that audits Pruco Life Insurance Company of New Jersey's financial statements,
will charge approximately $2500 in connection with the filing of this
registration statement with the Commission.
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.
New Jersey, being the state of organization of Pruco Life Insurance Company of
New Jersey ("PLNJ"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law,
Article V, which relates to indemnification of officers and directors,
is incorporated by reference to Exhibit 1A(6)(c) to Form S-6 filed August 13,
1999 on behalf of the Pruco Life of New Jersey Variable Appreciable Account.
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) (a) Form of Distribution Agreement between Prudential Investment Management
Services LLC (Underwriter) and Pruco Life Insurance Company of New Jersey
(Depositor). (Note 2)
(4) (a) Strategic Partners Select Variable Annuity Contract. (Note 3)
(b) Strategic Partners Select Variable Annuity Application. (Note 3)
(5) Opinion of Counsel as to legality of the Securities being registered (Note
1)
(23)Written Consent of PricewaterhouseCoopers LLP, Independent Accountants
(Note 1)
(24)Powers of Attorney.
(a) James J. Avery, Jr., Helen M. Galt, Bernard J. Jacob (Note 4)
(b) Tucker I. Marr, Scott D. Kaplan. (Note 4)
(c) Stephen Pelletier (Note 1)
(d) Scott G. Sleyster (Note 5)
- --------
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Effective Amendment No. 5 to Form
S-6, Registration No. 333-85117 filed June 28, 2001 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 3) Incorporated by reference to Pre-Effective Amendment No. 1 to Form
N-4, Registration No. 333-62246, filed November 27, 2001 on behalf of
this Registrant.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 18 to Form
N-4, Registration No. 333-75702, filed April 19, 2007 on behalf of
Pruco Life Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 7, Form N-6,
Registration No. 333-112808, filed on behalf of Pruco Life New Jersey
Flexible Premium Variable Annuity Account.
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; and
(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.
(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.
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 the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newark, State of New
Jersey, on the 12th day of February 2009.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (Registrant)
Attest: /s/ Thomas C. Castano /s/ Scott D. Kaplan
------------------------------------ -----------------------------------
Thomas C. Castano Scott D. Kaplan
Chief Legal Officer and Secretary President and Chief Executive
Officer
Signature and Title
*
- --------------------------
JAMES J. AVERY JR.
VICE CHAIRMAN AND DIRECTOR Date: February 12, 2009
* **By: /s/ Thomas C. Castano
- ------------------------------------ -----------------------------------
SCOTT D. KAPLAN THOMAS C. CASTANO
DIRECTOR VICE PRESIDENT AND CORPORATE
COUNSEL
*
- --------------------------
TUCKER I. MARR
CHIEF ACCOUNTING OFFICER
*
- --------------------------
BERNARD J. JACOB
DIRECTOR
*
- --------------------------
SCOTT G. SLEYSTER
DIRECTOR
*
- --------------------------
HELEN M. GALT
DIRECTOR
*
- --------------------------
STEPHEN PELLETIER
DIRECTOR
EXHIBIT INDEX
Exhibit No.
- -----------
5 Opinion of Counsel
23 Written Consent of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting Firm
24 Power of attorney for Director, Stephen Pelletier.