<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27 , 2000
1933 ACT REGISTRATION NO. _________
1940 ACT REGISTRATION NO. 811-07325
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X ]
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 15 [X]
(CHECK APPROPRIATE BOX OR BOXES)
PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-5740
(Address and telephone number of depositor's principal executive offices)
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name and address of agent for service)
Copies to:
CHRISTOPHER E. PALMER WILLIAM V. HEALEY
MICHAEL K. ISENMAN CHIEF LEGAL OFFICER-INVESTMENTS
SHEA & GARDNER THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
1800 MASSACHUSETTS AVENUE, N.W. 100 MULBERRY STREET
WASHINGTON, D.C. 20036 NEWARK, NEW JERSEY 07102-4077
(202) 828-2093 (973) 802-2991
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on __________ pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered:
1
<PAGE> 2
Interests in Individual Variable Annuity Contracts
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.
2
<PAGE> 3
STRATEGIC PARTNERS ADVISOR (SM)
VARIABLE ANNUITY
PROSPECTUS: ________, 2001
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE). PRUCO LIFE IS A WHOLLY OWNED
SUBSIDIARY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA.
THE FUNDS
------------------------------------------------------------------------------
Strategic Partners Advisor offers a wide variety of investment choices,
including 25 variable investment options that invest in mutual funds managed by
these leading asset managers.
PRUDENTIAL INVESTMENTS
JENNISON ASSOCIATES
AIM ADVISORS
ALLIANCE CAPITAL MANAGEMENT
BANKERS TRUST, PART OF DEUTSCHE ASSET MANAGEMENT
DAVIS SELECTED ADVISERS
FIDELITY MANAGEMENT AND RESEARCH
INVESCO
JANUS CAPITAL
MFS
PIMCO
PLEASE READ THIS PROSPECTUS
--------------------------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Advisor
variable annuity contract and keep it for future reference. Current prospectuses
for each of the underlying mutual funds accompany this prospectus. These
prospectuses contain important information about the mutual funds. Please read
these prospectuses and keep them for reference.
TO LEARN MORE ABOUT STRATEGIC PARTNERS ADVISOR
--------------------------------------------------------------------------------
To learn more about the Strategic Partners Advisor variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated _____,
2001. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of this prospectus. Pruco Life also files other reports
with the SEC. All of these filings can be reviewed and copied at the SEC's
offices, and can be obtained from the SEC's Public Reference Section, 450 5th
Street N.W., Washington, D.C. 20549. The SEC also maintains a Web site
(http://www.sec.gov) that contains the Strategic Partners Advisor SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is on Page 32 of
this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
--------------------------------------------------------------------------------
1
<PAGE> 4
(888) PRU-2888 or write to us at:
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
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 ADVISOR IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
2
<PAGE> 5
CONTENTS
PART I: STRATEGIC PARTNERS ADVISOR PROSPECTUS
SUMMARY
Glossary........................... 7
Summary............................ 8
Summary of Contract Expenses....... 10
Expense Examples................... 12
PART II: STRATEGIC PARTNERS ADVISOR PROSPECTUS
SECTIONS 1--9
Section 1: What Is The Strategic Partners Advisor
Variable Annuity?.................... 16
Short Term Cancellation Right or
"Free Look"...................... 16
Section 2: What Investment Options Can I Choose? 17
Variable Investment Options........ 17
Transfers Among Options............ 18
Dollar Cost Averaging.............. 18
Asset Allocation Program........... 18
Auto-Rebalancing................... 19
Voting Rights...................... 19
Substitution....................... 19
Section 3: What Kind Of Payments Will I Receive
During The Income Phase? (Annuiti-
zation)............................ 20
Payment Provisions................. 20
Option 1: Annuity Payments for a Fixed
Period......................... 20
Option 2: Life Annuity with 120 Payments
(10 Years) Certain............. 20
Option 3: Interest Payment
Option......................... 20
Option 4: Other Annuity
Options........................ 20
Section 4: What is the Death Benefit?... 21
Beneficiary........................ 21
Calculation of the Death Benefit... 21
Section 5: How Can I Purchase A Strategic Partners
Advisor
Contract?............................. 22
Purchase Payments.................. 22
Allocation of Purchase Payments.... 22
Calculating Contract Value......... 22
Section 6: What Are The Expenses Associated With
The Strategic Partners Advisor
Contract?............................. 23
Insurance Charges.................. 23
Contract Maintenance Charge........ 23
Premium Taxes...................... 23
Transfer Fee....................... 23
Company Taxes...................... 23
Section 7: How Can I Access My Money?... 24
3
<PAGE> 6
Withdrawals During the Accumulation
Phase............................ 24
Automated Withdrawals.............. 24
Suspension of Payments or
Transfers........................ 24
Section 8: What Are The Tax Considerations
Associated With The Strategic Partners
Advisor Contract?..................... 25
Contracts Owned by Individuals (Not
Associated With Tax Favored Retirement
Plans)........................... 25
Contracts Held by Tax-Favored
Plans............................ 26
Section 9: Other Information............ 31
Pruco Life Insurance Company....... 31
The Separate Account............... 31
Sale and Distribution of the
Contract......................... 31
Assignment......................... 32
Financial Statements............... 32
Statement of Additional Information 32
Accumulation Unit Values........... 33
IRA Disclosure Statement........... 37
PART III: PROSPECTUSES
VARIABLE INVESTMENT OPTIONS
THE PRUDENTIAL SERIES FUND
JANUS ASPEN SERIES
4
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5
<PAGE> 8
PART I SUMMARY
STRATEGIC PARTNERS ADVISOR PROSPECTUS
6
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7
<PAGE> 10
PART I STRATEGIC PARTNERS
ADVISOR PROSPECTUS SUMMARY
GLOSSARY
WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THESE WORDS
OR TERMS.
ACCUMULATION PHASE
The period that begins with the contract date (see definition 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.
ANNUITANT
The person whose life determines the amount of income payments that will be
paid.
ANNUITY DATE
The date when income payments are scheduled to begin.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
CONTRACT DATE
The date we receive your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract.
DEATH BENEFIT
If the sole or last surviving owner dies, the designated person(s) or the
beneficiary will receive, at a minimum, the total amount invested or a
potentially greater amount related to market appreciation. See "What is the
Death Benefit?" on page 21.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, these are referred to as payout or annuity options.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract.
PRUDENTIAL ANNUITY SERVICE CENTER
P.O. Box 7960, Philadelphia, PA, 19101. The phone number is (888) PRU-2888.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, with some
restrictions you can make additional purchase payments at any time during the
accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life Flexible Premium Variable Annuity
Account. The separate account is set apart from all of the general assets of
Pruco Life.
TAX DEFERRAL
8
<PAGE> 11
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.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the mutual
fund which are held as an investment for that option. We hold these shares in
the separate account. The division of the separate account of Pruco Life that
invests in a particular mutual fund is referred to in your contract as a
subaccount.
9
<PAGE> 12
PART I STRATEGIC PARTNERS
ADVISOR PROSPECTUS SUMMARY
SUMMARY FOR 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 ADVISOR VARIABLE ANNUITY?
The Strategic Partners Advisor Variable Annuity is a contract between you, the
owner, and us, the insurance company, Pruco Life Insurance Company (Pruco Life
Insurance Company will hereafter be referred to as Pruco Life, We or Us). The
contract allows you to invest on a tax-deferred basis in one or more of 25
variable investment options. The contract is intended for retirement savings or
other long-term investment purposes and provides for a death benefit.
The variable investment options are designed to 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.
You can invest your money in any or all of the variable investment options.
You are allowed 12 tax-free transfers each contract year among the variable
investment options, without a charge.
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 of payments 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 selected.
If you change your mind about owning Strategic Partners Advisor, you may
cancel your contract within 10 days after receiving it (or whatever time period
is required under the applicable state 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 any or all of the variable investment options that
use the mutual funds described in the fund prospectuses provided with this
prospectus:
The Prudential Series Fund
Prudential Global Portfolio
Prudential Jennison Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
SP Alliance Large Cap Growth Portfolio
SP Alliance Technology Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
10
<PAGE> 13
SP MFS Capital Opportunities Portfolio
SP MFS Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small/Mid Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
Janus Aspen Series
Growth Portfolio - Service Shares
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 mutual funds used by the variable investment options that you
choose. Performance
11
<PAGE> 14
information for the variable investment options is provided in the Statement of
Additional Information (SAI). Past performance is not a guarantee of future
results.
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 owner or joint owner dies before the income phase
of the contract begins, the person(s) or entity that you have chosen as your
beneficiary will receive at a minimum, the total amount invested adjusted for
withdrawals or a potentially greater amount relating to market appreciation
depending on the death benefit option you choose.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS ADVISOR ANNUITY CONTRACT?
You can purchase this contract, under most circumstances, with a minimum initial
purchase payment of $10,000. Generally, you can add $1,000 or more at any time
during the accumulation phase of the contract. Your representative can help you
fill out the proper forms.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ADVISOR CONTRACT?
The contract has insurance features and investment features, and there are costs
related to each. Each year we deduct a contract maintenance charge if your
contract value is less than $50,000. This charge is equal to the lesser of $30
or 2% of your contract value. For insurance and administrative costs, we also
deduct an annual charge of 1.40% or 1.65% of the average daily value of all
assets allocated to the variable investment options, depending on the death
benefit option that you choose.
There are a few states/jurisdictions that assess a premium tax when you begin
receiving regular income payments from your annuity. In those states, we will
assess the required premium tax charge, which can range up to 5%.
There are also charges made by the mutual funds which are invested in by the
variable investment options. These charges currently range from 0.39% to 1.40%
per year of a fund's average daily assets.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may take money out 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.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ADVISOR
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you take money out
during the accumulation phase, earnings are withdrawn first and are taxed as
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 partly a return of your original investment. As a result, that
portion of each payment is not taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contracts 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, a subsidiary of the Prudential Insurance
Company of America, and sold by registered representatives.
12
<PAGE> 15
PART I STRATEGIC PARTNERS
ADVISOR PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS YOU WILL PAY
FOR STRATEGIC PARTNERS ADVISOR. THIS SUMMARY INCLUDES THE EXPENSES OF THE MUTUAL
FUNDS USED BY THE VARIABLE INVESTMENT OPTIONS BUT DOES NOT INCLUDE ANY CHARGE
FOR PREMIUM TAXES THAT MIGHT BE APPLICABLE IN YOUR STATE.
For More Detailed Information:
More detailed information can be found on page 23 under the section called,
"What Are The Expenses Associated With The Strategic Partners Advisor Variable
Annuity?" For more detailed expense information about the mutual funds, please
refer to the individual fund prospectuses which you will find at the back of
this prospectus.
<TABLE>
<CAPTION>
TRANSACTION EXPENSES
------------------------------------------------------------------------------------------------------------
TRANSFER FEE
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
first 12 transfers per year $ 0.00
transfer after 12 (see Note
1 below) $30.00
ANNUAL CONTRACT FEE AND CONTRACT CHARGE UPON FULL WITHDRAWAL (see Note 2 below)
-------------------------------------------------------------------------------------------------------------
$60.00
ANNUAL ACCOUNT EXPENSES
-------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE ACCOUNT VALUE
Basic Death Benefit Option
Insurance Charge: 1.40%
Enhanced Death Benefit Option
Insurance Charge: 1.65%
</TABLE>
NOTE 1: CURRENTLY, WE CHARGE $10 FOR EACH TRANSFER AFTER THE TWELFTH IN A
CONTRACT YEAR. AS SHOWN IN THE TABLE, WE CAN INCREASE THAT CHARGE UP TO A
MAXIMUM OF $30, BUT WE HAVE NO CURRENT INTENTION TO DO SO. You will not be
charged for transfers made in connection with Dollar Cost Averaging and
Auto-Rebalancing.
NOTE 2: Currently, we waive this fee if your contract value is greater than or
equal to $50,000. If your contract value is less than $50,000, we currently
charge the lesser of $30 or 2% of your contract value. We assess this fee
annually and at the time of a full withdrawal. As shown in the table, we can
increase this fee in the future up to a maximum of $60, but we have no current
intention to do so.
NOTES FOR ANNUAL MUTUAL FUND EXPENSES
These expenses are based on the historical fund expenses for the year ended
December 31, 1999, except as indicated. Fund expenses are not fixed or
guaranteed by the Strategic Partners Advisor contract and may vary from year to
year.
(1) THE PRUDENTIAL SERIES FUND:
Because this is the first year of operation for all "SP" Portfolios, other
expenses are estimated based on management's projection of non-advisory fee
expenses. Each "SP" Portfolio has expense reimbursements in effect, and the
table shows total expenses both with and without these expense reimbursements.
These expense reimbursements are voluntary and may be terminated at any time.
(2) Each Asset Allocation Portfolio of The Prudential Series Fund invests in a
combination of underlying portfolios of The Prudential Series Fund. The Total
Expenses and Total Expenses After Expense Reimbursement for each Asset
Allocation Portfolio are calculated as a blend of the advisory fees of the
underlying portfolios, plus a 0.05% advisory fee payable to the investment
adviser, Prudential Investments Fund Management LLC.
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<PAGE> 16
(3) JANUS ASPEN SERIES GROWTH PORTFOLIO- SERVICE SHARES:
Expenses are based on the estimated expenses that the new Service Shares Class
of the Growth Portfolio expects to incur in its first fiscal year. Janus Aspen
Series maintains a distribution plan, or "12b-1 Plan", for this class of shares
under which an annual fee of 0.25% of the class's average daily net assets is
paid to the class distributor. This fee is discussed in the Janus Aspen Series
prospectus.
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<PAGE> 17
ANNUAL MUTUAL FUND EXPENSES (AFTER REIMBURSEMENT, IF ANY):
AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE DAILY NET ASSETS
<TABLE>
<CAPTION>
TOTAL EXPENSES
INVESTMENT OTHER TOTAL AFTER EXPENSE
ADVISORY FEES EXPENSES EXPENSES REIMBURSEMENTS*
THE PRUDENTIAL SERIES FUND (1)
<S> <C> <C> <C> <C>
Prudential Global Portfolio 0.75% 0.09% 0.84% 0.84%
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
Prudential Money Market Portfolio 0.40% 0.02% 0.42% 0.42%
Prudential Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
SP Aggressive Growth Asset Allocation
Portfolio (2) 0.84% 0.64% 1.48% 1.04%
SP AIM Aggressive Growth Portfolio 0.95% 0.50% 1.45% 1.07%
SP AIM Growth and Income Portfolio 0.85% 0.38% 1.23% 1.00%
SP Alliance Large Cap Growth Portfolio 0.90% 0.30% 1.20% 1.10%
SP Alliance Technology Portfolio 1.15% 0.47% 1.62% 1.30%
SP Balanced Asset Allocation Portfolio (2) 0.75% 0.51% 1.26% 0.92%
SP Conservative Asset Allocation Portfolio (2) 0.71% 0.60% 1.31% 0.87%
SP Davis Value Portfolio 0.75% 0.31% 1.06% 0.83%
SP Deutsche International Equity Portfolio 0.90% 0.77% 1.67% 1.10%
SP Growth Asset Allocation Portfolio (2) 0.80% 0.51% 1.31% 0.97%
SP INVESCO Small Company Growth Portfolio 0.95% 0.59% 1.54% 1.15%
SP Jennison International Growth Portfolio 0.85% 0.99% 1.84% 1.24%
SP Large Cap Value Portfolio 0.80% 0.34% 1.14% 0.90%
SP MFS Capital Opportunities Portfolio 0.75% 0.39% 1.14% 1.00%
SP MFS Mid Cap Growth Portfolio 0.80% 0.52% 1.32% 1.00%
SP PIMCO High Yield 0.60% 0.77% 1.37% 0.82%
SP PIMCO Total Return Portfolio 0.60% 0.57% 1.17% 0.76%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.52% 1.12% 0.90%
SP Small/Mid Cap Value Portfolio 0.90% 0.68% 1.58% 1.05%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.42% 1.32% 1.01%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT ADVISORY
FEES 12b-1 FEE OTHER EXPENSES TOTAL EXPENSES
JANUS ASPEN SERIES (3)
<S> <C> <C> <C> <C>
Growth Portfolio- Service Shares 0.65% 0.25% 0.02% 0.92%
</TABLE>
* Reflects the effect of management fee waivers and reimbursement of expenses,
if any. See notes on page 10.
The "Expense Examples" on the following pages are calculated using the Total
Actual Expenses.
15
<PAGE> 18
PART I STRATEGIC PARTNERS
ADVISOR PROSPECTUS SUMMARY
EXPENSE EXAMPLES
--------------------------------------------------------------------------------
THESE EXAMPLES WILL HELP YOU COMPARE THE FEES AND EXPENSES OF THE DIFFERENT
VARIABLE INVESTMENT OPTIONS OFFERED BY STRATEGIC PARTNERS ADVISOR. YOU CAN ALSO
USE THE EXAMPLE TO COMPARE THE COST OF STRATEGIC PARTNERS ADVISOR WITH OTHER
VARIABLE ANNUITY CONTRACTS.
Example 1: Basic Death Benefit Option
This example assumes that you:
- Invest $10,000 in Strategic Partners Advisor;
- Elect the BASIC Death Benefit Option;
- Allocate all of your assets to only one of the variable investment options;
- That investment has a 5% return each year; and
- The mutual fund's operating expenses remain the same each year.
Example 2: Enhanced Death Benefit Option
This example assumes that you:
- Invest $10,000 in Strategic Partners Advisor;
- Elect the ENHANCED Death Benefit Option;
- Allocate all of your assets to only one of the variable investment options;
- That investment has a 5% return each year; and
- The mutual fund's operating expenses remain the same each year.
Because this contract has no withdrawal charges, your costs are not impacted by
whether or not you choose to make withdrawals. Your actual costs may be higher
or lower, but on the following page are examples of what your costs would be
based on these assumptions.
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.
If your contract value is less than $50,000, on your contract anniversary (and
upon a full withdrawal), we deduct the lesser of $30.00 or 2% of the contract
value. 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 2001.
Based on these estimates, the annual contract fee is included as an annual
charge of 0.05% of contract value. Your actual fees will vary based on the
amount of your contract and your specific allocation(s).
Premium taxes are not reflected in the examples. A charge for premium taxes may
apply depending on the state where you live.
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<PAGE> 19
EXPENSE EXAMPLES 1 AND 2
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXAMPLE 1: EXAMPLE 2:
WITH THE BASIC DEATH BENEFIT WITH THE ENHANCED DEATH BENEFIT
---------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prudential Global Portfolio $ 232 $ 715 $ 1225 $ 2626 $ 257 $ 791 $ 1350 $ 2875
Prudential Jennison Portfolio $ 211 $ 652 $ 1119 $ 2410 $ 236 $ 727 $ 1245 $ 2666
Prudential Money Market Portfolio $ 190 $ 588 $ 1011 $ 2190 $ 215 $ 664 $ 1139 $ 2452
Prudential Stock Index Portfolio $ 187 $ 579 $ 995 $ 2159 $ 212 $ 655 $ 1124 $ 2421
SP Aggressive Growth Asset Allocation
Portfolio $ 252 $ 776 $ 1326 $ 2826 $ 277 $ 850 $ 1450 $ 3070
SP AIM Aggressive Growth Portfolio $ 255 $ 785 $ 1340 $ 2856 $ 280 $ 859 $ 1464 $ 3099
SP AIM Growth and Income Portfolio $ 248 $ 764 $ 1306 $ 2786 $ 273 $ 838 $ 1430 $ 3032
SP Alliance Large Cap Growth Portfolio $ 258 $ 793 $ 1355 $ 2885 $ 283 $ 868 $ 1479 $ 3128
SP Alliance Technology Portfolio $ 278 $ 853 $ 1454 $ 3080 $ 303 $ 927 $ 1577 $ 3318
SP Balanced Asset Allocation Portfolio $ 240 $ 739 $ 1265 $ 2706 $ 265 $ 814 $ 1390 $ 2954
SP Conservative Asset Allocation Portfolio $ 240 $ 740 $ 1267 $ 2713 $ 265 $ 815 $ 1392 $ 2961
SP Davis Value Portfolio $ 231 $ 712 $ 1220 $ 2615 $ 256 $ 788 $ 1345 $ 2866
SP Deutsche International Equity Portfolio $ 258 $ 793 $ 1355 $ 2885 $ 283 $ 868 $ 1479 $ 3128
SP Growth Asset Allocation Portfolio $ 245 $ 755 $ 1291 $ 2756 $ 270 $ 829 $ 1415 $ 3003
SP INVESCO Small Company Growth Portfolio $ 263 $ 808 $ 1380 $ 2934 $ 288 $ 883 $ 1504 $ 3176
SP Jennison International Growth Portfolio $ 272 $ 835 $ 1425 $ 3022 $ 297 $ 910 $ 1548 $ 3261
SP Large Cap Value Portfolio $ 238 $ 733 $ 1255 $ 2686 $ 263 $ 808 $ 1380 $ 2934
SP MFS Capital Opportunities Portfolio $ 248 $ 764 $ 1306 $ 2786 $ 273 $ 838 $ 1430 $ 3032
SP MFS Mid Cap Growth Portfolio $ 248 $ 764 $ 1306 $ 2786 $ 273 $ 838 $ 1430 $ 3032
SP PIMCO High Yield $ 230 $ 709 $ 1215 $ 2605 $ 255 $ 785 $ 1340 $ 2856
SP PIMCO Total Return Portfolio $ 224 $ 691 $ 1185 $ 2544 $ 249 $ 767 $ 1311 $ 2796
SP Prudential U.S. Emerging Growth Portfolio $ 238 $ 733 $ 1255 $ 2686 $ 263 $ 808 $ 1380 $ 2934
SP Small/Mid Cap Value Portfolio $ 253 $ 779 $ 1331 $ 2836 $ 278 $ 853 $ 1454 $ 3080
SP Strategic Partners Focused Growth
Portfolio $ 249 $ 767 $ 1311 $ 2796 $ 274 $ 841 $ 1435 $ 3041
</TABLE>
17
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<TABLE>
<CAPTION>
JANUS ASPEN SERIES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Portfolio- Service Shares $ 240 $ 739 $ 1265 $ 2706 $ 265 $ 814 $ 1390 $ 2954
</TABLE>
These examples do not show past or future expenses. Actual expenses for a
particular year may be more or less than those shown in the examples.
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19
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PART II SECTIONS 1--9
--------------------------------------------------------------------------------
STRATEGIC PARTNERS ADVISOR PROSPECTUS
20
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
1:
WHAT IS THE STRATEGIC PARTNERS ADVISOR
VARIABLE ANNUITY?
--------------------------------------------------------------------------------
THE STRATEGIC PARTNERS ADVISOR VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, THE INSURANCE COMPANY, PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE,
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 second
contract anniversary. Your annuity is in the accumulation phase until you decide
to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral. 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.
Strategic Partners Advisor is a variable annuity contract. This means that
during the accumulation phase, you can allocate your assets among 25 variable
investment options. The amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the mutual fund associated with that variable investment option. Because the
mutual funds' portfolios fluctuate in value depending upon market conditions,
your contract value can either increase or decrease. This is important, since
the amount of the annuity payments you receive during the income phase depends
upon the value of your contract at the time you begin receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person who receives the annuity payments when the
income phase begins. The annuitant is also the person whose life is used to
determine how much and how long these payments will continue. On and after the
annuity date, the annuitant is the owner and may not be changed.
The beneficiary is: the person(s) or entity designated to receive any death
benefit if the owner(s) dies during the accumulation phase. You may change the
beneficiary any time prior to the annuity date by making a written request to
us. Your request becomes effective when we approve it. The beneficiary becomes
the owner when a death benefit is payable.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Advisor, you may cancel
your contract within 10 days after receiving it (or whatever period is required
by applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable law:
- Your full purchase payment; or
- The amount your contract is worth as of the day we receive your request. This
amount may be more or less than your original payment.
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
--------------------------------------------------------------------------------
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF 25 VARIABLE INVESTMENT OPTIONS.
The 25 variable investment options invest in mutual funds managed by leading
investment advisors. Each of these mutual funds has a separate prospectus that
is provided with this prospectus. You should read the mutual fund prospectus
before you decide to allocate your assets to the variable investment option
using that fund.
VARIABLE INVESTMENT OPTIONS
Listed below are the mutual funds in which the variable investment options
invest. Each variable investment option has a different investment objective.
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The Prudential Series Fund
- Prudential Global Portfolio
- Prudential Jennison Portfolio (domestic equity)
- Prudential Money Market Portfolio
- Prudential Stock Index Portfolio
- SP Aggressive Growth Asset Allocation Portfolio
- SP AIM Aggressive Growth Portfolio
- SP AIM Growth and Income Portfolio
- SP Alliance Large Cap Growth Portfolio
- SP Alliance Technology Portfolio
- SP Balanced Asset Allocation Portfolio
- SP Conservative Asset Allocation Portfolio
- SP Davis Value Portfolio
- SP Deutsche International Equity Portfolio
- SP Growth Asset Allocation Portfolio
- SP INVESCO Small Company Growth Portfolio
- SP Jennison International Growth Portfolio
- SP Large Cap Value Portfolio
- SP MFS Capital Opportunities Portfolio
23
<PAGE> 26
- SP MFS Mid Cap Growth Portfolio
- SP PIMCO High Yield Portfolio
- SP PIMCO Total Return Portfolio
- SP Prudential U.S. Emerging Growth Portfolio
- SP Small/Mid Cap Value Portfolio
- SP Strategic Partners Focused Growth Portfolio
The Prudential Global Portfolio, Prudential Jennison Portfolio, Prudential Money
Market Portfolio, and Prudential Stock Index Portfolio. are managed by The
Prudential Insurance Company of America ("Prudential"). The remaining portfolios
of the Prudential Series Fund are managed by Prudential Investments Fund
Management LLC ("PIFM"), a subsidiary of Prudential. In addition, the portfolios
listed below also have subadvisers, which are listed below and which have
day-to-day responsibility for managing the portfolio, subject to the oversight
of Prudential or PIFM.
- Prudential Money Market Portfolio and Prudential Stock Index Portfolio:
Prudential Investment Corporation
- Prudential Jennison Portfolio, SP Jennison International Growth
Portfolio, and SP Prudential U.S. Focused Growth Portfolio: Jennison
Associates LLC
- SP Strategic Partners Focused Growth Portfolio: Jennison Associates LLC.
and Alliance Capital Management L.P.
- SP AIM Aggressive Growth Portfolio and SP AIM Growth and Income
Portfolio: AIM Advisors, Inc.
- SP Alliance Large Cap Growth Portfolio and SP Alliance Technology
Portfolio: Alliance Capital Management L.P.
- SP Davis Value Portfolio: Davis Select Advisers, LP
- SP Deutsche International Equity Portfolio: Bankers Trust Company, part
of Deutsche Asset Management and a wholly-owned subsidiary of Deutsche
International Bank A.G.
- SP INVESCO Small Company Growth Portfolio: INVESCO
- SP Large Cap Value Portfolio and SP Small/Mid Cap Value Portfolio:
Fidelity Management and Research Company
- SP MFS Capital Opportunities Portfolio and SP MFS Mid Cap Growth
Portfolio: Massachusetts Financial Services Company
- SP PIMCO High Yield Portfolio and SP PIMCO Total Return Portfolio:
Pacific Investment Management Company
Janus Aspen Series
- Growth Portfolio - Service Shares
Janus Capital Corporation serves as investment adviser to the Growth Portfolio -
Service Shares of Janus Aspen Series.
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options. Your transfer
request may be made by telephone or in writing to the Prudential Annuity Service
Center. Only two transfers per month may be made by telephone. After that, all
transfer requests must be in writing with an original signature. We have
procedures in place to confirm that instructions received by telephone are
genuine. We will not be liable for following telephone 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. Our business day usually
closes at 4:00 p.m. Eastern time.
During the contract accumulation phase, you can make 12 transfers each
contract year, among the investment options, without charge. If you make more
than 12 transfers in one contract year, you may be charged up to $30 for each
additional transfer. Currently we charge only $10 for additional transfers.
(Dollar Cost Averaging and Auto-Rebalancing transfers are always free, and do
not count toward the 12 free transfers per year.)
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature allows you to systematically transfer
either a fixed dollar amount or a percentage out of the Money Market Portfolio
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 allocating amounts on a regular schedule instead of allocating 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.
Each transfer from your DCA account must be at least $100. Transfers will be
made automatically on the schedule you elect until the entire amount in your DCA
account has been transferred or until you tell us to discontinue the transfers.
If your DCA account balance drops below $100, the entire remaining balance of
the account will be transferred on the next transfer date. You can allocate
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<PAGE> 27
subsequent purchase payments to re-open the DCA account at any time.
Your transfers will be made 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 transfers you make because of Dollar Cost Averaging are not counted
toward the 12 free transfers you are allowed each contract year. The DCA feature
is available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding on the allocation of your
money. 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.
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 or to change allocations by selecting the
Auto-Rebalancing feature. The DCA account cannot participate in this feature.
Your rebalancing will be done monthly, quarterly, semiannually or annually
based on your choice. The rebalancing will be done 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.
VOTING RIGHTS
We are the legal owner of the shares in the mutual funds available as variable
investment options. However, we vote the shares of the mutual funds according to
voting instructions we receive from contractowners. 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. Fund shares for which
we do not receive instructions, are voted in the same proportion as shares for
which instructions are received from contractowners. We may change the way your
voting instructions are calculated if it is required by federal regulation.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We may also cease to allow investments in existing funds. We
would do this only if events such as investment policy changes or tax law
changes make the mutual fund unsuitable. We would not do this without the
approval of the Securities and Exchange Commission and necessary state insurance
department approvals. You will be given specific notice in advance of any
substitution we intend to make.
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
--------------------------------------------------------------------------------
PAYMENT PROVISIONS
The annuitant can begin receiving annuity payments any time after the second
contract anniversary (or as required by state law if different). Annuity
payments must begin no later than the contract anniversary that coincides with
or follows the annuitant's 90th birthday (unless we agree to another date).
You may choose among the income plans described below at any time before the
annuity date. These plans are called annuity options or settlement options.
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If you have not selected an annuity
option by the annuity date, the Life Income Annuity Option (Option 2, described
below) will automatically be selected unless prohibited by applicable law.
GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, YOU CANNOT CHANGE THE ANNUITY
OPTION.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for a period you choose, up to 25
years. 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. A lump sum payment will be made to the beneficiary if the
beneficiary so chooses. 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
used will always be at least 3% a year.
OPTION 2
LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments to the annuitant 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 the present value of the remaining annuity payments in one lump sum
unless the annuitant has specifically instructed that the remaining monthly
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 used will
always be at least 3% a year.
If you have not selected an annuity option by the annuity date, this is the
option we will automatically select for you, unless prohibited by applicable
law.
OPTION 3
INTEREST PAYMENT OPTION
Under this option, you can choose to have us hold all or a portion of your
contract value in order to accumulate interest. You can receive interest
payments on a monthly, quarterly, semiannual, or annual basis or you can 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.
OPTION 4
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time you choose to receive your annuity payments, we may make available to
you any of the fixed annuity options that are offered at your annuity date.
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
4:
WHAT IS THE
DEATH BENEFIT?
--------------------------------------------------------------------------------
THE DEATH BENEFIT FEATURE PROTECTS THE VALUE OF THE CONTRACT FOR THE
BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner or last survivor, if there are joint owners, dies.
CALCULATION OF THE DEATH BENEFIT
The death benefit to which your beneficiary is entitled depends on whether you
elected the basic death benefit or the enhanced death benefit. The enhanced
death benefit is only available if you are age 75 or under at the time you
purchase the contract.
BASIC DEATH BENEFIT
If the sole owner, or last survivor of the owner or joint owner, dies during the
accumulation period, after we receive the appropriate proof of death and any
other needed documentation ("due proof of death"), your beneficiary will receive
the greater of the following:
- the contract value as of the date we receive due proof of death; or
- the total of all purchase payments made, proportionally reduced by the
effect of withdrawals.
ENHANCED DEATH BENEFIT
If the sole owner, or last survivor of the owner or joint owner, dies during the
accumulation period and prior to age 80, after we receive due proof of death,
your beneficiary will receive the greater of the following:
- the contract value as of the date we receive due proof of death; or
- the guaranteed minimum death benefit (GMDB).
The GMDB is calculated daily and is equal to the greater of:
1) the total purchase payments compounded daily at an effective annual interest
rate of 5%, subject to a 200% cap. This is called the roll-up value. The
roll-up may not be available in all states. Both the roll-up value and the
cap are proportionally reduced by the effect of withdrawals. Once the cap is
reached, the roll-up value will be increased by subsequent purchase payments
and proportionally reduced by the effect of withdrawals; and
2) the highest value of the contract on any contract anniversary. This is called
the step-up value. Before the first contract anniversary, the step-up value
is the initial purchase payment increased by subsequent purchase payments and
proportionally reduced by the effect of withdrawals. Between anniversaries,
the step-up is increased only by purchase payments and proportionally reduced
by the effect of withdrawals.
After the contract anniversary on or next following the 80th birthday of the
sole owner or older of the owner or joint owner, the beneficiary will receive a
death benefit equal to the greater of:
1) the contract value as of the date we receive due proof of death; or
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2) the GMDB as of the contract anniversary on or next following the sole or
older of the owner or joint owner's 80th birthday increased by subsequent
purchase payments since such contract anniversary and proportionally reduced
by the effect of withdrawals since such contract anniversary.
Here is an example of a proportional reduction:
If an owner withdrew 50% of a contract valued at $100,000 and if the step-up
value at that time was $80,000, the new step-up value following the withdrawal
would be $40,000, or 50% of what it had been prior to the withdrawal.
28
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
5:
HOW CAN I PURCHASE A
STRATEGIC PARTNERS ADVISOR CONTRACT?
--------------------------------------------------------------------------------
PURCHASE PAYMENTS
A purchase payment is the amount of money you give us to purchase the contract.
The minimum purchase payment is $10,000. With some restrictions, you can make
additional purchase payments of at least $1,000 or more at any time during the
accumulation phase. However, no purchase payments may be made on or after the
85th birthday of:
- the owner;
- joint owners;
- the annuitant.
We have established an aggregate maximum purchase payment limit of $20
million, and we limit the maximum total purchase payments per contract in any
contract year, other than the first, to $2 million. Depending on the applicable
state law, other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable investment options based on the percentages you choose. The percentage
of your allocation to a specific investment option can range in whole
percentages from 1% to 100%. If, after the initial invested purchase payment, we
receive a purchase payment without allocation instructions, we will allocate the
corresponding invested purchase payment in the same proportion as your most
recent purchase payment (unless you directed us to allocate that purchase
payment on a one-time-only basis). You may submit an allocation change request
at any time. Contact the Annuity Service Center for details. We generally will
credit the initial purchase payments to your contract within two business days
from the day on which the payment is received and subsequent payments on the
business day on which they are received in good order. Our business day ends
when the New York Stock Exchange closes, usually at 4:00 p.m. Eastern time.
CALCULATING CONTRACT VALUE
The value of your contract will go up or down depending on the investment
performance of the variable investment option(s) you choose. To determine the
value of your contract, we use a unit of measure called an accumulation unit. An
accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) adding up the total amount of money allocated to a specific investment
option;
2) subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3) dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment, we credit your contract with accumulation
units of the subaccount or subaccounts selected. 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.
29
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We cannot guarantee that your contract value will increase or that it will not
fall below the amount of your total purchase payments.
30
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE
STRATEGIC PARTNERS ADVISOR 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.
INSURANCE CHARGES
Each day, we make a deduction for the insurance charge. The insurance charge
covers our expenses for mortality and expense risk, administration, marketing
and distribution. The mortality risk portion of the charge is for assuming the
risk that the annuitant(s) will live longer than expected based on our life
expectancy tables. When this happens, we pay a greater number of annuity
payments. The expense risk portion of the charge is for assuming the risk that
the current charges will be insufficient in the future to cover the cost of
administering the contract. The administrative expense portion of the charge is
for the expenses associated with the administration of the contract. This would
include preparing and issuing the contract; establishing and maintaining
contract records; preparation of confirmations and annual reports; personnel
costs; legal and accounting fees; filing fees; and systems costs.
The insurance charge is equal, on an annual basis, to 1.40% (Basic Death
Benefit) or 1.65% (Enhanced Death Benefit) of the daily value of the contract
after expenses have been deducted.
If the charges under the contract are not sufficient, then we will bear the
loss. We do, however, expect to profit from this charge. The insurance risk
charge for your contract cannot be increased. Any profits made from this charge
may be used by us to pay for the costs of distributing the contracts.
CONTRACT MAINTENANCE CHARGE
On each contract anniversary during the accumulation phase, if your contract
value is less than $50,000, we will deduct the lesser of $30 or 2% of your
contract value, for administrative expenses. (This fee may differ in certain
states). While this is what we currently charge, we may increase this charge up
to a maximum of $60. Also, we may raise the level of the contract value at which
we waive this fee. The charge will be deducted proportionately from each of the
contract's variable investment options. This charge will also be deducted when
you surrender your contract if your contract value is less than $50,000.
PREMIUM TAXES
Some states and/or municipalities charge premium taxes or similar taxes. We are
responsible for the payment of these taxes and will make a deduction from the
value of the contract to pay them. Some of these taxes are due when the contract
is issued, others are due when annuity payments begin. It is our current
practice not to deduct a charge for these taxes until annuity payments begin. In
the few states that impose a tax, the current rates range up to 5%. If, in the
future, we are charged for additional taxes that are based on purchase payments,
that charge may be passed on to contractowners.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $10 for each additional
transfer. We have the right to increase this fee up to a maximum of $30 per
transfer, but we have no current intention of doing so. The transfer fee will be
deducted proportionately from each of the investment options involved in the
transfer.
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We are not
currently charging the separate account for taxes. We will
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periodically review the issue of charging the separate account for these taxes
and may impose a charge in the future.
32
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
7:
HOW CAN I
ACCESS MY MONEY?
--------------------------------------------------------------------------------
YOU CAN ACCESS YOUR MONEY BY:
- MAKING A WITHDRAWAL (EITHER PARTIAL OR COMPLETE); OR
- ELECTING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a complete withdrawal, you will receive the value of your contract
minus the contract maintenance fee, if applicable. 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 variable investment options you have selected.
The minimum amount which may be withdrawn is $250. If you request a withdrawal
that would reduce your total contract fund below the minimum $2,000, we will
withdraw the maximum amount that will not reduce the total contract fund below
that amount.
We will generally pay the withdrawal amount, less any required tax
withholding, within seven days after we receive a withdrawal request in good
order. We will deduct applicable charges, if any, from the assets in your
contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS 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. The minimum automated withdrawal amount you can
make is $100.
INCOME TAXES AND A 10% PENALTY TAX ON EARNINGS MAY APPLY TO AUTOMATED
WITHDRAWALS AS WELL AS ANY OTHER WITHDRAWALS MADE FROM YOUR CONTRACT.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- Trading on the New York Stock Exchange is restricted;
- An emergency exists during which sales and redemptions of shares of the
mutual funds are not reasonable or we cannot reasonably value the
accumulation units; or
- The Securities and Exchange Commission, by order, permits suspension or
postponement of payments for the protection of owners.
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE
STRATEGIC PARTNERS ADVISOR CONTRACT?
--------------------------------------------------------------------------------
The tax considerations associated with the Strategic Partners Advisor contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan, 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. It is not intended as tax advice. A qualified
tax adviser should be consulted for complete information and advice.
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.
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.
If you assign all or part of your contract as collateral for a loan, the part
assigned will be treated as a withdrawal. Also, if you elect the interest
payment option, 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 the gain in the contract. This rule does not apply
if you transfer the contract to your spouse or you transfer the contract
incident to divorce.
It is our position that the enhanced death benefit option is an integral part
of the annuity contract and accordingly that the charges made against the
annuity contract's cash value for the option should not be treated as
distributions subject to income tax. It is possible, however, that the Internal
Revenue Service could take the position that such charges should be treated as
distributions.
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 is allowed for the unrecovered
amount.
PENALTY TAXES ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10 %
penalty tax. Amounts are not subject to this penalty tax if:
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- 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 level annuity payments paid or
received not less frequently than annually under a lifetime annuity;
TAXES PAYABLE BY BENEFICIARIES
Generally, the same tax rules apply to amounts received by your beneficiary as
those set forth above with respect to you. The election of an annuity payment
option instead of a lump sum death benefit may defer taxes. Certain minimum
distribution requirements apply upon your death, as discussed further below.
WITHHOLDING OF TAX FROM DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. These elections must be made on the appropriate forms that we provide.
ANNUITY QUALIFICATION
Diversification and Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the contract must be an annuity
contract for tax purposes. This means that the assets underlying the annuity
contract must be diversified, according to certain rules. It also means 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. We believe these rules, which are further discussed in the Statement
of Additional Information, will be met.
Required Distributions Upon Your Death. Upon your death (or the death of a
joint owner, if earlier), certain distributions must be made under the contract.
The required distributions depend on whether you die before you start taking
annuity payments under the contract or after you start taking annuity payments
under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
ownership of the contract passes by reason of death, and must be a natural
person.
If any portion of 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 contractowners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- You are a nonresident alien.
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- You transfer your contract to, or designate, a beneficiary who is either 37
1/2 years younger than you or a grandchild.
- You wish additional information on withholding taxes.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities ("IRAs") which are subject to
Sections 408(a), 408(b) and 408A of the Code. At some future time we may allow
the contract to be purchased in connection with other retirement arrangements
which are also entitled to favorable federal income tax treatment ("tax favored
plans"). These other tax favored plans include:
Simplified employee pension plans ("SEPs") under Section 408(k) of the Code;
Saving incentive match plans for employees-IRAs ("SIMPLE-IRAs") under Section
408(p) of the Code; and Tax-deferred annuities ("TDAs") under Section 403(b) of
the Code. This description assumes that (i) we will be offering this to both IRA
and non-IRA tax favored plans, and (ii) 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 the contract. The "IRA Disclosure Statement" on page 37 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 credited under
the contract, calculated as of the date that we receive this cancellation
notice, if greater).
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. 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 you may make to an IRA (which is
generally $2,000/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 be able subsequently to "roll over" the contract funds into another
Section 401(a) plan or TDA (although you may be able to transfer the funds to
another IRA).
Required Provisions: Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- Your rights as owner are non-forfeitable;
- You cannot sell, assign or pledge the contract, other than to Pruco Life;
- The annual premium you pay cannot be greater than $2,000 (which does not
include any rollover amounts);
- The date on which annuity payments must begin cannot be later than the April
1st of the calendar year after the calendar year you
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turn age 70 1/2; and
- Death and annuity payments must meet "minimum distribution requirements"
(described below).
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" (described below);
- Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- Failure to take a minimum distribution (also generally described below).
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a SEP
must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of (a)
$30,000 or (b) 15% of the employee's earned income (not including the
employer contribution amount as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established by
the IRS will not be considered. In 2000, this limit is $170,000;
- SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- Some SEPs for small employers permit salary deferrals (up to $10,500 in 2000)
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SAR-SEPs" can be established after 1996.
You will also be provided the same information, and have the same "free look"
period, as you would have if you were purchasing the contract for a standard
IRA.
SIMPLE-IRAs. SIMPLE-IRAs are another variation on the standard IRA, available
to small employers (under 100 employees, on a "controlled group" basis) that do
not offer other tax favored plans. SIMPLE-IRAs are also subject to the same
basic IRA requirements with the following exceptions:
- Participants in a SIMPLE-IRA may contribute up to $6,000 (in 2000, indexed),
as opposed to the usual $2,000 limit, and employer contributions may also be
provided as a match (up to 3% of your compensation); and
- SIMPLE-IRAs are not subject to the SEP nondiscrimination rules.
ROTH IRAs. Congress amended the Code in 1997 to add a new Section 408A,
creating the "Roth IRA" as a new type of individual retirement plan. 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" (generally, held for 5 years and payable on account
of death, disability, attainment of age 59 1/2, or first time-homebuyer) from
Roth IRAs are excludable from your gross income; and
- If eligible, 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.
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 (generally,
$2,000 less any contributions to a traditional IRA), you may purchase a contract
as a Roth IRA only in connection with a "rollover" or "conversion" of the
proceeds of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA, or Roth IRA.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who
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receive certain qualifying distributions from such non-Roth IRAs, to directly
rollover or make, within 60 days, a "rollover" of all or any part of the amount
of such distribution to a Roth IRA which they establish. This conversion
triggers current taxation (but is not subject to a 10% early distribution
penalty). Once the contract has been purchased, regular Roth IRA contributions
will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or employee
of a tax-exempt organization (as defined under Code Section 501(c)(3)) or a
public educational organization, and you may make contributions to a TDA so long
as the employee's rights to the annuity are nonforfeitable. Contributions to a
TDA, and any earnings, are not taxable until distribution. You may also make
contributions to a TDA under a salary reduction agreement, generally up to a
maximum of $10,500 (2000, indexed). Further, you may roll over TDA amounts to
another TDA or an IRA.
A contract may only qualify as a TDA if distributions (other than
"grandfathered" amounts held as of December 31, 1988) may be made only on
account of:
- Your attainment of age 59 1/2;
- Your severance of employment;
- Your death;
- Your total and permanent disability; or
- Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by April
1st of the calendar year after the calendar year you turn age 70 1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
MINIMUM DISTRIBUTION OPTION
If you hold the contract under an IRA or other tax favored plan, you can satisfy
the IRS minimum distribution requirements described above (generally,
distribution after age 70 1/2) under the contract without either annuitizing or
"cash surrendering" a portion of the contract. You, as owner of the contract,
can select either a "calculation" or "recalculation" method to determine the
minimum distribution. We will send you a check for the minimum distribution
amount, less any other partial withdrawals that you made during the year. More
information on the mechanics of this calculation is available on request.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% penalty tax to the taxable part of distributions received from
an IRA, SEP, SIMPLE-IRA (which may increase to 25%), Roth IRA, TDA or qualified
retirement plan before you attain age 59 1/2. There are only limited exceptions
to this tax, and you should consult your tax adviser for further details.
WITHHOLDING
The Code requires a mandatory 20% federal income tax withholding for certain
distributions from a TDA or qualified retirement plan, unless the distribution
is an eligible rollover contribution that is "directly" rolled into another
qualified plan, IRA (including the IRA variations described above) or TDA. For
all other distributions, unless you elect otherwise, we will withhold federal
income tax from the taxable portion of such distribution at an appropriate
percentage. The rate of withholding on annuity payments where no mandatory
withholding is required is determined on the basis of the withholding
certificate that you file with us. If you do not file a certificate, we will
automatically withhold federal taxes on the following basis:
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- For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with 3 exemptions;
and
- For all other distributions, you will be withheld at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents 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 "What Are the Expenses Associated with the
Strategic Partners Advisor Contract" starting on page 23.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale and Distribution of the Contract" on page 31.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about the requirements of federal tax law applicable
to tax favored plans, see the "IRA Disclosure Statement" on page 37.
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PART II STRATEGIC PARTNERS ADVISOR PROSPECTUS SECTIONS 1--9
9:
OTHER
INFORMATION
--------------------------------------------------------------------------------
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company is a stock life insurance company organized in 1971
under the laws of the State of Arizona. Pruco Life is licensed to sell life
insurance and annuities in the District of Columbia, Guam and in all states
except New York and therefore is subject to the insurance laws and regulations
of all the jurisdictions where it is licensed to do business. Pruco Life is a
wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential), a mutual insurance company founded in 1875 under the laws of the
State of New Jersey.
Prudential is currently considering reorganizing itself into a publicly
traded stock company through a process known as "demutualization". On February
10, 1998, the company's Board of Directors authorized management to take
preliminary steps necessary to allow the company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion to
occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of a
plan by the company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval. Prudential is working toward completing
this process in 2001 and currently expects adoption by the Board of Directors to
take place in the latter part of 2000. However, there is no certainty that the
demutualization will be completed in this timeframe or that the necessary
approvals will be obtained. Also it is possible that after careful review,
Prudential could decide not to demutualize or could decide to delay its plans.
The plan of reorganization, which has not been fully developed and approved,
would provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including types, amounts and
issue years of the policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, provided that their
policies were in force on the date Prudential's Board of Directors adopted a
plan of reorganization, while mutual fund customers and customers of the
company's subsidiaries (such as the Pruco Life insurance companies) would not
be. It has not yet been determined whether any exceptions to that general rule
will be made with respect to policyholders and contractholders of Prudential's
subsidiaries. This does not constitute a proposal, offer, solicitation or
recommendation regarding any plan of reorganization that may be proposed or a
recommendation regarding the ownership of any stock that could be issued in
connection with any such demutualization.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account, to hold the assets that are associated with the contracts. The
separate account was established under Arizona law on June 16, 1995, and is
registered with the U.S. Securities and Exchange Commission under the Investment
Company Act of 1940, as a unit investment trust, which is a type of investment
company. The assets of the separate account are held in the name of Pruco Life
and legally belong to us. These assets are kept separate from all of our other
assets and may not be charged with liabilities arising out of any other business
we may conduct. More detailed information about Pruco Life, including its
audited financial statements, are provided in the Statement of Additional
Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC ("PIMS"), 751 Broad Street,
Newark, New Jersey 07102-3777, acts as the distributor of the contracts. PIMS is
a wholly-owned subsidiary of Prudential and is a limited liability corporation
organized under Delaware law in 1996. It is a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. Commissions for the sales of contracts are paid to
Prudential representatives and to other independent broker-dealers who sell the
contracts, and do not reduce the amount of your investment. Registered
representatives of independent broker-dealers may be paid on a different basis
than those affiliated with PIMS.
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ASSIGNMENT
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 the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
FINANCIAL STATEMENTS
The financial statements of the separate account associated with Strategic
Partners Advisor are included in the Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- Company
- Directors and Officers
- Experts
- Litigation
- Legal Opinions
- Principal Underwriter
- Determination of Accumulation Unit Values
- Performance Information
- Comparative Performance Information
- Federal Tax Status
- Financial Information
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IRA DISCLOSURE STATEMENT
--------------------------------------------------------------------------------
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
your simplified employee pension IRA (SEP) for employer contributions, your
Savings Incentive Match Plan for Employees (SIMPLE) IRA, or to one you purchase
for your spouse. You can obtain more information regarding your IRA either from
your sales representative or from any district office of the Internal Revenue
Service. Those are federal tax law rules; state tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 10 days (or whatever period is
required by applicable state law) after it is delivered. This is a more liberal
provision than is required in connection with IRAs. To exercise this "free-look"
provision, return the contract 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.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA (or SEP) contributions must be made by
no later than the time you file your income tax return for that year. For a
single taxpayer, the applicable dollar limitation is $30,000, with the amount of
IRA contribution which may be deducted reduced proportionately for Adjusted
Gross Income between $30,000--$40,000. For married couples filing jointly, the
applicable dollar limitation is $50,000, with the amount of IRA contribution
which may be deducted reduced proportionately for Adjusted Gross Income between
$50,000--$60,000. There is no deduction allowed for IRA contributions when
Adjusted Gross Income reaches $40,000 for individuals and $60,000 for married
couples filing jointly.
Contributions made by your employer to your SEP are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEP will be entitled to
elect to have their employer make contributions to their SEP on their behalf or
to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEP are subject to an inflation-adjusted limit, which is $10,500 in 2000.
Salary-reduction SEPs (also called "SARSEPs") are available only if at least 50%
of the employees elect to have amounts contributed to the SARSEP and if the
employer has 25 or fewer employees at all times during the preceding year. New
SARSEPs may not be established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) $2,000 or (2) 100% of your earned compensation. Contributions in
excess of the deduction limits may be subject to penalty. See below.
Under a SEP agreement, the maximum annual contribution which your employer
may make on your behalf to a SEP contract that is excludable from your income is
the lesser of 15% of your salary or $24,000. An employee who is a participant in
a SEP agreement may make after-tax contributions to the SEP contract, subject to
the contribution limits applicable to IRAs in general. Those employee
contributions will be deductible subject to the deductibility rules described
above.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
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If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEP, the excess amount will be considered an "excess
contribution." You are permitted to withdraw an excess contribution from your
IRA or SEP before your tax filing date without adverse tax consequences. If,
however, you fail to withdraw any such excess contribution before your tax
filing date, a 6% excise tax will be imposed on the excess for the tax year of
contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions below for penalties imposed on
withdrawal when the contribution exceeds $2,000.)
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to $2,000 each may be made to
your IRA and the spousal IRA if the combined compensation of you and your spouse
is at least equal to the amount contributed. If requirements for deductibility
(including income levels) are met, you will be able to deduct an amount equal to
the least of (i) the amount contributed to the IRAs; (ii) $4,000; or (iii) 100%
of your combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See above under "Contributions and Deductions." If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEP and reinvest it in another IRA or bond. Withdrawals may also be made
from other IRAs and contributed to this contract. This transfer of funds from
one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. You will not be allowed a
tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with IRA (or SEP) contributions you have deducted from your income. (You may
roll less than all of a qualified distribution into an IRA, but any part of it
not rolled over will be currently includable in your income without any capital
gains treatment.)
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEP be forfeited. To insure that
your contributions will be used for retirement, the federal tax law does not
permit you to use your IRA or SEP as security for a loan. Furthermore, as a
general rule, you may not sell or assign your interest in your IRA or SEP to
anyone. Use of an IRA (or SEP) as security or assignment of it to another will
invalidate the entire annuity. It then will be includable in your income in the
year it is invalidated and will be subject to a 10% penalty tax if you are not
at least age 59 1/2 or totally disabled. (You may, however, assign your IRA or
SEP without penalty to your former spouse in accordance with the terms of a
divorce decree.)
You may surrender any portion of the value of your IRA (or SEP). In the case
of a partial surrender which does not qualify as a rollover, the amount
withdrawn will be includable in your income and subject to the 10% penalty if
you are not at least age 59 1/2 or totally disabled unless you comply with
special rules requiring distributions to be made at least annually over your
life expectancy.
The 10% penalty tax does not apply to the withdrawal of an excess
contribution as long as the excess is withdrawn before the due
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date of your tax return. Withdrawals of excess contributions after the due date
of your tax return will generally be subject to the 10% penalty unless the
excess contribution results from erroneous information from a plan trustee
making an excess rollover contribution or unless you are over age 59 1/2 or are
disabled.
(b) DISTRIBUTION AT AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEP) regardless of when you
actually retire. In addition, you must commence distributions from your IRA by
April 1 following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the period payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, a portion of the distribution
attributable to the nondeductible contribution will be tax-free.
(c) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA or SEP is intended to provide retirement benefits over your lifetime.
Thus, federal tax law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If you
elect to receive periodic payments, those payments must be sufficient to pay out
the entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse). If the payments are not sufficient to meet
these requirements, an excise tax of 50% will be imposed on the amount of any
underpayment.
(d) DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of your
IRA (or SEP), the remaining interest must be distributed to your beneficiary (or
your surviving spouse's beneficiary) in one lump-sum within 5 years of death, or
applied to purchase an immediate annuity for the beneficiary. This annuity must
be payable over the life expectancy of the beneficiary beginning within one year
after your or your spouse's death. If your spouse is the designated beneficiary,
he or she is treated as the owner of the IRA. If minimum required distributions
have begun, the entire amount must be distributed at least as rapidly as if the
owner had survived. A distribution of the balance of your IRA upon your death
will not be considered a gift for federal tax purposes, but will be included in
your gross estate for purposes of federal estate taxes.
ROTH IRAS
Section 408A of the Tax Code permits eligible individuals to contribute to a
type of IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by
taxpayers with adjusted gross incomes of less than $160,000 for married
individuals filing jointly and less than $100,000 for single individuals.
Married individuals filing separately are not eligible to contribute to a Roth
IRA. The maximum amount of contributions allowable for any taxable year to all
Roth IRAs maintained by an individual is generally the lesser of $2,000 and 100%
of compensation for that year (the $2,000 limit is phased out for incomes
between $150,000 and $160,000 for married and between $95,000 and $110,000 for
singles). The contribution limit is reduced by the amount of any contributions
made to a non-Roth IRA. Contributions to a Roth IRA are not deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a non-Roth IRA may be converted, transferred or rolled over to a Roth
IRA. Some or all of the IRA value will typically be includable in the taxpayer's
gross income. If such a rollover, transfer or conversion occurred before January
1, 1999, the portion of the amount includable in gross income must be included
in income ratably over the next four years beginning with the year in which the
transaction occurred. Provided a rollover contribution meets the requirements of
IRAs under Section 408(d)(3) of the Code, a rollover may be made from a Roth IRA
to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"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 years after the first year for which a
44
<PAGE> 47
contribution was made to any Roth IRA established for the owner or five years
after a rollover, transfer, or conversion was made from a non-Roth 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 taxed
generally in the same manner as distributions from a non-Roth IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if
the owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for underpayments),
you must file Form 5329 with the Internal Revenue Service. The form is to be
attached to your federal income tax return for the tax year in which the penalty
applies. Normal contributions and distributions must be shown on your income tax
return for the year to which they relate.
45
<PAGE> 48
PART III PROSPECTUSES
-------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
46
<PAGE> 49
STATEMENT OF ADDITIONAL INFORMATION
_____, 2001
PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The Strategic Partners Advisor annuity contract* (the "contract") is an
individual variable annuity contract issued by the Pruco Life Insurance Company
("Pruco Life"), a stock life insurance company that is a wholly-owned subsidiary
of The Prudential Insurance Company of America ("Prudential") and is funded
through the Pruco Life Flexible Premium Variable Annuity Account (the
"Account"). The contract is purchased by making an initial purchase payment of
$10,000 or more; subsequent payments must be $1,000 or more.
This statement of additional information is not a prospectus and should be read
in conjunction with the Strategic Partners Advisor prospectus, dated ____, 2001.
To obtain a copy of the prospectus, without charge, you can write to the
Prudential Annuity Service Center, P.O. Box 7960, Philadelphia, Pennsylvania
19101, or by telephoning (888) PRU-2888.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPANY............................................... 1
DIRECTORS AND OFFICERS 1
EXPERTS............................................... 1
LITIGATION............................................ 2
LEGAL OPINIONS........................................ 2
PRINCIPAL UNDERWRITER................................. 2
DETERMINATION OF SUBACCOUNT UNIT VALUES............... 3
PERFORMANCE INFORMATION............................... 3
COMPARATIVE PERFORMANCE INFORMATION AND ADVERTISING... 3
FEDERAL TAX STATUS.................................... 4
SEPARATE ACCOUNT FINANACIAL INFORMATION A1
COMPANY FINANCIAL INFORMATION......................... B1
</TABLE>
<TABLE>
<S> <C>
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 WASHINGTON STREET P.O. BOX 7960
NEWARK, NEW JERSEY 07102-2992 PHILADELPHIA, PENNSYLVANIA 19101
TELEPHONE: (888) PRU-2888
</TABLE>
* STRATEGIC PARTNERS ADVISOR is a service mark of Prudential.
ORD______
1
<PAGE> 50
COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company
organized in 1971 under the laws of the State of Arizona. Pruco Life is licensed
to sell life insurance and annuities in the District of Columbia, Guam and all
states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"), a mutual life insurance company founded in 1875 under
the laws of the State of New Jersey.
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life, listed with their principal
occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE
JAMES J. AVERY, JR., Chairman and Director - President, Prudential Individual
Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief Actuary
and CFO, Prudential Individual Insurance Group; 1995 to 1997: President,
Prudential Select. Age 48.
RONALD P. JOELSON, Director - Senior Vice President, Prudential Asset, Liability
and Risk Management since 1999; 1996 to 1999: President, Guaranteed Products,
Prudential Institutional; 1995 to 1996: Managing Director, Prudential Enterprise
Planning. Age 42.
IRA J. KLEINMAN, Director - Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group. Age 53.
ESTHER H. MILNES, President and Director - Vice President and Chief Actuary,
Prudential Individual Life Insurance since 1999; prior to 1999: Vice President
and Actuary, Prudential Individual Insurance Group. Age 49.
DAVID R. ODENATH, JR., Director - President, Prudential Investments since 1999;
prior to 1999; Senior Vice President and Director of Sales, Investment
Consulting Group, Paine Webber. Age 43.
I. EDWARD PRICE, Vice Chairman and Director - Senior Vice President and Actuary,
Prudential Individual Life Insurance since 1998; 1995 to 1998: Senior Vice
President and Actuary, Prudential Individual Insurance Group. Age 57.
KIYOFUMI SAKAGUCHI, Director - President and CEO, Prudential International
Insurance Group since 1995. Age 57.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer - Vice President and Treasurer, Prudential since
1995. Age 43.
JAMES C. DROZANOWSKI, Senior Vice President - Vice President, Operations and
Systems, Prudential Individual Financial Services since 1998; 1996 to 1998: Vice
President and Operations Executive, Prudential Individual Insurance Group; 1995
to 1996: President, Credit Card Division, Chase Manhattan Bank. Age 57.
THOMAS F. HIGGINS, Senior Vice President - Vice President, Annuity Services,
Prudential Individual Financial Services since 1999; 1998 to 1999: Vice
President, Mutual Funds, Prudential Individual Financial Services; 1995 to 1998:
Principal, Mutual Fund Operations, The Vanguard Group. Age 45.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary - Chief Counsel, Variable
Products, Prudential Law Department since 1995. Age 40.
HIROSHI NAKAJIMA, Senior Vice President - President and CEO, Pruco Life
Insurance Company Taiwan Branch since 1997; prior to 1997: Senior Managing
Director, Prudential Life Insurance Co., Ltd. Age 56.
2
<PAGE> 51
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary - Vice President and
Associate Actuary, Prudential since 1996; prior to 1996: Vice President and
Assistant Actuary, Prudential Corporate Risk Management. Age 45.
WILLIAM J. ECKERT, IV, Vice President and Chief Accounting Officer- Vice
President and IFS Controller, Prudential Enterprise Financial Management since
2000; 1999 to 2000: Vice President and Individual Life Controller, Prudential
Enterprise Financial Management; 1997 to 1999: Vice President, Accounting
Enterprise Financial Management; 1995 to 1997: Vice President, Accounting,
External Financial Reporting. Age 38.
The business address of all directors and officers of Pruco Life is 213
Washington Street, Newark, New Jersey 07102-2992. Pruco Life directors and
officers are elected annually.
EXPERTS
The consolidated financial statements of Pruco Life and its subsidiaries as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 and the financial statements of the Pruco Life Flexible
Premium Variable Annuity Account as of December 31, 1999 and for each of the two
years in the period then ended included in this Statement of Additional
Information have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants given on the authority of
said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP's
principal business address is 1177 Avenue of the Americas, New York, New York
10036.
LITIGATION
We are subject to legal and regulatory actions in the ordinary course of our
businesses, including class actions. Pending legal regulatory actions include
proceedings specific to our practices and proceedings generally applicable to
business practices in the industries in which we operate. As an example of such
litigation, in March 2000, plaintiffs filed a purported class action against us
titled Olmsted v. Pruco Life Insurance Company of New Jersey and The Prudential
Insurance Company of America, alleging that certain fees and expenses charged to
the plaintiffs in connection with the sale of variable annuities since March 1,
1997 were excessive and unreasonable. In certain of these lawsuits, large and/or
indeterminate amounts are sought, including punitive or exemplary damages.
In particular, Pruco Life and Prudential have been subject to substantial
regulatory actions and civil litigation involving individual life insurance
sales practices. In 1996, Prudential, on behalf of itself and many of its life
insurance subsidiaries including Pruco Life, entered into settlement agreements
with relevant insurance regulatory authorities and plaintiffs in the principal
life insurance sales practices class action lawsuit covering policyholders of
individual permanent life insurance policies issued in the United States from
1982 to 1995. Pursuant to the settlements, the companies agreed to various
changes to their sales and business practices controls and a series of fines,
and are in the process of distributing final remediation relief to eligible
class members. In many instances, claimants have the right to "appeal" the
decision to an independent reviewer. The bulk of such appeals were resolved in
1999, and the balance is expected to be addressed in 2000. As of January 31,
2000, Prudential and/or Pruco Life remained a party to two putative class
actions and approximately 158 individual actions relating to permanent life
insurance policies issued in the United States between 1982 and 1995. Additional
suits may be filed by individuals who opted out of the settlements. While the
approval of the class action settlement is now final, Prudential and Pruco Life
remain subject to oversight and review by insurance regulators and other
regulatory authorities with respect to their sales practices and the conduct of
the remediation program. The U.S. District Court has also retained jurisdiction
as to all matters relating to the administration, consummation, enforcement and
interpretation of the settlements.
Prudential has indemnified Pruco Life for any liabilities incurred in connection
with sales practices litigation covering policyholders of individual permanent
life insurance policies issued in the United States from 1982 to 1995.
In 1999, 1998, 1997 and 1996, Prudential recorded provision in its Consolidated
Statements of Operation of $100 million, $1,150 million, $2,030 million and
$1,125 million, respectively, to provide for estimated remediation costs, and
additional sales practices costs including related administrative costs,
regulatory fines, penalties and related payments, litigation costs and
settlements, including settlements associated with the resolution of claims of
deceptive sales practices asserted by policyholders who elected to "opt-out" of
the class action settlement and litigate their claims against Prudential
separately, and other fees and expenses associated with the resolution of sales
practices issues.
3
<PAGE> 52
LEGAL OPINIONS
Shea & Gardner of Washington, D.C., has provided advice on certain matters
relating to the federal securities laws in connection with the contracts.
PRINCIPAL UNDERWRITER
Prudential Investment Management Services LLC ("PIMS"), a subsidiary of
Prudential, offers the contracts on a continuous basis through corporate office
and regional home office employees in those states in which contracts may be
lawfully sold. It may also offer the contract through licensed insurance brokers
and agents, or through appropriately registered direct or indirect
subsidiary(ies) of Prudential, provided clearances to do so are obtained in any
jurisdiction where such clearances may be necessary.
Prudential may pay trail commissions to registered representatives who maintain
an ongoing relationship with a contractholder. Typically, a trail commission is
a compensation that is paid periodically to a representative, the amount of
which is linked to the value of the contract and the amount of time that the
contract has been in effect.
DETERMINATION OF ACCUMULATION UNIT VALUES
The value for each accumulation unit is computed as of the end of each business
day. On any given business day the value of a Unit in each subaccount will be
determined by multiplying the value of a Unit of that subaccount for the
preceding business day by the net investment factor for that subaccount for the
current business day. The net investment factor for any business day is
determined by dividing the value of the assets of the subaccount for that day by
the value of the assets of the subaccount for the preceding business day
(ignoring, for this purpose, changes resulting from new purchase payments and
withdrawals), and subtracting from the result the daily equivalent of the 1.40%
or 1.65% (depending on death benefit option elected) annual charge for
administrative expenses and mortality and expense risks. (See WHAT ARE THE
EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ADVISOR CONTRACT and CALCULATING
CONTRACT VALUE in the prospectus.) The value of the assets of a subaccount is
determined by multiplying the number of shares of The Prudential Series Fund,
Inc. (the "Series Fund") or other Fund held by that subaccount by the net asset
value of each share and adding the value of dividends declared by the Series
Fund or other Fund but not yet paid.
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN
The Account may advertise average annual total return information calculated
according to a formula prescribed by the U.S. Securities and Exchange Commission
("SEC"). Average annual total return shows the average annual percentage
increase, or decrease, in the value of a hypothetical contribution allocated to
a Subaccount from the beginning to the end of each specified period of time. The
SEC standardized version of this performance information is based on an assumed
contribution of $1,000 allocated to a Subaccount at the beginning of each period
and full withdrawal of the value of that amount at the end of each specified
period. This method of calculating performance further assumes that (i) a $1,000
contribution was allocated to a Subaccount and (ii) no transfers or additional
payments were made. Premium taxes are not included in the term "charges" for
purposes of this calculation. Average annual total return is calculated by
finding the average annual compounded rates of return of a hypothetical
contribution that would compare the Unit Value on the first day of the specified
period to the ending redeemable value at the end of the period according to the
following formula:
P(1 + T)n = ERV
Where T equals average annual total return, where ERV (the ending redeemable
value) is the value at the end of the applicable period of a hypothetical
contribution of $1,000 made at the beginning of the applicable period, where P
equals a hypothetical contribution of $1,000, and where n equals the number of
years.
4
<PAGE> 53
NON-STANDARD TOTAL RETURN
In addition to the standardized average annual total return information
described above, we may present total return information computed on bases
different from that standardized method. The Account may also present aggregate
total return figures for various periods, reflecting the cumulative change in
value of an investment in the Account for the specified period.
The tables below provide performance information for specified periods ending
December 31, 1999 for each Subaccount that invests in a Fund that had a
performance history as of December 31, 1999. No standard total return table is
included because the Subaccounts are only commencing operations on or after the
date of this Statement of Additional Information. For the periods prior to the
date the Subaccounts commenced operations, non-standard performance information
for the Contracts will be calculated based on the performance of the Funds and
the assumption that the Subaccounts were in existence for the same periods as
those indicated for the Funds, with the level of Contract charges that were in
effect at the inception of the Subaccounts (this is referred to as "hypothetical
performance data"). Standard and non-standard average annual return calculations
include all of the fees under the Contract (i.e., the mortality and expense risk
charge and the administrative fee). This information does not indicate or
represent future performance.
The following three tables assume a daily insurance and administrative charge
equal to 1.40% on an annual basis.
Table 1 below shows the average annual rates of total return on hypothetical
investments of $1,000 for periods ended December 31, 1999 in each subaccount
other than the Money Market Subaccount. These figures assume withdrawal of the
investments at the end of the period other than to effect an annuity under the
Contract. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 40.57% 20.55% 7.51% 12.68%
PRUDENTIAL JENNISON PORTFOLIO 05/95 34.60% N/A N/A 30.06%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 13.23% 26.07% 14.09% 15.29%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 36.34% 27.92% N/A 22.48%
</TABLE>
5
<PAGE> 54
Table 2 shows the average annual rates of return as in Table 1, but assumes that
the investments are not withdrawn at the end of the period. This table assumes
no deferred sales charges.
TABLE 2
AVERAGE ANNUAL TOTAL RETURN
ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 46.17% 20.70% 11.76% 12.68%
PRUDENTIAL JENNISON PORTFOLIO 05/95 40.20% N/A N/A 30.29%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 18.83% 26.20% 16.02% 15.29%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 41.94% 28.04% N/A 22.52%
</TABLE>
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 46.17% 156.22% 203.92% 284.90%
PRUDENTIAL JENNISON PORTFOLIO 05/95 40.20% N/A N/A 243.83%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 18.83% 220.09% 342.05% 476.01%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
</TABLE>
6
<PAGE> 55
<TABLE>
<S> <C> <C> <C> <C> <C>
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 41.94% 244.16% N/A 259.31%
</TABLE>
The following three tables assume a daily insurance and administrative charge
equal to 1.65% on an annual basis.
Table 1 below shows the average annual rates of total return on hypothetical
investments of $1,000 for periods ended December 31, 1999 in each subaccount
other than the Money Market Subaccount. These figures assume withdrawal of the
investments at the end of the period other than to effect an annuity under the
Contract. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 40.21% 20.15% 11.44% 12.38%
PRUDENTIAL JENNISON PORTFOLIO 05/95 34.26% N/A N/A 29.48%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 12.93% 25.76% 15.73% 14.94%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 36.00% 27.61% N/A 22.18%
</TABLE>
Table 2 shows the average annual rates of return as in Table 1, but assumes that
the investments are not withdrawn at the end of the period. This table assumes
no deferred sales charges.
TABLE 2
AVERAGE ANNUAL TOTAL RETURN
ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 45.81% 20.31% 11.44% 12.38%
PRUDENTIAL JENNISON PORTFOLIO 05/95 39.83% N/A N/A 29.71%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 18.53% 25.88% 15.73% 14.94%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
</TABLE>
7
<PAGE> 56
<TABLE>
<S> <C> <C> <C> <C> <C>
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 41.60% 27.73% N/A 22.22%
</TABLE>
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FUND PORTFOLIO DATE ONE YEAR FIVE YEARS TEN YEARS FROM DATE
ESTABLISHED ENDED ENDED ENDED ESTABLISHED
12/31/1999 12/31/1999 12/31/1999 THROUGH
12/31/1999
<S> <C> <C> <C> <C> <C>
PRUDENTIAL GLOBAL PORTFOLIO 09/88 45.81% 152.03% 195.35% 273.23%
PRUDENTIAL JENNISON PORTFOLIO 05/95 39.86% N/A N/A 236.78%
PRUDENTIAL STOCK INDEX PORTFOLIO 09/87 18.53% 216.11% 330.99% 455.39%
SP AGGRESSIVE GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM AGGRESSIVE GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP AIM GROWTH AND INCOME PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE LARGE CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP ALLIANCE TECHNOLOGY PORTFOLIO 08/00 N/A N/A N/A N/A
SP BALANCED ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP CONSERVATIVE ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP DAVIS VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP DEUTSCHE INTERNATIONAL EQUITY PORTFOLIO 08/00 N/A N/A N/A N/A
SP GROWTH ASSET ALLOCATION PORTFOLIO 08/00 N/A N/A N/A N/A
SP INVESCO SMALL COMPANY GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP JENNISON INTERNATIONAL GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP LARGE CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS CAPITAL OPPORTUNITIES PORTFOLIO 08/00 N/A N/A N/A N/A
SP MFS MID CAP GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO HIGH YIELD PORTFOLIO 08/00 N/A N/A N/A N/A
SP PIMCO TOTAL RETURN PORTFOLIO 08/00 N/A N/A N/A N/A
SP PRUDENTIAL U.S. EMERGING GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
SP SMALL/MID CAP VALUE PORTFOLIO 08/00 N/A N/A N/A N/A
SP STRATEGIC PARTNERS FOCUSED GROWTH PORTFOLIO 08/00 N/A N/A N/A N/A
JANUS ASPEN SERIES-GROWTH PORTFOLIO SERVICE SHARES 09/93 41.60% 239.96% N/A 253.77%
</TABLE>
MONEY MARKET SUBACCOUNT YIELD
The "yield" and "effective yield" figures for the Money Market Subaccount
shown below were calculated using historical investment returns of the Money
Market Portfolio of the Prudential Series Fund. All fees, expenses and charges
associated with the STRATEGIC PARTNERS ADVISOR Annuity and the Series Fund have
been reflected.
The "yield" and "effective yield" of the Money Market Subaccount for the
seven days ended December 31, 1999 were 6.53% and 6.74%, respectively, assuming
the Basic Death Benefit. Assuming election of the Enhanced Death Benefit the
"yield" and ."effective yield" were ___% and ___% respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the difference by the value of the subaccount at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7), with the
8
<PAGE> 57
resulting figure carried to the nearest ten-thousandth of 1%.
The deduction referred to above consists of the 1.35% charge for insurance
risks for the Basic Death Benefit and 1.65% for the Enhanced Death Benefit.
The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula: Effective Yield=([base period
return + 1] 365/7)-1.
The yields on amounts held in the Money Market Subaccount will fluctuate on
a daily basis. Therefore, the stated yields for any given period are not an
indication of future yields.
COMPARATIVE PERFORMANCE INFORMATION AND ADVERTISING
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and
Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow
Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in
publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune,
Money Magazine, and Financial World.
FEDERAL TAX STATUS
X. OTHER TAX RULES.
1. DIVERSIFICATION.
The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements. 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, whichever is applicable. Pruco Life believes the underlying
variable investment options for the Contract meet these diversification
requirements.
2. INVESTOR CONTROL.
Treasury Department regulations do not provide guidance concerning the
extent to which you may direct your investment in the particular investment
options without causing you, instead of Pruco Life, to be considered the owner
of the underlying assets. Because of this uncertainty, Pruco Life reserves the
right to make such changes as it deems necessary to assure that the contract
qualifies as an annuity for tax purposes. Any such changes will apply uniformly
to affected contractowners and will be made with such notice to affected
contractowners as is feasible under the circumstances.
3. 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 will be subject to tax.
9
<PAGE> 58
4. PURCHASE PAYMENTS MADE BEFORE AUGUST 14, 1982.
If your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982, favorable tax rules may apply to certain
withdrawals from the contract. Generally, withdrawals are treated as a recovery
of your investment in the contract first until purchase payments made before
August 14, 1982 are withdrawn. Moreover, any income allocable to purchase
payments made before August 14, 1982, is not subject to the 10% penalty tax.
5. WITHHOLDING OF TAX FROM DISTRIBUTIONS.
Taxable amounts distributed from annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. The rate of withholding on annuity payments will be determined on the
basis of the withholding certificate you file with Pruco Life. These elections
must be made on the appropriate Pruco Life forms. Absent these elections, Pruco
Life will withhold the tax amounts required by the applicable tax regulations.
You may be subject to penalties under the estimated tax payment rules if your
withholding and estimated tax payments are not sufficient.
6. NONRESIDENT ALIENS. Special tax withholding rules apply to nonresident
aliens.
7. TRANSFERS TO YOUNGER PERSONS. If you transfer your contract to a person
either 37 1/2 years younger than you, or a grandchild, or designate such younger
person as a beneficiary, there may be Generation Skipping tax consequences.
FINANCIAL STATEMENTS
The following financial statements describe the sub-accounts of the Discovery
Select Variable Annuity, another variable annuity contract offered by Pruco
Life. This information is provided because some of the sub-accounts associated
with Discovery Select are also used by the Strategic Partners Select Annuity
contract. Financial information specific to the Strategic Partners Select
Annuity contract will be available following the completion of the initial
accounting period for this contract.
10
<PAGE> 59
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) Financial Statements of the Discovery Select Variable Annuity Subaccounts of
Pruco Life Flexible Premium Variable Annuity Account (Registrant) consisting
of the Statements of Net Assets as of December 31, 1999; the Statements of
Operations for the period ended December 31, 1999; the Statements of Changes
in Net Assets for the periods ended December 31, 1999 and December 31, 1998;
and the Notes relating thereto will appear in the statement of additional
information. (Part B of the Registration Statement) (Note 4)
(2) Consolidated Statements of Pruco Life Insurance Company (Depositor) and its
subsidiaries consisting of the Consolidated Statements of Financial Position
as of December 31, 1999 and 1998; and the related Consolidated Statements of
Operations, Changes in Stockholder's Equity and Cash Flows for the years
ended December 31, 1999, 1998 and 1997; and the Notes to the Consolidated
Financial Statements will appear in the statement of additional information
(Part B of the Registration Statement) (Note 4).
(b) EXHIBITS
(1) Resolution of the Board of Directors of Pruco Life Insurance Company
establishing the Pruco Life Flexible Premium Variable Annuity Account. (Note
2)
(2) Agreements for custody of securities and similar investments--Not
Applicable.
(3) (a) Form of Distribution Agreement between Prudential Investment
Management Services, Inc. "PIMS" (Underwriter) and Pruco Life Insurance
Company (Depositor) (Note 3)
(b) Form of Selected Broker Agreement used by PIMS (Note 3)
(4) (a) The Strategic Partners Advisor Variable Annuity Contract -VFLX-99.
(Note 1)
(5)(a) Application form for the Contract. (Note 1)
(6)(a) Articles of Incorporation of Pruco Life Insurance Company, as amended
through October 19, 1993. (Note 5)
(b) By-laws of Pruco Life Insurance Company, as amended through May 6,
1997. (Note 6)
(7) Contract of reinsurance in connection with variable annuity contract--Not
Applicable.
(8) Other material contracts performed in whole or in part after the date the
registration statement is filed:
(a) Form of Fund Participation Agreement. (Note 7)
(9) Opinion of Counsel as to legality of the securities being registered. (Note
4)
(10) Written consent of PricewaterhouseCoopers LLP independent accountants.
(Note 4)
(11) All financial statements omitted from Item 23, Financial Statements -- Not
Applicable.
(12) Agreements in consideration for providing initial capital between or among
Registrant, Depositor, Underwriter, or initial Contract owners--Not
Applicable.
(13) Schedule of Performance Computations. (Note 4)
(14) Powers of Attorney.
1
<PAGE> 60
(a) Ira J. Kleinman, Esther H. Milnes and I. Edward Price (Note 8)
(b) Kiyofumi Sakaguchi (Note 10)
(c) James J. Avery, Jr (Note 11)
(d) David R. Odenath, Jr, William J. Eckert and Ronald P. Joelson
(Note 13)
(Note 1) Filed herewith
(Note 2) Incorporated by reference to Form N-4, Registration No. 33-61125,
filed July 19, 1995 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 6 to Form
N-4, Registration No.333-06701, filed April 15, 1999 on behalf of the
Pruco Life Flexible Premium Variable Annuity Account.
(Note 4) To be filed by pre-effective amendment
(Note 5) Incorporated by reference to the initial registration on Form S-6,
Registration No. 333-07451, filed July 2, 1996, on behalf of the
Pruco Life Variable Appreciable Account.
(Note 6) Incorporated by reference to Form 10-Q as filed August 15, 1997, on
behalf of the Pruco Life Insurance Company.
(Note 7) Incorporated by reference to Form N-4, Registration No. 333-06701,
filed June 24, 1996 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 8) Incorporated by reference to Form 10-K, Registration No. 33-08698,
filed March 31, 1997 on behalf of the Pruco Life Variable Contract
Real Property Account.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 2 to Form
S-6, Registration No. 33-85115, filed October 13, 2000 on behalf of
the Pruco Life Variable Universal Account.
(Note 10) Incorporated by reference to Post Effective Amendment No. 8 to Form
S-6, Registration No.33-49994, filed April 28, 1997, on behalf of the
Pruco Life PRUvider Variable Appreciable Account.
(Note 11) Incorporated by reference to Post-Effective Amendment No. 2 to Form
S-6, Registration No. 333-07451, filed June 25, 1997 on behalf of the
Pruco Life Variable Appreciable Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No.7 to Form
S-1, Registration No. 33-86780, filed April 10, 2000 on behalf of the
Pruco Life Variable Contract Real Property Account.
(Note 13) Incorporated by reference to the initial registration statement on
Form N-4, Registration No. 333-52754, filed December 26, 2000 on
behalf of the Pruco Life Flexible Premium Variable Annuity Account.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
See Part B: Directors and Officers.
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<PAGE> 61
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT
Pruco Life Insurance Company ("Pruco Life"), a corporation organized under the
laws of Arizona, is a direct, wholly-owned subsidiary of The Prudential
Insurance Company of America, ("Prudential"), a mutual life insurance company
organized under the laws of New Jersey. The subsidiaries of Prudential and short
descriptions of each are set forth on the following pages.
Pruco Life may be deemed to control its two wholly-owned subsidiaries, Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey") and The
Prudential Insurance Company of Arizona ("PLICA"). Pruco Life may also be deemed
to control the following separate accounts which are registered as unit
investment trusts under the Investment Company Act of 1940: the Pruco Life
Variable Appreciable Account, the Pruco Life Variable Insurance Account, the
Pruco Life Single Premium Variable Life Account, the Pruco Life Variable
Universal Account, the Pruco Life PRUvider Variable Appreciable Account, the
Pruco Life Single Premium Variable Annuity Account, the Pruco Life Flexible
Premium Variable Annuity Account (Registrant) (separate accounts of Pruco Life),
the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New
Jersey Variable Insurance Account, the Pruco Life of New Jersey Single Premium
Variable Life Account, and the Pruco Life of New Jersey Single Premium Variable
Annuity Account (separate accounts of Pruco Life of New Jersey).
The above-referenced separate accounts, along with Prudential and certain of
Prudential's separate accounts, hold the majority of the shares of The
Prudential Series Fund, Inc., a Maryland corporation. In addition, The
Prudential holds all the shares of Prudential's Gibraltar Fund, a Maryland
Corporation, in three of its separate accounts. The Prudential Series Fund, Inc.
and Prudential's Gibraltar Fund are registered as open-end diversified,
management investment companies under the Investment Company Act of 1940.
Additionally, the aforementioned separate accounts of Prudential are registered
as unit investment trusts under the Investment Company Act of 1940.
In addition, Pruco Life may also be deemed to be under common control with The
Prudential Variable Contract Account-2, The Prudential Variable Contract
Account-10, and The Prudential Variable Contract Account-11, separate accounts
of Prudential, all of which are registered as open-end, diversified, management
investment companies under the Investment Company Act of 1940 and with the
Prudential Variable Contract Account-24, a registered unit investment trust.
The subsidiaries of Prudential and short descriptions of each are listed under
Item 25 of Post-Effective Amendment No. 32 to the Form N-1A Registration
Statement for The Prudential Series Fund, Inc., Registration No. 2-80896, filed
February 28, 1997, the text of which is hereby incorporated.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
ITEM 28. INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
Arizona, being the state of organization of Pruco Life Insurance Company
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et. seq.
of the Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII,
which relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 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
3
<PAGE> 62
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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Investment Management Services LLC (PIMS)
PIMS is distributor for Prudential Government Securities Trust, The
Target Portfolio Trust, Cash Accumulation Trust, COMMAND Government Fund,
COMMAND Money Fund, COMMAND Tax-Free Fund, Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund),
Prudential Balanced Fund, Prudential California Municipal Fund, Prudential
Diversified Bond Fund, Inc., Prudential Diversified Funds, Prudential Emerging
Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential Europe Growth Fund,
Inc., Prudential Global Genesis Fund, Inc., Prudential Global Total Return Fund,
Inc., Prudential High Yield Fund, Inc., Prudential Index Series Fund, Prudential
MoneyMart Assets Inc., Prudential Natural Resources Fund, Inc., Prudential
Government Income Fund, Inc., Prudential High Yield Total Return Fund, Inc.,
Prudential International Bond Fund, Inc., Prudential Institutional Liquidity
Portfolio, Inc., The Prudential Investment Portfolios, Inc., Prudential Mid-Cap
Value Fund, Prudential Municipal Bond Fund, Prudential Municipal Series Fund,
Prudential National Municipals Fund, Inc., Prudential Pacific Growth Fund, Inc.,
Prudential Real Estate Securities Fund, Prudential Sector Funds, Inc.,
Prudential Small-Cap Quantum Fund, Inc., Prudential Small Company Fund, Inc.,
Prudential Special Money Market Fund, Inc., Prudential Short-Term Corporate Bond
Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential Tax-Managed Funds,
Prudential 20/20 Focus Fund, Prudential Value Fund, Prudential World Fund, Inc.,
Strategic Partners Series and Target Funds.
PIMS is also distributor of the following unit investment trusts:
Separate Accounts: Prudential's Gibraltar Fund, Inc., The Prudential Variable
Contract Account-2, The Prudential Variable Contract Account-10, The Prudential
Variable Contract Account-11, The Prudential Variable Contract Account-24, The
Prudential Variable Contract GI-2, The Prudential Discovery Premier Group
Variable Contract Account, The Prudential Discovery Select Group Variable
Contract Account, The Pruco Life Flexible Premium Variable Annuity Account, The
Pruco Life of New Jersey Flexible Premium Variable Annuity Account, The
Prudential Individual Variable Contract Account and The Prudential Qualified
Individual Variable Contract Account.
(b) Information concerning the officers and directors of PIMS is set forth
below.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME (1) WITH UNDERWRITER WITH REGISTRANT
---------------------- --------------------------------- ----------------------------
<S> <C> <C>
Robert F. Gunia....... President None
Jean D. Hamilton...... Executive Vice President None
John R. Strangfeld.... Executive Vice President None
Kevin B. Frawley...... Senior Vice President and Chief None
Compliance Officer
Francis O. Odubekun... Senior Vice President and Chief None
Operating Officer
William V. Healey..... Senior Vice President, Secretary None
and Chief Legal Officer
Margaret M. Deverell.. Senior Vice President, None
Comptroller and
Chief Financial Officer
C. Edward Chaplin..... Treasurer None
</TABLE>
-----------------
(1) The address of each person named is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102 unless otherwise noted.
4
<PAGE> 63
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section 31
(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
Registrant through The Prudential Insurance Company of America, 751 Broad
Street, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
Summary of any contract not discussed in Part A or Part B of the registration
statement under which management-related services are provided to the
Registrant--Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this Registrant
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16 months old
for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a statement of additional information, or (2) a postcard or
similar written communication affixed to or included in the prospectus that
the applicant can remove to send for a statement of additional information.
(c) Registrant undertakes to deliver any statement of additional information and
any financial statements required to be made available under this Form
promptly upon written or oral request.
(d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the
Chief of the Office of Insurance Products and Legal Compliance of the U.S.
Securities and Exchange Commission to the American Council of Life Insurance
on November 28, 1988.
(e) Pruco Life hereby represents that the fees and charges deducted under the
Contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by
Pruco Life.
5
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal hereunto affixed and attested, all in the City of
Newark and the State of New Jersey, on this 27th day of December, 2000.
THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY
(Depositor)
<TABLE>
<S> <C>
Attest: /s/ CLIFFORD E. KIRSCH /s/ ESTHER H. MILNES
-------------------------------------------------------- -----------------------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICER AND SECRETARY PRESIDENT
</TABLE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated:
<TABLE>
<CAPTION>
SIGNATURE AND TITLE
----------------------------------------------------
<S> <C>
*
--------------------------------
ESTHER H. MILNES Date: December 27, 2000
PRESIDENT AND DIRECTOR
*
--------------------------------
JAMES J. AVERY JR
CHAIRMAN OF THE BOARD AND DIRECTOR
* *By: /s/ CLIFFORD E. KIRSCH
-------------------------------- --------------------------------
WILLIAM J. ECKERT CLIFFORD E. KIRSCH
VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER (ATTORNEY-IN-FACT)
(PRINCIPAL FINANCIAL OFFICER AND CHIEF
ACCOUNTING OFFICER)
*
--------------------------------
IRA J. KLEINMAN
DIRECTOR
*
--------------------------------
I. EDWARD PRICE
DIRECTOR
*
--------------------------------
KIYOFUMI SAKAGUCHI
DIRECTOR
*
--------------------------------
RONALD P. JOELSON
DIRECTOR
*
--------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
</TABLE>
6
<PAGE> 65
Exhibit Index
(4) Strategic Partners Advisor Variable Annuity Contract
(5) Application
